Recent Appellate Court Case Has Lessons for Public Employers

In Village of Posen, Illinois v. Illinois Fraternal Order of Police Labor Council, No. 1-13-3329 (Aug. 11, 2014), the Illinois Appellate Court, First District upheld an arbitration award finding that a police officer was not discharged for just cause because he accepted both regular salary payments under the Public Employee Disability Act (PEDA), 5 ILCS/0.01, et seq., and workers’ compensation payments for the same time periods.  The decision is notable for a number of reasons.

First, it alerts public employers to the need for monitoring of PEDA and workers’ compensation payments to insure compliance with law.  The statute provides that, while a police officer or firefighter is receiving PEDA payments, workers’ compensation payments during that time revert to the public employer.  The employer in this case apparently did not have in place an adequate procedure for insuring compliance with that statutory directive.

Second, the decision underscores the need for a good pre-disciplinary investigation.  In this case, the officer was charged with theft of public funds but was not interviewed to give his side of the story.  Although the decision of the arbitrator and the courts did not turn on this point, this failure caused the arbitrator to rule that the Village had denied the officer the right to a pretermination hearing under the Supreme Court’s decision in Cleveland Board of Education v. Loudermill, 470 U.S. 532 (1985).

Third, the decision suggests that, in selecting an arbitrator for a discipline case, it is important to determine, if possible, the standard that the employer must meet in order to uphold the disciplinary action.  In this case, the arbitrator ruled that, because the Village based its decision on conduct that was criminal in nature, “more than a mere preponderance” of evidence was needed to sustain the discharge.  The Appellate Court found that the collective bargaining agreement was silent on the standard to be used in such a case but that the parties, in agreeing for such disputes to be heard by an arbitrator, impliedly agreed that the arbitrator had the power to determine the standard for just cause in any given case.  

Fourth, the case is a reminder that, if the employer is going to discharge an employee for theft, it had better be prepared to prove that the employee’s actions were theft and not mistake or miscommunication.  The arbitrator in this instance held that the employer did not prove that the employee intentionally took money from the employer that did not belong to him, with no intent to reimburse or repay the employer.

Fifth, the decision demonstrates the consequences of failing to ask for alternative relief in arbitration.  The Village did not ask for a setoff against back pay of the workers’ compensation payments that were made to the officer instead of to the Village, the arbitrator did not award a setoff, and the court refused to remand the case back to the arbitrator to determine whether a setoff was appropriate.  As a result, the Village was deprived of the opportunity to secure a return to it of the money that belonged to it by statute.  The lesson is clear, therefore, that, even if the public employer thinks it has a strong case, it is important to hedge against a loss by asking for alternative relief.