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55 FLRA No. 84
GENERAL SERVICES ADMINISTRATION
AMERICAN FEDERATION OF GOVERNMENT
EMPLOYEES, LOCAL 2431
May 28, 1999
Before the Authority: Phyllis N. Segal, Chair; Donald S. Wasserman and Dale Cabaniss, Members.
Decision by Member Wasserman for the Authority.
I. Statement of the Case
This matter is before the Authority on exceptions to an award of Arbitrator Rodney E. Dennis 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 found that the Agency violated the terms of the collective bargaining agreement (CBA) when it based performance awards for 1996-97 on a percentage rate of employees' annual salary lower than it had used as a basis in the past, and ordered backpay for employees affected by the violation of the CBA. For the following reasons, we conclude that the Agency has failed to establish that the award is deficient on any of the grounds raised in the exceptions that are set forth in section 7122(a) of the Statute. Accordingly, we deny the exceptions that the award fails to draw its essence from the agreement, that it is contrary to the Back Pay Act and that the Arbitrator failed to conduct a fair hearing.
II. Background and Arbitrator's Award
The Agency had a performance award program, and for 10 years prior to the incident that gave rise to the grievance, performance awards of 2 percent of basic salary were given to employees rated "outstanding," with 1 percent provided to employees rated "highly successful." In June, 1997, the Agency's regional administrator decided to award 1 percent of basic salary to employees rated outstanding, and ½ percent to employees rated highly successful. A grievance over this decision was denied.
The Arbitrator framed the issue to be decided as follows:
Did the Agency violate the terms of the Collective Bargaining Agreement when it granted performance awards for 1996-97 of 1 percent for employees rated "outstanding" and ½ percent for employees rated "highly successful?" If so, what is the appropriate remedy?
Award at 2.
The Arbitrator analyzed various Articles of the CBA. Article 20, Incentive Awards and Productivity, provides, in pertinent part:
Article 20, Section 1. Purpose and Policy
[T]he amount of, and the circumstances under which awards will be given are decisions reserved to management subject to the provisions of the HB, GSA Incentive Awards Program (EPA P 9451.2) and Section 2, below.
Section 2. Performance Awards
A. Within each organization, the Employer will set annually a performance award minimum applicable to employees rated outstanding. This amount shall be a percentage of base salary.
B. Employees receiving an annual summary rating of outstanding shall receive a performance award of at least the minimum amount established under section 2A, above. . . .
C. Performance awards given to employees rated highly successful, if any, will be given in a fair and equitable manner.
The Arbitrator found that Article 20 "clearly grants to Management the authority to decide under what conditions awards will be given and how much those annual awards will be." Award at 7. The question, he stated, is whether the Agency properly exercised its authority and then informed the Union and employees.
The Arbitrator concluded that the Agency was arbitrary and capricious, and did not properly exercise its authority. [n1] He stated that the authority regarding awards "may not be exercised without regard to other obligations" of the Agency. Id. at 8. The Arbitrator [ v55 p494 ] found that the Agency ignored various other sections of the agreement by its actions.
Article 2, Section 4 addresses past practice. It provides, in pertinent part:
B. Past Practices
1. As of the effective date of this National Agreement, all past practices that conflict with law, rule or Government-wide regulation are null and void.
2. All past practices that conflict with the terms and conditions of this National Agreement or the terms and conditions of a Supplemental Agreement are null and void.
3. All other past practices continue until changed through negotiations.
The Arbitrator found that the Agency cannot ignore the fact that over the past ten years the 2 percent/ 1 percent raises were "all but automatic." Id. at 8-9. He found that there was no discussion or notice of the change, and that management had an obligation to give notice of its intention to reduce the awards. When he considered the obligation in light of other sections of the CBA, the Arbitrator concluded that the Agency violated the CBA.
The Arbitrator found that the Agency also failed to meet its obligation under Article 8, Negotiations, Section 4, which provides:
Section 4. Regional Negotiations
A. The Union will be given notice at the regional level of proposed changes in personnel policies, practices and working conditions arising out of, initiated by or under the control of a GSA Region which are regional and/or local in scope and which are not national in scope. Negotiation resulting from such changes will be conducted by the Parties' regional representatives in accordance with the Federal Labor Management Relations Statute.
The Arbitrator found that the Agency failed to meet the CBA requirement that the Union to be given notice at the regional level of proposed changes in policies, practices and working conditions.
In addition, the Arbitrator found that the Agency failed to meet its obligation to keep employees informed about the relationship of performance appraisals to awards, required by Article 19, concerning Performance Appraisal Systems, Section 10 of which provides:
Section 10. Appraisal System Information
Supervisors will advise employees of the provisions of the performance appraisal system including the definition of and significance of critical elements, the purposes of performance standards, the relationship of performance appraisal to awards, within-grade salary increases, and completion of probation, the use of GSA appraisal system forms, and the purposes of performance reviews.
The Arbitrator required the Agency to remedy the contract violations by making whole the employees affected by the reduction. He found nothing in the record to indicate that there was not money available to fund the bonuses at the 2 percent/ 1 percent rate. Nor were "arguments presented to support the notion that Management had thought through any new program that would justify" the reduction. Award at 10.
III. Analysis and Conclusions
A. The Award Draws Its Essence From the Collective Bargaining Agreement
1. Positions of the Parties
a. Agency Exception
The Agency states that under Article 20 of the CBA, management has sole discretion to determine the amounts of the awards, as well as whether employees rated "highly successful" would receive any awards. Thus, the Agency contends it had no duty to bargain regarding the amounts of any award for any given year.
The Agency claims that the Arbitrator's interpretation of the other cited sections of the CBA is "not plausible." Exceptions at 9. Thus, the Agency argues that the Arbitrator's interpretation of Article 2, concerning past practice, nullifies its right in Article 20 to set the amount of the awards annually.
It also claims that the interpretation of Article 8, Section 4.A, which provides for notice at the regional level of proposed changes in personnel policies, practices and working conditions that arise at the regional level is not plausible because it conflicts with Section 4.D, which provides that agreements below the national level may not change or amend the terms of the National Agreement. [ v55 p495 ]
The Agency also contends that the interpretation of Article 19, Section 10, regarding notice to employees of the relationship of performance appraisals to awards, is contrary to Article 20. Finally, the Agency argues that the change in percentage of awards did not alter the relationship of performance appraisals to awards.
The Union argues that Article 2 (past practice) "takes precedence" over Article 20 "because it was applied 10 times over [the past 10 years] while the language of Article 20 never was applied." Opposition at 14.
The Union similarly contests the Agency's arguments that the Arbitrator otherwise incorrectly interpreted the CBA. Regarding the argument that agreements below the national level may not change the terms of the National Agreement, the Union refers to the Agency regional director's position that performance awards are regional in scope.
Finally, the Union argues that the admitted change in the award percentages is a change in the relationship of appraisals and awards.
In order for an award to be found deficient as failing to draw its essence from the collective bargaining agreement, the excepting party must establish that the award: (1) cannot in any rational way be derived from the agreement; (2) is so unfounded in reason and fact and so unconnected with the wording and purposes of the collective bargaining agreement as to manifest an infidelity to the obligation of the arbitrator; (3) evidences a manifest disregard of the agreement; or (4) does not represent a plausible interpretation of the agreement. National Treasury Employees Union, Chapter 168 and U.S. Department of the Treasury, Customs Service, Port of Baton Rouge, Louisiana, 55 FLRA 237, 240 (1999) citing United States Department of Labor (OSHA) and National Council of Field Labor Locals, 34 FLRA 573, 575-76 (1990) (OSHA).
In this case, the Arbitrator interpreted the CBA as a whole, and concluded that "while Management has the authority to set the amount of the performance awards on an annual basis [under Article 20], that authority is not absolute [and] may not be exercised without regard to other obligations[.]" Award at 8. Specifically, the Arbitrator found that the Agency was obligated to exercise its authority to set the amount of awards in connection with its obligations under three other articles. He stated that in spite of its authority to set the amount of performance awards, the Agency could not ignore the fact that for ten years, the 2 percent/ 1 percent formula "was all but automatic," which he found to be a past practice as addressed by Article 2. Id. at 8-9. He also found that the change ignored the obligation to keep the Union informed of proposed changes, and employees informed about the relationship of performance appraisals to awards, pursuant to Articles 8 and 19, respectively. The Arbitrator concluded that the CBA as a whole requires negotiations over a decision to change a past practice. In addition, he found that Article 8 and Article 19 require that the Union and unit employees should have been given notice of the "apparent new scheme for recognizing employees[.]" Id. at 11. He found that "[b]ased on this fact alone, the Union's grievance must be upheld." Id.
None of the above four reasons from OSHA is present to justify finding the Arbitrator's interpretation of the CBA deficient. Given the past practice, which is not disputed, the Arbitrator's interpretation of the CBA as a whole is plausible and can rationally be derived from the agreement. The Agency's position, to the contrary, would require the Arbitrator to ignore relevant portions of the CBA regarding past practice and notice of proposed changes at the regional level, and would limit his consideration of its conduct to Article 20 only.
Given the Arbitrator's interpretation of the CBA as a whole, his reasoning was not so unfounded and unconnected with the CBA as to find the award deficient. The interpretation of the agreement as a whole to require notice and bargaining over the change in past practice also does not evidence a manifest disregard of the agreement.
Therefore, the award is not deficient in failing to draw its essence from the agreement and we deny the Agency's exception.
B. The Award Is Not Contrary to Law
1. Positions of the Parties
a. Agency Exception
The Agency claims that the award is contrary to the Back Pay Act because, it contends, the award does not provide a specific monetary amount or percentage of salary for awards, and the decision about amounts is left to management. Therefore, the Agency contends, the "but for" requirement of the Back Pay Act has not been met. [ v55 p496 ]
The Union argues that the remedy is consistent with the Back Pay Act, contending that the "past practice delineates the exact amount due" here. Opposition at 19.
The Authority reviews the questions of law raised by an exception that an award is contrary to law de novo. See, e.g., 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, we assess whether the arbitrator's legal conclusions are consistent with the applicable standard of law. In making that assessment, we defer to the arbitrator's underlying factual findings. See, e.g., U.S. Department of Health and Human Services and National Treasury Employees Union, 54 FLRA 1210 (1998) (HHS).
An award of backpay is authorized under the Back Pay Act only when an unjustified or unwarranted personnel action has resulted in the reduction of an employee's pay, allowances, or differentials. See HHS, 54 FLRA at 1218-19.
In applying the Back Pay Act, the Authority must determine whether there has been an unjustified or unwarranted personnel action, and then whether there is a causal relationship between the improper personnel action and loss of pay. See HHS, 54 FLRA at 1219 (Authority clarified that a requirement that the pay loss would not have occurred but for the unwarranted action is not a separate, independent requirement of the Act, but merely amplifies the causal connection requirement of the Act).
A violation of a collective bargaining agreement constitutes an unjustified or unwarranted personnel action under the Act. See U.S. Department of Defense, Department of Defense Dependents Schools and Federal Education Association, 54 FLRA 773, 785 (1998). Here, the Arbitrator found that the Agency changed a past practice of "all but automatic" awards of 2 percent/1 percent, in violation of the CBA. Award at 8-9. He found that the CBA required the Agency to give notice of its intention to reduce the awards and to discuss the proposed change in past practice, as well as to keep employees informed about the relationship of performance appraisals to awards. Further, he determined that the reduction in awards violated the CBA. We defer to the Arbitrator's interpretation of the CBA and the factual finding of a past practice. See HHS. This violation of the CBA constituted an unjustified or unwarranted personnel action.
On de novo review, we are required to determine whether the arbitrator's legal conclusions are consistent with the standard of law to be applied. In this case, the question is whether there is a causal connection between the unjustified or unwarranted personnel action and the loss of pay. We conclude, based on the Arbitrator's factual findings to which we defer, that there is such a causal connection, because the change in award percentage rates directly resulted in lowered annual performance awards, which constituted a loss of pay, allowances, or differentials.
Accordingly, we deny this exception.
C. The Arbitrator Did Not Fail To Conduct A Fair Hearing
The Agency contends that there was no evidence to support the Arbitrator's finding that it reduced the awards in retaliation against the Union.
An award will be found deficient on the ground that an arbitrator failed to provide a fair hearing where a party demonstrates that the arbitrator refused to hear or consider pertinent and material evidence, or that other actions in conducting the proceeding so prejudiced a party as to affect the fairness of the proceeding as a whole. American Federation of Government Employees, Local 1668 and U.S. Department of the Air Force, Elmendorf Air Force Base, Anchorage, Alaska, 50 FLRA 124, 126 (1995).
The Agency's contention that the evidence does not support a finding that the performance awards were reduced in retaliation for lack of cooperation by the Union in bargaining, even if correct, would not establish the absence of a fair hearing. A finding of retaliation is not the basis of the award, and is not necessary to the Arbitrator's finding that the Agency violated the CBA. Therefore, there can be no showing of prejudice to the Agency, so as to affect the fairness of the proceeding.
Accordingly, we deny this exception.
The Agency's exceptions are denied.
Footnote # 1 for 55 FLRA No. 84
The Arbitrator also stated that there "seems to be some basis to conclude that the [performance] awards were cut . . . in retaliation for the Union not agreeing to the pass/fail system during bargaining." Award at 8.