[ v56 p873 ]
56 FLRA No. 146
U.S. DEPARTMENT OF DEFENSE
FEDERAL EDUCATION ASSOCIATION
September 29, 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 James A. Gross 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 (Hockenberry and Popular) 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 Gross sustained a grievance finding that the Agency's failure to pay the grievant her Living Quarters Allowance (LQA) in a timely fashion was an unjustified and unwarranted personnel action pursuant to the Back Pay Act and, therefore, ordered the grievant be paid interest on the amount payable. For the reasons that follow, we conclude that the Agency has not established that the award is deficient under section 7122(a) [ v56 p874 ] of the Statute. Therefore, we deny the Agency's exceptions.
II. Background and Arbitrator's Award
In January 1997, the grievant completed the required form to request her LQA for 1996 and provided it for processing to her personnel office. [n1] After inquiring to the Agency about her LQA in September 1997 and January 1998, and still not having received it, the grievant filed the underlying grievance in this matter in March 1998. The grievant received a partial payment of her LQA in August 1998, and her final payment in October 1999. See Attachment to Exceptions at 2. No interest was paid on either amount. The grievance was never resolved and proceeded to arbitration.
B. Arbitrator's Award
As the parties did not agree on the issue, the Arbitrator framed the issue as:
Did the Agency violate laws, rules and regulations and/or the Collective Bargaining Agreement by failing to pay the [g]rievant her 1996 Living Quarters Allowance Reconciliation in a timely manner and by failing to pay interest on the payment owed the [g]rievant. If so, what shall the remedy be?
Award at 2.
The Arbitrator noted that the case arose in the context of three prior arbitration decisions involving the Agency and the Union. The Arbitrator stated that stare decisis does not apply in the arbitration setting. However, where there are prior arbitration decisions involving the same parties, the same contractual or legislative language, and essentially the same issues and fact patterns, arbitrators will adhere to the conclusions of those awards for the sake of consistency of interpretation unless those awards are clearly wrong and without foundation in logic or fact. Award at 15-16. The three previous awards that the Arbitrator considered were the Bloch, Hockenberry and Popular awards. The Arbitrator found that the questions at issue in those cases were essentially the same as the questions in this case, and that the conclusions reached in the Bloch, Hockenberry and Popular awards were carefully reasoned, thoroughly substantiated and consistent with relevant law. Id. at 16.
The Arbitrator concluded that the thirty-three month delay by the Agency in paying the grievant her LQA was an unjustified and unwarranted personnel action in the context of the Back Pay Act, the Bloch, Hockenberry and Popular awards, and the parties' past practices. Id. at 19. Therefore, the Arbitrator found that since the Agency had committed an unjustified or unwarranted personnel action, the grievant was entitled to recover the LQA she was owed, plus interest.
The Arbitrator also found that the Department of Defense Directive, dealing with the salaries of employees of the Agency's Overseas Dependents' School System, sets forth a biweekly pay cycle and directions on how LQAs are to be determined. As such, although the parties' agreement does not directly deal with the timing of regular pay and allowances such as LQAs, it was clear to the Arbitrator that the Agency had established mutually understood and accepted procedures and practices which include biweekly pay periods and specific directives concerning the amount and payment of LQAs. Id. at 24.
III. Positions of the Parties
A. Agency Exceptions
1. Office of Personnel Management Regulations
The Agency maintains that the Office of Personnel Management (OPM) regulations implementing the Back Pay Act are "ambiguous" and that Arbitrator Gross "would not be disagreeing with OPM definitions if he construed the ambiguous concept of `omission' to exclude the delays in pay involved in this [e]xception." Exceptions at 21. 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 to always include the omission of a "pay action" as the basis of an unjustified or unwarranted personnel action. [n2] Id. As such, the Agency argues that "[t]here is no justification within the [Back Pay Act] for including every pay action or every procedural error as an independent [ v56 p875 ] basis for an [unjustified or unwarranted personnel action]." Id.
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, and violates the sovereign immunity of the United States. [n3] The Agency "does not challenge the [g]rievant's entitlement to receive LQA for the period in question[,]" but contends that the grievant is not entitled to backpay with interest. Exceptions at 4.
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 exclude pay delays, per se, as unjustified or unwarranted personnel actions. According to the Agency, the Back Pay Act generally excluded administrative error and pay delay from the definition of an unjustified or unwarranted personnel action. The Agency contends that the 1978 amendment to the Back Pay Act, which provided for coverage of omissions, did not include administrative error or pay delay as the type of omission that would provide a basis for an unjustified or unwarranted personnel action. The Agency relies on an opinion from the Department of Justice and several court decisions, including Testan, 424 U.S. 392.
The Agency argues that the delay in payment of the LQA to the grievant was an administrative error and "[t]he administrative error did not violate the specific provisions of any law, rule, regulation or CBA[.]" Exceptions at 9 (emphasis in original). As such, the Agency claims the administrative error does not provide a basis for concluding that the pay withholding was unjustified or unwarranted, and therefore the payment of interest is not authorized. Id.
The Agency suggests that the grievant does have a remedy which allows for the recovery of the pay which was erroneously withheld. The Agency cites to the administrative and clerical exception rule (administrative exception rule), promulgated by the Comptroller General, which permits retroactive payment by the Agency, but without interest. Id.
The Agency further contends that the Back Pay Act clearly and unambiguously requires a finding that there was an underlying unjustified or unwarranted personnel action if the grievant is to recover interest on the delayed pay. The Agency contends that the grievant did not suffer a personnel action that deprived her of an entitlement. The Agency asserts that there is no basis for concluding that the administrative delays in making payments, associated with the consolidation of the Agency's payroll function in DFAS, constituted an unjustified or unwarranted personnel action.
The Agency also argues that the Arbitrator's reliance on the prior decision of Arbitrators Bloch, Hockenberry and Popular is misplaced. The Agency asserts that those decisions do not bind it because the principle of stare decisis does not apply to arbitration awards. Id. at 20-21.
A final argument asserted by the Agency is that it has no control over the Defense Finance and Accounting Office (DFAS), because it is "a separate legal entity" and "[o]ne agency cannot determine that the actions of a separately regulated entity are nondiscretionary and mandatory merely because the pay entity is an agent of the employing activity." Id. at 23-24.
The Agency argues that there is no language in the parties collective bargaining agreement which sets forth specific date requirements for when employees must be paid. The Agency contends that by adopting the conclusions of the Bloch, Hockenberry and Popular awards, Arbitrator Gross is inappropriately concluding from disparate sections of the agreement that the requisite specificity has been established to create a mandatory duty to pay, the omission of which, constitutes an unjustified or unwarranted personnel action. Id. at 18 n.6. We construe these contentions as an exception that the award fails to draw its essence from the parties' agreement.
The Agency challenges Arbitrator Gross' award on the basis that there was a lack of evidence of any personnel action that was taken to establish an adverse effect on the grievant and that there is a lack of any evidence regarding whether the pay action had become both nondiscretionary and ministerial.
B. Union Opposition
1. OPM Regulations
The Union did not specifically address this exception in its opposition. [ v56 p876 ]
2. Contrary to Law
The Union states that the Agency's exceptions are merely an attempt to avoid paying interest on a Back Pay Act award for as long as possible. According to the Union, the exception amounts to "mere disagreement with Professor Gross' 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 one more time. Id. 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 "[the Agency] would have the Authority believe [the Agency] never actually has to pay its employees and never has to pay interest on backpay either." Id. at 2. In response, the Union asserts that "[c]ommon sense and the clear intent of the [parties'] Collective Bargaining Agreement are to the contrary." Id. The Union also states that the Back Pay Act contains no such requirement.
The Union asserts that cases and legislative history relied on by the Agency are not persuasive because everything cited was prior to the 1978 and 1988 amendments to the Back Pay Act and/or were not decided based on the Back Pay Act. The Union contends that 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 (DOJ), which takes exception to OPM's overbroad definition of unjustified or unwarranted personnel actions, is flawed for several reasons. First, the Union argues that the DOJ memorandum is merely an opinion and does not constitute authority for the Arbitrator to void a portion of the Code of Federal Regulations. Id. at 4. Second, the Union argues that the DOJ memorandum has nothing to do with the case because it was based on an exemption from liability for wrongful withholding of FICA, a type of provision which does not appear in the Back Pay Act. Id. at 5. Lastly, the Union argues that the DOJ opinion also relies on legislative history and case law prior to the amendments to the Back Pay Act.
In response to the Agency's argument regarding discretionary actions, the Union asserts that the Agency still mischaracterizes the distinction between discretionary and nondiscretionary. The Union states that certifying principal which is clearly due in accordance with the parties' agreement and the Defense Department Overseas Teachers Pay and Personnel Practices Act involves no discretion or exercise of judgment. Moreover, the Union notes that several of the cases relied on by the Agency distinguish between nondiscretionary actions and discretionary actions, and even if the Agency had discretion to exercise in this case, it exercised it when it sent the LQA form to DFAS after the grievant applied for her LQA. Id. at 11.
The Union also disagrees with how the Agency characterizes the Arbitrator's reliance the Bloch, Hockenberry and Popular awards. The Union agrees that generally one arbitrator is not bound by another arbitrator's award. Id. at 6. However, asserts the Union, an arbitrator has the discretion to decide that an earlier award is "binding" and incorporate the reasoning and conclusions found within it. Id.
Finally, the Union disagrees with the Agency's assertion that the Appropriations Clause of the United States Constitution somehow prevents the payment of interest because payments of money are limited to those authorized by Statute. The Union responds to this claim by stating "[t]he statutes authorizing payment to the [g]rievant are obvious-the various Defense Appropriations Acts and the Back Pay Act." Id. at 14.
The Union did not specifically address this exception.
The Union did not specifically address this exception.
IV. Analysis and Conclusions
A. Office of Personnel Management Regulations Implementing the Back Pay Act May Not Be Challenged in this Proceeding
The Agency's arguments regarding the OPM regulations implementing the Back Pay Act, set forth at 5 C.F.R. Part 550, in effect ask the Authority to review and construe this OPM regulation to find that a pay action alone cannot constitute an unjustified or unwarranted personnel action.
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 v. FLRA, 794 F.2d 1013, 1015 (5th Cir. 1986) (Congress did not intend for the Authority to sit in [ v56 p877 ] 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) (DODDS, Bulzbach). 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) (citation omitted). 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, 1218-19 (1998). A violation of a collective bargaining agreement constitutes an unjustified or unwarranted personnel action under the Back Pay Act. See U.S. Department of Defense, Department of Defense Dependents Schools and Federal Education Association, 54 FLRA 773, 785 (1998).
In this case, Arbitrator Gross found a violation of a contractual right to receive timely payment based on the Block, Hockenberry and Popular awards and the past practice of the Agency paying its employees on a biweekly basis. 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 this case, 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 Gross' award in this case is contrary to the Back Pay Act.
As noted in DODEA, Arlington, the administrative or clerical error rule 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). [n4]
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 [ v56 p878 ] 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 that omission or delay is, per se, an unjustified or unwarranted personnel action. Rather, Arbitrator Gross made his finding of an unjustified or unwarranted personnel action based upon the Agency's failure to pay the grievant in a timely manner as established by the parties' past practices. The Authority has previously held that the finding of a past practice by an Arbitrator is a matter of contract interpretation. See U.S. Department of the Navy, Navy Public Works Center, San Diego, California and National Association of Government Employees, Local R12-35, 48 FLRA 679, 684 (1993) (exception, which contended that the arbitrator's rejection of an alleged past practice was contrary to Authority precedent, was denied because it concerned the arbitrator's interpretation and application of the collective bargaining agreement). Therefore, based on Arbitrator Gross' finding of a past practice, the Agency had a contractual obligation to pay the grievant in a timely manner. The Authority has found the violation of such a contractual obligation to constitute an unjustified or unwarranted personnel action. See DODDS, Bulzbach, 56 FLRA at 212. Even if the Arbitrator's finding with respect to past practice did not rise to the level of a contractual violation, his findings regarding delay in payment of the LQA are sufficient to find an unjustified or unwarranted personnel action under the administrative error rule.
We have reviewed the other judicial precedent relied on by the Agency and find those decisions unpersuasive. [n5] As discussed above, Arbitrator Gross found that the Agency's failure to pay the grievant her LQA in a timely manner constituted an unjustified or unwarranted personnel action and that backpay and interest were due the employee. Consistent with the analysis of the above described Comptroller General cases, the grievant is entitled to back pay with interest in the situation presented here. Accordingly, the Agency's reliance on the other cited cases is misplaced.
The Agency also asserts that "[p]rior arbitration decisions are not stare decisis," and that Arbitrator Gross' reliance on the Bloch, Hockenberry and Popular awards is misplaced as "[t]hose decisions do not bind the Agency to perpetuate the errors of those decisions by reading them into [the parties' agreement]. Exceptions at 20-21. However, it is clear from his award that Arbitrator Gross did not just adopt the prior awards based on the principle of stare decisis. He stated that while stare decisis does not apply in the arbitration setting, where there are prior arbitration decisions involving the same parties, the same contractual or legislative language, and essentially the same issues and fact patterns, arbitrators will adhere to the conclusions of those awards for the sake of consistency of interpretation unless those awards are clearly wrong and without foundation in logic or fact. Award at 15-16. As such, it is clear that Arbitrator Gross did not improperly adopt the Bloch, Hockenberry, and Popular awards.
Lastly, the Agency argues that it has no control over DFAS, because it is "a separate legal entity" and "[o]ne agency cannot determine that the actions of a separately regulated entity are nondiscretionary and mandatory merely because the pay entity is an agent of the employing activity." Exceptions at 23-24. This argument seems to imply that DFAS, as opposed to the Agency, somehow is liable to the grievant. However, the Agency provides no substantiation or legal authority for its belief that it is not responsible for ensuring compliance with its contractual obligation to pay its employees in a timely manner. As such, this claim is nothing more than a bare assertion, and is rejected in accordance with Authority precedent. See, e.g., U.S. Department of Transportation, Federal Aviation Administration, Washington, D.C. and National Air Traffic Controllers Association, 55 FLRA 322, 326 (1999); American Federation of Government Employees, Local 3615 and Social Security Administration, Office of Hearings and Appeals, Falls Church, Virginia, 54 FLRA 494, 499 (1998).
Accordingly, we find that the award is not contrary to law and deny the Agency's exception. [ v56 p879 ]
C. The Award Does Not Fail to Draw Its Essence from the Parties' Agreement
In order for an award to be found deficient as failing to draw its essence from the collective bargaining agreement, it must be established 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 purpose of the collective bargaining agreement as to "manifest an infidelity to the obligation of an arbitrator"; (3) does not represent a plausible interpretation of the agreement; or (4) evidences a manifest disregard of the agreement. U.S. Department of the Navy, Naval Surface Warfare Center, Indian Head, Maryland and American Federation of Government Employees, Local 1923, 55 FLRA 596, 599 (1999); United States Department of Labor (OSHA) and National Council of Field Labor Locals, 34 FLRA 573, 575 (1990).
Here, the Arbitrator's conclusion that the Agency has a duty to pay the grievant in a timely manner is supported by the parties' past practice of paying salaries and LQAs at the end of each pay period and by the reasoning found in the Bloch, Hockenberry and Popular awards as adopted by the Arbitrator. The Agency has not identified any contract language that would contradict the Arbitrator's conclusion. As such, the Agency has not demonstrated that the award is implausible, irrational, or in manifest disregard of the parties' collective bargaining agreement. Accordingly, we find that the Agency has not demonstrated that the award fails to draw its essence from the parties' agreement and 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 generally to dispute an arbitrator's findings of fact.
In addition, 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 Gross made the legal determination that the Agency owed interest on the monies owed to the grievant. The Agency's exception is not based on nonfact, but rather on the legal conclusions reached by Arbitrator Gross concerning the applicability of the Back Pay Act and its authorization for the payment of interest. As such, the exception provides no basis to overturn the award.
Consistent with the above, we deny the Agency's exceptions.
Footnote # 1 for 56 FLRA No. 146
Footnote # 2 for 56 FLRA No. 146
an act of commission or an act of omission (i.e., failure to take an action or confer a benefit) that an appropriate authority subsequently determines, on the basis of substantive or procedural defects, to have been unjustified or unwarranted under applicable law, Executive order, rule, regulation, or mandatory personnel policy established by an agency or through a collective bargaining agreement. Such actions include personnel actions and pay actions (alone or in combination).
Footnote # 3 for 56 FLRA No. 146
In its exceptions, the Agency states that the Arbitrator "exceeded his authority, and violated the scope of the [Back Pay Act] when he waived sovereign immunity[.]" Exceptions at 26. We construe this contention as a restatement of the Agency's claim that the award is contrary to law, rather than setting forth a separate exception.
Footnote # 4 for 56 FLRA No. 146
Contrary to the Agency's contention, the failure to pay the grievant the correct rate of pay is not the same as a miscalculation of employees' Law Enforcement Availability Pay as in Bradley v. U.S., 42 Fed. Cl. 333 (1998). See Exceptions at 8-9.
Footnote # 5 for 56 FLRA No. 146
Abramson v. U.S., 42 Fed. Cl. 621 (1998) (addressed whether claim under Fair Labor Standards Act was required to be processed through negotiated grievance procedure instead of raising claim before the court); Brown v. Secretary of the Army, 918 F.2d 214 (D.C. Cir. 1990) (Back Pay Act waiver of sovereign immunity did not authorize prejudgment interest on backpay awards to federal employees denied promotions on basis of discrimination, where there was no proof that employees would have been selected for promotion); Hambsch v. U.S., 857 F.2d 763 (Fed. Cir. 1988) (Claims Court did not have subject matter jurisdiction over employee's claim regarding sick leave); Spagnola v. Stockman, 732 F.2d 908 (Fed. Cir. 1984) (employee detailed to higher-level position well beyond 120-day detail period was not entitled to recover backpay).