Executive Summary: On April 10, 2018, the New York State Supreme Court, Appellate Division, First Department (“the First Department”), in Matter of New York City Tr. Auth. v. Phillips, 2018 NY Slip Op 02442, in a remarkably strongly worded opinion, reversed the determination of an arbitrator who had ruled that although the terminated employee sexually harassed a co-worker, he should only have been subjected to a ten-day suspension.

Matter of New York City Tr. Auth. v. Phillips

In Phillips, the employer’s internal office of Equal Employment Opportunity (EEO) found the former employee, Aiken, had sexually harassed a supervisor, Melendez, by, among other things, saying to her and in front of her subordinates that he would “stay in bed all day” and “oil her down” if he had a woman like her, offering to be her “sugar daddy,” and asking if she was “looking for another husband.” Melendez’s allegations were corroborated by numerous other employees, some of whom also reported being harassed by Aiken. The employer ordered Aiken to stay away from Melendez and to work on a different floor of the building. But Aiken was undeterred. Melendez repeatedly told Aiken to leave her alone, to no avail. She was so distressed by his conduct that on one occasion she worked in her car to avoid contact with him.

Pursuant to the disciplinary procedure in the governing Collective Bargaining Agreement (CBA), Aiken was terminated. However, because the termination occurred while Aiken was on an indefinite union-paid release, the parties arbitrated the procedural issue of whether the imposition of discipline violated the terms of the CBA.

Separately, the parties arbitrated the merits of the disciplinary charges themselves. In reducing the severity of the discipline to a suspension, the arbitrator faulted Melendez for not speaking up sooner. The determination of the merits was the basis of the appeal at the First Department.

While noting that “[j]udicial review of an arbitration award is narrowly circumscribed,” and that vacatur is even more limited, the First Department, which has jurisdiction over Manhattan and the Bronx, nevertheless concluded that imposing a mere ten-day suspension “fashions a remedy that violates public policy.” This was particularly true where the arbitrator adopted the EEO’s findings of fact. In light of these accepted facts, the court found it “unfathomable that the arbitrator could find that Aiken’s conduct did not violate the workplace policy against sexual harassment[.]”

The First Department further denounced the arbitrator’s “language maligning victims in an entirely inappropriate manner, including statements that it was incumbent on Melendez to take appropriate action if she felt Aiken’s comments were inappropriate. Such a ‘blame the victim’ mentality inappropriately shifts the burden of addressing a hostile work environment onto the employee. The arbitrator’s decision belies the realities of workplace sexual harassment. The fact that the victim did not earlier report Aiken’s behavior is not atypical and should in no way be construed as absolving Aiken of his misconduct.”

Finally, the court remanded the matter to a different arbitrator to determine whether termination was the appropriate penalty, in light of the findings of fact that Aiken had sexually harassed Melendez, thereby violating his employer’s anti-harassment policy.

Employers’ Bottom Line:

In this case, the employer took all the right steps. The New York City Transit Authority (“Authority”) had a workplace anti-harassment policy in place. It had a reporting mechanism by which Melendez could report the harassment. When she did, the Authority took steps to separate Aiken and Melendez. When he continued to harass her, he was disciplined, and ultimately terminated. It was only at arbitration that the employer’s efforts to prevent workplace harassment were thwarted.

Arbitration awards are subject to extreme deference by courts, and decisions are not lightly reversed. Beyond vindicating the appropriate steps taken by the Authority to protect its employees from workplace harassment, the First Department’s opinion is noteworthy in that it signals the court’s continuing skeptical view of the arbitration regime. In July, 2017, this firm discussed the court’s refusal to uphold arbitration agreements and class action waivers in the context of a New York Labor Law dispute. Read the Legal Alert here: http://www.fordharrison.com/appellate-court-nixes-employee-arbitration-agreements. This latest opinion serves as a warning that arbitrations are not necessarily shielded from judicial review, and even judicial intervention, particularly when the decision goes against the strong public policy of the state.