Court of Appeals Affirms PPG’s Implementation of Wage Structure, Cuts Didn’t Violate Union Arbitration Award

The U.S. Court of Appeals for the Seventh Circuit affirmed May 9 that PPG Industries Inc. didn’t violate a past arbitration award to the United Steelworkers and Local Union 193-G, despite contrary arguments by the union.

According to court documents, in 2009, PPG unilaterally implemented a two-tier wage system that cut employees’ compensation at an Illinois glass manufacturing plant, which the union argues was in violation of an arbitration award issued in June that year.

The arbitration spawned from a disagreement between PPG and the union during a three-day negotiation conference at the beginning of June.

During the meetings, PPG proposed the two-tier system and pay cuts. According to the court, the union argued that the parties’ bargaining agreement “barred new proposals from being made after the conference’s first day.”

PPG disagreed, and a grievance from the union prompted the parties to submit their dispute to an arbitrator.

The arbitrator subsequently concluded that by the beginning of the bargaining conference, the union “knew or should have know[n] some of [PPG’s] economic proposals—specifically [PPG’s] labor cost goals as well as the two tier wage structure,” citing a meeting in May and a corresponding email, both in which PPG proposed lowering its labor costs from $37 to $27 an hour while suggesting the two-tier system.

PPG proceeded to implement the system following the union’s refusal of a post-arbitration offer, and the union then sued PPG under the Labor-Management Relations act, seeking to “confirm and enforce” the arbitration award, though the district court ruled in favor of PPG.

“PPG is pleased that the U.S. Court of Appeals for the Seventh Circuit has affirmed the district court’s award of summary judgment in its favor, confirming that PPG did not violate the terms of the arbitrator’s award when it unilaterally implemented certain terms and conditions of employment for employees at its Mt. Zion, Illinois facility,” PPG’s Mark Silvey told USGNN™.

That ruling was affirmed last week despite the union’s appeal last December, which insisted the district court “misconstrued” the arbitration award.

“[N]either the text of the arbitrator’s decision nor the arbitration record supports the Union’s desired interpretation of the award,” the court concluded. “To accept the Union’s arguments, we would have to substantively alter the award in the Union’s favor. Because we may not do so, we affirm.”

The appeals court also rejected the union’s claims that its conclusion rendered the arbitrator’s award “meaningless,” pointing to PPG’s removal of several proposals such as limited severance benefits and the altering of the pension agreement as examples of obligations imposed on PPG.

“The award may not have been as favorable to the Union as it wanted,” the court said, “but it was not ‘meaningless.’”

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