Award set aside because arbitrator ignored stipulated issue

A California Court of Appeals has refused to enforce an arbitration award granting back pay for “out of class” work to employees of the Victim’s Compensation and Government Claims Board (VCGCB). Department of Personnel Administration v. SEIU Local 1000. SEIU Local 100 filed a grievance on behalf of the VCGCB employees, claiming they were working “out of class” and were entitled to differential pay. While the employees were subsequently reclassified to the higher classification, the Union went to arbitration on the claim for back pay.

The cba addressed claims both that employees were working out of their classification and claims that they had been misallocated to the wrong classification, but a grievance could claim only one of these issues.

At the arbitration the parties stipulated the issue to be whether the subsequently reclassified employees “work[ed] out of class…”. During the course of the arbitration, however, the Union asserted that the issue was one of misallocation. The arbitrator noted that the original grievance sought reclassification and that “[o]n its face, the stipulated issue may reasonably be subject to dispute” He concluded that “considered in context” the issue presented was one of reclassification. On the merits the arbitrator found that the employees had not been working out of class as that term was defined in the contract, but that the employees had been performing the work of the higher classification and that reallocation was appropriate. He awarded back pay for the period prior to the reclassification.

The employer sought to set aside the award, contending that the arbitrator exceeded his authority by deciding an issue not before him (i.e. the reclassification issue) and awarding back pay when the contract permitted back pay only in working out of class cases. The trial court agreed, and vacated the award. The Court of Appeals affirmed the lower court’s decision, agreeing that the arbitrator exceeded his powers by deciding an issue not before him.

Like the lower court the Court of Appeals found no ambiguity in the stipulated issue. In affirming the decision to vacate the court observed:

The parties agreed to arbitrate the issue of whether the [employees] had been working out of class within the meaning of [the agreement]. The arbitrator based his ruling on whether the [employees] had been reallocated. In doing so, the arbitrator exceeded his delegated powers. The trial court properly vacated the arbitrator’s award on that basis.