Employee terminated for cause may grieve the employer’s denying the individual post-employment health insurance benefits

Employee terminated for cause may grieve the employer’s denying the individual post-employment health insurance benefits
Matter of Union- Endicott Cent. School Dist. v Union-Endicott Maintenance Workers' Assn., 2011 NY Slip Op 05167, Appellate Division, Third Department

George Kolmel, was employed as a maintenance worker for some 35 years by the Union-Endicott Central School District.  In May 2009 Kolmel submitted a letter of resignation setting out an effective date of September 30, 2009.

The school district, however, disregarded his resignation letter pursuant to 4 NYCRR 5.3 (b)* and filed disciplinary charges against him pursuant to Civil Service Law §75. Following the §75 hearing on the disciplinary charges, but before a decision was rendered, the Union-Endicott Maintenance Workers Association filed a grievance on behalf of Kolmel alleging that the school district violated the CBA by conditioning Kolmel's entitlement to retirement health insurance benefits upon the outcome of the disciplinary proceeding by electing to  disregard Kolmel's letter of resignation and pursue disciplinary charges against him.**

The disciplinary hearing officer sustained the charges against Kolmel and recommended his termination. The Board of Education adopted the hearing officer’s findings and recommendations and terminated Kolmel. It then denied his grievance on the ground that, since he was terminated from employment, he was not a "retiree" for purposes of retirement health benefits under the CBA.

The Union filed a demand for arbitration but the school district filed a petition pursuant to Civil Practice Law and Rules §7503, seeking a court order to stay the arbitration of the grievance.

Supreme Court denied the school districts motion to stay arbitration, finding that there was no public policy prohibiting arbitration of the issue of Kolmel's entitlement to post-employment health benefits and that the dispute was one which the parties had agreed to arbitrate under the CBA.

In considering the school district’s appeal of the Supreme Court’s ruling, the Appellate Division said that: "The court's role in reviewing applications to stay arbitration is . . . a limited one," citing Matter of Enlarged City School Dist. of Troy [Troy Teachers Assn, 69 NY2d 905.”

Further, said the court, in considering the school district’s appeal, it applies a “two-pronged test” for determining whether a grievance is arbitrable, and must decide:

1. Is there is any statutory, constitutional or public policy prohibition against arbitration of the grievance; and

2. If no such prohibition exists, the court must determine if the parties in fact agreed to arbitrate the particular dispute by examining their collective bargaining agreement.

As to the public policy issue, the Appellate Division said that the school district argues that “public policy prohibits arbitration of the matter since determination of Kolmel's employment status is governed by 4 NYCRR 5.3(b), which provides that "when charges of incompetency or misconduct have been or are about to be filed against an employee, the appointing authority may elect to disregard a resignation filed by such employee and to prosecute such charges and, in the event that such employee is found guilty of such charges and dismissed from the service, his [or her] termination shall be recorded as a dismissal rather than as a resignation."

Essentially the school district contended that “to allow an arbitrator to determine whether Kolmel retired or was dismissed for purposes of receiving retiree benefits under the CBA would violate the policy considerations embodied in 4 NYCRR 5.3(b) in that it would defeat its authority to disregard petitioner's resignation and ignore Kolmel's status as a dismissed employee under the regulation.”

The Appellate Division disagreed, explaining that “[I]t is well settled that 'there is no prohibition against arbitrating a dispute originating from the terms of a collective bargaining agreement concerning health insurance benefits for retirees,'" citing Matter of Peters v Union-Endicott Cent. School Dist., 77 AD3d at 1239.”

The school district, said the court, had not identified any statute, precedent or public policy that prohibits arbitration of a dispute over the provision of contractual post-employment retirement benefits to an employee who has committed a crime or otherwise engaged in misconduct. Further, although 4 NYCRR 5.3 (b) provides for an employee's termination under these circumstances to be recorded as a dismissal rather than a resignation, no law or policy requires an employee's status under 4 NYCRR 5.3 (b) to be determinative of that employee's status under the CBA.

The Appellate Division concluded that “The issue of the effect, if any, of Kolmel's status as a dismissed employee pursuant to 4 NYCRR 5.3 (b) — as well as his alleged misconduct — as it pertains to his entitlement to benefits goes to the merits of the grievance, not to its arbitrability.”

The Appellate Division also rejected the school district’s argument that Kolmel had no right to arbitration under the CBA as a dismissed employee, noting that the broad arbitration clause permitted the Union to demand arbitration if dissatisfied with the decision at Stage 3 of the grievance process. Moreover, said the court, issues such as a school district's relationship to retired or discharged employees and the question of whether such former employees are covered by the grievance procedure are for the arbitrator to decide.

* N.B. 4 NYCRR 5.3(b) applies to employees in the classified service of the State and public authorities, public benefit corporations and other agencies for which the Civil Service Law is administered by the State Department of Civil Service, provides: 4 NYCRR 1,  Application of Rules, states that “Except as otherwise specified in any particular rule, these rules shall apply to positions and employments in the classified service of the State and public authorities, public benefit corporations and other agencies for which the Civil Service Law is administered by the State Department of Civil Service” [emphasis supplied]. However, many local civil service commissions and personnel officers have adopted a similar rule.

** Kolmel otherwise met the requirements to receive retirement health benefits under the CBA.

The decision is posted on the Internet at:
http://www.courts.state.ny.us/reporter/3dseries/2011/2011_05167.htm