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59 FLRA No. 74
OF GOVERNMENT EMPLOYEES
DEPARTMENT OF VETERANS AFFAIRS
ASHEVILLE, NORTH CAROLINA
November 28, 2003
Before the Authority: Dale Cabaniss, Chairman, and
Carol Waller Pope and Tony Armendariz, Members
I. Statement of the Case
This matter is before the Authority on an exception to an award of Arbitrator Robert B. Hoffman filed by the Union under § 7122(a) of the Federal Service Labor-Management Relations Statute (the Statute) and part 2425 of the Authority's Regulations. The Agency filed an opposition to the Union's exception.
The Arbitrator denied a grievance alleging that the Agency violated the agreement by refusing to implement and then rescinding Issue 93, an awards incentive program.
For the following reasons, the Union's exception is denied.
The Union filed a grievance when the Agency failed to implement Issue 93, "Guidelines for Implementation of Recruitment and Retention Incentives", an awards program created by a committee of Agency and Union representatives. Award at 2. The Union alleged that the Agency violated the awards plan as well as the employees' contractual rights. Id. at 4.
In 2001, a team, formed to address the retention and recruitment of nurses, drafted Issue 93. Id. Issue 93 provided "special contribution awards" based upon preceptorship work, longevity in the VA system, perfect quarterly attendance, and obtaining a higher degree in nursing. Id. at 2-3. The Director of Human Resources (Director), who is in charge of incentive awards for the Agency, testified that he did not learn about Issue 93 until February of 2002, at which time he contacted VA Headquarters for an opinion on the legality of the awards called for in Issue 93. Id. at 3.
While the Director waited for guidance from VA Headquarters, the Human Resources Department informed the official in charge of Issue 93 that the general awards program was already in effect and that a VA Directive specifically precluded awards for good attendance like those called for in Issue 93. Id. As a result, some attendance awards were not approved. Id.
As part of the review conducted by VA Headquarters, Office of Personnel Management (OPM) notified the Agency that there was no legal basis for Issue 93 because 5 C.F.R. § 451.101 only permits awards for "exemplary performance." Id. In April 2002, at a meeting with the Union, management advised the Union that it thought the program was illegal based on the OPM opinion. Id. at 4. The Union, in response, filed a grievance in May 2002, on behalf of employees who did not receive their awards. Id. In June 2002, the Agency advised the Union that it intended to rescind Issue 93. Id. The grievance was not resolved and proceeded to arbitration.
The Arbitrator framed the issues as,
Whether the Union complied within the time provision in the parties' collective bargaining agreement ("CBA") for filing a grievance. If the grievance is timely, the issue is whether the Agency violated this agreement when it refused to pay employees who had qualified for the awards and later rescinded the plan. If so, what would be the remedy?
Award at 2.
After hearing the parties' timeliness arguments, the Arbitrator found that the grievance was timely filed under the contract and proceeded to the merits of the case. [n1] The Union argued that the Agency created the policy and agreed to it and then violated the law by refusing to implement the binding policy. Id. at 5. The Union refers to Issue 93 as a policy, but the Arbitrator never determined whether Issue 93 was an Agency policy or a negotiated provision and only referred to Issue [ v59 p462 ] 93 as an awards program. Award at 11, 12. The Union also contended that the law and the regulations governing awards, 5 U.S.C. §§ 4501-4506 and 5 C.F.R. § 451.102-107, contain undefined standards with intentionally broad terms that do not specify the types of contributions that warrant awards. Id. at 6. Finally, the Union asserted that Issue 93 awards are justifiable under the law and regulations. Id.
The Agency argued that it had a right to rescind Issue 93 because it conflicted with law, regulations, the agreement, and VA policy. Id. at 7. The Agency explained that the regulations permit agencies to grant awards when an employee's efforts contribute to the efficiency, economy, or improvement of operations, when an employee acts in the public interest or when an employee has a certain performance rating. Id. at 7-8. According to the Agency, awards under the law and regulations must relate to performance, and because Issue 93 awards did not relate to performance, they were contrary to law. Id. at 8.
The Arbitrator examined 5 U.S.C. §§ 4501-4506, which state that agencies may grant awards for the "honorary recognition of an employee." Award at 11. The implementing regulations state that agencies may grant awards for ". . . [a] superior accomplishment . . . or other personal effort that contributes to the efficiency, economy, or other improvement of Government operations . . .; a special act . . . in the public interest . . .; or Performance as reflected in the employee's most recent rating of record . . . ." Id., (citing 5 C.F.R. § 451.104(a)(1)-(3)). The Arbitrator found that any awards program an agency adopts must comply with the standards in the law and regulations. Id.
The Arbitrator also found that the Authority has concluded that "both the incentive law and the regulations `require an award be based on performance or activity by an employee.'" Id. at 12 (quoting NAGE, Local R1-109, 53 FLRA 271 (1997) (Local R1-109)). The Arbitrator clarified that an employee's performance must be superior to warrant the granting of an award. Id.
The Arbitrator examined each type of award provided for in Issue 93. The Arbitrator, considering the award for nonuse of sick leave, found Authority precedent stating, "[A]lthough nonuse of sick leave may in some instances be traceable to an employee's effort . . . it is not reasonable to conclude that nonuse of sick leave results from such efforts in all instances." Id. at 13 (quoting Local R1-109, 53 FLRA at 274). The Arbitrator concluded that a healthy employee is expected to come to work, thus, not using sick leave does not constitute a "superior accomplishment" and is not a "personal effort." Award at 13.
The Arbitrator found that the award created for preceptorship recognized employees merely for their selection as preceptors. Id. Although employees with excellent qualifications and work ethic may be selected to perform preceptor work and preceptors may have an increased workload, the Arbitrator found that the mere assignment to act as a preceptor did not constitute a superior accomplishment. Id.
Third, the Arbitrator recognized that rewarding longevity may be important for morale, but found that the award was not connected to performance because there are many factors which may affect longevity. Id. at 14.
Finally, the Arbitrator examined the award granting step increases for obtaining a higher degree. Id. The Arbitrator explained that this award created a system where an employee would receive a quality step increase (QSI). [n2] Id. The Arbitrator found Authority precedent stating that a QSI may only be granted to recognize an employee for an outstanding performance and the attainment of an educational degree did not warrant the granting of a QSI because it is "unrelated to an outstanding performance rating." Id. (citing International Brotherhood of Police Officers, 47 FLRA 397, 403 (1993) (IBPO)).
Thus, the Arbitrator determined that the four types of awards created by Issue 93 were contrary to law and regulation. Id. at 15. Based on his determination, the Arbitrator denied the grievance.
III. Positions of the Parties
A. Union's Exception
The Union makes the same arguments in its exceptions filed with the Authority as it made to the Arbitrator. The Union argues that the Arbitrator incorrectly interpreted the regulations and that the award is contrary to the binding policy adopted by the Agency. Exception at 3. The Union alleges, "[T]he Arbitrator must be legally correct that this policy is inconsistent with controlling law or the Award is inconsistent with the policy." [ v59 p463 ] Id. at 4. The Union asserts that the Arbitrator's interpretation of the regulations was too narrow and "should be rejected as a basis for invalidating an otherwise binding agency awards policy." See id. The Union also contends that the Agency properly created Issue 93 and then violated it by refusing to provide awards pursuant to its terms and attempting to rescind awards already granted. Exception at 3.
Although OPM may not endorse some of the approaches set forth in Issue 93, the Union argues that there is no authority to support the finding that the policy is contrary to law. Id. at 4. The Union explains that Authority precedent only questions an agency's authority to execute awards programs, not whether the programs were contrary to law. Id. The Union states, "[t]here is a difference between being specially authorized by a statute and being forbidden by a statute[,]" in other words, just because the awards were not specifically authorized does not mean they are prohibited. See id. at 6. The Union also alleges that the standards in the law and regulations are vague and undefined and that the awards created in Issue 93 are justifiable under the law and regulations. Id. at 5.
The Union argues that the law and regulations governing awards, 5 U.S.C. §§ 4501-4506 and 5 C.F.R. §§ 451.102-107, allow agencies to grant awards to an employee "who makes a contribution to the efficiency, economy or other improvement of the [Agency][,]" and that the terms in the law and the regulations are broad by intent and the standards for awards are not defined. Exception at 4-5. The Union contends that by creating awards in Issue 93, the Agency imputed meaning to the vague language of the law and regulations and determined what types of acts satisfy those standards. Id.
The Union also argues that all of the awards created in Issue 93 comport with the law and regulations. In that regard, only the best nurses are selected under established guidelines to be preceptors; longevity recognizes incremental contributions by employees who have performed well over a period of time; good attendance is uniquely important for nurses because it is difficult to cover the work of an absent nurse; and obtaining a higher degree indicates that the employee has achieved additional skills. Id. at 5-6.
B. Agency's Opposition
The Agency disputes the Union's argument that Issue 93 was properly implemented by the Agency. The Agency contends that Issue 93 was never signed by the Director of the Medical Center and therefore was never an official policy. Opposition at 3.
The Agency argues that Issue 93 is contrary to law and therefore cannot be implemented. Id. at 4. The Agency contends that Chapter 45 of title 5 of the United States Code and OPM regulations on awards establish policy that must be followed and preempt any agency policies that are contrary. Id. at 2. The Agency maintains that any policy found to be improper under the law or regulations is contrary to law and points out that Issue 93 is inconsistent with Authority precedent and Comptroller General opinions which have held that similar programs are inconsistent with the law. Id. at 2-3, 5. As such, the Agency argues that it had an obligation to invalidate Issue 93 because it was contrary to law. Id. at 4.
The Agency alleges that the Union argues both that the Arbitrator interpreted the regulations beyond the plain language and that the language in the law and regulations is vague and undefined. Id. at 3. According to the Agency, the Arbitrator utilized Authority precedent to assign meaning to the regulations and establish the appropriate legal standards. Id.
Finally, the Agency asserts that the Union is incorrect in its contention that the awards created in Issue 93 are allowed because there is nothing expressly prohibiting the awards created in Issue 93. Id. at 4. In fact, the Agency argues, the Federal government may only act when it has the express authority to do so and its actions are not limited only by express prohibitions in laws and regulations. Id.
IV. Analysis and Conclusions
The Union argues that the award is contrary to law because the Arbitrator incorrectly concluded that Issue 93 did not comply with law and regulations governing awards. When an exception alleges that an award is contrary to law, the Authority reviews the question of law and the Arbitrator's award de novo. NTEU, Chapter 24, 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. NFFE, Local 1437, 53 FLRA 1703, 1710 (1998). In making that assessment, the Authority defers to the arbitrator's underlying factual findings. Id.
A. The law and regulations governing awards.
Employee awards are governed by federal law and regulations. According to 5 U.S.C. §§ 4503 and 4505(a), agencies may grant employees awards for acts that contribute to the efficiency, economy, or other improvement of operations, or are in the public interest as well as awards for performance ratings that reach a certain level. OPM implementing regulations regarding [ v59 p464 ] awards programs state that an agency may grant an award for a superior accomplishment or personal effort contributing to the improvement of the operations of the federal government, for a special act in the public interest, or for an employee's most recent performance rating. 5 C.F.R. § 451.104. The law and regulations do not provide definitions for "superior accomplishment" or "personal effort."
Under principles of statutory interpretation, terms that are undefined in a statute or its legislative history are understood to have their ordinary meaning, which includes dictionary definitions. AFGE, Local 1827, 58 FLRA 344, 345-46 (2003) (citing Koyo Seiko Co., Ltd. v. United States, 36 F.3d 1565, 1571 n.9 (Fed. Cir. 1994)); ACT, Razorback Chpt. 117, 56 FLRA 427, 430 (2000); Columbia Power Trades Council, 54 FLRA 189, 193 (1998). The Authority has found, "[a]ccomplishment is defined as `the act of accomplishing' and `accomplish' is defined as `to execute fully' or `perform, achieve[.]' `Effort' is defined as the `conscious exertion of physical or mental power[.]'" See Local R1-109, 53 FLRA at 274 (citing Webster's Third New International Dictionary (1986) (Unabridged)). Given these dictionary definitions, the Authority concluded that the law and regulations require that an award be based on an employee's performance or activity. Id.
B. The awards created in Issue 93 are contrary to law because they are not performance based.
When reviewing the award, the Authority defers to the Arbitrator's findings of fact. NFFE, Local 1437, 53 FLRA at 1710. The Arbitrator decided that none of the awards in Issue 93 were performance based. Award at 13-15. The Arbitrator concluded that the award for the nonuse of sick leave did not constitute a "superior accomplishment" or a "personal effort." Id. at 13. The Arbitrator found that the award for preceptor work was based on the assignment as a preceptor and did not recognize an employee's "superior accomplishment." See id. The Arbitrator determined that the award for longevity was not connected to an employee's performance or accomplishments as many factors lead to longevity. Id. at 14. Finally, the Arbitrator found no correlation between obtaining a higher degree and an employee's job performance. Id.
According to Authority precedent, a proposal to continue to implement an incentive awards program rewarding employees for the nonuse of sick leave was inconsistent with law and regulations. [n3] Local R1-109, 53 FLRA at 273. The Authority found that awards must be performance based and that if the Agency were required to grant an incentive award based on an employee not becoming sick, the Agency would be required to "grant an incentive award to an employee on a basis that does not involve performance or activity by that employee." See id. Based on the Arbitrator's factual finding that the award for the nonuse of sick leave did not constitute a "superior accomplishment" or a "personal effort" and Authority precedent, the portion of Issue 93 creating awards for the nonuse of sick leave is contrary to the relevant law and regulations. See id.; Award at 13.
The Arbitrator found that the step increases granted under Issue 93 to employees who earned a higher degree in nursing were not based on normal step increases and therefore must meet the definition of a QSI. Award at 14. The Authority has held that a proposal requiring an agency to grant a QSI to employees who obtain higher degrees was nonnegotiable because it was contrary to government regulations. IBPO, 47 FLRA at 403. The Authority found that QSIs, authorized in 5 C.F.R. § 531.504, may be granted to recognize "high quality job performance" and could not, consistent with regulations, be granted for educational attainment. See id. Given the Arbitrator's factual findings, the regulations governing QSIs and Authority precedent, the portion of Issue 93 granting QSIs to employees who earn higher degrees is contrary to the relevant law and regulations. See id.; Award at 14.
The Arbitrator found that Issue 93 rewarded employees for being selected to perform preceptor work and not for an employee's work as a preceptor. Award at 13. The Union, in its exceptions, does not deny that the award is for the selection, but rather justifies the award by explaining the additional contributions and the importance of preceptors and explaining that no employee is guaranteed to be selected. Exception at 5. The Authority has found that awards must be based on an employee's performance or activity in order to comply with the law and regulations governing employee awards. See Local R1-109, 53 FLRA at 274. We conclude that the Arbitrator's factual finding that the award recognizes an employee for being selected to act as a preceptor, requires that we find the award is not based on an employee's performance or activity. Therefore, the portion of Issue 93 that rewards employees who are selected to perform preceptor work is contrary to the relevant law and regulations. See id. [ v59 p465 ]
When examining the longevity award created in Issue 93, the Authority must determine if the award recognizes an employee's performance or activity. Id. The Union argues that this award recognizes an employee's incremental contributions and performance over a period of time. Exception at 5. The Union does not present any evidence that an employee who continues to be employed by the Agency and comes to work without performing in a superior way would not receive this award. The Union also does not contest the Arbitrator's finding that the award is not connected to an employee's performance or accomplishments. Award at 14. Thus, we conclude that this award does not recognize an employee's superior accomplishment or personal activity. [n4] Thus, that portion of Issue 93 creating an award for longevity is contrary to the relevant law and regulations. See Local R1-109, 53 FLRA at 274.
Finally, it is necessary to address the Union's statement, "[t]here is a difference between being specially authorized by a statute and being forbidden by a statute." See Exception at 6. The Authority has held "an expenditure of appropriated funds for a particular purpose is permitted only if there is a statutory or regulatory authority for such expenditure." See NTEU, 58 FLRA 611, 614 (2003) (Chairman Cabaniss concurring) (quoting Downs v. Office of Personnel Management, 69 F.3d 1141, 1143 (Fed. Cir. 1995) ("The United States Constitution limits payments of monies from the Federal Treasury to those authorized by statute.")) (citing Office of Personnel Management v. Richmond, 496 U.S. 414, 416 (1990)); AFGE, Local 1978, 56 FLRA 894, 896 (2000) (AFGE). The law and regulations governing awards only authorize awards for an employee's superior performance or activity, and the Union does not cite to any other authority that would permit an agency to make an expenditure for awards such as those created in Issue 93. 5 U.S.C. §§ 4503 and 4505; 5 C.F.R. § 451.103; Local R1-109, 53 FLRA at 274. In addition, the OPM regulations limit the Agency's discretion to giving awards for performance based activities and the Agency may not take action inconsistent with the regulations. See cf. AFGE, 56 FLRA at 898 (holding that proposals granting pay retention to employees to whom OPM did not, in 5 C.F.R. 536, grant pay retention were not within the duty to bargain because, "OPM regulations do not authorize pay retention for employees affected by [the proposals]."); Patent Office Prof'l Ass'n, 53 FLRA 625, 649 (1997) (stating, "[t]he Authority has found proposals to be inconsistent with a regulation where the regulation states an express standard governing the exercise of an agency's authority, and the proposal either expanded or contracted that regulatory standard.").
Based on the foregoing, we conclude that the Arbitrator correctly found that the four types of awards set forth in Issue 93 were contrary to law. Thus, the award is not contrary to law and we deny the Union's exception.
Footnote # 1 for 59 FLRA No. 74 - Authority's Decision
Footnote # 2 for 59 FLRA No. 74 - Authority's Decision
According to 5 C.F.R. §§ 531.501-503, QSIs are increases in an employee's basic rate of pay to the next higher step created to "provide appropriate incentives and recognition for excellence in performance by granting faster than normal step increases." 5 C.F.R. § 531.504 states that a QSI may only be granted to an employee receiving a Level 5 performance rating or who demonstrates a high quality of performance.
Footnote # 3 for 59 FLRA No. 74 - Authority's Decision
The Authority relies on negotiability precedent to settle issues of management's rights in arbitration awards. Panama Canal Commission, 54 FLRA 1161, 1171 (1998) (citing United States Dep't of the Treasury, Bureau of Engraving and Printing, Wash., D.C., 53 FLRA 146, 151-54 (1997)).
Footnote # 4 for 59 FLRA No. 74 - Authority's Decision
In Local R1-109, the Authority, quoting OPM, explains that employees who attend work everyday are doing what is expected of them and are not "performing above and beyond job requirements[.]" See Local R1-109, 53 FLRA at 274.