Minnesota Labor & Employment Law Blog : Minnesota Employment Lawyers & Attorneys : Abrams & Schmidt Law Firm : Unfair Labor Practices, Workplace Investigations : Minneapolis, St. Paul, Twin Cities

The beauty of arbitration decisions is that they provide a blueprint on what went right and what went wrong in discipline decision-making. Employers should carefully review arbitration awards, taking note of the arbitrator’s rationale to avoid making the same costly mistakes in the future.

The Minnesota Department of Natural Resources (DNR) terminated an employee, which was later overturned by an arbitrator. (Hamm v State of Minnesota) The employee was reinstated and then she filed a discrimination claim, which was recently settled when the State agreed to pay her $250,000.00.

DNR officer Cathy Hamm, had been terminated for her participation in preparing for the 2007 National DNR Conference held in Minnesota. 150 employees worked on the conference, but only Hamm was disciplined. The state alleged she had:

1. Failed to establish a time track code for work she completed on the conference, (The arbitrator ruled this was above her pay grade. Her supervisors were discussing how to accomplish this, but did not follow through.)
2. Conference fees were not set appropriately; (The arbitrator ruled that higher ups were actually responsible for setting the fees, not Hamm.)
3. She failed to report donated gifts; (The arbitrator ruled the gift policy was not applicable to the facts.)
4. Her use of state property and time in the drafting and sending of a fund-raising letter for the event was inappropriate. (The facts indicated the Commissioner of the DNR had approved the fund-raising letter via email and received copies of it as well.)

In conclusion, the arbitrator found the charges of misconduct alleged by the employer could not be supported by the results of the investigation.

So what went wrong? When we conduct investigations at our firm we make a practice of reviewing an investigation microscopically and then telescopically; up close and then stand back and take a fresh look. A fresh pair of eyes would have also been a great idea in the Hamm case, to review the investigation before making a disciplinary decision. Fresh eyes might have seen that the alleged policy violation did not actually fit the facts of alleged misconduct. Fresh eyes would have made sure the employee actually was given the job responsibilities, and not some supervisor above the employee, before alleging such misconduct. Fresh eyes would have confirmed the head of the department had actually approved a fund-raising letter, before finding misconduct on the part of an employee for sending it. Fresh eyes might have questioned why only 1 out of 150 employees was under investigation for misconduct. 

Employers should make it a habit to routinely read discipline arbitration decisions to avoid making costly mistakes.  The Minnesota Bureau of Mediation Services is a good place to start your reading.......

 

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Class action grievances permit a group of individuals who are similarly situated to arbitrate claims together under one umbrella case. Previously, if a labor contract or arbitration agreement was silent on class action grievances, they were generally allowed by most arbitrators. However, according to the U.S. Supreme Court that is no longer the case.

In April, the U.S. Supreme Court ruled “[A] party may not be compelled under the FAA (Federal Arbitration Act) to submit to class arbitration unless there is a contractual basis for concluding that the party agreed to do so.” Stolt-Nielsen v. Animal Feeds Intl’ Corp. This means unless an arbitration agreement specifically permits class action arbitrations, none will be allowed.

But wait, in May the Minnesota legislature passed legislation overhauling the Minnesota Uniform Arbitration Act. In the overhaul there is a provision for consolidating separate arbitration proceedings if some or all of the claims are between the same parties, the claims arise in substantial part from the same transaction or series of related transactions, there is a common issue of law which creates the possibility of conflicting decisions, and the prejudice for failing to consolidate claims is not outweighed by the risk of delay or prejudice to the party opposing consolidation. In essence, the law provides a vehicle to combine grievances, much like a class action grievance.

What the U.S. Supreme Court had put asunder, the Minnesota legislature now has put together….
 

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The United States Supreme Court has agreed to hear a case regarding the arbitrability of race discrimination and retaliatory termination claims made by an employee who has alleged the arbitration agreement with his employer was unconscionable.

Gavin Craig, Minnesota attorney and publisher of Twin Cities Business Litigation Blog, warns about courts rewriting contracts.

“This is an odd case. If you accept the premise that the arbitration Agreement is a contract, and that the parties are bound by their contracts, the Ninth Circuit is wrong. The court is essentially re-writing the contract and deleting a provision. That is not right. Courts are not supposed to rewrite contracts. But that is the effect of the Ninth Circuit ruling. (pdf)"

The United States Supreme Court will now be deciding if a district court is required to determine the unconscionability of an arbitration agreement, even when the parties to the agreement have clearly and unmistakenly assigned this “gateway” issue to the arbitrator for decision?

The U.S. Supreme Court’s decision may have a far reaching impact on arbitration agreements between employers and employees, but for now we will have to wait and see.

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