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The decision of the Authority follows:
43 FLRA No. 41
FEDERAL LABOR RELATIONS AUTHORITY
U.S. DEPARTMENT OF DEFENSE
OVERSEAS EDUCATION ASSOCIATION
December 13, 1991
I. Statement of the Case
This matter is before the Authority on exceptions to an award of Arbitrator Kenneth Cloke 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 contesting the Agency's withdrawal and denial of entitlements to certain benefits and allowances related to their reassignments under the Agency's transfer program. The Arbitrator sustained the grievances, concluding that the grievants were entitled to those benefits.
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
This case concerns three separate grievances involving entitlements to certain benefits related to the reassignment of the grievants under the Agency's transfer program. The first grievant was initially hired as a local hire by the Agency overseas. As a local hire she was not entitled to, and did not receive, a living quarters allowance (LQA). She subsequently applied for and received a reassignment through the Agency's transfer program. After her move, she was granted an LQA and a foreign post differential (FPD), and was told that she was eligible to negotiate a transportation allowance agreement (TAA) and renewal agreement travel (RAT). The Agency later determined that it had erred in granting the LQA and FPD to the grievant, and ceased those payments.
The second grievant was initially hired by the Agency from the continental United States (CONUS). As a CONUS hire, the grievant received travel allowances and an LQA. She resigned from the Agency at one point and stopped receiving those benefits. Subsequently, she was rehired as a local hire and as such was not eligible for any benefits. She later received a reassignment through the Agency's transfer program and she began receiving an FPD. The Agency subsequently notified her that she was not eligible for the FPD and required that she repay the FPD monies she had received. She was reassigned again, but received no benefits.
The third grievant was initially hired overseas as a local hire after accompanying her husband, a CONUS hire, to England. As a local hire, the grievant did not receive her own TAA or LQA. Both the grievant and her husband later transferred to Turkey. The grievant then received an FPD for 2 years until it was discontinued for all civilian employees in that location. The grievant and her husband then transferred to Spain, where they both received LQAs for 10 years. In 1986, the grievant applied for and was granted a transfer to Okinawa, where she received an FPD for over a year before the Agency determined that it had been granted erroneously, and ceased those payments.
Each of the three grievants filed a grievance contending eligibility for certain benefits and allowances related to their reassignments under the Agency's transfer program. The grievances were not resolved and the matters were submitted to arbitration. The three grievances were consolidated for the hearing.
The Arbitrator stated that the central issue concerned whether the parties had intended to create one system for the granting of LQA, FPD and travel allowances after the reassignment of employees who were hired initially as local hires and another system for CONUS hires who are reassigned.
The Union contended before the Arbitrator that the doctrine of collateral estoppel precluded the Agency from relitigating the issues involved in this arbitration because the same issues have been decided in an earlier arbitration. The Union also contended that locally hired employees are entitled to the same benefits as CONUS employees when reassigned under the Agency's transfer program.
The Agency contended that the grievants are not entitled to the claimed benefits and allowances under Department of State Standardized Regulations (DSSR), a Government-wide regulation, and Department of Defense (DoD) regulations.(1) Further, the Agency argued that the grievances were not timely filed.
The Arbitrator first found that the grievances were timely filed under the parties' agreement. The Arbitrator next concluded that although the previous arbitration award alone may not possess sufficient finality to satisfy the doctrine of collateral estoppel, the Authority's decision in Department of Defense Dependents Schools, Pacific Region and Overseas Education Association, Pacific Region, 30 FLRA 1206 (1988), which upheld the award, and another similar decision have precedential value sufficient to preclude the relitigation of the same issue between the parties. Nonetheless, the Arbitrator proceeded to determine the grievances on their merits.
The Arbitrator reviewed the parties' agreement, a recent settlement agreement between the parties regarding the eligibility of local hires to certain allowances upon transfer, and the applicable rules and regulations with regard to the allowances at issue in this case. The Arbitrator concluded that CONUS hires initially receive an LQA and an FPD as an inducement to work overseas, but that the difference between the benefits received by CONUS hires and local hires becomes "meaningless" after the first transfer. Award at 36. The Arbitrator further concluded that the applicable law and regulations do not "preclude the establishment of a single class of employment" after local hires are transferred out of the area where they originally were hired. Id. at 37. The Arbitrator found that the availability for transfer is a condition of employment for both CONUS and local hires, noting that employees could suffer loss of employment and other penalties if they do not accept a reassignment under the transfer program. He concluded that the Agency's transfer program was "a management generated program to encourage transfer to hardship areas and fill other vacancies with career professionals rather than inexperienced new hires." Id. at 39. The Arbitrator found that the transfer program is a system-wide mechanism that benefited the Agency even though the requests for transfers are voluntary. The Arbitrator further found that language of the parties' agreement, pursuant to which local hires are eligible for the transfer program after three years of continuous service, and the past practice of granting these allowances, supported the Union's position that local hires were entitled to the claimed allowances under the transfer program.
Accordingly, the Arbitrator found that the grievants were entitled to specified benefits and allowances because of their transfers and ordered the Agency to: (1) restore those allowances retroactively from the date of termination, with interest; (2) cease any attempts to recoup the allowances already paid; (3) repay any amount already paid by the grievants, with interest; (4) expunge from the grievants' personnel files all documents and references related to any alleged debt concerning such allowances; and (5) pay the grievants certain entitlements to which they are eligible under the Agency's transfer program. The Arbitrator retained jurisdiction to entertain a motion for attorney fees.
III. Positions of the Parties
A. Agency's Exceptions
The Agency contends that the Arbitrator's award is contrary to the DSSR and DoD Directive 1400.25. The Agency argues that the DSSR makes a distinction between employees who are recruited in the United States and those recruited outside the United States. The Agency argues that although the DSSR generally authorizes the payment of LQAs to employees recruited in the United States, it limits the authorization of LQAs to employees recruited outside the United States to specific circumstances.(3) The Agency acknowledges that DoD Directive 1400.25 provides for waivers of section 031.12c of the DSSR if certain conditions have been met, one of which is that the relocation was caused by a management-generated action. The Agency contends, however, that the Directive clearly states "[a] move effected through a voluntary reassignment program is not considered to be a management-generated action." Exceptions at 5 (emphasis in original). The Agency asserts that a relocation through its transfer program is voluntary and thus, is not management generated. Therefore, the Agency contends that the Arbitrator's conclusion that the transfer program was management generated is contrary to the unambiguous language of that Directive.
B. Union's Opposition
The Union contends that the award is consistent with Government-wide regulation, noting that this is the third time that the Agency has appealed this issue to the Authority. The Union argues that the Agency is merely disagreeing with the Arbitrator's interpretation of the parties' agreement, the DSSR and DoD regulations, and that such disagreement does not support a finding that the award is deficient. The Union also argues that the Agency has offered no arguments or evidence that the award is contrary to the DSSR. Rather, it contends that the Agency's only argument is that the award violated Agency regulation. The Union maintains that considerable evidence supported the Arbitrator's findings that the grievants transferred as a condition of employment and that the transfer program was management generated.
IV. Analysis and Conclusions
Section 7122(a) of the Statute provides, as relevant here, that an arbitration award is deficient if it conflicts with a governing rule or regulation. U.S. Department of the Army, Fort Campbell District, Third Region, Fort Campbell, Kentucky and American Federation of Government Employees, Local 2022, 37 FLRA 186, 195 (1990) (Fort Campbell). Only an arbitration award that conflicts with a rule or regulation that governs the matter in dispute will be found to be deficient under section 7122(a)(1) of the Statute. Id. Collective bargaining agreements, and not agency rules and regulations, govern the disposition of matters to which they both apply when there is a conflict between the agreement and the rule or regulation. Id. at 194. Nothing in the Statute prevents an agency from agreeing to collective bargaining agreement provisions that modify policies established by an agency rule or regulation, and a provision that has become part of a collective bargaining agreement takes precedence over agency rules and regulations with respect to matters to which they both apply. Id.
In this case, Article IX of the parties' agreement, Transfer Program, provides that "[u]pon transfer or reassignment under this program, unit employees . . . shall be entitled to benefits and allowances in accordance with applicable regulations." Award at 8 (emphasis in original). The Agency contends that the Arbitrator's award granting the grievants certain benefits and allowances under the Agency's transfer program is contrary to subsection 031.12c of the DSSR and DoD Directive 1400.25. The DoD Directive states, in pertinent part, that an LQA may be paid pursuant to subsection 031.12c of the DSSR when an employee is relocated pursuant to a "management-generated action." The Directive also states that a "move effected through a voluntary reassignment program is not considered to be a management-generated action."
In Panama Canal Commission and International Association of Firefighters, Local 13, 41 FLRA 284 (1991), the Authority concluded, consistent with the principles set forth in Fort Campbell, that when a collective bargaining agreement incorporates the regulations with which the award allegedly conflicts, the matter becomes one of contract interpretation because the agreement, not the regulation, now governs the matter in dispute. 41 FLRA at 292-93. We find that the agreement in this case incorporates the regulations with which the award allegedly conflicts. Consequently, the issue before us is whether the Arbitrator's award draws its essence from the agreement.
To demonstrate that an award fails to draw its essence from an agreement, a party must show that the award: (1) cannot in any rational way be derived from the agreement; or (2) is so unfounded in reason and fact, and so unconnected with the wording and the purpose of the agreement as to manifest an infidelity to the obligation of the arbitrator; or (3) evidences a manifest disregard for the agreement; or (4) does not represent a plausible interpretation of the agreement. For example, id. at 293. The Agency has not shown that the Arbitrator's award fails to draw its essence from the parties' agreement under any of the above tests. Rather, the Arbitrator's award constitutes a rational and plausible interpretation of the relevant provisions of the agreement.
The Arbitrator found that the transfer program was a condition of employment for CONUS and local hires. He noted that employees could suffer loss of employment and other penalties if they do not accept a reassignment under the transfer program. The Arbitrator concluded that the Agency's transfer program was a management-generated program that benefited the Agency.
This interpretation by the Arbitrator that the Agency's transfer program is management generated and that a reassignment under that program is not voluntary has previously been addressed. The arbitrator in U.S. Department of Defense Dependents Schools and Overseas Federation of Teachers, 41 FLRA 1362, 1365-66 (1991) (DoDDS and OFT), came to the identical interpretation regarding the same regulations that are incorporated here in the parties' agreement. The Authority in that case denied the Agency's exceptions, finding that the Agency failed to establish that arbitrator's award conflicted with the Directive. See also U.S. Department of Defense Dependents Schools, Mediterranean Region and Overseas Federation of Teachers, 36 FLRA 861 (1990); Department of Defense Dependents Schools, Pacific Region and Overseas Education Association Pacific Region, 30 FLRA 1206 (1988). Consequently, we conclude that the award does not constitute an irrational or implausible interpretation of the parties' agreement.
Finally, the Agency's assertion that the award conflicts with the DSSR is based solely on the award's alleged conflict with the Directive, which provides for a waiver of section 031.12c of the DSSR if certain conditions have been met, such as where a relocation of an employee was caused by a management-generated action. As the Arbitrator found that the Agency's transfer program was management generated within the meaning of the Directive, we find no basis for finding that the award is contrary to the DSSR. See DoDDS and OFT, 41 FLRA at 1365-66.
We conclude, therefore, that the Agency has not shown that the award is deficient under section 7122(a) of the Statute. Accordingly, we will deny the exceptions.
The Agency's exceptions are denied.
DEPARTMENT OF STATE STANDARDIZED REGULATIONS
(Government Civilians, Foreign Areas)
. . . .
031 United States Citizen Employees
031.1 Quarters Allowances
031.11 Employees Recruited in the United States
. . . .
031.12 Employees Recruited Outside the United States
Quarters allowances prescribed in Chapter 100 may be granted to employees recruited outside the United States, provided that:
a. the employee's actual place of residence in the place to which the quarters allowance applies at the time of receipt thereof shall be fairly attributable to his/her employment by the United States Government; and
b. prior to appointment, the employee was recruited in the United States, the Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana Islands, the former Canal Zone, or a possession of the United States, by:
(1) the United States Government, including its Armed Forces;
(2) a United States firm, organization, or interest;
(3) an international organization in which the United States Government participates; or
(4) a foreign government and had been in substantially continuous employment by such employer under conditions
which provided for his/her return transportation to the United States, the Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana Islands, the former Canal Zone, or a possession of the United States; or
c. as a condition of employment by a Government agency, the employee was required by that agency to move to another area, in cases specifically authorized by the head of agency.
Subsection 031.12b may be waived by the head of agency upon determination that unusual circumstances in an individual case justify such action.
An employee who was determined to be eligible to be granted a living quarters allowance under former Section 031.12d, last effective March 25, 1971 and last published in TL:SR-174 dated August 11, 1968, may continue to be eligible for and be granted a living quarters allowance while continuously employed in a foreign area and while he/she is otherwise eligible for such allowance.
DEPARTMENT OF DEFENSE CPM 1400.25-M
Chapter 592, Subchapter 2
. . . .
. . . .
b. Employees recruited outside the United States (section 031.12, DSSR) will have their eligibility for quarters allowance determined at the time of hire and at any time pertinent changes in their individual status occur that may confer eligibility. . . .
. . . .
(6) The appropriate Major Command decides whether an employee acquires an LQA under section 031.12c of the DSSR . . . . The Major Command may redelegate this authority . . . . Section 031.12c provides that an LQA may be given an employee recruited outside the United States if, "as a condition of employment by a Government agency, the employee was required by that agency to move to another area, in cases specifically authorized by the head of the agency." A "condition of employment," if not fulfilled, results in failure to gain or retain employment. Section 031.12c, DSSR, will be applied when an employee is relocated to another area by a management-generated action. It also will be applied when management must request that an employee not now eligible for LQA relocate to another area. A management request that an employee relocate is considered a management-generated action. A move effected through a voluntary reassignment program is not considered to be a management-generated action.
(If blank, the decision does not have footnotes.)
1. The pertinent regulations are set forth in the Appendix to this Decision.
2. Generally, those employees who are eligible for an LQA under section 031.1 of the DSSR may be granted other allowances. DSSR §§ 031.2 and 031.3.