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The decision of the Authority follows:
43 FLRA No. 20
FEDERAL LABOR RELATIONS AUTHORITY
U.S. DEPARTMENT OF VETERANS AFFAIRS
AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES
November 22, 1991
Before Chairman McKee and Members Talkin and Armendariz.
I. Statement of the Case
This matter is before the Authority on exceptions to an award of Arbitrator James Cox 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 exceptions.
This matter involves three grievances filed by three grievants disputing their performance ratings of "Fully Successful" on certain elements of their annual performance evaluations. The grievants contended that they should have been rated at the "Exceptional" level of achievement. The Arbitrator found that the Agency violated the provision of the parties' collective bargaining agreement requiring that standards be established at the beginning of each appraisal period. However, the Arbitrator found that the grievants would have received the same performance ratings despite this violation of the parties' agreement.
For the following reasons, we conclude that the Agency fails to establish that the award is deficient under section 7122(a) of the Statute, and we will deny the exceptions.
II. Background and Arbitrator's Award
In May 1990, each of the three grievants was given his performance evaluation for the period of April 1, 1989, through March 31, 1990. In the summer of 1989, the Agency had modified the performance standards that had been in effect at the beginning of that rating year. The new standards eliminated the practice of rating an employee at the fully successful level of achievement if the employee's performance fell within a predetermined range of achievement and replaced this range with a discrete number. Previously, employees whose performance had exceeded the maximum of the range on an element by any amount were rated on that element at the exceptional level. Under the new standards, in order to achieve an exceptional rating, an employee's performance had to meet a threshold quantity that was calculated and established by the "Adjudication Officer." Award at 2.
For the rating period at issue, the Adjudication Officer calculated this threshold production level based upon a retroactive assessment of the performance data of all the employees in the affected classification during the rating period. The Adjudication Officer then set the standard for exceptional at a level that in his judgment "significantly surpasses" the performance standard necessary for an evaluation of fully successful. Id. The Adjudication Officer testified that he determined a precise numerical figure by establishing a performance average for the classification, setting the fully successful level based on that average, and then deciding where, in his judgment, there was a "clear point or break at which a number of individuals did, in fact, significantly exceed, and whether that significant exceeding was a major contribution to the organization." Id. at 9.
The three grievants challenged the fully successful ratings they received on certain elements of their annual performance evaluations. They claimed that because their performance in those elements surpassed the discrete number established to achieve a fully successful rating, they should have been rated at the exceptional level. Further, one grievant contested his rating on a noncritical element, contending that the standard lacked objectivity. The grievances were not resolved and the matter was submitted to arbitration.
The parties stipulated to the following issue before the Arbitrator: "Whether the written performance standard, at the 'Fully Successful' level, fully defines the performance which is evaluated at 'Fully Successful' and, if so, whether levels of performance bettering the 'Fully Successful' level should be evaluated as 'Exceptional.'" Id. at 1.
The Union contended before the Arbitrator that the new method of evaluation violated both the provisions of 5 C.F.R. § 430.206(d), which prohibit forced distribution of ratings, and various provisions of Article 32 of the parties' agreement.
The Arbitrator reviewed the provisions of Article 32 of the parties' agreement, 5 C.F.R. § 430.206 and the Agency's performance appraisal system regulations. The Arbitrator specifically noted that Article 32 defines performance standards as "'statements of the expectations or requirements established by management for a critical or non-critical element at a particular achievement level.'" Id. at 6 (emphasis in original). The Arbitrator further noted that section 3 of Article 32 provides that "the standards should be established at the beginning of each appraisal period, but that modifications during the appraisal period are permitted." Id. (emphasis in original).
The Arbitrator concluded that the Adjudication Officer did not violate the parties' agreement or applicable regulations by establishing a discrete level for an exceptional rating that is separated by an interval from the performance level at which employees are evaluated as fully successful. However, he did find that the Agency violated those provisions of Article 32 requiring that: (1) standards be established at the beginning of each appraisal period; (2) such standards be a statement of performance expectations; (3) performance appraisals be based upon performance plans; (4) each employee be given a copy of the performance standard at the beginning of each performance period; and (5) during the appraisal period supervisors discuss with employees their current performance contrasted against the standard so that employees know the degree to which they are meeting or failing to meet that standard. The Arbitrator concluded that Article 32 requires that employees' performance be evaluated "against a pre-existing standard, not one retroactively applied." Id. at 10 (emphasis omitted).
The Arbitrator determined that under the prior rating system the performance of the three grievants during this period also would have been evaluated as fully successful. In addition, the Arbitrator concluded that there was insufficient evidence to conclude that the noncritical element rating contested by one of the grievants was not proper.
In view of his determination that the retroactive application of the standards violated the parties' agreement, the Arbitrator did not make any findings with respect to the reasonableness of the threshold set for an exceptional rating. He did find, however, that if the standards set by the system were prospectively applied, there would not be a prohibited forced distribution of ratings. The Arbitrator also found that performance above the fully successful level of achievement need not be evaluated as exceptional unless it significantly surpasses the fully successful standard.
III. Positions of the Parties
A. Agency's Exceptions
The Agency contends that the Arbitrator's award is contrary to existing law and regulation and that the Arbitrator addressed matters not properly before him. The Agency argues that the Arbitrator answered the issue that was stipulated by the parties when he concluded that performance above the fully successful level of achievement need not be evaluated as exceptional unless employees significantly surpass the fully successful standards. However, the Agency argues, the Arbitrator went too far "with his interpretation on how standards should be implemented in the Federal sector." Exceptions at 2. The Agency agrees with the Arbitrator that Article 32 of the parties' agreement obligates the Agency to inform an employee at the beginning of each appraisal period of the employee's performance plan, but disputes the Arbitrator's finding that management improperly determined at the end of the performance year the amount necessary to obtain the exceptional level of achievement.
The Agency contends that Authority case law has consistently held that proposals by a union that restrict management's authority to establish performance standards are inconsistent with an agency's right to assign work and direct employees. Further, it contends that the Authority has held that arbitrators cannot overturn an agency's identification of critical elements and establishment of performance standards or render awards that would require the agency to use different critical elements or set different standards. The Agency also contends that it need only provide for a minimum of three rating levels for each critical element and that it is required to write the performance standards only at the fully successful level. Similarly, it argues that the Merit Systems Protection Board has held that an employer has to inform an employee in a performance plan only what is required of the employee to retain his or her job, that is, the requirements of the fully successful level. The Agency cites National Treasury Employees Union and U.S. Nuclear Regulatory Commission, 13 FLRA 325 (1983), for the proposition that an agency cannot be required to negotiate performance standards for levels of performance above the level necessary for job retention.
The Agency asserts that the Arbitrator failed to comprehend the relevant case law, the Agency's performance appraisal system regulations, and the parties' agreement when he found that the Adjudication Officer's determination of what constituted an exceptional level of achievement was inappropriate because that determination was made after the performance year had ended. The Agency argues that the Arbitrator ignored the fact that management informs the employees at the beginning of the performance year of their performance plans; that management tells the employees what they must do to be fully successful and retain their jobs; and that management informs the employees that to be rated exceptional they must significantly surpass fully successful and make a major contribution to the organization. The Agency argues that to let the award stand would force the Agency to write its standards at both the fully successful and exceptional levels of achievement, which would be contrary to the weight of authority and would allow the Union to achieve through arbitration what it cannot obtain through collective bargaining.
B. Union's Opposition
The Union disputes the Agency's contention that the Arbitrator decided what the content of a performance standard should be. Rather, the Union argues, the Arbitrator "decided when a standard should be enunciated." Opposition at 1 (emphasis in original). The Union contends that any management right under section 7106(a) of the Statute is subject to negotiated procedures under section 7106(b)(2). The Union argues that the agreement provisions relied on by the Arbitrator were clearly procedural and proper.
The Union also contends that any management right to evaluate employee performance pursuant to section 7106(a)(2) of the Statute must be in accordance with applicable laws. The Union argues that 5 C.F.R. § 430.204(d)(1) requires the communication of performance standards at the beginning of an appraisal period. Therefore, it contends, because the Agency's retroactive creation of a performance standard violated this requirement of applicable law, no management right was violated by the Arbitrator's award.
IV. Analysis and Conclusions
We conclude that the Agency fails to establish that the Arbitrator's award is contrary to law, rule or regulation, or that the Arbitrator exceeded his authority.
A. The Arbitrator Did Not Exceed His Authority
We construe the Agency's contention that the Arbitrator decided issues beyond the issue stipulated by the parties as an allegation that the Arbitrator exceeded his authority. An arbitrator exceeds his or her authority when, among other things, the arbitrator resolves an issue not submitted to arbitration. American Federation of Government Employees, Local 3258 and U.S. Department of Housing and Urban Development, Boston, Massachusetts, 38 FLRA 600, 606 (1990) (HUD).
According to the Arbitrator, the stipulated issue as framed by the parties was: "Whether the written performance standard, at the 'Fully Successful' level, fully defines the performance which is evaluated at 'Fully Successful' and, if so, whether levels of performance bettering the 'Fully Successful' level should be evaluated as 'Exceptional.'" Award at 1. In reviewing the relevant provision of Article 32 of the parties' agreement, the Arbitrator determined that the Agency's application of the performance standards for an exceptional rating violated those agreement provisions. We conclude that this finding was responsive to the stipulated issue. We note that the Union clearly raised and argued the issue before the Arbitrator of whether the performance standards were contrary to the requirements of 5 C.F.R part 430 and Article 32 of the parties' agreement. As the Arbitrator's finding was responsive to the issue before him, there is no basis on which to conclude that the Arbitrator exceeded his authority. The Agency's exception constitutes mere disagreement with the Arbitrator's resolution of the issue before him. As such, the exception provides no basis for finding the award deficient. See HUD, 38 FLRA at 606.
B. The Award Is Not Contrary to Law, Rule or Regulation
The Agency contends that the award is contrary to law and regulation because the Arbitrator's award would require the Agency to write its standards at both the fully successful and exceptional levels of achievement. The Agency misconstrues the effect of the award. Contrary to the Agency's contentions, the Arbitrator found only that establishing and communicating at the end of the rating period the standard necessary to achieve an exceptional rating violated the provisions of Article 32 of the parties' agreement, which require that standards and statements of performance expectations be established at the beginning of each appraisal period. In fact, the Arbitrator found that, apart from their retroactive application, the standards established by the Adjudication Officer were proper.
Under established Authority law, it is within an arbitrator's authority, in resolving a dispute, to make a finding of whether an agency applied established elements and standards in accordance with law, regulation, and the parties' agreement. For example, Social Security Administration and American Federation of Government Employees, AFL-CIO, 30 FLRA 1156 (1988). In doing so in this case, the Arbitrator concluded that, as applied, the standards violated the parties' agreement. We find that the Agency has not established how the award conflicts with any law or regulation. Rather, the award is fully consistent with 5 U.S.C. § 4302 and 5 C.F.R. § 430.204(d)(1), which states that "[e]ach appraisal system shall provide . . . plans to employees at the beginning of each appraisal period . . . ." Retroactive application of a standard is inconsistent with the statutory requirement that standards be communicated to the employees at or before the beginning of the appraisal period for which they apply. See, for example, Clarke v. Department of Health and Human Services, 37 M.S.P.R. 63, 66 n.4 (1988) (appraisal based on comparison of an employee's error rate with those of other employees during performance period failed to give employee sufficient advance notice of the agency's expectations); Cross v. Department of Air Force, 25 M.S.P.R. 353, 357 (1984) (recognizing congressional intent in passing Civil Service Reform Act that employees must be made aware in advance of what is expected of their performance). See also Weirauch v. Department of Army, 782 F.2d 1560, 1563 (Fed. Cir. 1986) (adopting the Merit Systems Protection Board's interpretation of 5 U.S.C. § 4302).
We conclude, therefore, that the Agency's exception constitutes mere disagreement with the Arbitrator's interpretation and application of the parties' agreement. Accordingly, this exception provides no basis for finding the award deficient. See, for example, U.S. Department of Health and Human Services, Social Security Administration, Region VI, Dallas, Texas and American Federation of Government Employees, Local 1336, 35 FLRA 1218, 1223 (1990).
The Agency's exceptions are denied.
(If blank, the decision does not have footnotes.)