Cytithm Horvath (.jtirbutt is an attorney andlabor arbitrator in Cbic<igo, Illinois. Lamont £.Staliworth is an as'^ociale professor at theInstitute of Industrial Re/at(ons at Loyola Uni-versity of Cbicago, a labor arbitrator, andpresident of tbe Society of Professionals inDispute Resolution (SPIDR). Tbe authors wishto thank Carolyn Hernandez for her assis-tance in tbe preparation of tbis article.

Theft in the Workplace:An Arbitrator's Perspective on

Employee DisciplineCYNTHIA HORVATH GARBUTT AND LAMONT E. STALLWORTH

The primary purpose of this arti-cle is to analyze the manner and thebasis upon which arbitrators decidediscipline and discharge cases in-volving employee theft. The dis-cussion focuses on the degree ofproof necessary to sustain a dis-charge for theft, what effect theexistence of a clear-cut companypolicy might have on an arbitrator'sdecision, and what circumstancesmay lead an arbitrator to overturnmanagement's discipline.

The authors offer practical guide-lines for instituting a policy thatclarifies each party's responsibil-ities in handling employee theftcases. In addition, steps are sug-gested that management can take tosubstantially minimize incidents oftheft of company property.

IHH-l IN IMI. WORKPLACE 21

Eitnployee theft costs employersbillions of dollars each year. Disputesinvolving employees disciplined and/or discharged for theft can presenttroublesome issues for arbitrators,among them the degree of theft in-volved (ranging from pilfering a smallitem from the company to grandlarceny); exceptional circumstanceswhere the general rule of summarydischarge for theft may not apply;complications involving Ihe presenta-tion of evidence and Ihe degree ofproof; and protecting the employee'sright to privacy and industrial dueprocess. Furthermore, because of fhepotentially devastating effect on theemployee's professional and personallife, arbifrators frequently requiresubstantial proof of the employee'sguilt before upholding a discharge forfheft.'

Employee theft cases are difficultfor all parlies concerned. An in-creased awareness of the inherentissues involved, however, may helplabor arbitrators and labor and man-agement advocates to deal more ef-fectively and more appropriately withthe problem. In addition, it is hopedthat this article will provide some in-sight into the arbitral resolution ofgrievances arising from employeetheft cases.

TYPES OF THEFT: DEFrNrTION

Employee theft is generally rec-ognized as the unauthorized taking,control, or transfer of money and/orproperty belonging to the employer(or belonging to fellow employees oncompany properly) that is perpe-trated by an employee during thecourse of his or her employment."Some common types of employeetheft are: (1) stealing money or com-

' As will be djs( usscd later in Ihis arlicJf', arbitra-tors' views of the proper standard of evidentiaryproof rcquiierl in employee theft cases varywidely, anrl ihis is reflected in Iheir decisions.

- See Richard Hollingerdnd |olin Clark, Ihefl 6yEmployees (Lexington, MA: Lexington Books,1%. ), at 2. In addition, an employee who occu-pies a position ot trust dor example, a cashier)may also be subjecl lo discharge for theft thaioccurs off duty anri away from company prop-erty.

. . . because of thepotentially devastating effect

on the employee's professionaland personal life, arbitratorsfrequently require substantialproof of the employee's guiltbefore upholding a discharge

for theft."

pany funds;^ (2) pilferage of companygoods or services;"* (3) theft from fel-low employees;'' (4) falsification oftime cards or other company docu-ments;*" (5) off-duly theft or miscon-duct;'' and (6) tolerating coworkerwrongdoing.''

GUIDELINES

It is well-established among laborarbitrators that employee theft is oneof the few offenses for which sum-

' See Kansas City Area Transportatiiin Authority,82 LA 409 (Maniscako,

' See American Welding & Manufacturing Co.,m LA 247 (Dworkin, 1987); Illinois Power Co., 84LA S8() (Penfield, 1983); and Beatrice/Hunt-Wesson, 89 LA 710 (Bickner, 19S7),

' See Rohr Industries, Int., 82 LA B6 (Darruw,1984); and Bethlehem Steel Corp., 81 LA 268(Sharnoff, 198.3).

'' See Pringle Transit Co., 81 I A 391 (Duda, l%3);and Vulcan Materials, 81 LA 1(i[i (|ewett, 19«3).

'See Means Services, Inc, 81 LA 1213 (Slade,1983); Hillon Hawaiian Village, 76 LA 347 (Ta-naka, 1981); and Vulcan Asphalt Refining Co., 78LA 1311 (Welch, 1982).

" See t: & P Telephone Co., 51 lA 457 (Seibel,19M); Spiegel, Inc., 44 LA 40.5 (Sembower, 19()5):and Scott & Felzer Co., !13-I ARB '| HIM (Kossoff,1983).

mary discharge is appropriate; pro-gressive discipline does not apply inthese cases. There are instances,however, when arbitrators must con-sider exceptional circumstances ormitigating factors, even when up-holding the discharge penalty. InAmerican Welding & ManufacturingCompany, Arbitrator Dworkin wrote:

(Tlherc is practically no category of mis-conduct which auiomatic:ally justifies em-ployment termination. Every employeefaced with discipline is entitled to judi-cious consideration of individual mitigat-ing tactors. Oi course, some offenses aremore serious Ihan others and most likelyto justify discharge. Theft is such an of-fense. Generally, stealing from an em-ployer is so contrary lo an employee'sresponsibilities that it literally cancels theemployment relationship. Only in excep-tional circumstances will an arbitrator re-verse an employer's decision to fire aproven thief. But even a thief is entitled tothorough examination of mitigating fac-tors (emphasis added).'*

An arbitrator is duty-bound toconsider all the circumstances pre-sented, especially given the severestigma attached to employees dis-

' Supra note 4, at 252.

TMT ARBITRATION JOURNAL, ShIMhMIJI-R IW), Vol. 44, No. 3

! • *

charged for theft.^" Initially, however,the arbitrator must consider an em-ployer's stated policy, if any, regard-ing employee theft and how thai pol-icy is promulgated and enforced.

Company Policy on Theft

Many companies have writtenrules of conduct for their employeesto follow. The rules are usually dis-seminated to new employees andposted at the plant. Rules of conducttypically include a prohibition againsttheft and specify thaf immediate dis-charfje will result for any employeecaught stealing.

In Kansas City Area Transpor-tation Authority, Arbitrator Mani-scaico summed up the prevailingarbitral attitude toward employeetheff:

An employer is entitled Io expect honestyun the part of employees; and employeeshave the basic responsibility not to stealfrom their employer. Courts arid legisla-tures have fashioned distinctions betweenpetty and grand larceny. In industry,however, theft, regardless of the value ofthe item, is virtually always consideredfirounds for immediate discharge."

The type or degree of theft in-volved apparently does not affect anarbitrator's decision to uphold an em-ployee's discharge. Theft which is malen .se, a wrong in itself, is treatedmuch the same as a mal en lex crime,an action prohibited by law.

For example, in Star-Kist Foods,Inc./' an employee was caught with apiece of raw tuna loin in hislunchbox. The company had a writtenpolicy thaf an employee could bedismissed without prior warning fortheft of company property. The com-

pany also required an employee toobtain a company-property pass priorto removing company property fromthe premises. The arbitrator upheldthe grievant's discharge, finding thatthe grievant was aware of the com-pany-pass requirement, did not pos-sess a pass, and therefore violated acompany rule that required termina-tion. Regardless of the value of thetheft involved, arbitrators emphasizethe employee's knowledge (actual orimplied) of company rules prohibitingsuch conduct when upholding thedischarge penalty.^^

'" It is not uncommon, for example, for an em-ployee who is apprehended for alleged shop-lifting to find his or her name in a local news-paper.

' Kansas ( j ty Area Transportation Authority,pra no1e i, at 41 i.

''' 81 LA .' 77 (Hardbeck, 1983).

^U:nmparf; Canteen Corp., 89 lA 813 (Keefe,1987), wherein the arhitrator found that thecompany improperly discharged the grievant forstealin(5 food. The grievant credibly claimed thatthf food was lun<h (whiih the company pro-vided), which she had not had time to eat. Theemployer did not assert that the grifivant hadfailed to ohiain a tompany pasf, for the removalof food. In upholding the grievances, the arhitra-tor noted that "if management feels this opensthe door lo trumped up excuses permitting theftto become widespread, if can publish and en-force a clear-cut rule requiring passes" {id. at

THFM IN THF WOKKPLACE

Some employers, however, donot have any written rules of conductfor their employees. Nevertheless, inthe absence of a written policy onemployee theft, arbitrators consis-tently hold that employees are re-sponsible for their actions. Theft istheft. Barring exceptional circum-stances, if an employee's guilt is es-tablished by the company, the em-ployee's discharge is invariablyupheld.

Exceptional Circumstances

Arbitrators may deviate from thegeneral rule of summary discharge foremployee theft when exceptional cir-cumstances exist. Such exceptionalcircumstances include cases where(a) the company condones or issomehow Involved in the miscon-duct; (b) the company discharges anemployee for off-duty misconductthat has no connection to the em-ployee's job; and (c) there are miti-gating circumstances related to dis-ability resulting from alcohol or drugabuse.

Company Condones Conduct.When an employee is charged withtheft of company property but thecompany has condoned the practiceor is in some way involved in themisconduct, arbitrators frequentlyfind tbat summary discharge is inap-propriate.

For example, in Carnation Com-pany,''' an employer discharged aunion steward for theft of 14 pads ofpaper, which he obtained, withoutauthorization, from a company sup-plyroom. The union steward intendedto use tbe pads for an official com-pany-union conference. The arbitra-tor found that the employer improp-erly discharged the union steward,because in the past the employer hadcondoned the practice by union stew-ards of taking office supplies from thestoreroom. Furthermore, the unionsteward did not intend to steal thepads for his personal use. Rather,they were to be used for company-related business purposes, which wasconsistent with the past practice ofthe parties.

Off-Duty Misconduct. Cases in-volving an employee arrested fortheft while off duty can present spe-cial problems for the arbitrator. Gen-erally, an arbitrator must examine twoseparate but interrelated considera-tions: the alleged misconduct of theemployee, and the effect of that mis-conduct on the employer's busi-ness. ^

In grievance arbitration, thefindings and determinations in acriminal forum are not dispositive ofthe merits of the case. Rather, em-ployers generally are required toprove that the employee's miscon-duct is significantly related to on-the-job considerations, or that a "nexusrequirement is established betweenthe conduct complained of and somelegitimate facet of the employer'sbusiness."^*" The "nexus," or connec-

tion, must be reasonable and dis-cernible—the misconduct must be in-jurious to the employer's reputationor its product, or the incident mustcause the employee to become inca-pable of performing his or her job attbe same level of competency.^'' Somearbitrators apply the "beyond a rea-sonable doubt" standard of proofwhen deciding off-duty misconductcases.'"

In a recent unpublished award,one arbitrator reinstated a grievantdischarged for shoplifting while offduty. The employer, a food retailer,argued that it had a long-standingpractice of discharging employees forserious off-duty misconduct becausesuch conduct affects their employ-ment relationship with the company.In this case the arbitrator overturnedthe discharge penalty because the

'" Marvin F. Hill, |r., and Anthony V. Sinicropi,Management Rights (Washington, DC: BNABooks Arbilralion Series, 1986).

"" Id. af 217.

''Id.

' "A more detailed discussion of the differingfypes of evidenfiary proof found in employeetheft cases is provided in nole 2b, infra.

*. * . employers generally arerequired to prove that theemployee's misconduct is

significantly related to on-the-job considerations, or

that a 'nexus requirement isestablished between the

conduct complained of andsome legitimate fecet of the

employer's business.'"

'"84 IA 80 (Wrighf, 198.';

24 THF AKHITRATION JOUKNAU SEPTEMBER 1989, Vol . 44, No. .5

employer's investigation of the al-leged off-duty theft was not thor-ough, and there was insufficient evi-dence of the grievant's intent tosteal.'^

Similarly, arbitrators may alsooverturn an employer's discharge de-cision if the penalty is found to be toosevere. For example, the arbitrator inMeans SerWces, /nc./" held that thepenalty of discharge was too severefor a route driver who had pleadedguilty to theft while off duty. Al-though the arbitrator noted that theftof any kind raises serious doubtsabout an employee's trustworthinessin the workplace, the evidence of tbeemployee's conviction did not es-tablish that the grievant's ability toperform his job competently was im-paired, or that the employer's busi-ness was adversely affected by thegrievant's off-duty misconduct. In soholding, the arbitrator emphasizedthe grievant's clean work record andthe fact that the crime was a firstoffense. Arbitrator Slade found that

while tbe employee may have been guilty,the act he may have committed whenameliorated by the mitigating offsets [tbatis, the grievant's work record and first-offender status] was not serious enough tojustify the supreme penalty of discharge. '

Mitigating Circumstances Relatedto Alcohol or Drug Abuse. Arbitratorsconfronted with an employee claim-ing alcohol or drug abuse as a de-fense must consider the individualcircumstances presented before de-ciding whether to uphold a summarydischarge for theft.

As lames R. Redeker states:

Alcoholism as a defense may or may notbe effective, depending on the circum-stances of the case. The conduct or work

''' See, atso, Great Midwest Mining Corp., 82 LA52, 5S (Mikrut, 1984); and Lee Dodge, 84 LA 1073,1077 (Chandter. 1985).

" Supra note 7.

" Id. at 1216. Compare H[tton tHawaiian Vitlaj;*;,supra note 7, in wt-iicti the arbitrator uptield ttiedisctiargo of a tiotet emptnyee who pteadedguilty to assistinj; in the sate of a stolen gunbecause the grievant's misconduet was retatedto his job. The grievant possessed the botet'smaster t<ey, wbicb gave bim access to valuabtoproperty. Evidence estabtished that the griev-ant's supervisor and cowort^ers no longertrusted bim, and the employer woutd rist< liabit-ity ior possibte further crimes committed by thegrievant on its premises if it cbose to re-emptoy

performance whicb result from the aico-holism is tbe basis for discipline, not alco-holism itself. . . .

When the aberrant behavior is so se-vere that it would normally justify sum-mary discharge, alcoholism will be an ef-fective defense when raised for tbe firsttime at tbe discharge bearing, unless theconduct was so hazardous to other em-ployees or sbocked tbe conscience of tbearbitrator that discipline is viewed primar-ily as punisbment.^'

Some arbitrators do not view evi-dence of alcohol or drug abuse asmitigating factors in employee theftcases.-' When rendering their deci-sions, a number of arbitrators con-sider the length of the ennployee'sservice, his or her work record, andthe severity of the abuse problem. In

addition, these arbitrators may alsoconsider whether the employer hasan established employee-assistanceprogram and whether the employeehas asked to participate in the pro-gram in lieu of immediate discharge.If a discharged employee is rein-stated, the reinstatement is almostalways conditioned on the employ-ee's willingness to seek—and have areasonable probability of successfullycompleting—an alcohol or drugtreatment program.'''

" lames R. Rcdet<er, Discipline Policiei and Pro-cedures (Washington, DC: Bureau of NationatAffairs, 19a:i), at 86,

"See Rohr industries, tnc, i-upra note !•>. inwhich an emptoyee's discharj^e for steating froma feltow emptoyee and fnr destruction of com-pany property was uphetd, notwithstanding thrgrievant's claim that tie may have been under iboinfluence of a controtted substance.

^ See, generalty, tia Schneider Denenberg andR. V. Denenberg, Alcohol and Drugs: Issues inthe W()ri<pl3ce (Washington, DC; Bureau of Na-tionat Affairs, 1983). tn Franl< Etkouri and EdnaAsper Llt<ouri, How Arhitration Works, supp. to4tb ed. (Wasbington, DC: tiureau of NationatAffairs. 19fi8), at 133, tbe authors note tbat inCrown Zettarbach Corp., 87 LA 114!") (Coben,1986), the arbitrator held ibat drug use does nolnecessarity invotvc morat turpitude and thatsuch issues sbould be decided on a case-by-casebasis. Additionally, some arbitrators find tbatthe employer's burden of proof in discbargecases involving drug or alcohol abuse may begreater—that is, beyond a reasonable doubt—tban in more general types of discbarge cases.See Maverick Tube Co., Bfj LA 1 (Mitter, 1985)-

THEn IN THh WORKPt-ACX

PROVING EMPLOYEE THEET

Burden of Proof

It is a well-established arbitralprinciple that discbarge is tantamountto industrial capital punishment and"is such serious punitive and finalaction that the employer must carry aheavy burden in supporting such ac-tion."•^•' In cases involving employeetheft, some arbitrators require clearand convincing evidence of the em-ployee's guilt, while others hold thatproof must be beyond a reasonabledoubt.^"

^H;enerat tetcptione Co. of Souttivvest, 79 t.A102, 105 (Hotman, 1982), citing Schnutt< Markets,73 LA 829, 8J2 (19791- tt shoutd be noted that trueindustriat tapitat punishment is "htacktisting, "wherein emptoyers have a gc>nerdtly known andaccepted understanding that certain employeesshalt not be hired,

^''Id., citing Cirdner-Denver Co,, SI LA 1019(Ray, 1968), and Continentat Conveyor & Lquip-ment Co., 69 LA 114.J (Tjcker, 1977). See, forexample, Martin F. Scheinnian, Evidence & Proofin Arbitration (Ithaca, NY: NYSStLR, Cornett LJni-versity, 1977), at 11, wherein it is stated: "Onrei thas been estabtished which party has the burdenot proof, the next question is, what shatt be fheproper standard of that proof? That is, what shatibe the yardstick to determine whether eachparty has met its respective burden? There aregeneratly considered to be three dcj^rees otproof that a party may be r(?quired to sustain:proof beyond a reasonable doubt' is the strict-est quantum of proof; 'preponderance of evi-dence' or 'fair preponderance' is the minimumquantum of proof acceptabte in most arbitrationcases; 'ctear and convincing evidence' liessomewhere between the two."

These three degrees are defined as foltowsin Black's Law Dictionary (St. Paul, MN: WestPublishing Co., 1979): beyond a reasonabledo(yfaf—"fully satisfied, entirely convinced, sat-isfied to moral certainty;" fair preponderance—"evidence sufficient to create in tbe minds of thetriers of fact the conviction that the party uponwhom is the burden has estabtished its case;"and clear and convincing eWfyence--"generatty,Ihis phrase and its numerous variations means'proof beyond a reasonable', i.e.. a welt-founded doubt. Some cases give a tess rigorous,but somewhat uncertain meaning, viz., morethan a preponderance but tess than is requiredin a criminat lase [beyond a reasonabte doubt],"

There is an active debate being waged overthe appropriate standard in arbitration andwhether that standard shoutd change accordingto the atieged intraction, especiatty if the altega-tion might tea(J to criminal prosecution {id. at10-i:i). See, also, Marvin Hilt, Jr., and AnthonyV. Sinitropi, fWdence in Arbitration, 2d ed.(Washington, [3C: RNA tiooks Arbitration Series,1987), at 32-M.

In LIkouri and LIkouri, How ArbilrationWorks, supra note 24, the authors note thatarbitrators continue to require proof beyond areasonable doubt in discharge cases involvingcrirninai misconduct, although there is stilt adivision of opinion on the topic. See AttantaLinen Service, 85 LA 827 (Statham, 198.5); AvisReni a Car System, 85 LA 435 (Atsber, 1985);

Circumstantial Evidence

Quite often, arbitrators are pre-sented with only circumstantial evi-dence in employee tbeft cases, asdirect evidence and eyewitness ac-counts are not always available. Usingcriminal law standards for guidance.Arbitrator Holman, in General Tele-phone Company of Southwest, foundtbat "circumstances relied upon mustbe consistent witb the theory of guiltand inconsistent witb any reasonabletheory of innocence."^' In that case,the arbitrator held Ihat suspicionsalone arc not enough to support adischarge. Because tbe employer badfailed to show that the employee in-tended to steal a teledialer, and therewas only inconclusive, circumstantialevidence to support the discharge,the grievance was upheld.-*"

Intent

Arbitrators usually require evi-dence of an employee's intent to stealcompany property or to act in a dis-honest manner before upholding adischarge. As discussed previously,tbe burden is on the employer topresent such evidence. In both Car-nation Company^'' and General Tele-phone Company of Southwest,^" theabsence of proof that the employeesintended to steal company propertyfor their own use resulted in tbe re-versal of tbo employers' dischargedecisions.

lames R. Redeker notes tbat incases where an employee is accusedof falsifying company records, tbemost crucial factor is proof of intent.Specifically, he states:

An employee may be discharged or other-wise disciptined tor dishonesty or falsifi-cation of company records where tbe cm-

Utility Traiter Manufacturing, 83 tA 680 (t<ich-man, 1984); d\ni Kroger Co., 88 tA 46,) (Wren,1986).

'" Stipi,! note 2.5, .i\ 105,

^" Compare Kansas City Area Transportation Au-thority, supra note 3, in which the arbitratorfound, based upon strong circumstantial evi-dence presented by the emptoyer, that tbe t om-pany acted property in discharging a mainte-nance employee for appropri.Uing tompanymoney in viotation of its rule against theft. See.atso, Chicago Transit Authority and ATtJ, locat308, 76-2 ARB 1 6049 (Larkin, 1976),

-"* Supra note 14,

'" Supra note 23.

ployer can sustain its burden of provingtbat the employee dc:ted with knowledgeof wronf^fulness of the act and with tntentto defraud the company. A prior goodwork record may be insufficient to miti-gate a discharge, because tbe offense isperceived as too serious."

Consistency of Application

It is the duty of tbe arbitrator inemployee theft cases to safeguard theinterests of the discharged employeeby making reasonably sure that thediscipline is jusf and equitable, andthai the offense would appear to rea-sonable and fair-minded persons towarrant discharge.'- An arbitratormust not only determine an employ-ee's guill but also decide whether theetriployer acted in an arbitrary, capri-cious, discriminatory, or unreasona-ble manner." If the employer dis-criminates against the aggrievedemployee by treating him or her dif-ferently from ofber employees guiltyof the same or similar offenses, thearbitrator has tbe authority to modifythe discharge decision and to reducethe penalty to a suspension.

Employers have a vested interestin treating their employees alike incases of employee theft. Dischargingemployees wbo cannot be (rustedand who do not take seriously Ibeirresponsibility to their employers is asound business decision—it sends aclear and unequivocal message toother employees tbat sucb conduct isnot tolerated. Some etnployers,however, may "look the other way"for a time with certain employees andthen suddenly decide to punish anemployee for behavior that is wellestablished in the workplace. To mostarbitrators, tbis constitutes inconsis-tent and disparate treatment and of-ten leads to the sustaining of tbeft-related grievances.

In Vulcan Materials,^'' the em-ployer discharged an employee forfalsifying log books in order to cover

" Redeker, Discipline I'olicies and Procedures,supra note 22, at 119. See, atso, Pringte TransitCo,, supra note (>, in which a discharge penattywas upheld where an employee knowingly filedimproper miteage ctaims for over a year toobtain company monies not due him.

'- Flkouri and Hkouri, How Arbitration Works,supra note 24.

" Safeway Stores, 84 LA 910 (Staudohar, 1985).

" .Supra note 6.

2(, TUL AKtittRATtON JOURNAL, SFPTTMtSt-t? I9H4, Vol. 44, No. .^

up an accident. In arbifration, thegrievant was found guilty of deliber-ately falsifying an official companyrecord; however, because the arbi-trator found that the company hadcondoned the falsification of logbooks in the past and had not dis-charged otber guilty drivers, the dis-cbarge was reduced to a suspension.The arbitrator stated tbat "falsificationof log books, lies and other violationsof company regulations must betreated uniformly.'"' By enforcingtheft/dishonesty policies inconsis-tently, employers run tbe risk thattheir discharge penalties will be re-duced.

Use of Polygraphs

On June 27, 1988, tbe EmployeePolygrapb Protection Act of 1988 wassigned into law.*'' Tbe act probibitsmost private employers from usingpoiygrapb tests to screen job appli-cants or to test current employees,unless tbe company reasonably sus-pects tbat tbe employee was involvedin a workplace theft or incident caus-ing economic loss to tbe employer.

Previously, the overwhelmingweigbt of arbitral authority held tbatpolygraph evidence was inadmissibleto establisb the guilt or innocence ofa grievant because of tbe inborentunreliability of the test.^' Arbitratorstherefore generally refrained frompunishing employees for refusing tosubmit to a polygrapb examination,despite tbeir duty to cooperate dur-ing an investigation into the theft ofcompany property.'"

' Id. at tftB.

"• Pub, t.. mn-.-i47-102, Stat. M6,

'•• Hitt and Sinicropi, Management Rights, supranote t l , dt 273-274. More recently, however,there appears to be ^ome indication that arbitra-tors are admitting such evidence into lhe record,but are affording liltle weight to the polygraphtest results, much like hearsay evidence ad-mitted "for what [t is worth." See note 43, infra.Compare the contrary statistical findings on theadmissibitity of potygraph test resutls in arbitra-tion proceedings in the foitowing two articles:Kimberly |anisc h-Ramsey, "Potygraphs: TheSearch tor Truth in Arbilration Proceedings,"The Arbitration journal A^ (March 1986): 34; andt-terman A. Theet^e and Tina M. Theeke, "TheTruth About Arbitrators' Treatment of PotygraphTests," The Arhitration lournal 42 (December1987): 23,

In tbe past, arbitrators bave con-sidered polygrapb testimony wbentbe parties stipulated to its reliabilityand tbe evidence was used only fodetermine the truthfulness of thegrievant.''' Witb the passage of tbenew law and its exceptions regarding

'•' t-lilt and Sinicropi, Management Rights, supranote 15, at 274, See, atso, Brint<'s tnc, 70 LA 909(Pinkus, t978); and Kisco Co., 75 LA .574, 582(Stix, 19801.

employees suspected of tbeft in tbeworkplace, arbitrators increasinglymay find polygrapb evidence to be anintegral but unstipulated part of tbeemployer's case. Under section 7(d)of tbe new law, employers may re-quest tbat an employee submit to apolygrapb examination if (1) tbe em-ployer is involved in an ongoingworkplace investigation of tbeff orotber incidents that cause economicloss to tbe employer; (2) tbe em-

'^ Sec C]len Manor1t78 (Katz, t%3l.

^ for Jewish Aged, 8t LA

IN THH WORKI't 27

ployee had access to the propertyunder investigation; (3} the employerhas a "reasonable suspicion" that theemployee was involved; and (4) theemployer provides the employee witha written statement giving its reasonsfor testing particular employees.

Additionally, arbitrators shouldnote that under section 8[a)(1) of thelaw, the exemption in section 7

shall not apply if an employee is dis-charged, disciplined, denied employmentor promotion, or otherwise discriminatedagainst in any manner on the basis of theanalysis of a polygraph test chart or refusalto take a polygraph test, without addi-tional supporting evidence. The evidencerequired by such subsection may serve asadditional supporting evidence.

Arbitrators should be aware thatthe law specifically prohibits employ-ers from disciplining, discharging,discriminating against, or denyingemployment or promotions to pro-spective or current workers solely onthe basis of polygraph test results.Consequently, an interesting devel-opment to monitor will be what de-gree of evidentiary weight, if any,arbitrators will accord polygraph testresults under the new law.*"

Testimony of Witnesses

When grievants testify on theirown behalf, arbitrators must carefullyconsider the testimony to ascertainwhether the grievants are being truth-ful or prevaricating to save their jobs.Similarly, when other witnesses arecalled, the arbitrator must also payclose attention to their testimony.

''" According to Norman Ansley, Quick Refer-ence Guide to Polygraph Admissihility, LicensingLaws, and Limiting Laws, 14th ed. (New York:Arrifirican Polygraph Association, I9«9), there i adivision among the federal circuit courts and thestate courts as to the admissibility of polygraphevidence. Compare, for example. United StatesV. Winter, 633 F.2d 120 (1st Cir. 1981), cert,denied, and United States v. tarly, 657 F.2d 195(8th Cir, 1981); In re Kathleen, 231") Cal. Rplr. 205(Cal. App. 1987) (new state law pt^rmits admissi-bility on stipulation, but not over objection,except in juvenile cases), and Smilh v. UnitedStates. 389 A.2d 1356 (D.C. App. 1978). Stu; also.United States v. V^illiams, 737 F,2d 594 (7tb Cir.1984] (appellate court will not overturn decisionby trial court to exclude polygraph evidence assuch decision is within tbe trial court's dis-cretion). What is apparent from the courts' dif-fering views on the admission of polygrapbevidence is fhat if such evidence is admitted, if isnof given mu(h weighf—much like fbe currentarbitral trend.

"Discharging employees whocannot be trusted and whodo not take seriously their

responsibility to tiieiremployers is a sound businessdecision—it sends a clear andunequivocal message to otheremployees that such conduct

is not tolerated."

The arbitrator must determinewhether the witnesses are disinter-ested parties or bear some ill willtoward the grievant that may colortheir testimony/^

When witnesses are called to tes-tify in employee theft cases, the arbi-trator credits the testimony of all dis-interested witnesses and weighs theevidence carefully. If there is a dis-crepancy among the witnesses, it isthe arbitrator's function to determinethe veracity of the testimony and themost plausible condition of the dis-puted events.^^ The arbitrator alonemust sift through all the testimonyand make a logical and well-reasonedconclusion.

Testimony by Other Employees.Occasionally, eoworkers are called totestify against a grievant. The arbitra-tor must determine whether tbere isan ulterior motive behind such testi-mony (for example, if the witnessharbors any ill will toward the griev-ant, or if the company induced the

witness to testify against the griev-ant). The arbitrator must also know ifthe witness saw the crime firsthand oris only offering hearsay evidence."

If an employee is called to testifyfor the grievant, it is usually to sup-port the grievant's good character orto provide an alibi. Whether the wit-ness is called to testify for or againstthe employee, however, the arbitra-tor must make a credibility judgmentregarding tbe witness and the prof-fered testimony before reaching anyfinal conclusions.

Testimony by Supervisory Employ-ees/Security Guards. More frequently,supervisory employees or securityguards are called to testify against thegrievant. In Beatrice/Hunt-Wesson,''^the arbitrator upheld the discharge ofan employee who was caught stealing

"' Safeway .Sfores, supra note 33, at 913.

"See South Penn Oil, 29 IA 718, 720 (Duff,19S7), and Mark VII Sales, 75 LA 1062, lOhb(O'Connell, 1980J, for criteria used in defermin-ing veracify.

•" Hearsay is defined as "tesfimony given by aperson who states, not what he knows of hisown knowledge, buf what he has beard Iromotbers." Dallas L. Jones, ed,. Problems of Proofin Arbitrafion, Proceedings of fhe 19th AnnualMeeting of the Nafional Academy of Arbitrators(Wasbington, DC: Bureau of National Atfairs,1967), at 24'J. Hearsay Is usually admitted byarbitrators "for wbaf if is wortb," in order tomake the record complete. See Continental Pa-per Co., If, LA 727 (Lewis, 1951).

•" Supra note 4,

28 "lUb AKBITRAnON |OUKNAL, .SII'TEMBEK 1989, Vol. 44, No.

plywood—a decision that was basedupon the eyewittiess testimony of thecompany security guard. The arbitra-tor found the guard's testimony to beplausible, believingthat he had ampleopportunity to see the grievant re-move the plywood and that he had noreason to fabricate his story. In con-sidering the testimony of supervisoryemployees or security guards, arbitra-tors must consider the witnesses' mo-tives for testifying and whether theyhave firsthand knowledge of the inci-dent. Where a credible supervisorywitness presents an eyewitness ac-count of the offense, an arbitrator haslittle choice but to uphold the dis-charge decision.

Problem of Missing Witnesses. If akey witness in an employee theft caseis missing, the arbitrator may find thatthere is insufficient evidence to sup-port the discharge penalty. In Hawai-ian Airlines, Inc.;^'' the arbitrator heldthat the airline had failed to establishthe discharged employee's theft of abox of fish. The company providedonly circumstantial evidence of theemployee's alleged crime. It failed tocall a key witness—a security guardwho was no longer employed by thecompany—lo testify as to the griev-ant's alleged actions, instead pre-senting a hearsay document in lieu ofthe guard's testimony. The arbitrator,noting that the company could havecompelled the guard to testifythrough the arbitrator's subpoenapower,'"' concluded that to consideronly the document (which could notbe cross-examined by the union)would be unfair, improper, and prej-udicial. Accordingly, because thecompany failed to meet its burden ofproof, the arbitrator sustained thegrievance.

Witnesses who are either nolonger employed by the company or

•••• 80 LA 2fit) (Damon, VIBTf.

"'' See t-titt and Sinicropi, Evidence in Arbitration,supra note 26, at 2B5-286, Ttie authors note ttiatItie subpoena power oi an arbitrator is (luttinedunder the U.S. Arbitration Act, 9 U.S.C. § 4. Sec,atso, Timothy t-feinsz, David R. Lowry, Joan Tor-zewski, "The Subpoena Power ot Labor Arbitra-tors," Utah Law Review 1(41 (1979): 29, tor agenerat discussion ot ihis topif. See, aiso, Timo-thy t-teins/, "The Use of Arbitral Subpoenas," inTim eornslein and Ann Costine, gen. eds., laborand Employment Arbilration, vol. t (New York:Matthew Bender & Co., t988).

are fearful of testifying because ofpossible retaliation may be compelledto testify by subpoena. Either partymay request that the arbitrator issue asubpoena, or the arbitrator may de-cide to subpoena a witness on his orher own initiative.

To avoid compromising theirneutral image, arbitrators shouldcarefully consider possible negativeconsequences before subpoenaing awitness without a request from one ofthe parties. Howard R. Sacks andLewis S. Kurlantzick note that:

[Tlhe missing witness creates a serious andcomplex dilemma (or the labor arbitrator.As a practical matter, it forces considera-tion of the question of the arbitrator'srelationship to the parties as well as thequestion of calling the witness. There is noquick and easy answer to this dilemma.We have examined three possible simplesolutions—to ignore the problem and relyon acceptability to the parties, to followtbe law, and to do as judges do—andfound tbem all wanting."^

If an arbitrator believes that amissing witness' testimony is crucialto the outcome of an employee theftcase, he or she may unreservedlysubpoena the witness. In so doing,the arbitrator must be mindful of hisor her responsibility as a neutral androle as a gatherer and determiner offact. On the other hand, an arbitralorwho believes that the parties shouldpresent Iheir cases unaided may onlysubpoena a missing witness if re-quested to do so by one of the par-ties.*"

A probably more acceptablemanner in which to obtain the testi-mony of an otherwise missing witnessis through the use of a formal dep-osition, wherein a sworn statement istaken from a witness who wouldrather not appear at the arbitral pro-ceeding. In deposition proceedings,the representatives of the parties aregiven the opportunity to question awitness on direct examination andcross-examination in the presence ofa certified court stenographer. From

an arbitrator's perspective, this ispreferable to one side submitting awritten statement or a sworn affidavitof the missing witness. (More oftenthan not, the opposing advocate willraise objections to the introduction ofsuch statements because, amongother reasons, "it is not possible tocross-examine a piece of paper." In-deed, this is a legitimate objection,and most arbitrators would be reluc-tant to admit such documents intoevidence. ' ) The taking of a dep-osition, although not an ideal solu-tion, presents a reasonable option tothe missing witness problem undercertain circumstances.

RIGHTS OF EMPLOYEES

A full discussion of the rights ofemployees in theft cases is beyondthe scope of this article. An examina-tion of an arbitrator's perspective onemployee theft, however, would notbe complete without a brief summaryof some of the constitutional issuesinvolved. These include privacy rightsof employers against unreasonablesearch and seizure actions, the FifthAmendment right against self-incrim-ination, and due process concerns.

Privacy Rights

Searches and surveillance aregenerally viewed by employees as aninvasion of privacy, yet they are con-sidered by employers to be a neces-sary evil to prevent theft. It is thefunction of the arbitrator to decidewhether the employer's actions vio-late the employee's contractual orcivil rights, while balancing the em-ployer's right to discipline an em-ployee for theft.

In American Welding & Manufac-turing Company,^''Arbitrator Dworkinfound that the employer's search formissing tools in the grievant's toolcontainer (which was open to every-one in the shop) "was not notably

""' t-toward R. Sacks and Lewis S. Kurlaiil7ict<,Missing Witnesses, Missing Testimony and Miss-ing Theories (tJoston: t5utterworth Legat Pubtish-ers, 1988), at :i9-4(l.

•"* See, aiso, Heinsz, "Jhv Use ot Arbitrat Sub-poenas," in Bornstein and Gostine, gen. eds.,Lahor anci Employment Arbitration, supra note46,

• As noted in ttt<ouri and Eltiouri, How Arhitra-tion Works, supra note 24, at J27, affidavits areused in arbitration but are subject to the sametimitations as other types of bearsay evidence.SeeSoutb Haven Rubber Co., 54 LA 6. 3, 654-655(Sembower, 1970); and Borden Co., 20 LA 48J,484 (Rubin, 1953].

''" Supra note 4.

THtFT IN THi; WORKPLACE 29

invasive or in violation of his civilrights." The arbitrator further foundthat "opening grievant's lunchboxwas certainly not the equivalent tobreaking into a washroom locker con-taining only personal belongings."^'Dworkin, concluding that the griev-ant's civil rights were not violated,denied the grievance.''^

If an employer's search and/orsurveillance is deemed unreasonableby an arbitrator because it is too inva-sive, the discharge penalty may bereduced to compensate the grievantfor the violation of his or her rights.Such cases, however, turn entirelyupon individual circumstances andmust be decided on a case-by-casebasis.

Fifth Amendment Rights

In Illinois Power Company,'"^ theemployee refused to cooperate in theemployer's investigation of chargesthat the employee was off his routeand stealing gas service. ArbitratorPenfield noted:

While the Constitution protects an ac-cused in criminal proceedings, it does notguarantee that an employee vv-ho invokesthe Fifth Amendment during the investiga-tion of infractions of company rules andpolicies will continue to be employed."'

The arbitrator in Illinois Power Com-pany concluded that while the em-ployee had the right to invoke theFifth Amendment to defend himselffrom criminal charges,''"' he could not

'^ Id. at 252.

' See, generally, Alan F. Westin, IndividualRights in the Corporation: A Reader (New York:Pantbeon Books, 1980], and Alan F. Westjn,Privacy and Freedom (New York: Atheneum,1%7). See. also, Alan F. Westin, Resolving fm-ployment Disputes Without Litigation (Washin;;-ton, DC: Bureau of National Affairs, 1988).

''' Supra note 4.

''* Id. at S90. See, also, Simonize C:o., 44 LA 658,663 (McClury, 19M).

" Tfie Fifth Amendment provides: "No personshall be field to answer for a capital, or otherwiseinfamous crime, unless on a presentment orindiitment of a Grand (ury, except in casesarisinfi in Ifie land or naval forces, or in theMilitia, when in actual service in time ot War orpubfit danger; nor shall any person be subjectfor the same offence to be twice put in jeopardyof life or limb; nor shall be compelled in anycriminal case to be awitness against himselt, norbe deprived of life, liberty, or property, withoutdue process ot law; nor shall private property betaken for pubfic use, without just compensa-tion."

use it to protect himself from losinghis job for refusing to support thecompany's legitimate investigation.Accordingly, the arbitrator upheld thedischarge penalty.

The Illinois Power case demon-strates that constitutional protectionsagainst criminal charges do not al-ways extend to the workplace. Aslong as the employer conducts a le-gitimate investigation, supported byreasonable cause, the employee mustcooperate in the process—even if itleads to self-incrimination—or risklosing his or her job.

Industrial Due Process

The notion of industrial due pro-cess—that an employee has a right tobe heard and that the employer mustfollow established procedural rules, ifany, before discipline is issued—isnot always applicable in employeetheft cases. Summary discharge for aserious offense such as theft is thegeneral rule. However, if the contractcontains procedures that must be fol-lowed before discipline can be issued(for example, allowing the employee

to be heard), an arbitrator must en-sure that the employer has compliedwith its contractual requirements be-fore initiating removal proceedings.'*'

PREVENTING EMPLOYEE THEFT

There are definite steps that em-ployers can take to prevent or reduceemployee theft. These include a thor-ough interview and hiring process,monitoring employees, and promul-gating a clear-cut policy covering em-ployee theft. It is imperative that suchrules and policies be established,and, if need be, that the employer canprove that all employees have beeninformed of such policies.''' Addi-tionally, employers should be awarethat the personal climate of theirworkplace may also help decreaseincidences of employee theft.

•'' See American Welding & Manufacturing Co.,supra note 4.

" This may be aciomplished hy having employ-ees acknowledge receipt of company hand-books that include, among other things, clear-cul rules and policies prohibiting fheft and dis-honesly.

THF ARBITRATION JOURNAL, SEPTFMBhK 1989, Vol. 44, No. .i

Hiring PoliciesPerhaps the best way to prevent

employee theft is to implement a de-tailed hiring process. The use of per-sonal interviews, resumes, and refer-ences are helpful, but carefullyscreening applicants antj takingenough time to make an informedselection is critical, tn the hotel andrestaurant industry, some employersalso use an "honesty questionnaire"to screen applicants, which has beenhelpful in identifying dishonest can-didates. The test consists of "yes/no"-type questions that inventory atti-tudes about honesty. Additionally,cross-checking references, and ask-ing those references about other peo-ple to contact, is another valuablemethod for collecting information todetermine a potential employee'sfitness for

Monitoring EmployeesThere is some disagreement re-

garding the scope and effectivenessof employee monitoring. The mostcommon and effective types of em-ployee monitoring in the workplaceare computer, telephone, and videomonitoring.^''

The downside of monitoring em-ployees is that it produces tremen-dous stress and diminishes productiv-ity. Employees generally view suchmonitoring as intrusive and as a signthat their employers do not trustthem. Monitoring employees is mosteffective when it is humanized. In-forming employees in advance of themonitoring and giving them a chanceto rebut any findings is important.Being sensitive as to where not toplace the monitors (for example,restrooms or employee lounges) mayalso decrease the negativity attachedto employee monitoring.

Promulgating a Clear-Cut Policy

Arbitrators find it difficult looverturn an employer's discharge de-cision if the company has a well-defined policy on employee theft andthe grievant had knowledge of the

policy prior to his or her proven of-fense. The employer should makeclear that theft of any kind is notallowed, including small items suchas food or office supplies.*^' The policyshould be in writing, posted in aconspicuous place, and disseminatedverbally to the workers. Moreover,the employer should communicate itsintolerance for theft clearly, force-fully, and in a consistent manner. Anyincidence of employee theft shouldbe dealt with swiftly. If not, fellowemployees may grow resentful andmorale will suffer.''^

Personal Climate of the Workplace

In their three-year scientific studyon employee theft, Richard Hollingerand John Clark found that "employ-ees who felt that their employers andsupervisors were concerned genu-inely with the workers' best interestsreported the least theft and devi-ance."^^ On the other hand, "whenemployees felt exploited by the com-pany or by their supervisor (who rep-resents the company in the employ-ees' eyes), we were not surprised tofind these workers more involved inacts against the organization as amechanism to correct perceptions ofinequity or injustice.'"'^

Employers should not underes-timate the power of positive actionand reaction. By establishing and en-forcing a well-defined policy, em-ployers may be able to reduce em-ployee theft. In addition, bygenuinely caring about the concernsof its workforce, employers may beable to minimize substantially inci-dents of employee theft.

CONCLUSION

From an arbitrator's perspective,an employee theft case can be one ofthe mosf difficult type of discbargecase lo decide. An employee who ispermanently tagged with the stigmaof being a thief might find it difficult

•^ CHRAQ News & Reviews (Novcmt)er 198fi); al13,

••'' Individual Employee Rights Manual (Wdbtiinj;-lon. DC: Bureau of National Affairs, 1981!), at509.

' ' 'To giv(> an example, ttneft policie;, migtir in-clude a provision ttiat st rap or leftover items arecompany property and cannot be removeii witti-out permission.

*•' Supra note 58,

''^ ttollinger and Clark, Theft hy t/np/oyees, .su-pra note 2, at 142.

to ever again secure meaningful em-ployment. Indeed, discharge for theftis effectively a form of "industrialcapital punishment."

Because of the negative import ofsustaining such an adverse employeraction, arbitrators are generally verycircumspect in examining and weigh-ing the quality and quantity of evi-dence presenfed by an employer insuch cases. Both labor and manage-ment should be mindful that the bur-den of proof falls on the employer tojustify its actions in such cases.

tn general, where the employerhas produced evidence that an em-ployee unequivocably has committedtheft, arbitrators are not reluctant tosustain an employer's discipline, in-cluding discharge. After all, the pro-verbial pendulumof fairness and trustswings both ways. Just as an em-ployee is expected to have trust in theemployer, the company also has areasonable basis for expecting hon-esty from its employees. This is argu-ably a fundamental quid pro quo ofthe employment relationship. Oncethe quid pro quo is breached, theemployment relationship may legiti-mately be terminated.

Notwithstanding this reciprocalrelationship of trust, there are in-stances where arbitrators are led toreverse an employer's adverse actionin theft-related cases, either becauseof insufficient evidence or because ofunclear or inconsistent application ofemployee theft rules. Invariably, insuch cases, a mixed message may beperceived by employees concerningthe consequences of employee dis-honesty.

On this score, an arbitrator mayattempt to clear such misperceptionsby expressing—or restating—thegeneral industrial relations principlethat employee theft and/or dis-honesty is "wrong in itself" (that is,mal en se) and is the basis for thedischarge. In Ihose instances wherean olherwise guilty employee is rein-stated, it is suggested that both theemployer and the labor organizationhave the mutual responsibility forrestating and promulgating the prin-ciples and rules concerning theft anddishonesty as well as the conse-quences for noi abiding by theseprinciples. H

IN THE WORKPLACE 31