Keeping It Confidential: Protecting Internal Investigations in a Unionized Workplace

In recent years, the National Labor Relations Board (NLRB) has been a source of controversial rulings with potentially drastic effects on the workplace, a prime example of which is its apparent decision to frustrate employers’ efforts to perform confidential workplace investigations. In a series of recent salvos against management, the NLRB has redefined the balance between an employer’s interest in confidential investigations and an employee’s rights under the National Labor Relations Act (NLRA).

The Warning Shot: Hyundai America Shipping Agency

On August 26, 2011, the NLRB provided a preview of things to come with its decision in Hyundai America Shipping Agency. In that case, the employer maintained a practice of verbally warning employees not to discuss or disclose matters that were under internal investigation. The employer claimed that it had legitimate business justifications for requiring confidentiality.

The administrative law judge (ALJ) rejected this argument and held that the employer’s policy violated the NLRA. The ALJ found that there must be a balancing between an employee’s Section 7 rights and "the right of an employer, under certain circumstances, to demand confidentiality." Importantly, the ALJ concluded that it is the employer’s burden "to first determine whether in any give[n] investigation witnesses need protection, evidence is in danger of being destroyed, testimony is in danger of being fabricated, and there is a need to prevent a cover up." Because the Hyundai employer failed to do so, its oral confidentiality policy constituted an unfair labor practice.

The NLRB affirmed the ALJ’s conclusion that the employer violated the NLRA by maintaining a policy barring employees from discussing matters under internal investigation. While it did not comment on the ALJ’s specific rationale, the NLRB adopted the judge’s findings in full.

The Broadside Salvo: Banner Health

Unfortunately for employers, the NLRB was given the opportunity to revisit Hyundai in July 2012. In Banner Health System, the employer’s practice was to ask "employees making a complaint not to discuss the matter with their coworkers while [the] investigation was ongoing." During the initial unfair labor practice proceedings, the employer argued that the prohibition was justified by its need to protect the integrity of internal investigations. The ALJ accepted this argument and concluded that the policy did not run afoul of the NLRA.

On July 30, 2012, the NLRB rejected the ALJ’s finding and held that the employer’s policy violated the NLRA. At the outset, the NLRB emphasized that "an employer must show that it has a legitimate business justification that outweighs employees’ Section 7 rights." Contrary to the ALJ, the NLRB found that a "generalized concern with protecting the integrity of [workplace] investigations is insufficient to outweigh employees’ Section 7 rights." Quoting Hyundai, the NLRB instead held that employers must make case-by-case determinations of whether witnesses need protection, evidence is in danger of destruction, testimony is at risk of fabrication or there is a need to prevent a cover up. The NLRB concluded that the employer’s "blanket approach clearly failed to meet those requirement.

The NLRB further observed that a threat of discipline is not required for a general confidentiality policy to be invalid. It emphasized that the law "does not require that a rule contain a direct or specific threat of discipline in order to be found unlawful." Instead, the NLRB concluded that a blanket policy alone is enough to violate the NLRA.

The Life Raft: Verso Paper Advice Memorandum

The Banner Health decision has placed employers in a tough situation. It is now clear that a general confidentiality requirement for investigations will be invalidated. At the same time, confidentiality is necessary to ensure a full and complete investigation of workplace harassment, discrimination or other unlawful behavior. Otherwise, an employer could be exposed to liability under a plethora of federal and state laws.

Fortunately, the NLRB recently qualified the scope of Banner Health. In an Advice Memorandum made public on April 16, 2013, the NLRB’s associate general counsel evaluated Verso Paper Corporation’s policy that barred employees from discussing ongoing workplace investigations, which stated:

Verso has a compelling interest in protecting the integrity of its investigations. In every investigation, Verso has a strong desire to protect witnesses from harassment, intimidation and retaliation, to keep evidence from being destroyed, to ensure that testimony is not fabricated, and to prevent a cover-up. To assist Verso in achieving these objectives, we must maintain the investigation and our role in it in strict confidence. If we do not maintain such confidentiality, we may be subject to disciplinary action up to and including immediate termination.

The associate general counsel found that this "blanket rule" was invalid under Banner Health, and reiterated that an employer "must demonstrate its need for confidentiality on a case-by-case basis." However, the associate general counsel also provided insight into how an employer may properly protect confidentiality. Interestingly, he concluded that the first two sentences of Verso’s policy lawfully stated the employer’s interest in protecting the integrity of its investigations.

More importantly, the associate general counsel also suggested that Verso could modify its policy to comply with Banner Health. He opined that the company could "lawfully advise employees" as follows: "Verso may decide in some circumstances that in order to achieve these objectives, we must maintain the investigation and our role in it in strict confidence. If Verso reasonably imposes such a requirement and we do not maintain such confidentiality, we may be subject to disciplinary action up to and including immediate termination."

Staying Afloat: What to Do Now?

In light of Hyundai and Banner Health, it is clear that the NLRB will not tolerate policies that require confidentiality for all internal investigations. As a precaution, an employer would be wise to avoid implementing this type of general confidentiality requirement, and instead enact a policy that conforms with the suggestions made in the Verso Paper Advice Memorandum. Employers with existing policies should likewise consider modifying policy language to make it clear that confidentiality requirements will be determined on a case-by-case basis.

Care should also be exercised during the actual investigation process. Before determining the level of emphasis to place on confidentiality warnings, employers should consider both the nature of the investigation and the identity of the employee being interviewed. In each instance, the employer should consider and document the four Banner Health factors as they apply to the particular circumstances of the investigation. By doing so, employers can protect the integrity of their investigations without running afoul of the NLRA.

A Double-Check on Criminal Background Checks: When Did You Last Review Your Policy and Forms?

Almost all employers do some form of background check. Whether it entails a credit check, criminal background check or simply an internet search depends on the industry, the employer’s needs or requirements, and the company’s location. Whatever the type, an employer should always be able to articulate a reasonable, job-related business justification for conducting the check. With growing concerns about privacy, many states – and even cities – have implemented restrictions that far exceed those under the Fair Credit Reporting Act (FCRA). If you conduct background checks on applicants or employees, be aware of the latest trends as you move forward.

Criminal Background Checks

On June 20, 2013, Seattle enacted a "ban-the-box" ordinance which prohibits virtually every private employer from automatically excluding individuals from employment based on their arrest or conviction records or inquiring about a criminal record prior to an initial screening of applicants. Similarly, on May 13, 2013, Minnesota’s governor signed S.F. 523, which prohibits private employers from asking job applicants about their criminal history on the initial job application and from asking such questions until the applicant has been selected for an interview or has received a conditional offer of employment. The latest to pass such laws, Minnesota and Seattle join jurisdictions including Hawaii; Massachusetts; Newark, New Jersey; and Philadelphia where the government has placed limits on an employer’s ability to inquire into criminal history as a part of the initial screening process. This new legislation is part of a growing trend of "ban-the-box" laws at the state and local levels of government. Ban-the-box legislation also is pending at the federal level, although it appears unlikely it will pass through Congress. Government contractors should take note that a number of states and localities have passed laws that apply exclusively to public employers and private entities that have contracts with the state or local government.

Best Practices

Unless otherwise permitted by law, employers with locations in ban-the-box states or cities should remove the question on applications asking candidates about their criminal history.

Moreover, given the Equal Employment Opportunity Commission’s 2012 Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Decisions, as well as existing obligations under FCRA and the various federal, state and local laws otherwise restricting the use of criminal records in hiring and personnel decisions, employers in ban-the-box jurisdictions and elsewhere around the country are wise to:

  • Tailor their policies so they do not impose a complete bar on employment based on a criminal conviction
  • Ensure that conviction records are considered in a manner that is job-related and consistent with business necessity (i.e., employers should not have a one-size-fits-all policy)
  • Not consider arrest records
  • Ensure that they have not violated any state or local statutes by considering expunged records or juvenile offenses
  • Train managers on the correct use of criminal history in the hiring, promotion, disciplinary and separation processes
  • Comply with FCRA and other state and local requirements (including "mini-FCRA" laws) before conducting background checks and taking adverse action against applicants or employees based on their criminal history
  • Keep information about applicants’ and employees’ criminal history confidential


What is permissible with respect to background checks is constantly changing and can vary significantly with the location of your operations. If you have not reviewed your policies and procedures in 2013, an evaluation is now in order. In addition, if you have not updated your Summary Notice of Rights under FCRA in 2013, you can obtain the updated version here.

Background checks are an integral part of most hiring processes. By taking steps to update your practices, you can ensure that the checks themselves do not become a source of liability or potential exposure.

Do You Have to Offer Health Coverage to Temporary Employees?

It is hard to believe that 2014 is just around the corner. Many employers are deep in the throes of planning for their 2014 benefit offerings, trying to decide whether and how they need to modify their health plans in order to avoid penalties under the Patient Protection and Affordable Care Act (PPACA), a law colloquially referred to by some as "Obamacare." As we help employers gear up for their 2014 health benefit offerings, we hear one question over and over again:

Do I have to offer coverage to my temporary employees?

We answer: "It depends."

Beginning in 2014, PPACA’s employer pay or play rules will in certain circumstances impose an excise tax on an applicable large employer (generally, one that employs an average of at least 50 full-time equivalent employees in 2013) that does not offer a sufficient level of affordable health coverage to all of its full-time employees.

If a temporary employee provided by a staffing agency is an employer’s "employee" and is considered "full-time" under those rules, an employer might be subject to the excise tax if it does not offer coverage to that temporary employee.

This article answers a number of frequently asked questions about temporary employees and staffing agencies. For more information about whether an employee is considered full-time under PPACA’s employer pay or play rules, please see this relevant bulletin or contact one of our Employee Benefits & Executive Compensation group’s lawyers.

How do I know if a temporary employee is my employee under PPACA?

Proposed regulations (on which employers may rely for 2014) provide that an employer must use the common law standard to determine the status of a temporary employee. The common law standard is the same standard used to determine whether an individual is an employee for employment tax purposes and requires an employer to examine the facts and circumstances of the employment relationship. If the employer has the right to control what the individual will do and how the individual will do it – regardless of whether the employer actually exercises that control – the individual will generally be considered the employer’s employee.

The IRS will consider a number of factors to determine whether a temporary employee is considered the employer’s employee and will examine all information that provides evidence of the employer’s degree of control.

Although each situation must be examined on its own merits, the IRS has provided an example situation in its Publication 15-A. In that example, a staffing agency enters into contracts with clients under which the clients specify services to be provided. The client pays a fee to the staffing agency, which hires the workers, assigns them to the client, controls the payment of their wages, and provides them with unemployment insurance and other benefits. The staffing agency, not the client, has the right to discharge or reassign the worker. In this example, the staffing agency (not the client) has the right to direct and control the worker and therefore is considered the employer.

What if a staffing agency and its client are co-employers?

In some common law contexts, a staffing agency and an employer may be considered co-employers of the temporary employee. However, the proposed regulations do not contemplate the concept of a co-employment relationship. It appears that the IRS will identify either the employer or the staffing agency as the common law employer and may impose the excise tax on that entity if it does not offer health coverage to the temporary employee.

It also appears that a staffing agency’s offer of coverage will not relieve the employer of liability if the temporary employee is the employer’s common law employee.

Can I use a staffing agency to avoid the excise tax?

An employer might decide to legitimately use a staffing agency to fill one or more positions that have previously been filled with the employer’s common law employees. However, employers should be careful about the creative use of staffing agencies to avoid the excise tax. The Treasury Department and IRS have expressed concern about an employer’s use of staffing agencies to deprive a temporary employee of his or her full-time status.

For example, the Treasury Department and IRS are concerned that a company might employ an employee for 20 hours per week, then hire the same individual through a staffing agency for the remaining 20 hours. If the individual is the common law employee of the company only for the first 20 hours and the common law employee of the staffing agency only for the other 20 hours, the worker would not be considered a full-time employee of either employer, so neither would be penalized for failure to offer health coverage to that individual. Future regulations will likely contain some anti-abuse rules to prevent this result, so employers would be wise to avoid using staffing agencies in this way.

Does my past classification of a temporary employee affect classification under PPACA?

When applying the common law standard in preparation for the pay or play rules, an employer may discover that it has previously misclassified one or more temporary employees. Employers may wish to consult with legal counsel to determine how best to address this situation. Correct worker classification is important for many reasons, and the process for assessing the pay or play excise tax may bring mistakes to light. Employers who have misclassified temporary employees (or other workers) may be interested in the IRS Voluntary Classification Settlement Program, under which eligible employers can pay a reduced amount to avoid interest and penalties that could otherwise be assessed for failure to pay past employment taxes. Information about this program is available on the IRS website.

OSHA to Increase Inspections of Employers Utilizing Temporary Workers

On April 29, 2013, OSHA’s director of enforcement programs issued a memorandum to its regional administrators directing them to ramp up efforts to investigate employers who utilize temporary workers and to ensure that temporary workers’ safety and health are protected. OSHA broadly defines the term "temporary worker." The Bureau of Labor Statistics defines temporary workers as those who are paid by a temporary help agency, whether or not their jobs are temporary. According to OSHA’s memorandum, they are focusing on temporary workers supplied to a host employer and paid by a staffing agency.

The memorandum reports that OSHA received numerous reports of temporary workers suffering fatal injuries during the first days on a job. According to OSHA, these fatalities typically resulted from an employer’s failure to provide safety training or to adequately address a workplace hazard. OSHA’s announcement followed a release by the Bureau of Labor Statistics that indicated 12 percent of fatal work injuries in 2011 involved workers supplied by staffing agencies to employers. There were 4,693 fatal work injuries reported in 2011.

OSHA’s memorandum reminds employers that they have a duty to provide all workers with safety and health training regarding workplace hazards. This is true whether the worker is directly employed by the employer controlling the worksite or by a temporary staffing agency supplying employees to that worksite.

As a component of employer inspections, OSHA is directing its regional chief safety and health officers (CSHOs) to identify employees who are temporary workers and determine if any of the identified temporary workers are exposed to a violative condition. The CSHOs will review records and conduct interviews to assess whether those workers have in fact received required training in a language and vocabulary they understand.

In addition, the memorandum directs CSHOs who encounter temporary workers during an inspection to document the name of the temporary workers’ staffing agency, the agency’s location and the supervising structure under which the temporary workers are reporting (i.e., the extent to which the temporary workers are being supervised on a day-to-day basis either by the host employer or the staffing agency). The memorandum requires CSHOs to use a newly created code to specifically track when and where temporary workers are exposed to violative conditions.

The memorandum further reports that recent inspections revealed problems involving temporary workers who were not trained and were not protected from serious workplace hazards due to lack of personal protective equipment when working with hazardous chemicals and lack of lockout/tagout protections, among other issues. OSHA makes reference to a case that occurred in February 2013 involving a 21-year-old worker employed by a temporary staffing service who was crushed to death by a palletizer machine on his first day on the job. According to OSHA, a failure to lockout and tagout the palletizer machine resulted in the worker’s death. OSHA penalized the employer who controlled the worksite (i.e., not the temporary staffing agency) for violations of lockout/tagout and other associated safety regulations, which OSHA believed contributed to the temporary worker’s death, assessing a fine of $192,000. When OSHA violations result in fatalities, lawsuits based upon tort often follow, potentially exposing the employer to liabilities greatly exceeding OSHA’s fine.

Employers should consider reviewing their policies and procedures to ensure that temporary staffing workers are appropriately trained and qualified to perform work at their facilities. Supervisors should be trained, as appropriate, to ensure that temporary workers are properly trained and qualified to perform particular tasks at a worksite. Whenever possible, an employer should also ensure that its temporary staffing agency supplies only properly trained and qualified employees, a requirement that can be incorporated in its contract with the staffing agency. Above all, employers should be aware that if OSHA finds an untrained temporary worker or a violation of an OSHA regulation on a worksite, OSHA will likely cite the employer controlling the worksite, not the staffing agency that supplied the temporary worker.

Growing Pains: Checklist of State Law Considerations for Expanding Businesses

From opening a new facility to hiring a single sales representative who will work from home, multistate employers must be aware of the variety of state law issues that are implicated when they expand to new states. While most employers are proactive on some state-specific issues, such as confirming minimum wage, many do not realize that their existing policies or practices must be modified to comply with state law until a violation occurs. Following are some issues to consider when hiring employees in other states:

  • Hours worked and wages. Many states have laws governing meal periods, breaks, day of rest, hours worked, minimum wage, overtime, exempt classifications and independent contractor classifications. These state laws can differ from federal law. Employers must comply with both state and federal law, and when there is a conflict, they must comply with the law that is most favorable to the employee. Some states also have wage payment laws governing the frequency of paying wages, timing of final wages upon termination and requirements to notify employees in writing of pay dates and rate of pay. State wage laws often provide for penalties and fines if wages are not paid properly.
  • Deductions for wages. Do you allow employees to take vacation before it is earned and deduct any unearned time from their final pay? Do you provide cash advances or loans to employees and enter into installment agreements? Do you deduct uniform replacement costs from an employee’s wages? Do you provide tuition or relocation assistance that must be repaid if the employee leaves within a certain amount of time? Do you automatically adjust an employee’s paycheck without authorization upon realizing an overpayment was made? The validity of all these practices varies from state to state. State law determines which deductions are permitted, whether written authorization is required and any monetary limits on how much can be deducted.
  • Vacation accrual, caps and payout. While no state requires employers to provide employees with vacation, many states have rules that employers must follow if they choose to offer vacation. The validity of use-it-or-lose it policies, policies capping the total amount of vacation that can accrue at any given time and other policies regarding earning vacation is determined by state law. Whether an employee is entitled to payout of earned, unused vacation upon termination is also determined by state law. Some states will allow for such forfeiture policies, some only if expressly stated in writing, while in other states forfeiture policies are void and employees must be paid all earned unused vacation upon termination. If vacation must be paid upon termination, it is considered part of the final wages that must be paid within the timeframe set forth by state law, so understanding whether vacation must be paid upon termination is important to avoid exposure to liability and penalties under state wage payment laws.
  • Bonuses, incentive plans and commission payments. The importance of vetting your bonus, incentive or commission plan under state law cannot be overstated. This is an area where employers often roll out a single plan only to learn after an employee is terminated that the plan was not enforceable as written in that state, and the employer therefore failed to pay wages due to an employee upon termination. Or an employer changes or terminates a plan mid-year without realizing certain states require a prorata or full payment under the old plan in these circumstances. While contract principles play a large role in determining whether an employee has earned a bonus, incentive or commission, they vary from state to state and some have statutes or regulations governing these matters. For example, effective January 1, 2013, California law requires that employees paid in whole or part with commissions be provided a written commission agreement, which must be signed by the employee. States differ on the questions of whether an employer may have a policy that states a commission is not earned until payment is received from the customer or requires an employee to be employed on the date of payout to be eligible for a bonus.
  • Criminal records, background checks and drug testing. In addition to implementing criminal record policies, application forms and background check release forms that comply with both federal discrimination law and the Fair Credit Reporting Act (FCRA), employers must also be aware that many states have laws that will impact these policies and forms. More and more state have laws limiting the types of criminal records that can be considered by employers during the hiring process, including Massachusetts and Hawaii, which preclude employers from asking about criminal records on the employment application. Some states also have laws similar to the FCRA that may set forth certain disclosures and notices that must be provided to employees prior to conducting a background check. It is important that employers hiring employees in multiple states become familiar with these requirements prior to hiring and confirm that their application and release forms (including those provided by third-party vendors) comply with both federal and state law. Whether an employer can drug test applicants and employees, and any requirements or limitations on drug testing policies, may also vary by state.
  • Maternity, family, military, school and other leave laws. Most employers realize they must have leave policies and practices that comply with federal laws such as the Family and Medical Leave Act (if a covered employer); the Americans with Disabilities Act, as amended; the Pregnancy Discrimination Act; USERRA; and the requirement to provide breaks for nursing mothers under the Fair Labor Standards Act. When an employee is hired in a new state, it is likewise important to review your policies and practices under state law. Many states have leave requirements that may provide rights to employees not otherwise provided under federal law. These laws apply to employers of a certain size, and each state varies on whether it considers only the number of employees in that state or employees nationwide in determining whether an employer is subject to the law. Understanding how state leave laws differ from the federal laws is important to ensure an employee receives their entitlement under each statute, and that written policies and posters are distributed where required. Leave rights provided under state law may include:
  • Pregnancy disability, maternity and/or paternity leave
  • Adoption leave
  • Family/medical leave
  • School activities leave
  • Family military leave
  • Domestic violence and sexual assault leave
  • Crime victim leave
  • Court attendance/witness leave
  • Privacy and off-duty conduct laws. States may also have laws governing privacy issues, such as social media usage, electronic communication of Social Security numbers, surveillance in the workplace and whether an employer can preclude an employee from storing a weapon in the employee’s car on company property. Some states also have laws prohibiting employers from taking disciplinary action against employees for lawful off-duty conduct.
  • Employment-related agreements. Employment contracts, restrictive covenants, separation agreements and other employment agreements must all be drafted with an understanding of applicable state law. Agreements that are enforceable as written in one state may not be in another. It is critical to tailor each agreement to the employee and state in question.

While many other employment issues arise under state law, this list is designed to help employers evaluate key policies and procedures that may be affected by state law when hiring employees in a new state.

What Union Employers Should Know About No-Fault Attendance Policies

No-fault attendance policies can be effective tools for curbing absenteeism, especially in a union workforce where an arbitrator may be called to decide whether the employer had "just cause" to discharge a chronic absentee. Not only do no-fault attendance policies help maintain an efficient and productive workplace where employees are informed of attendance expectations well in advance, but they also help ensure disciplinary consistency through specifically prescribed penalties. Scheduled progressive discipline can effectively discourage casual absenteeism that might otherwise occur on an occasional basis. But depending on their precise language, no-fault attendance policies may hinder more than they help in long-term situations, where chronic absentees may cleverly evade the termination step of the discipline schedule through devious planning. Employers should therefore understand the benefits and limitations of no-fault attendance policies, so they may exercise informed managerial discretion in drafting, adopting, and enforcing such policies.

Differing Opinions Regarding the Adoption of No-Fault Attendance Policies

An employer should be mindful of conflicting views about no-fault attendance policies if, as a matter of practice or contract, the employer ordinarily bargains over work rules or does not have a management rights clause that specifically reserves the right for the employer to unilaterally establish work rules. The National Labor Relations Board (NLRB) generally takes the position that no-fault attendance policies are mandatory subjects of bargaining and employers may not unilaterally implement new policies or change pre-existing policies for employees who are represented by a union. Arbitrators tend to disagree, instead recognizing that an employer’s unilateral adoption or revision of a no-fault attendance policy is consistent with management’s inherent and/or contractual right to adopt reasonable work rules that are not in conflict with the applicable labor agreement. This conflict sometimes is resolved when a union files both an unfair labor practice charge and a contractual grievance to challenge a unilaterally implemented policy, which typically prompts the NLRB to defer both issues to arbitration. So long as the arbitrator directly addresses the unfair labor practice in the arbitration award, the NLRB is likely to defer to the arbitrator’s finding that the employer had the management right to unilaterally implement or change the no-fault attendance policy, if that finding is based on express contract language rather than just the reserved rights doctrine.

Facial Reasonableness of No-Fault Attendance Policies

Arbitrators have differing views about no-fault attendance policies. Some arbitrators find that these policies inherently violate principles of just cause by allowing employees to be disciplined or discharged based on absences that might admittedly be viewed as "excusable" or beyond the employee’s control. But most arbitrators seem to agree that no-fault attendance policies are consistent with principles of just cause if they:

  • Allow employees to cleanse their occurrence record periodically
  • Permit a specific number of absences before imposing any discipline
  • Impose clearly stated progressive penalties
  • Exempt statutorily protected absences from being counted as "occurrences" under the policy (e.g., FMLA and disability leave, workers’ compensation, jury duty)

Reasonable Application of No-Fault Attendance Policies

Even when no-fault attendance policies are upheld on their face, they must still be applied fairly and consistently – after due warning, independent investigation and consideration of mitigating circumstances. In a study of 146 arbitrated absentee-discharge cases from 1975 to 1983, grievants were reinstated in 93.1% of cases where the employer failed to conduct an impartial investigation into the actual reasons for the employee’s final absence. If a majority of absences, including the last absence, may reasonably be viewed as "excusable," then a discharge is unlikely to be upheld in arbitration. This is especially true when an employee is not specifically warned in writing at the penultimate disciplinary step that the next step will be discharge, or when an employee accumulates multiple occurrences (and thus transgresses multiple disciplinary steps) in an unbroken sequence of absences. Arbitrators do not favor indiscriminate application of attendance policies in such cases where there is no meaningful forewarning of the ultimate consequence and/or where the "discharge absence" was arguably beyond the employee’s control. This trend is likely linked to the arbitral principle that just cause cannot be reduced to a mere counting exercise or mechanical application of policy. Employers must instead investigate final absences to determine whether the penalty of discharge is appropriate on a case-by-case basis – which, ironically, tends to defeat the purpose of a true "no-fault" attendance policy.

Unfortunately, the case-by-case inquiry extended to employees does not seem to apply equally to employers. With few exceptions, arbitrators are extremely reluctant to allow employers to deviate from the progressive discipline steps in their own policies, even in cases of chronic absenteeism when an employee has a history of abusing sick leave over a long period of time. This reluctance stems from the idea that employees should have a definite understanding of what is expected of them in the way of attendance to minimize the potential for favoritism, subjectivity or inconsistency. Arbitrators generally hold that an employer who chooses to institute an attendance policy must scrupulously adhere to its terms in administering discipline and progressing through the steps of the policy. As a result, chronic absentees have a clear advantage over employers because absentees are entitled to the benefit of the doubt while employers seem to be stuck with their policies.

Discretionary Language in Disciplinary Provisions

Arbitrators recognize the frustration associated with employees who chronically abuse sick leave yet always avoid the discharge step. This sympathy, however, has little effect on arbitral insistence that an employee, although obligated to be as regular in attendance and punctuality as possible, is entitled to know with reasonable specificity what the consequences of missing work will be. Arbitrators therefore usually require employers to follow the progressive discipline set forth in their attendance policies even when, for example, an employee has a deplorable attendance record, is absent 40% of the time for three years, or misses more than 15 days for several years in a row.

However, if an attendance policy expressly includes an "unusual circumstances" exception or other discretionary provision, employers may sometimes deviate from their progressive discipline schedules in chronic absenteeism situations. Before any such deviation is permitted, however, arbitrators generally require employers to expressly warn employees (1) that the "unusual circumstances" exception may be applied, and (2) that, consequently, future absences may result in more severe discipline than provided in the policy. When policies do not include discretionary language and/or employees are not expressly warned, employers will be bound by their policies’ progressive discipline steps. This is especially true where an attendance policy is a negotiated part of a collective bargaining agreement, as opposed to a rule established unilaterally by the employer.

Occurrence Expiration

To comport with principles of just cause, attendance policies should provide some expiration period or other redemption method that allows "stale" occurrences to be removed from employees’ records after a certain period of time. Employers most commonly impose fixed or rolling periods (e.g., 12 months) after which employees earn a clean slate for good attendance. But rather than allowing employees to cleanse their entire record (or rolling portions of it) all at once, employers might instead consider requiring employees to work off occurrences one by one based on shorter periods of perfect attendance (e.g., 160 consecutive hours worked removes one occurrence). This approach may be equally effective for employers and more palatable to unions and arbitrators. Regardless of the expiration period chosen, any no-fault attendance policy should expressly state that the employee is solely responsible for keeping track of his or her occurrence level and disciplinary step.

Strategic Distinctions Between Active Occurrences and Active Discipline

While employees must have the opportunity to redeem themselves by working occurrences off their records, no-fault attendance policies should provide only for occurrence expiration—not discipline expiration. This distinction may become important and benefit an employer if its attendance policy’s expiration period for occurrences is shorter than the labor agreement’s expiration period for discipline generally. For example, if an attendance policy provides that occurrences are cleansed from an employee’s record on a rolling 12-month basis, but the labor agreement’s general disciplinary provision provides that discipline shall be active for 24 months, then some arbitrators may allow the employer to consider attendance-related discipline for a 24-month period for purposes of imposing progressive penalties for future occurrences, despite the fact that some or all of the occurrences underlying past discipline may have expired.

Because a labor agreement must be interpreted as a whole, with effect given to all provisions, some arbitrators faced with similar discipline situations have balanced the need for sequential progressive penalties with the need for contractual time limits on discipline. For example, one arbitrator specifically addressed whether there was just cause to discharge an employee whose most immediate preceding discipline was a five-day suspension, but whose prior discipline leading to the five-day suspension had already expired. In determining which prior discipline should be considered in the "just cause" analysis, the arbitrator applied the labor agreement, which specified that "[d]isciplinary records are only active and used as substantiation against a Union employee for eighteen (18) months from the date of the incident." The union argued that "the appropriate progressive disciplinary step must be calculated only with respect to offenses which occurred within the past 18 months regardless of the fact that the time between the progressive steps was considerably less than 18 months." The arbitrator rejected this "roll-back" approach, which would require the employer to "roll back the progressive discipline levels each time a new offense occurred that was over 18 months after the first offense." The arbitrator instead construed the 18-month limitation to mean that "if the incident immediately prior to the one for which discipline is being assessed was less than 18 months ago, the level of discipline assessed at that time is the determinant of the next level of appropriate discipline."

Notably, other arbitrators may refuse to distinguish between the expiration of occurrences and the expiration of discipline, finding that such a distinction would render the occurrence expiration period meaningless and, in effect, punish an "improving problem" more harshly. But even these arbitrators are not completely unsympathetic to employers’ concerns regarding chronic absentees. Arbitrators often address the seriousness of a grievant’s absenteeism through an award of reinstatement without back pay, seniority, or benefits, and at the appropriate disciplinary step.

In conclusion, at some point, an employee’s excessive absenteeism will constitute grounds for termination even when the absences are for justifiable reasons and/or beyond the employee’s control. If just cause exists, then employers may discipline and/or discharge employees for chronic absenteeism even without a no-fault attendance policy. In fact, some employers may decide that they are better off without formal policies, so they have more discretion to issue discipline on a case-by-case basis. On the other hand, formal policies often give employers more confidence in taking disciplinary action against chronic absentees, and in most cases, such policies also ensure consistency and give employees better notice of where they stand. As long as employers understand the benefits and limitations of no-fault attendance policies, they may serve as useful tools in managing absenteeism and maintaining efficiency.