DON’T DO THESE BACK PAY DEALS
Not long ago we posted two pieces about how the FSIP and interest arbitrators do not appear to have the right to order new compensation provisions be retroactively implemented. See “Peter Sutton’s Very Hot Potato,” “Say ‘Thanks, But No Thanks’ to Back Pay From FSIP or Interest Arbitrators- Part 2” and Part 1 of that article. Since then we have been asked whether an agency and union can agree on their own to a compensation-generating clause being retroactively implemented. While we will all have to wait for the Authority and/or courts to resolve the case making its ways through the FLRA ULP process now to get a definitive answer, Fedsmill believes that neither the Panel nor arbitrator can—unless they comply with the Back Pay Act.
The law is quite clear that no federal official can agree in collective bargaining negotiations or grievances to pay money to compensate employees for things that happened in the past unless they do so under the Back Pay Act (BPA). If two parties take two years to reach agreement to implement a child care or public transit subsidy program, they cannot agree to make the payments retroactive to cover the last 24 months unless they can show that 1- there was an unjustified and unwarranted personnel action, 2- as determined by application of law, regulation, policy or existing collective bargaining agreement, that 3- resulted in a reduction or withdrawal of compensation entitling employees to 24 months of back pay.
Some folks apparently believe that if the union and agency negotiators simply agree among themselves that the BPA criteria were met that is enough and all is legal. We are virtually certain that they are very wrong. Any audit of agency pay actions or even a motivated whistleblower could shine a bright light on the deal and force it to be undone. That will be unfortunate for both parties, but worse for the employees who under law would probably be obligated to pay back the money they received with interest.
We hear through the grapevine that FLRA believes it can win the pending ULP because 1- the Supreme Court said that salaries and other forms of compensation are negotiable so long as the federal agency head has the discretion to set them, and 2- the NLRB has long recognize that private sector salary negotiations include demands for prospective as well as retroactive compensation. While it is right on both counts, the Authority is missing the fact that private sector negotiators are not bound by the Constitutional principle of sovereign immunity nor limited to waiving it only when certain criteria specified in statute are met and retroactive pay was not at issue before the Court.
We realize that this hurts unions more than agencies since unions are usually the ones pushing for compensation increases and agencies are usually the ones dragging their feet on a deal. There are some ways around the devastating impact delay can have on unions, but they will each have to find what works for them once this pending case is resolved. When you couple the news that OPM’s leadership is drooling over a chance to “reform” the GS salary system with the pending FLRA that could make compensation bargaining delay very, very costly for employees we just might be in the middle of a Compensation Modernization Kickoff.