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Franklin County Sheriff’s Office
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.
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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