NOTE ON LAST CHANCE AGREEMENT CASE: AFGE & ARMY

A hand signing a document titled "Last Chance Agreement," symbolizing a critical opportunity for resolution.

AFGE Local 1770 and Department of the Army, 2022 BNA LA 252, 2022 BL 281061, 22-2 ARB ¶ 8040, 2022 WL 3644541, 122 LRP 27029, (Cornelius,

Arb, July 25, 2022); Also available on arbitrator.org/opinions, 90. US Army

March 18, 2026

Arbitrator E. Frank Cornelius, PhD, JD

This is the first of several blog posts about cases in which the arbitrator has addressed the issue of Last Chance Agreements (“LCA”). The basic principles of such contracts were described in the arbitrator’s blog post of March 3, 2026, entitled “Understanding Last Chance Agreements in Grievance Settlements”. Below is an AI Summary of the subject case above, followed by the arbitrator’s discussion of Legal Points raised in the case.

AI Summary

This arbitration decision addresses a grievance filed by the union after the United States Department of the Army terminated an employee who had previously entered into a Last Chance Agreement. The case centers on whether the agency properly enforced that agreement after the employee committed additional attendance-related violations.

The grievant was employed as an HVAC Equipment Technician at Fort Bragg, North Carolina, one of the world's largest U.S. Army installations. The dispute began when the agency accused the employee of serious misconduct related primarily to time and attendance. Investigations determined that on several occasions in 2020, the employee had falsely reported hours worked and overtime on his timecard when he was not actually present at work. These incidents, along with earlier attendance problems, led the agency to propose the employee’s removal from federal service.

Rather than proceed directly with termination, the parties resolved the matter through a Last Chance Agreement in 2021. Under this agreement, the agency agreed to hold the proposed removal in abeyance for a period of two years. In place of removal, the employee received a thirteen-day suspension and was allowed to remain employed under strict conditions. The agreement specified that any further misconduct, including violations related to attendance, reporting procedures, or workplace rules, could result in the agency immediately reinstating the original removal action. The employee signed the agreement voluntarily and acknowledged that the agency had sufficient grounds for discipline.

During the period covered by the Last Chance Agreement, the employee again encountered problems with attendance and communication with his supervisors. On one occasion he informed his supervisor by text message that he would be late to work but ultimately arrived several hours after the start of his shift without proper authorization for leave. In other instances, he failed to follow established procedures for notifying management of schedule changes. The agency concluded that these actions violated the terms of the Last Chance Agreement and therefore reinstated the previously held removal, terminating the employee in December 2021.

The union filed a grievance challenging the termination and the validity of the agreement. It argued that the Last Chance Agreement had procedural flaws, including the claim that the union was not adequately involved in drafting the agreement. The union also asserted that the agency had not conducted a proper investigation into the alleged violations and pointed to a typographical error related to the dates of the employee’s suspension as evidence that the disciplinary process was flawed.

The arbitrator rejected these arguments after reviewing the record. The decision concluded that the employee knowingly and voluntarily signed the Last Chance Agreement and had the opportunity to consult with union representatives or legal counsel before doing so. The arbitrator also found that the agency had provided sufficient notice of the charges and had conducted an adequate investigation before determining that the agreement had been violated. The typographical error identified by the union was determined to be insignificant and did not affect the substance of the disciplinary action.

Because the evidence showed that the employee failed to comply with the attendance and reporting requirements set out in the agreement, the arbitrator determined that the agency was entitled to enforce the terms of the Last Chance Agreement. The grievance was therefore denied, and the agency’s decision to remove the employee from federal service was upheld. The ruling reinforces the principle that once an employee voluntarily enters into a Last Chance Agreement, arbitrators will generally enforce its terms strictly when subsequent misconduct occurs.

Legal Points by Arbitrator

According to Lizzio v Department of the Army, 534 F3d 1376, 1379 (Fed Cir 2008), citing Link v Department of the Treasury, 51 F3d 1577, 1582 (Fed Cir 1995), a grievant challenging an LCA bears the burden of prevailing by a preponderance of the evidence on one of the following issues:

(1)  Whether grievant complied with the Last Chance Agreement;

(2)  Whether the agency breached the Last Chance Agreement; or

(3) Whether grievant knowingly and voluntarily enter into the Last Chance Agreement.

Although Lizzio involved a Merit Systems Protection Board review of agency action, the Supreme Court has held that arbitrators are governed by the same standards as the Merit Systems Protection Board in reviewing actions taken by agencies.  Cornelius v Nutt, 472 US 648, 660-661 (1985).Top of Form

Lizzio, supra, 534 F3d @ 1383, explained a grievant’s rights to challenge an LCA in this regard:

If, as a matter of law, an appellant may establish Board jurisdiction in the face of a last chance agreement by establishing that he or she did not breach the agreement, it necessarily follows that, to be able to exercise that right, the appellant must be told in what way he or she allegedly breached the agreement. Otherwise, the appellant will not know what he or she has to prove was not done. This is nothing more than what due process requires. See Licausi v. Office of Pers. Mgmt., 350 F.3d 1359, 1363 n. 1 (Fed.Cir.2003) (pointing out that both this court and the Board have recognized “the due process principle that a person must be given notice of the charge on which the action against him is based”). This principle applies when an employee is charged with breach of a last chance agreement. Otherwise, an employee will not be able to exercise his right to “overcome his waiver of appeal rights by proving that he complied with the last chance agreement.” Link, 51 F.3d at 1582. 

Perhaps the most important point made in the subject case is that an LCA defines what “just cause” means under an LCA:

While agreeing that some investigation is required by due process, the arbitrator was not convinced that an investigation must be conducted in accordance with the collective bargaining agreement when a last chance agreement is alleged to have been breached. Elkouri & Elkouri, How Arbitration Works (ABA/Bloomberg BNA, 8^th ed 2016) @ 15-54 has this to say on the subject:

When considering whether there is just cause for discharge under such agreements, arbitrators do not apply the same due process considerations or procedural protections as under a normal discharge or disciplinary matter.²⁶⁰

²⁶⁰ Eaton Cutler-Hammer Corp., 110 LA 467, 470-71 (Franckiewicz, 1998) (a last chance agreement typically defines what “just cause” will mean for the particular employee involved) … .

Case law further militates against the Union’s assumption regarding the applicability of the CBA. In Bakers Union Factory, #326 v ITT Continental Baking Co, 749 F2d 350 (6^th Cir 1984), the Court held that an arbitrator is bound by the terms of a last chance agreement and may not look to the collective bargaining agreement for additional authority. The Court elaborated on its Bakers Union holding in Tecnocap LLC v Graphic Communications Conference/International Brotherhood of Teamsters Local 24M, 777 Fed Appx 804 ; 2019 US App LEXIS 18503 *; 2019 WL 2537816:

The Union appealed, claiming that the controlling question was whether Tecnocap had “just cause” to fire Witherow and that the district court erred by holding that the LCA “vitiated” the CBA’s just-cause provision. But in Bakers Union Factory No. 326 v. ITT Continental Baking Company, 749 F.2d 350, 354-55 (6th Cir. 1984), we held exactly that: we upheld a company’s dismissal of an employee for violating his LCA, over the union’s resort to the CBA, by explaining that “parties who reach a settlement [i.e., LCA] pursuant to the terms of a collective bargaining agreement do not intend that an arbitrator may amend the terms of the [LCA] settlement” and, therefore, “an arbitrator to whom the dispute is submitted is bound by the terms of that [LCA].” Similarly, in Ohio Edison Company v. Ohio Edison Joint Council, 947 F.2d 786, 787 (6th Cir. 1991), we considered an LCA in which the union had negotiated an employee’s continued employment, coupled with participation in a treatment program, but provided for dismissal if he failed to attend treatment. When the arbitrator disregarded the LCA and reinstated the employee despite the breach of the LCA, “because he viewed the discharge as ‘unreasonably harsh,’” we reiterated our Bakers Union holding that “last chance agreements are binding in arbitration,” and we vacated the arbitration award for failure to adhere to the LCA. Id. Thus, pursuant to our precedent, an LCA can supersede a CBA’s just-cause provision.

More to the point, however, is that an LCA is an agreed-upon predetermination of “just cause.” It is a concession by the employee (and the union) that the employer already had “just cause” to discipline the employee, who is thereafter on the grace of one “last chance” in exchange for a promise of compliance, the violation of which all three agree will be “just cause” for immediate discipline.

A lesson to be learned is that an LCA defines what “just cause” means in context, and that an arbitrator may not resort to a collective bargaining agreement for additional authority but must follow the LCA.  

In the subject case, although the union was not involved, the grievant had an opportunity to seek union assistance, but did not do so. In a collective bargaining context, it is prudent to have union involvement. As will be seen in subsequent blog posts, unions themselves may use an LCA to save a member’s job.

The principles applied in the subject case also apply to state and local government LCAs, because of the 14^th Amendment. Cleveland Board of Education v Loudermill, 470 US 532 (1985). Even in the private sector, an employee wrongly terminated under an LCA may have a breach of contract claim.

For additional information, visit Dr. Cornelius' website, arbitrator.org, or CONTACT him directly.