Library of Congress (Agency) and Congressional Research Employees Association, IFPTE, Local 75 (Union)

[ v60 p715 ]

60 FLRA No. 136

LIBRARY OF CONGRESS
(Agency)

and

CONGRESSIONAL RESEARCH EMPLOYEES
ASSOCIATION, IFPTE
LOCAL 75
(Union)

0-AR-3835

_____

DECISION

March 10, 2005

_____

Before the Authority: Dale Cabaniss, Chairman, and
Carol Waller Pope and Tony Armendariz, Members [n1] 

I.      Statement of the Case

      This matter is before the Authority on an exception to an award of Arbitrator David Paul Clark filed by the Agency under § 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 exception.

      The Arbitrator found that the Agency violated the parties' agreement by failing to conduct a performance appraisal for an employee who retired and by failing to give him a performance award, in lieu of a performance-based pay adjustment, and by informing the Union that similarly situated employees were not eligible for performance awards.

      For the reasons set forth below, we set aside the portion of the award requiring the Agency to grant performance awards, in lieu of a performance-based pay adjustment, to the grievant and similarly situated employees.

II.      Background and Arbitrator's Award

      Since 1995, senior level employees at the Agency have been paid pursuant to an agreement negotiated by the parties called the "SL Agreement." Under the SL Agreement, the appraisal period for these employees corresponds to the calendar year. Employees who are "employed as of December 31 must receive an appraisal if they have been employed as a Senior Level Employee for at least 180 days . . . ." Award at 5, (quoting section 7(E)(1)(b) of the SL Agreement). [n2] 

      The pay of these employees is adjusted annually in May based on the rating given the employee in the previous year's performance appraisal. Section 6(C)(3) of the SL Agreement, entitled "Adjustments to Basic Pay Based on Performance," states in relevant part:

(c) If the performance-based pay adjustment would take the Senior Level employee above the salary limit established by law, then the amount of the proposed performance adjustment which exceeds the limit will be given as a performance award rather than as an increase to the base.

Award at 4.

      The grievant in this case was a senior level employee who was at the statutorily set maximum salary level. On December 31, 2002, the employee submitted his work file to the Agency for an annual performance review. On the same day, he also submitted his retirement papers.

      In early January 2003, the Agency informed the Union and the employee that it would not conduct a performance review for the employee. In February 2003, the Agency issued a memorandum noting that there had been "some confusion on the part of senior level staff retiring or otherwise leaving the [Agency] before receiving a review and pay adjustment for work performed the preceding year." Exceptions, Joint Exhibit 3. The memo stated, in relevant part:

[P]ay adjustments based on performance are considered adjustments to salary and as a result the employee would have to be in pay status at the time the adjustment is effective. As you know, adjustments to senior level pay are effective in May. Therefore, a senior level employee who leaves the [Agency] before the pay adjustment becomes effective, is not eligible for the adjustment.

Id.

      The Union then requested clarification from the Agency as to whether a senior level employee would similarly have to be in a pay status in order to receive a performance award under the conditions of section [ v60 p716 ] 6(C)(3)(c) of the SL Agreement. The Agency responded that, "`in all circumstances for which a pay adjustment would result in an increase [in] salary . . . if the employee leaves [Agency] employment for any reason before the adjustment is effective, that employee is not eligible for the adjustment.'" Award at 3 (quoting Agency's response (Joint Exhibit 5)).

      The Union filed a grievance alleging that the Agency violated the SL Agreement by refusing to conduct annual performance reviews of senior level employees and provide them with performance awards if they left the Agency after the review period. The grievance was not resolved, and the matter was submitted to arbitration.

      In the absence of a stipulated issue, the Arbitrator framed the issue as follows:

Whether the [Agency] violated the terms of the SL Agreement when: (1) The [Agency] refused to conduct an annual performance appraisal for [the employee], a member of the bargaining unit who retired on December 31, 2002; and (2) the [Agency] informed the [Union] that [the employee] and similarly situated bargaining unit members were ineligible for performance awards under the SL Agreement's performance appraisal provisions. If so, what should be the remedy?

Award at 2.

      After finding that the grievance was properly before him, [n3]  the Arbitrator sustained the grievance based on his interpretation of the SL agreement. The Arbitrator found that the SL Agreement

requires the [Agency] to conduct performance appraisals for every bargaining unit member who is employed as of December 31 for a given calendar year, and who was a senior level employee for at least 180 days during that year. The structure of the SL Agreement requires that a senior level employee at the salary limit established by law will be given a performance award if his or her performance receives a sufficiently high rating.

Id. at 11. Based on the language of the SL Agreement provisions, the Arbitrator concluded that the Agency "must conduct a performance appraisal for the work that [the employee] performed" in 2002 and that the language "requires [the Agency] to give [the employee] a performance award if his rating carries with it a dollar value that exceeds the statutory limit." Id. at 12.

      The Arbitrator rejected the Agency's argument that a performance award is required only if an employee is in a pay status at the time that performance awards are scheduled to be executed (on or after May 5 of each year, according to the SL Agreement). Rather, the Arbitrator determined that "the operative language for purposes of receiving a performance appraisal and accompanying performance award is that a member of the bargaining unit must be employed `as of' December 31 of the appraisal year[.]" Id. In this regard, the Arbitrator stated that the "as of" language of the SL Agreement "implies that a member of the unit may not in fact be employed after December 31, yet still will be deserving of the rights granted by the SL Agreement if he or she parts service before May 5th of the subsequent year." Id.

      The Arbitrator further found that "there are practical reasons why a bargaining unit member would expect to be appraised for the performance year prior to his or her separation date." Id. In this regard, the Arbitrator stated that "an appraisal might be necessary in order for such an employee to receive a discretionary performance award for outstanding achievement, as contemplated by Section 6D(1) of the SL Agreement." [n4]  Id.

      Based on his interpretation of the agreement, the Arbitrator sustained the grievance. [n5]  The Arbitrator ordered the Agency to: (1) conduct a performance appraisal of the employee for calendar year 2002 and give him any consequential performance award to which he was entitled; and (2) ensure that all future performance awards under the SL Agreement's performance appraisal provisions are given to the awardee as [ v60 p717 ] long as he or she was in pay status during the applicable calendar year as of December 31 of that year and was employed as a senior level employee for at least 180 days of that year. [n6] 

III.      Positions of the Parties

A.      Agency's Exception

      The Agency argues that the award fails to draw its essence from the parties' agreement in two respects.

      First, the Agency asserts that, by requiring the Agency to pay the grievant and similarly situated employees, the Arbitrator has effectively rewritten the SL Agreement "in violation of the agreement's plain wording and purpose." Exception at 5. In this regard, the Agency asserts that the award requires it "to pay a performance award in lieu of a performance-based pay adjustment to a former employee who, at the time the awards are paid, is no longer at the salary cap (as non-employees have no salary)." Id. According to the Agency, "[t]his directly violates the terms of Section 6.C.3.c of the [SL Agreement,] which is triggered only when employees are at the statutory pay cap." Id. Further, noting that the SL Agreement states that a performance-based pay adjustment will be given as a performance award "rather than as an increase to the base" of an employee's salary, the Agency contends that the Arbitrator's award is irrational because it gives non-employees or former employees (who do not have a salary that can be increased) "a lump sum payment intended as a substitute for an increase in base salary." Id. at 7.

      Second, the Agency contends that the award is inequitable and unconnected to the wording of the SL Agreement because the award treats senior level employees "who are at the statutory pay cap . . . more favorably than those who are not." Id. The Agency notes that, unlike the grievant and other employees who are at the statutory pay cap, a senior level employee who had not reached the statutory pay cap and had retired on December 31 would not receive a pay adjustment under the Arbitrator's award. According to the Agency, "[t]his result could not have been contemplated by the parties and is inconsistent with the purpose and wording of the agreement." Id. at 8.

B.      Union's Opposition

      The Union contends that the Agency has failed to demonstrate that the Arbitrator's interpretation of the contract and his reasoning "is irrational, implausible, or unconnected to the SL Agreement[']s wording and purpose." Opposition at 13. As to the Agency's first argument, the Union contends that the Arbitrator directly addressed and rejected the argument that there were "no wages to adjust" because the employee was no longer in pay status in May 2003. Id. at 11. As to the Agency's second argument concerning a "so-called inequity," the Union argues, among other things, that "the contract itself makes the potential distinction [and the distinction] is what the parties bargained for." Id. at 12.

IV.     Analysis and Conclusions

      The Authority will find an award deficient as failing to draw its essence from a collective bargaining agreement when the appealing party establishes 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 the arbitrator; (3) does not represent a plausible interpretation of the agreement; or (4) evidences a manifest disregard of the agreement. See United States Dep't of Labor (OSHA), 34 FLRA 573, 575 (1990). For the following reasons, we find that the award fails to draw its essence from the SL Agreement.

      As noted above, Section 6(C)(3)(c) of the SL Agreement is entitled "Adjustments to Basic Pay Based on Performance," and states in relevant part:

(c) If the performance-based pay adjustment would take the Senior Level employee above the salary limit established by law, then the amount of the proposed performance adjustment which exceeds the limit will be given as a performance award rather than as an increase to the base.

Award at 4. Section 6(C)(3)(c), by its plain terms, addresses the circumstance under which a senior level employee is entitled to a performance-based pay adjustment, but the pay adjustment would exceed the statutory limit on pay.

      In order for an employee to have his or her pay "adjusted," it is apparent that the employee must be receiving pay. It is undisputed that "Senior Level employees' performance-based pay adjustments . . . are effected the first day of or after May 5 of each year[.]" Section 6(C)(4)(b) of the SL Agreement. Thus, an employee who retires on December 31 is not receiving [ v60 p718 ] pay in May of the following year when pay adjustments are determined, and accordingly has no pay that can be adjusted. Moreover, an employee who is not receiving any pay at the time that a pay adjustment is effected does not have any basic rate of pay, and the Agency has no pay rate from which to measure how much of "the performance-based pay adjustment would take the Senior Level employee above the salary limit established by law" so that, under Section 6(C)(3)(c), the excess would "be given as a performance award rather than as an increase to the base." Consequently, the Arbitrator's requirement that the Agency grant performance-based cash awards has no basis in the agreement.

      For these reasons, the Arbitrator's award does not represent a plausible interpretation of the agreement. Rather, as asserted by the Agency, the Arbitrator has effectively rewritten the SL Agreement in violation of its plain wording by requiring the Agency "to pay a performance award in lieu of a performance-based pay adjustment to a former employee who, at the time the awards are paid, is no longer at the salary cap (as non-employees have no salary)." Exceptions at 5. Such a requirement is directly at odds with the requirement of Section 6(C)(3)(c) of the SL Agreement for paying a performance-based cash award, "which is triggered only when employees are at the statutory pay cap." Id.

      As such, the result reached by the Arbitrator does not represent a plausible interpretation of the SL Agreement, and the award fails to draw its essence from the agreement. See SSA, Office of Labor Management Relations, 60 FLRA 66, 67 (2004) (award deficient as not representing plausible interpretation of agreement); SSA, Region 1, Boston, MA, 59 FLRA 614, 617 (2004) (same); United States Small Business Administration, 55 FLRA 179, 182 (1999) (award deficient because arbitrator's interpretation of agreement was incompatible with its plain wording).

      Accordingly, we set aside the award to the extent that it requires the Agency to give the grievant and similarly situated employees a performance-based pay adjustment in the form of a performance award rather than as an increase to the base. [n7] 

VI.      Decision

      The award is set aside, to the extent described above.


APPENDIX

Section 6. Basic Pay and Other Compensation

. . . .

C. Adjustments to Basic Pay After Initial Appointment

. . . .

(3) Adjustments to Basic Pay Based on Performance

      (a) Adjustments to Senior Level basic pay, other than those driven by statute, will be based on performance. Performance based pay adjustments are made to the basic rate of pay.

      (b) Each adjectival rating carries with it a standard dollar value (or percentage value), determined by the Librarian on an annual basis and applied consistently to all Senior Level employees. The performance-based pay adjustment is determined by totaling the dollar values associated with those ratings. Changing fiscal conditions necessitate some flexibility in proposing salary adjustments based upon performance. The great majority of adjustments will fall into the two to three percent range, although extraordinary performance could result in an adjustment as high as ten percent.

      (c) If the performance-based pay adjustment would take the Senior Level employee above the salary limit established by law, then the amount of the proposed performance adjustment which exceeds the limit will be given as a performance award rather than as an increase to the base.

      (d) On an annual basis, management will project the anticipated total dollar amount of Senior Level performance-based increases and will include that dollar projection in the budget preparation and execution process.

      (e) The Library, on or about the beginning of each calendar year (beginning in 1996 and thereafter), will announce the formula for making pay determinations for performance for the previous calender year. The announcement shall be issued prior to the submission of performance accomplishments by covered employees. This information will demonstrate, on an annual basis, the link between particular levels of performance and pay determinations.

. . . . [ v60 p719 ]

(4) Responsiblity

      (a) The Librarian of Congress has ultimate responsibility for making performance-based pay adjustments.

      (b) The office of the Director for Human Resources shal be responsible for ensuring that Senior Level employees' performance-based pay adjustments, in accordance with the Librarian's determinations, are effected the first day of the first pay period on or after May 5 of each year, the anniversary date of the Library's conversion to the Senior Level system.

. . . .

D. Other Compensation

      (1) Performance Awards. At the discretion of the Librarian or designee, Senior Level employees may receive performance-based awards not to exceed twenty percent of basic pay. Senior Level employees are eligible both for honorary performance awards and for cash awards based on outstanding achievement.

. . . .

Section 7. Performance Appraisal System

      A. Purpose and Scope. The performance appraisal system documents management expectations and individual job accomplishments. It is designed to:

      (1)      appraise Senior Level employees on their contribution to CRS' and the Library's mission, goals, and objectives;

      (2)      enhance individual motivation and encourage excellence;

      (3)      increase organizational effectiveness and accountability; and

      (4)      provide the basis for pay adjustments and awards related to performance, as well as decisions related to Senior Level development and retention.

      B. Performance Appraisal Process. The performance appraisal process involves four distinct stages: performance planning, progress review, appraisal, and appraisal review and certification.

. . . .

      E. Appraisal

     (1)       Rating Periods
          (a)      Senior Level employees must be appraised annually. The appraisal period corresponds to the calendar year, January 1 through December 31.
          (b)      Senior Level employees employed as of December 31 must receive an appraisal if they have been employed as a Senior Level employee for at least 180 days.

. . . .

     (2)       Proposed Rating
          (a)      Supervisors must rate each Senior Level employee they supervise, based on performance measured against the generic performance standards for each rating level.

. . . .

     (3)      Rating by the Director of the Congressional Research Service
          (a)      The Director of CRS will develop internal mechanisms for reviewing the performance appraisals of all bargaining unit Senior Level employees to ensure a fair and equitable process.

. . . .

      F. Appraisal Review and Certification. The Director of the Congressional Research Service is responsible for making certain that levels of achievement and recommendations regarding ratings and performance recognition are justified properly in the appraisal and for ensuring equity and consistent application of the standards used to measure levels of performance.

      G. Issuance of Ratings of Record. After consulting with the Librarian of Congress or designee to ensure Library-wide consistency of the application of performance standards, the Director of the Congressional Research Service shall then forward those ratings to the Librarian of Congress or designee for final issuance.

. . . .

Exceptions, Attachment III. [ v60 p720 ]


Dissenting Opinion of Member Pope:

      I disagree with the majority's conclusion that the award fails to draw its essence from the parties' agreement. Accordingly, I dissent.

      The majority acknowledges, and then disregards, the Authority's deferential "essence" standard for reviewing an arbitrator's interpretation of a collective bargaining agreement, which is mandated by § 7122(a) of the Statute and which requires that awards construing contract provisions be upheld unless they are irrational, unfounded, implausible, or in manifest disregard of the agreement. See United States Dep't of the Air Force, Dover Air Force Base, Del., 59 FLRA 827, 829 (2004); Soc. Sec. Admin., Balt., Md., 58 FLRA 592, 594-95. The majority finds the Arbitrator's interpretation of the award implausible, asserting that it is "apparent" that the parties' SL agreement does not require a performance award for an employee who resigns after the date of a performance rating but before the date of the award. Majority Opinion at 8. In my view, the majority is engaging in de novo contract interpretation and, in so doing, is acting inconsistent with the Statute.

      The Arbitrator found, as relevant here, that consistent with various provisions of the parties' SL Agreement, every senior-level unit employee above a certain pay level who was "employed as of" December 31 "must receive" a performance rating. Award at 11 (quoting Agreement, § 7.E(1)(b)). He also found that adjustments to basic pay are based on performance ratings and that an employee above that certain pay level, including the grievant, "will be given" such adjustment as a performance award. Id. at 12 (quoting Agreement, § 6.C(3)(b), (c)). In interpreting the contract provisions, the Arbitrator relied not only on the wording of the provisions, but also on testimony of the Union's witnesses as well as statements by Agency counsel and witnesses that an employee may be paid other performance awards even if the employee is not in a pay status at the time of the award. See Award at 12.

      When the award is examined in connection with the wording of the disputed contract provisions, it is clear that the Arbitrator's interpretation of the agreement is not deficient. In fact, the majority makes no attempt to find error in the Arbitrator's interpretation of the contract provisions. Instead, the majority merely finds it "apparent" that a provision relating to "pay adjustment" can not apply to former employees. Majority Opinion at 8. In so doing, the majority ignores the fact that employees in the grievant's situation are not entitled to, or requesting, a pay adjustment. Indeed, the SL Agreement expressly entitles these employees to an award "rather than" an increase in pay. Award at 4 (quoting Agreement, § 6.C(3)(c)). As such, determining whether employees are in a pay status at the time of the award is not relevant to whether they are entitled to monetary recognition of their performance. That determination is relevant only to the form of the recognition.

      Similarly, the majority relies on a contract provision specifying that pay adjustments are "effected" after May 5 of each year. Majority Opinion at 8 (quoting Agreement, § 6.C(4)(b)). For the same reasons set forth above, it is not relevant when a pay adjustment is effected in a situation where an award in lieu of such adjustment is at stake. Moreover, while awards are computed based on the amount of a pay adjustment that an employee otherwise would receive, the majority makes no attempt to explain why the employee must be in a pay status on either the date a pay adjustment is effected or the date the pay adjustment is computed.

      The majority's seat-of-the-pants contract interpretation demonstrates why it is not only good law but also good policy to defer to arbitral contract interpretations. Applying the essence standard properly, the award is not deficient. I would, therefore, deny the Agency's exception.

      I would also deny the Agency's exception that the award is "inequitable" and "unconnected" to the parties' agreement because it treats employees who have reached the statutory pay cap and retire on December 31 more favorably than employees who have not reached the pay cap and retire on the same day. Exceptions at 7. Put simply, nothing in the agreement requires that these employees be treated the same. As a result, even assuming that the award treats them differently, that would not provide a basis for finding the award deficient. See Nat'l Air Traffic Controllers Ass'n, 55 FLRA 1025, 1027 (1999) (Member Wasserman dissenting on other grounds) (award treating similar employees differently did not fail to draw its essence from an agreement).

      For the above reasons, I respectfully dissent.



Footnote # 1 for 60 FLRA No. 136 - Authority's Decision

   Member Pope's dissenting opinion is set forth at the end of this decision.


Footnote # 2 for 60 FLRA No. 136 - Authority's Decision

   The relevant portions of the SL Agreement are set forth in the Appendix.


Footnote # 3 for 60 FLRA No. 136 - Authority's Decision

   The Agency did not file an exception to this finding, and we do not address it further.


Footnote # 4 for 60 FLRA No. 136 - Authority's Decision

   The Arbitrator also rejected the Agency's argument that the grievant was precluded from receiving a performance award under the SL Agreement because he had entered into a "gratuitous services contract" with the Agency that allowed him to use the Agency's resources during 2003 to perform economic research. Award at 12. The Arbitrator found that the services contract "simply states that [the grievant] will not receive compensation for the bargained-for exchange of services that are listed therein[,]" and that it "does not otherwise contain a waiver of [the grievant's] rights[.]" Id. The Agency did not except to the Arbitrator's finding, and, accordingly, we do not address it further.


Footnote # 5 for 6