1998 NAC 109 Coos-Curry Electric Cooperative and IBEW Local 659

Title: Coos-Curry Electric Cooperative and IBEW Local 659
Date: November, 1998
Arbitrator: Jack H. Calhoun
Citation: 1998 NAC 109

IN THE MATTER OF THE GRIEVANCE

ARBITRATION BETWEEN:

INTERNATIONAL BROTHERHOOD OF )

ELECTRICAL WORKERS, LOCAL 659, )

) OPINION

and ) AND

) AWARD

COOS-CURRY ELECTRIC COOPERATIVE, INC. )

BEFORE

JACK H. CALHOUN

ARBITRATOR

HEARING HELD

JUNE 5, 1998

PORT ORFORD, OREGON

______________________________________________________________________________

REPRESENTATION

FOR THE UNION: FOR THE EMPLOYER:

Ronald Jones James K. Arntz

Business Manager Assistant General Manager

I.B.E.W. Local #659 Coos-Curry Electric Cooperative, Inc.

The union and the employer are parties to a collective bargaining agreement that provides employees may not be discharged without cause. The grievant, Ken Kaiser, was terminated in January of 1998 for violating the employer’s policy against reporting to work under the influence of liquor. The matter was aggrieved and went to arbitration. The arbitration award, issued July 30, 1998, sustained the grievance and reinstated grievant to his former position with full back pay, minus interim earnings, seniority, and all other rights and benefits he would have been entitled to had he not been discharged. The arbitrator retained jurisdiction for sixty days to resolve disputes over the remedy ordered. The parties subsequently asked the arbitrator to retain jurisdiction for the purpose of resolving two specific issues. Written arguments were filed by the parties, the last of which was received October 14, 1998

The following issues were agreed to by the parties: (1) Whether the employer should reimburse the grievant for penalty and taxes he incurred for the early withdrawal of his retirement monies. (2) Whether the employer should reimburse the grievant for living and travel expenses he incurred while working at another job.

The union contends that payment of expenses incurred by the grievant during the time he worked away from home after he was discharged by the employer is proper because he would not have incurred the expenses otherwise. What the grievant earned as wages during the time he was not working for the employer up to his reinstatement was deducted from his back pay; therefore, the expenses he incurred in making the wages should be paid by the employer.

The expenses the grievant incurred were reasonable. He shared a motel room and should be reimbursed for his part thereof. His meal costs and travel from home to the construction work site on weekends should be reimbursed.

The union also contends the employer should be required to pay all penalties and taxes the grievant incurred when he made an early withdrawal of his pension monies. He was required to move the money within six months after he was terminated. Although he had other options, the grievant chose to withdraw all his pension funds to protect his immediate interests and pay off debts. Further, his new job rendered an income that was varied and required that he travel. Had he not been terminated, his use of his pension money would not have been necessary.

The employer contends that it should not be required to reimburse the grievant for the taxes and early withdrawal penalty he incurred as a result of taking a lump sum distribution from the retirement plan. He had two other options that he could have elected: (1) leave the money in the plan and receive annuity payments immediately on a deferred bases, or (2) rollover the lump sum to a qualified plan where there would have been no tax liability.

As a standard practice, a company is not responsible for the income tax consequences of decisions made by employees on the distribution of pension funds. The grievant was not forced by the company to take a distribution resulting in tax liabilities. Other options were available. The grievant could have taken the company offer that would have allowed reinstatement in the plan and reversed the effects of the lump sum distribution and its tax liability.

The employer also maintains it should not be required to reimburse the grievant for mileage, meals, and lodging expenses while he worked during the time he was not with the employer. Traditionally, employees are responsible for such expenses, with some exceptions. Construction contractors have reimbursed employees for extra expenses they incur while working on the road. In calculating the offset to back pay, the contractor’s per diem was excluded, thereby allowing the grievant reimbursement for the extra amount of expense he incurred. The grievant has already been paid for expenses in excess of normal living expenses.

As to the question of whether the grievant is entitled to reimbursement for the job-related expenses he incurred while working away from his home base location, it is a well-settled principle in arbitration remedies that such necessary expenses be allowed. The remedy ordered in the July 30, 1998 award was a make whole remedy. The grievant was to be placed in the position he would have been, with respect to job, seniority, benefits and pay, but for the wrongful act of the employer. The expenses claimed by the grievant are reasonable and were necessary for him to fulfill his obligation to mitigate damages by pursuing employment. Had he not done so, he could have been denied back pay.

The question of reimbursement for penalties and taxes the grievant suffered when he made an early withdrawal of his retirement money is distinguishable from the necessary expense he incurred in maintaining employment during the time he was not in the employer’s work force. He clearly had a choice, as the employer argues. Nothing in the employer’s termination of the grievant required him to take the option he took. Unlike job-related expenses, which were necessary because he was obligated to seek and maintain employment in mitigation of damages, penalties and taxes suffered because of his early withdrawal of his pension funds were not of the employer’s doing, and they were incurred because he made a decision that he did not have to make. He was under no obligation to make an early withdrawal of the retirement funds. He was indeed under a stringent obligation to seek and maintain employment.

With respect to the two remedial issues that the parties agreed the arbitrator was empowered to decide, the following is awarded. With this award, the arbitrator’s jurisdiction in this matter is ended.

The employer is ordered to reimburse the grievant for all travel, meals, and lodging expenses he incurred while working away from his home during the time he was not employed by the employer.

The grievant is not to be reimbursed by the employer for penalties and taxes he incurred when he made the early withdrawal of his retirement funds.