Contractual just cause provision trumped last chance agreement

Normally last chance agreements (LCA) are binding in arbitration, but the 8th U.S. Circuit Court of Appeals reversed the district court and enforced an arbitrator’s decision that an LCA did not provide the employer just cause to discharge its employee.

Leo Johnson was employed by Associated Electric Cooperative, Inc. (AECI) and a member of the International Brotherhood of Electrical Workers, Local No. 53 (Union). AECI and the Union were parties to a collective bargaining agreement (CBA), which contained a proviso that “discipline and/or discharge of employees shall be for just cause only, and such action shall be subject to the grievance and arbitration procedure.”

After participating in a random drug test on April 18, 2011, Johnson told the Plant Manager he recently smoked marijuana. Based on his statement, Johnson attended a disciplinary proceeding where he signed AECI’s standard LCA, which stated, in relevant part, “I understand and agree that if I report to work under the influence, test positive, or I am in the possession of alcohol, drugs, or controlled substances on Cooperative property, my employment with AECI will be terminated.” Johnson declined AECI’s offer to have a Union representative be present when he signed the LCA and was suspended without pay.

Approximately eight days after Johnson signed the LCA, AECI informed Johnson that the test result of his April 18 urine sample was negative. Johnson nonetheless remained on suspension and continued treatment under the terms of the LCA.

Once Johnson was cleared to return to work by the treatment counselor, AECI instructed Johnson to appear for a return-to-work drug screen. Laboratory analysis of Johnson’s urine sample revealed the presence of a benzodiazepine drug for which Johnson did not have a prescription. As a result, AECI terminated Johnson’s employment for testing positive in violation of the LCA, and the Union advanced a grievance to arbitration claiming there was not just cause for termination.

In his lengthy decision, the arbitrator sustained the grievance because: (1) he perceived the LCA as unconscionable, and (2) AECI failed to consider Johnson’s explanation for the presence of the benzodiazepine drug.  As a result, Johnson was reinstated with back pay. The district court later vacated the award, concluding that the arbitrator overstepped his authority by refusing to enforce the LCA’s mandatory discharge clause. The Union appealed and the appellate court reversed the district court.

To distinguish its previous rulings where it enforced last chance agreements, the appellate court noted the bargaining for the LCAs in the other cases (1) involved the union, and (2) resolved pending disciplinary proceedings governed by the grievance and arbitration provisions of the applicable CBAs. Here, the Union did not agree to the LCA between Johnson and AECI, and the LCA was the result of a mutual mistake “that Johnson had violated AECI’s drug policy” not the result of pending disciplinary proceedings. Thus, the appellate court concluded the arbitrator acted within his authority when he decided AECI did not have just cause to discharge Johnson.

Associated Electric Cooperative, Inc. v. International Brotherhood of Electrical Workers, Local No. 53, 8th Cir., No. 12-3712 (May 14, 2014).

Professional Pointer: Employers should consider using “your side of the story” letters to obtain an employee’s version of events prior to issuing discipline. A letter of this nature would have allowed AECI to evaluate Johnson’s explanation, if any, for the presence of the benzodiazepine drug discovered in his urine for his return-to-work drug screen. Also, if the employee is represented by a collective bargaining representative, the union should be copied on the letter.

While the case discussed above did not reference Section 9(a) of the National Labor Relations Act, 29 U.S.C.A. § 159(a), private employers should remember that they can make grievance adjustments with employees consistent with the terms of the collective bargaining agreement then in effect, without the intervention of the bargaining representative, so long as the bargaining representative is given opportunity to be present at such adjustment. Consent from an employee to proceed without representation may not be enough. The decision did not indicate that AECI provided the Union an opportunity to be present at the disciplinary proceeding involving Johnson.

If you have a question, the St. Louis employment attorneys at McMahon Berger have been representing employers across the country in labor and employment matters for over sixty years, and are available to discuss these issues and others. As always, the foregoing is for informational purposes only and does not constitute legal advice regarding any particular situation as every situation must be evaluated on its own facts. The choice of a lawyer is an important decision and should not be based solely on advertisements.

Editor’s Note: This article should not be construed as legal advice.