Arbitrator concludes past practice prevails over clear contract language

Arbitrator Christine D. Ver Ploeg has issued a decision involving the City Of Minnetonka, Mn. and Teamsters Local No. 320. The dispute arose from a claim for severance pay for grievant, who had voluntarily resigned his position as a police officer for the City. The relevant language of the agreement provided that a departing employee would be eligible for severance when, inter alia, “the employee is eligible, based on age and/or service requirements, for an annuity from the Public Employees Retirement Association”.

At the time of his separation from employment grievant was 46 years old and had 23 years of service. To be eligible for an annuity from PERA an officer must be at least 50 and have three years of service or meat the “Rule of 90”, i.e. a combination of age and service totaling 90. Grievant did not meet these requirements. The City denied grievant’s request for severance. The Union grieved, claiming the contract required grievant to meet only one of the conditions, relying on the contract language providing eligibility if an employee met "the age and/or service requirements…”

The City argued that the language was ambiguous and, in any event no City employee had ever been granted severance based on the Union’s interpretation of the language. 

Initially, the Arbitrator concluded that the contract language supported the union. She reasoned: The question is whether the phrase 'based on age and/or service requirements'can in any way be construed to mean ‘both.’ It cannot. For this language to mean ‘both,’ it would have been reasonable, easy and obvious for the parties to use the word ‘and’ rather than ‘and/or.’ On its face ‘or’ does not mean ‘both.’

The Arbitrator next turned to the City’s past practice argument. She noted that the City faced a significant challenge on this point; it sought to amend the clear and unambiguous language of the contract. She noted that the Employer’s burden was high, but not impossible. 

The evidence showed that the contract language in issue was copied verbatim from the City’s Personnel Policy and that there was no discussion during the negotiations concerning the terms or how the City applied them. Identical language was also contained in two other labor agreements the City had with different unions. The City presented evidence that for 18 years the eligibility language applied to virtually all employees, both union and non union, and that it had always required employees to meet both the age and service requirements to be eligible.

In response to the question of “whether the City’s evidence of a past practice is ...so compelling that it should overcome the clear and unambiguous language of Section 29.13,” the Arbitrator concluded that it was. She determined:

For at least 18 years all separating employees, including two bargaining unit members, have been required to meet both the age and service thresholds to be eligible for severance pay.
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This has apparently been such an accepted practice that until this grievance no employee-either union or non-union- has ever protested.

Another basis for finding that the Employer’s past practice prevails over contract language is found in the fact that the parties never actually negotiated the terms of Article 29, Severance Pay.


Based on this history the Arbitrator concluded that their intent was to maintain the status quo. 
Accordingly she concluded that despite what she considered the clear language of the contract the grievance would be denied.