"Last Chance" Agreement Fails to Bar Retaliation Claim
2/19/2009
Last chance agreements are relatively common in unionized work settings. Arbitrator Stanley Sergent explained in Drummond Co., Inc., 106 LA 250 (1996):
So-called “last chance” agreements, which impose special terms and conditions of employment, have become increasingly commonplace in industry as employers and unions seek to find mutually satisfactory solutions to a variety of disciplinary problems. There is no question that until an employee’s problems affect his work performance, the employer has no right to discipline him or to institute special conditions of employment. However, once an employee’s disciplinary problems have reached the level at which discharge is imminent, an agreement which imposes special conditions of employment may be offered by the Company or sought by the Union in an effort to salvage the employee’s job and give him a chance for rehabilitation. In that respect, it is a commendable undertaking and one to be supported by arbitrators.
As a general rule, arbitrators encourage programs of salvage and rehabilitation by strict enforcement of such last chance agreements in accordance with the terms that the parties, including the employee, have been willing to accept. However harsh or strict such terms may be and even though the arbitrator might well regard such conditions as unfair, that should not be his concern. Once the arbitrator starts substituting his judgment for that of the parties, he has exceeded his authority, and more importantly, has jeopardized the future use of such agreements for employees who are at the brink of losing their jobs. This is because an employer that has been willing to forego assertion of its right of termination for just cause in return for a strict and absolute agreement of this nature would be extremely reluctant to take a chance on such an agreement in the future.
In a recent case, a divided Sixth Circuit Court of Appeals found that a last chance agreement did not bar an employee’s claim of unlawful retaliation.
Hamilton worked for General Electronic Company (“GE”) in Louisville, Kentucky for more than 30 years. However, in 2004, the relationship between GE and Hamilton took a turn for the worse.
On June 18, 2004, Whitehouse, the Manager of Plant Relations, waited by the front gate of the plant looking for Hamilton. GE managers had been unable to find Hamilton when he was supposed to be working. After examining Hamilton’s time card, Whitehouse determined that Hamilton had been gone for more than 30 minutes. GE suspended Hamilton for a month.
When he returned to work, Hamilton asked his supervisor to honor his medical restrictions. His supervisor suddenly started yelling at him and called for the guards to remove Hamilton. GE alleged it terminated Hamilton because he was insubordinate and refused to follow the direction of his supervisor.
The union, Hamilton, and GE, signed a last chance agreement (“LCA”) on August 17, 2004. This LCA gave Hamilton his job back in exchange for his agreement that he would comply with all of GE’s rules. The LCA stated that if Hamilton violated any rules, he would be subject to immediate termination. Hamilton also agreed that if, in the future, GE terminated him for violating the LCA, any grievance filed protesting the discharge would not be subject to arbitration and that no legal action respecting the discharge would be filed. The LCA was to be in effect for two years.
For almost a year, Hamilton worked without a problem. On May 6, 2005, a supervisor, Bale, told Hamilton to take his lunch early and then to go work on the line. Hamilton felt that he was not required to comply with either of these orders, and asked to see a union steward.
According to Bale, he offered to go find a union representative but ordered Hamilton to work on the line in the interim. Hamilton continued to refuse to work and walked away from Bale, so Bale called the guards and had Hamilton removed from the plant.
When Hamilton returned to work the next Monday he learned that he had been terminated. The Union intervened again, and Hamilton was reinstated but given a 30-day suspension. While serving this suspension, Hamilton filed an age-discrimination charge against GE with the EEOC.
Hamilton alleged that after filing his EEOC complaint, his supervisors greatly intensified their scrutiny of his work and harassed him more than they ever had before.
On August 9, 2005, the line Hamilton was working on broke down, leaving Hamilton with no work. Hamilton went to the lunchroom to eat his lunch. According to Hamilton, after he had put his food in the microwave, supervisor Blair told him to move some skids. Hamilton says that he agreed to do the work, but that seconds later, Blair and Bale came back into the lunchroom and told him to gather his belongings and leave the plant immediately.
According to Bale and Blair, after the assembly line broke down, they found Hamilton in the lunchroom and asked him to move the skids. After a few minutes had passed, they returned to the lunchroom and found Hamilton still there, continuing to prepare his food. Both Bale and Blair stated that after Bale suspended Hamilton, and as they were escorting him out of the plant, Hamilton swore at them and threw his badge down rather than handing it to either man.
GE sent Hamilton a letter reading:
Your employment with GE is being terminated as a result of your unacceptable conduct and behavior in the workplace. Despite repeated verbal and written warnings, you have failed to abide by the Appliance Park Rules of Conduct and GE’s policies….Subsequent to the [LCA] you engaged in additional unacceptable conduct on more than one occasion. You refused specific work directions from your supervisor, and used unacceptable foul and abusive language.
Hamilton filed suit under Kentucky law, alleging retaliation for his filing an EEOC charge.
The district court concluded that the LCA did not bar Hamilton’s suit. However, the district court granted GE’s motion for summary judgment because it found that Hamilton could not establish a prima facie case of retaliation because he could not show that his EEOC complaint caused his termination. The district court also noted that even if Hamilton could establish a prima facie case, Hamilton could not show that GE’s proffered reason for firing him, ongoing behavior problems, was pretextual. Hamilton appealed.
On appeal, GE argued that by signing the LCA, Hamilton waived his right to proceed to court. A divided court of appeals disagreed.
It is the general rule in the Sixth Circuit that an employee may not prospectively waive his or her rights under Title VII. An employer cannot purchase a license to discriminate. An employment agreement that attempts to settle prospective claims of discrimination for job applicants or current employees may violate public policy.
In this case, Hamilton did not bring any Title VII claims, and instead sued under the Kentucky Civil Rights Act (“KCRA.”) The court found that the language of the KCRA generally tracks the language of Title VII and, thus, should be interpreted consonant with federal interpretation.
The Sixth Circuit has upheld the validity of pre-dispute mandatory arbitration agreements, including those which extend to agreements to arbitrate statutory employment discrimination claims. However, such pre-dispute arbitration agreements are enforceable only if they provide the employee with an effective substitute for the judicial forum to pursue his Title VII claims. The waiver in the LCA left Hamilton with no forum in which to pursue his retaliatory-discharge claims, and therefore was not a valid waiver under the Sixth Circuit precedent relating to waivers contained in arbitration agreements.
GE cited two cases which held that when an individual is faced with a known violation, he may waive his ability to pursue further legal action relating to that past violation. According to the court of appeals, neither case stood for the proposition that an employee can prospectively waive statutory claims relating to potential future violations. Hamilton signed the LCA nearly a year before he was terminated, and the LCA did not represent his choice to forego future remedies based on GE’s future statutory violations. The court of appeals majority concluded that the LCA did not bar Hamilton from pursuing his legal action.
The court went on to find that Hamilton contested the facts underlying his termination and alleged a question of material fact sufficient to defeat a motion for summary judgment.
Hamilton v. General Electric Company, ____ F.3d ____, 2009 WL 331260 (6th Cir. 2009).
