April 2013

By: James B. Sherman, Esq.

The United States Court of Appeals for the Eighth Circuit recently vacated an arbitration award reinstating an employee fired following a conviction for possession of child porn. See, Northern States Power Co. v. Int’l Brotherhood of Electrical Workers. The employee in this case was convicted of possessing pornographic material involving a minor and placed on probation which prevented him from having any “contact with a minor until approved.” The employer, Northern States Power Co. (NSP), terminated the employee because it could not guarantee that he would have no contact with minors in his job as a journeyman lineman. The employee filed a grievance under the company’s collective bargaining agreement (CBA) with the IBEW union. Following a hearing an arbitrator found that although the company had “demonstrated justification for [its] decision,” termination was too severe a penalty under the circumstances. NSP sought judicial review of the arbitrator’s decision that the employee should be reinstated to his job. On appeal, the court relied on explicit language in the arbitration clause of the parties’ CBA to conclude that the arbitrator had exceeded his authority in ordering the reinstatement of the grievant.

The CBA provided that “[i]n the matter of suspension, demotion, or discharge, if after hearing witnesses, the charges are not sustained . . . the arbitrator may rule that the employee shall or shall not receive full or partial wages from the Company.” The court of appeals held that this language limited the arbitrator’s authority in matters involving termination. Specifically, the arbitration clause of the CBA prohibited any arbitration decision imposing different disciplinary measures absent a finding that NSP lacked “just cause” for its decision. The arbitrator’s opinion in this case had found that the employer had “demonstrated justification” for its decision to terminate the grievant employee because his conviction for possession of child porn and resulting terms of probation conflicted with his job duties. Accordingly, the court on appeal held that the arbitrator had no authority to go beyond his finding, in essence, that NSP had “just cause” for its discharge decision.

The court’s ruling in this case demonstrates the importance of having a carefully-worded arbitration clause limiting the authority of any arbitrator, panel, or board. Those familiar with union contracts and arbitration agreements know how hard it is to challenge and overturn an unfavorable arbitration agreement, yet NSP was successful in this particular case because of the specific limiting language of its CBA. Employers can take advantage of well recognized legal precedent limiting the authority of arbitrators solely to that which the parties have given them. The problem is that all too often employers agree to arbitration language vesting arbitrators with sweeping authority with few if any limitations. Another common mistake is where employers unwittingly agree to submit the issue(s) to be decided in arbitration using the union’s suggested language, which can greatly expand the arbitrator’s authority far beyond that which the contract allows.

For experienced guidance in crafting and/or negotiating contracts that do not allow arbitrators unfettered discretion to render decisions that may impose their own ideas of industrial justice, or with arbitrating disciplinary and other grievances, contact: James B. Sherman at (952) 746-1700, or email jasherman@wesselssherman.com.