The collective bargaining agreement between Reyco Granning, a commercial vehicle suspension supplier, and the Teamsters provides holiday pay to workers who work at least 8 hours on the last regularly scheduled workday prior to the holiday. The CBA further states that an exception “may be made” if an employee arrives to work late by less than 60 minutes.
So did Reyco breach the contract when it did not pay a union worker holiday pay after he was 45 minutes late to work because of a flat tire on the last workday before a holiday? According the ALJ who heard the case, yes; but according to the 8th Circuit Court of Appeals, no, Reyco did not breach the contract.
Specifically, the ALJ ruled that Reyco loses its discretion when employees are late because of “vehicle mechanical trouble, oversleeping, or car wrecks.” But to reach that conclusion, the ALJ broke the golden rule of ALJing – he looked beyond the text of the union contract and considered testimony about contract negotiations and bargaining history between the company and the union.
The arbitrator made no determination about the ambiguity of the CBA’s holiday pay provision and went beyond the terms of the agreement when he analyzed negotiation history to decide that Reyco and the union intended for the tardiness exception to apply when employees were late because they overslept, had car issues, or were involved in an auto accident.
In fact, the collective bargaining agreement even said that the arbitrator “shall have no authority to substitute his discretion for the Company’s discretion in cases where the Company is given discretion by any provision of this Agreement, including the form of discipline imposed against an employee.”
The 8th Circuit Court of Appeals rectified the ALJ’s abuse of power. A court can vacate an arbitration award “if the arbitrator ignored or disregarded the plain language of an unambiguous contract or nullified a provision of the contract.” In chastising the arbitrator, the Court said, “Under the arbitrator’s decision, Reyco does not have discretion, rewriting the CBA to read ‘must’ instead of ‘may.’ Thus, the arbitrator’s interpretation alters the plain language of the contract as written.”
This case is a good reminder to union negotiators to make sure that every word in contracts is unambiguous. As we see here, even the tiny word “may” had a major legal implication.
Matt Austin is a Columbus, Ohio lawyer who owns Austin Legal, LLC, a boutique law firm with offices in central and northeast Ohio that limits its representation to employers dealing with labor, employment, and OSHA matters. Austin Legal’s Concierge Legal Services program is relied upon by companies to remain compliant and competitive. If you have employees, you need Concierge Legal Services. You can call Matt at (614) 285-5342 or email him at Austin@LaborEmploymentOSHA.com.