Employer Takes Last Chance Agreement One Step Too Far

An employee with decades of satisfactory service began experiencing significant workplace problems in 2004. Over a 16-month period, the employee was disciplined on multiple occasions, suspended twice and eventually terminated. On each occasion, the union intervened and was successful in preserving his job. After the first termination in 2004, the employee, employer, and union entered into a “Last Chance Agreement.” The employee agreed that, if the employer terminated him for violating the terms of the Last Chance Agreement, “any grievance filed protesting the discharge [would] not be subject to arbitration and that no legal action respecting said discharge [would] be filed.” Disciplinary problems concerning the employee next arose in 2005. The employer first suspended and ultimately terminated the employee for violations of the Last Chance Agreement. The employee had an age discrimination charge pending with the United States Equal Employment Opportunity Commission prior to his termination, and eventually took that claim to federal court. In response, the employer argued that the Last Chance Agreement constituted a waiver of the employee’s ability to take his claim to court. The United States Court of Appeals for the Sixth Circuit held that a Last Chance Agreement cannot operate as a prospective waiver of rights under Title VII of the Civil Rights Act of 1964, as amended. Moreover, the court held that the employee’s allegations of increased vigilance over his behavior by supervisors prevented the entry of summary judgment in favor of the employer. Despite the employer’s claim that it was entitled to monitor more closely an employee with disciplinary problems, the Sixth Circuit found that this behavior could be evidence of pretext. Employers must recognize that, while last chance letters can be effective evidentiary tools, and may operate as a waiver of an employee’s rights to challenge discipline under the grievance and arbitration provisions of a collective bargaining agreement, waivers in last chance letters cannot bar an employee’s claim under Title VII for events occurring after the date of the agreement.

Hamilton v. Gen. Elec. Co., No. 08-5023 (6th Cir. Feb. 12, 2009)