National Treasury Employees Union, Chapter 98 (Union) and United States, Department of the Treasury, Internal Revenue Service, Memphis Accounting Management Center, Memphis, Tennessee, (Agency)
[ v60 p448 ]
60 FLRA No. 88
DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE
November 30, 2004
Before the Authority: Dale Cabaniss, Chairman, and
Carol Waller Pope and Tony Armendariz, Members [n1]
I. Statement of the Case
This matter is before the Authority on exceptions to an award of Arbitrator Roger P. Kaplan filed by the Union under §7122(a) of the Federal Service Labor-Management Relations Statute (the Statute) and part 2425 of the Authority's Regulations. The Agency filed an opposition to the Union's exceptions. The Union filed a response to the Agency's opposition and the Agency filed a reply to the response. The Agency also filed a motion to strike the response. [n2]
II. Background and Arbitrator's Award
The Arbitrator determined that the Union filed a timely grievance on behalf of all affected employees, claiming that the Agency violated the parties' agreement, statutes and regulations when it denied the opportunity to work overtime to some employees. According to the Arbitrator, the Union sought backpay for employees who had been denied overtime, and that the Agency cease its violation of the agreement. When the grievance was not resolved, the Union invoked arbitration. The Arbitrator stated that the parties stipulated the following issues for arbitration:
(1) Whether the Agency violated Article 24, Section 2A of the National Agreement when it denied certain employees . . . with the opportunity to work overtime.
(2) If so, what is the appropriate remedy?
Award at 2. [n3]
Before the Arbitrator, the parties disputed both the substantive violation and the appropriate remedy. According to the Arbitrator, the Union argued that backpay was required, but the Agency contended that the proper remedy (if any remedy was required) was to schedule additional future overtime. The Arbitrator determined that the cases relied on by the Union were distinguishable from the instant matter and were not persuasive. [n4] However, the Arbitrator indicated that he was persuaded by the reasoning of the Court of Appeals in Indep. Employees' Union of Hillshire Farm Co., Inc. v. Hillshire Farm Co., Inc. 826 F.2d 530 (7th Cir. 1987) (Hillshire Farm), relied on by the Agency. According to the Arbitrator, in that case, the arbitrator preferred make-up work as a remedy to backpay because it placed the employees in roughly the same position he or she would have been in but for the violation and the remedy [ v60 p449 ] avoided a "punitive penalty" of forcing the employer to pay for work not actually performed. Award at 7.
As his award, the Arbitrator found that the Agency violated Article 24, Section 2A of the parties agreement when it denied certain employees the opportunity to work overtime. The Arbitrator ordered the Agency to cease and desist from such further violations and to make overtime available consistent with the parties' agreement and the award.
III. Positions of the Parties
A. Union's Exceptions
1. Contrary to Law
The Union contends that the award is contrary to the Back Pay Act and Authority precedent. According to the Union, the Back Pay Act provides a remedy to federal workers for unwarranted or unjustified personnel actions taken by a federal agency. Thus, the Union maintains that arbitrators must look to the Back Pay Act in cases where, as here, agency employees have suffered a withdrawal or reduction in any, allowance, or differential as a result of an unwarranted or unjustified personnel action. The Union asserts that it presented the Arbitrator with precedent justifying an award of backpay, yet the Arbitrator's award is devoid of any discussion of the Back Pay Act.
The Union argues further that it sought backpay under the Back Pay Act and, thus, the Arbitrator was lawfully obligated to consider the Act and "engage in the required analysis to determine whether [backpay] was appropriate." Exceptions at 6. The Union contends that the private sector case, Hillshire Farm, was not controlling or relevant when the Union had presented unambiguous Authority precedent.
The Union contends that the Arbitrator's award neglected to interpret and apply a provision of the agreement dealing with the arbitration proceeding and, thus, the award does not draw its essence from the agreement. According to the Union, Article 43 of the agreement deals with arbitration and provides an arbitrator with the authority to fashion remedies under the Back Pay Act. The Union argues that under the agreement, the Arbitrator was obligated to analyze the Back Pay Act after the Union requested backpay as a remedy and to determine whether backpay was an appropriate remedy. The Union further argues that by ignoring Article 43 of the parties' agreement, the Arbitrator demonstrated a manifest disregard of the agreement and, therefore, the case should be remanded to the Arbitrator.
B. Agency's Opposition
1. Contrary to Law
The Agency asserts that it is well-established that arbitrators have great latitude in fashioning remedies for agreement violations. The Agency also asserts that mere disagreement with the remedy fashioned by the arbitrator provides no basis for finding an award deficient.
The Agency argues that, to the extent the Union is asserting that the award was per se unlawful because it did not include backpay, that argument is without merit. According to the Agency, there is nothing in the Back Pay Act that requires a monetary award for every unjustified or unwarranted personnel action. The Agency argues that arbitrators are free to fashion remedies involving make-up work or monetary remedies.
The Agency contends that of the three arbitration awards submitted by the Union, only one (Murphy) references the Back Pay Act, and none stands for the proposition that a backpay remedy is mandatory if an overtime violation is found. The Agency asserts that the Murphy award indicates that some arbitration decisions support the backpay remedy and others support the make-up work remedy. The Agency notes that the Union did not submit any Authority precedent and failed to submit any precedent requiring an award of backpay for agreement violations dealing with overtime. The Agency asserts that the Hillshire Farm decision it cited summarizes a number of arbitration decisions setting forth "cogent reasons" why backpay should not be awarded in overtime cases. See Opposition at 3. The Agency also notes that the Arbitrator cited the Murphy award and distinguished it on the facts, but found the Hillshire Farm decision persuasive. Therefore, the Agency contends that there is simply no basis for the Union's assertion that the Arbitrator did not consider the Back Pay Act.
The Agency contends that nothing in the parties' agreement requires that backpay be the remedy for a violation of the agreement's overtime provision. The Agency argues that the agreement provision cited by the Union clearly shows that an award of backpay is just one remedy an arbitrator may grant. The Agency also argues that Article 24, Section 2, relied on by the Arbitrator does not mandate what remedy should be imposed. The Agency contends that the Arbitrator's decisions not to award backpay does not meet any of the criteria in the essence standard, and that many arbitration decisions do not award backpay for contractual overtime violations. [ v60 p450 ]
IV. Analysis and Conclusions
A. The Award Is Not Contrary to Law
The Authority's role in reviewing arbitration awards depends on the nature of the exceptions raised by the appealing party. See United States Customs Serv. v. FLRA, 43 F.3d 682, 686 (D.C. Cir. 1994). In NTEU, Chapter 24, 50 FLRA 330, 332 (1995) (NTEU Chapter 24), the Authority stated that if the arbitrator's decision is challenged, as it is here, on the ground that it is contrary to any law, rule, or regulation, the Authority will review the legal question de novo. In applying a standard of de novo review, the Authority assesses whether an arbitrator's legal conclusions are consistent with the applicable standard of law. NFFE, Local 1437, 53 FLRA 1703, 1710 (1998). In making that assessment, the Authority defers to the arbitrator's underlying factual findings. See id. [n5]
Under the Back Pay Act, 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; (2) the personnel action has resulted in the withdrawal or reduction of the grievant's pay, allowances or differentials. See United States Dep't of Health & Human Servs., 54 FLRA 1210, 1219 (1998). With regard to the first requirement, a breach of a collective bargaining agreement constitutes an unjustified or unwarranted personnel action. See GSA, 55 FLRA 493, 496 (1999). An arbitrator's finding of an agreement violation satisfies this requirement. See United States Dep't of Def., Army & Air Force Exch. Serv., Dallas, Tex., 49 FLRA 982, 991-93 (1994).
In this case, the Arbitrator determined that the Agency violated Article 24, Section 2A of the parties' agreement when it denied certain employees the opportunity to work overtime. However, the Arbitrator made no finding that the agreement violation resulted in a loss of pay to those employees. In fact, the Arbitrator found specifically that the Union failed "to sustain its burden to prove that payment of backpay is the appropriate remedy." Award at 5.
The second requirement under the Back Pay Act is only met where there is a causal connection between a violation of the parties' collective bargaining agreement and a withdrawal or reduction in pay, allowances or differentials. This connection is shown only where "it is clear that the violation of the parties' collective bargaining agreement resulted in the loss of some pay." United States Dep't of the Air Force, Travis Air Force Base, Cal., 56 FLRA 434, 437-38 (2000). Accordingly, as the Arbitrator did not find that the second requirement under the Back Pay Act had been met, the Arbitrator's denial of backpay is not deficient.
We note that the Authority has never required an arbitrator to award backpay under the Back Pay Act to remedy an agreement violation, particularly where, as here, no finding of a loss of pay was made. In fact, the Authority has specifically held that "nothing in the Back Pay Act that requires a monetary award for every unjustified or unwarranted personnel action." AFGE, Local 916, 57 FLRA 715, 717 n.7 (2002). In this regard, the Authority has also upheld awards of future overtime, in lieu of backpay. See, e.g., id; United States Dep't of the Air Force, Oklahoma City Air Logistics Ctr., Tinker AFB, Okla., 47 FLRA 98, 101-02 (1993); United States Dep't of the Navy, United States Marine Corps Logistics Base, Albany, Ga., 39 FLRA 576 (1991).
We also note that, although not addressed by the parties, the United States Court of Appeals for the Federal Circuit has addressed the issue of the extent to which an employee may be entitled to backpay where an arbitrator sets aside all or part of a disciplinary action. See Ollett v. Dep't of the Air Force, 253 F.3d 692 (Fed. Cir. 2001) (Ollett); AFGE, Local 2718 , Nat'l Immigration & Naturalization Serv. Council, et al. v. Dep't of Justice, Immigration & Naturalization Serv., 768 F.2d 348 (Fed. Cir. 1985) (AFGE, Local 2718).
In AFGE, Local 2718, the court reviewed an arbitrator's award mitigating a removal for misconduct to a 15-day suspension but denying backpay. The court found no violation of the Back Pay Act by not providing backpay. In making that finding, the court noted that an entitlement to backpay under the Back Pay Act did not apply "where the arbitrator has mitigated a removal, has found the employee as much responsible for the removal action as the agency, and has expressly denied back pay as part of the mitigated penalty." AFGE, Local 2718, 768 F.2d at 351.
In Ollett, the arbitrator in the underlying case reversed an employee's removal for misconduct but awarded no backpay. It was not possible for the court to determine why the arbitrator determined to award no backpay. On appeal of that arbitration award, the court remanded to the arbitrator for clarification on the issue backpay in light of the Back Pay Act and AFGE, Local 2718. In concluding to remand, the court noted, however, that "[o]nly if the arbitrator made a finding of fault on [the grievant's] part which would justify a mitigated penalty could he properly deny back pay." Ollett, 253 F.3d at 695.
In both Ollett and AFGE, Local 2718, the court found that an employee is not always entitled to backpay for the period of time of a removal or suspension [ v60 p451 ] that is set aside when the disciplinary action is found to be an unjustified or unwarranted personnel action under the Back Pay Act. See AFGE, Local 2718, 768 F.2d at 351; Ollett, 253 F.3d at 695. The court noted that an arbitrator, as part of his or her ability to mitigate a penalty, may set aside the entire removal or period of suspension yet still not award the affected employee backpay for that period if the employee was found to bear some responsibility for causing the underlying disciplinary action (and the resulting loss of pay). See AFGE, Local 2718, 768 F.2d at 351. However, where the employee was found not to bear any responsibility for what occurred, the employee would then be entitled to backpay for that period. See Ollett, 253 F.3d at 695.
In sum, the Authority has held specifically that arbitrators are not required to award backpay and the Federal Circuit has held that backpay is required in only limited circumstances. In the present case, involving an alleged lost opportunity to work overtime rather than a disciplinary action, it is unclear whether or how the Federal Circuit's reasoning would apply. Nevertheless, as set forth above, the Arbitrator in the case now before us found that the Union failed to sustain its burden of establishing that backpay was a required remedy. Thus, we leave for another day, in a case where the issue is presented and addressed, the question whether the Authority should reconsider its precedent on this point.
Based on the foregoing, we conclude that the award is not contrary to law and deny the exception.
To demonstrate that an award fails to draw its essence from a collective bargaining agreement, a party must show that the award: (1) is so unfounded in reason and fact and so unconnected with the wording and purposes of the collective bargaining agreement as to manifest an infidelity to the obligation of the arbitrator; or (2) does not represent a plausible interpretation of the agreement; or (3) cannot in any rational way be derived from the agreement; or (4) evidences a manifest disregard of the agreement. See United States Dep't of Labor (OSHA), 34 FLRA 573, 575 (1990).
The Union asserts only that "Article 43 . . . provides an arbitrator with the authority to fashion remedies under the Back Pay Act." Exceptions at 7. The Union does not claim, and nothing in Article 43 states, that arbitrators are required to award backpay in every circumstance. Consequently, the Arbitrator's exercise of his discretion not to award backpay is consistent with the parties' agreement.
The Authority has long held that arbitrators have wide latitude to fashion a remedy. See NTEU, Chapter 68, 57 FLRA 256, 257 (2001); Warner Robins AFB, 25 FLRA at 971 (arbitrator substituted make-up overtime as a remedy for a contract violation in the absence of a clear showing by the grievant of a monetary loss). As the Union has failed to demonstrate that the Arbitrator's award fails to draw its essence from the parties' agreement, we deny the exception.
The Union's exceptions are denied.
Dissenting Opinion of Chairman Cabaniss:
I write separately to note that, regardless of the possible impact of the AFGE, Local 2718 and Ollett decisions discussed in the majority opinion, I would not find sufficient evidence in the record upon which to resolve the Union's contrary to law exception. Therefore, I would remand the case for a determination of whether the Agency's violation of the agreement (an unjustified or unwarranted personnel action (UUPA)) actually caused the grievants to lose pay (a causal relationship between the UUPA and a loss of pay, allowances, or differentials).
I agree completely that arbitrators are not required to award automatically backpay for every violation of an agreement, and that the Back Pay Act does not require a monetary award for every UUPA. However, as this Agency committed a UUPA, the grievants would be entitled to lost overtime pay if that loss was caused by the UUPA. It may well be that the employees would not have worked the overtime but for the Agency's UUPA: the Arbitrator, however, appears to have made no such findings regarding that causal relationship requirement. I note that the Authority has remanded cases to arbitrators where the record is not sufficient to resolve a contrary to law exception. See, e.g., United States Dep't of Veterans Affairs, Med. Ctr., Asheville, N.C., 59 FLRA 605, 608-09 (2004) (because of lack of evidence in record, award remanded for arbitrator to make determination whether grievant minimally qualified for promotion). I would do the same in this instance.
Footnote # 1 for 60 FLRA No. 88 - Authority's Decision
Footnote # 2 for 60 FLRA No. 88 - Authority's Decision
The Authority's Regulations do not provide for the filing of a response to an opposition to a party's exceptions, or a reply to such a response. Although § 2429.26(a) of our Regulations allows the Authority to grant leave to file additional documents based on a showing of need, the Authority has held that it is incumbent on the moving party to demonstrate why the Authority should consider such supplemental submissions. See United States Dep't of the Navy, Naval Sea Sys. Command, 57 FLRA 543, 543 n.1 (2001); United States Dep't of Agric., Food Safety & Inspection Serv., W. Region, 36 FLRA 393, 400 n.* (1990). Neither the Agency nor the Union has demonstrated that its additional submission should be considered. Accordingly, we will not consider the Union's or the Agency's additional submissions and we grant the Agency's motion to strike the response.
Footnote # 3 for 60 FLRA No. 88 - Authority's Decision
Overtime will be distributed as equitably as possible among qualified employees. When overtime becomes available, the Employer will contact the impacted chapter to discuss equitable distribution. Local negotiations concerning this matter will be in accordance with Article 47 [Mid-Term Bargaining].
Award at 2.
Footnote # 4 for 60 FLRA No. 88 - Authority's Decision
The decisions the Arbitrator found distinguishable include: NTEU and IRS, Kansas City Service Center (Arb. Eisler 1999) (involved claim of one grievant who declined 2 hours overtime in section where she did not work but to whom management failed to offer 2 hours in area where she did work); NTEU and IRS, Brooklyn District (Arb. Blum 1990) (involved retroactive overtime claim for employees who traveled to training classes); and NTEU and IRS, Memphis Service Center (Arb. Murphy 1986) (Murphy) (concerned distribution of overtime among employees working five 8-hour days and those working four 10-hour days). Award at 6-7.
Footnote # 5 for 60 FLRA No. 88 - Authority's Decision
See also United States Dep't of Commerce, Patent & Trademark Office, 52 FLRA 358, 367 (1996); United States Dep't of the Air Force, Lowry Air Force Base, Denver, Colo., 48 FLRA 589, 593 (1993) (discussing Supreme Court's articula