Arbitrator Has Authority To Decide Back Pay Offsets

Trooper Michael Keyes of the Pennsylvania State Police was removed from duty on February 9, 2007, following a number of suicide attempts, one of which resulted in Keyes’ involuntary commitment. The Pennsylvania State Troopers’ Association filed a grievance challenging Keyes’ removal from duty, and an arbitrator ordered that Keyes be returned to limited duty on October 20, 2008 without back pay.

The State appealed the Arbitrator’s decision through the court system, but lost. While its appeals were pending, the State did not allow Keyes to return to work.

On July 9, 2010, the State placed Keyes back on the payroll and compensated him for back pay but withheld $15,810.08, which he earned as a bus driver in supplementary employment that was approved after he was placed on suspension, during the time the appeals from the arbitration award were being considered. Keyes’ labor organization, the Pennsylvania State Troopers’ Association, filed another grievance seeking full compensation for back pay. When an arbitrator ordered the State to make Keyes whole for the offset to his back pay, the State again appealed the decision.

The Pennsylvania Commonwealth Court upheld the Arbitrator’s decision. The State argued that the absence of any contract provision concerning offsets meant the Arbitrator exceeded his jurisdiction in determining that State could not offset Keyes’ interim earnings, particularly where it established that there was a past practice of allowing offsets for earned salary from the back pay awards.

From the Court’s perspective, the issue was a broader one: “Regarding jurisdiction of the Arbitrator, we have held that an arbitrator exceeds his jurisdiction only when he addresses issues not submitted to him. Here, the propriety of the offset was submitted to the Arbitrator for resolution and was necessarily within his jurisdiction to decide.

“As to whether he exceeded his powers, what constitutes an excess of an arbitrator’s powers is far from expansive. An arbitrator may not mandate that an illegal act be carried out; he or she may only require a public employer to do that which the employer could do voluntarily. Essentially, if the acts an arbitrator mandates the employer to perform are legal and relate to the terms and conditions of employment, then the arbitrator did not exceed his or her authority. An error of law alone will not support a finding that an arbitrator exceeded his or her powers.

“Because back pay deals with compensation, the Arbitrator was within his powers in addressing the propriety of the award. Moreover, the award also does not implicate any managerial prerogatives, such as service standards, overall budget, or organizational structure.”

Pennsylvania State Police v. Pennsylvania State Troopers’ Ass’n, 54 A.3d 129 (Pa. Cmwlth. 2012).