Award for Worker in Vacation Dispute Properly Overturned

By Ken Diamond March 24, 2020
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two medical workers in stairwell having a discussion

​An arbitration award in favor of a worker in a vacation dispute was properly overturned because it did not draw its essence from the parties' collective bargaining agreement (CBA). The arbitrator exceeded his authority under the CBA "by dispensing his own brand of industrial justice," according to the 3rd U.S. Circuit Court of Appeals.

A Pennsylvania hospital had a CBA with a union representing more than 500 of its workers. The CBA provision regarding vacation scheduling stated in part that "vacation will, so far as possible, be granted at times most desired by employees; but the final right to all vacation periods, and the right to change vacation periods, is exclusively reserved to the hospital. Any changes in vacation schedules must be by mutual consent. In the event the hospital unilaterally changes a schedule causing the employee to suffer financial loss, the hospital agrees to reimburse the employee for provable loss."

In late 2016, the hospital denied a union worker's vacation request because her supervisor had asked for the same week off, and they could not both be away from work at the same time. The worker filed a grievance alleging this was a CBA violation. The arbitrator sustained the grievance, finding that although the hospital had the exclusive right to allocate vacations, since vacations should be granted "so far as possible," the CBA precluded the hospital from denying workers their desired vacation "when there is no operating need" for such denial.

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The hospital filed suit under the Labor Management Relations Act seeking to vacate the award on the grounds the arbitrator exceeded his authority by ignoring the plain language of the CBA. While acknowledging it owed much deference to the arbitrator, the district court vacated the award. The court concluded the arbitrator's interpretation of the CBA provision "was a manifest disregard of the plain language of the CBA, ignored the clear intentions of the parties," and "failed to construe such provision" to give effect to all parts of it.

The union appealed, and the 3rd Circuit affirmed the district court's ruling. The 3rd Circuit explained that while arbitrators are owed much deference, such deference is not unlimited, and an award is properly vacated "if it is entirely unsupported by the record or it reflects a manifest disregard of the agreement," as an arbitrator must "act within the scope of authority conferred by the CBA."

The 3rd Circuit held the arbitrator improperly ignored the CBA's provision giving the hospital the final and exclusive right to deny employees their desired vacation. Contrary to the arbitrator's ruling, the 3rd Circuit stated that "so far as possible" simply meant the hospital should consider in good faith an employee's preferences when exercising its final and exclusive right to determine vacation schedules. The 3rd Circuit further noted the arbitrator ignored the parties' bargaining history, which showed that while a prior CBA between the hospital and the union contained an operating-need restriction, the CBA at issue did not, further confirming the parties' intent.

"Where an arbitrator injects a restriction into a contact to which the hospital did not agree and to which bargaining unit employees are not entitled," the 3rd Circuit stated, "he dispenses his own brand of industrial justice and should be overturned."

Monongahela Valley Hospital Inc. v. United Steel Paper and Forestry Rubber Manufacturing Allied Industrial and Service Workers International Union AFL-CIO CLC, 3rd Cir., No. 19-2182 (Dec. 30, 2019).

Professional Pointer: As arbitration rulings are entitled to significant deference, absent a rare situation such as this case, employers should expect an award will be final and binding. Since many arbitrations—both union and nonunion—require an arbitrator to interpret a contract provision, it is especially important that employers seek to ensure their agreements are clearly worded to reflect the parties' intent.

Ken Diamond is an attorney with Winterbauer & Diamond PLLC, the Worklaw® Network member firm in Seattle.

 

Join the Society for Human Resource Management and the U.S. Department of Labor (DOL) for a Twitter chat hosted by @ePolicyWorks on March 25 at 2 p.m., using the hashtag #EPWChat to provide input as the DOL develops guidance on the Families First Coronavirus Response Act. Or participate online at https://ffcra.ideascale.com from March 23 through March 29.

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