Can A Past Practice Change A Contract?
March 30th, 2012
A topic that finds the opinion of arbitrators fractured is whether a past practice can change the clear terms of a contract.
The most often cited reference works on past practice are a 1961 law review article by Arbitrator Richard Mittenthal, and the basic treatise on labor arbitration, How Arbitration Works by Frank and Edna Elkouri. Mittenthal’s article, titled “Past Practice and the Administration of Collective Bargaining Agreements,” suggested there were five elements to a binding past practice:
Clarity and consistency.Mittenthal wrote that “a course of conduct which is vague and ambiguous or which has been contradicted as often as it has been followed can hardly qualify as a practice.”
Longevity and Repetition.Mittenthal observed that “a period of time has to elapse during which a consistent pattern of behavior emerges. Just how frequently and over how long a period something must be done before it can be characterized as a practice is a matter of good judgment for which no formula can be devised.”
Acceptability.The third of the elements of a past practice is that employees and the employer “must have knowledge of the particular conduct and must regard it as the correct and customary means of handling a situation. Such acceptability may frequently be implied from long acquiescence in a known course of conduct.”
The Underlying Circumstances.As Mittenthal described, “a practice is no broader than the circumstances out of which it has arisen, although its scope can always be enlarged in the day-to-day administration of the contract.
Mutuality.The last of Mittenthal’s requirements was that a past practice be mutual: “Some practices are the product, either in their inception or in their application, of a joint understanding; others develop from choices made by the employer in the exercise of its managerial discretion without any intention of a future commitment.”
Elkouri and Elkouri use a similar definition of past practice, and suggest that a majority of arbitrators believe that a past practice can even “fill in the gap” in an area not covered by the contract. As to the next level of use – whether a past practice can actually contradict an unambiguous clause in a contract – the Elkouris note that arbitrators are in disagreement.
A majority of arbitrators believe that while a past practice can help explain a contract, or can fill in the gaps where a contract is silent, it cannot contradict the explicit terms of a contract. However, a minority of arbitrators believe that if a past practice is longstanding enough, and has spanned the repeated renegotiation of the contract, the past practice can actually amend clear and unambiguous contract terms. As phrased by one arbitrator following the minority rule, “day-to-day actions, when they run counter to the plain meaning of the contract’s words, evidence an intent to substitute that which they actually do for that which they said in writing they would do.” City of Palo Alto, 107 LA 494 (Riker 1996).
An arbitrator following the majority rule recently decided a case involving the Hampshire County, Massachusetts Sheriff’s Department. The contract between the County and the National Correctional Employees Union allowed the employer to require employees to provide medical verification of sick leave use when they used more than 15 days of sick leave in a calendar year. Notwithstanding the clear contract language, on 299 occasions over 23 years, the Department required medical verification after ten days of sick leave use, not 15. The Union failed to challenge any of the 299 ten-day letters.
When the employer issued its 300th ten-day letter, the Union challenged the letter in arbitration. The employer argued that the long-standing past practice effectively amended the contract.
The Arbitrator sided with the Union, finding that the “Union’s right to grieve was not diminished by its failure to exercise that right. While the Union neglected to grieve ten-day letters in the past, its right to do so was not in conflict with the specific terms of the agreement.”
Hampshire County Sheriff’s Department, LAIG ¶6984 (O’Brien 2012).