Ohio Supreme Court Adopts Seven-Part “Daugherty Test” To Determine Whether Good Cause Has Been Established In Labor Disputes

It is rare that any court speaks to the issue of what “just” cause for discipline means. Recently, the Supreme Court of Ohio ventured into the area, and upheld an arbitrator’s decision that adopted a seven-part test to define the phrase “good cause.” The Court unanimously concluded that the Arbitrator was acting within his discretion using the seven-part test, known as the Daugherty test, to establish “good cause.”

The case involved the Summit County, Ohio Children’s Service Board. The Board investigated Renee Scott, a receptionist, for leaving the office without permission on a number of occasions and of falsifying time cards and personnel records. A neutral administrator heard the complaint against Scott and concluded that she had violated the rules as alleged. The administrator recommended a seven-day suspension. The Board instead fired her.

Scott filed a grievance in response, which proceeded to arbitration. The primary issue before the Arbitrator was whether Scott was terminated for “good cause.” The Arbitrator ruled that Scott should not have been punished for leaving work without permission, for falsifying personnel records because the rules had lapsed by virtue of non-enforcement. The Arbitrator did conclude that Scott was subject to discipline for violating the time card rules. Nevertheless, the Arbitrator determined that this was not a serious enough infraction to warrant termination.

The Arbitrator’s decision was based on an analysis of whether the one remaining violation was serious enough to warrant “good cause” as mandated by the collective bargaining agreement. The Arbitrator applied a seven-part test originally used by federal arbitrator Carroll Daugherty in 1972 that has since been widely utilized in employment-related arbitration cases. One of the factors of the test necessitates that punishment for a rule violation must be proportionate to the offense in light of a worker’s past service record and other mitigating factors. The Arbitrator concluded that the Board failed to meet that standard. Scott was suspended seven days without pay and ordered reinstated to her job. The Board then challenged the arbitrator’s decision.

The Court reasoned that because the collective bargaining agreement did not define “good cause,” and because it was necessary to do so, the Arbitrator had to define the term. The Court observed that the definition of the term found in Black’s Law Dictionary was too vague to be of any use in a labor dispute. The Court further found that the Daugherty test is widely used in defining “good cause” in the context of labor disputes and should have come as no surprise to either party. Since the consideration of proportionality and mitigating circumstances is directly incorporated into the Daugherty test the Arbitrator was right to consider those factors in reducing Scott’s penalty. The Court overturned the lower courts’ decisions and reinstated the Arbitrator’s findings.

The Court’s decision bolsters the use of the seven-part Daugherty test for “good cause” in the context of labor disputes. A likely outcome is an increased reliance on this test by arbitrators in resolving disputes.

The seven factors of the Daugherty test are: (1) Did the company give the employee forewarning or foreknowledge of the possible or probable disciplinary consequences of the employee’s misconduct? (2) Was the company’s rule or managerial order reasonably related to: (a) the orderly, efficient, and safe operation of the company’s business, and (b) the performance the company might properly expect of the employee? (3) Did the company, before administering discipline to an employee, make an effort to discover whether the employee did in fact violate or disobey a rule or order of the management? (4) Was the company’s investigation conducted fairly and objectively? (5) At the investigation did the judge obtain substantial evidence or proof that the employee was guilty as charged? (6) Has the company applied its rules, orders, and penalties evenhandedly and without discrimination to all employees? (7) Was the degree of discipline administered by the company in a particular case reasonably related to: (a) the seriousness of the employee’s proven offense, and (b) the record of the employee in his service with the company?

Summit County Children Services Board v. Communication Workers of America, 113 Ohio St. 3d 291 (2007).

NOTE: Reprinted with permission from the Columbus, Ohio law firm of Downes, Hurst & Fishel.

This article appears in the September 2007 issue