DEPARTMENT OF THE TREASURY INTERNAL REVENUE SERVICE WESTERN AREA DISTRIBUTION CENTER RANCHO CORDOVA, CALIFORNIA and CHAPTER 239, NATIONAL TREASURY EMPLOYEES UNION
In the Matter of
DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE
WESTERN AREA DISTRIBUTION CENTER
RANCHO CORDOVA, CALIFORNIA
Case No. 99 FSIP 121
CHAPTER 239, NATIONAL TREASURY
ARBITRATOR’S OPINION AND DECISION
Chapter 239, National Treasury Employees Union (NTEU or Union), filed a request for assistance with the Federal Service Impasses Panel (Panel) to consider a negotiation impasse under section 7119 of the Federal Service Labor-Management Relations Statute between it and the Department of the Treasury, Internal Revenue Service (IRS), Western Area Distribution Center (WADC), Rancho Cordova, California (Employer). After investigation of the request for assistance, the Panel asserted jurisdiction and directed that the parties’ dispute over performance awards be submitted to the undersigned for mediation-arbitration.
Accordingly, on August 25, 1999, the undersigned met with the parties at the Employer’s facility. While the parties have come close to a settlement on several occasions, these mediation efforts failed to result in a settlement of the dispute. Following those efforts, an arbitration hearing was conducted during which the parties were afforded an opportunity to submit proposals, provide testimony under oath, and make final supporting oral arguments. The record is now closed.
The WADC is one of three IRS facilities in the United States responsible for the distribution of income tax forms to taxpayers, tax preparers, and other IRS offices located within the western region of the country.(1) The Union represents 60 General Schedule and Wage Grade employees who work as telephone operators, document handlers and processors, and forklift operators. The parties are covered by the terms of the National Office Regions and Districts NORD V collective bargaining agreement (NORD V), which is due to expire on June 30, 2002. NORD V permits local parties to negotiate over issues involving mandatory performance awards. The three centers first attempted to reach an agreement covering all centers but when that attempt in direct negotiations failed, they each negotiated separately. Thereafter, the WADC notified the Union of its proposal to negotiate a new performance awards system.
The parties disagree over whether the awards system should have a specifically designated cut off number to attain or a percentage system which recognizes a specific percent of bargaining-unit employees.
POSITIONS OF THE PARTIES
1. The Union’s Position
The Union proposes that the current language in the contract remain in effect with a performance rating of 4.1 or greater receiving a performance award. The Union argues that the current performance award system has been in effect at WADC for at least 11 years both when WADC was part of the Sacramento District and continued when the IRS reorganization occurred and a separate local agreement was written with WADC and NTEU (Union Exhibit 1). This system is fair for this bargaining unit as the employees know the standards and work to exceed them. Moreover, these bargaining-unit employees do the same work as the employees at the other distribution centers. At those centers, the cutoff is even lower, 4.0, and nearly all bargaining-unit employees have received performance awards.
Regarding the point for receipt of the performance award on the promotion list, the Union asserts that it is a non-issue as the same system is used throughout the country and specifically, the other two service centers have still maintained the specific cutoff. Moreover, it contends that the current practice has not created a competitive problem in this area.
Conversely, the Union believes that only rewarding the top 40 percent would decrease morale in the unit as the high activity employees who received "exceeds fully successful" on their evaluations would not necessarily receive an award and the direct nexus between performance evaluations and awards would be lost. Whereas, with a fixed score, employees can see the direct connection.
As to the Employer’s argument of "rating creep," it points out that all performance evaluations have two supervisor’s signatures; the first writing the appraisal and the second, reviewing that appraisal and concurring.
For all the above stated reasons, the Union urges the Arbitrator to order that the current contract language remain in effect.
2. The Employer’s Position
The Employer states that it believes that an award system should reward only the top performers, be easily administered, provide an incentive for bargaining-unit employees to improve their performance, and maintain the integrity of the point system. It asserts that the current system is unacceptable because, with a known specific cutoff, employees are not motivated to achieve outstanding performance. It supports its contention with evidence that demonstrates that in 1998, 80 percent of unit employees received awards. Moreover, it contends that employees know the cutoff and, therefore, only perform to that level.
Next, the Employer believes there is "rating creep" inherent in a system where supervisors and employees know a specific cutoff. Because of that knowledge, it asserts that there is pressure on supervisors to evaluate employees at that level. It supports its contention by citing Arbitrator Franklin Silver’s Award, June 30, 1999, in IRS, Northern California District and NTEU Chapters 20 and 239, where he states on page 7:
Second, there would seem to be indirect pressure in a cutoff system for "rating inflation," i.e., raising the rating level of employees to the point where they would qualify for an award. Supervisors would feel pressure to raise ratings from below the cutoff point so that employees would qualify for an award, and employees would likely be greatly dissatisfied at being rated slightly below the cutoff. Using the percentage system by which it is not known ahead of time what rating level is necessary to qualify for an award would lessen, but not eliminate, the pressure to consider the award in evaluating an employee’s performance.
It also cites Department of Army, Madigan Army Medical Center, Fort Lewis, Washington and Local 1502, AFGE, AFL-CIO, Case No. 89 FSIP 193 (October 4, 1989), Release No. 285, wherein the Panel stated:
Moreover, by providing for awards to employees rated "highly successful," we believe it is inconsistent with a major purpose of such programs, that is, to motivate employees by rewarding high achievers.
Further, the Employer emphasizes very emphatically, that the cutoff system gives WADC employees an unfair competitive advantage for promotional positions, because each time an employee receives an award, they get an extra point on the qualifying list. Therefore, their chances of reaching the "best qualified" list are substantially enhanced and the extra point may actually become meaningless. Additionally, in California, several of the District Offices have the percentage system and the Northern California District has been using a percentage system since 1997.
For all the above stated reasons, the Employer urges the Arbitrator to adopt its proposal.
The Employer is the moving party and has the burden of showing that its proposed language should be adopted.
The evidence and testimony it presented regarding comparability with other offices in the Agency and particularly Northern California would be persuasive, provided they could demonstrate that these unit members did have an unfair competitive advantage and were competing for positions. However, when asked specifically for occasions when this unfair competitive advantage had occurred, they could not cite one instance. Moreover, the Union countered that these unit employees simply do not have a history of competing for positions in the other offices.
What then, of the Employer’s assertion of "rating creep?" An analysis of the performance appraisal tool (Employer Exhibit 8) supports the Union’s contention that the employee is rated first by a supervisor measuring the employee’s performance against the specific standards and then a second supervisor reviewing the appraisal. Therefore, to receive a rating of 4.1 or better, an employee, who is not necessarily performing in accord with his/her grade, experience, and training, and exceeding more than half of the performance aspects of the standard and meeting expectations for the remaining aspects, would have to successfully "pressure" two supervisors into inflating his/her evaluation. Frankly, that scenario does not seem very likely to occur on an occasional basis let alone on a regular basis to cause inflation of reviews.
More likely, as the Union contends, these employees have a lot of experience and know their jobs and the standards. Therefore, they are capable of exceeding the standards on a consistent basis. Further, the scores for 1996 do not have any awards at 4.1, 1997 only has one score at that number, 1998 has one score at 4.15 and 1999 has none (Employer Exhibit 1). The scores do not demonstrate this "rating creep" at 4.1. A further analysis shows that in 1996, 35 employees received awards, with 33 in 1997, 51 in 1998, and under this system, 42 in 1999. In comparison to the other 3 reported years, 1998 is unusually high for this center but is not unusually high when compared to the other two centers (below on page 9).
The Union submitted contracts demonstrating a range of cutoffs from 3.52 to 4.25 (Union Exhibit 3) and two with percentages, one at 35 percent and the second at 50 percent, plus all ties. The Employer submitted contracts which represented various percentages. Clearly, the IRS and NTEU have many contracts with specific cutoffs and many contracts with various percentages. There is no established norm.
In the final analysis of the evidence and testimony, the Union demonstrated that at the other two distribution centers the parties have agreed to specific cutoffs of 4.0. Those distribution centers have approximately 240 employees in Illinois and nearly 200 in Virginia and all employees but 3 or 4 received performance awards, a significantly higher number then at WADC.
In sum, the Employer was unable to demonstrate that these employees had an unfair competitive advantage over other employees in Northern California or California and, therefore, neither of these agreements nor Arbitrator Silver’s Award are persuasive. And, in regard to the FSIP Decision and Order, the facts here show that for at least 11 years, this unit has had these negotiated working