In April 2009, the Henderson City Council voted to fire City Manager Mary Kay Peck after they determined that she had created a “culture of fear” for her employees.
A month after she was fired, Peck filed a federal lawsuit and a grievance against the city over her termination. The lawsuit was dismissed, and the grievance was sent to arbitration.
The City claimed that it terminated Peck “for cause,” while Peck claimed that she was fired “not for cause.” According to Peck’s employment agreement, being terminated “not for cause” entitles her to a severance payment equal to the balance of her three-year employment term.
According to the Arbitrator, “The only dispute that exists is whether the City has to pay Ms. Peck for its decision to terminate her or not pay Ms. Peck for its decision to terminate her.”
The Arbitrator stated that “Cause is defined in the contract in paragraph 6, but the only portion of that definition that has any application to the present disupte is ‘(iv) intentional and continued failure to substantially perform her duties under this Agreement, subject to Section 6(b) of this Agreement.'”
On December 21, 2010, the Arbitrator ruled that Peck did not intentionally or continually fail to substantially perform her job duties, so the City’s termination is considered “without cause.” As a result, he ruled that the City owes Peck compensation pursuant to the terms of a “not for cause” termination.
The Arbitrator did not consider workplace bullying to be an “intentional and continued failure” to substantially perform one’s duties.
On February 15, 2011, Henderson City Council approved a settlement where the city will pay Peck $1.3 million.
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