THE LIMITS OF BACK PAY ORDERS

Dear Fedsmill,

I just saw the Authority’s May 22, 2019 decision in which it chose not to enforce a 2017 FSIP final order.  That order required an agency to implement a salary increase retroactive to 2015 as part of its new term agreement. I am shocked.  Doesn’t the law say that FSIP has the power to “take whatever action is necessary” to resolve an impasse? (5 USC 7119(c)(5)(B)(iii)). If this decision holds up, how should we respond to it?

/s/ Colleen DeBurg 

Dear Colleen:

Rather than focus just on the Panel’s ability to set salaries, which only a few unions bargain over, let’s assume the Panel did the same thing with a transit subsidy dispute. For example, imagine that in May 2019 FSIP increased the subsidy the agency was to pay and made its order 24 months retroactive. Lots of unions bargain those subsidies.

Before the Panel can exercise the very wide latitude the section of the law you mention provides it, there must first be an “impasse” because the law (7119(c)(1)) only let’s FSIP resolve impasses. (FSIP defines as impasse as something over which “the parties are unable to reach agreement.” (5 CFR 2470.2(e))  Suppose the parties’ prior term agreement included a transit subsidy of $100.00 a month and said, “If either party opens this agreement to renegotiate its terms, the agreement will remain in effect until the next term agreement is implemented.”  Such a clause would mean there was no dispute over the subsidy for the period that agreement was in effect.  In fact, there was enforceable contract language, not just a practice, spelling out that it would be $100.00 until the next agreement was implemented.

Moreover, if the Panel tried to impose enforceable terms for the months prior to the when the new agreement became effective, it also would have violated 7119(c)(5)(C).  That states Panel orders are only “binding on such parties during the term of the agreement, unless the parties agree otherwise.”  Moreover, if either party insisted on changing the prior term agreement, it probably would have violated law under the covered-by doctrine. In short, there was no impasse over the 2015-2017 subsidy, and, therefore, no Panel jurisdiction.

If the union believes it is entitled to a retroactive subsidy, it should file a ULP alleging the delay in negotiating the increased subsidy was due to something illegal the agency did. If after a due process ULP hearing before a judge and maybe even review by the federal courts the agency is found to have violated law in bargaining, then it would be legal to order the subsidy be retroactive. The Panel does not have the power to do what FLRA cannot do under 7118(a)(7)(B) without giving the agency full due process.  If it could that would make the Panel more powerful than the Authority, its parent agency when enforcing law. If the union chooses not to pursue this path, so be it.

Now let’s get back to the section of the law you mentioned stating that the Panel can take whatever action is necessary. That is true, but you must read the rest of the 7119(c)(5)(B)(iii) sentence which requires that Panel actions not be “inconsistent with this chapter to resolve the impasse.”

Another section of that chapter of the law includes the Back Pay Act (BPA) (5 USC 5596) which requires that before anyone in the federal government can awarded retroactive pay a four-part criteria must be met, namely,

  1. there must be a decision by “an appropriate authority” that
  2. employees were affected by an “unjustified or unwarranted personnel” action based on
  3. a “violation” of law, regulation or a collective bargaining agreement, and which
  4. resulted in the “withdrawal or reduction” of all or part of the pay, allowances, or differentials of the employee.

The problem with the case you mention and our hypothetical modification is that–

  1. OPM regulations do not list FSIP as “appropriate authority” under the BPA,
  2. Although a compensation decision is a personnel action there, was no legal finding that the subsidy given employees between 2015 and 2017 was unjust or unwarranted,
  3. No law, regulation or bargaining agreement violation was found; the Panel just saw a need to increase the subsidy to maintain comparability, and
  4. The subsidy paid between 2015 and 2017 was not the result of an agency withdrawal or reduction of pay.

Unless the BPA criteria are met, a Constitutional principle of sovereign immunity bars the retroactive compensation of employees.

Pushing for the Panel to have the power to impose retroactively effective contract provisions could be dangerous for unions. For example, imagine that a prior term agreement gave the union local president 100% official time and the Panel ordered not only that that be reduced to 50% official time in the new term agreement but retroactive two years.  That local president would owe the agency a year’s worth of pay. Or suppose it ordered a $50.00 monthly reduction in transit subsidies in the new contract and retroactive two years. Each member would owe the agency about $1,200.00. Given that one of the two political parties has  chosen not to staff the Panel with certified, professional, HR/LR neutrals, but with hard-core, union-hating, party operatives, it could be a disaster for unions to give the Panel the power to impose retroactively effective orders.

Don’t feel bad about missing this limitation on the Panel’s powers. Only the most experienced negotiators on the union side of the bargaining table were even aware of this legal trap until the idea got out back in 2015 through some sloppy protection of a union’s institutional secrets. The Panel itself had awarded retroactive compensation in other earlier cases and not even been challenged.

As for your question about how to respond, we are going to leave that up to individual unions after we point out one thing of critical importance, i.e., keep your eye on the money.  If the union wins its arguments by appealing the FLRA decision to court, which should take about a year, members getting transit subsidies would likely get about $6,000.00 in retroactive, tax free subsidy compensation.  WHA HOO!  But if the union appeals and loses, the members will get no retroactive money. BOO HOO!  If the union signed the agreement in May 2019 after the FLRA decision by severing the question of retroactive transit subsidies, the members would have received at least $1,200 in subsidy payments by the time the court rules in 2020. If the union had signed the agreement in 2017 when the Panel decision came out by also severing the dispute over the retroactive payments, its members would have received about $3,600 in subsidy payments by the time the court rules. If the union had renegotiated the terms of the Panel-imposed order when it came out in 2017 and reached a settlement, there is a possibility its members could have received even more than $3,600. It is up to each union to decide what is best for its members.

(Of course, before you rely on any of this check with competent legal counsel. Perhaps they know of a law or other entitlement that permits the Panel to grant retroactive pay. Moreover, they may have their own thoughts about whether the union should adopt a high or low risk approach to getting relief.)

About AdminUN

FEDSMILL staff has over 40 years of federal sector labor relations experience on the union as well as management side of the table and even some time as a neutral.
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