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What is an employer to do with a problem employee? Other than outright termination, a new trend has been to negotiate last chance agreements, which are essentially contractual understandings where the employee is given one last chance to retain his employment in exchange for what may turn out to be, as one arbitrator recently put it, draconian obligations of strict attendance and impeccable conduct. Although LCAs are commonly used to quell a union’s threat of a grievance while still offering the employer a modicum of protection, their use may deprive employees of a number of statutory protections and may result in being more of a problem than a solution for either party. The legitimacy of LCAs as a measure of compromise between employers and employees has been acknowledged and accepted by the New Jersey Supreme Court as recently as February of this year. See Watson v. City of East Orange, 175 N.J. 442 (2003). In a typical LCA, the employer defines the parameters of what constitutes a violation of the agreement and will hold the worker’s feet to the fire if there is any variation whatsoever in the employee’s conduct from the contract terms. In Buchanan v. Department of Energy, 247 F.3d 1333 (5th Cir. 2001), a company even invoked a military term to place the employee on notice that any infraction will result in the employee being “AWOL,” resulting in his termination: Any nonemergency absence that is not prescheduled or pre-approved will result in AWOL. No AWOL will be approved during the term of this agreement. . . . Appellant shall work the same full 8-hour tour of duty each day beginning between 7:45 a.m. � 8:15 a.m., with a 45 minute lunch, leaving between 4:30 p.m. � 5:00 p.m. Any variations in this schedule shall conform to BPA core hour requirements and shall be approved in advance by appellant’s supervisor. Any failure to be on duty during scheduled duty hours . . . will result in the appellant being AWOL. Although it is arguable that a zero tolerance policy may befit an employee who is a constant problem or who persistently presents a danger to other employees or company property, what are the rights of employees if the conduct is not voluntary? For instance, what if the employee is habitually late due to a disability or absent because he is the victim of an accident that is not his fault? Involuntary Conduct As states such as New Jersey continue to recognize human conditions such as alcohol and drug dependency as legitimate disabilities protected by anti-discrimination laws, issues dealing with an employee’s compliance under LCAs may not be so straightforward. Thus, when the worker’s absence may be a symptom of a disability covered by the New Jersey Law Against Discrimination or the Americans With Disabilities Act, how can a company enforce an LCA agreement without infringing on such well-guarded rights? (Especially when, in most instances, last chance means what it says: one violation and you are out.) Take, for example, New Jersey’s Family Leave Act or the federal Family and Medical Leave Act. Is the employee simply out of luck if one of his family members becomes seriously ill, or, under the federal act, if he himself has a serious health condition? Since many of these agreements are not only inflexible, but contain arbitration clauses that simply empower an arbitrator to interpret the plain terms of the agreement, an employee’s access to these statutory rights may be totally foreclosed. See Vanessa Payne, “Work Law: Beware of Last Chance Agreements,” (CALM, March 2001) � http://www.local72m.com/Docs/Articles/LastChance.html. Clearly, the theory behind a statute like the FMLA is to allow the worker to balance family and work needs. To accomplish this purpose, the act presupposes a need for flexibility to deal with family and medical problems as they arise. See Mora v. Chem-Tronics, Inc., 16 F. Supp. 2d 1192 (S.D. Cal. 1998). However, where the employer seeks to impose such strict requirements on an employee, thereby essentially dispelling any flexibility, it could be argued that a valid LCA must defer to these codified public policies, or by its very terms be deemed unenforceable. Many courts that have already addressed this conflict have decided that adherence to the strict language contained in LCAs may create an illegal restraint on the FMLA, and have suggested that terminations on the basis of absenteeism will be barred where all FMLA requirements have been met. In Bond v. Abbott Laboratories, 7 F. Supp. 2d 967 (N.D. Ohio 1998), the court suggested that LCAs must defer to the FMLA, but did not reach the question because the injury was not serious. And in Eldridge v. Northrop Grumman Corp., 81 F. Supp. 2d 600 (D. Maryland 1999), the court questioned the validity of the LCA, but did not reach the question of enforceability because the employee did not work 1,250 hours for the year. Similarly under the LAD, employees are entitled to rely on the employer’s obligation to provide a “reasonable accommodation” for a physical or mental condition that meets the statutory definition of a handicap. See Soules v. Mount Holiness Memorial Park, 354 N.J. Super. 569 (App. Div. 2002). However, if the LCA provides no room for diversion from its strict contract terms, there is little question that an employee’s rights under the LAD have been seriously compromised. So, what is an employee to do if he is fired for violation of an LCA that fails to take into account his rights under such statutes as the LAD or the FMLA? Although such agreements routinely provide for arbitration of disputes, which is usually the case for union employees, a plaintiff’s attorney should argue that where rights under statutes such as the FMLA or the LAD have not been considered by the arbitrator, there has been no waiver of statutorily protected rights, and any decision in favor of the employer is void. See Wright v. Universal Maritime Serv. Corp., 525 U.S. 70 (1998), and Alexander v. Gardner Denver Co., 415 U.S. 36 (1974). In circumstances where the employee’s absence from work may not fall directly within the protections afforded by antidiscrimination or family leave laws, a public policy claim under Pierce vs. Ortho Pharmaceutical Corp., 84 N.J. 58 (1980), may also provide a basis (in New Jersey) for challenging the validity of an LCA. Since the PierceCourt mandated that “an employee has a cause of action for wrongful discharge when the discharge is contrary to a clear mandate of public policy,” a company’s expectation that an employee virtually guarantee his own health and the well being of his family should easily afford a basis to argue a violation of public policy if a client finds himself without a job. Recognize the Risk However, LCAs also have pitfalls for employers who believe that these agreements, which finally allow them to get rid of troublesome employees, provide little risk. For example, if a company chooses to provide one employee with an LCA but not another, it may run the risk of claims of disparate treatment or failure to accommodate in showing a tolerance for certain medical conditions, such as alcoholism, but not others, such as obsessive-compulsive disorder. This is in spite of the employer’s defense that it was “doing the right thing” by providing an LCA itself as the accommodation, since it permitted the employee “one last chance” prior to the company incurring an “undue hardship.” Ottowa-Carleton Public Employee’s Union v. Ottawa-Carleton,(Regional Municipality) (Canada June 2, 2000), cited in “Emerging Issues in Attendance Management,” (FOCUS, January, 2001) � http://www.emond-harnden.com/jan01/attendance.html. On the other hand, if the company opts for a policy of offering a majority of its problem employees a last chance, this may establish an unwritten policy by the employer, causing disgruntled employees to claim an implied contract, much the same as they would where a progressive discipline procedure is firmly entrenched over years of usage. Thus, while LCAs may save an employee his job, both plaintiff and defense attorneys should be forewarned of the potential for litigation unless the agreement is clear, unambiguous and provides for the type of unforeseen circumstances inherent in our daily lives. Employees should be cautioned not to sign such agreements unless there are specific exemptions for family leave and medical conditions that may develop, and for those situations that are truly involuntary and that make it impossible for the employee to meet the company’s expectations. Likewise, employers should be aware that even though an employee may sign an agreement that would seem to foreclose any excuses for their deficient performance, an LCA may be deemed void if it fails to contain a knowing and voluntary waiver of statutory rights. Resnick is a partner and Rachiele is an associate at Deutsch Resnick of Hackensack.

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