This case is yet another example of what happens when HR terms of art that folks involved in related fields know the meaning of come to be construed by people who aren’t used to those terms of art.

Other sites have commented on this case fully enough.

I would just add that in circmstances like these, you might ask a colleague who is not involved in HR/labor issues what they think something means before you get whacked on appeal like that.  Having said that, it seems like this may have been a deliberate test case.