Labor — official salaries

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United States Court of Appeals For the Seventh Circuit

Civil

Labor — official salaries

A company may not legally pay the full-time salaries of the President and Benefit Representative of the union representing the company’s employees.

“Paying the full-time union salaries of Local 745’s President and Benefit Representative is ‘so incommensurate with [their] former employment [at Titan] as not to qualify as payments “in compensation for or by reason of” that employment.’ Id. Rather, these payments are ‘by reason of’ the union’s President’s and Benefit Representative’s service to Local 745 members, and those members include both employees working for Titan and employees working for the Freeport School District. We reach this conclusion based on the plain meaning of Section 302, although our holding also furthers the statutory purpose of preventing conflicts of interest. Because such payments are illegal, the arbitrator’s decision violates explicit public policy and thus ‘we are obliged to refrain from enforcing it.’ W.R. Grace & Co. v. Local Union 759, Int’l Union of United Rubber, 461 U.S. 757, 766 (1983). Accordingly, we reverse the district court’s decision and vacate the arbitrator’s award.”

Reversed and Remanded.

12-1152 Titan Tire Corp. of Freeport, Inc., v. United Steel, Paper & Forestry, Rubber, manufacturing, Energy, allied Industrial & Service Workers International Union

Appeal from the United States District Court for the Northern District of Illinois, Kapala, J., Manion, J.