Non-disciplinary termination, a zipper clause and the covenant of good faith and fair dealing

By John H Curley on January 20, 2019

The facts presented to Arbitrator Stiteler were largely undisputed. Grievant was hired and thereafter promoted into several positions despite his having a criminal conviction which, under Agency policies, should have disqualified him from employment. There was no claim that the managers were unaware of the conviction when they took action. In 2016 (after grievant had been employed for at least eight years) an audit of the Agency’s background check files noted several employees with apparently disqualifying convictions. The Agency was advised to reevaluate the background checks of several employees, including the grievant. It attempted unsuccessfully to move grievant to a position not impacted by his conviction, and he was ultimately separated from employment on what the Agency described as a “non-disciplinary” basis.

The Union grieved the Agency’s action and the matter was submitted to Arbitrator Stiteler for resolution.

The Union claimed that grievant’s separation was disciplinary and was without just cause. It also claimed hat the Agency’s action violated two provisions of the CBA, Article 28 which addressed privacy and off duty conduct and Article 50, the Entire Agreement or zipper clause. Article 28 provided that off-duty conduct would not be grounds for discipline unless it was a conflict of interest or was otherwise detrimental to the employee’s performance of the Agency’s programs. Article 50 included both a waiver of the right to bargain during the contract’s term and a bar to past practices.

The Agency maintained that the separation was non-disciplinary and therefore not subject to the just cause provision. It claimed that the removal was required by”operation of policy” and that because of his criminal conviction grievant was not qualified to hold his former position.

Arbitrator Stiteler agreed with the Agency that the separation was not disciplinary. He also rejected the Union’s reliance on Article 28 (privacy and off duty conduct). He therefore found that the just cause standard did not apply. He found that the Union’s claim under the zipper clause was a matter of contract interpretation for which the Union had the burden of proof.

On the merits, the Arbitrator found that the Union had sustained its burden. Initially he found that Article 50, the “entire agreement” provision, was ambiguous as to the parties intent:

Article 50 has several elements. The parties agreed that the CBA was their entire agreement and nullified past practices not specifically included. They agreed to waive the right to demand bargaining during the contract term over subjects covered in the CBA. They also agreed that the CBA supersedes agency policies that conflict with it.
I find that Article 50 is ambiguous because it is capable of being interpreted in more than one way. Did the parties intend to limit the Agency’s discretion to dismiss employees for non-disciplinary reasons to those specified in the agreement? Or is their silence on non-disciplinary removals, other than those specified (such as disability separations), intended to mean that the Agency had the discretion to enact policies such as the one in question?

Since there was no evidence of bargaining history, he turned to another interpretive tool, the concept of the covenant of good faith and fair dealing. He noted of that concept:

It is inherent in every collective bargaining agreement. The concept exists to prevent one party from taking an action that will result in interfering with the right of the other party to receive the benefit of the bargain. It is used by arbitrators to determine if an employer acted reasonably.

He concluded that while the CBA provided for one specific form of non-disciplinary separation, in the case of disability, the agreement nowhere addressed the Agency’s ability to dismiss an employee in the circumstances presented in this case. He rejected the Agency’s contention that the managers involved in the hiring and promotions erroneously believed they had the power to waive disqualification. None of these managers testified and there was no persuasive evidence to support that claim.

Sustaining the grievance, Arbitrator Stiteler concluded:

In the end though, it does not matter whether these hiring authorities chose to deliberately flout the express language of the policy or were guilty of making an egregious error. The Agency, by the actions of these managers, created this problem by hiring Grievant and compounded the problem by promoting him. The result was that Grievant, a good employee, was harmed by the loss of his job. It is hardly consistent with good faith for the Agency punish Grievant for its managers’ misapplication of the policy.
The Agency deprived Grievant of job security, seniority, and significant financial benefits by belatedly removing him from his position. While the Agency may have the managerial discretion to adopt policies regarding disqualification, it must exercise such discretion reasonably and not in a manner that conflicts with its obligations under the contract. In removing Grievant, the Agency acted unreasonably, contrary to its duty of good faith and fair dealing and in violation of Article 50.

He ordered grievant’s reinstatement to the position he held at the time of his separation and the payment to him of back pay for the time lost.