CHAPTER 8: EXTRA CASES
Vacation Pay
Facts:
The company and the union had a collective bargaining agreement in effect from November 2,
1973, to October 31, 1976. No agreement for a new contract was reached by the October 31, 1976
expiration date, and the employees went on strike. The strike lasted until July 11, 1979—two
years and eight months.
In June of 1977, the union asked for accrued vacation pay for the 10-month period before
the strike (January 1976 through October 1976) for all eligible employees. The company refused,
stating that under its interpretation of the contract, no vacation pay was yet due. The contract
provisions in question are as follows:
Section VII. Vacations
A. Eligibility—To be eligible for a vacation in any calendar year during the
term of this Agreement, the employee must have one year or more of
continuous service.
B. Length of Vacation and Extra Vacation Pay—An eligible employee who
has attained the years of continuous service indicated in the following
C. Vacation Pay—An employee granted a vacation will receive, for each
vacation week, two percent (2%) of his earnings from January 1 to
December 31 of the year previous.
D. Vacation Allowance in Lieu of Vacation—While it is recognized that the
The union charged that the company committed an unfair labor practice by withholding
the vacation pay, and the NLRB agreed. The company appealed.
In defending its position, the NLRB relied on court-tested standards for determining an
unfair labor practice when an employer discourages union membership by means of
discrimination.
If the conduct complained of could naturally and foreseeably have an adverse effect on
employee rights, then the conduct is “inherently destructive.” In such cases, there is no need to
find actual antiunion motivation, and showing a legitimate business purpose will not relieve the
destructive” of important employee rights.
The NLRB further contended that the company’s interpretation of the contract was
incorrect, and therefore there was not legitimate or a substantial business reason for its conduct.
Because the conduct was “inherently destructive,” however, neither the lack of antiunion
sentiment nor a legitimate business purpose was relevant.
The company’s position included the following points:
2. The Board overstepped its role by disagreeing and substituting its own
3. In the past, vacation rights were not determined by expired contracts but by the
contract in effect at the time of payment.
5. Payment of benefits was contingent upon reaching an agreement on the contract
not on the employees’ return to work.
Decision:
The court found in the company’s favor. Because the withholding of vacation pay affected all
workers, strikers and nonstrikers alike, and because ending the strike in the absence of an
Questions for Discussion
1. Did the company’s action of withholding vacation pay illegally affect the employees’
right to collectively bargain? Explain your answer.
2. Would you have reached a different decision if nonstriking employees had received
vacation benefits? Explain your answer.
3. If you were the union, how might you propose changing the eligibility clause to avoid
future problems?
4. Should striking employees be paid for accrued vacation time?
Serious Distress Pay
Facts:
The grievant and his wife were both employed. They were the parents of a three-year-old child.
On a Saturday evening, the child became ill with a high fever. On Monday morning, the fever had
not subsided, and the mother stayed home from work and took the child to the doctor, who
diagnosed the illness as an upper respiratory infection. He suggested that the child be kept at
home and be given bed rest, cool sponge baths, and acetaminophen to reduce the fever. The
mother decided to stay home from work again Tuesday and Wednesday because the fever had not
subsided. At the conclusion of the workday on Wednesday, the child’s parents conferred, and the
child’s father informed his supervisor that he would stay home from work on Thursday and
probably Friday to care for his son. The grievant requested that his leave be classified under the
“serious distress” provision of the contract. Serious distress was defined in the contract as “a
serious condition which requires the personal attention or presence of the employee at a time over
which the employee has no control and which cannot appropriately be served by others, or
attended to by the employee at any other time when the employee is off duty.”
The supervisor informed the grievant that he did not consider it a serious distress
situation, but the grievant remained at home on Thursday and Friday anyway. The child’s fever
did not break until Saturday evening, and by Monday he was well. In defending the grievant’s
request for serious distress pay, the union argued that the situation met the requirements of the
contract. The child’s illness required the personal attention and presence of his father at a time
over which he had no control and which could not appropriately be served by others. The union
felt that had the grievant been the mother and not the father, the company would have routinely
paid the claim. The company argued that an emergency situation has to be demonstrated to
invoke the serious distress pay provision of the contract. Because the child had been ill since
Saturday, and the father was not needed until Thursday and Friday, he had adequate time to
arrange for someone else to care for the child. Therefore, although the father’s presence was
preferable, it was not required as the term requirement relates to the serious distress pay
provision. It was also the company’s position that it is up to the claimant to establish entitlement
to a special benefit such as that provided by the “serious distress” provision of the contract.
Decision:
The arbitrator noted that, although the child’s usual babysitters were not available the week of his
illness, it was not impossible for the parents to decide to use a professional nurse, and such
services were available. The arbitrator found in this case that the grievant had not established his
entitlement in that the child’s illness was not a sudden emergency situation but one for which the
parents could have made alternative arrangements, had they so desired. Although it was in their
power to determine the type of care the child should receive, it was the company’s decision on
whether the situation warranted serious distress pay.1
Questions for Discussion
1. Do you think the company would have paid the serious distress pay if the employee had
been a woman instead of a man?
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2. Do you agree with the arbitrator?
Company Discounts
Facts:
Employees of a petroleum company had been given discounts on the company’s products for
more than 30 years. This benefit had been characterized as a “gift” or a “gratuity” in the
employee handbook. In 1966, the collective bargaining agreement between the company and the
employees excluded “company gratuities” from the scope of the agreement and from collective
bargaining negotiations. After the contract was signed, the company announced it was
discontinuing the employee discount program. The union objected and filed a grievance.
The union argued that the discounts were a form of additional earnings, and like wages,
could not be changed without bargaining. The company insisted that the discounts were
gratuities, as previously stated, and that under the contract, they were not subject to negotiations.
The company further argued that the union had accepted the characterization of discounts as
gratuities in the past and therefore, the union couldn’t change their minds now and say the
discounts were wages. Moreover in 1949, the company reduced the discount from 20 percent to
10 percent and the union did not complain or even raise the issue.
Decision:
The arbitrator ruled in the union’s favor. He disagreed that the failure of the union to complain in
the past when the discount was reduced prejudiced the union’s complaint now, because the
reduction from 20 percent to 10 percent brought the company in line with what other companies
in the area gave their employees. The arbitrator felt that over the 20 years during which both the
gratuity was offered and the union had represented the employees, the discount had become an
employee benefit and as such the company could not eliminate it without negotiating.2
Questions for Discussion
1. If this discount were not a “gratuity” outside the scope of the contract, what kind of
things would be?
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2. If the company had not eliminated the discounts but reduced it to 1 percent, would the
decision be the same even if other companies gave only a 1 percent discount?
Vacation
Facts:
When Stan Cooper quit his job at the end of January of a recent year, the personnel manager saw
to it that his final check included all pay and allowances due as of his last day of work.
Management assumed that was the last they would see of this former employee, but seven months
later—shortly before August 1 of that year—Stan showed up to collect his one week of vacation
pay. The personnel manager said he was not due the vacation pay. Stan may have expected that
response for he had a copy of the union contract with him, with sentences in the vacation pay
clause underlined. “It says here that to be eligible for a week of vacation a man must have worked
100 days prior to August 1 of the vacation year,” he pointed out. “I finished my last vacation on
August 10, and worked more than 100 days before I quit, so I’m entitled to the money.”
ARTICLE XVII—VACATIONS:
Employees to be eligible for one week’s vacation with pay shall have worked
100 working days prior to August 1 of the vacation year. An employee’s vacation
pay is to be based upon the straight time average earned for the months of
The company’s chief arguments were:
1. The reference to August 1 means that only those on the rolls as employees on that date
are entitled to vacation pay, provided they also meet the 100-day requirement.
2. According to union interpretation, a man who quits after working 100 days after his last
3. The fact that the rate of vacation pay is based upon earnings during the first three or four
months of the year reinforces management’s judgment that a man can’t quit in January
and still collect for a vacation.
The union’s answer was:
1. According to management interpretation, a man who quits or dies at the end of July
2. The August 1 date is merely the cutoff point for meeting the 100-day requirement. It
3. The reference to January through April is just a convenient way of computing the amount
Decision:
Stan was awarded vacation money. The arbitrator agreed with the union that the August 1 cutoff
date was only for determining length of service and number of days worked. He pointed out:
“there is no clause stipulating that vacations shall be limited to workers on the payroll, or on the
seniority list, or otherwise in the company.” The arbitrator also stated that this conclusion is
consistent with general industrial relations practice. Although not bound by precedents, he wrote,
“I must conclude that the particular contract before me was intended to have the meaning given to
similar vacation clauses by settled industrial practice.” The arbitrator did find some slight support
Questions for Discussion
1. In view of the decision in this case, if the same situation arose again during the same
contract, do you think an employee quitting at the end of January, after completing 100
days of work since his previous vacation, could claim vacation pay immediately, or
would he have to wait for the next August 1 before getting it?
2. The vacation clause states that employees on leave of absence due to injury are deemed
to be working, for purposes of meeting the 100-day requirement. Let us assume that an
employee ended his 1968 vacation on July 15 and worked 100 days before the end of the
year. He then suffered an injury that kept him from work during the first four months of
1969. On quitting his job on May 1, he would have more than 100 working days to his
credit, but he would not have had any earnings during the first three months of 1969 on
which to base his vacation pay. How would you propose that the problem be solved?
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3. In view of the decision in this case, do you think Stan would have won the week of
vacation pay if, instead of quitting, he had been discharged for just cause?
4. This arbitration case revealed many ambiguities in the vacation clause. We do not know
whether, during the next contract negotiations, the parties made an effort to write a more
satisfactory clause. If you were a negotiator for the company, what language would you
propose in order to give employees vacation money provided they worked at least 100
days since the last vacation, and provided they were still in the company’s employ by, let
us say, May 1?
Maternity Leave
Facts:
A member of the bargaining union adopted a baby girl. She delayed the adoption for three weeks
to avoid missing work because it was a busy time for her employer. When she finally adopted the
baby, she took a two-week vacation and then applied for a six-month unpaid maternity leave
pursuant to the contract, which read in part:
Article X Leave of absence
Section 4 Unpaid leaves
Reasonable purpose
1. Leaves of absence for a limited period without pay, not to exceed 90
2. Reasonable purpose in each case shall be agreed upon by the Union and
the Borough.
Maternity
1 Maternity Leaves, not to exceed six months, shall be granted at the
request of an employee. Maternity leaves shall, upon the request of the
employee, be extended or renewed for a period not to exceed six months.
The employer denied her maternity leave request but offered her a first and second 90-
day leave for “reasonable purpose.” The employee filed a grievance. The employer contended
that the employee is not entitled to maternity leave because she did not conceive and bear the
child. The term maternity modifies leaves and as such is an adjective defined by Webster’s
Dictionary to refer to “women during pregnancy and confinement.” Other collective bargaining
agreements correctly refer to the leave as childbirth leave and this is obviously the purpose. The
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employer offered the grievant a reasonable-purpose leave she refused to take, which would have
been the same six months off.
The grievant contended that the term maternity leaves in the contract is a noun defined
by Webster’s Dictionary to refer to “the quality or state of being a mother.” Maternity leaves are
to provide both for the physical health and recovery of the mother and for the child rearing after
birth. The length of time, an initial six months, and the ability to request another six moths would
not have been provided if it were for the purpose of physical recovery alone. Obviously, the
maternal relationship during the first months of an infant’s life is important to its development,
regardless of whether the infant is adopted or biological.
Decision:
The arbitrator found no basis for the employer’s contention that the leave was limited to
childbirth leave. Other contracts that mean childbirth leave use that term. This contract said
maternity leaves and the arbitrator agreed that maternity included acting as mother after the child
is born. The six-month leave was granted. 4
Questions for Discussion
1. Should the claimant in this case be awarded maternity leave or not?
2. If the claimant only intended to take a six-month leave, why should it make any
difference what kind of leave she was granted?
3. If the claimant is successful in this case, why couldn’t a father claim the right to take six
months off to establish the paternal relationship with the child?
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CHAPTER 8: EXERCISE AND EXERCISE GUIDANCE
Flexible Benefit Decisions
Purpose:
The purpose of this exercise is to familiarize students with the general concept of flexible benefit
plans and the difficulty many employees have in choosing their own plan. And to help students
gain an understanding of the philosophy behind flexible benefit plans and the individual decision
making involved.
Management is increasingly striving to negotiate flexible benefit plans as a means of controlling
the total cost of employer-paid employee benefits.
If today you were given $1,000 per month in benefit dollars to allocate among the following,
what package of benefits would you choose? Complete the following chart by placing a dollar
amount for each benefit you choose in the right column:
Benefit
Pension plan (matched by employer 50/50 up to $500 per month)
Paid holidays ($50 per day)
Vision care ($50 per month per employee or $75 per month per
family)
Child care ($75 per week per child)
Cafeteria lunches ($50 per month)
Tuition reimbursement ($50 per month maximum)
Funeral leave (three days per death, 6 days per year; maximum, $50)
Life insurance ($50 for $100,000)
Disability insurance ($50 per month)
Dental insurance ($50 per employee, $75 per family)
Guaranteed maternity or paternity leave ($50 per day for two weeks
per year)
Medical insurance ($250 per employee, $450 per family)
Elder care ($50 per week; provides daily care for one adult)
Legal insurance ($50 per month)
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