Resignation Triggers Halt to Fringe Benefits

In an arbitration decision published June 12, a grievance calling for a school district’s employment benefits to continue past the effective date of a teacher’s resignation was denied. After three teachers retired, their health insurance benefits ceased, but the teachers’ association demanded that the school district continue to provide and pay for these benefits up to the end of the school year, defined by the contract as August 31.

The basic facts of this grievance were undisputed. Both the school district and the teachers’ association agreed that the collective bargaining agreement (CBA) contained the agreed terms regarding employment benefits. These terms noted that all full-time employees are eligible to participate in the district’s insurance plan on a “yearly basis.”

Three employees who had participated in the insurance plan submitted their resignation to be effective on the last working day of the school year. Because they had fulfilled their contractual obligation to work the required number of days, they continued to receive payment for the school year through August. However, their health and other fringe benefits ceased as of the effective date of their resignation or the last day of the month of their resignation, in accordance with the CBA.

The teachers’ association filed a grievance arguing that the fringe benefits should continue through the entire school year, as defined by the CBA to end on August 31, as the employees had received their paychecks through that period.

The district argued that its past practice had always been to terminate employment benefits as of the effective date of resignation and was able to show that it had consistently held to that practice. Furthermore, employees who were contemplating retirement were routinely advised of severance matters by the district treasurer, including notification that health, dental, vision, and/or life insurance generally would end as of the effective date of resignation.

Interestingly, the previous teachers’ association president, who had more than two decades of leadership in the association, provided testimony that when an employee resigns or retires, the employee severs the employment relationship, and the fringe benefits and other contractual entitlements cease as of the date of resignation or at the end of the month. Additionally, she had encouraged the association to bargain for fringe benefits to continue through the end of the school year but was unsuccessful in bargaining for this very provision.

The arbitrator agreed with the Board of Education and held that an employee ceases to be an employee as of the effective date of resignation and as such ceases to be a member of the bargaining unit covered by the CBA. The arbitrator went so far as to declare that the association is “estopped from taking a contrary position through this Grievance since it has been long-standing and it has been aware of the District’s practice.” The association, the arbitrator held, must bargain for this provision in the contract if it is so desired.

Arbitrator May Override Employer’s Disciplinary Decision — Absent Contract Limitations

Reversing the decision of two lower courts, the Ohio Supreme Court recently ruled that absent negotiated language in a collective bargaining agreement (CBA) limiting an arbitrator’s authority to modify a disciplinary action for just cause, an arbitrator has authority both to review the disciplinary action and to fashion a remedy that is outside the scope of the CBA.

A City of Findlay police officer was first disciplined in 2012 for conduct unbecoming. This discipline was grieved, taken to arbitration, and then modified by the arbitrator to be in line with the city’s use of a discipline matrix.

Later that same year, the same officer was found to have violated the department’s sexual harassment policy, and termination of the officer’s employment contract was recommended. The termination was grieved and taken to arbitration. The arbitrator determined that the city did not present evidence to support termination, and therefore he set aside the termination. Instead, the arbitrator determined that the disciplinary matrix could not be used, stated that a “lengthy disciplinary suspension [was] warranted,” and imposed a five-month suspension. The city appealed this decision to the county common pleas court. Both the common pleas court and the appeals court agreed with the city and found that the arbitration award did not draw its essence form the CBA and was arbitrary, capricious, and unlawful (i.e., the arbitrator overstepped his authority and power). However, the Ohio Patrolmen’s Benevolent Association, on behalf of the officer, appealed these decisions to the Ohio Supreme Court.

The Supreme Court was left to determine whether the just cause discipline provision in the CBA authorized an arbitrator to change the disciplinary action recommended by the employer (in this case, the police chief using a disciplinary matrix). Key to this case was the fact that the disciplinary matrix used by the department to discipline the officer was not part of or mentioned in the CBA. Furthermore, the CBA neither mentioned the department’s disciplinary procedures nor restricted an arbitrator’s authority to review the appropriateness of the type of discipline imposed upon finding just cause for discipline. Absent this limiting language in the CBA, the arbitrator was free to fashion a remedy that he believed was appropriate.

Only Chief Justice Maureen O’Connor dissented from the court’s majority opinion, noting that the case should not have been accepted by the Supreme Court in the first place and that the majority’s decision could have unintended consequences as it seems to throw out the consideration of past practice(s). She noted that the department used the matrix as a past practice as the basis for disciplinary action, and the inability to rely on this or throw it out of consideration is dangerous. O’Connor concluded that under the majority opinion, even if a past practice is established related to disciplinary outcomes, an arbitrator could modify the discipline if the practice is shown as not specifically bargained for and incorporated into the CBA. This, in her opinion, is an undesirable result.

School districts should be aware that this holding by the Supreme Court could impact arbitrations and the review of the same by courts in Ohio. The court concluded, “Any limitation on an arbitrator’s authority to modify a disciplinary action pursuant to a CBA provision requiring that discipline be imposed only for just cause must be specifically bargained for by the parties and incorporated into the CBA.”


Ohio Patrolmen’s Benevolent Assn. v. Findlay, Slip Opinion No. 20147-Ohio-2804.