Member DuBester, dissenting:

                In their summary decision in this case, the majority adopts a per se rule strictly limiting an agency’s bargaining obligation where the agency is changing conditions of employment to comply with legal requirements.  The majority’s rule establishes only a post-implementation bargaining obligation in all such cases.  This rule, adopted without a reasoned explanation or any meaningful consideration of the case’s facts, lacks a foundation in the Federal Service Labor-Management Relations Statute (the Statute).[1]  Because the majority’s decision limiting collective bargaining in these circumstances is inconsistent with Congress’s determination in the Statute that “collective bargaining [is] in the public interest,”[2] I dissent. 

                A complete understanding of the case’s facts is key to determining how the case should be resolved.

I.             Background and Arbitrator’s Award

                The Agency uses administratively uncontrollable overtime (AUO) to compensate its approximately 5000 law-enforcement officers for irregular and occasional overtime.  Without notifying the Union or offering the Union an opportunity to bargain, the Agency unilaterally implemented a change in how it computes AUO entitlements.  This change affected employees’ eligibility for AUO and their amount of AUO pay.  The Union filed a grievance alleging that the Agency violated the parties’ agreement and committed an unfair labor practice (ULP) by changing this computation without notice to or bargaining with the Union. 

                Arbitrator Jeffrey Goodfriend found that the grievance was substantively arbitrable.  The Arbitrator further found that the Agency violated the parties’ agreement, and committed a ULP under § 7116 of the Statute,[3] when it failed to notify or engage in impact and implementation (I&I) bargaining with the Union before changing its AUO computation.  He ordered a status quo ante (SQA) remedy, backpay, and other benefits.

                The Arbitrator made detailed factual findings.  As the Arbitrator found, the Agency is a component of the U.S. Department of Homeland Security (DHS or Department).  The Union represents approximately 5800 Agency employees, of which 5000, in law enforcement, are affected here.  The Agency uses AUO to pay employees for “irregular and occasional” overtime.[4]  AUO is an alternate overtime-pay system, administered by the Office of Personnel Management (OPM), for compensating employees who work “substantial amounts of irregular unscheduled overtime duty.”[5]

The Agency determines AUO eligibility (AUO certification) and AUO pay by periodically reviewing an employee’s time sheets to determine the percentage of AUO hours worked.  The Agency calculates the percentage by dividing AUO hours by the total number of hours worked in the applicable time period.  The Arbitrator found that the Agency had a “longstanding practice” of excluding certain leave times, such as sick and annual leave, from the AUO computation (excludable-days practice).[6]  This practice lowered an employee’s total number of hours worked, resulting in an increase in the percentage of AUO hours, and made it easier for employees to meet the threshold-hour requirement for AUO certification and/or receive a higher AUO pay rate.

Responding to reports of AUO abuse, DHS distributed a memorandum in May 2014 (May 2014 memo) directing components to “develop a comprehensive [c]omponent-specific plan to achieve . . . compliance with [AUO] laws,” including a review of excludable-days practices.[7]  The May 2014 memo, which cited OPM regulations, stated that DHS would develop and issue a “Department-wide directive” to ensure “consistent . . . application” of rules on AUO pay.[8]  The Arbitrator found that in response to the May 2014 memo, the Agency “put together an initial action plan . . . [and] began to address issues related to AUO” – but “did not provide specific guidance [on] . . . AUO” because of “confusion” about OPM’s AUO regulations.[9] 

Eight months later, in January 2015, DHS issued another memorandum (January 2015 memo) on AUO, directing the Agency to “provide feedback” concerning compliance with AUO law as directed in the May 2014 memo, to submit a “status report” concerning excludable days, and to “take immediate action to correct . . . unauthorized practices.”[10]  But the Arbitrator found that the Agency did not immediately change its excludable‑days practice.  Instead, the Agency responded by submitting a status report and “not[ing] the need for department-wide guidance on AUO.”[11]

Almost four months later, in April 2015, the Agency, while awaiting a Department-wide directive, contacted DHS for assistance in modifying its AUO practices.  DHS responded by instructing the Agency to comply with the January 2015 memo.  DHS also continued to work on a Department-wide AUO policy which, after distributing a draft to “national labor unions for review and comment,” DHS issued on June 26, 2015 (DHS Directive).[12]

Also, in May 2015, the Agency – on a Saturday night, May 2, 2015 – sent an email to employees announcing issuance of a “new Premium Pay Guide” that included changes to the excludable-days practice.[13]  These changes had a “significant effect” on bargaining unit employees’ pay.[14]  That same night, the Agency notified the Union for the first time that the Agency was changing its way of calculating AUO.  Specifically, the Agency notified the Union that under “[Article] 9F of [the parties’] agreement,” it was discontinuing the excludable-days practice “effective immediately” (9F notice).[15]  Article 9F provides for “expedited implementation of new policies or practices affecting conditions of employment,” without pre-implementation bargaining, on “certain occasions.”[16]  The effect of the unexpected change was “chaotic.”[17]  The Union was “swamped” with phone calls from employees who were upset and confused about the effect the change would have on their pay.[18]

The Union responded to the Agency’s 9F notice by filing a grievance alleging that the Agency’s failure “to notify the Union of [the] proposed changes before the Agency implemented the changes” violated Article 9A of the parties’ agreement, and its failure to bargain was a ULP.[19]  Article 9A of the agreement requires the Agency to provide pre‑implementation notice of proposed changes in existing practices and the opportunity for the Union to request bargaining.  The Union asserted that “no circumstances existed that would allow the Agency to avoid bargaining with the Union prior to implementing the policy.”[20] 

The Agency denied the grievance, asserting that it was required to immediately end the excludable-days practice and that it was not legally required to bargain over that decision.[21]  The parties could not resolve the matter and took it to arbitration.

The stipulated issue before the Arbitrator was:  “Did [the Agency] violate the [parties’ agreement] and/or commit a [ULP] by unilaterally implementing a new [pay guide] in May 2015, which changed the [A]gency’s policy on excludable days without engaging in any bargaining with [the Union].  If so, what is the remedy?”[22]

Before the Arbitrator, the Agency argued that the grievance was not arbitrable based on Article 47B of the parties’ agreement.  Article 47B “excludes matters from the grievance and arbitration procedures that are not subject to the control of management.”[23]  The Agency argued that DHS’s instruction that the Agency change its excludable-days practice eliminated any control the Agency had over the change. 

But the Arbitrator disagreed.  He found that the Agency had four months after receiving the January 2015 memo, and before implementing the change in its May 2015, Saturday-night email, to “contact the Union and fulfill its obligation by engaging in pre‑implementation bargaining.” [24]  He further found that the Agency had previously made the same argument in a negotiability matter involving the same parties, which the Authority also rejected.[25]  Therefore, finding that the DHS instructions did not prevent the Agency from engaging in pre-implementation bargaining over the impact and implementation of the change to the excludable-days practice, the Arbitrator determined that Article 47B did not bar the grievance, and that the grievance was substantively arbitrable.

On the merits, the Agency argued that because the excludable-days practice was inconsistent with law; that is, OPM’s AUO regulations, the Agency was entitled to “expedited implementation” of its new practice under Article 9F.[26]  The Arbitrator rejected this argument as well, finding that the Agency’s asserted need to comply with DHS’s new interpretation of OPM’s AUO regulations did not preclude the Agency from pre‑implementation I&I bargaining.  Therefore, the Arbitrator found that the Agency’s failure to engage in pre‑implementation I&I bargaining with the Union over the change violated Article 9A of the parties’ agreement. 

Additionally and independently, the Arbitrator found that the Agency committed a ULP under the Statute because it failed “to engage in pre‑implementation bargaining”[27] over a change in employees’ conditions of employment that was more than de minimis.  He ordered an SQA remedy and related remedies under the Back Pay Act.[28]

The Agency filed exceptions to the award, and the Union filed an opposition to the Agency’s exceptions.

II.            Analysis

1. The Arbitrator’s substantive‑arbitrability determination draws its essence from the parties’ agreement.     

The majority’s summary decision does not discuss the Agency’s threshold claim that the Arbitrator erred in determining that the grievance was arbitrable under the parties’ agreement.[29]  However, resolving that threshold claim is instructive. 

When reviewing exceptions involving matters of contract interpretation, like the Agency’s arbitrability claim here, the Authority defers to an arbitrator’s interpretation of a collective-bargaining agreement.[30]  This deference, and the private-sector cases from which it is derived, make clear that an award will not be found to fail to draw its essence from the parties’ agreement merely because a party believes the arbitrator misinterpreted the agreement.[31]  The Authority and the courts defer to arbitrators in this context “because it is the arbitrator’s construction of the agreement for which the parties have bargained.”[32]

To show that an award fails to draw its essence from the collective-bargaining agreement, the appealing party must establish 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 purposes 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.[33] 

The Agency argues that the grievance is not arbitrable under the “plain language” of Article 47B of the parties’ agreement because this provision excludes matters from the contractual grievance procedure “which are not subject to the control by Management.”[34]  As noted previously, Article 47B “excludes matters from [the] grievance and arbitration procedures that are not subject to the control of management.”[35]  The Agency contends that DHS instructed it “to cease” its excludable‑days practice, and because it was “obliged” to follow DHS’s direction, the matter was beyond its control and excluded from arbitration by Article 47B.[36]  In support, the Agency contends that the Arbitrator improperly relied on Authority case law addressing the negotiability of the Agency’s excludable-hours practice, and disregarded DHS directives issued in January and April 2015, which the Agency claims obliged the Agency to cease that practice.[37]

The Agency’s arguments do not demonstrate that the Arbitrator’s interpretation of Article 47B fails to draw its essence from the parties’ agreement.  The grievance alleges that the Agency violated the parties’ agreement by failing to engage in pre‑implementation bargaining over changing its excludable-days practice.  In determining whether the Agency had control over the matter, the Arbitrator found that the Agency waited four months after DHS issued the January 2015 memo before implementing the change.  Making a determination that has significance for other aspects of this case as well, the Arbitrator concluded that during this time, the Agency had ample opportunity to “contact the Union and fulfill its obligation by engaging in pre‑implementation bargaining.” [38]  And the Agency does not dispute this finding.  Therefore, because the issue the Agency raises – whether the Agency was obliged to cease its excludable‑hours practice – standing alone, is not dispositive of the Arbitrator’s conclusion that the grievance is arbitrable, the Agency fails to show that the Arbitrator’s reading of Article 47B is irrational, unfounded, implausible, or in manifest disregard of the parties’ agreement.[39]  Accordingly, I would deny the Agency’s threshold arbitrability exception. 

2. The Arbitrator’s finding that the Agency committed a ULP is not contrary to law.

The heart of the majority’s summary decision is the conclusion that the Arbitrator’s ULP finding is contrary to law.  For reasons similar to those cited by the Arbitrator when he found the grievance arbitrable, I disagree with the majority regarding the Arbitrator’s ULP finding.

The Agency argues that the Arbitrator improperly found that the Agency violated § 7116(a)(5) of the Statute by failing to notify and bargain with the Union before changing the Agency’s excludable-days practice.  Specifically, the Agency contends that the award is contrary to law because the change “was necessary to end a practice contrary to government-wide regulation[s].”[40]  Therefore, the Agency argues, it was only required to notify the Union and bargain after implementing the change to its excludable-days practice.[41] 

When an exception involves an award’s consistency with regulations, the Authority reviews any question of law raised by the exception and the award de novo.[42]  In applying the standard of de novo review, the Authority determines whether an arbitrator’s legal conclusions, not his or her underlying reasoning, are consistent with the applicable legal standard.[43]  In making that determination, we defer to the arbitrator’s underlying findings of fact.[44]

Under the Statute, an agency ordinarily may not change terms and conditions of employment without giving the collective-bargaining representative of the affected employees prior notice and an opportunity to bargain concerning the change.[45]  Parties “may establish terms and conditions of employment by practice, or other form of tacit or informal agreement, and this, like other established terms and conditions of employment, may not be altered by either party in the absence of agreement or impasse following good faith bargaining.”[46]  It is well settled, in the area of federal-service labor‑relations law, that the right to engage in a collective-bargaining dialogue with respect to matters for which there is an obligation to meet and confer ordinarily becomes meaningful only when agency management has afforded the exclusive representative reasonable notification and an ample opportunity to explore fully the matters involved “prior to the implementation date.”[47]                    
 

If an existing practice is contrary to a government-wide regulation, an agency may take legitimate steps to conform to lawful requirements.[48]  When an agency changes a past practice because it is unlawful, it has no duty to bargain over the substance of the change.[49]  However, even if the subject matter of a change in conditions of employment is outside the duty to bargain, an agency must still bargain over the impact and implementation of the change if the change has more than a de minimis impact on employees.[50] 

Even the majority concedes that the Agency has a duty to bargain in this case.  The issue that separates us, therefore, is when – not whether – the Agency had an obligation to notify, and engage in I&I bargaining with the Union over the change to the Agency’s excludable‑days practice.[51]  The Agency contends that it fulfilled its bargaining obligation by offering post‑implementation bargaining over, what it asserts, is an illegal practice.  But the Authority has found, in certain circumstances, that even when an agency must correct an unlawful practice, there may also remain an obligation to give prior notice of the change and bargain, to the extent consistent with law and regulation, concerning the impact of the required change and, where possible, its implementation.[52]  Specifically, the Authority has held that an agency must notify a union before changing an unlawful practice, when this will not delay discontinuation of the practice and would not be otherwise contrary to law.[53]

Contrary to the majority, the Authority has not held that an agency has an unrestricted right to unilaterally implement a change to correct an unlawful practice, without giving the exclusive representative notice and an opportunity to bargain.  The cases on which the majority relies do not support such an expansive exception to the requirement that notice and the opportunity to bargain must ordinarily occur before a change is made.[54] 

Here, the Arbitrator’s factual findings, to which we defer, show that the Agency had ample opportunity to, at a minimum, provide the notice to the Union required under 5 U.S.C. § 7116(a)(5).[55]  This is not a case where the Agency needed to act abruptly, precluding adequate notice to, and bargaining with, the Union.  The Agency’s unilateral change was not premised on exigent circumstances such as an emergency or newly discovered information.  And the Agency does not dispute the Arbitrator’s finding that it waited four months after DHS issued the January 2015 memo before it unilaterally changed its longstanding practice.  Nor does the Agency dispute that it was aware that it would need to make changes to the excludable-days practice at least since DHS issued the May 2014 memo – a year before it sent the 9F Notice. 

In short, the Arbitrator found that the Agency engaged in a protracted process to revise its AUO calculation.  And the Agency’s review process continued for months even after DHS instructed the Agency to take “immediate action.”[56]  The Arbitrator further found that DHS itself distributed a draft of its department-wide directive to “national labor unions for review and comment” before it became final – making no claim that doing so would delay correction of illegal practices.[57]  The Agency does not explain why DHS was able to provide this notice when responding to a presumed illegal practice, but the Agency could not satisfy its own obligation to notify and bargain with the Union before changing that practice.  Indeed, when considered in the context of the large number of employees involved, and their demanding function as law-enforcement officers, it would have made more sense for the Agency to notify the Union before creating the chaotic situation caused by the Agency’s surprise Saturday announcement that it was changing its excludable-days practice.                           
 

Accordingly, based on the facts and circumstances of this case, I would find that even if the change to the excludable-days practice was necessary to conform to requirements of a government-wide regulation, the Agency was obligated to provide the Union with notice and an opportunity to bargain before instituting this change.[58]  As there is no evidence that this would have delayed the Agency’s conforming to regulatory requirements, I would deny the Agency’s exception to the Arbitrator’s finding that the Agency committed a ULP in violation of 5 U.S.C. § 7116(a)(5).[59]

Further, although the Arbitrator also based his award on a contract-violation finding,[60] I would find that the Arbitrator’s ULP determination is a separate and independent ground for the award.  When an arbitrator’s remedy is based on separate and independent grounds, the Authority has held that the excepting party must establish that all of the grounds for the award are deficient in order for the Authority to find the award deficient.[61]  And when an excepting party has not demonstrated that the award is deficient on one of the grounds relied on by the arbitrator, and the award would stand on that ground alone, then it is unnecessary to address exceptions to the other grounds.[62]  As the Agency fails to establish that the Arbitrator’s finding that it committed a ULP is contrary to law, it is unnecessary to address the Agency’s contrary-to-law exception as it relates to the contract violation. 

3. An SQA remedy is not appropriate in this case.

Although I would uphold the Arbitrator’s finding that the Agency committed a ULP, not all of the remedies the Arbitrator ordered are appropriate.  The Arbitrator ordered an SQA remedy to correct the Agency’s violation of 5 U.S.C. § 7116(a)(5), in part, because he concluded that the agency was not compelled by regulation to change the excludable-days practice.  The parties have not specifically addressed the appropriateness of the SQA remedy.  But the Agency’s exceptions implicitly challenge the SQA remedy by arguing that the award is contrary to regulation by finding that “the Agency was required to engage in pre‑implementation bargaining over the change to its excludable[‑]day[s] practice.”[63]  Moreover, before the Arbitrator, the Agency argued that an SQA remedy was not appropriate because it would return the parties to an unlawful practice.[64] 

The Authority has held that it will not order an SQA remedy that would result in the reinstitution of an illegal practice.[65]  I would find, contrary to the Arbitrator, that to the extent the Agency was determining AUO eligibility and calculating AUO pay by excluding annual and sick leave, its practice is contrary to OPM’s regulations. 

The Authority defers to OPM’s interpretation of its own regulations.[66]  In 1997, OPM issued OPM Compensation Policy Memorandum (CPM) 97-5 (guidance)[67] interpreting its AUO regulations.[68]  The guidance advises that “in determining the number of weeks in a review period, there is no authority to reduce the number of weeks by subtracting hours of paid leave (such as annual leave or sick leave).”[69]  As the guidance specifically states that agencies lack authority to exclude sick and annual leave from their AUO calculations, I would find that the Agency’s excludable-days practice is contrary to regulation.  Consequently, an SQA remedy would result in the restitution of an illegal practice.

I think it is important to point out that I disagree with the Arbitrator that two previous Authority decisions are applicable here.[70]  In those decisions, the Authority found negotiable a union ground-rules proposal concerning the treatment of official time in calculating bargaining-unit employees’ AUO eligibility and pay.  The Authority concluded that neither the applicable regulations nor OPM guidance “address the subject of the proposal, the exclusion of official time” from AUO calculations.”[71]  Those decisions did not consider the principal change made here, ending the Agency’s longstanding practice of excluding sick and annual leave from its AUO calculation.  And as OPM’s guidance makes clear, this practice is not permitted under the regulations. 

Therefore, I would conclude that the Agency’s past practice of excluding sick and annual leave from AUO eligibility and pay obligations is contrary to government-wide regulation, and consequently, that an SQA remedy would reinstitute an unlawful practice.  Accordingly, I would modify the award and set aside the SQA remedy. 

III.          Conclusion

                The majority’s summary analysis does not include any meaningful consideration of any of the facts, and most of the issues, discussed in this separate opinion.  Because considering and discussing these matters is essential to resolving this case in a manner that is not arbitrary, I have included those details in this opinion.  As it stands, the majority’s summary decision is little more than a brief statement unduly restricting bargaining.  The majority’s decision is consequently inconsistent with the Statute’s policy promoting collective bargaining, and with general principles of administrative law requiring a decision maker to make clear the reasonable basis for a decision.  Accordingly, I dissent.