American Federation of Government Employees, Council 238 (Union) and United States Environmental Protection Agency, Chicago, Illinois (Agency)
[ v62 p350 ]
62 FLRA No. 63
OF GOVERNMENT EMPLOYEES
ENVIRONMENTAL PROTECTION AGENCY
January 30, 2008
Before the Authority: Dale Cabaniss, Chairman and
Carol Waller Pope, Member
I. Statement of the Case
This matter is before the Authority on exceptions to an award of Arbitrator Richard Kimbel filed by the Union under § 7122(a) of the Federal Service Labor-Management Relations Statute (the Statute) and 5 C.F.R. Part 2425 of the Authority's Regulations. The Agency filed an opposition to the Union's exceptions.
The Arbitrator found that the Agency had not violated the parties' agreement or the Statute when it implemented a new performance appraisal system. For the reasons that follow, we deny the Union's exceptions.
II. Background and Arbitrator's Award
The parties' master collective bargaining agreement (MCBA) included a two-tier (satisfactory or unsatisfactory) employee evaluation system. In response to the President's Management Agenda for fiscal year 2002, which required agencies to implement multi-level performance evaluation systems, the Agency provided the Union with a proposal to change the two-tier system to a five-tier system. The Union responded with a counterproposal containing a two-tier system. The Union then filed a grievance challenging the Agency's proposal for the new five-tier system. The Agency denied the grievance and the Union invoked arbitration.
While the grievance was pending, the Agency notified the Union that its counter proposal was in part non-negotiable and indicated that it would proceed to impact and implementation bargaining. The Union did not respond with any new proposals or address the impact and implementation bargaining that the Agency offered. Subsequently, the Agency implemented the five-tier system.
The Arbitrator framed the issues before him as:
(1) Did the Agency violate the MCBA of the parties when it proposed and then implemented the [five-tier system]. If so, what shall be the appropriate remedy?
(2) Did the Agency commit an Unfair Labor Practice in its proposal and implementation of the [five-tier system]. If so, what shall be the appropriate remedy?
Award at 5.
The Arbitrator found that under the management rights provision, established under § 7106 of the Statute and also set forth in Article 4 of the MCBA, the Agency could establish the five-tier system. The Arbitrator relied on NTEU v. FLRA, 691 F.2d 553 (D.C. Cir. 1982) for the proposition that management's right to assign and direct work includes the right to establish a performance evaluation system. Moreover, the Arbitrator noted that in AFGE, Council of GSA Locals, Council 236, 55 FLRA 449 (1999) (Council 236), the Authority concluded that the right to direct and assign work includes the determination of the number of tiers within a performance evaluation system. Based on this precedent, the Arbitrator concluded that the Agency's five-tier proposal constituted "an exercise of a legitimate management right" and that the Union's counterproposals pertaining to the number of tiers and other substantive matters were outside the duty to bargain. See Award at 14-15.
The Arbitrator next examined the propriety of the Agency's unilateral implementation of the five-tier system. The Arbitrator determined that, to the extent the parties' ground rules could be read to conflict with management's rights under § 7106(a) of the Statute, they are "not enforceable." Id. at 15. Moreover, the Arbitrator found that the Agency afforded the Union notice and an opportunity to bargain, but the "Union did not respond." Id. Therefore, the Arbitrator found that the Union waived its right to bargain. The Arbitrator concluded that there was no violation of the parties' agreement.
Next, the Arbitrator examined the Union's assertion that the Agency committed an unfair labor practice, violating §§ 7116(a)(1), (5), and 7117 of the Statute. See Award at 16. With regard to the allegation that the [ v62 p351 ] Agency violated § 7116(a)(1) and (5) of the Statute, the Arbitrator found that the duty to bargain in good faith does not extend to proposals that are inconsistent with law or a government-wide rule or regulation. In this regard, the Arbitrator found that the Agency had provided the Union with notice of the change and the Union replied with counterproposals that were nonnegotiable. According to the Arbitrator, the Agency then replied with an offer for impact and implementation bargaining, to which the Union declined to respond. Based on these facts, the Arbitrator concluded that the Agency did not violate § 7116(a)(1) and (5) of the Statute. As to the Union's contention that the Agency violated § 7117 of the Statute by failing to bargain with the Union, the Arbitrator concluded that the Agency exercised a management right in accordance with Article 45 and that the parties' ground rules agreement had no bearing on the five-tier evaluation system, as that system was the result of an exercise of a management right by the Agency under § 7106(a) of the Statute and was in compliance with Articles 2 and 4 of the MCBA.
Accordingly, based on the above rationale, the Arbitrator denied the grievance.
III. The Union has not established that the award is contrary to law.
A. Positions of the Parties
1. Union's Exception
The Union contends that the award is in violation of law because the Arbitrator wrongly determined that the breached agreement provision was unenforceable, pursuant to § 7106(a) of the Statute. In this regard, the Union claims that the Arbitrator's analysis was incomplete and therefore erroneous. In particular, the Union argues that the Arbitrator erred in holding that management was free to change the number of tiers in the agreement because the number of tiers in a performance appraisal system is covered by management's right to assign work under § 7106(a) of the Statute. Specifically, the Union asserts that it is inconsistent for the Authority to hold that the number of tiers in a performance appraisal system is subject to management's right to assign work under § 7106(a) of the Statute, but does not concern the methods and means of performing work under § 7106(b)(1) of the Statute. Accordingly, as the Union argues that issues concerning the number of tiers in a performance appraisal system are governed by § 7106(b)(1) of the Statute, it contends that the agreement was enforceable.
2. Agency's Opposition
The Agency contends that determining the number of tiers in a performance evaluation system is included in its management rights to direct employees and to assign work, which are not subject to the duty to bargain. See Opposition at 6-7 (citing NTEU v. FLRA, 691 F.2d 553 (D.C. Cir. 1982)). Therefore, the Agency argues that a proposal that addresses the number of levels in a performance evaluation system conflicts with a management right and is not subject to negotiation.
Moreover, the Agency asserts that the Union has misinterpreted the case law. According to the Agency, the number of tiers in a performance appraisal system is integrally related to work and is a matter of management rights under § 7106(a) of the Statute. The Agency maintains that the number of tiers is not concerned with how the Agency performs its work and, thus, it is not a method and means within the meaning of § 7106(b) of the Statute. See Opposition at 13-14.
B. Analysis and Conclusions
When an exception involves an award's consistency with law, the Authority reviews any question of law raised by the exception and the award de novo. See NTEU, Chapter 24, 50 FLRA 330, 332 (1995) (citing United States Customs Serv. v. FLRA, 43 F.3d 682, 686-87 (D.C. Cir. 1994)). In applying the standard of de novo review, the Authority assesses whether an arbitrator's legal conclusions are consistent with the applicable standard of law. See United States Dep't of Def., Dep'ts of the Army and the Air Force, Ala. Nat'l Guard, Northport, Ala., 55 FLRA 37, 40 (1998). In making that assessment, the Authority defers to the arbitrator's underlying factual findings. See id.
Under Authority precedent, the validity of a contract provision may be raised in grievance and arbitration proceedings. United States Dep't of Def., Educ. Activity, Arlington, Va., 56 FLRA 119, 121 (2000). In this regard, if an agreement term is found to be in violation of the Statute, it is considered void and unenforceable. Id. Here, the Arbitrator determined that the Agency was not bound by a contract provision that provided for a two-tier performance appraisal system and that its decision to modify the system to a five-tier system was within its right to assign work, as provided in § 7106(a)(2)(B) of the Statute.
In resolving the Union's exception, we note that the Authority has long held, and the Union does not dispute, that a contract term concerning the number of tiers or levels of performance in a performance evaluation system affects an agency's rights to assign work and [ v62 p352 ] direct employees. AFSCME, AFL-CIO, Council 26, 13 FLRA 578, 580-81 (1984). We also note that where an award affects a management right under 7106(a) of the Statute, the Authority determines whether the award provides a remedy for a violation of either an applicable law, within the meaning of § 7106(a)(2) of the Statute, or a contract provision that was negotiated pursuant to § 7106(b) of the Statute. United States Dep't of the Treasury, BEP, Wash., D.C., 53 FLRA 146, 151-54 (1997) .
Here, the Union asserts that an agreement provision concerning the number of tiers of a performance evaluation system is a "method or means of performing work" pursuant to § 7106(b)(1) of the Statute and is, therefore, an enforceable, permissive topic. However, in Council 236, 55 FLRA at 452, the Authority addressed whether a contract term concerning the number of tiers in a performance appraisal system was a method or means of performing work under § 7106(b)(1), and held it was not. The Authority distinguished such proposals as concerning "how an agency evaluates" the work, rather than "how employees will do their work," which is the concern of § 7106(b)(1). Id. In this regard, the Authority noted that such proposals concerned "work objectives for employees" and fell within an agency's right to assign and direct work under § 7106(a)(2)(A) and (B), even though they did not fall within § 7106(b)(1). Id.
The Union argues that the distinction made by the Authority in Council 236 is "irrational" and that a contract term concerning the number of tiers in a performance system must be either included in or excluded from both § 7106(a) and (b)(1). Exceptions at 4. However, other than stating that such a contract term is a measure for accomplishing work, an argument that the Authority rejected in Council 236, 55 FLRA at 452, the Union provides no reason why the distinction made in that case is improper. Therefore, consistent with our holding in Council 236, we find that the Arbitrator's conclusion that the contract provision at issue, requiring a two-tier performance system, was unenforceable and could be altered by the Agency without bargaining over the substance of the provision is not contrary to law.
IV. The Union has not established that the award fails to draw its essence from the parties' agreement.
A. Positions of the Parties
1. Union's Exception
The Union contends that the Arbitrator erred when he found that the Agency had not violated the parties' agreement by proposing and then implementing a change in the number of tiers in the performance evaluation system. Exceptions at 3. According to the Union, the MCBA was still in full force and effect and required only two tiers. In this regard, the Union contends that the award is inconsistent with Articles 34 and 45 of the parties' agreement, which govern performance evaluation and mid-term bargaining, respectively.
2. Agency's Opposition
The Agency contends that its proposal for a five-tier system concerned the number of levels in the performance evaluation system and was, therefore, non-negotiable. The Agency asserts that it correctly served notice on the Union under Section 1.B., Article 45 of the parties' MCBA to reopen the agreement and, accordingly, that it did not breach the agreement. [n*]
Additionally, the Agency asserts that the Union did not cure the deficiencies in its proposals by submitting negotiable proposals. The