Court Reversed Arbitration Award to Reinstate a Discharged Manager for Misappropriation of Funds
In Pennsylvania Liquor Control Board v. Independent State Stores Union (ISSU), 520 Pa. 266, 553 A.2d 948 (1989), a general manager for the Pennsylvania Liquor Control Board (LCB) misappropriated funds and falsified business records.
The collective bargaining agreement (CBA) in that case provided that the employer could not take any disciplinary action against a manager without just cause.
In addition, the employer's work rules set forth a class of offenses that could provide just cause for immediate dismissal, including the theft of Commonwealth property.
In vacating the arbitration award reinstating the discharged manager, our Supreme Court opined:
The LCB, pursuant to its distributional function, has responsibility for enormous inventories of merchandise and vast amounts of money resulting from sales.
It is equally obvious that the LCB, given its legal responsibilities, must be able to maintain honesty and integrity on the part of its employees who have ready access to its wares and revenues.
To that end, the power of the LCB to discharge any employee who is proven to have stolen property from the agency is one of unquestionable importance and presumptively retained by management.
We find nothing in the labor agreement here involved or any circumstance to suggest that the LCB had "bargained away" its power to discharge a proven thief; and it would be "manifestly unreasonable" to conclude that the agency intended to do so.
In this connection, it should be recognized that a governmental agency does not have the freedom of a private enterprise to relinquish powers inherently essential to the proper discharge of its function. 520 Pa. at 277-78, 553 A.2d at 953-54.
The Supreme Court reinstated the discharge of a liquor store manager who had falsified store records and misappropriated funds.
In doing so, the court noted the absence of anything in the CBA "to suggest that the LCB had 'bargained away' its power to discharge a proven thief; and it would be 'manifestly unreasonable' to conclude that the agency intended to do so." 520 Pa. at 277, 553 A.2d at 953-54.
The court further opined:
If an agency of the Commonwealth entered into an agreement, which expressly excluded conduct by an employee, of the nature herein, from the definition of "just cause" for discharging that employee, its validity would at best be questionable.
It should be recognized that a governmental agency does not have the freedom of a private enterprise to relinquish powers inherently essential to the proper discharge of its function. Id. at 276, 277-78, 553 A.2d at 953, 954.