Tom Hurley, a Portland, Oregon firefighter, suffered an on-the-job injury in 1993. Hurley received disability benefits from the City’s Fire and Police Disability Fund (Fund), and also vocational training that allowed him to become a chef. Under the Fund’s rules, the wages Hurley earned as a chef had the effect of reducing his disability benefits, but no lower than a minimum of 25% of his base rate of pay at the time of his disability.
In 2006, the City implemented a return-to-work (RTW) program, which required some injured firefighters and police officers to resume work in restricted-duty positions. The City notified Hurley that he was a potential participant in the RTW Program, and ordered him to attend mandatory training upon penalty of having his disability benefits suspended or terminated. Hurley did not attend the training due to scheduling conflicts with his chef job and subsequently refused to participate in the RTW Program. Hurley also asserted that he had already participated in the rehabilitation program to become a chef and should not be required to participate in the new program.
The City responded by assigning Hurley to an inspector’s position and ordered him to report to work or his benefits would be terminated. Hurley did not report to his new assignment and in 2007, the Fund terminated his benefits and the City terminated his employment. Hurley did not appeal the termination of his benefits through the Fund’s appeal process.
In 2007, Hurley’s labor organization, the Portland Fire Fighters’ Association, filed an unfair labor practice charge asserting that the City had an obligation to bargain over the RTW Program before it was implemented.
The City argued that the Fund was an independent entity outside the City’s control and that the City had no duty to bargain with the Association. Oregon’s Employment Relations Board rejected this argument, concluding that the Fund was part of the City’s governmental structure. The Board also concluded that the City violated its obligation to bargain when it unilaterally implemented the RTW Program. The Board’s decision was affirmed by the appellate court.
At the same time the Court of Appeals was hearing the unfair labor practice complaint, the Association filed a grievance over termination of Hurley’s employment. Relying on the Board’s ruling, an arbitrator found that Fund’s order to report for training and to work in the newly-assigned position was unlawful due to the City’s unlawful implementation of the RTW Program without bargaining. Since the City’s termination decision was based upon Hurley’s non-compliance with the RTW Program, as part of the “make-whole” remedy the Arbitrator ordered the City to reinstate Hurley and ordered the City, not the Fund, to pay Hurley the equivalent of the disability benefits the Fund would have paid had the Fund not terminated those benefits.
The City challenged the Arbitrator’s decision before the Board, arguing that the Arbitrator acted beyond the scope of the arbitration clause in the contract. The Board affirmed the Arbitrator’s decision and the City again appealed to the Oregon Court of Appeals.
The Court focused on the City’s assertion that the Arbitrator exceeded his authority when he ordered the City to pay the disability benefits. The City argued that ordering the City to pay the Fund’s obligation was essentially adding a provision to the contract.
The Court found that the grievance of the City’s termination of Hurley’s employment was in fact grievable and within the Arbitrator’s authority. The Court specifically held that arbitrators are authorized under arbitration clauses to grant make-whole awards. Even though the disability benefits were not contained within the contract, the only way to make Hurley whole was to reinstate his benefits. Because it had already been determined that the Fund was within the City’s control as a division of the City government, the Court found that the City was responsible for the benefits either as the party or through the Fund.
Portland Fire Fighters’ Association v. City of Portland, 2014 WL 6978716 (Or. App. 2014).