48:0499(48)AR - - DOI, Bureau of Reclamation, Grand Coulee Project Office and Columbia Basin Trades Council - - 1993 FLRAdec AR - - v48 p499



[ v48 p499 ]
48:0499(48)AR
The decision of the Authority follows:


48 FLRA No. 48

FEDERAL LABOR RELATIONS AUTHORITY

WASHINGTON, D.C.

_____

U.S. DEPARTMENT OF THE INTERIOR

BUREAU OF RECLAMATION

GRAND COULEE PROJECT OFFICE

(Agency)

and

COLUMBIA BASIN TRADES COUNCIL

(Union)

0-AR-2392

_____

DECISION

September 3, 1993

_____

Before Chairman McKee and Members Talkin and Armendariz.

I. Statement of the Case

This matter is before the Authority on exceptions to an award of Arbitrator Cornelius J. Peck filed by the Agency 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 Union filed an opposition to the Agency's exceptions.

For the following reasons, we find that the award is contrary to section 704(b) of the Civil Service Reform Act of 1978 (CSRA), codified at 5 U.S.C. § 5343 (Amendments). Therefore, we will set aside the award.

II. Background

The award in this case is related to our decision in U.S. Department of the Interior, Bureau of Reclamation, Grand Coulee Project Office and Columbia Basin Trades Council, 42 FLRA 166 (1991) (Grand Coulee I). In Grand Coulee I, the Arbitrator was retained to resolve a dispute concerning the rates of pay in the parties' 1988-89 collective bargaining agreement for certain prevailing rate employees of the Chelan and Grant County public utility districts who negotiate their pay and pay practices under section 704 of the CSRA.(*) The Arbitrator issued an award in which he established the rates of pay in the parties' 1988-89 collective bargaining agreement for 23 job classifications.

In establishing the base rates of pay for several classifications of general craft employees, the Arbitrator considered a 4 percent signing bonus given to employees of two public utility districts which were used by the parties to determine current industry practices. The Arbitrator stated that although the bonus did not become a part of the employees' wage base in those districts, the signing bonus had a value equivalent to that of a permanent increase in the rate of pay. The Arbitrator concluded that it would be inappropriate to consider the 4 percent signing bonus as an addition to base pay for employees of the Chelan and Grant County public utility districts. The Arbitrator also stated that, on the other hand, it would not be appropriate to give the signing bonus no consideration in making wage comparisons. The Arbitrator concluded that at least half of the bonuses should be considered for comparison purposes. Accordingly, the Arbitrator granted certain employees of the Chelan and Grant County public utility districts a 2 percent increase in their rates of pay, based on the 4 percent signing bonus. The Agency filed exceptions to the Arbitrator's award.

As relevant here, we found in Grand Coulee I that the Arbitrator determined that it was not the practice in the Chelan and Grant County public utility districts to consider the signing bonus as part of employees' base pay rates. We also found that, in light of that determination, the Arbitrator's award conflicts with section 704(b) of the CSRA because it required the parties to establish the base pay rates of unit craft employees by calculating the signing bonus into the base pay rates. We found that the effect of the Arbitrator's award was to require the parties to set the base pay rates of unit employees in a manner that was not consistent with the current practices the Arbitrator found to exist in the industry and concluded that his award was contrary to section 704(b) of the CSRA. Therefore, we modified the Arbitrator's award by setting aside the pay rates that were established based on taking into account the 4 percent signing bonus. However, because we found that the Arbitrator determined that a 4 percent signing bonus was a prevailing practice in the relevant industry and because the pay and pay practices for the employees in Grand Coulee I must be set in accordance with prevailing rates and practices, we remanded the case to the parties to determine how the prevailing practice of a 4 percent signing bonus should be applied, consistent with section 704(b) of the CSRA, to the pay practices of bargaining unit employees in the Grant and Chelan public utility districts for the period covered by the 1988-89 supplementary agreement.

Subsequent to the remand, the parties were unable to reach agreement on how to give effect to the signing bonuses agreed upon by the Grant and Chelan County public utility districts. Therefore, the parties resubmitted the matter to the Arbitrator. The parties agreed to waive a hearing and submitted briefs to the Arbitrator.

III. Arbitrator's Award on Remand

Initially, the Arbitrator stated that, contrary to the Authority's findings in Grand Coulee I, he "did not determine in [his] first decision that the payment of a signing bonus was a prevailing practice in the industry." Award at 4. The Arbitrator also stated that he "did not make the finding attributed to [him] by the Authority that it was not the practice in the public utility districts to consider the signing bonus as a part of the employees' base pay rates." Id. at 5. The Arbitrator stated that "no evidence was presented . . . at the hearing concerning the practice of public utilities with respect to signing bonuses." Id.

The Arbitrator rejected the Agency's argument that he could not consider the signing bonuses in setting pay rates unless they were the subject of bargaining prior to August 19, 1972. Relying on United States Information Agency v. FLRA, 895 F.2d 1449, 1455 (D.C. Cir. 1990) (USIA), the Arbitrator found that section 704(b) of the CSRA governs the negotiation of pay and pay practices and requires that pay and pay practices be negotiated in accordance with currently prevailing rates and practices. The Arbitrator stated that in USIA the court found that "if a pay practice is not among the current practices in the industry, the parties may not negotiate over that subject, but that 'if the pay practice has some place in current practice, then the parties must negotiate over the subject and subsection 704(b) functions as a restriction on the permissible outcome of the negotiations.'" Id. at 8 (quoting USIA, 895 F.2d at 1455) (emphasis in award). The Arbitrator concluded that section 704(b) "does not require that [pay and pay practices] had been prevailing prior to August [19], 1972." Id.

The Arbitrator again noted that the issue of whether the paying of a signing bonus was a prevailing practice in the late 1980s was not litigated at the hearing that he held in 1989. However, the Arbitrator stated that "[i]f it had been, it seems likely that the Union could have established that it was a prevailing practice, at least in the sense accepted by [the court in USIA] that it had 'some' place in current industry practice." Id. (emphasis in original). According to the Arbitrator, two of the four utilities responding to the inquiries made by the parties in 1988 paid a signing bonus. The Arbitrator also stated that other evidence indicated that a third utility in the relevant industry also had agreed to a signing bonus.

The Arbitrator cited a study conducted by the Bureau of Labor Statistics (BLS) of all major settlements negotiated in 1984, which he stated revealed that "some 700,000 workers, covered by 37 of the 539 agreements[,] had received lump sum payments over the contract term." Id. at 9 (citation omitted). The Arbitrator also stated that the BLS projection for collective bargaining during 1988 was that "there would be use of lump sum payments to take the place of all or part of wage increases." Id. (citation omitted). The Arbitrator also noted that the BLS reported that, "at the time[,] lump sum payments were provided by major agreements covering 2.5 million private industry and 128,000 state and local government employees." Id. (citation omitted). The Arbitrator noted that a BLS report of major settlements in 1987 showed that "contracts covering over one million workers, or 52 percent of the total, provided for lump sum payments." Id. (citation omitted). The Arbitrator stated, however, that "[d]espite [his] belief that the Union could have demonstrated that signing bonuses were a prevailing practice if that had been made an issue at the hearing, [he was] unwilling to proceed on the assumption that such payments were a prevailing practice in the public utility industry in the late 1980s." Id.

However, the Arbitrator stated that because it would be "unfair to deny or further delay payment to the prevailing wage employees of payments which they should have received for work performed during the term of the 1988-1989 collective bargaining agreement[,]" he would "reformulate the rationale for [his] original decision." Id. at 10. The Arbitrator noted that he was not deciding whether the Agency has a duty to bargain with the Union about granting employees a signing bonus. The Arbitrator stated that his "concern is whether any weight should be given to the signing bonus received by employees of Grant and Chelan County [public utility districts] in determining the base rate for the [Agency's] prevailing rate employees." Id.

According to the Arbitrator, the Prevailing Rate Systems Act (PRSA), 5 U.S.C. § 5341(4), "includes the principle that 'the level of rates of pay will be maintained so as to attract and retain qualified prevailing rate employees.'" Id. The Arbitrator noted that section 704(b) of the CSRA "provides that negotiation of pay and pay practices be in accord with prevailing pay and pay practices." Id. The Arbitrator stated that:

Comparisons made for determining whether rates of pay at other employers should be considered in fixing the rate of pay for the [Agency's] prevailing rate employees should be concerned with what rates of pay are observed by comparable employers and not with whether this [Agency] would be required to negotiate on the proposal which led the comparable employer to accept the pay rate.

Id. at 11. The Arbitrator found that the Agency's view that the level of a basic rate of pay is a subject completely different from and bearing no relationship to a signing bonus "is a completely unrealistic view of the process of collective bargaining." Id.

In the Arbitrator's view, the parties to other collective bargaining agreements which provide for signing bonuses "discussed interchangeably increases in the basic rate of pay to be fixed in the collective bargaining agreement and the amount which might be obtained as a signing bonus." Id. (citation omitted). According to the Arbitrator, when the utilities and the respective unions undertook to negotiate collective bargaining agreements, "managements' offers of a 4 percent signing bonus undoubtedly led the unions to forego increases in the basic rates set by the collective bargaining agreement." Id. at 12. The Arbitrator stated that "[t]he parties called it a 'signing bonus'; they might as well have called it 'an alternative to an increase in basic rates,' or a 'one year modified increase in basic rates.'" Id.

The Arbitrator also stated that:

If no consideration is given to the signing bonuses received by employees of the Grant and Chelan [public utility districts], the [Agency's] prevailing rate employees will not receive pay at the rate observed by other public utility employers in the area during the 1988-1989 year. The result will be to make employment by the [Agency] that much less attractive, and to that extent in conflict with a principle of the Prevailing Rate Systems Act.

Id. To avoid that result, the Arbitrator "modif[ied] [his] previous decision and award by directing that the affected employees receive a one year supplement to their basic rates of pay . . . . as an alternative to a 4 percent increase in their rates of pay." Id. at 13. The Arbitrator required the supplement to be "based on the hours actually worked by the employees and not in the form of a bonus." Id.

Therefore, the Arbitrator rescinded his former award of a 2 percent increase in the rates of pay for certain employees in the Grant and Chelan County public utility districts and ordered a 1-year supplement to be calculated by adding 4 percent to the rates of pay for those employees. The Arbitrator's award also provided that those revised rates of pay "shall then be blended with the rates of pay shown for other utilities [in the relevant area] to establish a higher, blended rate for each job classification." Id. Further, the Arbitrator's award provided that each employee in the affected job classifications "shall receive a one year supplement to their basic rate of pay equal to the difference between their regular rate of pay and the higher, blended rate of pay for the hours which they actually worked pursuant to the 1988-1989 collective bargaining agreement." Id. The Arbitrator retained jurisdiction over the award "for the purpose of resolving any disputes concerning the meaning and application of this award and for the purpose of resolving any disputes which may arise concerning the calculation of the supplements to the basic rate of pay of the affected employees." Id. at 14.

IV. Positions of the Parties

A. Agency

The Agency contends that the Arbitrator's revised award is inconsistent with the Authority's decision in Grand Coulee I and with the requirement in section 704(b) of the CSRA that the pay practices established by the parties under section 704 be based on current industry practices. The Agency states that in Grand Coulee I the Authority concluded that, to the extent that the Arbitrator's award required the incorporation of a signing bonus in the calculation of base pay rates, the award was contrary to law. The Agency notes that in his revised award the Arbitrator stated that "he did not decide whether the signing bonus was based on a current prevailing industry practice or whether it had been negotiated prior to August 19, 1972, or whether the Agency had a duty to bargain with the [U]nion about granting a signing bonus[.]" Exceptions at 4. The Agency maintains that all of these issues "are critical to a decision in this case." Id.

The Agency states that the Arbitrator "hypothesized that the Grant and Chelan [public utility districts'] offer of a 4 percent signing bonus 'undoubtedly' led the unions to forego an increase in the basic rates set by the collective bargaining agreement." Id. at 5 (quoting Award at 10-12). The Agency argues, therefore, that, "contrary to the Authority's decision in [Grand Coulee I], the Arbitrator considered the signing bonus to be part of basic pay, and a collective bargaining package deal, instead of as a separate pay practice as required by section 704." Id. The Agency also argues that "[s]ince a singing bonus is a pay practice . . . and the [a]ward here is admittedly not based on prevailing pay practices in the industry surveyed, it is inconsistent with the requirements of section 704(b)." Id. at 5-6.

The Agency asserts that "in the course of negotiations on pay and pay practices, the [U]nion proposed that the parties negotiate on a 'signing bonus.'" Id. at 7. The Agency maintains, therefore, that in the context of the interest arbitration proceeding, "the issue of the negotiability of a signing bonus as a pay practice is similar to those raised in a negotiability appeal to the Authority." Id. The Agency asserts that "[s]ince the [U]nion made this proposal, it has the burden of presenting evidence to show that the signing bonus complies with the requirements of [section] 704(a) and (b)." Id. at 8.

The Agency notes that the Arbitrator found that "evidence was not presented at the hearing of this case as to whether the subject of a signing bonus was negotiated prior to August 19, 1972 under section 704(a)." Id. (citation omitted). Therefore, the Agency argues that the Union has not met its burden of presenting evidence to show that the signing bonus complies with the requirements of section 704(a) because the evidence presented did not show that the subject of a signing bonus was negotiated prior to August 19, 1972. Relying on U.S. Department of Interior, Bureau of Indian Affairs v. FLRA, 887 F.2d 172, 176 (9th Cir. 1989) (Bureau of Indian Affairs), the Agency argues that the Arbitrator's award is deficient and contrary to law because "the Arbitrator rejected the established principle that, to be negotiable, the pay practice, such as a signing bonus, must also have been the subject of negotiation prior to August 19, 1972." Id. The Agency states that "[i]f the Authority believes further evidence should be adduced to establish whether a signing bonus had been negotiated . . . , it could remand the case to the parties or the Arbitrator to resolve that factual issue at a hearing." Id. at 9.

B. Union

The Union claims that the Agency misstates what the Arbitrator did in his second award. The Union asserts that the Arbitrator did not award an increase in basic pay rates. According to the Union, "[i]n his second award, the [A]rbitrator carefully avoided converting a one-time industry 'bonus' or wage supplement into an increase in a base wage rate." Opposition at 6. The Union states that the Arbitrator "made it clear that, although the 'bonus' at the two public utility districts had to be considered, the effect on Grand Coulee employee wages would be no more or no less than at the public utility districts: the employees would receive a one time, one year supplement to their wages." Id. The Union argues that "contrary to the Agency's claim, the 'bonus' is not incorporated on some sort of permanent basis into the Grand Coulee wages." Id. at 6-7.

The Union argues that the Arbitrator's award is consistent with section 704(b) of the CSRA because it is based on the pay practices in two of the three or four relevant employers surveyed. The Union asserts, therefore, that the award is consistent with the requirement in section 704(b) that pay and pay practices must be in accordance with currently prevailing rates and pay practices. The Union also argues that "one examines subsection (b) [of section 704], not subsection (a), to determine the requisites of bargaining over pay and pay practices." Id. at 10. The Union asserts that "the analysis of historical bargaining subjects required by subsection (a) [of section 704] for terms and conditions of employment other than pay and pay practices, has no place for cases involving pay and pay practices." Id. at 10-11. However, the Union notes that, "[n]aturally, only those employees who are subject to section 704 in the first place are within the scope of section 704(b). Thus, there must be a preliminary analysis of whether employees bargained before 1972." Id. at 11. The Union states that inasmuch as it is undisputed that the Grand Coulee employees bargained over wages and other terms and conditions of employment before 1972, the threshold requirement in section 704(a) is satisfied.

In the alternative, the Union argues that the supplement ordered by the Arbitrator "is so closely linked to traditional wage bargaining, there is no requirement that the parties have bargained over one year wage supplements prior to 1972." Id. at 13. The Union maintains that "[w]here the item is so closely related to a historical subject as a one year supplement is to wages, the statute does not support a reading requiring historical negotiation of the supplement." Id.

Finally, the Union states that if the Authority determines that there is some missing element in the record, or that further evidence or conclusions are necessary, the Authority should remand the matter again to the parties.

V. Analysis and Conclusions

Even assuming that the Arbitrator's award is consistent with section 704(a) of the CSRA, we find that the award is contrary to section 704(b) of the CSRA because the Arbitrator ordered the Agency to provide a supplement to certain employees' pay, based on the 4 percent signing bonus, without determining that the signing bonuses reflected prevailing rates and practices in the relevant industry or that the supplement was in accordance with current prevailing rates and practices in the relevant industry.

The Arbitrator ordered the supplement to the pay of bargaining unit employees because he found that the supplement would make the wages of bargaining unit employees comparable to the wages paid by other industry employers and, therefore, was consistent with the principle in the PRSA that the level of pay for prevailing rate employees be maintained so as to attract and retain qualified prevailing rate employees. However, as noted above, the prevailing rate employees in this case negotiate their pay and pay practices in accordance with section 704(b) of the CSRA. Under section 704(b), the parties are required to establish the pay and pay practices of the employees in this case in accordance with current prevailing rates and practices in the industry. USIA, 895 F.2d at 1454-55. See also National Association of Government Employees, Local R14-143 and U.S. Department of the Interior, Bureau of Reclamation, Lower Colorado Regional Office, Yuma Projects Office, Yuma, Arizona, 47 FLRA 103 (1993). Consequently, as a condition precedent to his award establishing pay and pay practices for the period covered by the 1988-89 supplementary agreement, the Arbitrator was required by section 704(b) to determine the prevailing rates and pay practices that were current in the industry during the period that was relevant for establishing pay and pay practices in the parties' 1988-89 supplementary agreement. Further, under section 704(b) the Arbitrator was required to base his award on, and conform it to, that determination. See, for example, U.S. Department of Interior, Colorado River Storage Project and International Brotherhood of Electrical Workers, Local 2159, 36 FLRA 283 (1990).

The Arbitrator stated that, based on reports issued by the Bureau of Labor Statistics concerning pay and pay practices in the relevant industry during the 1980s--the relevant period for determining current industry practices in this case--and other independent evidence, he "belie[ved] that the Union could have demonstrated that signing bonuses were a prevailing practice if that had been made an issue at the hearing" in this case. Award at 9. However, the Arbitrator specifically declined to reach that conclusion because the parties never presented evidence at the hearing or in their briefs on resubmission of the case to the Arbitrator on the issue of whether the paying of a signing bonus was a prevailing practice in the industry in the late 1980s.

The Arbitrator determined, in essence, that the record was not sufficient for him to make a determination as to whether the 4 percent signing bonuses were consistent with prevailing rates and practices in the industry. Nevertheless, the Arbitrator provided a one year supplement to the pay of bargaining unit employees in consideration of the 4 percent signing bonuses because he determined that it would be "unfair to deny or further delay the payment to the prevailing rate employees of payments which they should have received for work performed during the term of the parties' 1988-1989 collective bargaining agreement." Id. at 10.

Because the Arbitrator ordered a supplement to the pay of bargaining unit employees without determining that the supplement was in accordance with prevailing rates and practices in the industry, the Arbitrator's award is contrary to section 704(b) of the CSRA. We note the Arbitrator's conclusion that by es