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The decision of the Authority follows:
54 FLRA No. 54
FEDERAL LABOR RELATIONS AUTHORITY
U.S. DEPARTMENT OF DEFENSE
FEDERAL EDUCATION ASSOCIATION
June 30, 1998
Before the Authority: Phyllis N. Segal, Chair; Donald S. Wasserman and Dale Cabaniss, Members.
Decision by Chair Segal for the Authority.
I. Statement of the Case
This matter is before the Authority on exceptions to an award of Arbitrator John J. Popular II 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 Regulations. The Union filed an opposition to the Agency's exceptions.
The Arbitrator awarded the Union attorney fees incurred during an arbitration proceeding in which the Union had prevailed (the Fee Award). For the reasons that follow, we deny the Agency's exceptions.
II. Background and Arbitrator's Award
In the Fee Award, the Arbitrator granted the Union attorney fees incurred during the adjudication of a prior award (the Merits Award). In the Merits Award, the Arbitrator concluded that the Agency's failure to timely pay employees during the centralization of its pay system was an unjustified and unwarranted personnel action. Although the Agency had reimbursed employees for all of their improperly withheld pay by the time of the Merits Award, the Arbitrator concluded that the Agency's violations required the payment of interest for the period of delay. Fee Award at 5, Merits Award at 11.
The Arbitrator rejected the Agency's argument that he lacked jurisdiction to award attorney fees because the fees were not incurred in conjunction with an award of back pay. Fee Award at 5. The Arbitrator determined that his award of interest "affirms a finding of a violation of the Back Pay Act." Id. The Arbitrator relied on his findings in the Merits Award that the "Agency violated laws, rules, regulations and/or the collective bargaining agreement when delays which accompanied the transfer of personnel data . . . resulted in failure to pay bargaining unit members in a timely manner" and "constituted an unjustified and unwarranted action which required the payment of interest." Id. (quoting Merits Award at 11). The Arbitrator concluded that each of the statutory requirements for an award of attorney fees under the Back Pay Act had been met, including those standards specifically contained in the Back Pay Act and those incorporated into the Back Pay Act, by reference, from 5 U.S.C. § 7701(g).
III. Positions of the Parties
The Agency argues that the attorney fee award is contrary to the Back Pay Act because, in the Merits Award, the Arbitrator did not award back pay. According to the Agency, a fee award under the Back Pay Act is authorized only where the Arbitrator makes a specific award of back pay to particular grievants, and such an award was not part of the Merits Award. Exceptions at 3. Further, the Agency argues that even if the Merits Award would constitute an award under the Back Pay Act, the Arbitrator only awarded interest to the grievants. According to the Agency, interest does not qualify as an award of "pay, allowances and differentials," which must be made in order for there to be a back pay award that would qualify an employee for attorney fees. Id.
The Union argues that, in the Merits Award, the Arbitrator awarded back pay. The Union relies on the Arbitrator's reasoning that "[a] violation of the Back Pay Act is a condition precedent to the payment of interest[,]" which was awarded. Opposition to Exceptions at 4 (quoting Fee Award at 5). According to the Union, the Arbitrator must have found that there had been a payment of back pay under the Back Pay Act because otherwise there would have been no interest to be awarded.
IV. Analysis and Conclusions
A. The Arbitrator's Merits Award Constitutes an Award Pursuant to the Back Pay Act
The Back Pay Act provides the standards that must be met for an "appropriate authority" to award back pay in an "appeal" or "administrative determination."(1) In order to establish entitlement to back pay under section 5596(b)(1) of that Act, the Authority has held that a moving party must establish the following three elements:
(1) the aggrieved employee was affected by an unjustified or unwarranted personnel action;
(2) the personnel action directly resulted in the withdrawal or reduction of the grievant's pay, allowances or differentials; and
(3) but for such action, the grievant otherwise would not have suffered the withdrawal or reduction.
Social Security Administration, Mid-Atlantic Program Service Center and American Federation of Government Employees, Local 1923, 53 FLRA 956, 965 (1997).(2)
As a threshold matter, this case involves an "appeal or an administrative determination" of entitlement by an "appropriate authority." 5 U.S.C. § 5596(b)(1). Under Office of Personnel Management regulations, individuals authorized to award back pay under the Back Pay Act include an arbitrator or "another official of the employing agency to whom such authority is delegated." 5 C.F.R. § 550.803. In this case, the requirement that an appropriate authority determine entitlement is satisfied both by the Agency's underlying determination that back pay was owed and by the Arbitrator's finding that the elements of the Back Pay Act had been met. Further, it is undisputed that the Arbitrator properly found that the employees were entitled to interest for the Agency's wrongful withholding of pay.
Under the first of the three criteria set forth above, the Back Pay Act's requirement that the moving party show that the agency committed an "unjustified or unwarranted personnel action" is satisfied by the Arbitrator's conclusion that the Agency violated "laws, rules, regulations and/or the collective bargaining agreement." Fee Award at 5. See Department of Health and Human Services, Health Care Financing Administration, Region IV, Atlanta, Georgia and National Treasury Employees Union, Chapter 210, 21 FLRA 910, 913 (1986) (collective bargaining agreement violation triggers entitlement under Back Pay Act).
Under the second criterion, the requirement that a party show a "withdrawal or reduction of pay, allowances or differentials" is satisfied by the Arbitrator's finding that the Agency's action had "resulted in [a] failure to pay bargaining unit members in a timely manner." Fee Award at 5. This undisputed finding also satisfies the Authority's "but for" test. Id.
In sum, although the underlying correction of the improper personnel action was accomplished prior to the Arbitrator's Merits Award, that award established that the Agency had, in fact, committed an unwarranted personnel action and that employees were entitled to all remedies available under the Back Pay Act, including interest. The Merits Award thus meets all requirements of an award pursuant to the Back Pay Act.
B. An Arbitrator May Award Attorney Fees Based on an Award of Interest
The Agency further argues that an arbitral award granting only interest under the Back Pay Act may not support an award of attorney fees. The Agency relies on Authority precedent stating that "in the absence of an award of back pay, attorney fees under the Act are not permitted." Western Division, Naval Facilities Engineering Command and American Federation of Government Employees, Local 2168, 35 FLRA 19, 23 (1990). According to the Agency, because interest does not constitute "pay, allowances, or differentials," it is not "an award of back pay" and cannot lead to an award of attorney fees.
A review of the remedial provisions of the Back Pay Act indicates, however, that interest on withheld monies is simply one of the remedies set forth once entitlement is established. Subsections 5596(b)(1)(A) and (b)(2) of the Back Pay Act provide three monetary remedies: (1) the withheld pay, allowances, or differentials; (2) interest on these amounts; and (3) attorney fees. Under the terms of the Back Pay Act, each of the elements for entitlement set forth in Part A, supra, must be established to obtain any of these remedies. Additionally, interest is payable only "with" a reimbursement of pay, allowances, or differentials. 5 U.S.C. § 5596(b)(2). Finally, there are additional, specific requirements set out for entitlement to attorney fees. 5 U.S.C. § 5596(b)(1)(A)(ii).
The Agency's position -- that fees may only be awarded where interest is included in a particular "award" or decision that also grants pay, allowances or differentials -- ignores the basic structure and plain wording of this aspect of the Back Pay Act. Interest is automatically paid "with" the reimbursement of pay, allowances or differentials. That is, interest is an inseparable element of any payment of withdrawn or reduced pay under the Back Pay Act. As the Arbitrator explained this principle, an award of backpay "is a condition precedent to the payment of interest" and "the payment of interest affirms a finding" that backpay is warranted. Fee Award at 5. Attorney fees are paid because there has been a finding of entitlement under the Back Pay Act, and the award of interest confirms that such a finding has been made. This wording of the Back Pay Act, that back pay is computed "with interest," confirms the common sense observation that an award of interest is necessarily tied to an underlying award of back pay, on which the interest has been computed. 5 U.S.C. 5596(b)(2)(A).
Further, the Agency's position ignores an element of the Back Pay Act discussed above: an "award" of back pay may be made by any appropriate authority, including an agency official. See 5 U.S.C. § 5596(b)(1); 5 C.F.R. § 550.803. There is no requirement in our precedent or the Back Pay Act that an award of back pay be in the same proceeding as the proceeding that determines entitlement to attorney fees. Rather, as long as employees have, in fact, been determined to be entitled to an award of back pay under the Back Pay Act, that this award was made in advance of the proceeding at issue has no bearing on a party's entitlement to the other remedies provided for in the Back Pay Act.
Our decision here is consistent with the holding of the United States Claims Court that it has jurisdiction to award attorney fees where the underlying back pay dispute was settled administratively. In Carpenter v. United States, 28 Fed. Cl. 195, 200 (1993), the court found:
Interest is only due in those circumstances in which the employee had been . . . paid wages retroactively upon the necessary finding of an unjustified or unwarranted personnel action. While the obligation to pay attorney fees is not automatic, . . . the interest and attorney fee provisions of the [Back Pay Act] presume that there has been an award of back pay, which, in turn, presumes proper appointment to a position. It would be difficult to imagine what more Congress would have to say to waive sovereign immunity in this regard.
That interest may be awarded under the Act in a proceeding that does not also award back pay is confirmed by Comptroller General decisions that have approved the payment of interest on administratively settled claims, as long as the other requirements of the Back Pay Act are met. See Matter of: Payment of Interest Under the Back Pay Act, B-242277 (Sept. 12, 1991) (employee entitled to interest on amounts erroneously withheld from employee's pay); see also Matter of: Interest on Late Payments of Mandatory Employee Incentive Awards, 70 Comp. Gen. 711 (Sept. 25, 1991) (agency may agree in a collective bargaining agreement to pay interest on late payment of incentive pay).
Finally, our decision is supported by the terms of the attorney fees provision of the Back Pay Act, which do not limit attorney fees to proceedings for pay, allowances or differentials. Rather, fees are paid when "related to the personnel action." 5 U.S.C. 5596(b)(1)(A)(ii). Consistent with this provision, attorney fees are routinely awarded for time spent litigating entitlement to attorney fees. American Federation of Government Employees, AFL-CIO, Local 3882 v. FLRA, 994 F.2d 20 (D.C. 1993) (AFGE, Local 3882). In AFGE, Local 3882, the court reasoned that such fees "are clearly 'related' to the underlying action, for such fees are often necessary to fulfill the purposes of the statutory scheme on which the action is based." Id. at 22. The court noted that one such purpose of statutory attorney fee provisions is to "make a litigant whole when she is wronged under a statute." Id. Certainly, attorney time spent collecting interest is at least as "related to the personnel action" as time spent collecting the attorney's fee. Fees for collecting interest are, further, equally necessary to make the employee whole. Thus, these fees are authorized by the terms and policy of the Back Pay Act.
In sum, we find that the Arbitrator properly awarded attorney fees for the time spent litigating the entitlement to interest.
The Agency's exceptions are denied.
(If blank, the decision does not have footnotes.)
1. The Back Pay Act, 5 U.S.C. § 5596, provides, in relevant part:
(b)(1) An employee . . . who, on the basis of a timely appeal or administrative determination, . . . is found by appropriate authority . . . to have been affected by an unjustified or unwarranted personnel action which has resulted in the withdrawal or reduction of all or part of the pay, allowances, or differentials of the employee-
(A) is entitled, on correction of the personnel action, to receive . . .
(i) an amount equal to all or any part of the pay, allowances, or differentials . . . which the employee normally would have earned . . . if the personnel action had not occurred . . . .
(ii) reasonable attorney fees related to the personnel action . . . .
. . . .
(2)(A) An amount payable under paragraph (1)(A)(i) of this subsection shall be payable with interest. . . .
2. The Back Pay Act is a waiver of sovereign immunity and is strictly construed in favor of the sovereign. Lane v. Pena, 518 U.S. 187, 192 (1996). There is no dispute in this case that the Back Pay Act waives sovereign immunity for the payment of interest on back pay.