PETER SUTTON’S VERY HOT POTATO

Peter, the Acting FLRA General Counsel, has a very hot potato in his lap. A case working its way through one of the regional offices stems from the fact that the FSIP ordered an agency to retroactively implement a salary scale increase in a unit where salary is negotiable. The agency has refused to execute the agreement arguing that the FSIP does not have the authority to award back pay for a variety of reasons. Given that the Panel has ordered retroactive salary increases in the past, FSIP clearly thinks it has the legal power to do so and presumably Peter is predisposed to defend that. If he does file a ULP complaint, it will take about two years for the case to work its way through to a final decision from the full Authority and another year if that is appealed to the courts. Assuming an unfair labor practice is found and sustained, the agency will likely owe a bucket full of back pay. However, if the agency’s refusal to execute is sustained, not only does any chance of back pay disappear, but the prospective salary increase the Panel ordered will be delayed for that two or three year litigation period. Employees will lose thousands of dollars they would have had but for the ULP complaint. That raises the question of what is the better course of action for the General Counsel.In light of the potential for a huge employee loss of compensation, it is time to consider the odds of winning the ULP complaint. Among the arguments that favor the Panel being allowed to award back pay are the following:

1. The Panel has awarded retroactive salary scale increases in several prior cases without being overturned.
2. The Panel has the authority to “take whatever action is necessary…to resolve an impasse.” (5 USC 7119(c)(5)(B)(ii))

Maybe we are being harsh, but those seem to be the only arguments favoring the FSIP’s power to award retroactive salary increases, and even they are not without flaws. The fact that it has previously awarded retroactive salary scale increases does not mean that FLRA or the courts agree it has that authority. Until the issue is put before them, there is no legally significant decision on whether the Panel has this authority. As for the second issue the full quote is, “take whatever action is necessary and not inconsistent with this chapter to resolve an impasse.” The Back Pay Act is part of the chapter and it has stringent requirements that must be met before back pay can be granted. It will be argued that even if the Panel does have the authority to award back pay it must do so consistent with the BPA, not just because it thinks that would be a “swell thing to do.”

On the other side of the table are the following arguments suggesting that the Panel may not award retroactive salary increases–or if it can it can only do so under certain conditions:

1. Before the U.S. government can be required to pay retroactive compensation or money damages, there must be a waiver of its sovereign immunity. Moreover, the waiver must be “unequivocally explicit,” not implied. Title 5 USC 5344(b) is an example of an explicit waiver.
2. The Authority has ruled that the FSLMR Act is not a waiver of sovereign immunity. See Federal Aviation Administration, Detroit, 64 FLRA 325 (2009))   That would seem to mean that even though the Act gives a union the right to negotiate compensation in certain bargaining units that is not a waiver of the agency’s sovereign immunity.
3. The Authority has ruled that the Back Pay Act (BPA) (5 USC 5596(b)) is a waiver of sovereign immunity, but it is a limited waiver requiring that certain conditions be met before the waiver activates.
   1. One criterion is that back pay can only be ordered by an “appropriate authority.” The recognized “appropriate authorities” are listed in 5 CFR 550.803 and include, “(f) the Federal Labor Relations Authority and its General Counsel, (g) the Foreign Service Labor Relations Board, (h) the Foreign Service Grievance Board, (i) an arbitrator in a binding arbitration case.”  The Panel is not listed, which presents a hurdle that the FLRA GC will have to clear. Similarly, Panel Orders are not listed in 5596(b) which does mention unfair labor practices and grievance decisions. The omission of the Panel in both regulation and statute will likely be read as strong evidence that neither FSIP nor its appointees are not permitted to apply the BPA waiver.  Indeed, in a similar case the Comptroller General found that the U. S. Special Counsel was not an “appropriate authority” empowered to order corrective action because it was not listed in the OPM regulation. (See Attorney Fees: Authority of the Special Counsel, MSPB, 59 Comp. Gen. 107 (1979)
   2. A second criterion of the BPA is that the back pay entitlement must flow from an “unjust and unwarranted personnel action.” That requires that the GC show the back pay order was founded upon a conclusion that a statute, regulation, mandatory personnel policy or agreement provision was violated. Does a retrospective examination of a contract provision establishing a salary scale and the conclusion that it could have been written differently qualify as a violation?
   3. The third criterion is that there was a “withdrawal or reduction of pay, allowances or differentials.” Does a failure to reach agreement earlier on a salary scale increase qualify as a withdrawal or reduction? Perhaps of greater significance is the Comptroller General’s opinion that granting a federal employee additional salary beyond that to which s/he is legally entitled risks violating the criminal prohibition against illegal gratuities. (See 18 U.S.C. 201(c)(1)(B)).  The CG does not see a retroactive salary increase unconnected to a violation of law, regulation, policy or existing agreement as pay. “When an employee has been paid the compensation lawfully fixed for his services by the head of the agency he is not legally entitled to claim more and the Government’s obligation in the matter is fully satisfied. Payment to him of an additional amount solely upon an administrative determination that he is justly entitled thereto would be tantamount to granting him a gratuity or involve the exercise of a power which the Congress generally has reserved to itself.” B-252215, March 24, 1993

Ironically, the Panel has twice before stated that it must comply with the Back Pay Act. (See Department of the Navy, Norfolk Naval Shipyard, Portsmouth, VA and Local 4015, AFGE, 92 FSIP 109 (November 6, 1992). See also Department of the Air Force, Whiteman Air Force Base, MO and Local 2361, AFGE, 88 FSIP 102 (September 16, 1988).) Those decisions could make it hard to explain why it did not apply the Act in this case, even if it is an appropriate authority.

4.   Given that there is no record that a party previously has raised the sovereign immunity-Back Pay Act objection to a Panel order for a retroactive salary increase, the Panel appears not to have jurisdiction over the issue under the Carswell rule.

We believe that the Panel and interest arbitrators have the same authority under the Statute to consider duty to bargain issues which arise in the negotiation impasse. That is, if the Panel can resolve an impasse relating to a proposal concerning a duty to bargain issue by applying existing Authority case law, the Panel may do so. (See Carswell Air Force Base, Texas and American Federation of Government Employees, Local 1364, 31 FLRA 620 (1988))

The Panel itself has described its Carswell jurisdictional limits as follows: “…the Panel and interest arbitrators may resolve duty-to-bargain questions concerning union proposals raised by employers in the course of its proceedings by applying the results of previous FLRA decisions where “substantively identical” proposals have been found negotiable. DHS, Coast Guard and AFGE, 12 FSIP 157 (2013)

5.   To the extent that the foundational policies of the FSLMR statute enter into consideration, the Authority has repeatedly recognized that, “Congress intended to foster contractual stability and repose. In this regard, courts and the Authority have held that the Statute embodies policies of …”enabling parties to rely on the agreements that they reach, once they have reached them.” SSA, ODAR and AFGE, 67 FLRA 597 (2014).  Where the parties have agreed an agreement remains in effect until a new one is implement, not only is stability and repose rejected, but “covered-by” questions begin to arise suggesting there was not even an obligation to bargain over the issue.  If the parties have not agreed to extend the life of the agreement, a retroactive order conflicts with the near sacrosanct concept that once the parties reach impasse the terms and conditions of the pre-existing agreement and/or practice remain in effect until a new agreement is reached.

6.    One might argue that an order to retroactively increase a salary scale is akin to a retroactive bargaining order (RBO), which the FLRA and courts have found appropriate to remedy ULP findings. However, several obstacles stand in the way of it being considered a persuasive comparison. First, FLRA is an appropriate authority for back pay purposes. Second, no one has yet challenged whether even the FLRA can impose a retroactive bargaining order involving a money issue without also satisfying the Back Pay Act requirements. It is an untested precedent, at best. Third, FLRA imposes an RBO only after giving an agency due process protections of formal charges, an evidentiary hearing before an ALJ, and review by higher authorities. The Panel cannot provide that.

The General Counsel has to choose between seeking enforcement of a Panel decision, which we admit is generally an important task, and enforcing the FLRA Carswell rule as well as it numerous decisions applying the Back Pay Act and enforcing sovereign immunity. His decision will have a huge impact on the increasing number of federal sector parties that bargain salary and other money benefits.  That makes this a big deal for many federal sector LMR advocates—and an especially big deal if one is a party to a pending or developing FSIP retroactive compensation decision. Stay tuned. This decision could involve millions and make any delay in reaching a new term agreement involving compensation matters very costly. Parties have way to restructure agreements to evade liabilities, but if time has taught us anything intellectual apathy, egos, and arrogance often prevent that.