ARBITRATION AWARD IN PENNSYLVANIA REVERSED BECAUSE IT VIOLATES PUBLIC POLICY
Employers who have contracts with labor unions which require the arbitration of grievances have seen it many times.
An employee first commits a significant offense or violation of a work rule, like theft, or engaging in workplace violence (see our FREE employer toolkit on this topic in the right margin, by the way). The employer then makes what seems to be the only logical decision in response under the circumstances and discharges the employee for just cause. However, the employee – through his or her union – grieves the termination and secures reinstatement for some reason, despite committing the offense. Because it is very difficult to get an arbitration award reversed in court on account of the deference given to arbitrators in interpreting collective bargaining agreements, it sometimes can seem like a hopeless situation for employers.
But maybe there is some hope – at least in an extreme situation. In a recent Pennsylvania Supreme Court decision, the Court ultimately reversed an arbitrator’s award of reinstatement to an employee which was made despite a finding that the employee engaged in significant acts of sexual harassment.
In Philadelphia Housing Authority v. AFSCME, District Council 33, a warehouseman employee with the Housing Authority was fired following an investigation into allegations he sexually harassed a co-worker. Following the arbitration, the arbitrator credited the testimony of the co-worker that the employee grabbed her from behind and “grinded” himself into her and would “play with himself” while speaking with her. In fact, the arbitrator concluded in his opinion that the employee’s conduct was “lewd, lascivious and extraordinarily perverse.” Despite this conclusion, the arbitrator found that there was no just cause to terminate the employee, and that he should be reinstated because he stopped engaging in the conduct after being given a warning about it.
Not satisfied with this result, the Housing Authority filed a petition to vacate the arbitrator’s award. The Philadelphia Court of Common Pleas denied that petition, but the Housing Authority took the matter further to the Commonwealth Court of Pennsylvania. Eventually, the Commonwealth Court reversed the trial court and vacated the arbitration award. The Union appealed to the Pennsylvania Supreme Court, which accepted the appeal to decide the specific question of whether the arbitrator’s award reinstating the employee under the circumstances derived its essence from the collective bargaining agreement when the award violated a state public policy.
In a common-sense result, the Supreme Court concluded that the arbitrator’s reinstatement of the employee – under the circumstances of having concluded that the employee did, in fact, engage in extraordinarily perverse sexually harassing behavior – would undermine the state public policy against sexual harassment embodied in both the Pennsylvania Human Relations Act as well as Title VII of the Civil Rights Act. As the Court stated, “[t]he arbitration award … in this case affirmatively encourages – indeed it rewards – sexual harassment in the public workplace.” They didn’t stop there, though. The Court added, “[t]he absurd award here makes a mockery of the dominant public policy against sexual harassment in the workplace, by rendering public employers powerless to take appropriate actions to vindicate a strong public policy.”
While this opinion takes place in the public setting, it’s probably not unreasonable to think it would apply as precedent with equal force in the private sector collective bargaining context, too, since the Court’s focus was on whether an arbitrator’s award can still derive its essence from a CBA when it violates a state public policy. There’s certainly nothing which prohibits the same situation from arising with a private sector employer, and nothing which would keep the same public policy from applying.
The Philadelphia Housing Authority case is certainly a good result for employers in Pennsylvania. And it reaffirms that employers everywhere always need to first take swift action to respond to and properly address complaints of sexual harassment – even when there’s a collective bargaining agreement in place. Even when that contract contains a right to take grievances to arbitration. And even when that arbitration forum may give you a questionable result which could be difficult to overturn. While not many principles transcend the deference given to arbitrators, we know now that – in Pennsylvania at least – one more does.