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44 FLRA No. 111

FEDERAL LABOR RELATIONS AUTHORITY

WASHINGTON, D.C.

UNITED STATES DEPARTMENT OF THE TREASURY

INTERNAL REVENUE SERVICE

AUSTIN COMPLIANCE CENTER

AUSTIN, TEXAS

(Respondent/Agency)

and

NATIONAL TREASURY EMPLOYEES UNION

CHAPTER 247

(Charging Party/Union)

6-CA-90506

DECISION AND ORDER

May 27, 1992

Before Chairman McKee and Members Talkin and Armendariz.

I. Statement of the Case

This unfair labor practice case is before the Authority on exceptions to the attached decision of the Administrative Law Judge filed by the General Counsel and the Union. The Respondent filed an opposition to the exceptions.⁽¹⁾

The complaint alleges that the Respondent violated section 7116(a)(1), (5), and (8) of the Federal Service Labor-Management Relations Statute (the Statute) by failing and refusing to implement the terms of an arbitrator's award and engaging in unreasonable delay in implementing and complying with the award. The complaint also alleges that the Respondent violated section 7116(a)(1) and (8) of the Statute by failing and refusing to implement fully the arbitrator's award when the Respondent failed and refused to pay backpay and other benefits due the grievant as required by the award.

The Judge found that the Respondent violated section 7116(a)(1), (5), and (8) of the Statute by failing to comply timely with the arbitration award when it unreasonably delayed offering reinstatement to the employee and delivering the backpay check to the employee. In this regard, the Judge noted that "compliance with the award required contact and dialogue and [the] Respondent's failure and refusal to consult or negotiate in good faith with [the Union] also violated § [71]16(a)(5)." Judge's Decision at 15. The Judge further found that the Respondent violated section 7116(a)(1) and (8) of the Statute by failing and refusing to fully comply with the award of backpay when it denied the employee backpay for the 2-week period from September 24, 1989, to October 8, 1989. However, the Judge found that the Respondent did not violate section 7116(a)(1), (5), and (8) of the Statute by delaying the processing of the employee's backpay claim; and section 7116(a)(1) and (8) of the Statute by deducting all of the employee's interim earnings from the backpay award.

To remedy the unfair labor practices, the Judge recommended that the Authority issue a cease and desist Order and a Notice requiring the Respondent to pay the employee backpay for the 2-week period at issue together with interest to the date of payment. The Judge further found that damages for allegedly adverse tax consequences suffered by the employee were not warranted.

Pursuant to section 2423.29 of the Authority's Rules and Regulations and section 7118 of the Statute, we have reviewed the rulings of the Judge made at the hearing and find that no prejudicial error was committed. We affirm the rulings.⁽²⁾ Upon consideration of the Judge's decision, the exceptions, the opposition, and the entire record, we adopt the Judge's findings, conclusions, and recommended Order to the extent that they are consistent with this decision. No exceptions were filed to the Judge's conclusions that the Respondent violated section 7116(a)(1), (5), and (8) of the Statute. Accordingly, we adopt the Judge's conclusions and recommended remedy as to those matters.⁽³⁾

However, contrary to the Judge, we find that the Respondent violated section 7116(a)(1), (5), and (8) of the Statute by failing to comply timely with the arbitration award when it unreasonably delayed processing the employee's backpay claim. Moreover, we find that the Respondent violated section 7116(a)(1) and (8) of the Statute by failing and refusing to comply fully with the arbitration award when it improperly deducted the employee's outside overtime and "moonlighting" earnings from the award of backpay. We will modify the Judge's recommended Order and Notice accordingly.

II. Background

The facts of this case are not in dispute and are set out fully in the Judge's decision. The facts will be referenced only as needed to resolve the issues raised by the parties' exceptions and opposition.

III. Positions of the Parties

A. General Counsel's Exceptions

The General Counsel excepts to the Judge's failure to conclude that the Respondent violated section 7116(a)(1), (5), and (8) of the Statute by unreasonably delaying processing the employee's backpay claim. The General Counsel argues that the Judge used the "wrong period of time" in concluding that the Respondent had not unreasonably delayed. General Counsel's Brief in Support of Exceptions at 2. According to the General Counsel, the Judge should have measured the timeliness of the Respondent's compliance with the backpay portion of the award from the date that the award became final, late July of 1989, rather than from the date on which the employee was reinstated, October 8, 1989, because the "Respondent's obligation to comply with all aspects of the award became effective" at the end of July of 1989. Id.

The General Counsel argues that the Respondent's "attitude toward this arbitration has been [one] of delay and avoidance" and that the "Respondent's motivation in the handling of the entire matter of compliance was suspect or in its best light not motivated by the best of intentions." Id. at 4, 5. The General Counsel contends that "the totality of [the] Respondent's actions show[s] unreasonable delay . . . ." Id. at 6. In these circumstances, the General Counsel maintains that the Judge should have found that the Respondent violated the Statute by unreasonably delaying processing the employee's backpay claim.

The General Counsel also excepts to the Judge's failure to conclude that the Respondent violated section 7116(a)(1) and (8) of the Statute by failing and refusing to comply fully with the arbitration award when it offset the employee's interim overtime earnings against the award of backpay. The General Counsel asserts that it is "clear that under Comptroller General, Merit Systems Protection Board [MSPB], National Labor Relations Board [NLRB] and Federal District and Circuit Court precedent that [the employee's] outside overtime earnings should not have been deducted from his backpay award." Id. The General Counsel argues that the Judge erred when he "ignored the great weight of Federal Court and Federal administrative law precedents" which hold that "overtime earned during the backpay period in excess of that which would have been earned in the desired job should not be offset." Id. at 6, 7.

The General Counsel also argues that the Judge "misconstrued the Federal Personnel Manual [FPM]." Id. at 6. The General Counsel contends that the portion of the FPM relied on by the Judge "pertains only to the situations where an employee already had a part time job prior to their [sic] removal from government service" and "has no applicability here." Id. at 9 (citing FPM Supp. 990-2, Book 550, Subchapter S8-7c).

The General Counsel further argues that the Judge "misconstrued the applicable regulations." Id. Specifically, the General Counsel argues that the applicable regulations, 5 C.F.R. § 550.805, "do not seek to punish an employee by depriving that employee of overtime pay that the employee worked in an outside job but would not have received if the employee had been working for the agency." Id. at 10. The General Counsel argues that the backpay period covers the amount of time that an employee would have worked for the agency "and not . . . all of the time in the day." Id. According to the General Counsel, the effect of the Judge's decision is "to punish [employees] for their initiative and to benefit the agency for work the employee[s] engaged in, outside of the time they would have worked for the agency." Id. at 11.

The General Counsel asserts that the Judge's decision creates a "strange disparity in Federal sector employment law." Id. at 12. In this regard, the General Counsel argues that, based on the Judge's decision, if an employee is reinstated by the MSPB, that employee's interim overtime earnings will not be deducted from the backpay award. However, the General Counsel maintains, "if the same employee went to an arbitrator[,] the Agency (under the decision of the Administrative Law Judge) could acceptably and legally deduct those overtime monies earned in outside employment." Id.

B. Union's Exceptions

The Union excepts to the Judge's failure to find that the Respondent's obligation to reinstate the employee arose on April 14, 1989, rather than in late July of 1989. Therefore, the Union contends that the Judge should have found that "since on or about April 14, 1989, [the] Respondent has violated section[] 7116(a)(1), (5) and (8) of the Statute by unreasonably refusing to immediately comply with the arbitrator's reinstatement order . . . ." Union's Brief in Support of Exceptions at 16.

The Union adopts by reference the General Counsel's exception concerning the Judge's failure to find that the Respondent violated the Statute by engaging in unreasonable delay in processing the employee's backpay claim. However, with respect to this exception, the Union argues that the Judge should have found that the Respondent violated the Statute beginning on or about April 14, 1989, rather than late July 1989.

The Union argues that the Judge also should have found that the Respondent violated section 7116(a)(1) and (8) of the Statute by deducting from the employee's gross backpay the amount that the employee earned on interim overtime and the amount that he earned on his interim jobs "that he could have earned concurrent with working his [Agency] job." Id. at 31. The Union disputes the Judge's finding that "'the nature of [the Judge's] review renders immaterial decisions of the Courts and/or the [NLRB] with respect to the private sector, or the decisions of the [MSPB], or of Courts under the Back Pay Act . . . .'" Id. at 17-18 (quoting Judge's Decision at 24-25).

The Union argues that in determining whether the Respondent acted reasonably, the Judge should have examined whether the Respondent implemented the arbitration award consistent with decisions of the Federal courts, the MSPB, the NLRB, and the Office of the General Counsel of the Comptroller General. According to the Union, those decisions "clearly hold that . . . 'other employment' [as defined in 5 C.F.R. § 550.805(e)(1)] excludes overtime work performed for an outside employer and excludes other outside employment that [the employee] could have performed concurrent with his [Agency] job." Id. at 20 (emphasis in original). The Union notes that the employee in this case would not have worked overtime for the Respondent and that the hours that the employee worked at his two jobs during the backpay period "rarely overlapped with his assigned tour of duty at the [Agency]." Id. at 30. The Union maintains that, based on judicial and administrative precedent, the Respondent improperly deducted from the employee's backpay entitlement "outside overtime wages" and amounts that the employee "could have earned concurrent with working his [Agency] job." Id. at 27, 31.

The Union argues that "public policy considerations demand" that the Authority reverse the Judge and apply the analytical framework used by the courts and other authorities. Id. at 27. Otherwise, the Union contends that "[i]nformed employees who understand that a back pay award from the [MSPB] can be worth substantially more than the same award from an arbitrator, can be expected to select the forum where their award is worth more." Id. at 27-28.

C. Respondent's Opposition

The Respondent argues that the Judge properly found that the Respondent did not unreasonably delay processing the employee's backpay claim. The Respondent contends that the arbitration award was "difficult to implement" and that the Respondent "attempted to prepare [the employee's] back pay check in a reasonable amount of time." Respondent's Opposition at 18. The Respondent further contends that the Judge correctly measured the Respondent's compliance with the backpay portion of the award from the time of the employee's reinstatement, October 8, 1989. According to the Respondent, the argument of the Union and the General Counsel that the Respondent "should have begun the preparation of the back pay check prior to [the employee's] reinstatement" is "illogical because the [Respondent] must have the employee reinstated to the rolls before back pay calculations can be made." Id. at 18-19.

The Respondent also argues that it did not act unreasonably or in a manner inconsistent with applicable rules and regulations when it deducted all of the employee's outside income from his backpay entitlement. The Respondent asserts that, pursuant to the FPM, only outside income held by an employee "prior to separation from [F]ederal employment" is not deducted from an employee's backpay entitlement. Id. at 10 (citing FPM Supp. 990-2, Book 550, Subchapter S8-7a and c). The Respondent maintains that the Judge correctly determined that the General Accounting Office (GAO) legal opinion relied on by the Union and the General Counsel "is not a decision of the Comptroller General and has been miscited by the MSPB . . . ." Id. at 12. According to the Respondent, the "Comptroller General has consistently required the offset of all interim earnings even when this would result in the employee being in debt to the government." Id. at 11 (citing Matter of Kido, 70 Comp. Gen. 124 (1990)). Further, the Respondent argues that the court cases relied on by the Union and the General Counsel have either not been adopted by the Comptroller General or "do not discuss payments by the [F]ederal [G]overnment under the Back [P]ay Act." Id. at 14.

The Respondent also argues that the Union and the General Counsel have not met their burden of proof as they have not shown "with any specificity the additional amounts [of backpay] owed" to the employee. Id. at 9 (citing 5 C.F.R. § 2423.18).

IV. Analysis and Conclusions

A. Preliminary Matter

The Union excepts to the Judge's failure to find that, since on or about April 14, 1989, the Respondent has violated section 7116(a)(1), (5), and (8) of the Statute by failing and refusing to comply with the arbitration award. The Authority will not review allegations that are not encompassed by the complaint. See U.S. Department of Justice, U.S. Immigration and Naturalization Service, U.S. Border Patrol, Washington, D.C., 41 FLRA 154, 173-74 (1991); U.S. Government Printing Office, 23 FLRA 35, 38 (1986). The complaint in this case alleges that the Respondent has violated the Statute "[s]ince on or about July 31, 1989 . . . ." General Counsel's Exceptions, Exhibit 1(h) at 2, 3. We found above that the Judge acted within his discretion when he denied the Union's request to amend the complaint to allege that the Respondent violated the Statute beginning on or about April 14, 1989. Accordingly, as the complaint does not encompass the Union's allegation, we deny the Union's exception in this regard.

B. The Respondent Violated Section 7116(a)(1), (5), and (8) of the Statute By Unreasonably Delaying the Processing of the Employee's Backpay Claim

An agency that fails to comply with an arbitration award in a timely manner violates section 7116(a)(1) and (8) of the Statute. See U.S. Department of Treasury, Customs Service, Washington, D.C. and Customs Service, Region IV, Miami, Florida, 37 FLRA 603 (1990) (Customs Service).

As found by the Judge, the arbitration award ordering the employee's reinstatement and backpay became final in late July of 1989. Therefore, the Respondent was obligated to comply with the award at that time. See id. However, the Respondent did not reinstate the employee until October 8, 1989. Further, the Respondent did not begin processing the employee's backpay claim until approximately October 18, 1989, and did not send the relevant papers to the Southwest Regional Office for review until approximately November 11, 1989. The Southwest Regional Office sent the papers to the Detroit Computing Center to calculate the amount of backpay and interest owed to the employee. The Respondent received the employee's backpay check from the Detroit Computing Center on February 13, 1990.

The Judge found that the Respondent "intentionally delayed implementation of the award" and "had no reason whatever for its failure and refusal to comply promptly with the arbitration award to reinstate" the employee. Judge's Decision at 16. The Judge concluded that the Respondent violated section 7116(a)(1), (5), and (8) of the Statute by "its unreasonable delay in offering reinstatement as directed by the arbitrator's final award . . . ." Id. at 17. However, the Judge also concluded that the Respondent did not unreasonably delay preparing the employee's backpay check but "acted with reasonable dispatch." Id. at 18.⁽⁴⁾ Contrary to the Judge, we find that the Respondent violated section 7116(a)(1), (5), and (8) of the Statute by failing to comply timely with the arbitration award when it unreasonably delayed processing the employee's backpay claim.

The Judge measured the Respondent's compliance with the backpay portion of the award from the time of the employee's reinstatement, October 8, 1989. The Respondent argues that the Judge correctly used October 8, 1989, as the date from which to measure the Respondent's compliance with the backpay portion of the award. We disagree. As we noted previously, the Respondent was obligated to comply with the arbitration award from the date that the award became final--on or about July 31, 1989. Having found that the Respondent unreasonably and intentionally delayed offering to reinstate the employee, we will not permit the Respondent to benefit from that delay or use that delay as a basis for failing to begin processing the employee's backpay claim until after the date of his reinstatement.

The Respondent was obligated to implement the arbitration award by reinstating the employee and processing his backpay claim in a timely fashion. These obligations were coextensive. Just as the Respondent was obligated, as of July 31, to reinstate the employee as soon as possible, it was similarly obligated to begin processing the employee's backpay claim as soon as possible after July 31. The Respondent has failed to explain why it took from July 31 to November 11 to forward to the Southwest Regional Office the relevant papers for the employee's backpay calculation. In the circumstances of this case, particularly the Respondent's unlawful failure to reinstate the employee in a timely manner, the Respondent's intentional failure to begin processing the backpay claim until after the date of reinstatement was unreasonable and violated the Statute.

We note the Respondent's argument that it "must have the employee reinstated to the rolls before back pay calculations can be made." Respondent's Opposition at 18-19. We find that the Respondent's argument does not excuse its failure to begin processing the employee's backpay claim in a timely fashion. The record indicates that on July 21, 1989, the employee completed working at one of the jobs held during the backpay period. The Respondent has not shown that it was in any way precluded from gathering information concerning that job once the award became final. Further, nothing in the record indicates that the Respondent was precluded until October 8 from gathering any information concerning the employee's primary job held during the backpay period. Rather, as found by the Judge, the Respondent chose to delay reinstating the employee. Had the Respondent chosen to begin gathering the relevant papers from the employee, or through the Union, when the award became final, it could have completed its processing of the backpay claim in a timely fashion.

As the Respondent unreasonably delayed implementing the arbitration award and processing the backpay claim, we find that the Respondent also failed to comply timely with the backpay portion of the arbitration award. Accordingly, we conclude that the Respondent violated section 7116(a)(1) and (8) of the Statute. See Customs Service. Further, we conclude that in the circumstances of this case the Respondent failed to negotiate in good faith and, thus, violated section 7116(a)(5) of the Statute.

C. The Respondent Violated Section 7116(a)(1) and (8) of the Statute by Improperly Deducting Certain Earnings from the Backpay Award

An agency that fails to comply with an arbitration award under section 7122(b) of the Statute violates section 7116(a)(1) and (8) of the Statute. U.S. Department of the Air Force, Carswell Air Force Base, Texas, 38 FLRA 99, 105 (1990) (Carswell Air Force Base).

Whether an agency has adequately complied with an arbitration award depends, in part, on the clarity of the award. Where an agency disregards portions of an unambiguous arbitration award, the agency fails to comply with the award within the meaning of section 7122(b), and thereby violates section 7116(a)(1) and (8) of the Statute. See, for example, Carswell Air Force Base (the agency failed to comply with the arbitrator's award in violation of section 7116(a)(1) and (8) when it failed to convert certain intermittent employees to regular part-time status as required by the award); U.S. Department of Justice and Department of Justice Bureau of Prisons (Washington, D.C.) and Federal Correctional Institution (Danbury, Connecticut), 20 FLRA 39, 43 (1985) (Bureau of Prisons), enforced sub nom. U.S. Department of Justice and Department of Justice, Bureau of Prisons v. FLRA, 792 F.2d 25 (2d Cir. 1986) (the agency failed to comply with the arbitrator's award when it imposed a precondition for compliance that the award did not require); and Department of Justice, U.S. Immigration and Naturalization Service, Washington, D.C., 16 FLRA 840, 842 (1984) (INS) (the agency failed to comply with the arbitrator's award by giving the employee 2 days' backpay when the award required the agency to provide the employee with 4 days' backpay). Where an arbitration award is ambiguous, the Authority examines whether the agency's construction of the award is reasonable in determining whether the agency adequately complied with the award. See, for example, U.S. Patent and Trademark Office, 31 FLRA 952, 975 (1988), remanded as to other matters sub nom. Patent Office Professional Association v. FLRA, 872 F.2d 451 (D.C. Cir. 1989); United States Department of the Treasury, Internal Revenue Service and United States Department of the Treasury, Internal Revenue Service, Austin Service Center, Austin, Texas, 25 FLRA 71, 72 (1987).

The arbitration award in this case provided in part that the employee "is to be reinstated to the position of tax examiner with backpay and accumulated benefits and seniority, less backpay, benefits and seniority for a six[-]month period commencing on the date of his discharge." Judge's Decision at 13. The arbitrator limited the amount of backpay only as to the date from which backpay was to be measured. We find that the backpay portion of the award is unambiguous. We note that the parties do not dispute that the amount of backpay provided for in the award was the full amount of backpay that the employee was entitled to receive for the stated time period under applicable laws, rules, and regulations governing backpay in the Federal sector. In these circumstances, the award clearly granted the employee backpay that he was entitled to receive under the Back Pay Act and its implementing regulations. Accordingly, to determine whether the Respondent disregarded the backpay portion of the arbitration award and thereby failed to comply with the award, we will examine whether, as required by the award, the Respondent calculated the employee's backpay entitlement consistent with the Back Pay Act and its implementing regulations. See Carswell Air Force Base; Bureau of Prisons; and INS.

For the following reasons, we conclude that the Respondent violated section 7116(a)(1) and (8) of the Statute by failing and refusing to comply with the backpay portion of the arbitration award when it improperly deducted from the backpay award the employee's overtime earnings from his interim job at the Circle-K Corporation (Circle-K) and the employee's earnings from his "moonlighting" job at a Wal-Mart store.

1. Overtime Earnings

The Back Pay Act, 5 U.S.C. § 5596, provides in part that an employee who is entitled to backpay shall receive:

an amount equal to all or any part of the pay, allowances, or differentials, as applicable which the employee normally would have earned or received during the period if the personnel action had not occurred, less any amounts earned by the employee through other employment during that period[.]

5 U.S.C. § 5596(b)(1)(A)(i). The regulations implementing the Back Pay Act provide in part that in computing the amount of backpay under the Back Pay Act and the regulations, an agency shall deduct "[a]ny amounts earned by an employee from other employment during the period covered by the corrective action . . . ." 5 C.F.R. § 550.805(e)(1). The regulations also provide that "[t]he agency shall include as other employment only employment engaged in by the employee to take the place of employment from which the employee has been separated by the unjustified or unwarranted personnel action." 5 C.F.R. § 550.805(e)(2).

The record shows that the employee was scheduled to work 40 hours a week at his interim job at Circle-K and that he worked overtime there as well. The record also shows that the employee had worked 40 hours a week for the Respondent and would not have worked overtime for the Respondent. See Judge's Decision at 11, 12. In determining the amount of backpay owed to the employee, the Respondent deducted all of the employee's Circle-K earnings, including overtime earnings, from the employee's gross backpay.

Neither the Back Pay Act nor its implementing regulations specifically address whether or to what extent overtime earnings from interim employment may be deducted from an employee's backpay award. However, as noted by the Judge, it is "arguable" that "overtime earned in 'other employment,' where no overtime had been worked by [the employee] in his government employment, should not be deducted . . . ." Id. at 21. Although the Authority has not addressed this issue, the issue has been addressed by the MSPB.

The MSPB has held that, under the Back Pay Act, "overtime earned during a period of wrongful removal in excess of that which would have been earned in the desired job should not be offset" against the backpay award. Blackmer v. Department of the Navy, 47 M.S.P.R. 624, 630 (1991) (emphasis in original) (Blackmer). Where overtime is not part of an employee's agency job, the MSPB has stated that the agency may "deduct[] from back pay as a result of earnings from other employment . . . only such sums as [the employee] may have earned during a regular forty-hour week" and not additional money earned as overtime. Phelps v. Department of Labor, 35 M.S.P.R. 273, 277 (1987) (Phelps) (citing Payne v. Panama Canal Co., 428 F. Supp. 997, 1001 (D.C. Canal Zone 1977), rev'd on other grounds, 607 F.2d 155 (5th Cir. 1979) (Payne)). In reaching this conclusion, the MSPB noted that, consistent with the reasoning of the NLRB in private sector cases, to allow an employer to offset excess overtime earnings "would create the anomaly whereby an assiduous and diligent backpay claimant would be penalized for toiling a long day while the shirker would be rewarded." Phelps, 35 M.S.P.R. at 276 (citing United Aircraft Corp., 204 N.L.R.B. 1068, 1073 (1973)). The MSPB reasoned that allowing an employee to retain "earnings from excess overtime does not make [an employee] more than 'whole;' rather, the additional income is the result of the [employee's] extra effort. Id. (citing Master Transmission Rebuilders, Inc., 269 N.L.R.B. 93, 94 (1984) and Southeastern Envelope Co., 246 N.L.R.B. 423, 424 n.10 (1979)).

Consistent with the above-noted reasoning, we find that under the Back Pay Act and its implementing regulations, an agency may deduct from an award of backpay the amount that the employee earned in interim employment during a regular workweek and the amount of overtime earned to the extent that the employee would have worked that amount of overtime in the agency job. If the employee would not have worked overtime in the agency job or would have worked less overtime in the agency job, the agency may not deduct from the employee's backpay award the excess amount of interim overtime wages that the employee earned. See Blackmer and Phelps. This reasoning is further supported by 5 C.F.R. § 550.805(e)(2), which provides that an agency may deduct from gross backpay "only [earnings from] employment engaged in by the employee to take the place of employment from which the employee has been separated by the unjustified or unwarranted personnel action[.]" Overtime hours in excess of what an employee would have worked for the agency do not "take the place of" the desired agency job. 5 C.F.R. § 550.805(e)(2).

The Judge found that FPM Supp. 990-2, Book 550, Subchapter S8-7c requires the Respondent to deduct all interim earnings from the backpay award unless those earnings were from outside employment which the employee had engaged in before the unjustified absence occurred. In view of this finding and of early Comptroller General decisions consistent with this finding, the Judge concluded that decisions of the courts and the NLRB with respect to the private sector, as well as decisions of the MSPB and the courts under the Back Pay Act, were "immaterial[.]" Judge's Decision at 24. The Judge further found that the Union and the General Counsel improperly relied on an advisory opinion of the General Counsel of the GAO's Comptroller General and that the "MSPB [in Phelps] has miscited the advisory opinion [B-224073, Mar. 17, 1987]." Id. at 25 n.18. The Judge concluded that the Respondent had acted "fully in accord with" the Back Pay Act, the implementing regulations, the FPM, and the Comptroller General. Id. at 20.

We noted above that we would apply the same reasoning used by the MSPB to determine whether an agency may deduct overtime earnings from interim employment from an employee's backpay award. To the extent that the Judge found that the MSPB improperly relied on an advisory opinion from the GAO's Office of the General Counsel, we disagree. The GAO General Counsel issued that opinion, B-224073 (Mar. 17, 1987), in response to a request from the MSPB to reexamine Comptroller General precedent on deducting outside overtime from backpay awards. The opinion from the GAO's Office of the General Counsel analyzes the recent public and private sector precedent on the issue and states with approval the underlying policy behind that precedent. The opinion notes the conflicting Comptroller General precedent but states that "it is not clear if the same result would be reached today, particularly in light of contrary precedent in other forums." B-224073 at 10.

The MSPB had requested the opinion from the GAO's Office of the General Counsel in relation to the MSPB's decision in Phelps. In Phelps, the MSPB adopted the reasoning of the opinion of the GAO General Counsel, including the reasoning of private sector precedent discussed in that opinion. In these circumstances, we reject the Judge's finding that the MSPB improperly relied on the opinion. Moreover, the Office of the General Counsel of the GAO continues to follow the reasoning of the opinion. In B-233954 (Jan. 24, 1989), the Office of the General Counsel of the GAO states in an opinion to the U.S. Department of Justice that the courts, the NLRB, and the MSPB have adopted a "more liberal approach" than older Comptroller General cases and "have limited deductions from backpay to only such salary as the [employee] may have earned during a 40-hour week." B-233954 at 1. Further, we note that while the Judge and the Respondent rely on the Comptroller General's decision in Matter of Kido to support their positions, their reliance is misplaced as there was no allegation in that case that the employee had worked overtime in her interim employment. Nothing in the 1987 or 1989 opinions from the Office of the General Counsel of the GAO indicates that the GAO, if presented with a case involving a similar situation, would not apply the reasoning of those opinions.

We also note that the Judge found that FPM Supp. 990-2, Book 550, Subchapter S8-7c requires the Respondent to deduct all of the employee's interim overtime earnings. However, the portion of FPM Supp. 990-2, Book 550, Subchapter S8-7c relied on by the Judge addresses the extent to which an agency may set off wages from gross backpay when those wages were earned in a part-time job that the employee held prior to the unjustified or unwarranted personnel action or when those wages were earned in a second part-time job taken as a substitute for Government employment. This subchapter of the FPM makes no mention of interim overtime wages. Accordingly, we find that the portion of FPM Supp. 990-2, Book 550, Subchapter S8-7c relied on by the Judge does not apply to interim overtime wages.

We find that, consistent with the Back Pay Act and its implementing regulations, an agency may not deduct from gross backpay the excess amount of interim overtime wages that the employee earned. This position is consistent with the policy of private sector case law that an employer should deduct wages earned only from employment engaged in to take the place of the desired job and not wages earned as a result of an employee's extra effort. See EDP Medical Computer Systems, Inc., 293 N.L.R.B. 857, 858 (1989) (the employee's backpay award was offset by only the first 32 hours of her weekly interim earnings because the employee "only worked a 32-hour week at the [r]espondent").

As we noted previously, the arbitration award granted the employee backpay that he was entitled to receive under the Back Pay Act and its implementing regulations. As the employee in this case worked overtime for Circle-K and would not have worked overtime for the Respondent, we conclude that, under the Back Pay Act and its implementing regulations, the Respondent should not have deducted any overtime earnings--in this case, interim earnings over 40 hours a week--from the employee's backpay award. Having found that the Respondent's actions were inconsistent with the Back Pay Act and its implementing regulations, we find that the Respondent disregarded the backpay portion of the arbitration award and thereby failed to comply with the award in violation of section 7116(a)(1) and (8) of the Statute. See Carswell Air Force Base; Bureau of Prisons; and INS.

2. "Moonlighting" Earnings

The record indicates that in addition to working full-time for Circle-K, the employee also worked in a "moonlighting" position at a Wal-Mart store. The employee testified at the hearing that he did not take his position at Wal-Mart to replace his Agency job. See Transcript at 174. As found by the Judge, the Respondent deducted the employee's earnings from the employee's "work outside the hours of his government duty hours, i.e., a second, or 'moonlighting,' job which he could have held simultaneously with his government job." Judge's Decision at 11. As no exceptions were filed to the Judge's finding, we adopt the Judge's finding that the employee could have held the Wal-Mart job simultaneously with his Agency job.

As we noted previously, under 5 C.F.R. § 550.805(e)(2), an agency may deduct from gross backpay "only [earnings from] employment engaged in by the employee to take the place of employment from which the employee has been separated by the unjustified or unwarranted personnel action[.]" Similar to the rule with respect to interim overtime earnings, we find that where an employee works an additional ("moonlighting") job during the backpay period, earnings from the "moonlighting" job do not "take the place of" agency earnings within the meaning of 5 C.F.R. § 550.805(e)(2) to the extent that the employee could have held the "moonlighting" job while working for the agency. Therefore, like excess overtime, those earnings from a "moonlighting" job may not be deducted from the backpay award. See Payne, 428 F. Supp. at 1001 (under the Back Pay Act, "[e]xtra employment that [the employee] may have obtained 'moonlighting' at nights or on weekends in order to survive should not be deductible" from the backpay award). However, "moonlighting" wages which could not have been earned simultaneously with the agency job are properly considered earnings from employment designed to "take the place of" the agency job. See Broadnax v. United States Postal Service, 35 MSPR 219, 228 (1987) ("where the 'moonlighting' job could not have been held if the employee had obtained or remained in the position at issue, such earnings constitute interim earnings and must be deducted from the award").

Applying these principles to this case, we find that the employee's Wal-Mart wages should not have been deducted from gross backpay because those wages were "moonlighting" wages which the employee could have earned simultaneously with his Agency job.

The Judge relied on the FPM and decisions of the Comptroller General in concluding that the Respondent properly deducted all of the employee's earnings from his "moonlighting" job at Wal-Mart. With respect to the FPM, the Judge noted that "in clear and unambiguous language[,]" FPM Supp. 990-2, Book 550, Subchapter S8-7c(1), provides that "all earnings from outside employment be deducted except earnings the employee already had prior to the separation." Judge's Decision at 23 (emphasis in Judge's Decision). As the employee had no outside employment prior to his separation, the Judge concluded that "the FPM required that [the] Respondent deduct all of his outside earnings," including his "moonlighting" earnings. Id. (emphasis in original).

We reject the Judge's interpretation of the FPM. The cited portion of the FPM addresses the circumstances under which an employee's outside part-time employment may be deducted from gross backpay. The FPM provides that a part-time job held prior to the unjustified or unwarranted personnel action does not "take the place of the Government employment." FPM Supp. 990-2, Book 550, Subchapter S8-7c(1) (paragraph 2). The FPM further provides:

If the employee was able to expand the part-time job to a full-time job, or took a second part-time job, as a substitute for Government employment, only those hours worked on the full-time job in excess of the aggregate of the part-time job, or only the hours worked on the second job . . . are considered as other employment in place of Government employment.

Id. Following this explanation, the FPM states: "In other words, the only earnings from other employment that may not be deducted from backpay are earnings from outside employment the employee already had before the unjustified suspension or separation." FPM Supp. 990-2, Book 550, Subchapter S8-7c(1) (paragraph 3) (emphasis in original). This statement must be read in context with the remainder of that section of the FPM as well as with 5 C.F.R. § 550.805(e). When read in context, it is evident that the section of the FPM concerning set-offs for second part-time jobs applies only to a job that was designed to "take the place of" or that was "a substitute for Government employment." 5 C.F.R. § 550.805(e)(2); FPM Supp. 990-2, Book 550, Subchapter S8-7c(1) (paragraph 2). Wages from a "moonlighting" job do not "take the place of" or act "as a substitute for" the agency job to the extent that the employee could have earned such wages simultaneously with the agency job. Id. Therefore, the cited section of the FPM does not apply to this case.

With respect to the Comptroller General, the Judge and the Respondent cite Matter of Kido as support for their positions. However, there was no allegation in that Comptroller General decision that the employee had worked in a "moonlighting" job or that the agency had improperly deducted any "moonlighting" earnings from the backpay award. Accordingly, that decision does not apply to this case.

Rather, as we noted previously, we find that an agency may not deduct "moonlighting" earnings from gross backpay to the extent that the employee could have held the "moonlighting" job while working for the agency.⁽⁵⁾ This rule is consistent with the rule applied by courts and the NLRB in the private sector. See United States v. State of New Jersey, 530 F. Supp. 328, 336 (D. N.J. 1981) ("'Moonlighting' earnings of the [employee] may be used to offset back pay only to the extent that the employer can show that the [employee] would not have been able to work the second job, if he had in fact been hired by the employer."); Teamsters Local 559, 257 N.L.R.B. 24, 25 (1981) (earnings from a "moonlighting" job held during hours that an employee would not have worked for the employer are not deducted from backpay). See also Chesser v. State of Illinois, 895 F.2d 330, 338 (7th Cir. 1990) ("[w]here an employee accepts a job that he could not have taken if he remained in his old employment, the earnings from that job are interim earnings" which are deducted from the backpay award); Superior Export Packing Co, Inc., 299 N.L.R.B. No. 9, slip op. at 10 (1990) (where an employee "had no supplementary job prior to the discrimination, any earnings from a second 'moonlighting' job during the back pay period [are] not included in interim earnings" and, thus, are not deducted from backpay).

Accordingly, as the employee in this case worked in a "moonlighting" job for Wal-Mart which he could have held while working for the Respondent, we conclude that, under the Back Pay Act and its implementing regulations, the Respondent should not have deducted the employee's earnings from his Wal-Mart job. Having found that the Respondent's actions were inconsistent with the Back Pay Act and its implementing regulations, we find that the Respondent disregarded the backpay portion of the arbitration award and thereby failed to comply with the award in violation of section 7116(a)(1) and (8) of the Statute. See Carswell Air Force Base; Bureau of Prisons; and INS.

3. Remedy

To remedy the Respondent's unfair labor practices, we will modify the Judge's recommended Order and Notice to reflect that the Respondent failed to comply timely with the arbitration award by unreasonably delaying the processing of the employee's backpay claim. We will further modify the Judge's recommended Order and Notice to require the Respondent to reimburse the employee, with interest to the date of payment, for any overtime and "moonlighting" earnings that were improperly deducted from the backpay award.

We note the Respondent's argument that the Union and the General Counsel have not met their burden of proof as to the specific amount of additional backpay owed to the employee. The Authority has consistently held, however, that the precise amount of backpay is determined in the compliance stage of the proceedings. See, for example, Department of the Air Force, Nellis Air Force Base, Nevada, 41 FLRA 1011, 1018 (1991). Accordingly, we reject the Respondent's argument.

V. Order

Pursuant to section 2423.29 of the Authority's Rules and Regulations and section 7118 of the Federal Service Labor-Management Relations Statute, the United States Department of the Treasury, Internal Revenue Service, Austin Compliance Center, Austin, Texas shall:

1. Cease and desist from:

(a) Failing and refusing to comply promptly and fully with the final award of Arbitrator Matthew W. Finkin, issued on March 8, 1989, and sustained upon reconsideration on June 27, 1989, in the grievance of Mr. Douglas Tyler, when it unreasonably delayed reinstating the employee, processing the employee's backpay claim, and delivering the backpay check, and when it failed to pay the employee backpay for the period from September 24, 1989, to October 8, 1989, and when it improperly deducted certain earnings from the backpay award.

(b) Failing and refusing to negotiate in good faith with National Treasury Employees Union, Chapter 247, the exclusive representative of certain of its employees, concerning timely compliance with the final arbitration award of Arbitrator Finkin, above, or with any other arbitrator's final award issued pursuant to the Federal Service Labor-Management Relations Statute.

(c) In any like or related manner, interfering with, restraining, or coercing its employees in the exercise of their rights assured by the Federal Service Labor-Management Relations Statute.

2. Take the following affirmative action in order to effectuate the purposes and policies of the Federal Service Labor-Management Relations Statute:

(a) Comply promptly and fully with the March 8, 1989, final award of Arbitrator Matthew W. Finkin, sustained upon reconsideration on June 27, 1989, by paying Mr. Douglas Tyler backpay for the period from September 24, 1989, to October 8, 1989, and by reimbursing him for earnings which were improperly deducted from the backpay award, together with interest to the date of payment.

(b) Upon request, negotiate in good faith with National Treasury Employees Union, Chapter 247 concerning timely compliance with the final arbitration award of Arbitrator Finkin as ordered herein, or with any other arbitrator's final award issued pursuant to the Federal Service Labor-Management Relations Statute.

(c) Post at its facilities at the Austin Compliance Center, copies of the attached Notice on forms to be furnished by the Federal Labor Relations Authority. Upon receipt of such forms, they shall be signed by the Director of the Compliance Center and shall be posted and maintained for 60 consecutive days thereafter, in conspicuous places, including all bulletin boards and other places where notices to employees are customarily posted. Reasonable steps shall be taken to insure that such Notices are not altered, defaced, or covered by any other material.

(d) Pursuant to section 2423.30 of the Authority's Rules and Regulations, notify the Regional Director, Dallas Regional Office, Federal Labor Relations Authority, in writing, within 30 days from the date of this Order, as to what steps have been taken to comply.

NOTICE TO ALL EMPLOYEES

AS ORDERED BY THE FEDERAL LABOR RELATIONS AUTHORITY

AND TO EFFECTUATE THE POLICIES OF THE

FEDERAL SERVICE LABOR-MANAGEMENT RELATIONS STATUTE

WE NOTIFY OUR EMPLOYEES THAT:

WE WILL NOT fail and refuse to comply promptly and fully with the final award of Arbitrator Matthew W. Finkin, issued on March 8, 1989, and sustained upon reconsideration on June 27, 1989, in the grievance of Mr. Douglas Tyler, by unreasonably delaying in reinstating the employee, in processing the employee's backpay claim, and in delivering the backpay check, and by failing to pay the employee backpay for the period from September 24, 1989, to October 8, 1989, and by improperly deducting certain earnings from the backpay award.

WE WILL NOT refuse to bargain in good faith with National Treasury Employees Union, Chapter 247, the exclusive representative of certain of our employees, concerning compliance with the final arbitration award of Arbitrator Finkin, or with any other arbitrator's final arbitration award issued pursuant to the Federal Service Labor-Management Relations Statute.

WE WILL NOT, in any like or related manner, interfere with, restrain, or coerce our employees in the exercise of their rights assured by the Federal Service Labor-Management Relations Statute.

WE WILL comply promptly and fully with the March 8, 1989, final award of Arbitrator Matthew W. Finkin, sustained upon reconsideration on June 27, 1989, by paying Mr. Douglas Tyler backpay for the period from September 24, 1989, to October 8, 1989, and by reimbursing him for earnings which were improperly deducted from the backpay award, together with interest to the date of payment.

WE WILL, upon request of National Treasury Employees Union, Chapter 247, the exclusive representative of certain of our employees, negotiate in good faith concerning compliance with the final arbitration award of Arbitrator Finkin or concerning compliance with any other arbitrator's final

award issued pursuant to the Federal Service Labor-Management Relations Statute.

________________________
(Activity)

Dated:__________ By:__________________________

(Signature) (Title)

This Notice must remain posted for 60 consecutive days from the date of posting and must not be altered, defaced, or covered by any other material.

If employees have any questions concerning this Notice or compliance with any of its provisions, they may communicate directly with the Regional Director of the Federal Labor Relations Authority, Dallas Regional Office, whose address is: 525 Griffin Street, Suite 926, Dallas, TX 75202, and whose telephone number is: (214) 767-4996.

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FOOTNOTES:
(If blank, the decision does not have footnotes.)
 

1. The Respondent's opposition is timely filed as it relates to the Union's exceptions but untimely filed as it relates to the General Counsel's exceptions. See 5 C.F.R. § 2423.28(b). However, as the Union's exceptions "adopt[] the General Counsel's exceptions by reference[,]" we will consider all of the arguments in the Respondent's opposition. Union's Exceptions at 3. Further, the Union requests that the Authority consider its supplemental Reply to the Respondent's Opposition to Exceptions. The record is sufficient for the Authority to resolve the issues in this case. Accordingly, we deny the Union's request. See 5 C.F.R. § 2429.26.

2. The Union objects to the Judge's failure to amend the complaint to state that "[s]ince on or about April 14, 1989," the Respondent had no basis upon which to refuse to implement the arbitrator's award. Union's Brief in Support of Exceptions at 4. Under the Authority's Rules and Regulations, a complaint may be amended prior to the hearing, upon a party's motion, by the administrative law judge designated to conduct the hearing. See 5 C.F.R. § 2423.12(d). Prior to the hearing, a complaint may also be amended by the Regional Director issuing the complaint. See id. In this case, the General Counsel specifically declined to join the Union's request and stated "[w]e do not see any need to amend the complaint." Transcript at 39. We find that it was within the Judge's discretion to deny the Union's request. Moreover, the Union has failed to show that the Judge abused his discretion in denying the Union's request to amend the complaint. In these circumstances, we affirm the Judge's ruling.

3. As no exceptions were filed to the Judge's conclusion that damages for allegedly adverse tax consequences suffered by the employee were not warranted in this case, we do not address the Judge's conclusions regarding our authority to award "consequential damages" in unfair labor practice cases generally. Judge's Decision at 29.

4. We do not adopt the Judge's findings with respect to the Southwest Regional Office and the Detroit Computing Center, as they were not named as respondents in this case.

5. We note that the 1987 opinion of the General Counsel of the GAO states that, although the Comptroller General ruled to the contrary in one case, "it is not clear if the same result [with respect to 'moonlighting' wages] would be reached today, particularly in light of growing judicial precedent to the contrary." B-224073 at 7.

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