37:0147(9)NG - - NTEU and Treasury, IRS - - 1990 FLRAdec NG - - v37 p147

[ v37 p147 ]
The decision of the Authority follows:

37 FLRA No. 9











September 11, 1990

Before Chairman McKee and Members Talkin and Armendariz.

I. Statement of the Case

This case is before the Authority on a negotiability appeal filed by the Union under section 7105(a)(2)(E) of the Federal Service Labor-Management Relations Statute (the Statute). It concerns the negotiability of two proposals which would require the Agency to request, from the Office of Personnel Management (OPM), both (1) an annual cost of living adjustment for its Special Salary Rate (SSR) employees equal to that granted its General Schedule (GS) employees, and (2) an additional 2 percent adjustment for those SSR positions where there was an attrition rate of 5 percent or more during the past year.

The Agency filed a Statement of Position in support of its contention that the proposals are nonnegotiable. The Union filed a Response. For the following reasons, we find that the proposals are negotiable.

II. Background

On July 15, 1988, the OPM issued Federal Personnel Manual (FPM) Bulletin No. 530-63 entitled "New Directions for the Annual Review of Special Salary Rates Authorized under 5 U.S.C. 5303." Union's Response, Attachment A. 5 U.S.C. § 5303 states, in pertinent part, that:

§ 5303. Higher minimum rates; Presidential authority

(a) When the President finds that the pay rates in private enterprise for one or more occupations in one or more areas or locations are so substantially above the pay rates of statutory pay schedules as to handicap significantly the Government's recruitment or retention of well-qualified individuals in positions paid under--

(1) section 5332 of this title;

. . . .

he may establish for the areas or locations higher minimum rates of basic pay for one or more grades or levels, occupational groups, series, classes, or subdivisions thereof, and may make corresponding increases in all step rates of the pay range for each such grade or level. However, a minimum rate so established may not exceed the maximum pay rate prescribed by statute for the grade or level. The President may authorize the exercise of the authority conferred on him by this section by the Office of Personnel Management or, in the case of individuals not subject to the provisions of this title governing appointment in the competitive service, by such other agency as he may designate.

(b) Within the limitations of subsection (a) of this section, rates of basic pay established under that subsection may be revised from time to time by the President or by such agency as he may designate. The actions and revisions have the force and effect of statute.

OPM, the President's designated representative under 5 U.S.C. § 5303, can revise the SSRs periodically, and, to that end, OPM seeks annual input from agencies employing SSR employees. Each agency then reviews its SSRs and recommends increases to OPM.

The FPM Bulletin provides that "[a]djustments in special salary rates as a result of each year's annual review will take effect at the same time the increase in General Schedule rates takes effect" and that "[u]nless agencies request otherwise, the amount of the increase for special salary rates in effect as of September 30 of each fiscal year will equal the amount of the General Schedule increase." OPM retains the right of final approval for all SSR adjustments.

III. Proposals

Proposal 1

1. The Agency request that each Special Salary Rate employee be granted an annual cost of living adjustment equal to that granted to all other General Schedule employees, to take effect on the same date the increase in General Schedule rates take effect; and, in addition,

Proposal 2

2. The Agency request an additional two percent (2%) adjustment effective immediately, for all positions that have had either of the following:

A. An attrition rate of five percent (5%) or more, as measured in a specific special rate geographical area over the past year; or,

B. A vacancy rate of five percent (5%) or more in authorized positions as measured in the same area over the last year.

IV. Positions of the Parties

A. The Agency

The Agency contends that the Union's proposals do not concern a condition of employment of unit employees because, in "Federal sector labor law," conditions of employment "is not a broad enough term to encompass wages." Statement of Position at 7. The Agency also asserts that the proposals do not concern a condition of employment because SSRs "are clearly pay issues specifically provided for in Federal statutes[.]" Id. at 9. According to the Agency, 5 U.S.C. § 5303 "mandates that revisions thereto have the force and effect of law[.]" Id. The Agency asserts that the Union's proposals are "nothing more than an attempt to dictate Special Salary Rates or wages couched in terms of influencing what the content of [the Agency's] requests to OPM regarding special salary rates will be." Id.

The Agency further contends that the Union's proposals would interfere with its right pursuant to section 7106(a)(1) of the Statute to determine its budget. In this regard, the Agency asserts that it already has a line item for salaries in its budget and "[s]hould the Union be permitted to determine what Special Salary Rates are to be, that line item would be directly affected upward by a huge amount." Id. at 13. In the Agency's view, increases in its budget caused by an increase in SSRs would not be "offset by any demonstrable or even speculative benefit." Id.

B. The Union

According to the Union, Proposal 1 "permit[s] the [A]gency to exercise the discretion provided by OPM . . . [to] request an increase for its special salary rate employees equal to that granted its GS employees." Union's Response at 1. Proposal 2 would "permit" the Agency to request "an additional 2% adjustment for those positions that have had an attrition or vacancy rate of 5% or more over the past year." Id.

The Union contends that its proposals concern a condition of employment of unit employees, citing the Authority's decision in Maritime/Metal Trades Council and Panama Canal Commission, 26 FLRA 140 (1987). The Union also contends that its proposals do not concern matters which are specifically provided for by Federal statute because 5 U.S.C. § 5303 does not prescribe the rate of any increase in SSRs.

The Union asserts that although 5 U.S.C. § 5303 does not prescribe the rate of SSRs, it provides OPM with the discretion to determine the rate for any SSR or the amount of any SSR increase. The Union states that the Agency's role in developing SSRs for its employees is limited to merely requesting SSRs or increases in SSRs from OPM and that its proposals "merely address the implementation of the [A]gency's discretion to request adjustments" to its current SSRs and "do not attempt to dictate special salary rates, nor do they attempt to dictate which employees will receive such rates." Id. at 9.

Finally, the Union contends that its proposals do not conflict with the Agency's right to determine its budget. The Union argues that its proposals do not require the Agency to "absorb a new program or operation into its budget," and do not "dictate the actual amounts" of any increases in the SSRs. Id. at 11. According to the Union, the Agency "has failed to demonstrate that it would incur significant and unavoidable costs which would not be offset by compensating benefits." Id.

V. Analysis and Conclusions

A. The Union's Proposals Concern Conditions of Employment of Unit Employees

In its decision in Fort Stewart Schools v. FLRA, 58 U.S.L.W. 4624 (U.S. May 29, 1990) (Fort Stewart), affirming 860 F.2d 396 (11th Cir. 1988), the Supreme Court concluded that proposals involving the wages and fringe benefits of Federal employees who are not covered by the General Schedule (GS) pursuant to 5 U.S.C. § 5332 concern the conditions of employment of those employees. The Court upheld the Authority's determination that the three proposals in Fort Stewart, involving mileage reimbursement, leave, and salary increases, concerned "conditions of employment," within the meaning of section 7103 of the Statute.

In reaching its conclusion, the Court rejected the argument, also advanced by the Agency, that Congress did not intend the duty to bargain under the Statute to extend to proposals relating to wages and fringe benefits. The Court found that statements in the legislative history of the Statute indicating that wage and fringe benefits would not be subject to bargaining "may reflect nothing more than the speakers' incomplete understanding of the world upon which the [S]tatute will operate." Fort Stewart, 58 U.S.L.W. at 4626. Consistent with the Court's decision, we reject the Agency's assertion that "Congress did not intend to include the subject of pay or money-related fringe benefits in the ambit of 'conditions of employment[.]'" Statement of Position at 7.

We also reject the Agency's assertion that the Union's proposals do not concern conditions of employment because SSRs are specifically provided for by Federal statute. Although 5 U.S.C. § 5303 provides for the establishment of SSRs and their adjustment, the statute does not specifically provide either the rate to be paid under the SSRs, or the level of any revisions to the rate of SSRs which the President may periodically establish. The prerogative to establish specific SSRs or to revise them is left to the President, who has delegated this responsibility to OPM.

Therefore, we conclude that the Agency has not shown that SSRs are specifically provided for by Federal statute.

Based on the foregoing, we conclude that the Union's proposals involve the conditions of employment of the Agency's employees.(1)

B. The Union's Proposals Do Not Conflict With the Agency's Right to Determine Its Budget

In Fort Stewart, the Court upheld the Authority's determination that the proposals therein did not interfere with management's right to determine its budget pursuant to section 7106 of the Statute. The Court noted that, in the Authority decision under review, the Authority held that in order "'[t]o establish that a proposal directly interferes with an agency's right to determine its budget under section 7106(a)(1) of the Statute, an agency must make a substantial showing that a proposal requires the inclusion of a particular program or amount in its budget or that the proposal will result in significant and unavoidable increases in cost not affected . . . by compensating benefits.'" Fort Stewart, 58 U.S.L.W. at 4627, quoting Fort Stewart (Georgia) Association of Educators and Fort Stewart Schools, 28 FLRA 547, 551 (1987).(2) The Court concluded that the Agency "challenged neither the Authority's requirement that an agency show a significant and unavoidable increase in its costs, nor the Authority's finding that [the Agency] failed to submit any evidence on that point[.]" Id.

The Court also rejected the Agency's contention that a proposal calling for a 13.5 percent salary increase "would necessarily result in a 'significant and unavoidable' increase" because the agency "placed nothing in the record to document its total costs or even its current total teachers' salaries." Id. Therefore, the Court concluded that the Authority had "reasonably determined that it could not conclude from an increase in one budget item of indeterminate amount whether [the Agency's] cost as a whole would be 'significant[ly] and unavoidabl[y]' increased." Id. (footnote omitted).

Consistent with the Court's decision in Fort Stewart, we find that the Agency has not supported its argument that implementation of the Union's proposals would directly interfere with management's right to determine its budget because the proposals "would by necessity cause a significant increase in the IRS's budget, an increase not offset by any demonstrable or even speculative benefit." Statement of Position at 13.(3)

The sole claim made by the Agency in this regard is that "the total cost of Special Salary Rates re