Less than four months ago we wrote about how FLRA had upheld an arbitrator’s decisions awarding what likely will be over $100 million in back pay to Customs and Border Protection (CBP) Officers because management violated the law about how to schedule employees.  Well, FLRA just upheld another NTEU arbitration victory that orders back pay as far back at the late 90’s and that is likely to generate just as much money.  This case proves so many things about how an agency should not operate a labor relations program, but before we get to those lessons learned, let’s review what happened.

CBP, and even before it the US Customs Service, had a negotiated deal with NTEU for how overtime would be assigned.  Soon after 9/11, management announced it was canceling that national formula and giving its local executives at each of about 300 ports around the country the authority to do what they felt was necessary when assigning OT.  NTEU tried to stop that change, but was unable to do so. Even the courts held that management had the right, given how the union had responded to the proposed change, to implement unilaterally the national change in policy.  However, when the local executives each started adopting their own formula to decide who was given what OT assignments, the union filed another ULP grievance.  This time it argued that just because national management had the right to give local executives discretion to do what they wanted, that did not mean the local managers could implement new policies or practices without giving the union advance notice and bargaining over the local impact.  The union won at arbitration, the FLRA upheld the arbitrator, and the U.S. Court of Appeals upheld the FLRA.

At that point, the arbitrator told the two parties to negotiate a specific back pay formula over the next 60 days or he would impose one.  Management refused to bargain anything, perhaps thinking that it would too complex for the arbitrator to unravel all the different factual situations to determine how much back pay was owed each employee.  But the union sidestepped that technical trap of any back pay case.  It merely asked him to order back pay and gave him ten formulas management was to use to calculate specific back pay amounts for each individual for every pay period going back well over a decade ago depending on how it violated the law from port to port.  The arbitrator agreed with the unprecedented back pay formulas NTEU negotiators designed in order to meet the strict requirements of the Back Pay Act, and now the FLRA has upheld the arbitrator in NTEU, 68 FLRA 524 (2015).  The agency threw the kitchen sink at this case hoping for something to break its way.  CBP argued that the remedy violated the Back Pay Act, the Anti-Deficiency Act and the Constitutional principles of sovereign immunity.  FLRA rejected each of those challenges and a couple of others.

Consequently, any CBP Officer who came from the NTEU- US Customs bargaining unit (or who has been added to it since 2007) and has lost overtime pay due to the grant of local discretion, dating all the way back to 1998 (or when they joined the NTEU unit if later), can now make a claim using these formulas for back pay with interest.  It remains to be seen whether retirees are entitled to any back pay or even an adjustment to their retirement annuities for salary they should have received but did not. We are also unable to tell you whether this case technically applies to CBP Officers who came from the former AFGE or NAAE units from Immigration and APHIS.

Now let’s turn to the lessons to be learned from this case for agency executives and managers.

  • Just a few days ago we wrote a piece entitled, “When Performance Awards Are Discretionary” about the dangers of giving local managers in a nationwide bargaining unit the discretion to implement their own policies, practices or working conditions. While an agency might have a management right to do so, it must realize that can come with a huge liability.  When local managers use their discretion they still owe the national exclusive representative advance specific notice and delay until all bargaining is complete.  If not, back pay liabilities will likely be adding up along with interest and attorney fees.
  • CBP spent three years bargaining a national contract with NTEU starting in 2007.  Over 100 issues went to the Panel for an impasse decision.  Yet, apparently the agency never offered the union concessions on the future overtime articles or any other topic in return for NTEU dropping this case or agreeing to limit its liability. During the time the agreement was under development from 2007 to 2010, the union had not yet received favorable decisions from the FLRA and the courts.  Consequently, it would have been a much more motivated deal maker then than now.  Agency leaders obviously decided to roll the dice with government funds and just lost in a huge way.
  • This is just a suspicion on our part, but we would not be surprised if the LR staff told agency leaders that “we have a good case here,” to build their resolve to fight the union.  (Let’s put aside for a moment how wrong they were, based even on the case law in place back in 2004-5 when NTEU filed this case.) However, no matter how good a case anyone thinks they have, executives are insane if they do not also ask LR, “OK, now assume that we do lose.  What is the worst case in terms of our liabilities?”  If you jump out of a plane at 10,000 feet with a parachute, you have a good chance of surviving. But on the slim chance something goes wrong, the alternative is bad enough that it should factor into one’s decision to jump.
  • Here is another suspicion.  This case shows all the signs that the many agency executives who touched this case all decided to kick the can down the road, knowing that by the time this finished they would be long-retired with comfortable end-of-career awards, welcomed pensions, and probably a lucrative consulting gig somewhere.  They got paid to make the tough decisions correctly for the agency and it appears that they chose to duck the issue.  What a great job it must be to get paid to do something while having the right to just not do it if you wish.

Ironically, the odds are high that the LR managers who were right in the middle of this disastrously foolish strategy for dealing with NTEU are still around.  Perhaps they are the ones who will finally be held accountable for this.

About AdminUN

FEDSMILL staff has over 40 years of federal sector labor relations experience on the union as well as management side of the table and even some time as a neutral.
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