U.S. Department of Defense, Education Activity, Germany Region, (Agency) and Federal Education Association, (Union) and
[ v56 p755 ]
56 FLRA No. 126
U.S. DEPARTMENT OF DEFENSE
FEDERAL EDUCATION ASSOCIATION
September 27, 2000
Before the Authority: Donald S. Wasserman, Chairman and Dale Cabaniss, Member.
I. Statement of the Case
This matter is before the Authority on exceptions to an award of Arbitrator Irving N. Tranen 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.
This case is related to three prior arbitration awards (Arbitrators Bloch, Hockenberry and Popular), other issued decisions, and several other arbitration cases pending before the Authority regarding payment of interest on arbitration awards. Two of the underlying arbitration cases were also before the Authority regarding payment of attorney fees pursuant to the Back Pay Act. The payment of interest on the award of backpay was not at issue in those cases. The underlying background is set forth in detail in U.S. Department of Defense, Education Activity, Arlington, Virginia and Federal Education Association, 56 FLRA No. 119 (September 26, 2000) (DODEA, Arlington) and will be referred to where necessary in this decision.
Arbitrator Tranen found that the Agency failed to pay the grievant for a change in the rate of pay to which she was entitled and incorrectly terminated her post allowance. The Arbitrator ordered that the grievant receive backpay plus interest, following the formula established by Arbitrator Popular.
For the reasons that follow, we conclude that the Agency has not established that the award is deficient [ v56 p756 ] under section 7122(a) of the Statute. Therefore, we deny the Agency's exceptions.
II. Background and Arbitrator's Award
The grievant is a teacher at an Agency school in Germany. She completed additional post-graduate education credits which qualified her for a higher salary under the parties' agreement. The grievant submitted the required original transcripts, and the grievant's principal completed the required form and hand-carried the paperwork to the District Superintendent's Office. Approximately 6 weeks later, Agency representatives in Washington notified the grievant that she needed to submit original transcripts. On numerous occasions after that date, the grievant, the principal, the principal's secretary, and the Superintendent's Office informed the Agency's Washington representatives that the original transcripts had been submitted. In the meantime, the Superintendent's Office misplaced the original copies of the transcripts.
The grievant obtained another set of original transcripts and resubmitted them. The Superintendent's Office also found the misplaced original transcripts and faxed them to the Agency's representatives in Washington. The Agency's Washington representatives approved the pay change 9 months after the original submission, and forwarded the paperwork to the Defense Accounting and Finance Service (DFAS). For an additional 2 months, the grievant, the principal and other Agency personnel inquired about the status of the pay increase. Moreover, during this period the grievant's post allowance was also incorrectly terminated.
Finally, the grievant was paid for the immediately preceding school year, but not for an earlier school year that also followed the date when she became entitled to the pay increase. However, the preceding year's pay was short by $132, the post allowance for the preceding year was $98.42 less than required, and no post allowance was paid for the current year. No interest was paid.
After the grievant was unsuccessful in having her pay correctly adjusted, despite numerous inquiries, she filed a grievance. In the grievance, she noted that she had not been correctly paid for 14 months. The Agency granted her grievance to the extent it sought restoration of pay but denied her claim for interest, stating in pertinent part:
You have also asked that interest be paid on monies restored in accordance with the Back Pay Act. The [DFAS] makes the policy for the Department of Defense regarding payment of interest under the Back Pay Act. DFAS has determined that the Back Pay Act does not authorize payment of interest on monies withheld because of processing delays. Because delays in making payments of salary or allowances do not amount [to] 'unjustified or unwarranted personnel actions' within the meaning of the Back Pay Act, they do not come within its coverage.
Memorandum of August 17, 1998, quoted in Award at 9.
When the grievance was not successfully resolved, it was submitted to arbitration.
B. Arbitrator's Award
The parties stipulated the issues for arbitration:
1. Did the Agency violate laws, rules, regulations, past practice, the negotiated agreement, Agency [d]ecisions and/or earlier FLRA/[a]rbitration decisions by failing to pay the [g]rievant in a timely manner for a [pay increase] and termination of [p]ost [a]llowances by failing to pay interest on the backpay? If so what shall the remedies be?
2. In regard to [the grievant]:
(a) Did the Agency fail to take necessary actions to timely and properly pay the [g]rievant? If not, is interest due and if so, what are the interest accrual dates?
(b) Did the Agency's failure to take the necessary actions constitute an [u]nwarranted or [u]njustified [p]ersonnel [action]?
(c) Should the Agency be forced to comply with the Popular arbitration?
(d) Should the Agency be forced to pay correct backpay and/or interest in accordance with the Back Pay Act, on post allowance that was incorrectly terminated, or on partial payments of backpay, accompanied by an audit demonstrating correct payment?
(e) Should the [A]rbitrator retain jurisdiction in order to hear a motion for attorneys' fee and costs?
Award at 2-3.
Arbitrator Tranen stated that Arbitrator Bloch had considered the Back Pay Act, Comptroller General Decisions, and the Federal Personnel Manual and concluded that the employees in the Bloch award suffered [ v56 p757 ] delays in payments of monies unquestionably owed to them as a result of "'unjustified or unwarranted personnel actions.'" Id. at 19-20. Arbitrator Tranen noted that Arbitrator Bloch's opinion dealt with, among other things, the grievance of a teacher who had completed sufficient course work to be found immediately eligible for a pay increase. In that case, the teacher had presented the necessary paperwork to the school principal, but was not paid for almost a year. Arbitrator Bloch found that the teacher was entitled to backpay.
Arbitrator Tranen also found that Arbitrators Hockenberry and Popular followed the Bloch award and held that although interest was due, as a general rule, on backpay, questions of interest had to be determined on a case-by-case basis. Arbitrator Tranen noted that the Bloch award was not appealed, but that the Hockenberry and Popular awards were appealed on attorney's fees grounds. The Arbitrator held that Arbitrator Bloch's finding that delays, sometimes extensive, of payment of monies unquestionably owed to them fell within the withdrawal or reduction of the Grievant's pay criterion of the Back Pay Act. Award at 21-22. The Arbitrator also noted that the Authority, in affirming the Popular arbitration fee award, held that the failure to pay bargaining unit members in a timely manner fell within the withdrawal or reduction of the grievant's pay criterion of the Back Pay Act. Id. at 22.
Arbitrator Tranen noted that the Agency did not base its defense on the lack of intent to deny backpay but rather asserted that the delay in payment of approximately 2 years "is not sufficient to establish" an unjustified or unwarranted personnel action." Id. Arbitrator Tranen concluded, as per Arbitrator Bloch, that when there was delay of payment caused by the failure to perform a required ministerial act, backpay was available as a remedy and interest should be paid.
Arbitrator Tranen found the Agency's failure to appeal the three prior arbitration awards dealing with this issue to be telling and of vital importance. Arbitrator Tranen concluded that the Agency violated laws, rules, regulations and/or the parties' agreement when delays caused the grievant to fail to receive her correct salary and post allowance. These violations, he concluded constituted an unjustified or unwarranted personnel action. Arbitrator Tranen therefore ordered the Agency to pay the grievant backpay and interest.
III. Positions of the Parties
A. Agency Exceptions
1. OPM Regulations
The Agency maintains that the OPM regulations implementing the Back Pay Act are invalid to the extent they overreach the scope of the Act. The Agency contends that the definition of an unjustified or unwarranted personnel action promulgated in OPM's regulations at 5 C.F.R. § 550.803 expands the scope of the Back Pay Act beyond Congressional intent. [n1] The Agency asserts that there is no justification within the Act for OPM's extension of the definition to pay actions as an independent basis for finding an unjustified or unwarranted personnel action.
Moreover, the Agency argues that OPM guidance is susceptible to a permissive interpretation that pay actions may be personnel actions under the Back Pay Act. The Agency asserts that while some pay actions may be personnel actions, routine pay actions do not constitute personnel actions. Similarly, the Agency contends that to the extent that it holds that a pay action alone may be an unjustified or unwarranted personnel action, OPM guidance overextends the Back Pay Act. The Agency asserts that Arbitrator Tranen misunderstood this argument. The Agency argues that "Congress did not contemplate computer failures or flawed consolidated payroll offices" when it enacted the Back Pay Act. Exceptions at 11. According to the Agency, in this case, there is no dispute that the grievant is owed the monies sought and, therefore, this case does not concern an unjustified or unwarranted personnel action but actions for unpaid or delayed salary.
2. Contrary to Law
The Agency asserts that the Arbitrator's award exceeds the scope of the Back Pay Act, 5 U.S.C. § 5596, violates the sovereign immunity of the United States, and requires the Agency to use its appropriations for purposes for which they were not appropriated. [ v56 p758 ]
The Agency argues that the Back Pay Act is a limited waiver of sovereign immunity that must be narrowly construed. As such, the Agency asserts, a narrow construction of the Back Pay Act would preclude treating pay delays, per se, as unjustified or unwarranted personnel actions. The Agency contends that the 1978 amendment to the Back Pay Act, which permits backpay liability for failure to act, i.e., omissions, did not include administrative errors or pay delays as the type of omissions that would provide a basis for finding an unjustified or unwarranted personnel action. The Agency relies on an opinion from the Department of Justice and several court decisions, including United States v. Testan, 424 U.S. 392 (1976).
The Agency contends that the Back Pay Act clearly and unambiguously requires a finding that there was an underlying unjustified or unwarranted personnel action. In this case, according to the Agency, there is no evidence of any personnel action that was not taken or that was taken which was unjustified or unwarranted and that resulted in the withholding of pay. According to the Agency, there was "no question about the underlying intent of management to pay the grievant monies owed." Exception at 16. The Agency contends that the grievant did not suffer a personnel action that had deprived her of an entitlement. Instead, what is at issue, according to the Agency, is "when will [m]anagement honor its contract--[w]hen will the payment arrive." Id. The Agency asserts that the Back Pay Act was not enacted to deal with this class of concerns. The Agency further asserts that there is no basis for concluding that administrative delays in making payments, associated with the consolidation of the Agency's payroll function in DFAS, constituted an unjustified or unwarranted personnel action.
3. Exceeds Authority
The Agency contends that Arbitrator Tranen did not address its argument that pay actions are different from personnel actions. According to the Agency, the Back Pay Act addresses only "personnel actions," and OPM's extension of that term to include pay actions is not consistent with the Act unless it is limited to pay actions with respect to which all discretionary acts have been completed for both the underlying personnel action and the pay action. The Agency argues that cases where the Comptroller General has authorized automatic promotions must be limited to their facts and do not create a general rule that personnel actions can be ministerial. The Agency contends that until the last discretionary act has occurred, an action may not be deemed ministerial, and the pay actions in the instant grievance were not ministerial.
The Agency argues that determining the legal sufficiency of a personnel action leading to a pay action and certifying a payment based on that personnel action are inherently discretionary acts. According to the Agency, the last discretionary personnel action (including a pay action) has not occurred "until the necessary certifications, pay audits and legal standards have been analyzed and decided and that the final decision necessary to be made to convert the action into a ministerial function has been taken." Exceptions at 18-19. [n2]
The Agency challenges Arbitrator Tranen's award on the basis that there was a lack of evidence of any personnel action that was taken, a lack of any evidence regarding whether the pay action had become ministerial, and that he did not take any evidence as to what the parties intended by the agreement regarding timely payment.
B. Union Opposition
1. OPM Regulations
The Union did not specifically address this exception in its opposition.
2. Contrary to Law
The Union states that the Agency's exception is merely an attempt to avoid paying interest on Back Pay Act awards for as long as possible. According to the Union, the exception amounts to a "mere disagreement with the clear meaning of and Arbitrator Tranen's studied interpretation and application of the Back Pay Act." Opposition at 4. The Union asserts that this disagreement does not constitute a basis for reviewing the award and that the exception is nothing but an effort to relitigate the issue. As such, the Union contends, the exception should be summarily dismissed.
As to the Agency's contention that there is no established day on which the Agency is required to pay employees, the Union states that a "past practice" exists of regularly scheduled pay days after the work is performed. The Union asserts that if the Agency deviates from this practice, then it violates the parties' agreement. The Union points to Arbitrators Bloch's, Hockenberry's and Popular's awards which "leave no doubt" about this requirement. Id. at 5. [ v56 p759 ]
The Union asserts that cases relied on by the Agency do not pertain to the matter at issue and were not decided based on the Back Pay Act. According to the Union, the Back Pay Act and 5 C.F.R. Part 550 are ambiguous only to the Agency. The Union further asserts that the Agency's reliance on an opinion issued by the Department of Justice is misplaced because that opinion does not constitute authority on which Arbitrator Tranen could base his decision.
In response to the Agency's argument regarding discretionary actions, the Union states that certifying sums clearly owed in accordance with the parties' agreement and the Defense Department Overseas Teachers Pay and Personnel Practices Act involves no discretion or exercise of judgment.
3. Exceeds Authority
The Union did not specifically address this exception in its opposition.
The Union did not specifically address this exception in its opposition.
IV. Analysis and Conclusions
A. Office of Personnel Management Regulations Implementing the Back Pay Act May Not Be Challenged in this Proceeding
The effect of the exception regarding the OPM regulations implementing the Back Pay Act, set forth at 5 C.F.R. Part 550, is to request that the Authority review and nullify those regulations.
Section 7105 of the Statute enumerates the powers and duties of the Authority, none of which relate to passing judgment on rules or regulations that OPM or any other Federal agency has enacted. See 5 U.S.C. § 7105; American Federation of Government Employees, AFL-CIO, National Council of Grain Inspection Locals v. FLRA, 794 F.2d 1013, 1015 (5th Cir. 1986) (Congress did not intend for the Authority to sit in review of other agencies' regulations). If the Agency wishes to challenge the validity of the OPM regulations implementing the Back Pay Act, the Authority is not the correct forum. See U.S. Department of Defense, Dependents Schools, Bulzbach Elementary School, Bulzbach, Germany and Federal Education Association, 56 FLRA 208, 212 (2000). If the validity of these OPM regulations is in question, the issue must be raised by an interested party in another forum.
B. The Award Is Not Contrary to Law, Regulation or Sovereign Immunity
When a party's exception challenges an arbitration award's consistency with law, rule, or regulation, the Authority reviews the questions of law raised in the exception and the arbitrator's award de novo. See National Federation of Federal Employees, Local 1437 and U.S. Department of the Army, Army Research, Development and Engineering Center, 53 FLRA 1703, 1709 (1998). When applying a de novo standard of review, the Authority assesses whether an arbitrator's legal conclusions are consistent with the applicable standard of law, based on the underlying factual findings. Id. at 1710. In making that assessment, the Authority defers to the arbitrator's factual findings. See National Treasury Employees Union, Chapter 50 and U.S. Department of the Treasury, Internal Revenue Service, Carolina District, Charlotte, North Carolina, 54 FLRA 250, 253 (1998).
Under the Back Pay Act, 5 U.S.C. § 5596(b)(1)(A)(i), an award of backpay is authorized only when an arbitrator finds that: (1) the aggrieved employee was affected by an unjustified or unwarranted personnel action; and (2) the personnel action resulted in the withdrawal or reduction of the employee's pay, allowances or differentials. See U.S. Department of Health and Human Services and National Treasury Employees Union, 54 FLRA 1210, 1218 (1998). Here, Arbitrator Tranen made those findings. As discussed below, this is a sufficient basis on which to determine that an unjustified or unwarranted personnel action occurred.
The Agency's Back Pay Act arguments in this case are encompassed by the Back Pay Act arguments made by it in DODEA, Arlington. Here, as there, three interrelated and overlapping arguments are being made: (1) the Back Pay Act does not come into play where the obligation to pay the underlying amount is not in question; (2) delay or omission does not fall under the Back Pay Act unless there is some law, rule or regulation that makes the payment nondiscretionary and by a specific date; and (3) omission or mere delay is not per se an unjustified or unwarranted personnel action.
In the present matter, we have examined the Agency's Back Pay Act arguments, the legal precedent cited in support thereof, and the underlying arbitral record. We conclude, for the same reasons set forth in DODEA, Arlington, that the Agency has not shown that Arbitrator Tranen's award in this case is contrary to the Back Pay Act. [ v56 p760 ]
As noted in DODEA, Arlington, the administrative or clerical error rule is set forth in Comptroller General precedent. That rule specifically recognizes that an error or delay in making payment can constitute an unjustified or unwarranted personnel action under the Back Pay Act. Moreover, the rule recognizes that such error or delay may constitute an unjustified or unwarranted personnel action even where the obligation to pay the underlying amount is not in question, and even where there is no nondiscretionary law, rule, or regulation mandating action in accordance with specific criteria or by a specific date. The Back Pay Act has been amended to provide that omissions can constitute an unjustified or unwarranted personnel action, and OPM regulations and Comptroller General precedent permitted omissions to constitute an unjustified or unwarranted personnel action even before the statute was amended. See Turner-Caldwell, 61 Comp. Gen. 408, 411 (1982).
The basic administrative error rule is set forth in Butler, 58 Comp. Gen. 51, 53 (1978), and is discussed in the context of being an exception to the general rule that personnel actions may not be retroactive so as to increase employee compensation. The administrative error rule identifies three situations when an administrative error creates an unjustified or unwarranted personnel action under the Back Pay Act, thereby permitting a personnel action to be retroactive, when the administrative error: (1) prevents a personnel action from being effected as originally intended; (2) results in a nondiscretionary administrative regulation or policy not being carried out; or (3) deprives an employee of a right granted by statute or regulation. Later Comptroller General decisions confirm explicitly that these administrative errors constitute unjustified or unwarranted personnel actions under the Back Pay Act. See Bishop, Comp. Gen. Decision No. B-206,181 (May 5, 1982) (unpublished).
Also, as in DODEA, Arlington, there is no arbitral finding in the present case that omission or delay is, per se, an unjustified or unwarranted personnel action. Rather, Arbitrator Tranen made his finding of an unjustified or unwarranted personnel action based upon the Agency's failure to carry out what Arbitrator Tranen determined to be a ministerial act, i.e., the failure to make the payments that the Agency acknowledged to be owed to the grievant. As noted in DODEA, Arlington, in its discussion of the administrative error rule, such conduct is sufficient to constitute an unjustified or unwarranted personnel action under the Back Pay Act. See DODEA, Arlington, slip op. at 18-19, citing Bishop. Additionally, the Agency's arguments are even less persuasive where, as here, the Agency has unilaterally terminated an ongoing entitlement (here, the grievant's post allowance) to which the Agency acknowledges the grievant was entitled.
Accordingly, we find that Arbitrator Tranen's award is not contrary to law and deny the Agency's exception.
C. The Arbitrator Did Not Exceed His Authority
An arbitrator exceeds his or her authority when the arbitrator fails to resolve an issue submitted to arbitration, resolves an issue not submitted to arbitration, disregards specific limitations on his or her authority, or awards relief to persons who are not encompassed within the grievance. U.S. Department of Defense, Army and Air Force Exchange Service and American Federation of Government Employees, (Worldwide Consolidated Bargaining Unit), 51 FLRA 1371, 1378 (1996). Nevertheless, "the Authority, like the Federal courts, will accord an arbitrator's interpretation of a submission agreement and an arbitrator's formulation of the issue submitted in the absence of a stipulation the same substantial deference accorded an arbitrator's interpretation and application of the collective bargaining agreement." Air Force Space Division, Los Angeles Air Force Station, California and American Federation of Government Employees, AFL-CIO, Local 2429, 24 FLRA 516, 518-19 (1986).
In this case, as relevant here, the issues stipulated by the parties were whether the Agency violated laws, rules, regulations, past practice, the negotiated agreement, Agency decisions and/or earlier FLRA/arbitration decisions by failing to pay the grievant in a timely manner for a pay lane change and termination of post allowance by failing to pay interest on the backpay. Therefore, it is apparent that the issues, as stipulated, did not specifically concern whether pay actions are separate from personnel actions.
Arbitrator Tranen's interpretation of the issues before him--focusing on the grievant's salary change, termination of her post allowance and payment of interest on the monies owed her--was entirely reasonable. His decision is directly responsive to the issues as stipulated by the parties. Accordingly, the Arbitrator did not fail to resolve an issue submitted to arbitration. Based on the foregoing, there is no basis on which to conclude that the Arbitrator exceeded his authority. See National Federation of Federal Employees, Local 1437 and U.S. Department of the Army, U.S. Army Armament Research Development and Engineering Center, Picatinny [ v56 p761 ] Arsenal, New Jersey, 55 FLRA 1166, 1170-71 (1999). Accordingly, we deny the exception.
D. The Award Is Not Based on a Nonfact
To establish that an award is based on a nonfact, the appealing party must demonstrate that a central fact underlying the award is clearly erroneous, but for which a different result would have been reached by the arbitrator. See, e.g., U.S. Department of the Air Force, Lowry Air Force Base, Denver, Colorado and National Federation of Federal Employees, Local 1497, 48 FLRA 589, 593 (1993); General Services Administration, Region 2 and American Federation of Government Employees, Local 2431, 46 FLRA 1039, 1046-47 (1992). However, this basis for finding an arbitration award deficient does not permit the appealing party to dispute an arbitrator's findings of fact.
Moreover, an arbitrator's legal conclusions cannot be challenged on the grounds of nonfact. See, e.g., National Federation of Federal Employees, Local 561 and U.S. Department of the Army, U.S. Army Corps of Engineers, Mobile, Alabama, 52 FLRA 207, 210-11 (1996); U.S. Department of the Navy, Philadelphia Naval Shipyard and Philadelphia Metal Trades Council, 39 FLRA 590, 605 (1991). Arbitrator Moore made the determination that the Agency owed interest on the monies owed the employees under the twelve grievances. The Agency's exception is not