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The decision of the Authority follows:
36 FLRA No. 37
FEDERAL LABOR RELATIONS AUTHORITY
U.S. DEPARTMENT OF INTERIOR
COLORADO RIVER STORAGE PROJECT
INTERNATIONAL BROTHERHOOD OF
ELECTRICAL WORKERS, LOCAL 2159
July 12, 1990
Before Chairman McKee and Members Talkin and Armendariz.
I. Statement of the Case
This matter is before the Authority on an exception to the award of Arbitrator Gerald Cohen 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 Rules and Regulations. The Union filed an opposition to the Agency's exception.(1)
The Arbitrator sustained the grievance, which claimed that the Agency improperly terminated the practice of providing Sunday premium pay to bargaining unit employees. The Arbitrator also ordered the Agency to reinstate the practice and provide payment to all employees who were otherwise entitled to such pay after its discontinuance.
For the following reasons, we find that the award is contrary to law and must be set aside.
II. Background and Arbitrator's Award
The bargaining unit employees involved in this case negotiate their wages and premium pay provisions in accordance with section 704 of the Civil Service Reform Act of 1978, Pub. L. No. 95-454, 92 Stat. 1111, 1218, codified at 5 U.S.C. § 5343 (Amendments) (1988 ed.) and section 9(b) of the Prevailing Rate Systems Act, Pub. L. No. 92-392, codified at 5 U.S.C. § 5343 (Amendments, note) (1988 ed.).
The Union filed a grievance, which was submitted to arbitration over the Agency's unilateral termination of 25 percent differential pay for non-overtime work performed on Sunday ("Sunday premium pay"). In lieu of a hearing on the matter, the parties submitted a stipulation of facts and briefs to the Arbitrator. The stipulation of facts contained the following issues:
12. The parties hereto stipulate that the Arbitrator may not consider any facts other than those contained in this Stipulation and the only issues presented to the Arbitrator for resolution are:
a. Whether the [Agency's] unilateral termination of Sunday premium pay, without bargaining on the issue of such pay, was proper under the provisions of Section 704,Public Law 95-454, where the practice is not a prevailing industry practice in the local area companies used by the parties to determine prevailing rates and practices, but had been a long-standing past practice of the parties; and where this practice was not, with the exception of brief discussion during the 1986 negotiations, pecifically negotiated or expressly included in the labor agreement.
b. If not proper, whether the [Agency] should be required to reinstate the 25% Sunday premium pay differential, and pay such differential, to all bargaining unit employees who performed non-overtime work on Sunday after its discontinuance.
Award at 1.
The Arbitrator found that "Sunday premium pay was paid prior to the first collective bargaining agreement between the parties" and that "Sunday premium pay has become a part of the contract." Id. at 11. Examining labor arbitration cases in the private sector, the Arbitrator concluded that "[t]here would be no question that, absent the statutes cited by the parties, the employees would be entitled to a continuance of their Sunday premium pay unless they lost this by negotiation." Id. at 12.
The Arbitrator then examined the effect of sections 9(b) and 704 and also 5 U.S.C. §§ 5544(a) and 5546(a) on the issue in dispute. The Arbitrator found that section 9(b) operated to permit the parties to continue negotiations over provisions of any contract that had been negotiated prior to 1972. Id. at 14. Contrary to the Agency's argument that Sunday premium pay had never been included in an agreement or been the subject of bargaining, the Arbitrator found that there existed a past practice of paying Sunday premium pay and that a past practice is a form of negotiation. Id. at 15. The Arbitrator noted that existing practices that are not specifically mentioned at the time of contract negotiations are deemed by the parties' silence to have been renegotiated and to remain intact. Id. Consequently, the Arbitrator concluded that, as Sunday premium pay was paid to employees prior to August 19, 1972, without objection by the Agency, Sunday premium pay "has then been negotiated as a part of the contract." Id. at 16.
The Arbitrator also addressed the effect of sections 9(b) and 704 on the parties' stipulation that Sunday premium pay was not a prevailing practice in the geographic area used as the basis for establishing prevailing rates and pay practices. After examining the relevant provisions of law and Authority cases relied on by the parties, the Arbitrator determined that resolution of the issue turned on whether Sunday premium pay had been negotiated prior to 1972. Id. at 18. Citing the parties' stipulation that Sunday premium pay had been paid prior to 1972 and his previous finding that Sunday premium pay had, thus, become a matter of negotiation, id., the Arbitrator concluded that "[s]ection 704 and [s]ection 9(b) were intended to preserve to the parties negotiations of all terms of the contract that had been negotiated and in the contract prior to August 19, 1972[.]" Id. at 19. Consequently, the Arbitrator concluded that the Agency's unilateral termination of Sunday premium pay without bargaining with the Union was improper. Id. at 20.
As a remedy, the Arbitrator directed the Agency to reinstate the 25 percent Sunday premium pay differential and to pay the differential to all bargaining unit employees who performed non-overtime work on Sunday following termination of the practice. Id.
III. Positions of the Parties
A. Agency's Exception
The Agency asserts that negotiations under section 704 must be in accordance with prevailing rates and practices. Because the parties stipulated that Sunday premium pay is not a prevailing practice in the local area used as a basis for determining employee pay rates and practices, the Agency argues that Sunday premium pay is not subject to negotiation. In support of its position, the Agency cites the legislative history of section 704 and various decisions of the Comptroller General interpreting section 704. The Agency argues that the Arbitrator's interpretation of section 704 is contrary to the plain meaning of that section and that the Arbitrator erred in determining that Sunday premium pay is negotiable. Agency's Exception at 5-6 and 12.
The Agency argues additionally that even if the payment of Sunday premium pay had been a past practice or had been included in a collective bargaining agreement, the payment would have been improper under section 704 because it was not based on current prevailing industry practices. Id. at 15. Moreover, the Agency claims that the payment of Sunday premium pay was illegal under section 704 and that the Agency was required to discontinue making such payments. Id.
B. Union's Opposition
The Union asserts that the Agency has failed to establish that the Arbitrator's award is contrary to law. Union's Opposition at 1-2. The Union argues that Sunday premium pay was a long-standing practice and that section 704 was designed to preserve existing collective bargaining relationships. Id. at 6. The Union also relies on the Authority's decision in International Brotherhood of Electrical Workers, Local Union No. 611, AFL-CIO and U.S. Department of the Interior, Bureau of Reclamation, Rio Grande Project, 26 FLRA 906 (1987) (Rio Grande Project), motion for reconsideration denied, 28 FLRA 587 (1987), to support its position that "an absence of local practice does not negate the Agency's duty to bargain . . . and . . . cannot be used to justify a blatant violation of the parties' Labor Agreement." Id. at 9.
Finally, the Union argues that the Agency's exception constitutes disagreement with the Arbitrator's reasoning and conclusion and provides no basis for finding the award deficient.
C. Agency's Response to Union's Opposition
In its submission, the Agency reiterated arguments it raised in its exception, along with citations to Authority and Comptroller General decisions.
IV. Analysis and Conclusions
Subsequent to the issuance of the Arbitrator's award, the United States Court of Appeals for the District of Columbia Circuit issued its decision in United States Information Agency v. FLRA, 895 F.2d 1449 (D.C. Cir. 1990). The court held, among other things, that under subsection (b) of section 704, "if a pay practice is not among the current practices in the industry, the parties may not negotiate over that subject." Id. at 1455. More recently, in Department of the Interior, Bureau of Reclamation, Washington, D.C., 36 FLRA No. 1 (1990) (Bureau of Reclamation), we adopted the court's interpretation that section 704(b) does not authorize negotiations over matters relating to pay and pay practices that are not among current industry practices. Slip op. at 5. We also indicated that we would not follow previous decisions to the extent that they were inconsistent with that interpretation.(2) Id.
As noted in this case, the parties stipulated that Sunday premium pay is not a prevailing practice in the local area. More particularly, the stipulation provides that:
6. The payment of Sunday premium pay is not, and was not prior to or since August 19, 1972, a prevailing practice in the geographic area surveyed pursuant to Article V of the Basic Labor and Supplementary Agreements (Exhibit A), as the basis for establishing prevailing rates and pay practices.
Award at 3.
Here, the parties stipulated that Sunday premium pay was not a current prevailing practice in the segment of the industry that the parties had agreed to use as a basis for determining prevailing pay rates and pay practices. Accordingly, the Agency was not obligated to continue making, or negotiate over making, such payments. The Arbitrator's finding that the Agency's unilateral termination of such payments was improper is, therefore, inconsistent with section 704 and must be set aside.
In Bureau of Reclamation, the Authority noted that a change in a condition of employment, such as the termination of a pay practice, may give rise to an obligation to bargain over the impact and implementation of the termination. Here, the grievance related to the termination of the practice of Sunday premium pay and did not raise issues concerning any other bargaining obligation the Agency may have had under the Statute. However, in setting aside the Arbitrator's award, we urge the parties to examine closely the impact of the termination of Sunday premium pay on bargaining unit employees and to fulfill, as appropriate, whatever bargaining obligations may have arisen from that termination.
The Arbitrator's award is set aside.
(If blank, the decision does not have footnotes.)
1. The parties also filed various submissions and motions with the Authority. In order to allow the Authority to fully consider the issues raised, which are complex and involve court litigation of related matters, we accept for consideration the Agency's response to the Union's opposition, and we deny the Union's motion to strike the opposition. For the same reasons, we also grant the Agency's request to file other submissions pursuant to section 2429.26 of our Rules and Regulations and consider those submissions, deny the Union's motion to strike filed in response thereto, and grant the Union's motion to respond and consider its submission.
2. Following issuance of Bureau of Reclamation, the Authority sought and was granted remand of its decision in Rio Grande Project, which had been appealed sub nom. Department of the Interior, Bureau of Reclamation, Rio Grande Project v. FLRA, No. 87-2483 (10th Cir. Oct. 8, 1987).