"Loss of value" for excessive absenteeism: a case study.(Instructor's Note)

Mayfield, E. Hill ; Borstorff, Patricia C.

CASE DESCRIPTION

The primary subject matter of this case is arbitration in a company with a powerful union. Other issues include absenteeism, FMLA, documentation, arbitrator's decisions, "Loss of value" letters, and Last Chance letters. The case has a difficulty level of being appropriate for senior level or first year graduate classes. The case is prepared for two hours of instruction and discussion. The students should receive the case earlier and be prepared to discuss the ramifications of the case together with the instructor.

CASE SYNOPSIS

This case involves an employee with an extended history of frequent and protracted absences over his employment of 17 years. When the company finally terminated him after going through all the options available to them, the union representing him naturally filed a grievance which progressed thorough the steps of the plant grievance procedure to arbitration. This case is exciting as it is based on first-hand knowledge of the situation. Students will have a sense of immediacy upon reading the case. It gives a perspective seldom available to undergraduate students in the meaning of "Loss of Value" and how such a case must be approached by management. It involves interesting exerts from previous Arbitrators' decisions, along with views on such cases from Authors Elkouri & Elkouri. The case involves interesting testimony during the arbitration hearing by both the grievant and his Union Representative as both give their perspectives on the case to the Arbitrator. This case also has serious implications during the negotiations of a Collective Bargaining Agreement between the parties at the time of the sale of the plant to a new owner. Finally, there is a surprising caveat seldom experienced following an arbitrator's binding opinion and decision to both the Company and the Union.

INSTRUCTOR'S NOTES

Recommendations for Teaching Approaches

The students should be assigned the case and have read and studied the concepts prior to coming to class. In class, the students and instructor can summarize the case and offer what they believe to be the important concepts in the case. Each of the following questions can be discussed. This case offers students the opportunity to be a part of a real arbitration case and discover the challenges faced by management when they face a powerful and experienced union.

Questions:

1. Would a "Last Chance" letter been an appropriate response for this employer?

2. How powerful is the Arbitrator? Can he/she render a final judgment?

3. Why do companies resort to arbitration?

4. Why do unions resort to arbitration?

5. Under what situations are employees allowed to take FMLA leave? What are "qualifying events" which entitles an employee to take FMLA leave?

6. How is an arbitrator chosen?

7. What is 'light duty' and who determines that?

8. What are the most effective ways for providing a Company Position or Union Position during an Arbitration hearing?

9. What is Collective Bargaining?

10. Why have labor and management tended to treat each other as adversaries in the U.S. labor relations system?

11. What, in your opinion, is the most significant impact of a union on the management of Human Resources? Explain.

12. Portray yourself as the Arbitrator, how would you have ruled in this case? Please provide all of your reasons which support your opinion in this matter.

13. What is the issue in the above disciplinary case involving the termination of this employee?

14. What are the seven tests or questions for "Just Cause" which management must address in employee terminations?

Answers for Questions:

1. Possibly, particularly in cases involving an employee whose previous actions had shown more effort to improve his or her attendance record. However, in this particular case we have an employee of 17 years who had been provided numerous opportunities to correct his attendance and had not been successful. Not only had management given up in their efforts to provide an additional opportunity to correct the situation, but also his co- workers or peers had recognized management's previous efforts and the individual's refusal to respond which had began to have a motivation effect with them.

2. As most CBA's indicate, the Arbitrator has sole discretion in issuing an answer that is binding on both the Company and the Union. It is the final and binding judgment, unless the parties agree, at a future date, to negotiate other terms and conditions regarding the matter.

3. Companies resort to arbitration to resolve a grievance which cannot be otherwise settled during the agreed to steps of the grievance procedure. A grievance process normally includes: a first step hearing (either oral or written) and Company answer usually by the grievant's supervisor; a second step hearing (written) and Company answer, usually by the Department Manager; a third step hearing and Company answer, usually by the Human Resource Manager; a three- and-a-half step, known as grievance "screening" prior to Arbitration, and the final Arbitration step.

4. Unions resort to arbitration to resolve a grievance they have been unsuccessful in resolving during the steps of the grievance procedure also. However, often times there are political motives depending on their relationship with the grievant, along with their efforts to send a message to the Company, show their strength to the membership, and present a problem within the facility that could be a future negotiation issue.

5. An employee is entitled to FMLA leave if the following requirements apply:

* The employee works for a covered employer (i.e., a government agency or a private company with at least fifty employees)

* The employee worked for that employer for least twelve months prior to taking leave.

* The employee worked at least 1250 hours during the twelve months prior to taking leave.

* The employer has at least fifty employees at the employee's work site or within a seventy-five-mile radius of that work site.

* The employee experiences a "qualifying event" and provides timely notification of the need for a leave to the employer.

* "Qualifying events" under the FMLA include:

* Birth of a son or daughter of the employee

* Placement of a son or daughter with the employee by adoption or foster care

* Serious health condition of an employee's spouse, son, daughter, or parent

* Serious health condition of an employee that makes him unable to perform the functions of his job

* Serious injury or illness of a service member that is incurred while on active duty

* Any "qualifying exigency" arising out of the fact that a family member is in the National Guard or Reserves and is or soon will be placed on active duty

6 Arbitrators are chosen based upon the procedure provided by the parties CBA. However, if several arbitrators are provided by the CBA, the Union President and the HR Manager or their designed representatives use what is known as the "striking method" whereas each of the parties will strike on arbitrator off the list until only one arbitrator is remaining.

7 "Light duty" is most commonly referred to as "modified work duties" which consist of work duties being revised to "match" or "fit" the temporary work limitations provided by an employee's physician. Most employers will provide "modified work" or "light duty" for a specified period of time. "Temporary medical restrictions" (TMR's) should not be confused with "Permanent work restrictions" (PMR's) which limit the employee from performing work outside the specified PMR's on a permanent basis which can lead to a "reasonable accommodation" determination under the Americans with Disabilities Act.

8 The most effective way as viewed by Arbitrators to present a parties position in a contract interpretation case is to reference past practice and past applications of the contractual provisions being challenged, along with presenting prior arbitrator's decisions which support your parties' position. In disciplinary cases, such as this one, you would present the above arguments, and the reasons proving "just cause" if you are the Company representative or the reasons why "just cause" has not been met, if you are the Union representative.

9 Under a collective bargaining system, union and management negotiate with each other to develop work rules, pay, and other benefits. The product of collective bargaining is a labor contract or agreement that spells out the conditions of employment and work rules that affect employees in the bargaining unit represented by the union. U.S. labor laws view labor and management as natural adversaries who will disagree over the distribution of the firm's profits and resources. For this reason, rules have been put in place so that the pie is distributed peacefully in most cases. Managers are more likely to develop work rules and HRM policies based on efficiency and productivity. But, when a union is in the picture, work rules and policies must reflect the employees' preferences as well. Employees have preferences related to staffing, employee development, compensation, and employee relations. The labor contract gives employees specific rights. The employees, through the collective bargaining process, have a voice in the development of work rules that affect their jobs.

10 Labor and management tend to treat each other as adversaries because of their origins and their different missions. Labor unions see their mission as gaining better benefits and pay for their members regardless of the company's economic situation. Companies have viewed their mission as maximizing shareholder wealth, and keeping labor cost as low as possible to help boost profits.

11 The most significant impact of a union on the management of human resources is its influence in shaping HRM policies. In the absence of a union, the company may develop all HRM policies based on efficiency. However, when a union enters the picture, management must develop HRM policies that reflect consideration for the preferences of workers who are represented by a union. A union's strong preferences for higher wages, COLAs, job security, the ability to express dissatisfaction with administrative actions, and having a voice in the development of work rules that affect their jobs get injected into the equation along with the employer's preferences.

12 Students should either grant or deny the grievance and give their opinion in detail justifying their decision.

13 The issue in this case was whether the Company was justified in terminating the employment of an employee with seventeen (17) years of seniority following the issuance of a "Loss of Value" letter for excessive absenteeism.

14 If the answer is "no" to one or more of the following questions, just cause for termination is not present or is seriously weakened.

I. Notice. Did the employer give to the employee forewarning or foreknowledge of the possible or probable consequences of the employee's disciplinary conduct?

II. Reasonable rule or order. Was the employer's rule or managerial order reasonably related to (a) orderly, efficient, and safe operation of the employer's business, and (b) performance that the employer might properly expect of the employee?

III. Investigation. Did the employer, before administering the discipline to an employee, make an effort to discover whether the employee did in fact violate or disobey a rule or order of management?

IV. Fair investigation. Was the employer's investigation conducted in a fair and objective manner?

V. Proof. At the investigation, did the decision maker possess substantial evidence or proof that the employee was guilty as charged?

VI. Equal treatment. Has the employer applied its rules, orders, and penalties even-handedly and without discrimination to all employees?

VII. Penalty. Was the degree of discipline administered by the employer in a particular case reasonably related to the seriousness of the employee's proven offense?

If the answers to the above questions are YES, then additional questions are considered in determining the degree of penalty:

I. Are there any due process procedural violations of the employee's rights, such as failure to give notice of charges, not allowing the employee to face his or her accusers, or lack of counsel?

II. Are there any mitigating circumstances, such as a record of long term service with the employer or fault on the part of management which may result in a penalty less than termination, such as reinstatement without back pay?

E. Hill Mayfield, Jacksonville State University

Patricia C. Borstorff, Jacksonville State University