WHEN PERFORMANCE AWARDS ARE DISCRETIONARY

What’s a union to do when management distributes cash performance awards as it sees fit without any negotiated formal criteria?  A lot, even if the FSIP said the agency could do it that way. The agency still must comply with all relevant the laws and regulations–and there are several a union could use to make the agency regret insisting on total discretion. We have covered some in previous posts concerning disparate impact claims. So, let’s look at other responses by describing what it would look like if managers had complete discretion. An agency typically will have employees distributed across several organizational components, located in dozens if not hundreds of offices, where they work in groups of ten or so under individual managers. Let’s also assume that the only agency-wide control imposed was only a budgetary one, e.g., limiting every second line manager to distributing awards that in total do not exceed one (1) percent of his/her employees’ total annual salary.

At the end of the award year the union could request award data under 5 CFR 293.311, FOIA, and/or through the labor statue assuming it had a particularized need, e.g., in contemplation of a grievance, to prepare for negotiations, to ensure regulatory compliance. Let’s assume the union asked the agency to give it a spreadsheet listing the following for every employee with the names sanitized: appraisal rating/score, grade, step, date of last award, amount of current year award, if any, organizational component, second line supervisor identification, and group or unit designation.  (If the agency objected on privacy grounds the union could request averages first to demonstrate and difference there and the need for more precise data.) Armed with that data the union should be able to determine whether the lower-level managers unilaterally imposed a system or formula of their own without telling the union, e.g., employees needed an overall appraisal score of 3.25 to qualify, everyone with a rating of 3.5 or above got a bonus, the amount of the award was tied to the employee’s grade, etc.  If the union can find managers adopted patterns, it can then file a ULP grievance claiming that management unilaterally implemented a policy or practice without notice and bargaining with the union.  Even when management has discretion as to what formula to use, it is still obligated to give the union advance notice and allow I&I bargaining if it adopts a policy or system for exercising its discretion, absent a waiver or covered-by defense. The remedy would likely be to demand negotiations with retroactive effect to any agreement reached.  Should that agreement generate back pay for some employees, the union could also get attorney fees. Check out “NTEU Reels in $2.6 Million” and NTEU, 63 FLRA 505 (2009)

Another liability the agency has once the union gets the data is if the union releases to employees the highlights of that data.  We doubt employees of one group would be happy if they found that employees in a similar group had lower award criteria or got more money in their awards for identical ratings and similar work.  Releasing that kind of information can make management very quickly regret its decision not to work out a formula.  After all, when the union works out the formula with management it commits to stand by that formula and defend it even before its own members.

But the biggest liability an agency has when it insists on retaining total discretion about who gets awards is that the union can encourage members to file grievances and/or charges claiming illegal discrimination based on disparate treatment.  (Actually, the union doesn’t need employee approval to file the grievance, but it would really help.) Under the law if two similarly situated employees of an agency are treated differently and they are of different races, genders, national origins, ages or disability status, the harmed employee often will have a legitimate discrimination claim.  It is not as hard to prove as you may think and can generate considerable settlement power even if you can’t fully prove your allegations. There is a federal employee case known as Lisa K. Russell v. Anthony J. Principi, Secretary of Veterans Affairs. (D.C. Cir, 2001) Ms. Russell charged that she did not receive a performance award because of illegal discrimination.  The court said, “If Plaintiff could prove that [s]he failed to receive a monetary award because of unlawful racial or national origin discrimination, [s]he could recover compensation under Title VII.”  It then listed three things the employee must prove to toss the burden onto the agency to come up with a good explanation of why it did not grant an award to the harmed employee.  The employee need only establish:

• she is a member of a protected class, i.e., race, gender age, national origin, etc;
• she suffered an adverse employment action, i.e. she lost out on an award and the positive impact it might have had on a future promotion; and
•  the unfavorable action gives rise to an inference of discrimination. (Typically, that is done by pointing to a similarly situated employee who got an award the grievant didn’t or a bigger award, e.g., works for the same award decision-maker, same job, grade, performance rating, etc.)

Everyone is in a protected class so long as the person treated better than him/her is of a different race, gender, age, national origin, or disability status.  (Actually, both can even be over 40, but if the harmed employee is substantially older he could still have an age discrimination claim.)  This court and others have held that denial of an award is an adverse employment action.

Once the employee demonstrates those three things, the agency has to identify a legitimate reason for treating the grievant less favorably. As soon as the agency places that reason(s) on the record, the union and employee get to show it is based on incorrect facts, facts management did not have when it made its decision, improper criteria, etc..  Showing the stated management reason is not proper is called showing that it was a pretext for something else. (If the collective bargaining agreement or agency regulations/policies require that award decisions be based on the fair and equitable treatment of employees (or some similar measures), the union could win even if the unfair award decision did not amount to discrimination.)

If the union and employee succeed in showing it was pretext, generally the arbitrator, hearing officer or judge decides there was illegal discrimination.  The normally appropriate remedy is to give the employee the award retroactively, with interest, attorney fees, an opportunity to prove compensable damages up to $300,000., and an order that the agency show cause why it has should not discipline the manager who made the discriminatory decision.

To give you a better idea of the activity and pressure a broad union challenge of disparate treatment discrimination could create on management we have outlined a hypothetical comparison of the award distributions in one work group.  Look it over to identify potential discrimination claims.  We offer our thoughts below this data table.

Employee,   Gender,    Age,              Race,      Appraisal,     Award

1                  Female      Under 40              White     4.0                $1,000.00

2                 Female      Under 40              Hispanic 3.5                $500.00

3                 Female      Under 40              Black       4.0                $500.00

4                Male           Under 40             Asian        4.5                $1,200.00

5               Male           Over 40                Hispanic  5.0                $1,000.00

6               Male          Over 40                 Black        4.0                  None

7              Female       Under 40              White       4.0                $500.00

Without knowing anything more than the facts above, the union could reasonably allege that —

• Employee 6 is potentially a victim in comparison to Employees 1 and 7 based on Gender, Race, and Age.
• Employee 5 is potentially a victim in comparison to Employee 4 based on Race and Age given #5 higher appraisal score and lower award.
• Employee 3 is potentially a victim in comparison to Employees 1 based on Race.
• Employee 7 is potentially a victim given that Employee 7 got the same award amount despite a significantly lower appraisal score.

Filing a grievance or even EEO discrimination claim would force the manager to explain on the record the reasoning and evidence behind each of these decisions.  The odds are worth the effort that the union will learn something about what management did and why, perhaps identify a violation of law, and demonstrate to management why management needs the union’s input and support when making award decisions.

We admit this is an aggressive strategy, not one designed to enhance a feel-good relationship between the union and management. But neither is denying employees any role in award decisions or protection against disparate treatment a relationship-builder. If a union promptly trains all its representatives how to pursue this strategy, it should not be long before it gets a call from management suggesting  that perhaps it does want union involvement in award decisions.

We have given you a very quick and generalized overview of this approach.  Given that the law is involved, check with a union attorney for specific guidance if you come across something that looks worth pursuing.