40:0763(62)AR - - Panama Canal Federation of Teachers and DOD Dependents Schools, Panama Region - - 1991 FLRAdec AR - - v40 p763



[ v40 p763 ]
40:0763(62)AR
The decision of the Authority follows:


40 FLRA No. 62

FEDERAL LABOR RELATIONS AUTHORITY

WASHINGTON, D.C.

PANAMA CANAL FEDERATION OF TEACHERS

(Union)

and

U.S. DEPARTMENT OF DEFENSE

DEPENDENTS SCHOOLS

PANAMA REGION

(Agency)

0-AR-1863

DECISION

May 3, 1991

Before Chairman McKee and Members Talkin and Armendariz.

I. Statement of the Case

This case is before the Authority on an exception to an award of Arbitrator Roger I. Abrams filed by the Union under section 7122(a) of the Federal Service Labor-Management Relations Statute (the Statute) and part 2425 of the Authority's Rules and Regulations. The Agency filed an opposition to the Union's exception.

As a result of the Panama Canal Treaty, the Agency (DODDS) took over the operation of the schools for American dependents in Panama. The salary schedule for teachers who had been employed by the Canal Zone Government Schools at the time the treaty was implemented in 1979 provided for higher rates than the DODDS salary schedule. When the Agency took over the schools, the Canal Zone teachers were given special pay retention when they were transferred to the Agency. When the Agency removed a number of these teachers from the retained salary schedule and placed them on the DODDS salary schedule, a grievance was filed. The Arbitrator found that the teachers had been properly placed on the DODDS salary schedule and denied the grievance.

We conclude that the Union fails to establish that the award is deficient, and we will deny the exception.

II. Background and Arbitrator's Award

As an ancillary matter to the negotiation of the Panama Canal Treaty (the Treaty), the Agency took over the operation of the schools for American dependents in Panama. When the Agency took over the schools, the teachers who had been employed by the Canal Zone Government Schools were transferred to the Agency. Because the salary schedule for Canal Zone teachers provided for higher rates than the DODDS salary schedule, the President of the American Federation of Teachers, Albert Shanker, raised with the Secretary of the Army the issue of the wage and retirement benefits of these teachers, who were described as "transfer-of-function" teachers. In subsequent correspondence and discussions with Deputy Under Secretary of the Army Michael Blumenfeld, Shanker sought to retain the Canal Zone Schools' salary schedule and prevent the imposition of the lower DODDS salary schedule. As support, Shanker cited the following provision, which was included as Article X, Section 2(b) of the Treaty ratified by Congress in 1979:

The terms and conditions of employment to be established will in general be no less favorable to persons already employed by the Panama Canal Company or Canal Zone Government prior to the entry into force of this Treaty, than those in effect immediately prior to that date.

Although Congress retained the ultimate power to set the pay policy, Blumenfeld and Shanker reached an understanding (Blumenfeld-Shanker understanding), which was considered by Congress in enacting legislation implementing the Treaty. The understanding was summarized by Blumenfeld in a memorandum for the record dated May 2, 1978. The memorandum provided, in part, as follows:

To avoid a reduction in pay or a "pay freeze" such teachers will retain their base salary schedule as it exists on the effective date of the treaty until they reach pay comparability with the DODDSS [sic] salary schedule. This retained base salary will be increased by one-half of the dollar amount of the DODDSS [sic] annual salary increase for the same class and step. Teachers will also be granted their normal step increases on the retained schedule and will receive the full dollar amount of the DODDSS [sic] annual increase upon reaching step 15 of the retained schedule, or when pay comparability is reached.

In addition, in a letter to Shanker dated February 24, 1978, concerning sick leave and length of the school year for transfer-of-function teachers, Blumenfeld stated: "We will now further agree to provide four more days pay at each teacher's applicable daily rate until the teacher is moved to the DOD worldwide teachers pay schedule." Award at 4 (quoting from Blumenfeld letter).

Secretary Blumenfeld also testified before Congress on the understanding reached with the Union, as follows:

Because the Department of Defense Dependent Overseas School System pay scales are significantly lower than the Canal Zone Government scale, the Defense Department, the American Federation of Teachers and the Department of the Army have agreed on a system to phase transferring teachers into the DOD pay system over time. These teachers will retain their base salary schedule as it exists on the effective date of the treaty until the Defense School salary schedule rises to meet it. But, to avoid a pay freeze, their retained base salary will be increased by one-half of the dollar amount of the annual salary increase for the same class and step. They will also be given their normal step increases on the retained schedule. We believe this to be a fair and equitable agreement.

Id. at 4-5 (quoting Blumenfeld's testimony). The Union issued a public statement complaining that Blumenfeld's testimony ignored the understanding that all teachers on the top step of the retained salary schedule would receive the full DODDS annual increase. The Union did not complain about Blumenfeld's statement that the purpose of the agreement was "to phase transferring teachers into the DOD pay system over time." Id. at 4 (quoting from Blumenfeld's testimony).

In the Panama Canal Act, Congress restated Article X, Section 2(b) of the Treaty, 22 U.S.C. § 3671(a)(1), and addressed the pay of transfer-of-function teachers, as follows:

Section 903(c) of title 20 shall not apply with respect to any teacher who was employed by the Canal Zone Government school system on September 30, 1979, and who was transferred from such position to a teaching position which is under the Department of Defense Overseas Dependent School System and the permanent duty station of which is in the Republic of Panama, until the rates of basic compensation established under section 903(c) of title 20 equal or exceed the rates of basic compensation then in effect for teachers who were so transferred.

22 U.S.C. § 3671(c)(1). In a subsequent appropriations bill, Congress provided, as follows:

None of the funds appropriated by this Act or any other Act appropriating funds for fiscal year 1980 or for subsequent fiscal years shall be available to pay the basic compensation of an individual employed on September 30, 1979, as a teacher or in a teaching position with the Canal Zone Government who is transferred to such a position in the Department of Defense in an amount in excess of the greater of:

(a) the amount of basic compensation an individual with comparable experience and level of education is entitled to receive pursuant to section 5(c) of the Defense Department Overseas Teachers Pay and Personnel Practices Act (20 U.S.C. 903(c)); or

. . . . . . .

(c) for fiscal year 1981 and subsequent fiscal years--the amount payable based on the rates of basic compensation in effect (including the limitations contained in this section) on September 30th of the fiscal year preceding the fiscal year for which payment is to be made, plus an amount equal to one-half of the increase in basic compensation for the school year in progress on October 1st in the fiscal year for which payment is to be made compared to the basic compensation for the previous school year, that an individual with comparable experience and level of education is entitled to receive pursuant to section 5(c) of the Defense Department Overseas Teachers Pay and Personnel Practices Act (20 U.S.C. 903(c)).

Department of Defense Appropriations Act, 1980, Pub. L. No. 96-154, § 766, 93 Stat. 1139, 1163 (1979). The conferees on the Appropriations Act explained their actions, as follows:

[B]y including this section in the bill the conferees reaffirm the intent of the House report that the DOD school teachers in Panama who were employed in the schools in the Panama Canal Zone prior to October 1, 1979, should after fiscal year 1980 receive one-half the pay raise approved for DOD school teachers until such time as the average rate of pay for Canal Zone teachers transferred to the DOD system is comparable to that of their counterparts in the Overseas Dependents Schools system.

The conferees also agreed that in view of the significant wage differential between these teachers and other teachers in the DOD system it was not equitable or reasonable to provide full pay raises for teachers at the top step of their grade, as the DOD negotiated Agreement has stipulated, until pay rates are comparable.

125 Cong. Rec. H35455 (daily ed. December 11, 1979) (explanatory statement of conferees). A later appropriations act revised these provisions to provide full annual adjustments for transfer-of-function teachers at the top step of the retained salary schedule.

In 1987, the pay rates under the retained salary schedule of a number of transfer-of-function teachers, who had not reached the top step of the retained salary schedule, were matched or exceeded by the pay rates on the comparable DODDS salary schedule. The Agency took the position that, in these cases, pay retention terminates and all future pay adjustments are based on the DODDS salary schedule. Accordingly, the Agency removed these transfer-of-function teachers from the retained salary schedule and placed them on the DODDS salary schedule. A grievance was filed disputing the Agency's actions. The grievance was not resolved and was submitted to arbitration.

Pursuant to their collective bargaining agreement, each party obtained interpretations from its proponent regarding the pay-setting policy for transfer-of-function teachers for submission to the Arbitrator. The Agency's proponent, the Assistant Secretary of the Army (Civil Works), interpreted the pay-setting policy as requiring absorption of the teachers into DODDS pay schedule as quickly as possible without reducing their pay or implementing a pay freeze. In the Assistant Secretary's view, this would happen as soon as pay comparability was reached between the DODDS pay schedule and the teacher's salary. The Union's proponent, National Union President Shanker, issued a contrary interpretation. He maintained that the intention of the pay-setting policy was that teachers would not be adversely affected by the implementation of the treaty, which clearly mandated that the terms and conditions of employment would not be less favorable to persons who had been employed prior to the Treaty's effective date.

The Arbitrator stated the issue to be whether the Agency wrongfully removed the transfer-of-function teachers from the retained salary schedule and placed them on the DODDS salary schedule. The Arbitrator noted that the Blumenfeld-Shanker understanding and the subsequent legislation implementing the Treaty had the purpose of protecting the preferred position the transfer-of-function teachers had under their salary schedule prior to the Agency's assumption of the operation of the schools. The Arbitrator acknowledged that under the terms of the Treaty, the teachers "in general" were "not [to be] adversely affected," but questioned what that meant. Award at 11. The Arbitrator stated that as the record reflected, for some teachers the retained salary schedule and the DODDS salary schedule provided the same rate of pay. In the Arbitrator's view, this constituted "pay comparability," and the key question became what happens after pay comparability has been reached. Id. at 12. The Arbitrator noted that the Union had argued that these teachers could not be converted to the DODDS salary schedule prior to reaching the top of the retained schedule because they would be penalized by losing a large incremental increase. The Union had contended that such action would be contrary to the Treaty, which provided for terms and conditions of employment that would be no less favorable than those in existence immediately prior to the implementation of the Treaty.

The Arbitrator determined that the Union had the burden of proof and failed to prove its position. The Arbitrator found that there was ample evidence that teacher movement from the retained pay schedule to the DODDS schedule was contemplated. The Arbitrator noted that Blumenfeld's congressional testimony stated as much when he said that the Department of the Army and the Union had agreed on a system to phase transferring teachers into the DODDS pay system over time. The Arbitrator further noted that although Shanker had objected to parts of Blumenfeld's testimony, Shanker had not objected to this clear reference to the elimination of the retained salary schedule. The Arbitrator also noted that Blumenfeld had indicated in his February 24, 1978, letter to Shanker, without subsequent objection by Shanker, that teachers would be moved to the DODDS salary schedule. In the Arbitrator's view, this suggested that Blumenfeld was restating their understanding. However, the Arbitrator was most persuaded by the stated purpose of the Blumenfeld-Shanker understanding, which was that transfer-of-function teachers would retain their base salary schedules "until they reach pay comparability with the [DODDS] salary schedule." Id. at 13 (quoting Blumenfeld's memorandum for the record dated May 2, 1978). The Arbitrator found that a reasonable interpretation of this language was that when a teacher reaches pay comparability, the teacher is to be placed on the DODDS salary schedule, just as the Agency had done. Accordingly, the Arbitrator denied the grievance.

In denying the grievance, the Arbitrator rejected the Union's argument that these teachers were being penalized. He found no penalty because he found that the Agency's actions were what was intended and all to which the teachers were entitled. The Arbitrator also rejected the Union's reliance on an affidavit from the local Union president, stating that there was never an agreement to transfer to the DODDS salary schedule, and a memorandum from the Agency's director of schools in Panama, which stated, as part of the grievance procedure, that he agreed with the position of the Union. The Arbitrator rejected the reliance on the affidavit because the local Union president was not a "proponent" of the pay-setting policy. Although the Arbitrator found the school director's memorandum troubling, he similarly rejected reliance on the memorandum because the director had not been a "proponent" of the pay-setting policy. He also rejected reliance on the memorandum because the director had determined that the Union's approach would further labor-management peace in the face of an interunion rivalry. The Arbitrator found that such a factor cannot be determinative of what was intended in 1979. In the Arbitrator's view, the parties intended that the Agency could act as it had in moving transfer-of-function teachers to the DODDS pay schedule when they reached pay comparability.

III. Position of the Parties

A. The Union's Exception

The Union contends that the award is contrary to the Panama Canal Treaty and the Panama Canal Act (the Act), implementing the Treaty.

The Union notes that because the Blumenfeld-Shanker understanding preceded the ratification of the Panama Canal Treaty and the statutory implementation of the Treaty, the Treaty and the Act govern the pay policy for the transfer-of-function teachers. The Union argues that the Arbitrator misinterpreted the mandate of Article X, Section 2(b) of the Treaty and 22 U.S.C. § 3671(a)(1) that subsequent terms and conditions of employment would be no less favorable to persons already employed by the Canal Zone Government. The Union also argues that the Arbitrator misinterpreted the intent of 22 U.S.C. § 3671(c)(1) that transfer-of-function teachers be exempt from the DODDS salary schedule "until the rates of basic compensation established under section 903(c) of title 20 equal or exceed the rates of basic compensation then in effect for teachers who were so transferred." The Union asserts that although the Arbitrator recognized that the purpose of the Act was to protect transfer-of-function teachers, the award denies the teachers such protection.

The Union maintains that a large incremental increase at the top step of the retained salary schedule is lost if teachers are converted to the DODDS salary schedule prior to reaching the top step. The Union argues that by denying these transfer-of-function teachers the opportunity to receive the incremental increase at the top step of the retained schedule, the award is contrary to Article X, Section 2(b) of the Treaty and the intent of the Act. The Union claims that the continued narrowing of the pay gap between the top step of the DODDS schedule and the retained schedule supports its position that pay comparability is reached when there is parity between the top steps of each schedule. The Union also claims that the concurrence with the Union's position by the Agency's school director should be a strong indication that the parties were in agreement as to the interpretation and application of the Blumenfeld-Shanker agreement until higher Agency authority forced arbitration.

The Union argues that its position is supported by the decision of the Comptroller General in Comp. Gen. No. B-205126 (unpublished) (Feb. 28, 1983). The Union notes that in that decision, the Comptroller General determined that firefighters employed in the Canal Zone continued to be entitled to overtime pay under the Fair Labor Standards Act by virtue of 22 U.S.C. § 3671(a)(1) because a denial of that pay would have significantly impaired their terms and conditions of employment contrary to the Treaty and the Act. The Union contends that, similarly, the award is contrary to the Treaty and the Act by permitting the premature integration of the retained salary schedule with the DODDS salary schedule when comparability had not yet been reached at the highest steps.

B. The Agency's Opposition

The Agency contends that the Union's exception constitutes nothing more than an attempt to relitigate this case before the Authority and provides no basis for finding the award deficient. The Agency claims that the Union's exception is flawed because it presumes that both Article X, Section 2(b) of the Treaty and 22 U.S.C. § 3671(a)(1) provided for pay increases. The Agency argues that these provisions ensured that pay rates in effect in 1979 would not be reduced. In the Agency's view, they did not prevent a pay freeze. The Agency maintains that it required subsequent appropriations actions by Congress to provide for any annual adjustments in salary for transfer-of-function teachers. The Agency notes that without those subsequent actions, these teachers would have received only step increases and teachers at the top level of the schedule would have received no increases at all. The Agency argues that, therefore, the Union's contention that the award is contrary to the Treaty and the Act by denying the top step increase is without merit.

The Agency further argues that the Comptroller General's decision cited by the Union offers no support for its exception. The Agency maintains that the decision simply demonstrates that the intent of Congress was to ensure that there were no reductions in terms and conditions of employment. The Agency claims that other unpublished decisions of the Comptroller General, for example, B-205126, November 29, 1983; B-205126, June 17, 1982, indicate that the "grandfather" provisions of the Treaty and the Act were not intended to cover situations where employees were earning more than before the Treaty was implemented. The Agency argues that, therefore, the terms and conditions of employment of transfer-of-function teachers with respect to basic pay cannot be considered to be generally less favorable than before the Treaty and the Act because there had been no reduction in their pay.

IV. Analysis and Conclusions

We conclude that the Union fails to establish that the award is contrary to the Panama Canal Treaty or the Panama Canal Act.

The pay of these transfer-of-function teachers was specifically addressed in the Panama Canal Act, as set forth in 22 U.S.C. § 3671(c)(1). The Arbitrator found that section 3671(c)(1) did not prevent the removal of the transfer-of-function teachers from the retained salary schedule and placement on the DODDS schedule. We find that the Union in its exception fails to establish otherwise.

We conclude that the express language of section 3671(c)(1) supports the Arbitrator's award. Stated affirmatively, section 3671(c)(1) provides that the DODDS salary schedule shall apply to a transfer-of-function teacher when the DODDS salary schedule equals or exceeds the rates of compensation under the retained salary schedule. The Arbitrator held that the Agency properly applied the DODDS salary schedule to the transfer-of-function teachers involved in this case when the DODDS salary schedule equaled or exceeded their rate of compensation under the retained salary schedule and properly removed them from the retained salary schedule. In our view, the Union has failed to demonstrate in what manner the award permitting the Agency's action is contrary to section 3671(c)(1) so as to provide a basis for finding the award deficient.

Furthermore, we find that the Arbitrator's interpretation and application of section 3671(c)(1) is consistent with the Blumenfeld-Shanker understanding, which Congress was fully aware of and considered in enacting section 3671(c)(1). Deputy Under Secretary of the Army Michael Blumenfeld specifically testified to Congress on the understanding that had been reached. He stated that "the Defense Department, the American Federation of Teachers and the Department of the Army have agreed on a system to phase transferring teachers into the DOD pay system over time." Award at 4 (quoting testimony). Moreover, this testimony accurately reflected the memorandum of record of May 2, 1978, in which Blumenfeld summarized the understanding and agreement on the pay-setting policy for transfer-of-function teachers. The memorandum stated that transfer-of-function teachers would retain their salary schedule until "they reach comparability with the DODDS salary schedule." The Arbitrator found that, pursuant to a reasonable reading of the Blumenfeld-Shanker understanding, the transfer-of-function teacher at pay comparability is removed from the retained salary schedule and that the Union had failed to persuade him otherwise.

We agree with the Arbitrator that a reasonable reading of the Blumenfeld-Shanker understanding permitted the Agency to move the transfer-of-function teachers involved to the DODDS salary schedule. We find that the Union's contentions to the contrary fail to establish that the award is contrary to law. The Union's contentions constitute nothing more than disagreement with the Arbitrator's interpretation and application of the understanding and agreement and provide no basis for finding the award deficient. See National Treasury Employees Union, Chapter 243 and United States Department of Commerce, United States Patent and Trademark Office, Arlington, Virginia, 37 FLRA 470 (1990) (disagreement with the arbitrator's interpretation of a memorandum of understanding and the agency's obligations under that memorandum of understanding provided no basis for finding that the arbitrator misinterpreted law).

Having found that section 3671 did not prevent the placement of these transfer-of-function teachers on the DODDS salary schedule, we additionally find that such placement did not conflict with the Treaty or the Act. As previously noted, Article X, Section 2(b) of the Panama Canal Treaty provides:

The terms and conditions of employment to be established will in general be no less favorable to persons already employed by the Panama Canal Company or Canal Zone Government prior to the entry into force of this Treaty, than those in effect immediately prior to that date.

22 U.S.C. § 3671(a)(1) similarly provides that terms and conditions of employment, including specifically rates of basic pay, shall generally be no less favorable after the implementation of the Treaty. The Union argues in its exception that, by denying the transfer-of-function teachers involved the opportunity to receive the large incremental increase at the top step of the retained schedule, the award is contrary to Article X, Section 2(b) of the Treaty and section 3671(a)(1). We disagree. In our view, Article X, Section 2(b) of the Treaty and section 3671(a)(1) guarantee that terms and conditions of employment will be generally no less favorable than prior terms and conditions of employment. These provisions ensured that the pay rates of the transfer-of-function teachers would not be reduced and prevented the Agency from imposing a salary schedule on transfer-of-function teachers providing for rates of basic pay lower than the rates they were paid prior to implementation of the Treaty. As noted by the Agency in its discussion of subsequent appropriations acts, section 3671(c)(1) effectively froze the pay rates of transfer-of-function teachers because it provided for no annual increases to the retained salary schedule. Annual increases were only subsequently provided in appropriations acts. Thus, the Union fails to support its position that Article X, Section 2(b) of the Treaty and section 3671(a)(1) guarantee that transfer-of-function teachers will be granted the opportunity to receive the incremental increase at the top step of the retained salary schedule and prevent the Agency from imposing on transfer-of-function teachers the DODDS salary schedule providing for rates of basic pay that are higher than the teachers were paid prior to implementation of the Treaty.

We also find that our view of Article X, Section 2(b) of the Treaty and section 3671(a)(1) is supported by the decisions of the Comptroller General, including Comp. Gen. No. B-205126 (unpublished) (Feb. 28, 1983), cited by the Union. These decisions indicate that Article X, Section 2(b) of the Treaty and section 3671(a)(1) were intended to guarantee that terms and conditions of employment would be generally no less favorable than prior terms and conditions of employment. Comp. Gen. No. B-205126 (unpublished) (Nov. 29, 1983). These provisions were intended to ensure that there would be no reductions in the terms and conditions of employment as a result of the implementation of the Treaty. Comp. Gen. No. B-205126 (unpublished) (Feb. 28, 1983). They were not intended to apply to situations where the terms and conditions of employment were more favorable after the implementation of the Treaty. Comp. Gen. No. B-205126 (unpublished) (Nov. 29, 1983). In our view, th