U.S. Department of the Navy, Naval Sea Systems Command (Agency) and International Federation of Professional and Technical Engineers (Union)
[ v57 p543 ]
57 FLRA No. 95
U.S. DEPARTMENT OF THE NAVY
NAVAL SEA SYSTEMS COMMAND
INTERNATIONAL FEDERATION OF
PROFESSIONAL AND TECHNICAL ENGINEERS
September 28, 2001
Before the Authority: Dale Cabaniss, Chairman, and
Carol Waller Pope and Tony Armendariz, Members
Decision by Member Armendariz for the Authority
I. Statement of the Case
This matter is before the Authority on exceptions to an award of Arbitrator Joseph F. Gentile filed by the Agency under § 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. [n1]
The Arbitrator sustained a grievance claiming that the Agency violated a memorandum of understanding by failing to compensate employees fully for overtime worked.
For the reasons explained below, we deny the exceptions.
II. Background and Arbitrator's Award
The parties had a long-standing dispute regarding the interpretation and application of the Fair Labor Standards Act (FLSA) to certain positions at various shipyards throughout the Agency. The record indicates that the Agency had erroneously classified certain employees as exempt from the overtime provisions of the FLSA. Under the terms of two settlement agreements reached by the parties in 1995, the Agency either reclassified certain employees as non-exempt under the FLSA (in other words, covered by the FLSA) or considered them as non-exempt for purposes of overtime that they previously worked.
The grievance in this case concerned how one of those settlement agreements -- the Global Memorandum of Understanding (the Global MOU)-- applied to a certain group of GS-12 employees. As relevant here, the Global MOU provided that affected employees, including the grievants in this case, "shall receive backpay equivalent to the difference between what they received as overtime compensation under [t]itle 5 of the United States Code (U.S.C.), and what they would have received as overtime compensation under section 7(a) of the FLSA, [t]itle 29 U.S.C. section 207(a)." Award at 3-4. The grievants had received compensatory time off for overtime that they had worked after May 4, 1991. [n2] As set forth below, the issue raised by the grievants concerned whether they were entitled to any additional differential in these circumstances.
When the parties could not resolve the grievance, it was submitted to arbitration. The parties did not stipulate the issues. The Arbitrator adopted the Union's formulation of the issues as follows:
(1) How should the damages be computed for the GS-12 grievants who are identified as FLSA non-exempt under the Global MOU with regard to compensatory time received as payment under [t]itle 5 for overtime worked after May 14, 1991? In other words, under the Global MOU, should the backpay after May 14, 1991, be computed by considering the comp. time as straight time paid, and the grievants receive the difference between straight time and time and one half as back pay?[ [n3] ] [ v57 p544 ]
(2) How should the damages be computed for the GS-12 grievants covered by paragraphs 9, 15 and 16 of the Global MOU with regard to compensatory time received as payment under [t]itle 5 for overtime worked prior to March 31, 1996? In other words, under the Global MOU, should the backpay be computed by considering the comp. time as straight time paid, and the grievants receive the difference between straight time and time and one half as back pay?
Id. at 6, 12. [n4]
Before the Arbitrator, the Agency argued that the reference in the backpay provision of the Global MOU to "[t]itle 5" was a reference to 5 U.S.C. § 5542 only, and not also to 5 U.S.C. § 5543, as the Union argued. [n5] In the Agency's view, the only differential payable under the Global MOU was the difference between the overtime rate under § 5542 and the overtime rate under § 207(a)(1) of the FLSA. [n6] The Agency also argued that the only employees who were entitled to this differential were those who had been paid for overtime, not those who had received compensatory time off under § 5543. The Union, on the other hand, claimed that the Global MOU required the Agency to give backpay to employees who had received overtime pay under § 5542 as well as to employees who had taken compensatory time off under § 5543. According to the Union, both groups of employees were entitled to backpay in amounts equal to the difference between the straight time rate and the time and a half rate.
As an initial matter, the Arbitrator found that the language of the Global MOU [n7] was ambiguous and that it was appropriate to consider extrinsic evidence to determine its meaning. He concluded, in agreement with the Union, that "the intent of the Global MOU with regard to the calculation of damages was that any comp time used is considered straight time paid[,]" and that according to the settlement terms, the grievants "are entitled to the difference between straight time and time and one-half." Award at 14.
In reaching this result, the Arbitrator relied on the terms of the Global MOU, which he emphasized was a settlement agreement containing provisions that were agreed to by both parties, and on two letters concerning the implementation of the Global MOU that he found were "pivotal." Id. at 13. The first letter, from the Agency to the Union, specified that "`comp time used is considered straight time paid. According to the settlement terms, grievants would be entitled to the difference between straight time and time and one-half.'" Id. at 11-12 (quoting Agency Letter). The Arbitrator found the letter "very persuasive," given the fact that it was [ v57 p545 ] written at almost the same time that the Global MOU was executed. Id. at 13. The second letter, which the Union wrote to the Agency, "buttressed the implementation comments found in the [Agency] Letter[,]" and confirmed to the Arbitrator that employees who had received compensatory time off would be entitled to the difference between the straight-time rate of pay and time and one-half. Id.
In sum, the Arbitrator found that the compensatory time used by the grievants was to be considered straight paid time, and that under the terms of the Global MOU the grievants were entitled to the difference between straight time and time and one-half. [n8]
III. Positions of the Parties
A. Agency's Exceptions
The Agency asserts that the award is contrary to the FLSA, the Back Pay Act, 5 U.S.C. § 5543, 5 C.F.R. § 551.531, and decisional law.
First, citing 29 U.S.C. § 216(b), the Agency claims that, under the FLSA, it is liable only for "unpaid compensation." [n9] Exceptions at 8. According to the Agency, since the grievants took compensatory time off and, under 5 U.S.C. § 5543, compensatory time "takes the place of overtime pay and is full compensation for any overtime hours worked," the grievants were fully compensated for the overtime worked. Id. Therefore, in the Agency's view, no unpaid compensation existed within the meaning of the FLSA.
Second, the Agency contends that overtime differentials such as those at issue here are prohibited under the Back Pay Act and its implementing regulations. The Agency argues that, under these provisions, a grievant may not receive any amount in excess of that which the grievant would normally have earned. Citing 5 U.S.C. § 5543, the Agency asserts that, since May 1991, federal employees have been treated identically for purposes of determining eligibility for compensatory time off, and since that time an erroneous FLSA classification has not had any impact on any federal employee's eligibility for compensatory time off. According to the Agency, since all of the grievants were eligible for, and did receive, compensatory time off after May 1991, they were fully remunerated for the overtime worked and, under 5 C.F.R. § 550.801, no differentials were otherwise due as a result of the FLSA misclassification. Therefore, the Agency contends that the award would require it to provide the grievants with differentials they would not have received even if their FLSA status had been properly classified and, as such, the award violates 5 C.F.R. § 550.805(b). [n10]
Next, the Agency claims that the compensatory time statute at issue, 5 U.S.C. § 5543, prohibits the payment of compensatory time off and overtime pay for the same overtime hours worked. According to the Agency, "[a]bsent a finding that the agency erroneously granted compensatory time off, a federal employee may only receive one or the other, but not both." Exceptions at 9. The Agency asserts that because the Arbitrator made no finding that compensatory time was erroneously granted, the award improperly grants the grievants both compensatory time off and overtime pay.
Finally, the Agency asserts that the statutes and regulations governing overtime compensation, not the Global MOU, control this dispute. The Agency contends that "[n]ot only did the settlement agreements at issue here not make provision for the payment of overtime differentials to those who had already properly received compensatory time off, the Agency did not have the statutory or regulatory authority to enter into such an agreement. Even if it had agreed to such an arrangement, it is well settled that the Government is not bound by the unauthorized acts of its agents." [n11] Id. at 4. The Agency adds that a differential that it paid to GS-11 [ v57 p546 ] employees, which is similar to that being sought by the GS-12 grievants in this case, was erroneously made and that the Agency did not agree to pay the differential to the GS-12 employees.
B. Union's Opposition
The Union contends that, under the terms of the Global MOU, for the purpose of computing backpay the grievants are entitled to the maximum amount provided under the FLSA (time and a half) and the Agency is permitted to receive an offset equivalent to what it paid the grievants under title 5 (straight time). According to the Union, the award of the differential (half time) ordered by the Arbitrator is not contrary to law because nothing in the FLSA, title 5 or the Back Pay Act addresses or prohibits such a payment.
The Union also claims that there are significant differences between title 5 overtime and title 29 overtime and that the parties agreed, in the Global MOU, that backpay would be paid as if the grievants had been covered by the FLSA (that is, by title 29). According to the Union, since the grievants "were treated as FLSA exempt employees at the time that the grievants received compensatory time, they were only provided with the limited rights and choices, if any, provided under [t]itle 5. The grievants simply did not have the opportunity to receive true time and one-half overtime compensation that the FLSA provides." Opposition at 12 (footnote omitted). The Union contends that the Comptroller General has approved the payment of FLSA overtime where, as here, compensatory time off under title 5 had been made erroneously, with an offset for the amount of the payment already made.
As for the Back Pay Act, the Union contends that the grievants would have received time and one-half overtime compensation but for the Agency's misclassification of the grievants as exempt from the FLSA. According to the Union, providing the grievants with the "additional half time compensation in addition to the [t]itle 5 compensatory time they received[,]" is consistent with 5 C.F.R. § 550.805(b). Id. at 15.
IV. Analysis and Conclusions
A. Standard of Review
The Authority's role in reviewing arbitration awards depends upon the nature of the appealing party's exceptions. United States Customs Serv. v. FLRA, 43 F.3d 682, 686 (D.C. Cir. 1994). Where, as here, a party's exception challenges an award's consistency with law, the Authority reviews the question of law raised by the exception and the arbitrator's award de novo. See NTEU, Chapter 24, 50 FLRA 330, 332 (1995) (citing Customs Serv., 43 F.3d at 686-87). In applying a de novo standard of review, the Authority assesses whether the arbitrator's legal conclusions are consistent with the applicable standard of law. See NFFE, Local 1437, 53 FLRA 1703, 1710 (1998). In making that assessment, the Authority defers to the arbitrator's underlying factual findings. See id.
B. The Award Is Not Contrary to 5 U.S.C. § 5543
There is no dispute in this case that under the Global MOU, as interpreted by the Arbitrator, the grievants' entitlement to compensation for overtime work performed was governed by the FLSA. [n12] Under the relevant overtime provisions of the FLSA, which are found at 29 U.S.C. § 207(a)(1), and the relevant implementing regulation, 5 C.F.R. § 551.501(a), [n13] the grievants in this case were entitled to overtime compensation at rates equal to one and one-half times their hourly regular rate of pay for the periods of overtime worked. Alternatively, compensatory time off was available in lieu of overtime pay "[a]t the request of an employee." 5 C.F.R. § 551.531(a).
The Agency asserts, citing 5 U.S.C. § 5543, that since May 1991, federal employees have been treated identically for purposes of determining eligibility for compensatory time off. Consequently, the Agency adds, [ v57 p547 ] since that time, an erroneous FLSA classification has not had any impact on any federal employee's eligibility for compensatory time off. In this case, the Agency claims that since all of the grievants were eligible for, and did receive, compensatory time off after May 1991, they were fully remunerated for the overtime worked.
Neither the laws nor the regulations governing compensatory time off support the Agency's assertions. 5 U.S.C. § 5543 differentiates among employees at various grade levels. For an employee whose rate of basic pay is below the maximum rate of basic pay for GS-10, the head of an agency may "on request of an employee, grant the employee compensatory time off from his scheduled tour of duty instead of payment under section 5542 or section 7 of the [FLSA]." 5 U.S.C. § 5543(a)(1). In contrast, for an employee whose rate of basic pay is in excess of the maximum rate of basic pay for GS-10, such as GS-12 employees, the head of an agency can require that the employee "shall be granted compensatory time off from his scheduled tour of duty equal to the amount of time spent in irregular or occasional overtime work instead of being paid for that work under section 5542 of this title." 5 U.S.C. § 5543(a)(2). The decision whether to award compensatory time in lieu of overtime pay for employees covered under § 5543(a)(2) is solely within the discretion of an agency. See John Doe, et al. v. United States, 47 Fed. Cl. 594, 594-95 (2000) ("The choice to award compensatory time rests entirely with the [a]gency for employees exceeding the maximum rate for GS-10." (footnote omitted)).
The regulation governing compensatory time off for employees covered by the FLSA (5 C.F.R. § 551.531(a)) is significantly different in that employees may elect compensatory time. In promulgating 5 C.F.R. § 551.531(a), the Office of Personnel Management (OPM) explained that "[t]he rules governing compensatory time off requested by an employee are not the same under both parts 550 and 551." 56 Fed. Reg. 26,340 (May 3, 1991). Distinguishing the rule under 5 U.S.C. § 5543(a)(2), OPM stated that "there is no legal authority for an agency to require that a nonexempt employee take compensatory time off in lieu of overtime pay under the FLSA." Instead, under 5 C.F.R. § 551.531(a), compensatory time off for employees covered by the FLSA is "[a]t the request of an employee."
There is no evidence in this case that the Agency provided employees with a choice of whether to elect compensatory time off, in lieu of overtime pay, as required under 5 C.F.R. § 551.531(a). We reject the Agency's claim that "the Union in this case admitted that compensatory time off was properly requested" as unsubstantiated. Exceptions at 5. First, the portions of the transcript of the arbitration hearing on which the Agency relies do not address the specific point of whether any of the grievants in this case requested compensatory time off. Second, at the time the Agency provided compensatory time to the grievants, the Agency was treating the grievants as though they were covered by title 5, not title 29. As stated above, for employees covered by title 5 (specifically, under 5 U.S.C. § 5543(a)(2)), the decision to require GS-12 employees to take compensatory time off rests solely with an agency. In this case, the record reflects that the Agency did not give the grievants the choice between overtime pay and compensatory time off to which they were entitled had they been considered covered under title 29, but essentially required the grievants to take compensatory time off.
Even assuming that some of the grievants requested compensatory time off, however, nothing in the record before us shows that such requests were based on the employees' understanding that under title 29 they had a choice between overtime pay and compensatory time off. The absence of such a showing in the record is not surprising, inasmuch as the Agency was operating solely under title 5 in compensating the employees for the overtime worked, and title 5 does not afford the employees such a choice.
Since the grievants were not given the choice of electing compensatory time off or overtime pay, as required under the FLSA, and because the FLSA provides a statutory basis for granting employees overtime pay at the rate of time and one-half, the award, which provides the grievants with the difference between straight time and time and one-half, is not contrary to law. [n14]
We further note that, in an analogous situation, the Comptroller General found that an employee who was entitled to overtime pay under the FLSA, but was erroneously [ v57 p548 ] granted compensatory time off under title 5 instead, was entitled to an additional amount of overtime compensation under the FLSA. See Matter of Marion D. Murray, 59 Comp. Gen. 246 (1980) (Murray). There, as here, the amount of overtime compensation was to be offset by the value of the compensatory time off. Although the facts in Murray and the facts in this case differ in certain respects, both cases involve employees who were or should have been classified as non-exempt from the overtime provisions of the FLSA and they both involve situations in which compensatory time off under title 5 was granted in error. In each case, the appropriate remedy consists of the payment of overtime pay, calculated under title 29, reduced by the value of the compensatory time off.
In sum, we find that this exception provides no basis for finding the award deficient.
C. The Award Is Not Contrary to 29 U.S.C. § 216(b) or the Back Pay Act
The Agency's contentions that the award is contrary to 29 U.S.C. § 216(b) and the Back Pay Act are premised on essentially the same claim; namely, that the grievants have been fully compensated for the overtime worked because they were granted compensatory time off. We reject these claims. As set forth above, the grievants were not fully compensated, under applicable law and regulations, for the overtime worked. There is nothing in § 216(b) or the Back Pay Act and its implementing regulations that addresses or resolves the question of whether employees who have received compensatory time off for overtime worked are precluded from receiving an additional amount of compensation -- in this case, the difference between straight time and time and one-half time --for the performance of that overtime. Consequently, these contentions provide no basis for finding the award deficient.
The Agency's exceptions are denied.
Footnote # 1 for 57 FLRA No. 95
The Agency also submitted a reply to the Union's opposition. The Authority's Regulations do not provide for the filing of a reply to an opposition to a party's exceptions. Although § 2429.26(a) permits the filing of additional documents, the Authority has held that it is incumbent on the moving party to demonstrate why the Authority should consider such a supplemental submission. See, e.g., United States Dep't of the Treasury, United States Customs Service, El Paso, Tx., 52 FLRA 622, 625 (1996). The Agency has not shown that its submission, in which it claims that the Union's arguments are a misreading of applicable law, should be considered. Therefore, we do not consider it. The Union's motion to strike the reply or, alternatively, to file a response, is thereby rendered moot. Id. at n.2.
Footnote # 2 for 57 FLRA No. 95
The significance of May 4, 1991, is that, before and after that date, different rules regarding compensation for overtime applied to employees who were covered by the FLSA. Prior to May 4, 1991, employees paid under the FLSA were required to be paid overtime at the rate of time and one-half. After that date, employees had the option of being paid at that rate or receiving compensatory time. See NFFE, Local 405, 42 FLRA 1112, 1141 n.6 (1991).
Footnote # 3 for 57 FLRA No. 95
Footnote # 4 for 57 FLRA No. 95
(1) Are employees who are exempt from the overtime pay provisions of the Fair Labor Standards Act but also eligible for back pay under the Global MOU, legally entitled to a compensatory time-off differential?
(2) Are grievants who are not exempt from the Fair Labor Standards Act and who are also eligible for back pay under the Global MOU, legally entitled to receive a compensatory timeoff differential for any period after May 4, 1991?
Award at 6. During the arbitration hearing, the Arbitrator stated that the Agency's and the Union's formulations of the record "are both reasonably within the same ballpark." Id.
Footnote # 5 for 57 FLRA No. 95
(a) For full-time, part-time and intermittent tours of duty, hours of work officially ordered or approved in excess of 40 hours in an administrative workweek, or . . . in excess of 8 hours in a day, performed by an employee are overtime work and shall be paid for, except as otherwise provided by this subchapter, at the following rates:
. . . .
(2) For an employee whose basic pay is at a rate which exceeds the minimum rate of basic pay for GS-10 . . . the overtime hourly rate of pay is an amount equal to one and one-half times the hourly rate of the minimum rate of basic pay for GS-10 . . . .
5 U.S.C. § 5543 provides, in pertinent part:
(a) The head of an agency may -
(1) on request of an employee, grant the employee compensatory time off from his scheduled tour of duty instead of payment under section 5542 or section 7 of the Fair Labor Standards Act of 1938 for an equal amount of time spent in irregular or occasional overtime work; and
(2) provide that an employee whose rate of basic pay is in excess of the maximum rate of basic pay for GS-10 . . . shall be granted compensatory time off from his scheduled tour of duty equal to the amount of time spent in irregular or occasional overtime work instead of being paid for that work under section 5542 of this title.
Footnote # 6 for 57 FLRA No. 95
Except as otherwise provided in this section, no employer shall employ any of his employees . . . for a workweek longer than forty hours unless such employee receives compensation for his employment . . . at a rate not less than one and one-half times the regular rate at which he is employed.
Footnote # 7 for 57 FLRA No. 95
As noted above, the relevant language of the Global MOU stated that affected employees, including the grievants, "shall receive backpay equivalent to the difference between what they received as overtime compensation under [t]itle 5 of the United States Code (U.S.C.), and what they would have received as overtime compensation under section 7(a) of the FLSA, [t]itle 29 U.S.C. section 207(a)." Award at 3-4.
Footnote # 8 for 57 FLRA No. 95
Noting the class action nature of the grievance and the inability to provide specific computations in each individual situation, the Arbitrator remanded the computation to the parties for implementation and retained jurisdiction only to resolve computational disputes. The Arbitrator also found that, pursuant to the Global MOU, attorney fees and costs were mandated, with the specific amounts to be awarded by him after the Union submitted an accounting to the Agency and the Agency had an opportunity to review it.
Footnote # 9 for 57 FLRA No. 95
Any employer who violates the provisions of section 206 and section 207 of this title shall be liable to the employee or employees affected in the amount of their unpaid minimum wages, or their unpaid overtime compensation, as the case may be, and in an additional equal amount as liquidated damages.
Footnote # 10 for 57 FLRA No. 95
5 C.F.R. § 550.805(b) provides that [n]o employee shall be granted more pay, allowances, and differentials under section 5596 of title 5, United States Code, . . . than he or she would have been entitled to receive if the unjustified or unwarranted personnel action had not occurred.
Footnote # 11 for 57 FLRA No. 95
Under 5 C.F.R. § 2429.5, the Authority will not consider issues that could have been, but were not, presented to the arbitrator. See, e.g., Int'l Ass'n of Fire Fighters, Local F-89, 50 FLRA 327, 328 (1995). There is no indication that the Agency argued before the Arbitrator that it did not have authority to enter into a settlement agreement granting an additional differential in these circumstances, and we do not consider this argument here.
Footnote # 12 for 57 FLRA No. 95
We note that even if there were a contention that the grievants were covered by both title 5 and the FLSA, the computation and payment of overtime compensation for them would be made only under the FLSA. See United States Dep't of Defense, Defense Mapping Agency Aerospace Ctr., St. Louis, Mo., 43 FLRA 147, 148 n.1 (1991). See also United States Dep't of Commerce, NOAA, Office of NOAA Corps Operations, Atlantic Marine Ctr., Norfolk, Va., 55 FLRA 816, 820 (1999) (citing 5 C.F.R. § 551.513). Employees who are subject to the overtime pay provisions of the FLSA are not subject to the overtime and compensatory time off regulations set forth in 5 C.F.R. Part 550. See § 550.101(c).
Footnote # 13 for 57 FLRA No. 95
a) An agency shall compensate an employee who is not exempt . . . for all hours of work in excess of 8 in a day or 40 in a workweek at a rate equal to one and one-half times the employee's hourly regular rate of pay . . . .
Footnote # 14 for 57 FLRA No. 95
We are aware that, under 5 C.F.R. § 551.501(a)(7), an employee who takes compensatory time off is not eligible to receive overtime pay. However, this exclusion from the overtime pay provisions of the FLSA applies when the employee's compensatory time off is granted under the compensatory time off provision of the FLSA, namely, 5 C.F.R. § 551.531. If the Agency had correctly classified the grievants as covered under the FLSA for the periods of the overtime worked, and if the employees had properly been given a choice and had request