Over the years, William Waters had a certain way of dealing with female co-workers, which is precisely what got him fired.

According to court papers, when Waters, a printer for the New York newspaper Newsday, would pass by a female co-worker, "certain offensive and unauthorized contact took place," a pattern the courts said continued over a five-year period until Waters was fired on grounds of sexual harassment in the summer of 1988.

But Waters, a member of the Communications Workers of America union, thought that the dismissal was unfair and appealed his case to an arbitrator under the terms of his union contract. A year later, the arbitrator ruled that Waters must be reinstated because Newsday had not followed the contract requirements that the company build a record against Waters with warnings that would justify his dismissal.

Newsday refused to take him back and took the case to court.

Earlier this month, the U.S. Court of Appeals for the Second Circuit upheld the firing on what could be precedent-setting grounds. If there is a clearly stated public policy -- in this case that sexual harassment in the workplace is forbidden -- that doctrine takes priority over the terms of the union contract. "In sum," the court said in its ruling, "there is an explicit, well-defined and dominant public policy against sexual harassment in the workplace."

The court said the arbitrator's reinstatement order "completely disregarded the public policy against sexual harassment in the workplace." The effect of the ruling, it said, was to "perpetuate a hostile, intimidating and offensive work environment" that prevents Newsday from carrying out its legal duty to eliminate sexual harassment in the workplace.

In upholding a lower court decision, the appellate court found that a court can refuse to enforce an arbitrator's award if it's contrary to public policy. As a result, it said, the courts "may refuse to enforce {labor} contracts that violate law or public policy."

Waters's attorney, Alan E. Wolin, warned that the court may be setting a "dangerous precedent" and said he is considering an appeal to the U.S. Supreme Court. Wolin said the ruling removes any flexibility an arbitrator might have. "I think the court has mandated that an employee be fired," he said.

Wolin called the actions by Waters "very innocuous acts." He said "what Waters had done was not so serious as to warrant dismissal." He said his client had already been off the job without pay for a year when he was ordered reinstated without back pay.

Alison Wetherfield of the National Organization for Women's legal defense and education fund, agreed that the case sets a precedent, but to her it's a precedent worth setting. Both NOW and the Equal Employment Opportunity Commission (EEOC) filed briefs in support of Newsday in the Waters case.

"I hope it sets a strong precedent," she said. "More and more arbitrators are going to have to deal with sexual harassment. This is an important message and I hope at the very least the word will be out among arbitrators."

Wetherfield noted that Waters had been suspended by an arbitrator for several days in 1983 for sexual harassment with a warning against further incidents. "Newsday had tried to fire this guy twice. This is a man who wasn't taking any warnings from anyone," she said.

Brad Coupe, an attorney with Morgan Lewis & Bockius who represented Newsday, said appeals courts have been extremely reticent about applying the public policy standard because the policies often are much too murky. He said the Waters case was significant because the policy against sexual harassment was so clear-cut.

A lower court, in initially upholding the dismissal, ruled that to reinstate Waters was to "compel his female co-workers to submit to his sexual harassment (conduct of which he has been repeatedly adjudicated) as a condition of their employment." Such an action, the lower court ruled, would "permit his sexual harassment to threaten to perpetuate a hostile, intimidating and offensive work environment."

In upholding Waters's dismissal, both courts cited EEOC rules against sexual harassment. "The public policy against sexual harassment in the workplace is well recognized," the appeals court said. The court cited the EEOC compliance manual, which states that "unwelcome, intentional touching of a charging party's intimate body areas is sufficiently offensive to alter the conditions of her working environment and constitute a violation of {the 1964 Civil Rights Act}. More so than in the case of verbal advances or remarks, a single unwelcomed physical advance can seriously poison the victim's working environment."