Babbitt resigned from the FAA in December 2011 after he had been arrested for drunk driving in Virginia. The charge was dismissed earlier this year by a Virginia judge who ruled that the police officer had no good reason to pull over Babbitt.
Southwest said Babbitt will report directly to chief operating officer Mike Van de Ven and be responsible for negotiations and communications between the company and its eleven union groups.
"For more than 40 years, Southwest has thrived because of our regard for labor organizations as partners," Van de Ven said in a statement. "Randy's unique skills and experience at various levels in our industry can only strengthen those partnerships to ensure our employees continue to play an important role in Southwest's success."
Babbitt, who was FAA administrator for two years, began his career as a pilot at Eastern Airlines. He was previously chief executive of the Air Line Pilots Association.