A New York City employee who was convicted of larceny deserves a harsher penalty than he got from an arbitrator, who gave him his job back with retroactive pay and seniority with only minor restrictions, a divided state appeals panel has ruled.

The 3-2 decision from the Appellate Division, First Department, in Social Service Employees Union v. City of New York, 111219/11, handed down Tuesday, was the second time the court remanded the case after finding the arbitrator too lenient. This time, it ordered a new proceeding before a different arbitrator.