Reference no: EM131736362

PIECEWORK TO STRAIGHT-TIME PAY

Facts: Under the existing collective bargaining contract, the employer paid some employees straight time hourly rates and some employees piecework or incentive rates. In order to change any employee from one rate to the other, the contract required that the employer meet with the union to discuss the change prior to making any change, and justify the change through the application of accepted industrial engineering practices. As a result of engineering studies conducted in 1980–1981, the employer changed the method of pay for three job classifications from piecework to straight time resulting in savings of approximately $275 per month. The union grieved the action. The union contended that the company could not justify the change based on accepted industrial engineering practices, and that the change was merely a cost-cutting tactic disguised as an improvement in operations. The company defended its action on the basis that the three job classifications involved were deficient in the conditions necessary to apply a professional incentive standard. Decision: The arbitrator found, first, that the employer complied with the first requirement of the contract, that is, meeting with the union prior to any change. The union participated in the studies undertaken in 1981–1982 and in discussions on the performance standards to be improved under the straight-line pay rate. As the second condition, that any change be based on accepted industrial engineering practices, the arbitrator found in the employer’s favor. Third, the arbitrator noted that the employer had, from December 1976 through June 1979, spent approximately $1.35 million on equipment used by the employees in the job classifications being grieved. The arbitrator also pointed out that prior to 1976 and after 1979 the same type of variability occurred in the performance of the employees. A previous arbitration award noted that an incentive pay rate can only be awarded if proper performance standards and records are provided, along with uniform equipment conditions and material. A relationship between performance and earnings return must also be shown. Based on this understanding of the facts, that is, a change in the equipment used by the employees and the continued variable in operations, the arbitrator agreed that a change in standard was justified and that change could also include a change from piecework to straight-time pay.

Question:

What was the significance of the before 1976 and after 1979 variability of employee performance noted in the arbitrator's decision and how could the arbitrator have found for the union in this case on a fairness issue? Explain your answer.