Should pension payments be offset against a back pay award?

That is the question raised in a recent Petition filed by Public Service Company of New Mexico seeking to overturn an award of Arbitrator John Fletcher.

Grievant had been terminated for an alleged safety violation which resulted in his injury. Arbitrator Fletcher sustained the grievance and reversed the termination. As to remedy, he ordered the Company to reinstate grievant and compensate him for wages and benefits lost. The award further provides

The only offsets the Company may take from the back pay due [grievant] is earnings he made working within the state of New Mexico, as evidence in this record is uncontroverted  and conclusive that he was unable to work in his trade in that state because he had been fired by the Company.

 The Arbitrator also awarded interest on the back pay, at the prevailing IRS rate, to be compounded quarterly. He retained jurisdiction for six months to deal with issues arising from the remedy awarded.


While acknowledging that a hearing before the Arbitrator on remedy questions is scheduled for later this month, the Company filed its Petition to avoid any statute of limitations issue, and reserved its right to amend its Petition based upon the Arbitrator’s ruling on the remedy issues.

The Company does not challenge the Arbitrator’s decision on the just cause issue, but asserts that the remedy is contrary to the cba, and constitutes an improper penalty. It challenges the restriction on offsets for back pay earned outside the state of New Mexico (which it states is in excess of $250,000.) and the award of any interest “at more than the applicable IRS annual interest rate which varied between 3-5% during the backpay period.”

With regard to the pension question, the Petition alleges:

[The Company] paid $145,867.32 in pension benefits to [grievant] after he retired effective December 1, 2010. [Grievant] would not and could not have received such pension benefits in addition to wages from [the Company], [grievant] did not contribute to the pension plan, [grievant] is not required to re-pay the pension benefits he has received, and when [grievant] retires, the payment of the pension benefits will resume at the same level.

The Company maintains, therefore, that the pension payment should be allowed as an offset.

This post, Should pension payments be offset against a back pay award?,  by  first appeared on  at http://arbitrationmatters.blogspot.com/.

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