WHY DID NTEU GIVE AWAY ALMOST $700 MILLION OF ITS CBP MEMBERS’ MONEY?
Actually, a guy named Tony gave it away for them, but I will get to that later. As far as I know, the largest arbitration battle in the history of federal sector labor relations ended with the Customs and Border Protection (CBP) Service required to pay its employees $900 million in back pay, plus interest. I know it was $900 million because CBP attorneys filed briefs with the U.S. Court of Appeals confirming that the arbitrations “would require the Government to pay nearly $700 million (plus interest) in back pay awards,” and “An additional back pay award ordered by the FLRA in a third related case, now pending in the Fourth Circuit, threatens additional liability of nearly $200 million (plus interest).” (See CBP briefs in Homeland Security v. FLRA, D.C. Cir. No. 15-1351 (March 9, 2016)). Yet, despite the FLRA and court refusing to overturn the $900 million debt, in the end NTEU agreed to let CBP pay only around $200 million. Given that the court’s decision left CBP no choice but to pay the money, why didn’t the union demand full payment? See if you can figure it out after I give you a few more facts and share my reasoning.
Soon after the 9/11 disaster the Customs Service leadership unilaterally terminated its employees’ scheduling policies. It told local managers they were free to change shift times and assignments at will and as often as they wanted, even daily. Customs HQ did not advise them of any regulatory or statutory requirements. The idea behind this scheme was that terrorists could not plan when to sneak across the border if even employees had no idea when they would be guarding it. This created absolute chaos in the lives of about 25,000 employees. They had no way to plan for childcare, their own school attendance, or other obligations outside work to their churches, their medical care, their com munity, etc. Moreover, it wrecked havoc with their sleep schedules.
NTEU pushed back with a two-pronged attack on this insanity once it became clear that CBP had no intention of working with the union to reduce the severe disruption to employee lives. First, the union filed a grievance alleging that a refusal to negotiate before implementing the changes violated the collective bargaining agreement. That case demanded back pay for any hours the employee would have worked that he did not work due to last-minute assignment changes. It also filed a grievance claiming CBP was violating 5 USC §6101. That statute required agencies to schedule employees so that they had two consecutive days off a week and the same start times every day that week. CBP was ignoring both of those requirements. Again, NTEU demanded back pay for hours not worked that should have been. Both cases would have required most of the back pay to be paid at an OT rate because the employees had already worked more than 8 hours those days.
The cases went to arbitration and NTEU won both of them. (Actually there were four arbitration decisions thanks to the Bush Administration’s Homeland Security reorganization that brought new groups of employees into NTEU’s Customs unit.) The decisions were rendered by some of the most renowned arbitrators in the country (Gootnick, Meredith, Simmelkjaer, and Vaughn). FLRA upheld each affirming that CBP’s back pay obligation began in 2001 You can find the decisions by clicking on these case decisions: 64 FLRA No. 190, 65 FLRA No. 205, 68 FLRA 157, and 68 FLRA 253. In those four cases there was only a single, one-time dissent.
Once FLRA rejected CBP exceptions, the agency effectively threw itself on the mercy of the court asking the DC Federal Circuit Court to find some way to void its $900 million back pay obligation because it was so large. As noted above, the court announced, consistent with long-standing precedent, it had no jurisdiction over the case, leaving CBP no option other than to pay the money—or convince NTEU to give it a big break.
And that is where the public record of the case stopped until suddenly NTEU signed a deal relieving CBP of having to pay employees over $600 million they were entitled to. Consequently, we can only draw on logic and reason to figure out what happened between the court room and the settlement signing.
That begins with recognizing that the biggest winner in that deal was CBP. Off the top of my head, I can’t recall ever hearing about a case where the union had such an ironclad, indisputable, legally sustainable claim and gave away so much of it. Even a 50-50 split would have given employees another $250 million.
Why would a union allow that? Obviously, it thought it was getting something out of the deal, but what? In this case, it is possible that the NTEU President, Tony Reardon, realized that forcing full–or even a 50%–payment could have caused CBP to cut back on current employee perks, such as overtime pay, the hiring of new employees, training, and perhaps even furloughs. That would likely have cost him substantial votes during his upcoming re-election. Additionally, had he insisted on CBP paying out as ordered a big chunk of that money would have benefited already retired employees, many of whom were no longer union members. They had no votes that could hurt or help Tony, making them politically expendable. Consequently, rather than paying employees for any harm done since 2001 as the arbitration decisions ordered, Tony also agreed to let CBP only pay employees for harm done since 2010. Eight plus years of harm were forgiven, resulting in more money for current union members. If that was his thinking, it certainly helped CBP management.
Another advantage for Tony is that by signing a deal before the next convention where he had to run for reelection, he avoided having to explain why this case that began in 2001 was not settled yet.
Some chatter on the grapevine at the time was that Tony believed a CBP management argument that appropriations laws prohibited any agency from paying employees for harm done more than six years before the payment date. He may have, but that flies against the clear language of 5 USC §5596(b)(2)(C)(4) allowing arbitrators to order back pay retroactive to six years before the grievance was originally filed, not resolved. It also ignores the fact that CBP had never raised that argument before any of the arbitrators or FLRA. When it brought it up for the first time before the Court of Appeals, the judges refused to even listen to it. But most confusing is that NTEU had a history of forcing agencies to distribute back pay retroactively due for decades, e.g., its “special rates” victory distributing millions back decades. See also our post entitled, “How Far Back Can Back Pay Go?” citing many similar cases. So, why did they cave in now?
One of the things supporting the idea that Tony could have put his political interests over those of the members is the political structure of NTEU. Trump’s eyes would roll back in his head and he would shudder uncontrollably for days if he had the power over the people he represents that an NTEU President (NP) does over the union’s members.
The NTEU NP has total and exclusive power to make deals with management. S/he need not ask the Executive Board’s permission, nor that of the local union leaders on whose behalf the grievance was filed. Nor can the General Counsel or the employees legally entitled to the money veto a deal the NP wants to make. So, if you are thinking that an NTEU NP could never put his/her own interests above those of the members because of the internal system of checks and balances, STOP! History has shown that there are no effective checks and balances inside NTEU.
Yes, members could have filed a ULP claiming NTEU violated its duty to fairly represent them, especially older and retired employees, but there was no evidence certifying what motivated the NP to give away $600+ million of their money. Moreover, they would have had to hire their own attorney because the 80+ NTEU staff attorneys work for the union’s NP, not for the union members. The NP is the client, not the members.
As for other explanations of Tony’s actions, I cannot think of any that benefited the CBP members. In fact, when he agreed to limit back pay checks to six years before the settlement rather than as law provides nearly a decade earlier, he set a terrible precedent for all federal sector unions.
Yes, there could be another explanation for Tony’s decision; maybe even one that makes him out to have been fully justified, if not a hero. I invite NTEU to make that known if there is. I will be glad to post its explanation and, if appropriate, a retraction.
Otherwise, I hope NTEU will consider putting some guardrails around the NP’s power to settle grievances, especially multi-million dollar ones. Would it be so hard to require the NP to canvas the local union presidents of the bargaining unit involved before giving their members’ money away? Unions ratify newly negotiated collective bargaining agreements. Why not mega-grievance deals?
