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U.S. Federal Labor Relations Authority

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54:0752(76)AR - - Interior, Bureau of Indian Affairs and NFFE, Bureau of Indian Affairs Council - - 1998 FLRAdec AR - - v54 p752

[ v54 p752 ]
The decision of the Authority follows:

54 FLRA No. 76














August 21, 1998


Before the Authority: Phyllis N. Segal, Chair; Donald S. Wasserman and Dale Cabaniss, Members.

I. Statement of the Case

This matter is before the Authority on exception to an award of Arbitrator Kent J. Collings 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 Agency filed a limited exception pertaining only to the portion of the award addressing the Agency's use of ratings covering an improper period in the Central District office.(1) The Union did not file an opposition to the Agency's exception.

The Arbitrator denied in part and sustained in part the Union's three consolidated grievances concerning the Agency's application of 5 C.F.R. § 351.504(b) in one of its districts when conducting a nationwide reduction-in-force (RIF).(2)

For the reasons stated below, we find that the award pertaining to the use of the FY1995 performance rating in the Central District is contrary to 5 C.F.R. § 351.504(b)(2), and set the award aside.

II. Background and Arbitrator's Award

In 1995 and 1996, the Agency conducted a nationwide RIF based on a lack of funding from Congress. The competitive area of the RIF at issue was the Agency's Central District Office, Eastern Area (Central District).(3) The grievant's placement on the Central District retention register was based on the Fiscal Year (FY)1992, 1993, and 1994 ratings.(4)

The grievant filed a grievance, alleging that the Central District was required, under § 351.504(b)(1), to apply her performance ratings from FY1993-95 in calculating her placement on the retention register. The Agency denied the grievance, and the grievance was submitted to arbitration. The Arbitrator framed the issue as follows:

Did the Agency commit substantive errors in the nationwide RIF . . . [b]y using ratings in the Central District [Office, Eastern Area] covering the improper period?

Award at 1.

At the arbitration hearing, the Union argued that because the actual date of the RIF was October 1995, and because the regulations require that an employee's entitlement to additional service credit be based on the employee's three most recent annual performance ratings of record, the Central District should have used the grievant's FY1993-95 performance ratings rather than the FY1992-94 performance ratings. The Union also asserted that as the Central District used FY1992-94 performance ratings while other areas used FY1993-95 performance ratings, the Agency did not uniformly and consistently award additional service credit to the employees affected by the nationwide RIF.

The Agency presented testimony and documentation showing that on June 29, 1995, the Central District requested and received Agency approval to extend the end of the 1995 performance appraisal period from June 30, 1995, as set forth under established Agency appraisal procedures, to September 30, 1995. According to the Agency, because the RIF notices were initially to be delivered in mid-July, the Central District was "well into the RIF process" in June 1995.

The Arbitrator found that: (1) the regulations require consistency regarding the employees in the same competitive area, and consistency was not the issue here; (2) applicable regulations allow the Agency to provide a cut-off date beyond which the ratings would not be accepted; and (3) although redoing the ratings would probably not make any substantive change in the RIF, it is possible that an injury occurred. Additionally, the Arbitrator found that: "[t]he logic of [§ 351.504(b)(1)] is obvious. . . . If the result of the examination of personnel records may put a person on the street, a 1995 performance evaluation should have more weight than a 1992 evaluation"; and "[t]o not use the 1995 ratings when they were available, cannot be condoned even though permission was granted to do so[.]" Id. at 34.

The Arbitrator concluded that the Agency, in the Central District, should recalculate the performance ratings using the FY1993, 1994 and 1995 ratings. In reaching this conclusion, the Arbitrator emphasized that, if the record did not show what the rating would have been if established elements and standards had been properly applied, "the arbitrator must . . . direct that management reevaluate work product or performance." Id. at 35 (emphasis in original). The Arbitrator also determined that if the recalculations demonstrated that any employee was wrongly RIFed, then the Agency must reinstate that employee with full backpay.

III. Positions of the Parties

A. Agency's Exception

The Agency contends that the award is contrary to 5 C.F.R. § 351.504(b)(2), which permits the Agency to set a "cut-off" date for annual performance ratings in order to provide adequate time to determine employee retention standing. Exception at 4. The Agency claims that the Arbitrator did not consider section 351.504(b)(2) in determining the award.

The Agency asserts that the Central District received Agency permission to extend the regular FY1995 rating period from June 30 to September 30 because there was not enough time to prepare the ratings and review such ratings prior to the scheduled issuance of the RIF notices, July 15, 1995. According to the Agency, it established a cut-off date of 1994 for appraisals to be used.(5) The Agency also maintains that although the issuances of the RIF notices were delayed until mid-October, due to the extension of the 1995 rating period to September 30, 1995, several supervisors had not yet prepared the 1995 performance ratings. Therefore, the Agency contends that it did not use the 1995 performance ratings in order to prevent inconsistencies in the placement of employees on the retention register and thereby to act in accordance with the requirements of 5 C.F.R. § 351.504(b)(4).

The Agency also asserts that it properly used its discretion in considering the 1994 rating as the cut-off date as permitted under § 351.504(b)(2), beyond which further ratings would not be considered for the purposes of that RIF. The Agency, citing Cooper v. Tennessee Valley Authority, 723 F.2d 1560, 1562 (Fed. Cir. 1983), maintains that the Federal Circuit and the Merit Systems Protection Board (MSPB) accord agencies wide discretion in conducting a RIF.

Additionally, the Agency contends that under MSPB case law, RIFs will not be reversed where the Agency demonstrates that its error had no adverse effect on any employee's substantive entitlement. Salazar v. Department of Transportation, 60 MSPR 633, 640 (1994); Schroeder v. Department of Transportation, 60 MSPR 566, 567 (1994). According to the Agency, even assuming that an error existed in the instant case, the Arbitrator did not find that such error had an adverse effect on any employee's retention rights during the RIF. Specifically, the Agency argues that the Arbitrator's findings regarding any employee's substantive RIF entitlement were speculative, and thus, inconsistent with MSPB precedent.

B. Union's Opposition

The Union did not file an opposition.

IV. Analysis and Conclusions

Under section 7122(a)(1) of the Statute, an arbitration award will be found deficient if it conflicts with any law, rule or regulation. Overseas Education Association and U.S. Department of Defense Dependents Schools, Arlington, Virginia, 51 FLRA 1246, 1251 (1996). As the Agency's exception involves the award's consistency with applicable regulations, the Authority reviews questions of law raised by the award and the Agency's exception de novo. National Treasury Employees Union, Chapter 24 and U.S. Department of the Treasury, Internal Revenue Service, 50 FLRA 330, 332 (1995). In applying a standard of de novo review, the Authority assesses whether an arbitrator's legal conclusions are consistent with the applicable standard of law. National Federation of Federal Employees, Local 1437 and U.S. Department of the Army, Army Research, Development and Engineering Center, 53 FLRA 1703, 1710 (1998) (Army Research). In making that assessment, the Authority defers to the arbitrator's underlying factual findings. See id.

The Agency contends that the award is contrary to 5 C.F.R. § 351.504(b)(2).(6) 5 C.F.R. § 351.504(b)(1) states that "[a]n employee's entitlement to additional service credit shall be based on the employee's three most recent annual performance ratings received during the 4-year period prior to the date of the issuances of the [RIF] notices, except as provided in paragraph (b)(2) of this section." 5 C.F.R. § 351.504(b)(2) establishes that the Agency may set a cut-off date after which no new annual ratings will be used to determine performance credit.

As relevant here, the Arbitrator's specific findings are that: (1) the competitive area of the RIF at issue was the Central District; (2) the Central District determined the grievant's placement based on the FY1992-1994 performance ratings; and (3) the regulations allow the Agency to set a cut-off date beyond which ratings would not be accepted. The regulation requires consistency only within a competitive area. In the instant case, there was no dispute as to the competitive area. We conclude that for reasons stated below, that these findings do not support the Arbitrator's conclusion that the Agency should have used the 1995 performance ratings to determine placement on the retention register.

The Agency extended the performance appraisal period in preparation of sending out RIF notices. There is no dispute that this action was proper or was a substantial departure under the Agency's performance appraisal system. In fact, the Arbitrator acknowledges that the Agency had "permission" to do so. Award at 34. Further, there are no findings that the Agency acted inconsistently, abused its discretion, or departed from applicable procedures under its performance appraisal system in using performance ratings for FY1992-1994 to place employee names on the retention register.

Under de novo review, we find that the Arbitrator's conclusion, that the Central District should have used the FY1995 performance rating to determine retention register placement under a RIF, is not supported by his factual findings.(7) See U.S. Department of Justice, Immigration and Naturalization Service, Washington, D.C. and American Federation of Government Employees, National Immigration and Naturalization Council, 44 FLRA 343, 353 (1992). According to the Arbitrator's findings, the Agency acted consistently under the applicable regulation, 5 C.F.R. § 351.504, in using the FY1992-1994 performance ratings in this competitive area. Further, it is undisputed that the regulation permits an agency to set a cut-off date after which no other performance ratings will be used to determine placement on the retention register. In short, the Agency reasonably exercised its discretion in implementing its performance appraisal system consistent with the applicable RIF regulations. Thus, there is no basis for the Arbitrator to set aside the Agency's lawful actions. Accordingly, we conclude that the award is deficient and must be set aside.

V. Decision

The award is set aside because it is inconsistent with

5 C.F.R. § 351.504(b)(2).(8)

(If blank, the decision does not have footnotes.)

1. As no exceptions were filed regarding any other portions of the award, the other portions of the award are not before the Authority for consideration.

2. 5 C.F.R. § 351.504(b) (1996) provides in pertinent part:

(b)(1) An employee's entitlement to additional service credit for performance . . . shall be based on the employee's three most recent annual performance ratings of record received during the 4-year period prior to the date of issuances of [RIF] notices, except as provided in paragraph (b)(2) of this section.

(2) To provide adequate time to determine employee retention standing, an agency may provide a cutoff date--a specified number of days prior to the issuance of [RIF] notices--after which no new annual ratings will be put on record . . . . [w]hen a cutoff date is used, an employee will receive performance credit for the three most recent annual ratings received during the 4-year period prior to the cutoff date.

. . . .

(4) The awarding of additional service credit based on performance for purposes of this subpart must be uniformly and consistently applied, and must be consistent with the agency's performance appraisal system[.]

3. According to 5 C.F.R. § 351.402(b), each agency may establish competitive areas, in which employees compete for retention, by organizational units and geographical location.

4. Performance ratings affect placement on a RIF retention register by granting an employee an additional service credit based on performance. See 5 C.F.R. § 351.504(b) (1996).

5. The Agency references an attached exhibit (BIAM-29) from the hearing to support its contention that the Central District properly followed § 351.504(b)(2), "when it considered the 1994 rating as the cut-off date beyond which subsequent ratings were not considered for RIF purposes." Exception at 6, n.2. However, the Agency did not include an attachment with its exception.

6. Although 5 C.F.R. § 351.504(b) was revised in 1997, the sections that are applicable in this case were not changed.

7. Although the Authority defers to an arbitrator's factual findings, in this case the factual findings relied on by the Arbitrator do not support his determination concerning the application of the regulations at issue here.

8. Based on the above determination, we need not address the Agency's contention that the Arbitrator's findings pertaining to any employee's RIF entitlement were speculative.