ABM Part II: Can An Arbitrator Rule on an Employer’s Application of an Ordinance?

Last week, we discussed an arbitration award between ABM Industries and SEIU, where an arbitrator ruled that not only did the St. Paul and Minneapolis ordinances apply to an employer outside the two cities, but that the employer was not abiding by the terms of the ordinance.  As we alluded to in that article, the award was ripe for appeal to district court, and on June 27, 2019, the U.S. District Court of Minnesota issued its decision on the appeal. 

For those unfamiliar with appeals of arbitration awards, courts have stated an award “must draw its essence from the contract….But as long as the arbitrator is even arguably construing or applying the contract and acting within the scope of his authority” a court cannot overturn the arbitrator’s decision even if it finds serious error within the decision.  United Paperworks Int’l Union, AFL-CIO v. Misco, Inc, 484 U.S. 29, 38 (1987).  Arbitrators are granted an incredible amount of deference in coming up with awards even if they look to external sources for assistance in issuing awards.  As such, even though there was some dispute about whether the arbitrator applied the Minneapolis and St. Paul Sick and Safe Leave ordinances correctly, the employer faced an uphill battle in challenging the award. 

First, the court agreed with the arbitrator when the arbitrator allowed the grievance to proceed when it was filed prior to the ordinances taking effect.  The Union preemptively grieved the employer’s stance on the ordinances, and filed its grievance two days early.  As the arbitrator found the contract defined grievance as “any difference of opinion, controversy or dispute arising between the parties,” and the parties clearly had a difference of opinion, the court took no issue with the early grievance from the union. 

In getting to the substance of the grievance, the court had to decide whether the arbitrator’s award “drew its essence” from the collective bargaining agreement.  This is where the employer’s willingness to discuss and negotiate over the sick and safe ordinances may have come back to haunt it.  As we discussed last week, the parties agreed that the employer would grant “sick days mandated by ordinance or statute within the jurisdiction/application of such ordinance.”  The court found that once the employer agreed to address an outside law via its collective bargaining agreement, it granted the arbitrator the authority to rule on issues pertaining to the ordinances. 

These ordinances were going to govern the parties whether they were in the collective bargaining agreement or not.  But now, instead of the union having to go to court in order to get the employer to comply with the ordinance, it could simply go to an arbitrator and let his interpretation of the ordinance control how they did business.

Takeaway: Employers should be hesitant to include references to statutory language in collective bargaining agreements – especially new legislation.  Employers are already required to comply with the law; adding the language to the collective bargaining agreement is just doubling down on the union’s choice of forum, and making them contractually bound to external legislation. 

Moreover, legislation is leading to an expansion of employee rights, but those rights are subject to the whims and caprices of elected lawmakers, and can change on an annual basis.  If the laws are changed or reduced, but an employer has included the previous statutory language in its contract, it may be  bound to the agreed-upon terms or be required to bargain its way out of them. 

At the same time, employers involved in collective bargaining relationships must work with their employee organizations on implementation of the terms of sick and safe leave ordinances.  In United Steelworkers Local 11-1259 and Interplastic Corporation, the employer attempted to modify the terms of its leave provisions in order to comply with the ordinance without consent of the Union.  The employer was forced to comply with the terms of its collective bargaining agreement when the union grieved its unilateral change to terms and conditions of employment. 

These situations can be incredibly difficult to manage.  With sick and parenting leave laws changing frequently, it is important to get the right advice when negotiating your collective bargaining agreements in order to stay in compliance with the law yet protect your organization’s interests.  For negotiations and contract expertise that works, contact the Wiley Law Office.