Second Circuit Court of Appeals holds that awarding designated employees three additional days of vacation did not violate public policy against punitive arbitration awards

In this appeal from a judgment by a Second Circuit Federal District Court a panel of the U.S. Circuit Court of Appeals, Second Circuit [Circuit Court] affirmed the judgment of the District Court's confirming an arbitration award against the Petitioner-Appellant [the Hospital]. The Hospital was a party to a collective bargaining agreement [Agreement] with the New York State Nurses Association [Union] representing registered nurses [RNs] employed by Hospital's Emergency Department [ED]. 

Under the Agreement, the Hospital’s failure to staff enough nurses on each shift constitutes a “Grid” violation. If this occurs, the Union may file a grievance and proceed to mediation, and then arbitration. The Agreement provides that arbitrators shall have the same remedial authority as an arbitrator under the collective bargaining agreement but "shall not have any power to add to or subtract from or otherwise amend this agreement", which Hospital referred to as the “zipper” clause.

This dispute arose when the Union filed a grievance alleging Grid violations by the Hospital. The Arbitrator subsequently found evidence that the Hospital had committed 143 Grid violations. Interpreting the Agreement to confer the arbitrator with broad remedial power, the Arbitrator awarded three additional vacation days to each full-time RN serving at the Emergency Department. Hospital filed a petition in a Federal District Court [FDC] seeking to vacate the arbitration award, contending that the Arbitrator exceeded his authority and violated public policy by issuing a punitive award. 

The FDC denied the petition and granted the Union’s petition to confirm the award. Hospital appealed the FDC's ruling.

The Circuit Court said it reviews a FDC decision de novo on questions of law and for clear error on findings of fact, noting that Hospital first argued that the Arbitrator exceeded his authority under the Agreement. 

In such cases, Circuit Court said “the arbitrator’s construction of the contract and assessment of the facts that are dispositive.” On review, "we ask 'whether the arbitrator’s award draws its essence from the collective bargaining agreement' [and] As long as the arbitrator was even arguably construing or applying the contract ... and did not ignore the plain language of the contract, the award should ordinarily be confirmed” [citations omitted].  

Noting this appeal is controlled by the decision in an earlier case, Hospital v. Union, 180 F.4th 482, a case involved an arbitration of another Grid dispute between the same parties where the presiding  arbitrator relied on a provision identical to Section 3.04(7) in the instant matter "to award nurses on under-staffed shifts in the Hospital’s CardioThoracic Intensive Care Unit a monetary remedy". In the earlier appeal the Circuit Court panel "rejected the Hospital’s argument that the arbitrator exceeded her authority", holding that the arbitrator "had “reasonably interpreted” the text to confer broad remedial power, and so she was “arguably construing or applying the contract.”  

In the earlier appeal Hospital had also argued that the monetary remedy adjusted wages in violation of a specific provision setting nurses’ pay and a “zipper" clause that forbade arbitrators to amend the contract. The Panel in the instant appeal noted that in that earlier appeal the monetary award "did not permanently adjust wages . . . or derive a new contract term," but only provided a temporary remedy for the Hospital’s breach of contract which drew upon the Agreement itself, and concluded the award did not violate “the Agreement’s only limitation—the ‘zipper’ clause” in the earlier appeal.

Holding that the same held true in the instant appeal, Circuit Court ruled that the Arbitrator’s vacation award did not amend the contract by deriving a new term, and it was arguably construing the text of the agreement. Accordingly the Circuit Court said it "will not vacate the award for exceeding the arbitrator’s authority" in the instant appeal. 

Turning to the Hospital claim that the Arbitrator's award of "additional vacation days" violated a public policy against punitive arbitration awards, Circuit Court said it had not decided whether a public policy forbids punitive arbitration awards, but “[b]efore considering whether such a public policy exists," the Circuit Court said it must first assess whether the Arbitrator’s monetary award was punitive to begin with. 

To distinguish “compensatory” from “punitive” awards, the Circuit Court Panel said it “look[ed] to the Arbitrator’s subjective intent in issuing the award and the objective nature of the award” and held that "The Arbitrator satisfied the objective prong if he 'made specific factual findings regarding the nurses harms' and tailored the award to make the impacted nurses whole for the harm they suffered.” 

The instant award, opined Circuit Court, was not punitive because “[c]ompensating a nurse for excessive workload is not a penalty or punitive award giving nurses additional pay.” Its objective structure is compensatory and the Arbitrator made detailed findings to identify 143 Grid violations which he found contributed to “excessive workload, unsafe working conditions, or burnout,” concluding that the parties had negotiated the Agreement to avoid precisely those harms, and because the harm was excessive workload, the Arbitrator concluded “the appropriate remedy is three vacation days for each full-time regular Allen ED RNs.” 

Accordingly, Circuit Court held that the subjective and objective elements of the test were both satisfied and "even if there is a public policy against punitive arbitration awards, this award would not violate it".  

After considering Hospital’s remaining arguments, the Circuit Court said it found them "to be without merit, and for the foregoing reasons", affirmed the judgment of the District Court. 

* Judge Debra Ann Livingston, originally a member of the instant Circuit Court panel, did not participate in the consideration of this appeal. The two remaining members of the panel, who were in agreement, determined the matter. 

Click HERE to access the Second Circuit's decision in the instant appeal.

Selected items posted on the Internet during the week ending November 6, 2026

Free Webinar: Getting AI Into Everyday Local Government Work Lessons from 23,000+ active staff users on getting AI from policy into everyday work. Register free

A New Era for Justice Information Sharing This paper explores how cloud, AI and other technological advancements are creating new opportunities for secure justice information sharing. DOWNLOAD

Close the Utility and Local Government Workforce Gap See how intelligent payment tools and digital self-service options can handle routine billing and customer service tasks, giving government staff more time for work that requires their expertise. DOWNLOAD

Big Ideas. Bold Leaders. The Future of Gov Tech Candid conversations with the builders, backers, and leaders shaping what's next in government technology. Watch Now

A Two-Year Analysis of Cyber Readiness in Government Nearly 350 local government professionals reveal where cyber readiness is gaining ground and where gaps remain. DOWNLOAD

Governance for a Sustainable Pension Promise Explore how governance, delegation, and risk management strengthen oversight, improve decisions, and support long-term sustainability. Learn more

New York State local government and school audits issued

On November 5, 2016, New York State Comptroller Thomas P. DiNapoli announced the following local government and school audits were issued.

                                      Click the text highlighted in color to access the audit.

Academy of Health Sciences Charter School – Information Technology Asset Management (Monroe County) School officials did not appropriately inventory, track and safeguard IT assets. Because the board of trustees did not adopt an IT inventory policy, school officials lacked detailed guidance for maintaining the IT inventory listing. As a result, the chief administrative officer and operations coordinator did not maintain a complete, accurate and up-to-date inventory listing to properly account for IT assets.

Campbell Fire Department – Treasurer (Steuben County) The treasurers did not properly collect, deposit, record, disburse and report department funds. As a result, the board of directors and membership lacked reliable information to manage the department’s financial activities, and the board could not determine whether all revenues were properly accounted for and deposited, and whether all disbursements were appropriate.

New Woodstock Fire District – Transparency of Fiscal Activities (Madison County) The board did not conduct an annual audit of the treasurer’s financial records and reports for fiscal year 2025. Senior officials were not aware the board should conduct an annual audit, and were therefore unable to state when, if ever, the board last audited the treasurer’s financial records and reports. However, senior officials said they attended the required fire district commissioner training, which should include content about annual audits. In addition, the treasurer did not prepare and file the 2025 Annual Financial Report (AFR) with the State Comptroller’s office within 60 days after the fiscal year end as required by state law. Prior to this audit, the district’s last filed AFR was for the 2019 fiscal year.

Town of Hermon – Town Clerk/Tax Collector (St. Lawrence County) For the collections auditors examined, the clerk generally remitted tax collections and clerk fees to the appropriate parties in a timely manner and properly reported clerk fee collections. However, the clerk did not properly record and deposit all collections.

Village of Brightwaters – Treasurer’s Duties and Claims Audit (Suffolk County) The board did not monitor the treasurer’s financial duties or audit claims before payment. As a result, the village has an increased risk that errors, unauthorized or inappropriate transactions, and the misappropriation of village funds could occur and remain undetected. In addition, the village has an increased risk that goods and services may not be obtained at the lowest possible cost.

Wheelerville Union Free School District – Audit Follow-Up Review (Fulton County) The purpose of the review was to assess the district’s progress in implementing recommendations in Wheelerville Union Free School District – Unused IT Asset Inventory, released in May 2022. Of the audit’s six recommendations, district officials fully implemented one recommendation and partially implemented five recommendations. District officials fully implemented a recommendation regarding physically safeguarding unused IT assets. However, district officials did not fully implement the recommendations regarding improving policies and procedures, maintaining complete inventory records, conducting periodic physical inventories and ensuring proper disposal practices.

###

A court may set aside an administrative disciplinary penalty only if it is so disproportionate to the offense as to be shocking to one's sense of fairness

A tenured teacher [Plaintiff] employed by a Central School District [District] was charged with, inter alia, misconduct, conduct unbecoming a teacher, neglect of duty, and insubordination arising from, among other things, repeated incidents of alleged noncompliance with the District's mask requirements during the COVID-19 pandemic and certain conduct toward school administrators and a colleague.

The District served Plaintiff with a notice of the disciplinary charges and Education Law §3020-a disciplinary hearing was conducted. The hearing officer sustained most of the Charges and Specifications alleged by the District and imposed termination of Plaintiff's employment as the the penalty.

Plaintiff initiated a CPLR Article 75 appeal challenging the hearing officer's findings and the penalty imposed. The District responded with a motion to dismiss Plaintiff's CPLR Article 75 petition. Supreme Court granted the District's motion to dismiss the CPLR Article 75 action,  denied Plaintiff's petition, and dismissed the CPLR Article 75 proceeding.

The Plaintiff appealed the Supreme Court's ruling.  The Appellate Division sustained the Supreme Court decision, holding that the lower court had properly granted the District's  motion to dismiss the petition, had properly denied the Plaintiff's petition, and had properly dismissed the proceeding.

The Appellate Division, citing a number of relevant cases, explained:

1. "Where, as here, the obligation to arbitrate arises through a statutory mandate", in this instance by Education Law §3020-a, "the determination of the arbitrator is subject to 'closer judicial scrutiny' under CPLR 7511(b) than it would otherwise receive";

2. An award in a compulsory arbitration proceeding, such as is here the case, must have evidentiary support and cannot be arbitrary or capricious; and

3. "When reviewing compulsory arbitrations in education proceedings such as [the instant proceeding], the court should accept the arbitrators' credibility determinations, even where there is conflicting evidence and room for choice exists".

Finding that the determination sustaining the charges of misconduct, conduct unbecoming a teacher, neglect of duty, and insubordination was rational, had evidentiary support, and was neither arbitrary or capricious, the Appellate Division held that,  notwithstanding Plaintiff's arguments to the contrary, "the proceedings comported with due process" as Plaintiff was given "adequate notice of the charge and the notice was reasonably specific, in light of all the relevant circumstances, to allow for the preparation of an adequate defense".

Further, the Appellate Division's decision noted that "A court may set aside an administrative penalty only if it is so disproportionate to the offense as to be shocking to one's sense of fairness". Although "reasonable minds might disagree over what the proper penalty should have been", this "does not provide a basis for ... refashioning the penalty".

The Appellate Division concluded that the penalty of termination of employment "was not so disproportionate to the sustained charges so as to shock one's sense of fairness, particularly in light of the repeated nature of the offending behavior, that it occurred in the presence of students, and the [Petitioner's] prior disciplinary record" and ruled that the Supreme Court had properly granted the District's motion to dismiss the Plaintiff's petition and dismiss the Plaintiff's CPLR Article 75 proceeding.

Click HERE to access the Appellate Division's decision posted on the Internet.

The U.S. Court of Appeals' summary of its decision in the Appeal of Barberan, Plaintiff-Appellant, v. Town of Eastchester, et al., Defendants-Appellees, is set out below

"Former employee sued the Town of Eastchester to recover for harm he allegedly suffered while employed with the Town of Eastchester Police Department (“Department”), including his ultimate termination. 

"In the operative Second Amended Complaint (“SAC”), Barberan asserted claims for discrimination based on his Hispanic national origin and for retaliation in violation of Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 1983 (“Section 1983”), and the New York State Human Rights Law (“NYSHRL”). 

"The district court concluded that Barberan failed to establish a prima facie case of discrimination or retaliation, failed to show that the Town’s reasons for the adverse employment actions were pretextual and that the real reason was discrimination, and granted summary judgment for the Town. See Barberan v. Town of Eastchester, No. 19-cv-10983-VR, 2025 WL 962815, at *16, *18 (S.D.N.Y. Mar. 31, 2025). 

"On appeal, Barberan challenges the district court’s grant of summary judgment to the Town only with respect to his Section 1983 and NYSHRL discrimination claims. 

"And as to those discrimination claims, his challenge is limited to his termination (the other claimed adverse actions were abandoned). 

"For the reasons stated below, the district court’s judgment is AFFIRMED."

Click HERE to access the Second Circuit's ruling posted on the Internet.

New York State's Workers Compensation Board continues its free Paid Family (PFL) webinar series

The New York State Workers’ Compensation Board continues its free Paid Family (PFL) webinar series for employers/HR professionals and employees to share what’s new for 2027. Each one-hour session will provide an overview of New York State’s landmark PFL benefit, who is eligible, and what’s new for 2027 - including the higher maximum weekly benefit amount, new employee contribution rate, and a new eligibility standard for certain construction employees.

The employer session will also cover employer responsibilities and updated resources to assist them.

PFL employers 

November 12, 2026

12:00 p.m. – 1:00 p.m.

Thursday, December 10, 2026

12:00 p.m. – 1:00 p.m.

Register here

PFL employees 

Thursday, December 17, 2026

12:00 p.m. – 1:00 p.m.

Register here

PFL background

Since PFL began in 2018, benefits have been significantly enhanced to further improve the lives of working New Yorkers and their families, including more time off, more uses for PFL, and more financial security.

PFL is employee-paid insurance that provides employees with job-protected, paid time off from work to bond with a new child, care for a family member with a serious health condition, or assist when a spouse, domestic partner, child, or parent is deployed abroad on active military service.

PFL resources are available

New York State offers complete details on PFL, including forms, fact sheets, benefit calculators and more, at PaidFamilyLeave.ny.gov. Visit the Paid Family Leave Updates for 2027 page for an overview of what’s new, as well as helpful resources for employers.

Sign up to receive PFL news, including information on future webinars, straight to your inbox. Help is also available via a toll-free PFL Helpline at (844) 337-6303, Monday through Friday, 8:30 a.m. – 4:30 p.m.

Having trouble?

If you are having trouble registering for or attending either of these webinars, check out these Webinar FAQs.

Selected administrative decisions posted on the Internet by New York State's Commissioner of Education

Decision No. 18,868 Appeal of certain action by the Board of Education of a School District concerning "shared decision-making". Click HERE to access the Commissioner's decision posted on the Internet.

Decision No. 18,869 Appeal of a parent, on behalf of her child, involving action by the Board of Education of a Union Free School District involving the Dignity for All Students Act. Click HERE to access the Commissioner's decision posted on the Internet.

Decision No. 18,870 Appeal of parents, on behalf of their child, with respect to the  action by a Board of Education of a Central School District concerning a school closure. Click HERE to access the Commissioner's decision posted on the Internet.

Decision No. 18,872 Appeal of a parent, on behalf of her child, concerning a Montessori School an immunization issue. Click HERE to access the Commissioner's decision posted on the Internet.

Decision No. 18,873 Appeal of a parent, on behalf of her child, addressing actions of the Board of Education of a Central School District concerning student discipline. Click HERE to access the Commissioner's decision posted on the Internet.