TEST YOUR LABOR RELATIONS BACK PAY ACT KNOWLEDGE
Many grievances are about getting back pay for employees, which makes it very important that practitioners know what can and cannot be done with back pay. Unfortunately, there are a lot of traps in the Back Pay Act (BPA) that can void an otherwise fair grievance settlement and hurt the covered union members deeply. Read through the hypothetical grievance settlement below and then answer the multiple choice question that follows. You can find the answer to the quiz at the end of this post.
GRIEVANCE SETTLEMENT FACTS
This is a settlement of a grievance filed by Diane Dinan, Sue D’Alessio, and Clara Dutton, each of whom is a GS-510-11 Accountant in Group 6 in the Agency’s Loudonville, NY office and represented by the Federation of Independent Technocrats (FIT). The employees’ grievance was filed on October 20, 2016 claiming that each of these named employees received unfair annual appraisals due to the practices of the manager of Group 6. The three employees requested retroactive score adjustments, incentive awards, retroactive promotions to GS-12 and all other appropriate remedies. The following constitutes the complete settlement of their grievance.
- The appraisal score of each of the employees in Group 6 will be increased by one level in Critical Element 4 retroactive to their 2016 annual appraisal. For example, if an employee of Group 6 received a score of 3 (Fully Successful), it will be increased to a 4 (Exceeds Expectations).
- A pool of money will be created by the agency in the amount of $20,000.00 dollars to compensate the employees of Group 6 for the violation of their rights and damages suffered.
- Each of the employees will receive a proportionate share of the $20,000.00 based on the following formula:
- Employees who did not receive a 2016 performance award will receive 5 shares.
- Employees who did receive a 2016 performance award will receive 3 shares.
- Employees who have more than three years of seniority in Group 6 will receive an additional share.
Once shares have been awarded, the total number of shares in Group 6 will be added up and divided into the $20,000.00 figure to determine the value of each share.
- In addition, the employees of Group 6 will have their Public Transit subsidy for Fiscal Year 2017 increased to a maximum claimable amount of $200.00 per month for one year.
- This agreement is entered into and effective on October 28, 2017.
Jethro Tull Maryann Faithful
President, Local 6 FIT Executive Director, U.S. ABCDEFQ
THE TEST QUESTIONS
Which of the following statements is accurate about the grievance settlement above? Check as many as you think are accurate.
- The settlement meets the requirements of the law and is enforceable?
- Even if the settlement has some legal flaws it is a settlement agreement, not an arbitration award that can be appealed to FLRA, and obviously neither party is going to challenge its legality.
- Paragraph #3 could render this settlement illegal and unenforceable because it confirms that the back pay is based on the mere potential that an employee may have been harmed rather than confirmation that the employee was harmed
- Even if it is illegal, there is nothing that can be done about it. For example, the government can’t make employees pay the money back.
- Paragraph #1 could render this settlement illegal and unenforceable because it extends the grievance remedy to employees not covered by the grievance.
- Paragraph #2 could render this settlement illegal and unenforceable because it provides that the government will pay out a specific amount of money without any connection to an actual amount that an employee lost.
- Paragraphs #3 (a & b) could render this settlement illegal and unenforceable because they base payments on a share system rather than the precise amount lost per individual due to a specific personnel action.
- Paragraph #2 could render this settlement illegal and unenforceable because it confirms that the $20,000 is at least partially based on the agreement to compensate employees for “damages.”
- Paragraph #3c could render this settlement illegal and unenforceable because it bases the employees’ back pay on their seniority.
- Paragraph #4 could render this settlement illegal and unenforceable because it grants back pay without any reference to a violation of a right the employee had to receive the $200.00 per month during FY 2017.
Federal agencies are not authorized to distribute appropriated funds for mistakes made in the past unless some statute waives the government’s Constitutional immunity against money damages. That concept is commonly called “sovereign immunity.” FLRA has held that the Back Pay Act is a waiver of the government’s sovereign immunity, but it is a limited waiver because each of the criteria of the act must be met before a dime of back pay can be distributed. Those criteria are in 5 USC 5596(b) and are follows:
(1)An employee of an agency who, on the basis of a timely appeal or an administrative determination (including a decision relating to an unfair labor practice or a grievance) is found by appropriate authority under applicable law, rule, regulation, or collective bargaining agreement, to have been affected by an unjustified or unwarranted personnel action which has resulted in the withdrawal or reduction of all or part of the pay, allowances, or differentials of the employee—
(A)is entitled, on correction of the personnel action, to receive for the period for which the personnel action was in effect—
(i)an amount equal to all or any part of the pay, allowances, or differentials, as applicable which the employee normally would have earned or received during the period if the personnel action had not occurred, less any amounts earned by the employee through other employment during that period; an
We like to think of the Act as having the seven criteria we underlined, but others might combine one or two of them. With that background, it is time to identify which of the statements above is accurate.
1.The settlement meets the requirements of the law and is enforceable?
This is not accurate as you will see below.
2. Even if the settlement has some legal flaws it is a settlement agreement, not an arbitration award that can be appealed to FLRA and obviously neither party is going to challenge its legality.
This is not accurate. The government’s Constitutional immunity applies to all payments whether ordered by arbitrators or agreed to be union-management parties. Settlements can be just as illegal and unenforceable as arbitration awards. If this was not so, it would mean that a union and agency rep could get together and sign a deal to distribute any money left in an agency’s appropriations just for the thrill of it all. Moreover, if they did sign a settlement they knew was likely illegal it would not be a stretch to imagine someone charging them with fraud. Check out Social Security Administration, 63 FLRA 313 (2009)
3. Paragraph #3 could render this settlement illegal and unenforceable because it confirms that the back pay is based on the mere potential that an employee may have been harmed rather than confirmation that the employee was harmed.
This is accurate. Back pay cannot be doled out merely because an employee was “potentially” harmed. Typically, there must be a finding by an “appropriate authority,” such as an authorized agency official or arbitrator, that the specific employee getting the money actually suffered an unjustified or unwarranted personnel action, i.e., a violation of law, regulation or collective bargaining agreement. Check out Oklahoma Air Logistics Command, 57 FLRA 715 (2002). See also 56 FLRA 541 (2000).
4. Even if it is illegal, there is nothing that can be done about it. For example, the government can’t make employees pay the money back.
This is not accurate because the government generally has the right to force employees to repay any compensation given them if it was paid in violation of law or government-wide regulation. It is a right it can exercise up to six years after the overpayment of the employee, even if s/he has retired or left the agency. It also can demand the employee repay the money with interest. Check out the CFR to understand the process.
If you think a signed agreement prevents an agency from welching on a deal, thumb through AFGE, 62 FLRA 350 (2008) and especially the part that says, “…if an agreement term is found to be in violation of the Statute, it is considered void and unenforceable.” You would be surprised how many self-proclaimed legal experts are not aware of that.
If you think that it is highly unlikely that an agency would try to void a grievance settlement it signed, you are thinking too narrowly about who can void an agreement. A higher level official than the agency head who signed the deealcan order an agency head not to implement an agreement or even undo it. Beyond that, any schmo off the street can blow the whistle on the deal by contacting GAO’s Fraudnet, or the U.S. Special Counsel, or the OPM Inspector General or a sympathetic Congressional rep, or even the local U.S. Attorney. The order to unravel an illegal deal can come from many, many places outside the agency that made the deal.
5. Paragraph #1 could render this settlement illegal and unenforceable because it extends the grievance remedy to employees not covered by the grievance.
This is an accurate statement. FLRA generally overturns arbitration awards granting back pay to employees who were not covered by the grievance. Check out Dept. of Transportation, Maritime Admin, 61 FLRA 816 (2006) and particularly the discussion leading to this statement, “As previously explained, we agree that, insofar as the award provides relief to non-grievants, it is deficient.” Since this grievance was filed only by three employees and there is no indication that it covered “all similarly affected employees,” only the three employees can get any money. That seems only right because adding employees after the remedy has been set will almost always lower the amount of money available to those employees actually harmed. Only Dinan, Dutton and, D’Alessio are entitled to any money.
6. Paragraph #2 could render this settlement illegal and unenforceable because it provides that the government will pay out a specific amount of money without any connection to an actual amount that an employee lost.
This is an accurate statement. The government cannot just make a ball park guess up front as to how much money it owes and promise to distribute that entire amount irrespective of how much a review of records shows it actually might owe. That would amount to potentially giving money away. Remember the part of the BPA that states payment is limited to, “an amount equal to all or any part of the pay, allowances, or differentials, as applicable which the employee normally would have earned or received during the period if the personnel action had not occurred.” Check out Federal Bureau of Prisons, W.Va, 64 FLRA 775 (2010) where the Authority wrote, “When an arbitrator finds that an agency violated an agreement provision in assigning overtime and awards back pay to several grievants, but doesn’t determine which grievants would have received the overtime assignment absent the violation, an award of back pay to all the grievants violates the Back Pay Act.” Another way FLRA addresses this issue is to demand a “causal connection” between the harm suffered by an employee and back pay. See Dept. of Army, Redstone, Ala, 68 FLRA123 (2014)
Setting the amount owed in advance of tracing the violation to a specific amount owed creates an unnecessary vulnerability for the settlement’s enforcement.
7. Paragraphs #3 (a & b) could render this settlement illegal and unenforceable because the payments are based on a share system rather than the precise amount lost per individual due to a specific personnel action.
This is an accurate statement. Once again, payment must be equal to (or a lesser part of) what the employee would have earned is s/he had not had a right violated. Share systems are legally enforceable for distributing money for future actions, such as performance awards, but not retroactively—unless the employees in this hypothetical had an award system that did pay out in shares. Check out Dept. of Air Force, Limestone, Me., 43 FLRA 1087 (1992) for a case where employees filed a ULP because some employees received shares of a back pay settlement unconnected to any unjustified personnel action they ever suffered. FLRA agreed that the bogus shares lowered the money available for those employees truly harmed and overturned the union settlement.
Another good case for understanding this element of back pay is Dept. of Army, Ft. Hood, TX, 56 FLRA 1121 (2001) where the Authority wrote, “…where an arbitrator fails to identify a non-discretionary agency regulation or a collective bargaining agreement provision that would entitle a grievant to back pay for performing the duties of a higher-graded position, there is no unjustified or unwarranted personnel action which would entitle the grievant to an award of back pay under the Back Pay Act.”
Finally, if you have doubts about this the FLRA has written, “Moreover, where an arbitrator finds that an agency violated an agreement provision in the method of assigning overtime and awards backpay to several grievants, but does not determine which of the grievants would have received the overtime assignment, or that all of them would have been assigned overtime, had the agency complied with the agreement, an award of backpay to all of the grievants violates the Back Pay Act and is deficient.” U.S. Army, Fort Eustis, 38 FLRA 362 (1990)
8. Paragraph #2 could render this settlement illegal and unenforceable because it confirms that the $20,000 is at least partially based on the agreement to compensate employees for “damages.”
The government is not authorized to pay its employees damages with rare exception, e.g. for a FLSA or civil rights act violation. Check out Dept. of Defense< Memphis, TN., 43 FLRA 228 (1991) where FLRA could not have stated it more clearly, i.e., “…an award of punitive damages against the federal government is contrary to law.” (Special Note: if the settlement is reached in connection with a violation of the FLSA or a civil rights act the Back Pay Act normally does not apply because those laws have their own back pay criteria.)
9. Paragraph #3c could render this settlement illegal and unenforceable because it bases the employees’ back pay on their seniority.
This is an accurate statement. Seniority never has anything to do with the amount of compensation an employee should earn. Seniority might entitle an employee to a particular overtime assignment, but what s/he gets paid an hour for overtime has no connection to seniority. Once again, payment amounts must be based on what an employee actually lost.
10. Paragraph #4 could render this settlement illegal and unenforceable because it grants back pay without any reference to a violation of a right the employee had to receive the $200.00 per month during FY 2017.
This is an accurate statement. If the parties agree to also include in their deal a boost to last year’s public transit subsidy they had better base it on an act that meets all the criteria of the BPA. They just can’t toss in a back pay sweetener to make the deal acceptable. Ironically, if the parties agreed to increase the subsidy for a future year that money can be paid because it is not back pay. Behind every employee’s back pay check there must be a finding that s/he “…was subjected to an unwarranted personnel action.” U.S. Penitentiary, Marion, Ill., 60 FLRA 728 (2005). Nothing in the facts of this case suggests that the employees’ transit subsidy rights were ever violated. While it is a convenient way to give employees tax free money, it is not legal to toss in a back pay sweetener.
We know it is very tough to stay focused when a party reaches a deal with another party to settle a legitimate problem. Those moments are generally filled with excitement, relief, and a desire to go celebrate. But it is especially important for unions to strictly follow the BPA criteria because it is the members who get hurt if the government demands the money back down the road. If retired employees do not have it, their pensions can be reduced to pay the debt. Since complicated back pay settlements must clear so many hurdles to be legal, we recommend that you contact an attorney in BPA matters when negotiating settlements. Do not rely on what we have said above as legal advice. Very small wording errors in a settlement can void the deal. So have each checked by a competent attorney with BPA expertise.