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  • Writer's pictureRobert Lusk

Reversal of Arbitrator’s Award Affirmed

An employee’s initially effective effort to finesse his away out of a tight spot resulted in the reversal of an arbitration award in Michigan AFSCME Council 25 v County of Wayne, Case Nos. 356320 and 256322 (April 21, 2022). In this case, the employee committed an act of misconduct and, while waiting for his employer to decide whether to fire him, applied for retirement. The employer did fire him and the employee’s union filed a grievance that, ultimately, resulted in his reinstatement with back-pay. In the meantime, the employee had also emptied his retirement account. Thus, at the end of the day, the employee had his job with back-pay and his retirement.

The employer appealed, arguing that when the employee applied for retirement, he signed a separation waiver averring he was terminating his employment and would not seek re-employment. The employer further argued that the upshot of the arbitrator’s decision – reinstatement with payback after signing the waiver plus a retirement payout – violated its retirement ordinance and Internal Revenue Code (IRC) regulations. The trial court agreed, reversing the arbitrator’s decision, and the Court of Appeals affirmed in an unpublished opinion.

The employee and his union argued long and hard the trial court lacked authority to reverse the arbitrator’s decision simply because the arbitrator may have made a legal mistake. The Court of Appeals somewhat opaque reasoning was to the effect that a clear enough legal error was grounds for reversing an arbitration award. The Court also cited cases permitting the reversal of arbitration awards on based on violations of public policy.

There are reasons, though, to suspect the Court of Appeals chose not to publish its decision, leaving it without precedential value, because the arbitrator’s award simply didn’t pass the smell test. After all, how could the final result be that the employee was reinstated to his job with back-pay and, in addition, received his retirement? Perhaps, rather than publish a decision that might undermine the deference usually afforded to arbitrators, the Court chose to set a highly suspect one aside in a fashion that would not affect future cases.

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