Arbitration Award
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Franklin County Sheriff’s Office
and
117
LA (BNA) 1821
FMCS
Case No. 02/05119-6
December
23, 2002
Mitchell B. Goldberg, Arbitrator,
selected by parties through procedures of the Federal Mediation and
Conciliation Service
Franklin County (Ohio) Sheriff’s
Office (“Employer”) and Fraternal Order of Police, Capital City Lodge No. 9
(“Lodge”) or (“Union”) are parties to a collective bargaining agreement (“CBA”)
in effect from June 2, 2002 through October 24, 2004. Article 5 contains a
multi-step grievance procedure ending at Step Four for unresolved grievances
and resulting in binding arbitration. Section D. 2. provides that “[t]he
arbitrator shall afford both parties the opportunity to be heard, to present
and examine witnesses, [to] offer documentary and other evidence and, if
requested by either party, to submit post-hearing briefs.... [T]he arbitrator
shall be without jurisdiction or authority to detract from, alter, add to or
otherwise amend in any respect any of the provisions of this Agreement, or any
supplements or appendices thereto. If the arbitrator sustains a grievance, he
must refer in his award to the provision or provisions of the Agreement which
are violated ....”
The Union filed grievance #2001-49 on December 21, 2001 alleging that
the Employer violated the provisions of a Memorandum of Understanding agreed
upon between the parties on October 19, 2001 when it denied the Union’s request
to compute military leave pay by excluding moneys received by the government
for housing and living expenses while on leave. The Union seeks a declaration
that government payments for expenses to employees on military leave not be
included in calculating the difference between their military pay and their
regular base pay from the Employer.
Section
21.12 Military Leave.
A.
Members who are also members of the Ohio National Guard, the Ohio Military
Reserve, the Ohio Defense Corps, the State and Federal Militia, or other
reserve components of the armed forces of the United States, are entitled to
short-term military leave, with full pay, for up to thirty-one (31) days, but
no greater than one hundred seventy-six (176) hours in any calendar year, for
such time as they are in military service on field training or active service.
When a member is scheduled for military service and has provided documentation,
he shall be excused from duty and marked on “military leave” of eight (8) hours
for any day of military service occurring on a member’s regular workday. Leave
in excess of thirty-one (31) calendar days, and greater than one hundred
seventy-six (176) hours in a calendar year shall be taken as military leave
without pay, vacation leave, personal leave or compensatory time. The member
shall submit the desired leave request through his chain-of-command for
approval.
B. A
member who is ordered into active duty by the Governor of the State of Ohio or
by the President of the United States, upon expiration of the aforementioned
short-term paid military leave of one hundred seventy-six hours, shall be paid
either the difference between their regular base salary less whatever amount
such member receives as military pay or five hundred dollars ($500.00) per
month, whichever is less. If the member’s military pay exceeds his or her
regular base pay, the member shall not be eligible for this differential pay
upon expiration of the Sheriff’s Office short-term military paid leave. In
order to qualify for this differential pay, the member shall, upon receipt of
his or her military pay voucher which documents the military pay rate and dates
of the pay period, submit a copy to the Sheriff’s Payroll. The differential pay
shall cease upon the member’s release from active duty. The member does not
accrue vacation and sick leave while on extended military leave; however, the
member shall continue to receive all health insurance benefits provided under
Article 24. This Section B may be overridden by any memorandum of understanding
executed by the parties. (emphasis added).
Memorandum
of Understanding, October 23, 2001 (“M/U”).
* *
*
IT IS HEREBY AGREED THAT, any member who is ordered into active duty by the Governor of the State of Ohio or by the President of the United States, as a result of the September 11, 2001 terrorist attack on the United States, shall, upon expiration of the aforementioned paid military leave of one hundred seventy-six hours, be paid at the regular base salary less whatever amount such member receives as military pay. If the member’s military pay exceeds his or her regular base pay, the member shall not receive any additional compensation from the Sheriff’s Office. The member serving active duty in response to the September 11, 2001 terrorist attack shall be eligible for this differential pay upon expiration of the Sheriff’s Office standard military paid leave. In order to qualify for this differential pay, the member shall, upon receipt of his or her military pay voucher which documents the military pay rate and dates of the pay period, submit a copy to the Sheriff’s Payroll. The differential pay shall cease upon the members release from active duty. (emphasis added).
Ohio Revised Code, Section
5923.05, provides for a cap of $500.00 per month similar to the above prior
contract language and provides for supplemental military pay in an amount equal
to the difference between the public employee’s regular pay and “the sum of
the... public employee’s gross uniformed pay and allowances”. (Emphasis added).
A typical military pay voucher itemizes “basic pay” and allowances for housing
and subsistence while the member is away from home and in the service of the
country. These expense reimbursements are referred to on the voucher as
“SUBSISTENCE ALWS” and “BAH”.
In December, 2001, the Union learned that the Employer was including
allowances with the basic pay to compute the difference between military pay
and the member’s regular pay from the Employer.
IV. Issue
The issue for resolution is whether the Employer may include allowances
as military pay for purposes of computing the member’s differential pay under
the terms of the Memorandum of Understanding agreed upon between the parties.
Not surprisingly, both parties contend that the language in the M/U is
clear and unambiguous and that parol evidence is not needed for assistance to
interpret the intentions of the parties. The fact, however, that each party
offers a contrary interpretation of the meaning of the words “pay” and
“military pay” for determining whether allowances are included demonstrates
that the terms are subject to different meanings and are therefore ambiguous.
The Union asserts that the words
and phrase in question does not mean pay plus allowances because the terms are
inconsistent with each other. The legislature recognized the difference in the
terms when they enacted Section 5923.05; they specifically used two separate
terms, pay and allowances to deduct from the employee’s regular pay from public
employment. The parties in this case purposely excluded the term “allowances”
from their agreement. Pay means compensation for services rendered and is
usually taxable. Allowances refers to the reimbursement of expenses which is
not a form of compensation and is usually not taxable.
The Union recognizes that the
parties did not discuss this issue when they negotiated the M/U, but they
clearly shared the same intention when they agreed to the terms; that members
would be made whole and not lose anything as the result of providing military
service to the country after the September 11 attacks. The Union is not seeking
a windfall for employees, as suggested by the Employer. Only employees who
actually incur expenses and can accurately document their expenses for housing
and subsistence should receive the allowances as a wash without including them
as a deduction from their regular pay.
The Employer acknowledges that
“pay” means money received from an employer as compensation for services
rendered, but contends that military housing and subsistence allowances are
also moneys received as compensation for services rendered. If base military
pay and allowances on the military pay voucher are deducted from an employee’s
regular pay, the Employer will make up the difference and the end amount
received by the employee will be the same as if the employee were working in
his regular job. This was the intent of the M/U; instead, the Union wants to
omit the allowances so the employee will wind up with more compensation than he
otherwise would have received if he were working at his regular job in the Sheriff’s
department. The additional payment is accurately described as a windfall which
was never intended to be bestowed upon employees by the Employer.
Witnesses for the Employer testified
that it was the intention of the Employer to follow R.C. Section 5923 in the
M/U. The employee’s regular base pay was established as the standard which
excludes shift differential pay and overtime pay. On the other hand, allowances
were intended to be included within military pay because the parties did not
provide for any exclusions.
The words “pay” and “compensate” are subject to different meanings and may, in certain circumstances, refer to something more than the payment of wages or salary. Synonyms for the word compensation include words such as indemnity, satisfaction, remittal and allowance as well as terms such as wages, earnings or pay. Webster’s New World Dictionary and Thesaurus, Simon & Schuster, Inc., p. 121 (1996). Wages and salary are more specific terms and refer to the payment of money for work or services performed. Id. at 549, 690.
The Legislature recognized these
distinctions when it enacted Section 5923.05. It decided to include military
allowances together with the payment of wages when determining the differential
wage payment for persons required to perform military service. The parties in this case did not
make the same distinction. Instead, the parties negotiated an exchange of pay
for pay or salary for pay with no mention of the inclusion of allowances.
Regardless of whether the parties discussed this issue or even considered this
issue during their negotiations, they must abide by the language which they
chose as the manifestation of their intention. Corbin on Contracts,
One Volume Edition, Section 538, pp. 506-09 (1952).
Military allowances are similar to expense reimbursements from
employers for travel, meals, special tools, equipment and uniforms. The
employer recognizes that the employees will be required to make these
expenditures in order to properly perform their jobs. They become necessities
or requirements of the job. An employer who agrees to reimburse an employee for
such expenditures is acknowledging that, but for the job, the employee would
not ordinarily incur such expenditures. The allowance or expense reimbursement
is made for the purpose of restoring the employee to the position he would be
in without the requirement in place, and to prevent the employee’s wages from
being reduced because of an expense which must be incurred as a condition of
employment, which otherwise would not be the case. Military housing and
subsistence payments are made for the express purpose of making up to soldiers
expenses which they are required to incur for living away from their homes on a
temporary basis when they are still incurring similar expenses for themselves
and their families at their permanent homes. These expense reimbursements are
separate and apart from the wages and salaries which are earned for services
performed. Without such allowances, the wages earned would be effectively
reduced because of the necessity of incurring such temporary expenses as a
condition of employment in the military.
This is not necessarily so for
all soldiers. Those who do not incur these expenses because of their particular
assignment or duties nevertheless receive the payments. The allowances are
intended to be estimates based upon the presumption that the expenses will be
incurred. For example, uniform allowances are common in police and fire units
as an additional form of compensation to cover uniform wear and tear. Certain
officers and firefighters because of their desk duties, however, do not wear
out their uniforms with the same frequency as others. They are nevertheless
permitted to retain the allowances, and for them, this amounts to an additional
source of income.
Both parties agree that the purpose of the M/U was to make sure that
the members would be kept whole and not suffer economic losses as the result of
performing their military services. For employees who actually incur additional
expenses for housing and subsistence, the inclusion of allowances for purposes
of computing their pay differential will result in an economic loss because the
expenses would not have been incurred if they were not required to serve in the
military. For these employees, the intention of the parties is best served by
excluding the allowances when computing the pay differential.
However, for those employees who do not incur the extra housing and
subsistence expenses, the receipt of allowances amounts to a constructive
increase in their salary and wages from the military and the intention of the
parties is best served by including the allowances received as additional wages
or salary for purposes of computing the differential payment under the M/U. The
exclusion of allowances in these cases will provide a windfall for employees
not contemplated or intended by the parties when they negotiated the terms of
the M/U.
The grievance is sustained in part. Military allowances shall be
excluded from the calculation of the military pay differential set forth in the
Memorandum of Understanding dated October 23, 2002 for those members or
employees who actually incur expenses relating to the allowances and who can
properly document such expenses. Allowances shall be included together with
military salary and pay for those members and employees who do not incur such
expenses and who have not properly documented them for submission to the
Employer.
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