Grievances are usually thought of as the way for recognized unions and employers to settle their disagreements. Virtually all collective bargaining agreements have some type of grievance procedure language. However, these types of agreements are not for the exclusive use of unions. Many states, including Montana, provide for the settling of disagreements between employer and nonunion employees through arbitration or mediation.
For private employers, many states allow the written language of a grievance procedure agreement to be controlling, similar to a contract. If, however, a private employer's grievance procedure is contrary to state law governing arbitrations, the statute controls. If the grievance procedure agreement is silent on an issue, the law controlling that issue will apply. For public employers, the grievance procedure is usually set out by statute and is strictly followed.
As an effective way to control legal costs and to stem the proliferation of employee lawsuits, many employers have taken an interest in the various methods of Alternative Dispute Resolution (ADR). Among the more common forms of ADR are mediation and arbitration. Many states have arbitration and/or mediation statutes. In situations in which it applies, the Federal Arbitration Act preempts contrary state laws that limit or bar agreements to arbitrate. The United States Supreme Court has ruled that the FAA also preempts state law that would give jurisdiction to a court or agency rather than to the arbitrator (Preston v. Ferrer, 128 S.Ct. 978 (2008)).