August 24, 2015

Arbitrator’s award baring disciplining an employee charged with sexual harassment while the employee was on “union leave” vacated as violative of public policy

Arbitrator’s award baring disciplining an employee charged with sexual harassment while the employee was on “union leave” vacated as violative of public policy
Matter of Phillips v Manhattan & Bronx Surface Tr. Operating Auth., 2015 NY Slip Op 06564, Appellate Division, First Department

A bus driver's employment was terminated by the Manhattanand Bronx Surface Transit Operating Authority (Authority) for alleged sexual harassment of a bus dispatcher. Although the bus operator did not contest the charges or the penalty, the Transport Workers Union of America, Local 100 [Union] challenged the Authority's power to impose the disciplinary penalty of termination against an employee who had been put on union-paid release time prior to the Authority imposing the disciplinary penalty. An arbitrator ruled that the Authority violated the CBA by seeking to impose discipline upon the employee while he was on approved union-paid release and Supreme Court granted the Union's Article 75 petition seeking to confirm the arbitration award.

The Authority appealed and the Appellate Division said that it had to resolve was whether it was a violation of public policy for the arbitrator to interpret the CBA's approved union-paid release time as a shield for an employee to prevent the Authority from fulfilling its obligation to prevent and sanction sexual harassment in the workplace.

The collective bargaining agreement [CBA] between the Authority and the Unionprovided for a multiple steps that culminate in final and binding arbitration. The Authority filed disciplinary charges against the employee alleging that he engaged in sexual harassment against the dispatcher and created a hostile work environment but the accused employee did not appear at the Step I Disciplinary Grievance Hearing. Indeed, said the court, the individual “never appeared [at any Step I hearing] because the Uniondisputed the Transit Authority's power to maintain a disciplinary grievance against an employee who was placed on union-paid release time.”  The Transit Authority found the employee guilty* and imposed the penalty of dismissal effective.

The Transit Authority denied the Union's appeal of the Step I disciplinary determination and the Unionfiled a Contract Interpretation Grievance, contending that the Authority could not discipline an employee who is on union-paid release time, arguing that the placement of the individual on union-paid release time created a "safe haven" for employee.  The Contract Arbitrator found that the Authority had "violated the [CBA] by seeking to impose discipline on [the employee] while he was on approved Union paid release time."

While the Union argued that, “under black-letter arbitration law,” the award should be enforced, because the "grievance arbitration provision was in the contract, the parties agreed to arbitrate the issues, and the arbitrator interpreted the contract and based his decision on actual provisions of the contract," the Authority contended by "preventing [it] from taking prompt action to address sexual harassment in the workplace," the award violated public policy and was subject to vacatur.

Noting that the Authority “has a very heavy burden” in this case, the Appellate Division said that both the Authority and the Unionhad bargained for the arbitrator's construction of the CBA, and they have granted him the authority to interpret the meaning of its language, including the interplay between the Contract Interpretation Grievance and Disciplinary Grievance provisions. As a result, said the court, in considering the issue before it must assume that the CBA itself calls for the remedy set forth in the Arbitrator's award; the question to be asked is whether the arbitrator's interpretation of the CBA — requiring reinstatement of the sexual harassment offender because the union-paid release time acts as a shield — runs counter to the identified public policy against sexual harassment in the workplace.”

The Appellate Division pointed out that the scope of the public policy exception to an arbitrator's power to resolve disputes is extremely narrow, and courts will only intervene in "cases in which public policy considerations, embodied in statute or decisional law, prohibit, in an absolute sense, particular matters being decided or certain relief being granted by an arbitrator," citing New York City Tr. Auth. v Transport Workers Union of Am., Local 100, AFL—CIO, 99 NY2d 1. Thus, said the court, under this analysis a court must focus on the result only and can vacate the award if [1] it intrudes into areas reserved for others to resolve or [2] if, because of its reach, the award violates an explicit law of this State.

The Appellate Division then cited Cohoes City School Dist. v Cohoes Teachers Assn. (40 NY2d 774 as an example of the application of the first test. Cohoesinvolved a dispute between a teachers' union and a local school board concerning whether a board could cede to arbitration its power to determine a teacher's tenure after a probationary period. The Court of Appeals held that public policy precludes delegation of that issue, finding it "inescapably implicit" in the applicable statutes “that the issue be withheld from the arbitral process, whatever applicability arbitration may have for the realm in general.”

Similarly, said the court, some cases have qualified for judicial intervention under the second prong of the public policy exception citing City of New York v Uniformed Fire Officers Assn., Local 854, IAFF, AFL-CIO, 95 NY2d 273, as an example. In Fire Officers the City’s Department of Investigations [DOI] was conducting an investigation into possible line of duty injury fraud within the Fire Department. The Court of Appeals deemed this to be a criminal investigation and thus the “expansive remedy sought by the UFOA, asking the arbitrator to order the DOI to conduct future criminal investigations only in accordance with the contract rules, would "impinge on DOI's ability to conduct a criminal investigation."

The Appellate Division said that this case “does not qualify for judicial intervention under the first prong of the public policy exception” noting that the parties conceded that these disciplinary and contract interpretation grievance proceedings were the proper subject of arbitration.

However, the court said it found it necessary to intervene under the second prong of the public policy exception because “the arbitrator construed the CBA and fashioned a remedy in a manner that conflicts with a well-defined and dominant public policy, explaining that the “public policy against sexual harassment in the workplace is well recognized,” citing Title VII of the Civil Rights Act of 1964 which prohibits employment discrimination on the basis of sex (42 USC §2000e-2[a][1]) and harassment on the basis of sex is a violation of §703 of Title VII. Further, explained the Appellate Division, Title VII places upon an employer the responsibility to maintain a workplace environment free of sexual harassment.

In this disciplinary action the bus driver was accused by his coworker, a bus dispatcher, of serious harassment charges that "created an uncomfortable and hostile work environment for [the dispatcher] and other female employees . . . [and] adversely affected their ability to perform their jobs by making frequent unwelcome, and/or inappropriate comments of a sexual nature to them." These allegations, which the Transit Authority considered serious enough to require the bus driver’s termination, have gone unchallenged.

Rather than the bus driver appearing at the Disciplinary Grievance Hearing to confront his accuser and to refute the allegations, the Union appealed the disciplinary determination through the Contract Interpretation Grievance process which ultimately resulted in the arbitrator agreeing with the Union that the Transit Authority violated the CBA by seeking to impose discipline on the bus driver while he was on approved Union paid release time at the time the termination was imposed.

The Appellate Division said that it could not “turn a blind eye” to the fact that the arbitrator’s interpretation of the CBA and the concomitant remedy of reinstatement conflicts with the sexual harassment policy. As Title VII is designed to encourage the creation of anti-harassment policies and effective complaint mechanisms for reporting harassing conduct, an employer's investigation of a sexual harassment complaint is not a gratuitous or optional undertaking under federal law, and appropriate corrective action is required following such investigation.

If the Authority is forced to honor the arbitration award, the Authority will not be complying with Title VII and the New York Stateand New York City Human Rights Law, each of which requires that an employer impose appropriate discipline for proven cases of sexual harassment in order to ensure a safe work environment free of sexual harassment. Accordingly, said the Appellate Division “this is one of the relatively rare cases where a CBA award — reinstating a sexual harassment offender — runs counter to the strong public policy against sexual harassment in the workplace. If left to stand, the arbitration award will send the wrong message — that certain employees at the Transit Authority, mainly those who also performed union—related activities, may be free to create a sexually-charged atmosphere in the Transit Authority's workplaces because any complaints against them will be impeded by CBA protections.”

The Court said it was imperative that employers have the unfettered ability to discipline employees such as this bus driver in order to both punish the offender and to deter other employees from engaging in such behavior.

The Appellate Division then unanimously reversed the Supreme Court’s ruling “on the law” and vacated the arbitrator’s award.

* Presumably the Authority tried the employee in absentia.

The decision is posted on the Internet at:


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New York Public Personnel Law Blog Editor Harvey Randall served as Principal Attorney, New York State Department of Civil Service; Director of Personnel, SUNY Central Administration; Director of Research, Governor’s Office of Employee Relations; and Staff Judge Advocate General, New York Guard. Consistent with the Declaration of Principles jointly adopted by a Committee of the American Bar Association and a Committee of Publishers and Associations, the material posted to this blog is presented with the understanding that neither the publisher nor NYPPL and, or, its staff and contributors are providing legal advice to the reader and in the event legal or other expert assistance is needed, the reader is urged to seek such advice from a knowledgeable professional.
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