Case Study 13-2. Discharge for Off-Duty Conduct
On March 4, 2011, Mr. Charles Lee was removed from the Postal Service. The Notice of Removal
stated:
“ You pled guilty to Count 1 of the information charging you with a violation of Title 18
USC § 371, Conspiracy to Commit an Offense or to Defraud the United States. ”
In an August 9, 2010 plea agreement that you signed, you engaged in a conspiracy to acquire
financing for two quadruplex homes located at 8416 and 8418 Camden Street, Miami, Florida. You
lacked the necessary financial assets to qualify for these loans. The elements of the conspiracy
follow:
“ You employed the service of Paldo Corporation to purchase the quadruplexes for
$100,000.00 each. You signed contracts agreeing to purchase the same
properties from Paldo for $169,000.00 each. As part of the conspiracy, false data were
provided to an appraiser to justify the inflated sales prices for the properties, and in
reliance of the fraudulent information, a lending institution extended loans in amounts
substantially in excess of the true values of these properties. In order to qualify for the
mortgage financing, you submitted two mortgage loan applications. In each application,
you falsely stated you had made a $19,000.00 down payment to Paldo Corporation. In
reality, you had agreed with Bert Muscat, Realtor, to accept a “rebate” on your down
payment in the amount of $19,000.00 from his commission. This was accomplished
through an exchange of checks. The purported down payment was thus a sham
transaction. The net effect of this scheme was that you were able to purchase this
property with “no money down” on your part. You received an additional $10,000.00
Book Title: Custom eTextbook: The Labor Relations Process Chapter 13. Labor Relations in the Public Sector Case Study 13-2. Discharge for Off-Duty Conduct
rebate after the closing, thereby reducing the actual purchase price of the properties. You
agreed with the loan broker and others not to disclose any of this rebate scheme to the
financial institution. In addition, you also failed to disclose on the loan application, two
other mortgage loans on which you were obligated. Your plea of guilty to Count 1 of the
information was accepted by the United States District Court for the Southern District of
Florida on September 21, 2010, and you were adjudged guilty. On December 3, 2010,
U.S. District Judge William S. Casta sentenced you to serve six months house arrest,
two years probation and ordered you to make restitution in the amount of$136,398.64 to
the lending institution you had defrauded. ”
Section 2635.101(a) of the Standards of Ethical Conduct for Employees of the Executive Branch
states, in pertinent part:
“ Public service is a public trust. Each employee has a responsibility to the United States
Government and its citizens to place loyalty to the Constitution, laws and ethical
principles above private gain. ”
Section 661.53 of the Employee and Labor Relations Manual states:
“ Unacceptable Conduct. No employee will engage in criminal, dishonest, notoriously
disgraceful or immoral conduct, or other conduct prejudicial to the Postal Service.
Conviction of a violation of any criminal statute may be grounds for disciplinary action by
the Postal Service, in addition to any other penalty by or pursuant to statute. ”
Your misconduct of conspiring to defraud the United States is in direct conflict with the basic
obligations of public service. As a postal employee, you hold a position that requires honesty and
trustworthiness.
You have the right to file a grievance within fourteen (14) days of your receipt of this notice of
removal.
On March 16, 2011, a step 1 meeting was held and the following written grievance was filed:
“ Background: On March 4, 2011, Mr. Lee received written notification that he would be
removed from the Postal Service for violation of the standards of ethical conduct and
unacceptable conduct. He pled guilty to violation of Title 18 U.S.C. 371, Conspiring to
Commit an Offense or Defraud the United States. Management’s Position: Mr. Lee was
removed from the Postal Service for his unacceptable conduct. He had an obligation as a
postal employee to demonstrate honesty and trustworthiness. He broke this trust when
he pled guilty to defrauding the United States. Union’s Position: Management did not
show just cause when it issued a notice of removal to Mr. Lee. Further, Management
currently employ another employee, Scotty Hall, a convicted felon and has not remove
him and other similar-situated employees. ”
The grievance was denied and was appealed. The step 2 grievance was completed by David
Tover, union steward, who stated:
“ Violation: Including but not limited to National (Art. & Sect.) 16.1, 16.6, 16.7, 19. Other
Grounds: ELM 661.53, previous arbitration cases. Facts and Union Contentions: Date,
Time & Location: 5 Feb. 94, GMF Miami, Fla. What Happened: Grievant was issued
Notice of Removal dated March 4, 2010. Reason for removal was cited as: you pled
guilty to Count 1 of the information, charging you with a violation of Title 18, U.S.C. &
371, Conspiracy to Commit an Offense or to Defraud the United States. Grievant and
Union contend that removal is without just cause. Corrective Action Requested: That
Grievant be returned to his job immediately and that he be made whole in all respects. ”
Mr. R. H. Gooche, Manager of Distribution Operations (MDO), Tour 3, provided management’s step
2 answer. He wrote:
On March 16, 2011, a Step 2 meeting was held to discuss the subject grievance.
Union Position: Union Contends:
1. The removal is without just cause.
2. Grievant did not knowingly commit a criminal offense.
3. Grievant was misled and he trusted other people, and therefore unwittingly became involved in a wrongful
act.
4. The Postal Service has not presented any nexus between the grievant’s workplace and the criminal
activity.
5. During the investigative interview, management stated that conviction of a felony is a removable offense.
However there is no provision to automatically remove an employee from the postal service based simply
on the fact that they have been convicted of a felony.
6. The Postal Service infers that being convicted of a criminal offense automatically means that an employee
is no longer loyal and trustworthy and destroys the faith and trust in him by the U.S. Postal Service and
public.
Management responded to each of the union’s contentions:
1. The grievant was removed from the Postal Service for his unacceptable conduct. He had an obligation as
a postal employee to demonstrate honesty and trustworthiness. He broke this trust when he pled guilty to
defrauding the United States.
2. The grievant voluntarily pled guilty. Case No. 93–234-CR-T-15 (A) Plea Agreement Page 6, Paragraph 5.
Second element for the crime: That the defendant willingly became a member of such conspiracy. Page 9,
paragraph 13 states that the grievant will plead guilty because he is in fact guilty of the charge contained
in Count One of the Information.
3. The grievant was part of a conspiracy to defraud financial institutions using the U.S. Mails. Appraisal on all
properties was inflated, which resulted in the subject receiving kickbacks from the original mortgage
company holding the mortgage. The grievant was involved in a wrongful act for three years. It is
reasonable to believe that the grievant had enough knowledge of the conspiracy to know what he was
doing was illegal.
4. The grievant and two others conspired in a scheme to defraud financial institutions using the U.S. Mails.
5. The grievant conspired in a scheme to defraud financial institutions using the U.S. Mails. By doing so he
violated his obligation as a Postal Employee to demonstrate honesty and trustworthiness. However he
was not automatically removed. An investigation into the grievant’s conduct was conducted. An
investigative interview was held by the grievant’s supervisor, William Smith, resulting in the grievant being
placed in an off-duty status. The grievant was removed from the Postal Service on March 4, 2011. All
actions taken were after a complete investigation, hardly an automatic removal.
6. The grievant was found guilty of a crime for which a sentence of imprisonment can be imposed. The
grievant pled guilty to Conspiracy to Defraud the United States. A complete investigation of all facts was
conducted; the facts of this case bring into question the loyalty and trustworthiness of the grievant. The
grievant conspired to defraud financial institutions using the U.S. Mails, compromising the faith and trust
in him by the Postal Service.
Based on the facts the grievant was properly removed from the Postal Service.
The grievance is denied.
The grievance was appealed to arbitration.
Issue
Was the removal of Charles Lee for just cause?
If not, what shall be the proper remedy?
Article 16
Relevant Provisions of the Employee and Labor Relations Manual
661.11 This Code of Ethical Conduct is designed to instruct and guide employees entering the
Postal Service, and to remind all employees of the conduct expected and required of them in
performing their official duties and in their general conduct.
661.3 Standards of Conduct
Employees must avoid any action, whether or not specifically prohibited by this Code, which might
result in or create the appearance of:
Using Postal Service office for private gain.
Giving preferential treatment to any person.
Impeding Postal Service efficiency or economy.
Losing complete independence or impartiality.
Making a Postal Service decision outside official channels.
Affecting adversely the confidence of the public in the integrity of the Postal Service.
Unacceptable Conduct. No employee will engage in criminal, dishonest, notoriously disgraceful or
immoral conduct, or other conduct prejudicial to the Postal Service. Conviction of a violation of any
criminal statute may be grounds for disciplinary action by the Postal Service, in addition to any
other penalty by or pursuant to statute.
Positions of the Parties
Management:
Management stated that it is a fact that Mr. Lee pled guilty to “conspiracy to defraud the United
States” and therefore the Postal Service does not have to prove that he was guilty. Management
claimed that Mr. Lee violated that standard of ethical conduct, that the Postal Service and the
public had lost trust in Mr. Lee as a postal employee, and he was not loyal to the Constitution and
the laws of the United States. Therefore, his actions were in violation of several provisions of the
Employee and Labor Relations Manual, and there was an obvious “nexus” between his crime and
his employment.
Management argued that the burden is on the union to prove that there was disparate treatment of
Mr. Lee. There was no disparate treatment of Mr. Lee because Ms. Edwards, the other postal
employee named by the union as a comparison, was not “similarly situated,” was not in the same
department, was not in the bargaining unit, did not plead guilty, and was not found guilty. In the
other comparison case, the union failed in its effort to show disparate treatment by addressing
Scotty Hall’s employment because his case was a hiring decision, not a removal decision.
Moreover, Mr. Hall’s civil rights had been restored prior to the date of his employment by the Postal
Service.
Mr. Lee was afforded the same opportunity as other employees who were judged guilty, that is,
either to resign or to be removed. Mr. Lee chose not to resign; therefore, he was removed from the
Postal Service. Management argued that even though the investigation mentioned that Mr. Lee
was involved in a conspiracy to defraud the financial institution using the U.S. Mails as a reason for
his removal, the union is not justified in using this information to support its claim.
Management explained that it considered the investigation, the plea of guilty, and the seriousness
of the crime. Management conducted its own investigation and gave Mr. Lee an opportunity to
present his side of the case. After its investigation, management found no merit to Mr. Lee’s
explanation and concluded that the removal was justified.
Management argued that the postal employees knew that Mr. Lee had been convicted of a crime.
Management stated: “… our employees knew. It doesn’t take a ‘rocket scientist’ to figure it out.
Everyone was aware.” Management submitted a decision by an appeals referee of the Florida
Department of Labor and Employment Security concerning Mr. Lee’s claim for unemployment
compensation. Management noted the following excerpt:
“ Consideration was given to the claimant’s contention that he was treated more harshly
than other postal employees who were involved in the same criminal activity. In support
of that position, the claimant provided information that another postal employee was not
disciplined. Further information provided by the claimant including that adjudication was
withheld by the court on the other employee. Since the legal disposition was different in
that case, the employer’s failure to discipline with the same degree of severity is not
viewed as disparate treatment. The claimant’s contention is rejected. At the hearing, the
parties agreed that there is a possibility that the claimant will be reinstated in his job. The
notice of removal, however, specifically terminated the claimant from his position and is
viewed as a discharge. The discharge was for misconduct connected with the work and
the claimant was properly disqualified from receiving benefits. ”
The Postal Service stated that postal employees must be honest and reliable and have good
character. Mr. Lee’s actions were willful and deliberate and were against the interests of the U.S.
government of which the Postal Service is a part. Guidelines for Postal employees are published in
the Employee and Labor Relations Manual to guide employee behavior.
Management responded to the union’s claim that Mr. Lee was an “ideal,” “long-term” employee with
no record of discipline. Management questioned this claim because no evidence was presented.
Mr. Lee was a “good employee” and the decision to remove Mr. Lee was “difficult.” However,
management felt “compelled to take removal action.” His actions were no different from theft, and
Mr. Lee had stolen money from the same institution that employed him. Management then asked:
“If he will steal, how can we trust him? He will have many opportunities to steal.”
Management objected to the introduction, any consideration, and any comparison to Ms. Edwards’
employment. The union did not mention any comparison between Mr. Lee and Ms. Edwards in the
processing of Mr. Lee’s grievance. Therefore, the union was estopped from arguing any
comparison at the hearing when disparate treatment had not been mentioned earlier.
Management concluded that a finding that Mr. Lee was removed from the Postal Service for just
cause and that his grievance should be denied.
The Union
The union argued that the Postal Service made its decision to remove Mr. Lee solely on the basis
of his conviction. The union claimed that the Postal Service failed to establish any connection
(nexus) between the crime and Mr. Lee’s ability to perform as a productive employee. The Postal
Service must show a nexus between the crime and the efficiency of the Postal Service and how the
Postal Service was adversely affected, and management failed to do so. The Postal Service
claimed that the public trust was broken, but there was no evidence that anyone in the public knew
of Mr. Lee’s conviction. In fact, there was no evidence that any other employees complained about
working with Mr. Lee.
The union presented numerous arbitration decisions to show that a postal employee may not be
removed from employment based solely on the commitment of a crime. The first arbitrator wrote:
“As many arbitrators have recognized, the Postal Service, among other things, must establish a
nexus between the employees conduct and the employment relationship. It must seek to
determine, for example, whether the occurrences of the off-duty misconduct has destroyed the
basis for continued employment because of adverse impacts on the efficiency, operations, property
or personnel of the Postal Service. To put it another way, the Postal Service must show some harm
to it, to the public, or to fellow employees if the employee continues his employment.”
In a second arbitration case, the grievant was charged with murder and later found guilty of first
degree manslaughter. The grievant shot his wife in the head with a 32-caliber pistol. The arbitrator
wrote in his decision that, “The Grievant’s conviction of first degree manslaughter, his sentencing
and his subsequent placement on probation did not involve an on-the-job action. Neither did it
involve a job related matter with an adverse impact on employee or public relations, efficiency, etc.,
or pose a threat to Postal operations, property or personnel.”
In a third case, the grievant was charged with aggravated sexual assault and criminal sexual
conduct. The grievant pled guilty to one count of criminal sexual conduct. The arbitrator interpreted
the CSRA, 5 U.S.C. 2302(b)(10), as prohibiting the termination of a Postal Service employee for
off-duty misconduct absent a showing that such conduct would affect the efficiency of the service.
The Court held that this requirement of a nexus cannot be satisfied by “unsupported general
assertions” or internal regulations prohibiting certain kinds of “immoral” or “disgraceful” conduct
period.” The arbitrator wrote: “The Court read the CSRA as an expression of congressional intent
with respect to termination for off-duty misconduct. Clearly, an arbitrator operating under a just
cause standard in a Postal Service contract should give great weight to such clearly expressed
Congressional intent.”
In the fourth case, the grievant was charged with knowingly receiving child pornography through
the mails, a violation of 18 U.S.C. 2252(a)(2). The grievant was found guilty of knowingly receiving
child pornography through the mails and was sentenced to a ten year suspended sentence, five-
year probation, and a fine of $50. The arbitrator wrote: “Under this contract, employees may only
be discharged or disciplined for just cause. Arbitrators and courts have interpreted this requirement
and similar statutory standards, as prohibiting the discharge of a Postal Service employee for off
duty, off-premises, misconduct unrelated to the employee’s job. In such cases, the Postal Service
must show that the retention of the employee will have some adverse impact on the employee
relationship. This principle has often been interpreted as requiring a showing of a nexus between
the off-duty misconduct and the ability of the employee to function in his job.”
In a fifth case, the arbitrator wrote: “Ms. Nichole’s conviction on charges associated with her
fraudulent application for housing subsidy funds is unrelated to her employment. Her conduct was
not prejudicial to the Postal Service. (661.53 E&LM). There is no showing of an adverse impact on
the employer or its employees. For these reasons this removal is not for just cause.”
In a sixth case, the arbitrator wrote in his opinion: “The weight of arbitral authority requires that a
nexus be shown before an employee may be discharged for off-duty, off-premises misconduct.”
See, for example, Elkouri and Elkouri, How Arbitration Works, Seventh Edition, page 15–11 and
cases cited.
The union argued that Mr. Lee was an excellent employee for 13 years with the Postal Service.
During these 13 years, Mr. Lee had no discipline issues and continued to perform effectively for
several months even after his conviction. Since the Postal Service was not adversely affected
during this time, the return of Mr. Lee to his former job had not and would not adversely affect the
performance and efficiency of the Postal Service. Management claimed that its trust of Mr. Lee was
broken, but offered no evidence.
The union claimed that the Postal Service failed to take any action against another employee who
was charged with the same crime and who continues to be employed as a postal employee. Other
employees who were involved in the “scheme” were offered to resign or told they would be fired.
However, no evidence was presented.
(1)
(2)
In regard to the charge and conviction, the union contended that the management incorrectly used
the postal inspector’s memos wherein Management indicated that Mr. Lee had conspired to
“defraud financial institutions using the U.S. Mails.” The fact is Mr. Lee was not charged with
misuse of the U.S. Mails. The Postal Service falsely charged him and this charge contaminated the
cause for removal.
The union addressed two arguments made by management:
unemployment compensation claim and
knowledge about continued employment of Ms. Edwards.
First, the unemployment compensation decision referred to “misconduct connected with work,” and
the arbitrator is not bound by this decision. Unemployment compensation is another forum with
different rules. Second, the union did not find out that Ms. Edwards’s employment had been
continued even though she was involved in the same financial scheme as Mr. Lee and that she had
been charged with the same crime until after Mr. Lee had filed an EEO claim, just before the date
of the arbitration hearing. During the processing of this EEO claim, the grievant and the union were
made aware of the fact that Ms. Edwards remained on the payrolls as a postal employee.
The union contended that the burden of proof rests with the Postal Service and it has failed to
prove just cause for the removal of Mr. Lee. As a result, the union requested that Mr. Lee be
returned to his former position, that his back pay and benefits including overtime and interest be
restored, and that all references to this removal be expunged.
Questions
1. What are the rules for discharge for off-duty conduct?
2. Explain the term nexus as used in labor arbitration.
3. Does equal treatment have any bearing on the outcome of this decision?
4. What is the rule concerning use of the employer’s submission of the unemployment
compensation claim in the labor arbitration proceedings?
5. How much weight should be given to Mr. Lee’s job performance after his conviction but before
his termination?
6. Should the arbitrator consider the union’s submission of evidence of the continued
employment of Ms. Edwards and Mr. Hall? Give your reasoning.
7. How much weight should be given to previous arbitrators’ decisions? Explain.
8. What will the arbitrator decide? Why?
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