The following is from pages 116-118 of the book Collective Bargaining in the Public Sector: The Experience of Eight States, edited by Joyce M. Najita and James L. Stern and published by M.E. Sharpe, Inc. Copyright date is 2001.
Act 312: Compulsory Interest Arbitration for Police and Firefighter Units
Michigan's local public safety employees are governed by a special impasse resolution statute, Act 312, which provides compulsory interest arbitration for police and firefighter units. This act was proposed shortly after the passage of PERA. In 1966, the governor appointed a five-member Advisory Committee on Public Employee Relations to study the impact and effectiveness of PERA. One impetus for the creation of the committee was public concern with public sector strikes that occurred in the year following the enactment of PERA, including "job actions," ''blue flu," and "work to rule" by police and fire units. The committee's recommendations included a proposal for experimental legislation to provide binding interest arbitration for police and firefighter units.
Bills were introduced in 1966 and 1967 but made no progress. Sporadic unrest occurred among police and firefighter units. A bill was passed in 1969 with a three-year limit. This law, commonly known as Act 312, was one of the first laws in the United States to provide compulsory interest arbitration for public safety employees. Disputes were to be submitted to tripartite arbitration panels, with the parties selecting the neutral member. In 1972 the law was extended, and in 1975 the legislation was made permanent.
In the 1970s, Act 312 was amended in several important ways. In 1972, the legislature changed the type of arbitration. The original Act 312 provided for conventional arbitration in which the panel could craft its own contract provisions. The 1972 amendment required instead that disputes over economic issues be resolved with issue-by-issue final-offer arbitration (also known as last-best-offer arbitration). Under this system, the arbitration panel must select either the employer's final offer without modification or the union’s final offer without modification for each economic issue, considered separately. The 1972 amendment, however, did not change the previous policy of using conventional arbitration for noneconomic issues.
Another change in the 1972 amendment provided for remand to the parties for further negotiations in order to encourage voluntary settlements. In 1976, coverage was extended to emergency medical service personnel employed by a police or fire department, and in 1977 it was extended to emergency telephone operators employed by such departments. The act was amended several times thereafter but not in major respects.
After the passage of Act 312, strikes virtually disappeared in the police and firefighter sector in Michigan. Although one strike occurred in 1970, when officers protested an attempt by the employer to appeal an arbitration award, Act 312 has been highly successful in achieving its key mission of preventing police and firefighter strikes.
For over twenty years, Act 312 has gone without any substantial amendment. There were, however, serious attempts at amending or rescinding Act 312 in the late 1970s and early 1980s. Among the most serious critics of Act 312 was the former and late mayor of Detroit, Coleman Young. Ironically, as state senator, he had been one of the sponsors of the bill in the state legislature. In the fall of 1978, an arbitration panel ruled in favor of the police and firefighter unions in Detroit in a high-stakes case. Mayor Young filed a legal appeal, asserting that the arbitrators had ignored the city's inability to pay the increase in wages and sick leave benefits, and by 1979 he was publicly looking for a way to “save us from these maniacs," referring to the arbitrators. In 1980, the Michigan Supreme Court upheld the constitutionality of Act 312 and ordered Detroit to pay $50 million in back pay in compliance with the 1978 arbitration award. Young then pressed for legislative changes, without success.
Efforts to amend or rescind Act 312 have died out because the parties now seem satisfied with the act. To some extent Act 312 continues to be an object of ritualistic management grumbling, but Young's retirement as mayor of Detroit reduced the pressure from management to change the law. Moreover, firefighter and police unions oppose any amendments to Act 312, fearing that opening up the law to amendments might bring changes that they dislike. The principal police unions are strong supporters of the present Republican governor [Engler], so that any change in Act 312 is extremely unlikely, despite the Republicans' regaining control of the state House of Representatives in the November 1998 elections.
MERC has worked with the parties and sought ways to improve administration of Act 312. Formal rules were first promulgated in 1995. Record keeping was computerized, the per diem pay rate for arbitrators has steadily increased, and MERC has reduced the size of the panel of available arbitrators to improve the expertise of those participating. Other administrative changes or improvements include arbitrator and advocate training, publication of awards, and modification of arbitrator selection procedures.
To what extent have the parties in police or firefighter units become dependent on interest arbitration to settle their contract negotiations? Table 5.5 shows MERC data for Act 312-eligible contract expiration cases for the fiscal years ending September 30, 1998.
The data in Table 5.5 [not included here] show that the parties resolve through negotiation the vast majority of Act 312-eligible cases. These results are consistent figures in previous studies. Nevertheless, the availability of interest arbitration may affect the negotiation outcome in many cases where the parties settle, regardless of whether the parties settle without petitioning for arbitration or after petitioning but before an award is issued.