The leader of the union that represents health-care employees at Temple University Hospital on Sunday threatened a strike over an arbitration dispute involving a terminated employee accused of sexual harassment.

"We're prepared to shut it down," said Henry Nicholas, president of AFSCME District 1199C, which represents hospital employees across the city.

There's almost no chance, union representatives said, of an actual strike - the union contract contains a no-strike clause. But for its president to even mention a strike - at a hospital that has historically enjoyed a strong, amicable relationship with its union - shows how upset the union has become over the arbitration dispute.

It centers on a female employee at Temple University Hospital who was fired after allegedly sexually harassing a coworker. Temple officials say she made lewd comments and showed the coworker sexually explicit material in the workplace.

The employee accused of harassment filed a grievance, and an arbitrator later decided she should be reinstated without back pay or retroactive benefits even though she had "engaged in a pattern of conduct that cannot be tolerated in the workplace."

The arbitrator said the employee's 30 years at Temple Hospital justified her reinstatement.

The hospital appealed the decision, writing in a statement Sunday that "length of service should not shield employees from their responsibility to conduct themselves in a professional manner at all times."

"We didn't share the arbitrator's conclusion - that the employee's length of service gave her a pass," Temple Hospital spokeswoman Rebecca Harmon said.

Union members say the case isn't about the employee, but rather about the hospital's decision to challenge an arbitrator's ruling.

"To us, it means we can have no confidence that any of that arbitration is ever going to have any meaning," said Peter Gould, 1199C executive vice president.

About 500 people attended a short rally over the dispute outside Temple Hospital's North Broad Street entrance Sunday afternoon, cheering and dancing as Nicholas spoke.

"If you want peace, obey the contract!" Nicholas told the crowd, and he promised: "We'll be back."

He said he hoped to hear from hospital officials soon on the matter and added that the case was the first arbitration ruling he'd come across where the hospital decided to challenge an arbitrator.

Temple Hospital officials said that the case was unusual and that union members should not expect regular challenges to arbitration rulings.

"While respecting the arbitration process, Temple University Hospital filed its appeal because the conduct at issue violates the commonwealth's dominant public policy against sexual harassment in the workplace," they wrote in a statement.

Harmon said she expected the university keep meeting with union officials over the dispute.