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The decision of the Authority follows:
44 FLRA No. 5
FEDERAL LABOR RELATIONS AUTHORITY
AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES
U.S. DEPARTMENT OF THE TREASURY
OFFICE OF THRIFT SUPERVISION
DECISION AND ORDER ON A NEGOTIABILITY ISSUE
February 21, 1992
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). The appeal concerns the negotiability of one proposal, which was offered during bargaining over the Agency's new performance appraisal system. The proposal precludes the Agency from using certain information in a manner that would adversely affect employees' performance ratings. For the following reasons, we find that the proposal is a negotiable appropriate arrangement under section 7106(b)(3) of the Statute.
II. Procedural Matter
In its statement of position, the Agency stated that the Union's petition for review contained only a "bare assertion" that the proposal constitutes an appropriate arrangement under section 7106(b)(3) of the Statute and that it would seek to submit a supplemental statement if the Union provided more "specificity" regarding the assertion. Statement of Position at 13. After receipt of the Union's reply brief, the Agency submitted a supplemental statement addressing the Union's appropriate arrangement arguments and requested that it be considered. The Union then moved to strike the Agency's supplemental submission.
The Authority has discretion, under section 2424.8 of the Authority's Rules and Regulations, to consider the Agency's supplemental submission. In this case, we note that, in its petition for review, the Union stated only that the proposal "constitutes an appropriate arrangement for employees adversely affected by the exercise of a management right." Petition for Review at 1. As such, although the Agency was aware at the time it filed its statement of position of the Union's position that the proposal constitutes an appropriate arrangement, the Agency was not aware of the Union's arguments in support of its position. After receipt of the Union's reply brief, which contains detailed support for its assertion that the proposal constitutes an appropriate arrangement, the Agency promptly requested permission to file its supplemental submission, which addresses only the appropriate arrangement issue. In these circumstances, we will consider the Agency's supplemental submission.
Information that is available to the Office of Thrift Supervision (OTS) at the time of a progress review meeting, and which is not provided to the employee at that meeting, will not be used to adversely affect a performance rating.
IV. Positions of the Parties
A. The Agency
The Agency argues that the proposal is inconsistent with 5 U.S.C. § 4303(c)(2)(A). The Agency also asserts that the proposal directly interferes with its rights under section 7106(a)(2)(A) and (B) of the Statute to direct employees and assign work because, by barring consideration of relevant information in evaluating employee performance, the proposal affects the content of performance standards. According to the Agency, the proposal also would prevent it from taking performance-based disciplinary actions in some cases and, thereby, directly interferes with its rights to suspend, remove, reduce in grade or pay, or discipline employees under section 7106(a)(2)(A) of the Statute.
The Agency argues that the proposal does not constitute an appropriate arrangement under section 7106(b)(3) of the Statute. The Agency requests, in this regard, that the Authority reject the excessive interference test adopted in National Association of Government Employees, Local R14-87 and Kansas Army National Guard, 21 FLRA 24 (1986) (KANG). The Agency argues that the Authority's test is inconsistent with Department of the Treasury, Internal Revenue Service v. FLRA, 110 S. Ct. 1623 (1990) (IRS v. FLRA) and asserts that "an 'arrangement' cannot be 'appropriate' if it interferes with the exercise of a management right in section 7106(a)." Statement of Position at 12. The Agency also argues that the proposal does not concern the adverse effects flowing from the exercise of a management right because such adverse effects are speculative and, in the Agency's view, the proposal "appears to be intended . . . to enforce procedural rights previously agreed upon[.]"(1) Id. at 13.
The Agency asserts that the proposal excessively interferes with the exercise of its right to discipline by preventing it from establishing, in some circumstances, that an employee is performing at an unacceptable level. The Agency asserts that the proposal would apply without regard to whether the Agency's failure to disclose information to an affected employee "was intentional or inadvertent and whether or not 'harmful'; i.e., whether the employee was otherwise fully on notice of the 'information' and whether there was any reasonable likelihood the employee would have brought his performance to a[n] acceptable level had management provided the information." Id. at 15. The Agency also argues that the proposal excessively interferes with its rights to direct employees and assign work because, under the proposal, "there could be less than 24 hours before management's right to 'use or lose' . . . information is extinguished." Id. at 18-19. According to the Agency, that time limit "is just too short to be . . . reasonable . . . ." Id. at 19.
B. The Union
The Union argues that the proposal does not conflict with management's rights or 5 U.S.C. § 4303(c)(2)(a). The Union maintains that the proposal imposes no "prescribed time limit" on the use of information concerning employee performance and, instead, constitutes a negotiable procedure. Reply Brief at 15.
In the alternative, the Union contends that the proposal constitutes an arrangement for employees who are adversely affected by management's exercise of its rights to direct employees, assign work and impose performance-based discipline. The Union asserts that although the impact of the proposal on the exercise of management's rights would be, "at most, slight[,]" the proposal would provide significant benefits to employees. Id. at 22. In particular, the Union asserts that the proposal would promote accuracy in performance evaluation by affording employees the opportunity to discuss instances of alleged inadequate performance before they "become stale in the minds of the employee and the supervisor." Id. In addition, the Union argues that the proposal would promote fairness in performance evaluation because disclosure of information adversely affecting an employee's performance rating "affects the employee's ability to correct or otherwise improve performance during the remainder of an appraisal period[.]" Id. at 23.
V. Analysis and Conclusions
A. Preliminary Matter
The proposal refers to "information" which is available to the Agency. Although that term is not defined in the proposal, the Union describes information as "evidence about an employee's performance" and notes that the proposal allows employees to discuss "supervisory perceptions." Reply Brief at 16 n.10 and at 19. Consistent with the Union's statements, and in the absence of a contrary definition in the record, we find that "information" encompasses supervisory judgments concerning performance, whether or not those judgments are in writing.
B. 5 U.S.C. § 4303(c)(2)(A)
5 U.S.C. § 4303(c)(2)(A) provides as follows:
(c) The decision to retain, reduce in grade, or remove an employee--
. . . .
(2) in the case of a reduction in grade or removal, may be based only on those instances of unacceptable performance by the employee--
(A) which occurred during the 1-year period ending on the date of the notice [of the proposed adverse action] [.]
Section 4303(c)(2)(A) establishes a time limit for the use of "instances of unacceptable performance" in imposing performance-based discipline. The proposal, however, does not concern "instances of unacceptable performance." Rather, the proposal concerns providing employees, during the performance appraisal cycle, with information which subsequently may adversely affect performance ratings. Therefore, nothing in the proposal alters the statutory time limit on the use of instances of unacceptable performance as grounds for performance-based adverse actions. Indeed, the proposal does not address in any way the "age" of such performance. Instead, the proposal addresses only the consequences of the Agency's failure to provide affected employees with certain information.
Put simply, the proposal and 5 U.S.C. § 4303(c)(2)(A) address different matters. The proposal encourages the Agency to provide employees with certain performance information by prohibiting the Agency from using that information in a particular manner if it fails to do so. The statutory provision, on the other hand, addresses only the "age" of instances of unacceptable performance which may be used when management decides to impose a performance-based action. Accordingly, we reject the Agency's argument that the proposal conflicts with 5 U.S.C. § 4303(c)(2)(A).
C. Management Rights
Under section 7106(a)(2)(A) and (B) of the Statute, management's rights to direct employees and assign work include the right to determine the quantity, quality, and timeliness of employees' work. These rights also encompass management's right to determine the aspects of employees' work that it will evaluate in preparing employee performance appraisals. See, for example, National Treasury Employees Union and U.S. Department of the Treasury, Office of Chief Counsel, Internal Revenue Service, 39 FLRA 27, 56 (1991) (Office of Chief Counsel, IRS), petition for review filed sub nom. U.S. Department of the Treasury, Office of Chief Counsel, Internal Revenue Service v. FLRA, No. 91-1139 (D.C. Cir. Mar. 25, 1991). Proposals preventing management from using particular information in evaluating employee performance directly interfere with management's rights to direct employees and assign work under section 7106(a)(2)(A) and (B) of the Statute. For example, American Federation of Government Employees, Local 3272 and Department of Health and Human Services, Social Security Administration, Chicago Regional Office, 34 FLRA 675, 679 (1990).
The proposal prohibits the Agency from using information to adversely affect a performance rating if the information was not furnished to the affected employee at the first progress review meeting after it became available. As such, the proposal prevents the Agency from using certain information to evaluate employee performance. Consequently, the proposal directly interferes with the Agency's rights to direct employees and assign work. See, for example, id.
Further, "documentation relating to the 'performance evaluation context' cannot be divorced from the disciplinary context." National Association of Government Employees and U.S. Department of Veterans Affairs, Medical Center, Brockton and West Roxbury, Massachusetts, 41 FLRA 529, 532 (1991) (VAMC, Brockton). In this regard, "[e]vidence is essential in disciplinary actions, including those taken for performance-based reasons." Id. Accordingly, management's right to discipline employees encompasses the right to obtain and use evidence to support actions, and proposals that restrict an agency's use of information as evidence directly interfere with management's right to discipline employees under section 7106(a)(2)(A) of the Statute. Id.
Although the proposal expressly addresses only information used to adversely affect performance ratings, the parties construe the proposal to encompass information used to sustain performance-based disciplinary actions as well. Moreover, insofar as information is used to support an unacceptable performance rating, the connection between the adversely affected rating and the performance-based action is direct. See, for example, 5 C.F.R. § 432.104 (an employee whose performance in one or more critical elements is unacceptable must be informed that "unless his or her performance in the critical element(s) improves to and is sustained at an acceptable level, the employee may be reduced in grade or removed").
As the proposal would preclude the Agency from using certain information to affect performance ratings adversely, the proposal also would preclude the Agency from using that information to support performance-based actions based on those ratings. See VAMC, Brockton, 41 FLRA at 533. Therefore, we conclude that the proposal directly interferes with management's right to discipline employees under section 7106(a)(2)(A) of the Statute. Id.
The proposal directly interferes with management's rights to direct employees, assign work, and discipline. Accordingly, it is not a negotiable procedure under section 7106(b)(2). National Federation of Federal Employees, Local 405 and U.S Department of the Army, Army Information Systems Command, St. Louis, Missouri, 42 FLRA 1112, 1116 (1991).
The Union argues that, if the Authority finds that the proposal interferes with management's rights, the proposal is an appropriate arrangement under section 7106(b)(3) of the Statute because it does not excessively interfere with the exercise of the rights. In response, the Agency requests that the excessive interference test adopted in KANG "be abandoned." Statement of Position at 12. Relying on IRS v. FLRA, the Agency argues that "nothing in the . . . Statute can affect the authority of agency officials to exercise their management rights guaranteed by 5 U.S.C. 7106(a)." Id.
We reject the Agency's argument. First, the Agency's reliance on IRS v. FLRA is misplaced. In that decision, the Supreme Court did not address, explicitly or implicitly, the standard for determining whether a proposal constitutes an appropriate arrangement. Second, the Agency's argument ignores the plain wording of both section 7106(a), which provides that the rights contained therein are "[s]ubject to" subsection (b)" and section 7106(b), which provides that "[n]othing" in section 7106 precludes parties from negotiating appropriate arrangements. See generally American Federation of Government Employees, Department of Education Council of AFGE Locals and U.S. Department of Education, Washington, D.C., 38 FLRA 1068, 1077 (1990) (Education), petition for review filed sub nom. U.S. Department of Education v. FLRA, No. 91-1219 (D.C. Cir. May 13, 1991). See also Overseas Education Association v. FLRA, 876 F.2d 960, 965-66 (D.C. Cir. 1989). Third, the Authority has reaffirmed the excessive interference test for determining whether a proposal constitutes an appropriate arrangement and the Agency's arguments provide no basis for reconsidering the test here. For example, American Federation of Government Employees, National Border Patrol Council and National Immigration and Naturalization Service Council and U.S. Department of Justice, Immigration and Naturalization Service, 40 FLRA 521, 525-26 (1991), petition for review filed sub nom. U.S. Department of Justice, Immigration and Naturalization Service v. FLRA, No. 91-4525 (5th Cir. June 25, 1991).
Accordingly, we decline the Agency's request that we abandon the test, adopted in KANG, for determining whether a proposal constitutes an appropriate arrangement. Consistent with KANG, we will determine whether the disputed proposal is intended as an arrangement and, if so, whether it excessively interferes with the exercise of management's rights under the Statute. KANG, 21 FLRA at 31.
The Union asserts that the proposal affords employees a timely opportunity to review and respond to information which, in management's view, adversely affects performance ratings or supports performance-based disciplinary actions. This opportunity, the Union maintains, enables employees "to correct a supervisor's misperceptions" and avoid poor performance ratings. Reply Brief at 19. We conclude, based on the Union's assertions, that the proposal is intended as an arrangement to mitigate the adverse effects of the exercise of management's rights to direct employees, assign work, and discipline.
In reaching this conclusion, we reject as meritless the Agency's argument that the proposal cannot constitute an appropriate arrangement because it is "intended . . . to enforce procedural rights previously agreed upon[.]". Statement of Position at 13. The Agency cites no authority, and none is apparent to us, for the proposition that appropriate arrangements and provisions enforcing contractual rights are mutually exclusive. We also reject the Agency's argument that the adverse effect addressed by the proposal is "completely speculative." Id. at 14. Under the Agency's merit pay system, performance ratings are directly related to employees' eligibility for increased compensation. See id. Moreover, as noted previously, ratings are directly related to performance-based disciplinary actions.
We next determine whether the benefits to employees flowing from the proposal outweigh the negative impact on management's rights to direct employees, assign work, and impose performance-based discipline. See KANG, 21 FLRA at 33.
The proposal offers significant benefits to employees. In particular, the proposal encourages the Agency promptly to bring to employees' attention information adversely affecting their performance. Employees' awareness of this information facilitates their ability both to correct inaccurate information and to improve performance before receiving final performance ratings. These benefits would flow also to the Agency by contributing to the accuracy and reliability of performance information and by encouraging performance improvement. See Federal Personnel Manual Chapter 430, subchapter 2-3.f. ("communication and counseling during the work planning and the appraisal period will help ensure that work activity will be consistent with organizational goals. Such communication together with written standards may also reduce the likelihood of disagreements when the appraisal is made at the end of the period."). In addition, the proposal bars management from using information, not timely shared with employees, to adversely affect performance ratings. This is an obvious benefit to employees.
On the other hand, the proposal has direct and obvious effects on the Agency also. In this regard, the proposal affects management's responsibilities to appraise employees and take actions based on those appraisals. Moreover, the proposal could operate in some circumstances to preclude the Agency from appraising an employee's performance as unacceptable and from supporting a performance-based disciplinary action based thereon. These are important management interests.
We find significant, however, the fact that the Agency already has agreed to share the information addressed by the proposal. In particular, the Agency agreed "to exchange information concerning the performance of the employee as compared to the established performance plan since the time of the preceding review meeting." See n.1 above. Indeed, this information exchange is the expressed purpose of the progress reviews. By meeting its agreed-upon obligation to share information adverse to employees' performance ratings, the Agency would avoid any burden on its rights to direct employees, assign work, and discipline. Moreover, the parties' agreement encompasses the exchange of information concerning performance "since the time of the preceding review meeting." Id. As such, the time limits the Agency now finds unreasonable and objectionable are those to which it has already agreed.(2)
We also note that the proposal establishes a remedy for the Agency's failure to abide by its contractual commitment to share performance information with employees. We find it appropriate to consider the effects of the proposal on the Agency's rights in light of the Agency's agreement to assume the obligation underlying the proposal. Further, in view of the connection between the proposal and the Agency's previous agreement, we conclude that, in addition to offering benefits to unit employees in connection with performance ratings, the proposal would encourage adherence to contractual obligations and, thereby, enhance confidence in collective bargaining as a whole.
On balance, we conclude that although the effects of the proposal on management's rights may be significant, those effects are outweighed by the benefits conferred by the proposal on unit employees. Accordingly, we conclude that the proposal does not excessively interfere with the Agency's rights to direct employees, assign work, or impose discipline based on unsatisfactory performance under section 7106(a)(2)(A) and (B) and constitutes an appropriate arrangement under section 7106(b)(3) of the Statute. See Office of Chief Counsel, IRS, 39 FLRA at 58-59 (provision barring agency from using certain information in evaluating performance unless the information was previously furnished to affected employees held to constitute an appropriate arrangement).
The Agency must, upon request or as otherwise agreed to by the parties, bargain on the disputed proposal.(3)
(If blank, the decision does not have footnotes.)
1. According to the Agency, the parties agreed on "numerous provisions intended to ensure employees know what performance is expected of them and how they are progressing throughout the performance appraisal period." Statement of Position at 2. Among those provisions is the following:
There will be 2 progress reviews for each bargaining unit employee, which will be held during June and October of each appraisal year. The purpose of the meetings is to exchange information concerning the performance of the employee as compared to the established performance plan since the time of the preceding review meeting. At each progress review meeting, the employee will be advised in writing of the level of performance which the employee has demonstrated in each element since the previous progress review meeting. . . . Additional questions relating to the [performance appraisal system] may be raised by the employee at any time.
Id. at 2-3 (ellipsis and brackets in original).
2. We note that the parties have agreed to hold progress review meetings twice yearly at 4-month intervals. See n.1 at 3. The Union states, and the Agency does not dispute, that the Agency "retains unilateral discretion to hold [a] progress review at any time during the applicable month" identified in the Memorandum of Agreement. Reply Brief at 15. It appears, therefore, that, if management became aware of information shortly before a scheduled progress review meeting, management could postpone the meeting.
3. In finding the proposal to be negotiable, we make no judgment as to its merits.