$50 MILLION IN BACK PAY OR 210,000 DAYS OF RESTORED LEAVE OR OPTION 3?

IRS has a tough decision to make.  An arbitrator just ruled that when it furloughed employees for three days in 2013, it violated the law.  But rather than impose a specific remedy, he told the parties to negotiate a “status quo ante” remedy and to come back to him for a specific decision if they can’t agree.  There are three obvious options that highlight how complex a remedy decision can be. 

The Background

Before we get to the three options, here is a quick review of the case.  When the idea of budget sequestration started to look likely in the summer of 2012, NTEU asked IRS management to sit down to begin talking about its plan as well as impact and implementation issues.  IRS ignored that union request and one other NTEU sent over in February 2013.  The agency did not give NTEU its plan until late March, at which time it announced that there would be a furlough and that it would begin in 60 days—with or without a union agreement.  It even began advertising to the public the days it had chosen to shut the agency down totally so that all employees could be furloughed simultaneously.   When the 60 days passed and there was no agreement, IRS implemented by furloughing employees for three individual days spread over different pay periods. The union filed a national grievance on behalf of all employees charging that IRS had failed to allow enough time to bargain when it ignored union requests to bargain and then dictated the furlough would start in 60 days.  The arbitrator agreed given that ULP case law requires that “Notice, to be timely and effective, should be given to the exclusive representative sufficiently in advance of implementation in order to permit the bargaining process to be completed prior to actual implementation.” (AFGE, 44 FLRA 988 (1992). By asking to begin discussion seven months before management issued its first notice, the union undermined the agency’s ability to blame the union for the delay.

The agency also tried to avoid guilt by using the “necessary functioning” exception that allows agencies to implement changes before agreements are reached when a delay would impede an agency’s ability to efficiently and effectively carry out its mission.  (Check out NTEU, 64 FLRA 127 (2009) for a good explanation of the “necessary functioning” defense.)  The arbitrator said IRS did not meet the criteria of that exception.   After all, IRS took the ridiculous position that in order to efficiently and effectively carry out its mission it was necessary to stop functioning. (Or to use MSPB lingo, it promoted the “efficiency of the service” for the IRS to shut down rather than operate.)  Words like oxymoronic, inane, absurd and idiotic come to mind.

The Remedy Options

“Option 1”  The first option the parties have to remedy the harm done employees is for IRS to issue about $50 million in back pay checks to unit employees.  Although the arbitrator speculated that the Back Pay Act may bar him from imposing it as a remedy, leading to a reversal and remand, nothing legally stops the two parties from agreeing to it.  “But for” the fact that IRS illegally implemented its furlough plan, the employees would have worked on the three furloughs days imposed on them.   Whether IRS would have had to furlough them anyway for three other days is a different issue and one that IRS did not address in the record.  In fact, the agency never seemed to rebut union evidence that the agency had failed to include about $90 million in available funds in its calculations to justify the need for a furlough and that the agency finished the year with a budget surplus large enough to cover the furlough.   The record is now closed and under FLRA precedent those facts are all the parties can rely on to make the decision.  The arbitrator would be well within his rights if he imposed a back pay order if settlement negotiations fail given FLRA case law precedent on the power of any factual finding he makes, even implicit ones and the high burden the agency would have to overturn that finding, e.g.,

  • Contrary to the Agency’s claims, the Arbitrator found that the Union provided information “sufficient to establish the [b]argaining [u]nit [employees] who would have been available for [overtime] work assignment[s] and be[en] paid for the time[s] that the [overtime] records [were] not available.” ….Relying on that information and incorporating it into his remedy award, the Arbitrator thus made factual findings that the employees would have been available and would have been paid the overtime. AFGE, 66 FLRA 737 (2012)
  • If an arbitrator makes such a finding, and an agency does not challenge it as a nonfact, then the Authority will not find an award deficient under the second BPA requirement. Id. And a direct causal connection between the contract violation and the loss of pay may be “implicit” from the record and the award. AFGE, 65 FLRA 1040 (2011).
  •  … the Authority stated that it “should uphold an arbitrator’s remedy determinations unless it can be shown that these determinations are ‘a patent attempt to achieve ends other than those which can fairly be said to effectuate the policies of the [Statute.]”  NTEU, 48 FLRA 566 (1993).

Aside from finding $50 million in a year when Congress is about to cut its budget by hundreds of millions, there are other problems with this remedy.  Under law the agency can only pay unit employees.  Supervisors and other non-unit never had a right to delay implementation until bargaining was complete. There is no clear legal authority for paying them.

“Option 2”   IRS could agree to give everyone three days of leave.  During bargaining the union had proposed that rather than force all employees to take furlough time on the three days management chose, it should allow people to work those days if they agree to charge at least three annual or sick leave days as furlough days before the end of the fiscal year. For example, if an employee had the last two weeks of August already approved for vacation, surgery, or an FMLA absence, the employee would be permitted the tell IRS to charge some of those days as furlough days. The advantage is that even though the employee would still have lost pay for three days he would save three leave days.

There is also a “but for” connection here that seems to satisfy the Back Pay Act. Had IRS not closed its doors and barred it employees from working those three days, they would have worked and been paid.  Moreover, if the parties never reached an agreement before the end of the fiscal year employees always had the right to tell their managers to charge some days of approved leave as furlough days, if needed. Only management’s refusal to agree to that would have stopped it from happening once the agency said it needed them to not work three days before the end of the fiscal year.

The advantage of this solution is that it costs almost nothing to administer if the agency just credits everyone with three days of leave to be used later.  While the bookkeepers may require IRS to record a book liability of three more leave days, this would not cost IRS a dime in actual money.  Moreover, employees cannot use the leave until management approves the request–just like any leave.  It could take years for some employees to burn off those days. All that is great for management in comparison to writing a $50 million dollar check and it might be a little easier to give non-unit employees an equivalent amount of time off over the next two or three years than it would be to give them back pay.  But this option likely would mean that some employees would get repaid leave even if they never took any leave during the furlough period of 2013.

“Option 3”  Ironically, this is probably the most defensible one under the Back Pay Act for the union if the agency forces the union to go back to the arbitrator, but it comes with a lot of disadvantages for the agency.  Under this approach, the agency would determine employee-by-employee whether they took leave during the furlough period and what kind of leave it was, e.g., annual or sick, so that the same kind of leave can be restored.  It also could ask them whether they want to get the leave back or just waive any remedy.  (Some will tell IRS to forget about any remedy, but we would not let them near IRS money in the future or close to windows on high floors.)  For example, if Sally used only one day of leave during that time, that is all she would get back.  If Jack used one day of annual and two of sick, he would get back one day of annual and two of sick.  If Alice had only two days of LWOP during the furlough period, she would get two days of leave credited or cash. This should more than satisfy the Back Pay Act requirement of a specific remedy so that no one unjustly profits from the grievance, but require a huge amount of staff work to administer.  Additionally, it would probably drive the union’s attorney fee request high, high into the six-figure territory as it clocked hours helping employees through the remedy maze—not to mention official time usage.  Conceivably, the money this option saved by individualizing the remedy– as opposed to giving everyone three days of leave– would off-set those costs.  Given that IRS employs thousands of seasonals, temps, and part-timers who may not have had to serve three full days of furlough, there is a good chance this is the most appropriate remedy under law.  Unfortunately, for IRS it is not the most manageable.

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We wish the two parties luck unraveling this one.

 

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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