U.S. Department of Defense, Education Activity, Arlington, Virginia (Agency) and Federal Education Association (Union)
[ v56 p711 ]
56 FLRA No. 119
U.S. DEPARTMENT OF DEFENSE
FEDERAL EDUCATION ASSOCIATION
September 26, 2000
Before the Authority: Donald S. Wasserman, Chairman and Dale Cabaniss, Member.
I. Statement of the Case
This matter is before the Authority on exceptions to an award of Arbitrator Robert Bennett Lubic 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 Regulations. The Union filed an opposition to the Agency's exceptions.
The Arbitrator sustained a grievance finding that payments due to certain employees, as a result of three prior arbitration awards and four separate settlement agreements, came within the scope of the Back Pay Act and that interest was owing on these payments. [n1]
For the reasons that follow, we conclude that the Agency has not established that the award is deficient under section 7122(a) of the Statute. Therefore, we deny the Agency's exceptions.
II. Background and Arbitrator's Award
Arbitrator Lubic enforced the backpay obligations of three prior arbitration awards and four settlement agreements. The prior arbitration awards involved in this case, for convenience, will be referred to by the respective arbitrator's names. Prior settlement agreements affected by the present award are also identified.
Bloch award [n2]
The case before Arbitrator Bloch involved seventeen grievants and alleged that the grievants were entitled to interest on payments that were untimely paid by the Agency. Arbitrator Bloch sustained the grievance and found that the Agency's failure to pay interest on untimely payments violated the Back Pay Act and the parties' agreement. In doing so, Arbitrator Bloch specifically rejected the Agency's claim that the Agency's action or inaction did not constitute an unjustified or unwarranted personnel action under the Back Pay Act.
Arbitrator Hockenberry resolved a grievance alleging that the Agency did not comply with the Bloch award because the Agency failed to pay interest owed on backpay included in the Bloch award. Arbitrator Hockenberry found that the Agency handled interest on backpay issues in an inconsistent manner and treated employees disparately. Specifically, he found that the Agency paid interest on the backpay for different lengths of time and there was confusion as to the methods the Agency used to calculate the interest.
Arbitrator Popular concluded that the Agency's failure to timely pay employees during the centralization of its pay system was an unjustified and unwarranted personnel action. Although the Agency had reimbursed employees for all of their improperly withheld pay by the time the award was issued, the Arbitrator concluded that the Agency's violations required the payment of interest for the period of delay. Arbitrator Popular found that the Agency violated laws, rules, regulations and/or the parties' agreement when delays accompanying the transfer of personnel data resulted in failure to pay employees in a timely manner. He further found that the Agency's violations constituted an unjustified and unwarranted action which required the payment of interest.
DoDDS-Atlantic Region Settlement Agreement
This agreement provided $400 to each grievant for performance awards for 1994-95. There are 60 grievants, none of whom had received interest on their performance [ v56 p712 ] awards. Additionally, ten members of the group had not received all or part of the principal owed them. See Lubic award at 21.
Employee A's Settlement Agreement
This agreement provided at least $9,000 plus interest for pay loss suffered by the grievant related to a change to her pay entitlement. According to the Arbitrator and the Agency, Employee A had received part of the principal owed her, and the Agency claimed that satisfaction of the remaining amount owed her was underway. See Lubic award at 14, 21.
Employee B's Settlement Agreement
This settlement agreement provided $750, that had been paid, plus interest, that had not been paid, for a living quarters allowance (LQA). See Lubic award at 9.
Employee C's Settlement Agreement
By agreement of the parties, Employee C's settlement regarding renewal agreement travel (RAT) was submitted to the Arbitrator in a post-hearing brief. Before Arbitrator Lubic, the Union asserted that Employee C had received $870 on August 23, 1993, but had not received any interest on the money owed her. See Lubic award at 9, 14.
This matter arose as a result of the consolidation of various Department of Defense pay authorities into one, the Defense Finance and Accounting Service (DFAS). Because of the consolidation, there were many delays in making authorized payments to employees. As a result, the Union filed a number of grievances, which progressed to three different arbitration hearings before Bloch, Hockenberry, and Popular. The grievances concerned whether the authorized payments came within the scope of the Back Pay Act, 5 U.S.C. § 5596, and if so, whether interest was owed on those payments. Other grievances were resolved through settlement agreements.
However, disputes arose as to the meaning and effect of the arbitration awards and settlement agreements, and the Union sought arbitration to determine whether the Agency had complied with the terms of the settlement agreements and arbitration awards. The parties did not agree on the issues to present to the Arbitrator, and the Arbitrator framed the issues as:
1. What are the Arbitrator's parameters regarding the grievants in this matter?
2. Did the Agency violate any laws and regulation, which in effect would constitute bad faith on its part, by failing to comply with or implement prior settlement agreements or arbitration awards?
3. Do the subject settlements and arbitration decisions, together with any other disputes in this matter, come within the purview of the Back Pay Act?
4. Should the Back Pay Act be held to be applicable to the subject principal payments in this matter, what are its requirements regarding the payment of interest on the settlement agreements, arbitration decisions, and other disputes involved in this matter?
5. Should interest be found to be owing in this matter, what shall be the accrual date or dates thereof?
Lubic award at 18-19.
C. Arbitrator's Award
As to the first issue, Arbitrator Lubic found that affidavits regarding four grievants were not properly before him. The Arbitrator determined that no provision was made during the hearing to receive these affidavits and concluded that he had no authority to render any decision on the issues raised therein.
The second issue concerns whether the Agency violated any law or regulation in delaying payments to the employees, and whether such delay constituted acting in bad faith. Before Arbitrator Lubic, the Agency asserted that the DFAS consolidation was the sole cause of the delays. The Arbitrator found that no evidence was presented regarding what a reasonable time would be for making the principal payments. The Arbitrator concluded that the Union failed to present sufficient evidence to refute the Agency's contention that it was acting as expeditiously as possible to make the authorized principal payments to the employees. Accordingly, the Arbitrator found that there was no proven failure of the Agency to comply with or implement the settlement agreements, and that the failure to pay interest was "by reason of a sincere difference of opinion." Award at 20.
Turning to the third issue, Arbitrator Lubic concluded that by agreeing to pay the principal amounts set forth in the settlement agreements, the Agency in effect acknowledged that these payments came under the Back Pay Act (Award at 20). The Arbitrator also noted that the Agency failed to reference any other law, rule or [ v56 p713 ] regulation that precluded the payment of interest (id. at 25). The Arbitrator listed employees to whom principal payments were still owed and stated that "there is a commitment by [the Agency] to finalize payment to them." Award at 21. As to the payments ordered by the arbitration awards, the Arbitrator found that "the failure of the Agency to reference any other law, rule or regulation requiring the concluded or committed principal payments described in this matter, it is the studied opinion of the Arbitrator that such payments come within the purview of the [Back Pay Act]." Award at 22. The Arbitrator also concluded that as a result, the Back Pay Act, as amended, is the proper statute to look to to determine whether interest is owing on such principal payments. [n3]
Next, Arbitrator Lubic addressed the issue of whether the Agency must pay interest to all of the bargaining unit employees to whom it has paid or committed to pay principal amounts. The Arbitrator noted the Agency's argument, relying on United States v. Testan, 424 U.S. 392 (1976) (Testan), that mere delay in payment does not constitute an unwarranted personnel action. However, the Arbitrator concluded that Testan was not dispositive because it pre-dated the amendments to the Back Pay Act that permit backpay liability for failures to act, i.e., omissions, and provide for the payment of interest on sums owed.
As to the Agency's contention that the regulations and guidance promulgated by the Office of Personnel Management (OPM) to implement the Back Pay Act are in error, the Arbitrator stated:
Various other authorities are cited by [the Agency], almost all of which are peripheral to this matter. To attempt to differentiate each and every one of these citations, as well as those of the Union, could result in a decision of well over 100 pages. Suffice it to say that the Arbitrator lacks authority under Article 2, Section 2 A of the Negotiated Agreement to override the interpretation of the OPM in this matter.
In view of this and the failure of the Agency to reference any other law, rule or regulation precluding the payment of interest, it is clear that the principal payments made or owing in this matter, come under the purview of the [Back Pay Act]. As a result, it is the opinion of the Arbitrator that interest is owing on all payments or agreements to pay bargaining unit members involved in this arbitration.
Lubic award at 25.
Finally, Arbitrator Lubic found that the Agency must pay interest to all of the bargaining unit members in this matter, following the date when the subject principal sums became due and owing, and such accrual will cease within 30 days of the time when payment is made. However, the Arbitrator also held that interest payment requirements need not be effectuated until the decision is final, either through a decision of the FLRA or upon the date when no appeal to the FLRA may be taken.
III. New Matters Not Raised to Arbitrator Lubic
A. Positions of the Parties
Each party claims that the other raises arguments not presented to the Arbitrator, for the first time, in the reply and response briefs submitted to the Authority.
In its Response brief, the Union asserts that Article 27 of the parties' agreement establishes a date certain by which the contested payments must be made, a matter argued by the Agency as a condition precedent to awarding interest on a delay in payment. [n4] The Agency argues that the Union's reliance on Article 27 is misplaced and that the Union raised this argument for the first time in its Response brief to the Authority.
The Union contends that the Agency has raised new arguments in its reply brief by attempting to introduce "new, unauthenticated, and untested evidence" regarding the settlement agreement in Employee A's case. Union Response at 2. The Union states that it has not had the opportunity to examine the purported audit performed on Employee A's case, and upon implementation of the Lubic award, would welcome the opportunity to find the errors in the audit that it is sure exist. The Union claims that the Agency's actions in Employee A's case provide the Authority with "a perfect example of the Agency's arrogance with regard to all of the Settlement Agreements in this case." Id. at 3. [ v56 p714 ]
B. Analysis and Conclusions
Under section 2429.5 of the Authority's Regulations, [n5] the Authority will not consider issues that could have been, but were not presented, to the arbitrator. See American Federation of Government Employees, Local 3295 and U.S. Department of the Treasury, Office of Thrift Supervision, Washington, D.C., 51 FLRA 27, 32 (1995). There is no indication in the record that the Agency did not agree that Employee A was owed at least $9,000, nor is there any indication that the Union claimed that Article 27 of the parties' agreement provided a date certain by which payments were to be made to employees.
We have determined that, consistent with our Regulations, we will not consider these arguments.
IV. Positions of the Parties on Other Exceptions
1. OPM Regulations
The Agency maintains that the OPM regulations implementing the Back Pay Act are invalid to the extent they overreach the scope of the Act. The Agency contends that the definition of an unjustified or unwarranted personnel action promulgated in OPM's regulations at 5 C.F.R. § 550.803 expands the scope of the Back Pay Act beyond Congressional intent. [n6] The Agency asserts that there is no justification within the Act for OPM to expand the scope of the Back Pay Act to encompass a "pay action" as an independent basis for finding an unjustified or unwarranted personnel action.
Moreover, the Agency argues that OPM guidance is susceptible to a permissive interpretation that pay actions may be personnel actions under the Back Pay Act. The Agency asserts that to the extent Arbitrator Lubic construed the OPM guidance to require that "a pay action or a delayed payment, per se, qualify" as an unjustified or unwarranted personnel action in every instance, he construed the guidance to overextend the Back Pay Act. Exceptions at 17. Similarly, the Agency contends that to the extent that OPM guidance holds that a pay action alone may be an unjustified or unwarranted personnel action, that guidance overextends the Back Pay Act.
2. Contrary to Law
The Agency, relying on Testan, contends that the Back Pay Act provides only a limited waiver of sovereign immunity. The Agency asserts that the legislative history of the Back Pay Act "makes unequivocal that the Back Pay Act waives sovereign immunity only for a narrow class of individualized adverse personnel actions, and not for each and every administrative error or delay." Exceptions at 26. Thus, according to the Agency, the Back Pay Act would not reach just any pay action, or other administrative concern where the underlying entitlement was not called into question. The Agency asserts that in the underlying cases involved herein, no employee suffered a personnel action that deprived him or her of an entitlement. The Agency argues that what is at issue in these cases is when will the Agency honor its contract--when will the payment arrive. The Agency contends that the Back Pay Act was not enacted to deal with this class of concerns.
The Agency asserts that a delay in payment is not an omission within the meaning of the Back Pay Act unless a law, rule or regulation states that payment is nondiscretionary, and payment "is required by a date specific." Id. at 28. In this regard, the Agency relies on a Comptroller General decision, John Cahill, 58 Comp. Gen. 59 (1978). Applying this rationale, the Agency contends that Arbitrator Lubic was required to apply OPM's regulations in the only way that could save the regulation from invalidity--by reading the guidance permissively. According to the Agency, had he done so, he would have had to identify another underlying unjustified or unwarranted personnel action other than the pay action, or he would have had to find that the pay action and the personnel action are included within each other: if so, he could then subject the pay action to a test for nondiscretionary conduct. The Agency argues that because there has been no finding that the Agency's delays in payment violated any nondiscretionary law, rule or regulation, or collective bargaining agreement, and because there was no finding that any payment had to be made by a date certain, no unjustified or unwarranted personnel action existed. Based on this argument, the Agency asserts that Arbitrator Lubic's [ v56 p715 ] decision is "incapable of implementation" and must be overturned. Exceptions at 9.
The Agency reiterates its position that there were no facts in evidence to support a finding that the Agency had committed an unjustified or unwarranted personnel action. The Agency contends that it did not concede the applicability of the Back Pay Act to the settlement agreements or other matters at issue here. The Agency asserts that the Back Pay Act is not the exclusive authority for paying entitlements to, or agreeing to pay, its employees. For example, the Agency states that the Comptroller General has awarded reimbursement for dependent travel and transportation expenses pursuant to the entitlement authority of 5 U.S.C. § 5722. In support, the Agency cites Ernest P. Gianotti, 59 Comp. Gen. 450 (1980). Moreover, the Agency asserts that it properly disclaimed any duty to pay interest. The Agency concedes that it did issue letters to some employees indicating that the Agency was going to pay interest, but the Agency rescinded those letters.
The Agency contends that the Arbitrator's award is in error because the Back Pay Act does not encompass delays due to administrative error. According to the Agency, Comptroller General decisions do not support the Union's claim that administrative error per se constitutes an unjustified or unwarranted personnel action.
Finally, in support of its contention that it did not commit an unjustified or unwarranted personnel action, the Agency relies on Bell v. United States, 23 Cl. Ct. 73 (1991) (Bell). According to the Agency, the court in that case held that mere failure by a government agency to pay money due is not the kind of adverse personnel action contemplated in the Back Pay Act. The Agency asserts that as to the settlement agreements, because there was no underlying finding of facts, no unjustified or unwarranted personnel action may be established. The Agency further asserts that the settlement agreements, by their nature, "preclude a review of the underlying facts" for unjustified or unwarranted personnel action "causality." See Reply at 8 n.1.
According to the Agency, the only unjustified or unwarranted personnel action found by Arbitrator Lubic was the delay in paying under the settlement agreements. The Agency contends that the Arbitrator did not make any specific findings of fact about the underlying personnel actions that led to the settlement agreements. The Agency claims that Arbitrator Lubic did not explain what law, rule, regulation or collective bargaining agreement was violated by the delayed payments, but relied on the "'compelling'" logic of the other arbitrators. Exceptions at 35. The Agency contends that Arbitrator Lubic's finding of an unjustified or unwarranted personnel action in this grievance, based upon the Bloch award, amounts to a finding based on nonfact. [n7] Based on this contention, the Agency argues that the finding of an unjustified or unwarranted personnel action is based on nonfact and must therefore be overturned.
4. Abdicate Authority
The Agency contends that Arbitrator Lubic failed to follow law and regulation and abdicated his authority when he erroneously concluded that he was precluded from overriding the OPM guidance on the payment of interest on awards of backpay, and that he would follow prior the arbitration awards already noted.
1. OPM Regulations
The Union replies that OPM has correctly implemented the Back Pay Act. The Union states that OPM considered arguments similar to those made by the Agency when OPM promulgated its regulations, and found that the legislative history of the Back Pay Act demonstrated that backpay was to be paid when an employee was deprived of pay or benefits due to an agency's unjustified or unwarranted personnel action, including acts of commission or omission. According to the Union, OPM determined that an agency's intent was not dispositive as to whether the employee was entitled to recover backpay with interest.
The Union argues that the effect of the Agency's argument is that the Agency is requesting the Authority to declare portions of the Back Pay Act and 5 C.F.R. Part 550 "void." Union Response at 8. The Union asserts that 5 C.F.R. part 550 is a Government-wide regulation and is "the law of the land," and is far more than just "guidance," as the Agency characterizes OPM's regulations. Id. at 10.
2. Contrary to Law
The Union asserts that the Authority determined in a related decision involving the parties, 54 FLRA at 517, that the "'failure to pay bargaining unit members in a timely manner' ([e]mphasis added) fell within the 'withdrawal or reduction of the grievant's pay' criterion of the Back Pay Act." Opposition at 13. [ v56 p716 ]
The Union contends that many of the sources relied on by the Agency regarding the payment of interest were issued prior to the amendments of the Back Pay Act that provided coverage for acts of omission and pay actions. The Union states that Congress amended the Back Pay Act in 1988 to include a waiver of sovereign immunity for interest. The Union also contends that other sources relied on by the Agency regarding the payment of interest did not come under the Back Pay Act, but under other statutes such as the Civil Rights Act, the Federal Insurance Contributions Act (FICA), or the Severance Pay Act.
The Union argues that the Agency "mischaracterizes or misunderstands" the Arbitrator's award as construing the Back Pay Act to require per se findings of unwarranted or unjustified personnel actions whenever a delay in payment exceeds 30 days. Opposition at 30. The Union states "[n]owhere in [the Arbitrator's award] does he use the term 'per se' or even hint that a 30 day or 60 day or any delay in payment 'requires' a finding of an [unjustified or unwarranted personnel action] under the Back Pay Act." Id. at 31 (emphasis in original).
With respect to the Agency's argument concerning discretionary action, the Union states that the act of a certifying principal, which is clearly dictated by a settlement agreement, involves no exercise of judgment. According to the Union, if it did (involve an exercise of judgment), "this would render the settlement process meaningless. Taken to its logical conclusion, this argument would also lead to a result in which DoDDS would never have to pay its teachers as long as a payroll officer never certified the payment." Response at 6.
The Union asserts that the Back Pay Act and 5 C.F.R. Part 550 are ambiguous only to the Agency. According to the Union, the Back Pay Act and 5 C.F.R. Part 550 are "crystal clear" to Arbitrators Bloch, Hockenberry, Popular, and Lubic, the Office of Personnel Management, the Comptroller General, and the FLRA. Id. at 7. The Union further asserts that the Agency continues to "totally ignore" legislative history and cases subsequent to the Testan decision. Id. at 8.
The Union contends, contrary to the Agency, that Arbitrator Lubic evaluated the evidence regarding the entitlements of the grievants. The Union states that the Agency had signed the settlement agreements and had paid the principal due in many of the cases. The Union argues that Arbitrator Lubic did not have to make further inquiry because the Agency "conceded the issue at the hearing." Opposition at 34. The Union asserts that "[t]he Agency's attempt to raise this 'issue' now is transparent." Id.
Additionally, the Union contends that the Agency misconstrues the meaning of "nonfacts." Response at 12. According to the Union, a fact is that which can be objectively ascertained; it is not the Arbitrator's legal conclusions or ultimate conclusion. The Union asserts that the Agency must identify the alleged nonfact and provide sufficient elaboration on its assertion to permit the Authority to ascertain the validity of the assertion. The Union argues that the Agency has not identified "the or even a fact upon which the Award is based." Id. at 13 (emphasis in original).
4. Abdicate Authority
According to the Union, Arbitrator Lubic did not abdicate his authority, he "exercised it." Opposition at 2. The Union asserts that his award was based upon a careful review of the specific, detailed, and comprehensive evidence presented at the hearing. The Union contends that Arbitrator Lubic actually "exercised" his authority under the Back Pay Act and 5 C.F.R. Part 550. Id. at 33 (emphasis in original). The Union asserts that the Back Pay Act specifically includes omissions as examples of unjustified or unwarranted personnel actions. The Union further asserts that the Back Pay Act and 5 C.F.R. Part 550 "go beyond mere 'guidance' as the Agency would have the Authority believe." Id.
V. Analysis and Conclusions
A. Office of Personnel Management Regulations Implementing the Back Pay Act May Not Be Challenged in this Proceeding
The effect of the exception regarding the OPM regulations implementing the Back Pay Act, set forth at 5 C.F.R. Part 550, is to request that the Authority review and nullify those regulations.
Section 7105 of the Statute enumerates the powers and duties of the Authority none of which relate to passing judgment on rules or regulations that OPM or any other Federal agency has enacted. See 5 U.S.C. § 7105; American Federation of Government Employees, AFL-CIO v. FLRA, 794 F.2d 1013, 1015 (5th Cir. 1986) (Congress did not intend for the Authority to sit in review of other agencies' regulations). If the Agency wishes to challenge the validity of the OPM regulations implementing the Back Pay Act, the Authority is not the correct forum. See U.S. Department of Defense, Dependents Schools, Bulzbach Elementary School, Bulzbach, Germany and Federal Education Association, 56 FLRA 208, 212 (2000). If the validity of these OPM regulations [ v56 p717 ] is in question, the challenge must be made by an interested party in another forum, such as a Federal district court. See, for example, National Treasury Employees Union v. Devine, 577 F. Supp. 738 (D.D.C. 1983), aff'd 733 F.2d 114 (D.C. Cir. 1984) (union challenge of OPM regulations is a matter for district court). Therefore, we deny the exception.
B. The Award Is Not Contrary to Law, Regulation or Sovereign Immunity
When a party's exception challenges an arbitration award's consistency with law, rule, or regulation, the Authority reviews the questions of law raised in the exception and the arbitrator's award de novo. See National Federation of Federal Employees, Local 1437 and U.S. Department of the Army, Army Research, Development and Engineering Center, 53 FLRA 1703, 1709 (1998). When applying a de novo standard of review, the Authority assesses whether an arbitrator's legal conclusions are consistent with the applicable standard of law, based on the underlying factual findings. Id. at 1710. In making that assessment, the Authority defers to the arbitrator's factual findings. See National Treasury Employees Union, Chapter 50 and U.S. Department of the Treasury, Internal Revenue Service, Carolina District, Charlotte, North Carolina, 54 FLRA 250, 253 (1998).
Under the Back Pay Act, 5 U.S.C. § 5596(b)(1)(A)(i), an award of backpay is authorized only when an arbitrator finds that: (1) the aggrieved employee was affected by an unjustified or unwarranted personnel action; and (2) the personnel action resulted in the withdrawal or reduction of the employee's pay, allowances or differentials. [n8] See U.S. Department of Health and Human Services and National Treasury Employees Union, 54 FLRA 1210, 1218 (1998). A violation of a collective bargaining agreement constitutes an unjustified or unwarranted personnel action under the Back Pay Act. See, U.S. Department of Defense, Department of Defense Dependents Schools and Federal Education Association, 54 FLRA 773, 785 (1998).
This case involves the Agency's compliance with three arbitration awards (Bloch, Hockenberry and Popular) and four settlement agreements. Arbitrators Bloch, Hockenberry and Popular found that the Agency was liable under the Back Pay Act, and the Agency did not challenge those three awards. The Agency also conceded Back Pay Act applicability as reflected in its attorney fee appeals to the Authority in the Hockenberry and Popular awards in 54 FLRA 514 and 54 FLRA 773. Therefore, we reject the Agency's Back Pay Act claims as to the awards based on the Agency's concession. Nevertheless, we note that even if the exceptions applied to the three awards and were properly before us, those awards would be subject to the same analysis. However, the Agency's Back Pay Act claims do apply to the settlement agreements.
The Agency's Back Pay Act arguments are overlapping in nature and not clearly distinguishable from each other. There are, however, three essential arguments that form its primary challenge to Back Pay Act liability. The Agency argues that: (1) the Back Pay Act does not come into play where the obligation to pay the underlying amount is not in question; (2) that delay or omission does not fall under the Back Pay Act unless there is some law, rule or regulation that makes the payment nondiscretionary and by a specific date; and (3) that omission or mere delay is not per se an unjustified or unwarranted personnel action.
The Back Pay Act now provides that omissions can constitute an unjustified or unwarranted personnel action. OPM regulations and Comptroller General precedent permitted omissions to constitute an unjustified or unwarranted personnel action even before the statute was amended to include omissions. See, e.g., 61 Comp. Gen. 408, 411 (1982). The part of the Back Pay Act in dispute here is whether an unjustified or unwarranted personnel action took place as determined under "applicable law, rule, regulation, or collective bargaining agreement" (5 U.S.C. § 5596(b)(1)). The Comptroller General, in interpreting law, rule and regulation, has established certain rules as to when "administrative or clerical errors" (hereinafter the administrative error rule) constitute unjustified or unwarranted personnel actions under the Back Pay Act.
The basic administrative error rule is set forth in Butler, 58 Comp. Gen. 51, 53 (1978), and is discussed in the context of being an exception to the general rule that personnel actions may not be retroactive so as to increase employee compensation. We note that Arbitrator Bloch cited to this same rule in making his decision. The administrative error rule identifies three situations when an administrative error creates an unjustified or unwarranted personnel action under the Back Pay Act, i.e., when the administrative error: (1) prevents a personnel action from being effected as originally intended; (2) results in a nondiscretionary administrative regulation or policy not being carried out; or (3) deprives an employee of a right granted by statute or regulation. [ v56 p718 ] Later Comptroller General decisions confirm explicitly that these administrative errors constitute unjustified or unwarranted personnel actions under the Back Pay Act. See Bishop, Comp. Gen. Decision No. B-206,181 (May 5, 1982) (unpublished). While most of the Comptroller General's decisions addressing this issue deal with promotion actions, Butler speaks of "personnel actions" in general, and Whitlock, 58 Comp. Gen. 290 (1979), for example, addresses the issue in the context of a quality step increase. Thus, the rule is clearly not limited to promotion actions.
The first prong under the administrative error rule is time sensitive in that the error must occur after the official authorized to approve the personnel action has so acted. An error falling under the second and third prongs is not time-sensitive. See Cahill, 58 Comp. Gen. 59 (1978), where the Comptroller General noted that an administrative error occurring before the authorizing official acted would not fall under the first prong of the administrative error rule but could fall under the second or third prong if there were some applicable law, rule or regulation mandating a specified time frame for action, or specified criteria which limited the agency's discretion to approve or disapprove the personnel action. The rationale for the distinction made under the first prong is that, after the authorizing official has exercised his or her authority by approving the personnel action, all that remains to effect the personnel action is a series of ministerial acts, for which a retroactive personnel action would be the appropriate remedy for the failure or delay in accomplishing those ministerial acts. See McMenamin, Comp. Gen. Decision No. B-211,143 (May 16, 1983) (unpublished) (citing Cahill, 58 Comp. Gen. at 61). The Comptroller General has also noted that "the cause of the delay is less important than when the delay occurs." See Mehutcs, Comp. Gen. Decision No. B-261,592 (Nov. 13, 1995) (unpublished).
We find that none of the three arguments made by the Agency provide a basis for overturning the award. As to the first argument (obligation to pay not in question), the entire line of Comptroller General precedent regarding the administrative error rule refutes this assertion. In those circumstances falling under the administrative error rule, the Agency has already concluded that the personnel action is going to be accomplished, hence the obligation to effect the action (along with the obligation to pay the employee any additional sums concomitant therewith) is already established and is not in dispute, with an enforceable right to backpay and interest as a remedy for failure to do so. The precedent relied on by the Agency, Testan, is not persuasive in this particular case given that it dealt with a classification challenge and interpreted the Back Pay Act prior to its amendment to cover "omission or failure to confer a benefit." Accordingly, the first argument provides no basis for overturning the award.
The second argument (the obligation to pay must be nondiscretionary and by a specific date before a delay or omission can constitute an unjustified or unwarranted personnel action under the Back Pay Act) is equally unpersuasive. Prong one of the administrative error rule, in contrast to prongs two and three, does not require the presence of a nondiscretionary law, rule, or regulation mandating action in accordance with specific criteria, or that action will be effected by a specific date. Prong one instead finds an unjustified or unwarranted personnel action where the agency fails to act (due to an administrative error) after the personnel action has been approved. The Agency's citation to Cahill in support of its argument misstates the holding in that decision and fails to acknowledge Comptroller General precedent regarding prong one of the administrative error rule. As noted in Cahill, the requirement that there be some law, rule or regulation, making action on or the timing of the personnel action nondiscretionary, becomes a factor only in the event that prong one of the administrative error rule was not applicable. Hence, the Cahill holding addresses matters falling only under prongs two and three of the administrative error rule and fails to address (or modify) Comptroller General precedent finding the Back Pay Act applicable to a "ministerial" obligation to effect a personnel action where prong one of the administrative error rule has been satisfied.
The Agency, in this second argument, also seems to be asserting [n9] that these personnel actions may not have been sufficiently "authorized" or "approved" to fall within prong one of the administrative error rule, although this assertion is not made with any degree of specificity. The Agency does not identify who it believes had the authority to approve or authorize these personnel actions and does not identify who (correctly or otherwise) approved or authorized these personnel actions. In this regard, the Agency cites no authority for its assertion other than Cahill, where the Comptroller General found that an agency regional personnel office had the authority to approve the personnel action. Given this lack of specificity, we find that this argument to be an unsubstantiated assertion and reject it on that basis. Additionally, the Agency's concession (exceptions at [ v56 p719 ] 39-40) that the error here "occurred between the [A]gency and its pay processing activity" lends credence to the conclusion that all necessary approvals had been made by Agency personnel and that it was subsequent to these approvals that a problem arose.
The third argument by the Agency (administrative error or delay is not, per se, an unjustified or unwarranted personnel action) and the legal authority in support of it also are not persuasive. As noted earlier, Testan is of limited probative value here because of the narrow issue presented therein (a classification challenge) and because the decision was issued before the Back Pay Act was modified to expressly apply to "omission or failure to confer a benefit." The Agency also relies on Bell for its assertion that its failure to pay "money due" is not a claim under the Back Pay Act and is analogous to non-Back Pay Act claims "for unpaid salary for time actually worked." That assertion misreads the court which, in finding that the matter was not subject to the Back Pay Act, expressly found that no unjustified or unwarranted personnel action was at issue before it. Id. 23 Cl. Ct. at 77.
The Agency's argument is also at odds with the already-noted Comptroller General precedent which clearly identifies situations where delay or error does constitute an unjustified or unwarranted personnel action. In examining the Comptroller General decisions cited by the Agency, the Agency misreads the holding of those decisions and/or fails to take into account the breadth of situations referenced by the Comptroller General's precedent. The Comptroller General has recognized that under some circumstances, delay or error does constitute an unjustified or unwarranted personnel action, even in the absence of explicitly or directly applicable nondiscretionary laws, rules or regulations (i.e., the noted difference between prong one and prongs two and three of the administrative error rule). Other precedent cited is just not on point. [n10] There also is nothing in any legislative history referenced by the Agency that warrants modification to the conclusions already set forth above. Accordingly, these arguments provide no basis for overturning the award.
Finally, the Agency asserts that the Back Pay Act is not an exclusive authority for paying money to its employees, and cites to Testan in support of its belief that the settlement agreements are not automatically subject to the Back Pay Act. The Agency's argument misreads the nature of the Back Pay Act. As the Agency correctly notes, the Back Pay Act does not in and of itself confer any right to receive pay, allowances or differentials, but rather is "derivative" in nature in that it is the vehicle by which those other rights (to receive pay, allowance or differentials) are enforced. [n11] Other court precedent is in accord. See Sparrow v. Commissioner of Internal Revenue, 949 F.2d 434, 435 n.2 (D.C. Cir. 1991) (in reviewing settlement agreement waiving claims under Back Pay Act and other laws, court noted the "Back Pay Act does not itself give rise to an independent claim").
The import of this precedent, however, is only that an appropriate authority must first find a violation of some applicable law, rule, regulation or agreement provision before the Back Pay Act may be relied on to mandate payment: this precedent does not compel the conclusion that Arbitrator Lubic erred, as a matter of law, in finding that the payments under these settlement agreements were subject to the Back Pay Act. In that regard, the Authority itself has enforced settlement agreements providing for backpay by imposing liability under the Back Pay Act for breach of the settlement agreements, to include the payment of interest. See Defense Logistics Agency, Defense Distribution Region East, New Cumberland, Pennsylvania and American Federation of Government Employees, Local 2004, 50 FLRA 282, 283 (1995). Therefore, this argument provides an insufficient basis to overturn the award as being contrary to the Back Pay Act. [n12]
Accordingly, we find that Arbitrator Lubic's award is not contrary to law and deny the Agency's exception.
C. The Award Is Not Based on a Nonfact
To establish that an award is based on a nonfact, the appealing party must demonstrate that a central fact underlying the award is clearly erroneous, but for which a different result would have been reached by the arbitrator. For example, U.S. Department of the Air Force, Lowry Air Force Base, Denver, Colorado and National Federation of Federal Employees, Local 1497, 48 FLRA 589, 593 (1993); General Services Administration, Region 2 and American Federation of Government Employees, Local 2431, 46 FLRA 1039, 1046-47 [ v56 p720 ] (1992) (GSA, Region 2). However, this basis for finding an arbitration award deficient does not permit the appealing party generally to dispute the arbitrator's findings of fact. As the Supreme Court has advised, "[t]he parties did not bargain for the facts to be found by a court, but by an arbitrator chosen by them who had more opportunity to observe" the grievant and the witnesses and who was familiar with the case. United Paperworkers v. Misco, Inc., 484 U.S. 29, 45 (1987) (Misco). In addition, in Misco, the Supreme Court reaffirmed its holding in United Steelworkers v. Enterprise Wheel & Car Corp., 363 U.S. 593, 596 (1960) (Steelworkers) that courts are not authorized to reconsider the merits of an award even when a party claims that the award rests on errors of fact. 484 U.S. at 36-38. The Court explained that in order to resolve disputes, an arbitrator must find facts, and a court may not reject those findings simply because it disagrees with them. Id.
In this case, Arbitrator Lubic was called upon to determine whether the awards under three prior arbitrations and the settlement agreements in four other cases were subject to payment of interest under the Back Pay Act. Arbitrator Lubic did not review the underlying merits of the prior arbitrations or the facts of the settlement agreements, and thus did not engage in the traditional "fact finding" as in the usual arbitration. Rather, Arbitrator Lubic made a legal determination that the Agency owed interest on the monies due the employees pursuant to those prior arbitration awards and settlement agreements. The Agency's nonfact exception amounts to a challenge to the legal conclusions reached by the Arbitrator concerning the applicability of the Back Pay Act and its authorization for the payment of interest. As such, the exception provides no basis to overturn the award, and we deny the exception.
D. The Arbitrator Did Not Abdicate His Authority
The Agency contends that the Arbitrator abdicated his authority when he did not overturn guidance from OPM regarding the payment of interest on awards under the Back Pay Act and when he decided to observe prior arbitration awards. We construe this exception as an argument that the award is contrary to law. As set forth above, we analyze claims that an award is contrary to law de novo.
The Agency has not demonstrated that the award is contrary to law as it pertains to the Arbitrator's application of the OPM guidance pertaining to payment of interest on awards under the Back Pay Act. The Arbitrator followed the OPM guidance, and the Agency provides no support for its contention that the Arbitrator should not have followed the OPM guidance. As noted above, a party wishing to challenge OPM's regulations may do so in an appropriate Federal district court, not through exceptions to an arbitrator's award.
In regard to the Agency's claim that the Arbitrator abdicated his authority by recognizing prior arbitration awards, we find that, as developed in the private sector, the principle that arbitration awards are not precedential recognizes that arbitrators must not abdicate their function of independent judgment. See generally, Owen Fairweather II, Practice and Procedure in Labor Arbitration 374-82 (3d ed. 1991); Frank Elkouri and Edna A. Elkouri, How Arbitration Works 414-36 (4th ed. 1985). As part of the process of arbitration, it is the responsibility for arbitrators to exercise independent and impartial judgment on the issues before them. However, an arbitrator is certainly free to accept the prior determinations of other arbitrators.
In this regard, the record reflects that Arbitrator Lubic independently and impartially exercised his judgment to resolve the matters before him. Arbitrator Lubic found that much of the authority relied on by the Agency predated the amendments to the Back Pay Act providing for payment for omissions and for the payment of interest on backpay awards. The Arbitrator also noted the Agency's failure to reference any other law, rule, or regulation precluding the payment of interest on the prior arbitration awards and settlement agreements. The Arbitrator thus found that those prior arbitration awards and settlement agreements came under the purview of the Back Pay Act, and concluded that interest was due on the monies paid to or owed to the employees. Accordingly, the Arbitrator did not abdicate his authority, and his decision is consistent with his role under the law. We therefore deny this exception.
The Agency's exceptions are denied.
Footnote # 1 for 56 FLRA No. 119
Two of the underlying arbitration cases were before the Authority regarding payment of attorney fees pursuant to the Back Pay Act in 54 FLRA 514 and 54 FLRA 773. The payment of interest on the award of backpay was not at issue in those cases.
Footnote # 2 for 56 FLRA No. 119
Footnote # 3 for 56 FLRA No. 119
Interest on backpay is permissible under the amendment to the Back Pay Act, 5 U.S.C. § 5596(b), contained in the Continuing Appropriations Act of 1988, § 623, 5 U.S.C. 5596(b) (1994 & Supp. IV 1998). Prior to that date, interest on awards of backpay under the Back Pay Act was not available.
Footnote # 4 for 56 FLRA No. 119
As soon as the activity is completed, I will notify the Principal and he/she shall arrange that I be paid by separate check not later than the next regular pay period for employees.
Joint Hearing Exhibit 1 at 65 filed with Union's Opposition.
Footnote # 5 for 56 FLRA No. 119
The Authority will not consider evidence offered by a party, or any issue, which was not presented in the proceedings before . . . the arbitrator. The Authority may, however, take official notice of such matters as would be proper.
Footnote # 6 for 56 FLRA No. 119
an act of commission or an act of omission (i.e., failure to take an action or confer a benefit) that an appropriate authority subsequently determines, on the basis of substantive or procedural defects, to have been unjustified or unwarranted under applicable law, Executive order, rule, regulation, or mandatory personnel policy established by an agency or through a collective bargaining agreement. Such actions include personnel actions and pay actions (alone or in combination).
Footnote # 7 for 56 FLRA No. 119
Footnote # 8 for 56 FLRA No. 119
The regulations promulgated by OPM to implement the Back Pay Act include pay actions within the definition of an unjustified or unwarranted personnel action. See 5 C.F.R. § 550.803; Arbitrator Lubic's award at 6.
Footnote # 9 for 56 FLRA No. 119
Exceptions at 35 ("whether the payments have `been authorized' is not resolved") and id. at 40 ("Who the authorizing official is and whether he or she has authorized the [personnel action] is . . . not apparent in the record before us").
Footnote # 10 for 56 FLRA No. 119
For example, Wener, 65 Comp. Gen. 541 (1986) (Exceptions at 22-23) is cited for support of why the Back Pay Act is not applicable, even though the facts in that case dealt with the failure of an agency to transfer part of an employee's salary to a financial institution via an allotment agreement.
Footnote # 11 for 56 FLRA No. 119
Footnote # 12 for 56 FLRA No. 119
Member Cabaniss notes that because the Agency did not argue that RAT reimbursement to Employee C did not constitute pay, allowance or differential within the meaning of the Back Pay Act, that issue is not before the Authority.