[ v47 p884 ]
47:0884(84)NG
The decision of the Authority follows:
47 FLRA No. 84
FEDERAL LABOR RELATIONS AUTHORITY
WASHINGTON, D.C.
_____
AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES
LOCAL 3295
(Union)
and
U.S. DEPARTMENT OF THE TREASURY
OFFICE OF THRIFT SUPERVISION
(Agency)
0-NG-2040
_____
DECISION AND ORDER ON NEGOTIABILITY ISSUES
June 15, 1993
_____
Before Chairman McKee and Members Talkin and Armendariz.(1)
I. Statement of the Case
This case is before the Authority on a negotiability appeal filed by the Union under section 7105(a)(2)(E) of the Federal Service Labor-Management Relations Statute (the Statute). The appeal concerns the negotiability of three proposals. For the reasons which follow, we find that sections 1, 2, 3, 4, 5, and 10 of Proposal 1, which concern matters related to employee compensation, and Proposal 4, which concerns employee health insurance coverage and premium contributions, are nonnegotiable. We find that the first sentence of section 6 of Proposal 1, which provides for a joint review of the classification of bargaining unit positions, is negotiable. The second and third sentences of section 6 of Proposal 1, which provide for arbitration of classification disputes, are nonnegotiable. Proposal 3, which establishes procedures for selecting employees for certain assignments, is negotiable.
II. Preliminary Matters
The Agency filed, in the alternative: (1) a motion to dismiss the petition for review based on the Union's alleged failure to explain the meaning of its proposals and support its assertion that they constitute appropriate arrangements; and (2) a request to file a supplemental statement of position. In its reply brief, the Union addressed, among other things, the meaning of its proposals and the basis for its assertion that they constitute appropriate arrangements. Thereafter, we provided: (1) the Agency an opportunity to file a supplemental statement addressing the Union's contentions regarding appropriate arrangements; and (2) the Union the opportunity to file a supplemental reply brief.
In its supplemental statement, the Agency requests the Authority to dismiss the Union's petition for review on the grounds that: (1) by providing a statement of the meaning of the Proposals 1 and 4 which allegedly is "directly contrary" to the wording of the proposals, the Union is attempting to change the meaning of the proposals; and (2) the Union fails to adequately explain the manner in which Proposal 3 is intended to apply. Supplemental Statement at 2. In its supplemental reply brief, the Union asserts that the Agency's supplemental statement should not be considered by the Authority because, according to the Union, the supplemental statement was submitted to the Authority before the Agency had received permission from the Authority to file it. Alternatively, the Union requests the Authority to ignore that portion of the Agency's supplemental statement which, the Union claims, addresses matters other than those related to the Union's contentions regarding appropriate arrangements.
Subsequently, the Agency filed a letter correcting misstatements allegedly made by the Union in its supplemental reply. The Union filed a reply requesting the Authority to close the record as of the date the Union filed its original reply brief. The Union asserts that, as neither party was prevented from making arguments in their initial briefs, there is no basis on which to permit supplemental positions.
As we previously granted permission to the parties to file supplemental positions, we deny the Union's motion to close the record as of the date the Union filed its initial reply brief. However, we will not consider the letter filed by the Agency in response to the Union's supplemental reply brief or substantive arguments in the Union's reply to the Agency's letter because these submissions were unsolicited. See 5 C.F.R. § 2424.8.
We also deny the Agency's motion to dismiss the petition for review on the grounds that the Union: (1) failed to support its assertion that the proposals constitute appropriate arrangements; (2) changed the meaning of Proposals 1 and 4; and (3) failed to explain the manner in which Proposal 3 is to apply. In this respect, as indicated above, the Union filed a reply brief addressing the meaning of its proposals, how they are intended to apply, and the basis for its assertion that the proposals should be considered as appropriate arrangements. Subsequently, the Agency filed a supplemental statement addressing the arguments raised by the Union in its reply brief. We find that the record establishes the meaning of the disputed proposals in this case. Finally, questions concerning the extent to which Union statements of intent are consistent with the wording of disputed proposals are properly addressed in the analyses of the proposals.
As the Union was afforded an opportunity to respond to all arguments raised in the Agency's supplemental statement, we deny the Union's request that we ignore that portion of the Agency's supplemental statement which addresses matters other than those related to appropriate arrangements. Finally, we deny the Union's request that we issue one decision on Proposals 1 and 4 and a second decision on Proposal 3. In our view, the Union has not established any basis for us to do so.
III. Proposal 1, Sections 1, 2, 3, 4, 5 and 10 and Proposal 4
Proposal 1
Section 1. Retroactivity. The provision of this Article will be retroactive to the earlier of: 1) January 1, 1991; or 2) the earliest possible under law.
Section 2. Placement in the schedule and range.
A. An employee will not be paid at an actual rate which is below the minimum established for the grade of the position.
B. An employee who would receive an increase to base pay under this Article will receive the full amount of the increase, up to the maximum rate in the range of the applicable grade. Where a promotion is involved, this maximum shall be the maximum rate in the post-promotion grade.
Section 3. Rate schedules and salaries.
A. The rate schedule in effect on October 30, 1991, or any higher rate schedule having been properly implemented, will be the schedule governing salaries until adjustments are made pursuant to this Article.
B.1. Each employee's actual base pay rate and the rate schedule applicable to the Washington Office of OTS [Office of Thrift Supervision] will be increased by 7.5% upon the effective date of this Agreement; by 7.5% as of the first pay period of the next succeeding 12-month period; and by 7.5% as of the first pay period of the third succeeding 12-month period.
2. Should a new Agreement not be implemented, as of the first pay period of any subsequent 12-month period(s), interim increases will be made which shall be equal to the percentage average of the preceding three annual increases. Corrective adjustments required by such new Agreement will be fully retroactive to the beginning of the applicable 12-month period.
Section 4. Contingency Pay.
A. The forms of direct compensation which may be made are: base pay, overtime pay, and contingency pay. The forms of contingency pay which may be made are: merit increases, bonuses, and incentive awards.
B. Contingency pay will be administered in accordance with the OTS' policies which were in effect on the effective date of this Agreement and provided to AFGE during the negotiation of this Agreement. The amount of a merit increase and/or bonus will be determined fairly and equitably and will not be reduced because of a promotion increase or base rate increase which an employee may receive.
Section 5. Promotion Amounts.
A. The amount of an employee's increase in base pay under a promotion shall be:
-- for single-grade interval promotions, between 6-10% of the applicable pre- promotion grade range under the applicable wage rate schedule in Section 2.B.
-- for double-grade interval promotion, between 12-15% of the applicable pre- promotion grade range under the applicable wage rate schedule in Section 2.B.
Section 10. Merit Pay Review.
A. During the term of this Agreement, the Employer and the Union will engage in a review of the Employer's performance-linked component of compensation. The purpose of this review will be to determine, based on the experience in OTS, cumulatively and from one appraisal year to another, whether and how merit pay should be implemented in OTS.
B. Each party reserves the right to reopen the subject of Merit Pay during the term of this Agreement, which reopening may occur at any time after payouts for the 1991 appraisal cycle are announced. By agreeing to this provision, neither party waives any claims it may have in regard to bargaining on specific proposals concerning performance- linked compensation.
Proposal 4
1. OTS will continue to pay the same percent of the total health insurance premium for the OTS health insurance program in 1992, as it paid in 1991.
2. Employees will not be required to increase the percentage of their contributions to the OTS health insurance program by more than the percent that the total premium was increased.
3. The OTS health insurance program will remain unchanged except for the premium changes contained in the draft memorandum provided to the Union on November 22, 1991.
A. Positions of the Parties
1. Agency
The Agency asserts that the Director of OTS, which was created by the Financial Institutions Reform, Recovery and Enforcement Act of 1989, Pub. L. No. 101-73, 103 Stat. 183 (1989) (FIRREA), was granted "extensive and wide-ranging authority to 'provide for the examination, safe and sound operation, and regulation of savings associations.'" Statement of Position at 6-7 (quoting 12 U.S.C. § 1463(a)(1). In particular, the Agency claims that, in order to enable OTS to attract and retain personnel necessary to carry out its mission, Congress provided the Director of OTS with the "sole discretion to fix employee compensation, both pay and benefits." Id. at 4. In this connection, the Agency relies on the wording of 12 U.S.C. § 1462a(g)(1),(2) which, according to the Agency, "frees the Director's discretion in fixing compensation" from restriction contained in laws applicable to Federal employees including "restrictions which might otherwise exist because of the collective bargaining obligations of [the Statute]." Id. at 11. The Agency also claims that the legislative history of 12 U.S.C. § 1462a(g) confirms that "the Director's compensation fixing authority was to be exercised in his 'sole' and 'exclusive' discretion." Id. at 12. The Agency argues that, as section 1462a(g) grants the Director of OTS sole and exclusive authority to set employee compensation and benefits, Proposals 1 and 4, which require bargaining over various aspects of employee compensation and benefits, are nonnegotiable.
Next, the Agency contends that Proposals 1 and 4 directly interfere with its rights to determine its mission and budget under section 7106(a)(1) of the Statute. By way of background, the Agency notes that "OTS is a non-appropriated funds agency funded by assessments levied on the industry it regulates[]" with the amount of the assessment based on each individual financial institution's asset size and soundness. Id. at 24. The Agency asserts that, as more than 90 percent of its income is based on these assessments, its budget is "inextricably wedded to the asset base of the industry it regulates." Id. at 24-25. The Agency also notes that, because the "thrift industry is shrinking and will continue to do so[,]" the Agency's income will "decline[] dramatically." Id. at 32.
The Agency contends that Proposal 1 meets the Authority's first budget test set forth in American Federation of Government Employees, AFL-CIO and Air Force Logistics Command, Wright-Patterson Air Force Base, Ohio, 2 FLRA 604, 608 (1980), aff'd as to other matters sub nom. Department of Defense v. FLRA, 659 F.2d 1140 (D.C. Cir. 1981), cert. denied, 455 U.S. 945 (1982) because the proposal prescribes a particular program or amount to be included in the budget. In support, the Agency notes that it already has budget line items for employee salaries, promotions, bonuses and awards.
Next, although the Agency argues that Proposal 1 also meets the Authority's second budget test, the Agency initially claims that the second test is invalid. In this regard, the Agency argues that Congress intended to place control over an agency's budget with agency management and that, under the second test, the Authority "usurps that control . . . ." Id. at 35 n.16. Applying the second budget test, the Agency notes that section 3 of the proposal would result in a 2.3 percent increase to its 1991 Washington Office budget, a 3.2 percent increase to its 1992 budget, and a 3.1 percent increase to its 1993 budget. The Agency argues that these increases are "very significant" because it is projecting a more than 21 percent reduction in income over the same period. Id. at 40-41. The Agency also argues that these significant cost increases would not be offset by compensating benefits. Here, the Agency initially argues that, in view of the Supreme Court's ruling in Fort Stewart Schools v. FLRA, 495 U.S. 641 (1990), "any effort to measure intangible benefits . . . can no longer be maintained." Id. at 43. Nevertheless, the Agency argues that there are no intangible benefits in this case. The Agency asserts, for example, that "reducing turnover -- a predictable goal for most employers -- is no benefit to [the Agency][]" because the Agency already is attempting to reduce its work force by the end of the year. Id. at 43-44.
The Agency contends that Proposal 4 also meets both budget tests. With regard to the first test, the Agency argues that the proposal would "require [the Agency] to increase its budget line item for health insurance." Id. at 48. With regard to the second test, the Agency contends that Proposal 4 would result in cost increases that are significant and unavoidable and are not offset by compensating benefits. According to the Agency, the proposal precludes the Agency from increasing employee contributions yet requires the Agency to maintain a specific level of health insurance coverage.
The Agency asserts that the proposals do not constitute appropriate arrangements because they do not mitigate any adverse effects on employees resulting from the exercise of management's rights. According to the Agency, although the receipt of higher levels of compensation is a benefit to employees, "the Statute does not provide for the negotiation of 'appropriate arrangements' for employees who do not receive as great a benefit as possible . . . ." Id. at 54.
2. Union
The Union does not dispute the Agency's claim that Proposals 1 and 4 require the negotiation of the compensation and benefits to be provided to OTS employees. However, the Union asserts that, although the "FIRREA accorded [the Agency] the authority to establish its own systems of compensation and classification[,] FIRREA . . . did not specifically provide for compensation and classification of [Agency] employees because it did not identify the types or levels of compensation or the system of classification . . . ." Reply Brief at 8 (emphasis deleted). Moreover, according to the Union, nothing in the legislative history of the FIRREA "indicates that Congress intended to grant [the Agency] any exception to any of the bargaining obligations imposed on [the Agency] by [the Statute]." Id. at 40. The Union asserts that Congress intended only to permit the Agency to act independently of Department of Treasury and "'sister' financial regulatory agencies[.]" Id. at 42.
Next, the Union contends that Proposals 1 and 4 do not directly interfere with the Agency's right to determine its budget. With respect to the first budget test, the Union asserts that, as the Agency "already has programs which provide for all of the benefits in Proposals 1 and 4, those [p]roposals do not prescribe a particular program for inclusion in the [Agency's] budget." Id. at 51.
As to the second budget test, the Union argues that, although some of the proposals could result in increased expenditures by the Agency, none of the proposals "specif[ies], directly or indirectly, the amount that the [Agency] would spend on any particular program(s)." Id. at 53. In addition, the Union argues that proposals do not prevent the Agency from taking actions to reduce the costs resulting from the proposals such as, among other things, "reducing the numbers of employees; . . . changing the levels and types of benefits; and . . . taking other human resources management actions of its choosing." Supplemental Reply Brief at 14. Moreover, the Union argues that the 7.5 percent proposed increase would be reduced by any amount that the Agency has already provided. By way of example, the Union notes that, as employees received a "6.81" percent average pay increase in 1991, the Agency's "expense for base pay . . . would have increased by .69 [percent] (7.5 [percent] - 6.81 [percent])[.]" Reply Brief at 60 (footnote omitted).
As to its assertion that Proposals 1 and 4 constitute appropriate arrangements, the Union notes that, based on the Agency's statements that employee pay increases have been reduced over the past 3 years and that additional employees will not be hired or existing workloads reduced, employees are adversely affected by being required to "continue to work harder and harder without ANY pay increases, year after year." Supplemental Reply Brief at 20 (emphasis deleted). The Union claims that the benefits to employees resulting from Proposals 1 and 4 "include the ability to receive any periodic pay increase, and to prevent employees from being exploited by total subservience [by the Agency's current pay system] which permits pay increases only if and when funding is available, regardless of the level of employee performance." Id. (emphasis omitted).
B. Analysis and Conclusions
It is undisputed that sections 1, 2, 3, 4, 5, and 10 of Proposal 1 would require negotiation of compensation for OTS employees and that Proposal 4 would require the negotiation of health benefits for OTS employees. What is disputed is whether the Director of OTS has been provided with unfettered discretion to establish compensation and benefits for OTS employees so as to exempt such matters from negotiation.(3)
Where law or applicable regulation vest an agency with unfettered discretion over a matter, the agency's discretion is not subject to negotiation. See, for example, Illinois National Guard v. FLRA, 854 F.2d 1396, 1402 (D.C. Cir. 1988) (National Guard Technician Act, which allows the agency head to prescribe the hours of duty for technicians notwithstanding any other provision of law, commits decisions regarding technicians' work schedules to the agency head's unfettered discretion); Colorado Nurses Association v. FLRA, 851 F.2d 1486, 1492 (D.C. Cir. 1988) (Colorado Nurses)(because 38 U.S.C. § 4108 grants the Veterans Administration unfettered discretion to prescribe the working conditions of the employees in the Department of Medicine and Surgery, the agency was not obligated to bargain over the union's proposals); Police Association of the District of Columbia, National Park Service, U.S. Park Police, 18 FLRA 348 (1985)(Park Police) (statute provided exclusive procedure for minor disciplinary actions for bargaining unit members and, therefore, proposal that permitted appeals of disciplinary actions through the negotiated grievance procedure was nonnegotiable).
On the other hand, matters concerning conditions of employment over which an agency has discretion are negotiable if the agency's discretion is not exclusive and the proposals to be negotiated are not otherwise inconsistent with law or applicable rule or regulation. See, for example, Department of Veterans Affairs, Veterans Administration Medical Center, Veterans Canteen Service, Lexington, Kentucky, 44 FLRA 162, 163-66 (1992), petition for review filed sub nom. U.S. Department of Veterans Affairs v. FLRA, No. 92-1184 (D.C. Cir. Apr. 24, 1992); U.S. Department of Defense, Office of Dependent Schools and Overseas Education Association, 40 FLRA 425, 441-43 (1991) and cases cited therein; National Treasury Employees Union and Family Support Administration, Department of Health and Human Services, 30 FLRA 677, 682 (1987).
The statute relied on by the Agency in this case, 12 U.S.C. § 1462a(g), concerns the authority of the Director of OTS and provides as follows, in pertinent part:
(1) Appointment and compensation
The Director shall fix the compensation and number of, and appoint and direct, all employees of the Office of Thrift Supervision notwithstanding section 301(f)(1) of Title 31. Such compensation shall be paid without regard to the provisions of other laws applicable to officers or employees of the United States.
(2) Rates of basic pay
Rates of basic pay for employees of the Office may be set and adjusted by the Director without regard to the provisions of chapter 51 or subchapter III of chapter 53 of Title 5.
(3) Additional compensation and benefits
The Director may provide additional compensation and benefits to employees of the Office if the same type of compensation or benefits are then being provided by any Federal banking agency or, if not then being provided, could be provided by such an agency under applicable provisions of law, rule or regulation. In setting and adjusting the total amount of compensation and benefits for employees of the Office, the Director shall consult, and seek to maintain comparability with, the Federal banking agencies.
It is clear that section 1462a(g) provides the Director of OTS with significant authority to determine the pay and benefits for OTS employees. Specifically, section 1462a(g)(1) requires the Director of OTS to "fix the compensation" of OTS employees and pay them "without regard to the provisions of other laws" applicable to Federal employees. Section 1462a(g)(2) further provides that rates of basic pay of OTS employees may be set and adjusted by the OTS Director without regard to two specific provisions of title 5 of the United States Code relating to the pay and classification of General Schedule employees. Finally, section 1462a(g)(3) specifically authorizes the Director of OTS to establish additional compensation and benefits for OTS employees so long as the total compensation and benefits for OTS employees is comparable to the compensation and benefits provided to employees of other Federal banking agencies.
In determining whether the significant authority granted to the Director of OTS to determine the pay and benefits for OTS employees is unfettered and exclusive, we turn first to the express wording of section 1462a(g). We find that the inclusion of the phrase "without regard to the provisions of other laws applicable to officers or employees of the United States" in section 1462a(g)(1), relating to the payment of compensation, is a strong indication that Congress intended the Director of OTS to have unfettered discretion. In this regard, we are unable to conclude that the phrase has a different substantive effect from the wording in other statutes which has been held to exempt agencies from the obligation to bargain over matters otherwise affecting conditions of employment of bargaining unit employees. See Colorado Nurses, 851 F.2d at 1490 (where amendment to statute stated that "[n]otwithstanding any other provision of law, no provision of title 5 or any other law pertaining to the civil service system . . . shall be considered to supersede, override, or otherwise modify such provision of this subchapter[,]" court held that the agency's authority to determine conditions of employment was not subject to bargaining under the Statute); New Jersey Air National Guard v. FLRA, 677 F.2d 276, 283 (3rd Cir. 1982) (court found the wording of statute providing that it applied "'[n]otwithstanding any other provision of law . . .'" was "powerful evidence that Congress did not intend any other, more general legislation, whenever enacted, to qualify the authority of the [agency head] . . . .")(emphasis deleted); Park Police, (Authority determined that statute providing that it took effect "[n]otwithstanding . . . any other law[]" constituted an exception to the negotiated grievance procedures mandated by the Statute).
Standing alone, section 1462a(g)(1) would indicate to us that the Director was granted exclusive authority. However, in contrast to the broad wording of section 1462a(g)(1) relating to the setting of compensation for OTS employees, section 1462a(g)(2) provides that rates of basic pay of employees may be set and adjusted by the OTS Director without regard only to two specific provisions of title 5 of the United States Code. In addition, section 1462a(g)(3), which authorizes the Director of OTS to provide additional compensation and benefits for OTS employees, contains no wording expressly superseding, overriding or otherwise modifying the application of any other statute. When the three subsections are read together, it is not clear whether the Director of OTS was granted exclusive discretion to set the pay and benefits for OTS employees. Consequently, we find it necessary to look to the legislative history of section 1462a(g).
The legislative history of section 1462a(g) indicates that Congress sought to provide the Director of OTS exclusive, unfettered authority to set the pay and benefits of employees. For example, the House report accompanying the bill, as passed by the House, stated that: "The Director shall perform the duties of the office and exercise the powers of the office with the degree of autonomy equal to that of the Comptroller of the Currency." H.R. Rep. No. 101-54(I), 101st Cong., 1st Sess. 340 (1989), reprinted in 1989 U.S.C.C.A.N. 86, 136. As to the authority of the Comptroller of the Currency to set the compensation of employees in the Office of the Comptroller, the House report stated that "such compensation shall be determined by the Comptroller without regard to the provisions of any other law, including any provision of Title 5 of the United States Code . . . ."(4) H.R. Rep. No. 101-54(I), 101st Cong., 1st Sess. 409 (1989), reprinted in 1989 U.S.C.C.A.N. 86, 205.
We also note the following exchange concerning the authority of the Director of OTS to set compensation and benefits for their employees which took place on the floor of the Senate during the debate immediately preceding the passage of the bill, as reported out of the House-Senate Conference Committee:
Mr. Garn. In conference, Senate and House conferees voted to remove the House requirement that the Director of the Office of Thrift Supervision consult with the Secretary of Treasury when setting compensation levels. Does the Senator from Michigan agree that the vote affirmatively gave the Director sole authority over administrative and personnel matters at the Office of Thrift Supervision?
Mr. Riegle. Yes, I agree, Mr. President. And the conferees intended to give the Director authority parallel to that given the Comptroller of the Currency under the Act. Both have exclusive authority over all personnel related matters including authority to decide . . . compensation, including pay and benefits . . . .
135 Cong. Rec. S10,198 (daily ed. Aug. 4, 1989) (statements of Sen. Garn and Sen. Riegle).
The legislative history of the FIRREA also explains the apparent conflict between the wording of sections 1462a(g)(1) and (2) concerning the extent to which the Director's authority to set pay is exclusive. In this connection, section 1462a(g)(2), with respect to the authority of the Director of OTS, and 12 U.S.C. § 482, with respect to the authority of the Comptroller of the Currency, both provide that rates of pay may be set and adjusted without regard to the same two specific provisions of title 5 United States Code. Although there is no explanation in the legislative history of the reason for including such wording in section 1462a(g)(2), the legislative history indicates that such wording was included in 12 U.S.C. § 482 expressly to "confirm[] OCC's current exclusion from these provisions [of Title 5 United States Code] based on [OCC's] nonappropriated status." See H.R. Conf. Rep. No. 101-222, 101st Cong., 1st Sess. 457 (1989), reprinted in 1989 U.S.C.C.A.N. 86, 496. As noted by the Agency, OTS is a "non-appropriated funds agency funded by assessments levied on the industry it regulates." See Statement of Position at 24. In our view, it is reasonable to conclude that the wording in section 1462a(g)(2) expressly exempting the Director of OTS from specific provisions of title 5 United States Code was not intended to limit the broad preemptive wording of section 1462a(g)(1) but, consistent with legislative intent regarding 12 U.S.C. § 1202, merely was intended to confirm OTS's status as a nonappropriated fund agency.
Finally, we find nothing in the legislative history which indicates that Congress intended section 1462a(g)(3) to limit the exclusive authority of the Director of OTS to establish pay and benefits for OTS employees. In this respect, the legislative history indicates that section 1462a(g)(3) was enacted to confirm the authority of the Director of OTS to provide sufficient pay and benefits to attract and retain the necessary examiner and supervisory personnel to carry out the banking reforms provided elsewhere in the FIRREA. See, for example, 135 Cong. Rec. H4,971 (daily ed. Aug. 3, 1989), (statement of Rep. Oakar). However, as Congress also was concerned that the various Federal bank regulatory agencies would compete with each other for essential examiner and supervisory personnel, Congress sought to obligate the Director of OTS, as well as the heads of the other Federal bank regulatory agencies, to consult in order to maintain comparability of total pay and benefits provided to employees. See, for example, H.R. Conf. Rep. No. 101-222, 101st Cong., 1st Sess. 458 (1989), reprinted in 1989 U.S.C.C.A.N. 86, 497. In this connection, as noted with regard to the authority of the Comptroller of the Currency, "[t]he guiding standard is comparability in total compensation and benefits with compensation and benefits offered by the other Federal bank regulatory agencies." H.R. Conf. Rep. No. 101-222, 101st Cong., 1st Sess. 457 (1989), reprinted in 1989 U.S.C.C.A.N. 86, 496. In other words, section 1462a(g)(3) merely confirms the exclusive authority of the Director of OTS to provide whatever total compensation and benefits he deems necessary to attract essential personnel based on a congressionally mandated standard of comparability with the total pay and benefits provided to the employees of the other Federal bank regulatory agencies.
Based on the wording of section 1462a(g) as a whole, and the aforementioned legislative history, we conclude that the Director of OTS was granted sole and exclusive authority to set the pay and benefits for OTS employees subject to the limited requirement stated in section 1462a(g)(3), and restated in 12 U.S.C. § 1833b, that the Director of OTS consult with the heads of the other Federal banking agencies in order to maintain comparability among the Federal banking agencies regarding compensation and benefits.
As noted earlier, there is no dispute in this case that sections 1, 2, 3, 4, 5, and 10 of Proposal 1 would require negotiation of compensation for OTS employees, or that Proposal 4 would require the negotiation of health benefits for OTS employees. Therefore, as 12 U.S.C. § 1462a(g) provides the Director of OTS with sole and exclusive authority to establish compensation and benefits for OTS employees, these proposals are nonnegotiable under section 7117(a)(1) of the Statute because they are inconsistent with 12 U.S.C. § 1462a(g). In view of our determination that sections 1, 2, 3, 4, 5, and 10 of Proposal 1 and Proposal 4 are nonnegotiable on this ground, it is unnecessary for us to address the Agency's additional contentions concerning the negotiability of these proposals.
IV. Proposal 1, Section 6
Section 6. Classification.
The parties will jointly review the classification of all bargaining unit positions during the period 60 to 90 days after the effective date of this agreement. If discrepancies in the grading of a position under the OTS classification (grading) system remain after the ninetieth day, the Union may submit the disputed grading to binding arbitration in accordance with Article ___ (Arbitration). In that instance, retroactivity to correct undergrading that may be awarded will be consistent with Section 1 of this Article.
A. Positions of the Parties
1. Agency
The Agency notes that, 12 U.S.C. § 1462a(g)(2) explicitly exempts the Director of OTS from the classification system established by title 5 United States Code and that "in exercising his authority to set compensation, the Director has adopted a position classification system[]" which assigns grades to OTS positions based on the duties and responsibilities assigned. Statement of Position at 55. In this connection, the Agency asserts that, as matters related to the classification of OTS positions are "an aspect of the OTS Director's exercise of his sole and exclusive authority to set compensation[,]" section 6 of Proposal 1 is nonnegotiable for the same reasons discussed in connection with other sections of Proposal 1 and Proposal 4. Id.
Next, the Agency argues the section 6 concerns the classification of positions, a matter which is excluded from the definition of conditions of employment by section 7103(a)(14)(B) of the Statute. According to the Agency, the joint review referred to in section 6 is not merely a procedure under which the Union presents its views but, instead, "is a step in negotiating the classification of positions or a prelude to processing grievances where the [U]nion believes positions are classified improperly." Id. at 57. Consequently, the Agency claims that section 6 of Proposal 1 "is outside the scope of bargaining under the [Statute]." Id. at 58.
Finally, the Agency argues that, insofar as section 6 of Proposal 1 entitles the Union to submit disputes concerning the grades of positions to arbitration, it is inconsistent with section 7121(b)(3)(C) of the Statute which excludes from the negotiated grievance procedure grievances over the classification of positions.
2. Union
The Union disputes the Agency' claim that section 6 of Proposal 1 concerns classification matters which are excluded from the definition of conditions of employment by section 7103(a)(14)(B) of the Statute. The Union argues that the Authority has held that, among other things, reclassifications that result in downgrades can be subject to the negotiated grievance procedure. In this connection, the Union contends that, although section 6 "would not include a challenge to [the Agency's] determination to place certain duties, actions, or responsibilities in a position[,] . . . if 'discrepancies' in the grading of a position were found and not corrected, then the misapplication of [the Agency's] classification procedure could be the subject of a grievance." Reply Brief at 63. Moreover, the Union asserts that matters related to the Agency's classification system can be negotiated and grieved because, in the Union's view, section 7103(a)(14)(B) of the Statute excludes only those classification matters which are "required to be done pursuant to [5 U.S.C.] chapter 51[] . . . under standards administered by [the Office of Personnel Management]." Id. at 64. The Union asserts that as the Agency has been granted authority "to determine the compensation and classification of positions outside of chapter 51," the Agency's classification system is a "'matter' which is bargainable and grievable." Id.
B. Analysis and Conclusions
1. The First Sentence
Section 7103(a)(14)(B) of the Statute excludes matters related to the classification of positions from the definition of conditions of employment. Although the word "classification" is not defined in the Statute, it is commonly understood to mean the process by which a level of compensation is assigned to a particular position based on the duties and responsibilities of that position. See Roberts' Dictionary of Industrial Relations 102 (3d ed. 1986). As relevant in this case, the first sentence of section 6 of Proposal 1 obligates the parties to jointly review the classification of all bargaining unit positions. Nothing in the wording of the this sentence, or in the record in this case, indicates that this sentence would require the Agency to take any particular action concerning the classification of any bargaining unit position. Rather, this sentence creates a forum for the exchange of information between the Union and management concerning Agency classification decisions. Consequently, even assuming that the establishment of a classification system for OTS employees is an aspect of the Director's sole and exclusive discretion to set the compensation of OTS employees, nothing in the first sentence is inconsistent with that discretion. In addition, insofar as the first sentence merely provides for a forum for the exchange of information between the Union and management concerning classification decisions, we find that the first sentence is not excluded from the obligation to bargain by section 7103(a)(14)(B) of the Statute. As such, we find the first sentence negotiable. See, for example, National Treasury Employees Union and Nuclear Regulatory Commission, 31 FLRA 566, 575 (1988), reversed in part and enforced in part as to other matters sub nom. U.S. Nuclear Regulatory Commission v. FLRA, 895 F.2d 152 (4th Cir. 1990)(proposal establishing advisory committee to make recommendations as to the legality of performance elements and standards found negotiable).
2. The Second and Third Sentences
The second sentence of section 6 would provide for arbitration (with the retroactive corrective action specified in the third sentence) of disputes as to the appropriateness of the grade levels assigned to positions in the bargaining unit. However, section 7121(c)(5) of the Statute excludes from the coverage of a grievance procedure negotiated under section 7121(a) and (b) any grievance concerning "the classification of any position which does not result in the reduction in grade or pay of an employee." For example, U.S. Department of the Air Force, Scott Air Force Base, Illinois and National Association of Government Employees, Local R7-23, 38 FLRA 32, 36 (1990). Because the second sentence of section 6 of Proposal 1 provides for arbitration of the appropriateness of the grade levels assigned to positions in the bargaining unit, it is inconsistent with section 7121(c)(5) of the Statute. In addition, as the third sentence concerns the appropriate corrective action for employees found to have been undergraded as a result of the arbitration required by the second sentence, we find that the third sentence is inextricably linked to the second sentence, and is also inconsistent with section 7121(c)(5) of the Statute.
In reaching this conclusion, we reject the Union' claim that the term "classification," as used in the Statute, is limited to classification which is accomplished pursuant to a position-classification plan established by the Office of Personnel Management under chapter 51 of title 5 United States Code. We note, in this regard, that the Union has not referred to anything in the wording of the Statute, or in its legislative history, and no such reference is apparent to us, which suggests that Congress sought to exclude from either the definition of conditions of employment set out in section 7103(a)(14)(B), or the coverage of negotiated grievance procedures required by section 7121(a) and (b), only those classification matters accomplished under chapter 51 of title 5 Unites States Code. As such, we find that the Union has not established that, by exempting OTS classification matters from the classification scheme established under chapter 51 of title 5 United States Code, Congress sought to permit such matters to be negotiated or to be included in the scope of grievance procedures negotiated under the Statute.
V. Proposal 3
Where a reassignment(s) is to be effected, OTS will first solicit volunteers. If the number of qualified volunteers is insufficient, OTS will utilize qualified volunteers and the determination regarding which additional employees will be reassigned will be made by inverse seniority among qualified non-volunteers.(5)
A. Positions of the Parties
1. Agency
The Agency first states that it does not contend that Proposal 3 is nonnegotiable if the proposal is intended to establish a procedure for determining "which employee(s) to reassign to another location, shift, or organizational component in the same position code, from among those management has determined are equally well qualified for the reassignment." Statement of Position at 68. However, the Agency asserts that, "if the proposal is intended to establish a procedure for selecting an employee to reassign" to a different type of position, it directly interferes with the Agency's right to make selections from any appropriate source under section 7106(a)(2)(C)(ii) of the Statute. Id. at 70. According to the Agency, "there is a fundamental difference between reassigning an employee who has already been appointed to a particular type of position to the same type of position in a different office or on a different shift, and reassigning an employee to a different type of position." Id. at 70-71. In addition, the Agency asserts that section 7106(a)(2)(C) of the Statute permits it to "select the particular individual from any appropriate source, including when the source is the bargaining unit." Id. at 71. According to the Agency, "a proposal which would require management to select a particular individual on the basis of seniority would conflict with the right to make the ultimate selection." Id. at 74.
The Agency also states that it does not assert that the proposal is nonnegotiable if, under the proposal, the Agency "may set the qualification requirements, including such job-related personal characteristics as judgment, reliability and speed of work, and determine whether individual employees meet the qualification requirements[.]" Id. at 68. However, the Agency asserts that, if Proposal 3 is intended to set a "standard for determining whether employees are qualified, e.g., 'minimally qualified' under the standards of the Office of Personnel Management, so that the [A]gency would have to reassign the most senior volunteer even if that employee were the least qualified, but still met the minimal qualifications," it directly interferes with its right to assign employees under section 7106(a)(2)(A) of the Statute. Id. at 69.
As to the Union's claim that Proposal 3 is an appropriate arrangement, the Agency contends initially that the Authority's excessive interference test is a "fundamentally erroneous" interpretation of appropriate arrangements under section 7106(b)(3) of the Statute and should be abandoned. Id. at 87. However, applying that test, the Agency contends that an appropriate arrangement can only be an arrangement "that seeks to ameliorate, mitigate, or minimize the adverse effects (or impact or consequences) of the reserved management right which is exercised." Id. at 78 (citation omitted). In this respect, the Agency claims that, "by requiring management to reassign someone other than an individual management considers the best qualified for reassignment[,]" Proposal 3 "would not operate only to soften the expected adverse impact (or consequences) of the decision after the decision has been made or effected." Id. at 78-79 (emphasis in original). Further, the Agency argues that, even assuming employees would experience adverse effects resulting from reassignments, the proposal "does nothing to mitigate or ameliorate any of these effects." Supplemental Statement of Position at 9. Rather, the Agency contends that the proposal "would determine which employee(s) would 'suffer' these effects, reducing the likelihood for more senior employees and increasing the likelihood for junior employees, but it would do nothing to 'ease' the effects for the employee(s) actually reassigned." Id.
Moreover, according to the Agency, Proposal 3 "could seriously impact management's ability to get the necessary work done in a timely fashion through a reassignment." Id. In this connection, the Agency contends that reassignments may be effected for many different reasons, including a need to "accommodate an employee's disability or handicapping condition or to provide relief for an employee claiming sexual harassment." Id. at 10. The Agency claims that requiring it to seek volunteers in circumstances "where there is . . . only one employee or a small number of employees appropriate for the reassignment, would . . . pose an excessive burden . . . on the exercise of management's right[s] to reassign or select." Id.
2. Union
Initially, the Union "requests that the Authority dismiss with prejudice the [Agency's] conditional allegation of non-negotiability involving Proposal 3." Reply Brief at 36 (emphasis omitted). The Union acknowledges, in this regard, that the Agency also stated that Proposal 3 "would violate management rights if it 'limited' management's discretion to determine whether employees are equally well-qualified[,] or if it "'limited' management's discretion" to reassign employees to different types of positions. Id. at 37 (footnote omitted). However, the Union claims that the Agency's "conjectural discussion does not provide a basis to conclude that it is alleging that Proposal 3 is non-negotiable." Id.
Next, the Union contends that the proposal does not preclude the Agency from filling positions from any appropriate source because the proposal "would apply after the [Agency] had determined that a reassignment was necessary (i.e., an employer-initiated or involuntary reassignment)." Id. at 65. Further, the Union asserts that, under Proposal 3, the Agency "would be able to determine what qualifications are required for the position of reassignment, and whether an individual met them." Id. According to the Union, the proposal concerns the procedure by which a reassignment would be accomplished and is negotiable under section 7106(b)(2) of the Statute.
In addition, the Union argues that, if the proposal is determined to directly interfere with a management right, the proposal is an appropriate arrangement. In this connection, the Union claims that involuntary reassignments will adversely affect an employee because the employee will experience a "loss of continuity over assigned work, with resultant delay in completion of work for which the employee is held accountable[,] . . . [a] loss of high-productivity work time while the new position is being learned[,] . . . [and] the arduous condition of being required to learn and adjust to a new position." Id. at 66. Further, according to the Union, the "reasonably foreseeable adverse effects of a management-initiated reassignment include lower performance appraisal and small merit pay increase for at least the remainder of the appraisal year after the reassignment." Id. The Union contends that the solicitation of volunteers for reassignments would mitigate the hardship for employees who do not wish to be reassigned. In addition, the Union asserts that involuntarily reassigned employees "would benefit from the perception and reality that they were treated equitably by the [Agency]." Id. at 67.
Finally, the Union contends that Proposal 3 would have only a minimal impact on management's rights. In this respect, the Union notes that as the Agency would be able to determine qualifications needed for the position and the solicitation process would not begin until the Agency determined to fill the position by reassignment, Proposal 3 would only "require the [Agency] to hold off for a reasonable time to permit any interested employees to respond." Id.
B. Analysis and Conclusions
1. Preliminary Matter
We deny the Union's request that we dismiss the Agency's allegation of nonnegotiability as to Proposal 3, with prejudice, because, in the Union's view, the Agency's "conjectural discussion" does not provide a basis for finding Proposal 3 nonnegotiable. Reply Brief at 39. Although the Agency, in its allegation of nonnegotiability, made alternative arguments regarding the proposal, in its statement of position the Agency clearly stated that Proposal 3 directly and excessively interfered with its rights to assign and select employees under section 7106(a)(2)(A) and (a)(2)(C)(ii) of the Statute. In these circumstances, we find that the conditions for review of the negotiability of Proposal 3 have been satisfied.
2. Management's Right to Select
We reject the Agency's claim that, to the extent that Proposal 3 establishes a procedure for selecting an employee for reassignment to a different type of position, it directly interferes with the Agency's right to select under section 7106(a)(2)(C). In this connection, we note that an agency can be required to select a candidate for a position on the basis of seniority where management is able to determine the source from which it will select and the qualifications needed for the position. See, for example, Overseas Education Association, Inc. and Department of Defense Dependents Schools, 29 FLRA 734, 793 (1987) (DODDS)(proposal that required the agency to use seniority as a tie-breaker if management determined that two or more employees where equally qualified and where management had determined to make the selection from one source found not to interfere with management's right to select), aff'd as to other matters sub nom. Overseas Education Association, Inc. v. FLRA, 872 F.2d 1032 (D.C. Cir. 1988). However, proposals must preserve management's right to select from among best-qualified candidates or they will be found to directly interfere with management's right to select. See American Federation of Government Employees, Local 12 and U.S. Department of Labor, 38 FLRA 1573, 1579, (1991).
As relevant in this case, the Union has stated that Proposal 3 would apply only after the Agency has determined to reassign a bargaining unit employee. The Union also has stated that Proposal 3 permits the Agency "to determine what qualifications are required for the position of reassignment, and whether an individual met them." Reply Brief at 65. As the Union's statements are consistent with the plain wording of Proposal 3, they are adopted for purposes of this decision. Based on the Union's statements, Proposal 3 preserves not only the Agency's right to determine the appropriate source for reassignments, but also the right to determine whether particular candidates are equally qualified. When management finds that two or more employees are equally qualified and capable of performing under the criteria management chooses to apply, the procedure by which one of the qualified employees will be selected is negotiable as a procedure under section 7106(b)(2) of the Statute. See DODDS, 37 FLRA at 793, and cases cited therein. Consequently, we find that Proposal 3 does not directly interfere with management's right to select under section 7106(a)(2)(C) of the Statute.
3. Management's Right to Assign
The right to assign employees under section 7106(A)(2)(A) of the Statute includes the right to determine the qualifications and skills needed to perform the work of a position, including job-related individual characteristics such as judgment and reliability, and the right to determine whether individual employees meet those qualifications. See American Federation of Government Employees, AFL-CIO, Local 987 and U.S. Department of the Air Force, Warner Robins Air Force Logistics Center, Robins Air Force Base, Georgia, 35 FLRA 265, 269 (1990). As set forth above, the Union has stated that Proposal 3 applies only after the Agency has determined to reassign a bargaining unit employee and that the proposal permits the Agency to determine the qualifications required for the reassignment and whether an individual met them. We have adopted the Union's statements for purposes of this decision. Consequently, we find that, as Proposal 3 preserves the Agency's right to determine the qualifications necessary for the reassignment and whether individual employees meet those qualifications, it does not directly interfere with the Agency's right to assign employees under section 7106(a)(2)(A) of the Statute. See American Federation of Government Employees, AFL-CIO, Local 738 and Department of the Army, Combined Arms Center and Fort Leavenworth, Fort Leavenworth, Kansas, 33 FLRA 380, 383 (1988).
In view of our decision, it is unnecessary for us to address the parties' additional contentions concerning whether Proposal 3 also constitutes an appropriate arrangement under section 7106(b)(3) of the Statute.
VI. Order
The petition for review concerning sections 1, 2, 3, 4, 5, the second and last sentences of section 6, and section 10, of Proposal 1, and Proposal 4 is dismissed. The Agency must, upon request or as otherwise agreed to by the parties, bargain on the first sentence of section 6 of Proposal 1 and on Proposal 3.(6)
Opinion of Member Talkin, dissenting in part
I am not persuaded that the provisions of 12 U.S.C. § 1462a(g) of FIRREA grant the Director of OTS sole and exclusive authority to set the pay and benefits for OTS employees so as to relieve the Director of the obligation to bargain with the exclusive representative of bargaining unit employees over such matters. Rather, in my view, the legislation merely grants the Director discretion to determine employee compensation and benefits free from the constraints of Title 5 and other laws specifically governing such pay and benefit matters and ensures the Director's autonomy from the Department of the Treasury in exercising such discretion. Accordingly, I would conclude that FIRREA accords the Director of OTS precisely the sort of discretion over compensation that would permit and, indeed, require the Director to negotiate over the Union's proposals so long as they are not otherwise inconsistent with law or applicable rule or regulation. I, therefore, respectfully dissent.
FOOTNOTES:
(If blank, the decision does not
have footnotes.)
1. The separate opinion of Member Talkin, dissenting as to sections 1, 2, 3, 4, 5, and 10 of Proposal 1 and Proposal 4, appears at the end of this decision.
2. 12 U.S.C. § 1462a(g)(1) provides as follows:
(1) Appointment and compensation
The Director shall fix the compensation and number of, and appoint and direct, all employees of the Office of Thrift Supervision notwithstanding section 301(f)(1) of Title 31. Such compensation shall be paid without regard to the provisions of other laws applicable to officers or employees of the United States.
3. We note, in this connection, that sections 4(A) and 10(A) of Proposal 1 do not expressly require negotiation of pay and/or benefits. However, neither party distinguishes between or among sections 1, 2, 3, 4, 5, and 10 of Proposal 1, or Proposal 4, in relation to their dispute over whether these proposals conflict with what the Agency alleges to be the sole and exclusive authority of the Director of OTS to determine employee compensation and benefits. Accordingly, for purposes of resolving this issue, and noting that interpreting sections 4(A) and 10(A) as requiring negotiations over pay is not inconsistent with the plain wording of the sections, we will treat all disputed sections as requiring negotiation of pay and/or benefits.
4. In this regard, 12 U.S.C. § 482, which concerns the authority of the Comptroller of the Currency with regard to personnel and compensation matters, provides, in relevant part, as follows:
Notwithstanding any of the provisions of section 481 of this title to the contrary, the Comptroller of the Currency shall fix the compensation and number of, and appoint and direct, all employees of the Office of the Comptroller of the Currency. Rates of basic pay for all employees of the Office may be set and adjusted by the Comptroller without regard to . . . chapter 51 or subchapter III of chapter 53 of Title 5. The Comptroller may provide additional compensation and benefits to employees of the Office if the same type of compensation or benefits are then being provided by any other Federal bank regulatory agency or, if not then being provided, could be provided by such an agency under applicable provisions of law, rule, or regulation. In setting and adjusting the total amount of compensation and benefits for employees of the Office, the Comptroller shall consult with, and seek to maintain comparability with, other Federal banking agencies.
We find it unnecessary to determine, in this regard, whether, or to what extent, the authority of the Comptroller of the Currency to make determinations regarding conditions of employment would be subject to bargaining under the Statute.
5. As originally submitted to the Authority, the last line of the second sentence of Proposal 3 provided that employees will be reassigned by inverse seniority among "qualified volunteers." Petition for Review at 5. In its Reply Brief, the Union submits that the word "volunteers," as used in the last line of the proposal, is a typographical error and requests that the word "non-volunteers" be substituted for it. We grant the Union's request and will analyze the proposal as corrected. We note, in this connection, that although the Agency questions the Union's claim that a typographical error occurred, the Agency does not object to the Union's request. Moreover, the Agency argues that, even as corrected, the proposal is nonnegotiable for the same reasons advanced in connection with the uncorrected proposal.
6. In finding the first sentence of section 6 of Proposal 1 and Proposal 3 to be negotiable, we make no judgment as to their merits.