‘Last-Chance’ Agreement Means What It Says

Occasionally, employees with a pattern of misbehavior enter into “last-chance” agreements in lieu of termination. Under those agreements, an employer agrees not to terminate an employee for whatever the employee’s current offense is, and the employee agrees that a finding of future misconduct will result in the loss of the employee’s job.

Fox Lake, Illinois Police Officer Tom Olson got to his last-chance agreement in a different manner. Olson was first fired by the Village in 2013 for a variety of offenses that included refusing to comply with orders, failing to properly and appropriately complete reports, and harassing a Village resident. At the time, Olson was under a 2007 last-chance agreement that resulted from his conduct during a traffic stop.

Olson’s labor organization, the Fraternal Order of Police (FOP), challenged his 2013 termination in arbitration. An arbitrator found that the 2007 last-chance agreement was not valid because the FOP had not been a party to the agreement. Though the Arbitrator reinstated Olson, he found that Olson had a tendency to be abrupt or dismissive toward his coworkers, had issues taking direction, and had displayed poor judgment or discretion in carrying out his police duties.

The Arbitrator’s solution was to condition Olson’s reinstatement on his agreement to and compliance with a new last-chance agreement. Under the new agreement, which Olson signed, Olson was required to participate in training to “address his deficiencies and performance issues,” and provided that any recurrence of similar misconduct within three years after his reinstatement would be grounds for his termination. The Arbitrator later clarified his opinion to provide that if Olson “engages in misconduct or performance issues as set forth in this Agreement, that conduct shall be sufficient just cause for the Village to terminate Olson’s employment. Should Olson or the FOP contest the Village’s termination of Olson’s employment, the only issue to be decided by any arbitral tribunal is whether Olson engaged in the conduct. If proved by a preponderance of the evidence that Olson engaged in the alleged conduct, the penalty for that conduct shall be termination.”

Olson had only been back to work for a matter of weeks before the Village invoked its terms and fired Olson. The Village cited a number of disciplinary offenses, including Olson’s failure to report for a fitness-for-duty evaluation.

The “failure to report” charge stemmed from Olson’s placement on administrative leave in May 2015. At the request of the FOP, the Village agreed to send Olson to the evaluation. When the Village was unable to get in touch with Olson, the Police Chief drove to Olson’s home and taped the “order to report” for the examination on Olson’s door. The next day, Olson told the Chief he had received the order, but could not attend the examination because he was sick with the flu. Olson also asked whether the Village was going to “put him up in a hotel” and if he would be paid overtime. Eventually, Olson simply refused to comply with the order.

A different arbitrator upheld the Village’s decision to again terminate Olson. The Arbitrator ruled that “last-chance agreements give employees a final opportunity to correct behavior. Where a last-chance agreement or order is determined to be enforceable, the arbitrator’s role is limited to determining whether the employee violated the terms of the agreement. An arbitrator must abide by the terms of an enforceable last-chance agreement or order.

“Here, the last-chance agreement stated that Olson does not have the discretion to disregard, modify or ignore orders or directives absent approval from the individual that gave him the initial order in question. The agreement also provides that if Olson engages in misconduct or performance issues, that conduct shall be sufficient just cause for the Village to terminate Olson’s employment.”

The Arbitrator concluded that Olson engaged in several acts of misconduct that triggered the last-chance agreement, including failing to back up a fellow officer on a traffic stop. With regard to the fitness-for-duty examination, the Arbitrator was completely unconvinced by Olson, holding: “Olson was ordered to report and informed that failure to report could result in his termination. Olson did not report, and his explanation for why he did not report is not credible. First, Olson claimed he did not have transportation to the examination site. When that excuse was rejected, Olson then claimed he was sick and could not go to the examination. Reason suggests that if Olson were in fact sick he would have raised that excuse first since that would make the alleged unavailability of transportation irrelevant. Also, when the Village gave Olson the opportunity to prove he was in fact sick, Olson refused to go to the nearby clinic to see a doctor. Third, it does not make sense that a person too ill to go to an examination would consider going if the employer provided hotel accommodations.

“Olson’s refusal to go to either the fitness-for-duty examination or to the physician to verify his illness claim constituted misconduct in violation of the last-chance order. Accordingly, that conduct is sufficient just cause for the Village to terminate Olson’s employment.”

Village of Fox Lake, FMCS 16-00391-1 (Grenig, 2016).