States Take on Mediation Burdens After Trump Cuts Labor Agency

Some state governments are scrambling to find alternatives to a critical labor mediation agency, even after a federal judge recently ordered the Trump administration to rehire its negotiators.

A court order from Chief Judge John McConnell of the US District Court for the District of Rhode Island demanding the reinstatement of workers at the Federal Mediation and Conciliation Service is unlikely to prevent the government from cutting states off from the long-used services, according to labor observers.

McConnell ordered the administration to cease dismantling FMCS along with two other small government agencies that had seen all or nearly all of their workers laid off after President Donald Trump ordered their operations be eliminated to the “maximum extent.”

Only four mediators were left at FMCS after the layoffs, down from 143 before Trump took office. FMCS mediators have assisted with labor disputes at major companies like Starbucks Corp., Apple Co. and Boeing Co.

Michigan, Washington, California, and other states have since taken steps to address the gap left behind by the federal mediators or are altering their labor relations statutes to curb the impact.

The legal battle over FMCS is just one part of a broadening tapestry of litigation challenging Trump’s efforts to downsize the federal government’s scope and reach. Both union and management-side attorneys are sounding alarms over the move to shrink the labor dispute resolution agency.

FMCS saved roughly $500 million per year in lost wages and revenue by averting strikes while operating on only $53 million, an Illinois coalition of over 175 labor and employer-side lawyers, law firms, and scholars wrote to Trump.

“It is imperative to retain a vibrant FMCS to respond to the inevitable labor relations problems that will arise on Main Street and in suburban and rural-based workplaces,” their letter said.

A ‘Stalwart Institution’

FMCS is a small labor agency that has played an out-sized role in some of the nation’s largest workplace negotiations over the last several years, Throughout the 2000s, the agencies’ mediators were also pivotal in preventing or ending work stoppages in the National Football League, the National Hockey League, and Major League Baseball.

In fiscal year 2023, FMCS was involved in 2,467 collective bargaining negotiations, 1,265 “high-impact” grievance mediations, and conducted 1,566 training programs.

FMCS was codified under the 1947 Taft-Hartley Act to neutrally mediate contracts, strikes, and grievances between employers and their workers’ unions.

The tiny bureau has also become critical for resolving disputes in the public and federal sectors, with many collective bargaining agreements and labor statutes requiring parties to go through FMCS before a strike or to arbitrate grievances.

“This was supposed to be a stable, stalwart institution that people could rely on so state and local governments wrote it into their contracts,” said Suzanne Summerlin, general counsel for the Federal Workers Legal Defense Project.

Contract and statute language varies case-by-case, but a dearth of FMCS mediators could force municipalities to seek out private mediation that is more expensive or forgo mediation at all.

McConnell’s injunction mandates that the agencies named in the lawsuit restore functions as required by the Taft-Hartley Act, but even that restoration of the agency could leave the public and federal sectors out in the cold because the law only authorizes private-sector work.

One mediator who was laid off in April said he hasn’t received word on whether he will be reinstated. The mediator previously operated in a state that heavily used FMCS services for public-sector bargaining with 60-70% of his workload revolving around those negotiations.

“In a new FMCS, I imagine it’s going to stay strictly within Taft-Hartley and only include private sector work,” the mediator said.

Adding to the uncertainty is the government’s appeal and motion to stay McConnell’s order, which is awaiting consideration by the US Court of Appeals for the First Circuit.

State Response

Nineteen states currently don’t have their own labor relations agencies, and only six have specific mediation bodies, according to the Association of Labor Relations Agencies.

But even states that do offer mediation services are often overwhelmed, Summerlin said.

Sean Egan, deputy director of labor at the Michigan Department of Labor and Economic Opportunity, said in an April hearing before the state Senate Labor Committee that the department planned on hiring more mediators to pick up extra workloads.

“Unfortunately, we won’t know we don’t have capacity until we don’t have capacity,” he said.

The California Public Employees Relations Board also said it would step-up to assist with more mediation across all sectors.

“It’s going to be challenging to find ways once word gets around that we can take on this work, but I’m glad we’re able to do that for our constituents,” Jerry Fecher, director of the State Mediation and Conciliation Service, said at an April hearing.

The coalition of 21 states suing in Rhode Island noted the higher cost of bargaining and labor disputes without FMCS in the picture in their April complaint.

And Washington Governor Bill Ferguson signed a bill May 19 to give striking or locked-out workers access to state unemployment benefits. The legislation requires the state to notify employers of the availability of mediation through the government’s Public Employment Relations Commission. It also authorizes Washington to charge unions and companies a fee to pay for mediation when there’s a strike that results in unemployment benefits being paid.

The lack of mediators could push more public sector unions down the path of arbitration and litigation, Summerlin said. And states that don’t take steps to create or alter their own mediation structures could face labor unrest that damages public services.

“You’re going to have teacher walkouts, sanitation worker walkouts, something is going to happen and the public is going to blame their lawmakers,” she said. “Do you want to learn the lesson the hard way? Or do you want to be proactive and fix your statutes and your contracts?”