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The decision of the Authority follows:
17 FLRA No. 142 SOCIAL SECURITY ADMINISTRATION, OFFICE OF HEARINGS AND APPEALS Activity and AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES, LOCAL 3506 Union Case No. 0-AR-842 DECISION This matter is before the Authority on an exception to the award of Arbitrator John F. Caraway filed by the Agency under section 7122(a) of the Federal Service Labor-Management Relations Statute and part 2425 of the Authority's Rules and Regulations. A grievance was filed and submitted to arbitration claiming that the Activity's denial of a within-grade increase to the grievant was contrary to the parties' collective bargaining agreement. Although the Arbitrator found that the grievant's performance appraisal rating of minimally satisfactory was grounds for denying her increase, he noted that the parties had negotiated strict requirements surrounding the denial of a within-grade increase. In this respect he determined that the Activity had not fully complied with the requirements of the agreement and he held that therefore he was required to rescind the denial. Accordingly, as his award in this regard, the Arbitrator directed that the grievant be granted her within-grade increase retroactively with backpay. In its exception the Agency primarily contends that the award is contrary to the Back Pay Act, 5 U.S.C. 5596. The Authority agrees. The Authority has uniformly held that in order for an award of backpay to be authorized under the Back Pay Act, there must not only be a determination that an employee was affected by an unwarranted personnel action, but also a determination that such unwarranted action directly resulted in the withdrawal or reduction in the pay, allowances, or differentials that the employee would otherwise have earned or received. E.g., American Federation of Government Employees, Local 51 and U.S. Department of the Mint, Old Mint Building, Customer Service Division, 15 FLRA No. 164 (1984). In addition, with respect to the withholding or denying of a within-grade increase, the Authority has recognized under 5 U.S.C. 5335(a) /1/ that in order for an employee to be entitled to the increase, the work of the employee must be determined to be at an acceptable level of competence. Social Security Administration and American Federation of Government Employees, AFL-CIO, 16 FLRA No. 76 (1984). Thus, in order for an award by an arbitrator of a retroactive within-grade increase to be authorized, the arbitrator must find that agency action in connection with the withholding or denying of the increase was unwarranted and that but for the unwarranted action, the grievant otherwise would have received the within-grade increase. In this regard, the arbitrator must find either that the negative determination (the determination that the work of the grievant was not at an acceptable level of competence) was not sustained or that due to some action or failure to take action on the part of the agency, the work of the grievant was determined not to be at an acceptable level of competence when it otherwise would have been. See id. at 2. In terms of this case, although the Arbitrator found that the Agency had failed to fully comply with the collective bargaining agreement, he erroneously concluded that at that point, he was required to rescind the denial of the grievant's within-grade increase. Thus, the Arbitrator did not find that but for the Activity's failure to fully comply with the agreement, constituting the unwarranted action, the grievant's work would have been determined to have been at an acceptable level of competence which would have resulted in the granting of the within-grade increase. Consequently, in view of the grievant's performance rating /2/ and the Arbitrator's failure to make the necessary finding, the award of a retroactive within-grade increase is deficient as contrary to 5 U.S.C. 5596. Accordingly, the award is modified by striking the first paragraph. Issued, Washington, D.C. May 13, 1985 Henry B. Frazier III, Acting Chairman William J. McGinnis, Jr., Member FEDERAL LABOR RELATIONS AUTHORITY --------------- FOOTNOTES$ --------------- /1/ 5 U.S.C. 5335(a) provides that an employee in the General Schedule shall be advanced to the next higher salary rate within his or her grade at certain intervals provided, among other things, that the work of the employee is at an acceptable level of competence as determined by the head of the agency. /2/ The Authority has previously noted that 5 C.F.R. 430.202(e) (1984 Supp.), which implements 5 U.S.C. 4301(3), requires the denial of a within-grade increase when an employee's performance in any critical element is below a minimum standard. See American Federation of State, County and Municipal Employees, AFL-CIO, Local 2027 and Action, Washington, D.C., 12 FLRA 643, 646-47 (1983).