‘Last Chance’ Agreements Under Civil Service Rules

In some environments, there are some different disciplinary rules that apply to “last chance” agreements. Typically, last chance agreements are used where an employee has engaged in serious misconduct, is willing to take affirmative steps to remedy the underlying source of the misconduct, and will agree to a sanction less than termination. A feature of such agreements is that in exchange for the employer’s agreement not to terminate the employee for the misconduct, the employee agrees that if he/she engages in similar misconduct for some time frame into the future, the employer will be able to immediately terminate the employee without the employee having recourse to the grievance procedure. Commonly, last chance agreements have a term of three to five years.

As last chance agreements involve mandatorily negotiable topics such as discipline and job security, labor boards have ruled that the employee’s labor organization must be a party to the agreement for the agreement to be valid. Labor boards usually cite prohibitions in labor laws against “direct dealing” with employees about mandatorily negotiable topics.

A recent case decided by the Iowa Supreme Court asks a different question – in a civil service setting, need a last chance agreement be approved by the civil service board or commission before it is valid? The Court answered the question “no.”

The case involved Larry Whitwer, a firefighter with the Sioux City Fire Department. In July 2012, Whitwer was arrested for an assault. He later pled guilty to domestic abuse assault. At sentencing, the Court granted Whitwer a deferred judgment. The Court also extended a previously entered no-contact order for five years. On September 26, the day after Whitwer pled guilty, he was placed on administrative leave from the Fire Department, with pay, and a pre-disciplinary hearing.

Before that hearing, Fire Chief Tom Everett spoke with Dan Cougill, a representative from the firefighters’ union, about the appropriate discipline for Whitwer’s actions. Although Whitwer could have been terminated, Everett and Cougill discussed the possibility of Whitwer signing a last chance agreement. Under the agreement, Whitwer would not be terminated because of the domestic abuse assault guilty plea and he would instead serve a short suspension. Whitwer would agree, among other things, to abide by the no-contact order and consent to immediate termination if he violated that order. Whitwer would also be required to waive the right to appeal if he were later terminated under the last chance agreement.

Whitwer signed the last chance agreement. For the next 13 months, Whitwer continued to work as a firefighter without incident. However, in November 2013, police were dispatched on reports that Whitwer was texting and attempting to meet with and otherwise reach the victim in violation of the no-contact order. Officers reviewed an actual text message, confirmed the no-contact order was still active, and arrested Whitwer. A court found him in contempt and sentenced him to two days in jail with credit for time served. The Department then terminated Whitwer for violating the last chance agreement.

The question for the Iowa Supreme Court was whether the failure of the Civil Service Commission to approve of the last chance agreement made the agreement unenforceable. Put another way, the Court had to decide “whether a civil service employee may prospectively waive those rights through a last chance agreement that avoids termination proceedings.”

The Court found that nothing in the civil service laws “expressly bars agreements waiving civil service appeal rights. In certain other contexts, the Legislature has declared that any purported waiver of statutory rights is void against public policy. In the federal system, where employees are covered by the Civil Service Reform Act, courts regularly uphold and enforce last chance agreements related to removals. So long as the agreement is validly executed, an employee’s removal is predicated on a breach of the agreement, not whether the employee was removed for cause.

“Likewise, several state courts have enforced last chance agreements as a valid waiver of a civil service employee’s rights related to the termination of employment. At least two other states expressly authorize waiver by statute.

“No provision in the civil service laws authorizes the Commission to review and approve such agreements or provides it with standards for doing so. Rather, the Commission acts in an adjudicatory capacity when it reviews the removal, demotion, or suspension of a civil service employee.

“We also do not accept that a last chance agreement becomes arbitrary simply because the municipality retains discretion whether to offer the agreement. Primarily, this ignores the fact that the employee has comparable discretion to reject the agreement, if and when offered. Further, any disciplinary decision begins with an exercise of discretion by the municipality in any event. The City should retain discretion to determine whether to offer an employee an opportunity to remain on the job through a last chance agreement despite otherwise removable misconduct.

“Here, we are satisfied that Whitwer entered into the agreement voluntarily, knowingly, and intelligently. The agreement provided a significant benefit – continued employment with a five-shift suspension in lieu of termination proceedings. The fact that Whitwer’s attorney was not present when he signed the agreement is not controlling. Whitwer’s attorney was informed of the terms of the last chance agreement before the hearing, and no objection was raised to his absence. Whitwer’s interests were represented by two union officials at the hearing. Whitwer was given ample time, outside the presence of any City personnel, to review the agreement with the union officials. Except for the scheduling of his shift suspensions, Whitwer raised no questions or concerns about the agreement despite several opportunities to do so. On these facts, we conclude that Whitwer agreed to the last chance agreement and was fully aware of both its benefits and its consequences.”

Whitwer v. Civil Service Commission, 2017 WL 2491646 (Iowa 2017).