[ v30 p616 ]
30:0616(76)AR
The decision of the Authority follows:
30 FLRA NO. 76
30 FLRA 616 (1987)
29 DEC 1987
NEWARK AIR FORCE STATION
Activity
and
AMERICAN FEDERATION OF GOVERNMENT
EMPLOYEES, LOCAL 2221
Union
Case No. 0-AR-1374
s DECISION
I. Statement of the Case
This matter is before the Authority on an exception to the
award of Arbitrator Jonas B. Katz filed by the Union under
section 7122(a) of the Federal Service Labor - Management
Relations Statute (the Statute) and part 2425 of the Authority's
Rules and Regulations. The Activity filed an opposition. The
Office of Personnel Management (OPM) requested and was granted
permission to file a brief as amicus curiae.
The issue before the Arbitrator was whether management
violated law, rule, and regulation when it established the
grievant's performance plan. The grievant's plan consists of
performance standards and elements which management uses to
'evaluate her job performance. Applying Authority case law, the
Arbitrator determined that the matter before him was not
arbitrable.
On review of the comprehensive briefs of the parties and the
amicus and the entire record in the case, we have reconsidered
that case law. We hold, based on the relevant provisions of law,
that a grievance alleging that management violated applicable law
when it established a grievant's performance standards and
elements, but has not yet evaluated the grievant against the
standards and elements, is arbitrable unless the parties have
excluded it from the scope of their negotiated grievance
procedure. We conclude that the parties in this case did not
exclude the grievance from their negotiated grievance procedure,
and that the grievance is arbitrable. Accordingly, we will remand
the award to the parties to permit them the opportunity to
seek a resolution of the merits of the grievance in a manner
consistent with this decision by mutual settlement or by further
arbitration.
II. Background and Arbitrator's Award
An employee filed a grievance in which she alleged that the
content of her
performance appraisal plan did "not meet the
requirements of governing directives." Arbitrator's Award at 6.
The plan had been established by management for the grievant; she
had not yet been evaluated under the plan. The Activity responded
that the grievance challenged the content of the grievant's
performance elements and standards, and it denied the grievance
on the basis of Air Force Regulation (AFR) 40-452, which
prohibits grievances of that nature.
The grievance was submitted to arbitration on the following
stipulated issue:
Did Management violate law, rule and regulation when it
established the grievant's performance plan effective for the
period 1 February 1986 through 31 January 1987?
The Union contended before the Arbitrator that the
grievant's performance elements and standards were "vague and
non-objective" (Award at 8) and that they violated the
requirements of 5 U.S.C. 4302, Federal Personnel Manual (FPM)
Chapter 430, and AFR 40-452. Those provisions require, among
other things, that performance standards will permit, to the
maximum extent feasible, the accurate evaluation of job
performance on the basis of objective job-related criteria and
that the standards must be defined in measurable terms.
The Union argued that the grievance was arbitrable because
it did not challenge the Activity's right to determine the
appropriate job elements and performance standards, but instead
contested only the plan's validity under applicable regulatory
requirements. The Union pointed out that under the FPM, the
standards must be "realistic, measurable, and objective," and
that while the Activity has the right to establish elements and
standards as it sees fit, the resulting plans must meet
applicable requirements. Award at 8. The Union submitted that the
grievant's plan did not meet those requirements, and, therefore,
the grievance should be granted.
The Activity contended that the grievance was not arbitrable
under section 7106(a)(2) of the Statute and under AFR
40-452 because it challenged the establishment of a performance
appraisal plan. As to the merits of the grievance, the Activity
asserted that the elements and standards established for the
grievant's position were a reasonable exercise of management's
judgment. The Agency argued that any review of the plan required
the Arbitrator to substitute his judgment for that of the
grievant's supervisor, in violation of the Activity's management
rights. The Agency argued that it reasonably exercised its
authority in establishing the grievant's plan, and that in doing
so no law, rule, or regulation had been violated.
The Arbitrator noted the Union's argument that the grievance
is arbitrable pursuant to the broad scope grievance procedure
established in Article 6 of the parties' agreement. He stated
that the Union correctly contended that while management has the
sole right to determine the content of performance appraisal
plans, those plans must meet the requirements of the prevailing
regulatory directives. He reviewed Authority case law and noted
that the Authority consistently set aside awards which found
grievances disputing the establishment of standards and the
identification of elements to be arbitrable.
The Arbitrator stated that the clear meaning of the Air
Force regulations and section 7106(a)(2)(A) and (B) of the
Statute, as interpreted by the Authority and mirrored in the
parties' agreement, compel the finding that the grievance is not
arbitrable. He then stated (Award at 13):
(A)ny consideration by the Arbitrator of the merits of this
dispute would necessarily require a substitution of his judgment
concerning the establishment of proper performance elements and
standards for that of management. Thus, while the Union is
correct that the grievant's performance appraisal plan must
satisfy the substantive requirements of the Federal Personnel
Manual and the AF Regulations, the Arbitrator regrets that the
law precludes the use of the contract arbitration to resolve the
merits of this type of dispute.
As his award, the Arbitrator denied the grievance on the
basis that it was not arbitrable for the reasons given.
III. The Union's Exception
The Union contends that "in light of recent Federal court
precedent and the language of the Statute, a performance
appraisal plan (and the elements and standards contained in the
plan) which has been implemented to evaluate the job performance
of bargaining unit employees can be challenged by means of a
grievance alleging that the performance appraisal plan is in
violation of 'applicable law.'" Union's Exception at 2. The Union
therefore contends that the award is contrary to law and that the
Authority should reverse the award and direct the parties to
select an arbitrator for a determination of the merits of the
grievance.
The Union asserts that the parties' agreement incorporates
the definition of grievance and the broad scope grievance
procedure set forth in the Statute. The Union recognizes that in
prior cases, the Authority has indicated that a performance
standard or job element cannot be grieved. The Union argues that
in light of the language of the Statute, Federal Circuit
decisions, and a district court decision questioning the
Authority's holding that a grievance challenging a performance
standard as a violation of regulation is nongrievable or
nonarbitrable, the Authority should examine its rationale on the
grievability/arbitrability of performance standards and elements
insofar as a grievance alleges that the standard violates law,
rule, or regulation.
Specifically, the Union contends that the grievance in this
case is not excluded from the negotiated grievance procedure
under section 7121(c) of the Statute, and is grievable under
section 7103(a)(9)(C)(ii) and arbitrable under section
7121(b)(3)(C). The Union cites U.S. Marshals Service v. FLRA,
708 F.2d 1417, 1421 n.5 (9th Cir. 1983) for the proposition that
an arbitrator may adjudicate any grievance concerning an alleged
violation, misinterpretation, or misapplication of any law or
regulation affecting conditions of employment, as in this case.
The Union further contends that a performance standard is
not removed from coverage of the grievance procedure under
section 7106(a)(2)(A) and (B) where the grievance alleges that
the standard is not in accord with applicable law. citing Equal
Employment Opportunity Commission v. FLRA, 744 F.2d 842, 848
(D.C. Cir. 1984), cert. dismissed, 106 S. Ct. 1678 (1986), the
Union notes that management's right extends only insofar as it is
exercised "in accordance with applicable laws."
Therefore, the Union asserts that management actions may be
challenged under the grievance procedure when management fails to
act in accordance with applicable laws.
The Union also contends that the Arbitrator's holding is
premised on the improper assumption that arbitral authority does
not exist to review the legal validity of performance standards
and elements. According to the Union, this premise is not
reconcilable with recent case law analyzing an arbitrator's power
to review performance standards. The Union cites the decisions in
Wilson v. Department of Health and Human Services, 770 F.2d 1048
(Fed. Cir. 1985) ; DePauw v. United States International Trade
Commission, 782 F.2d 1564, 1565-66 (Fed. Cir. 1986); and Rogers
v. Department of Defense Dependents Schools, 814 F.2d 1549, 1553
(Fed. Cir. 1987) in support of its contention that arbitrators
must examine the validity of performance standards under
applicable law and must apply the same standards as the Merit
Systems Protection Board (MSPB) in performance standards cases.
The Union also cites American Federation of Government Employees
v. Calhoun, 659 F. Supp. 191 (E.D. Mo. 1987), and contends that
the District Court questioned the Authority's holding that
section 7106(a) of the Statute precludes the examination of
performance plans by arbitrators for violation of regulations.
Further, the Union disputes the contention that arbitration
of the grievance in the present case would require the Arbitrator
to substitute his judgment for that of management as to the
content of the grievant's performance standards. The Union states
that had it been successful in the arbitration, the relief it
sought was not an arbitral direction to management as to what
performance standards or elements were proper.
Also, the Union contends that the Authority's
content-application test developed in negotiability cases does
not direct a finding that the present grievance is nongrievable
or nonarbitrable. The Union contends that in Patent Office
Professional Association and Patent and Trademark Office,
Department of Commerce, 25 FLRA 384 (1987) ("POPA"), petition
for review filed sub nom. Patent Office Professional Association
v. FLRA, No. 87-1135 (D.C. Cir. March 26, 1987), the Authority
distinguished a nonnegotiable proposal (Section 3.J) from one
"which simply requires that performance standards be established
'in accordance with law' as provided in section 7106(a)(2)(A)."
25 FLRA at 394. The Union also cites General Services
Administration and American Federation of Government Employees,
AFL - CIO, National Council 236, 27 FLRA 3 (1987), in
which the Authority held that a grievance challenging an agency
reorganization as violating a regulation is grievable and
arbitrable notwithstanding the agency's assertion that the
grievance was nonarbitrable under section 7106.
The Union asserts that a doctrine that a legally invalid
performance standard cannot be grieved or arbitrated until an
adverse personnel action is taken against an employee would lead
to "absurd results." In the Union's view, if an invalid standard
is established for 100 unit employees, the Union should be able
to present a grievance at that time on behalf of all of those
unit employees in one grievance; if it waited until an adverse
personnel action is taken against any of the 100 employees based
on the improper standard, that would lead to a multitude of
grievances limited to each personnel action. This, the Union
contends, would frustrate "an effective and efficient
Government." See section 7101(b) of the Statute. The Union
concludes that since a grievance challenging a performance
appraisal plan as violating statute or regulation is not limited
by section 7106, the rationale of previous Authority decisions
fully supports a finding of grievability in this case.
IV. The Activity's Opposition
The Activity contends that the Union ignores the Authority's
case law which holds that performance standards can be grieved by
employees who believe they have been adversely affected by the
application of management's performance standards to them. The
Activity maintains that the Union errs in contending that the
grievance is grievable under section 7103(a)(9) of the Statute
and argues that the Union overlooks section 7106(a), which
preserves management's rights and prevails over other provisions
of the Statute.
The Activity notes that section 7106(a) states that "nothing
in this chapter shall affect the authority of any management
official of any agency . . . (2) in accordance with applicable
laws -- (A) to hire, assign, direct . .. employees." Activity
Opposition at 3. The Activity states that in American Federation
of Government Employees AFL - CIO, Local 1968 and Department of
Transportation, Saint Lawrence Seaway Development Corporation,
Massena, New York, 5 FLRA 70, 79 (1981), the Authority held that
a negotiated grievance procedure under section 7121 of the
Statute cannot deny an agency's authority to exercise its rights
under section 7106. Therefore, the Activity argues that the Union
improperly relied on the statutory definition of grievance in
section 7103(a)(9) to support the arbitrability of a matter which
the Authority has found to be nongrievable and
nonarbitrable as an illegal interference with section 7106
management rights. Activity Opposition at 3-4. The Activity
contends that employees who are adversely affected by the
application of established performance standards are able to
challenge those standards. The Activity cites NTEU and Department
of the Treasury, Bureau of the Public Debt, 3 FLRA 769, 780
(1980), in which the Authority held that:
In the context of negotiated grievance procedures it would
be possible for an employee against whom action has been taken
for unacceptable performance to grieve such actions, contending
that the performance standard as applied to the grievant pursuant
to which the discipline was imposed is improper, or impossible of
performance, under requirements of law or the parties'
agreement.
The Activity also contends that the case law cited by the
Union is consistent with the Arbitrator's award. The Activity
notes that Wilson, 770 F.2d 1048, was an appeal of an MSPB
decision in which a job standard had already been applied in such
a way as to adversely affect the employee, and the court decided
that the content of the job standard was insufficient to support
a removal action. The Agency contrasts that situation to the
present case, in which there is no application of the job
standard, no rating, and no adverse action against the
grievant. Activity Opposition at 5.
The Activity contends that once the job standard is applied
and there has been some alleged adverse effect on the grievant,
there can be a challenge of management's right to establish
performance standards under requirements of law or the parties'
agreement. According to the Activity, the Authority's decisions
preclude the arbitration of the content of job standards until
those standards have been applied. As to the Union's citation of
AFGE v. Calhoun, the Activity points out that the court found
that it did not have jurisdiction in the matter.
The Activity argues that finding the grievance in this case
to be arbitrable would result in the substitution of the
Arbitrator's judgment for that of management on the content of
performance standards. The Activity states that the Arbitrator
specifically found that he was being asked to substitute his
judgment in reviewing the content of performance standards.
Activity Opposition at 6. The Activity cites the Authority's
decision in POPA as establishing that the review of
performance standards and critical elements under a substantive
criterion is impermissible, although an arbitrator may review
management's application of its already established standards and
elements to an employee in a performance appraisal.
The Activity contends that the Authority's
content-application test does not support the arbitrability of
the grievance in this case and asserts that the Union
misconstrues the purpose of the test as set forth in POPA. The
Activity maintains that the test concerns the negotiability of
performance standards and does not directly indicate whether a
matter is grievable and arbitrable. Activity Opposition at 8. The
Activity disputes the Union's reliance on the following passage
from POPA (25 FLRA at 394-95):
(W)e are not presented with a proposal which simply requires
that performance standards be established 'in accordance with
law' as provided in section 7106(a)(2). Rather, the proposals
here present precisely the circumstances covered by Saint
Lawrence Seaway and subsequent cases, namely, they provide a
contractual standard which authorizes arbitral review of the
content of performance standards.
The Activity contends that the decision in POPA must be
understood in the context of Saint Lawrence Seaway, which would
not allow the negotiation of any proposal which would deny an
agency's authority to exercise its rights under section 7106. The
Activity concludes that there is ample opportunity for the
grievant in this case to challenge her performance standards and
elements under existing precedent.
V. The Amicus Brief of the Office of Personnel Management
OPM contends that in addition to basing his award on
provisions of law, the Arbitrator based his award on the parties'
agreement which he found excluded the arbitration of grievances
over the validity of performance standards. OPM contends that
apart from the question of law presented, this case is merely one
of contract interpretation and the Union is merely disagreeing
with the Arbitrator's interpretation and application of the
agreement.
As to the question of law presented, OPM maintains that
there is no statutory employee right to challenge the content of
a performance rating or any other aspect of the appraisal process unless an agency-initiated personnel action has
occurred, in which case the employee is covered by the procedures
provided in 5 U.S.C. 4304. OPM contends that the Union cannot
rely simply on the broad definition of grievance contained in
section 7103(a)(9) of the Statute. Brief at 6-7. Rather,
according to OPM, all matters pertaining to the establishment of
performance standards, plans, appraisals, and performance-based
actions are covered by 5 U.S.C. Chapter 43, and the legislative
history indicates that Congress intended that there be no appeal
of such matters before application to an employee. OPM stresses
that "it is only at the point when action is taken against an
employee that he may grieve or appeal the action under 5 U.S.C.
7121; not before." Brief at 9.
OPM maintains that Wilson, 770 F.2d 1048 and Rogers, 814
F.2d 1549, cited by the Union, are not applicable in the present
case because those cases concerned employees' appeals to MSPB
following adverse performance-based actions. OPM therefore
contends that the grievant in this case, who had not been
affected by a performance-based action, had no standing to
challenge the validity of her performance plan.
In response to the Union's contention that the exercise of
management rights must be in accordance with law, OPM contends
that any challenge to a matter involving a performance appraisal
system is subject to the statutory procedures set forth in 5
U.S.C. 4303. OPM argues that those procedures do not apply until
an action has been taken against an employee. Brief at 11.
OPM also maintains that the Union ignores Authority
precedent in this area which supports the Arbitrator's award. OPM
disagrees with the Union's contention that arbitration of the
grievance would not require the substitution of the Arbitrator's
judgment for management's judgment concerning the content of
performance standards. Finally, OPM contends that to allow
performance plans to be grieved before application would hinder
agencies from taking performance-based actions, contrary to the
intent of Congress. Brief at 13.
VI. Union Reply to OPM Amicus Brief
In its reply, the Union contends that the matter in this
case is one of law as well as contract interpretation and that
the Arbitrator improperly relied on section 7106(a) of the
Statute to find that the grievance was nonarbitrable.
The Union contends that OPM fails to establish that: (1) the
conformance of performance standards to applicable law is not
grievable under section 7103(a)(9); and (2) Chapter 43 restricts
the scope of grievability in the performance area. The Union
asserts that the fact that the validity of performance ratings
can be grieved, as demonstrated by Warner Robins Air Logistics
Center, Robins Air Force Base, Georgia and American Federation of
Government Employees, Local 987, 28 FLRA 652 (1987), indicates
that the grievability in the performance area is not limited to
demotions and removals appealable to the MSPB under 5 U.S.C.
4303.
The Union states that under section 7106(a)(2), there is no
right to establish a performance standard that is not "in
accordance with applicable laws." Reply at 5. The Union also
disputes the contention that allowing performance standards to be
grieved would hinder management's ability to direct employees.
The Union argues that allowing standards to be grieved would
permit the unified processing of many grievances and would
prevent grievances over application of faulty performance
plans.
VII. Discussion
The issue in this case is whether a grievance which asserts
that an employee's performance standards and elements are not in
accordance with governing directives--that is, applicable law,
rule, or regulation--is grievable and arbitrable under the
Statute. Resolution of this issue begins with consideration of
the statutory framework which Congress established for
arbitration in Federal sector labor management relations.
A. Arbitration Under the Statute
The Statute requires parties' collective bargaining
agreements to provide procedures for the settlement of
grievances, including questions of arbitrability. 5 U.S.C.
7121(a)(1). See U.S. Marshals Service v. FLRA, 708 F.2d 1417,
1419 (9th Cir. 1983) (section 7121 recognizes "the centrality of
arbitration" under the Statute). Negotiated grievance procedures
must be fair and simple, provide for expeditious processing, and
include procedures that provide that any grievance not
satisfactorily settled under the negotiated grievance procedure
shall be subject to binding arbitration. 5 U.S.C. 7121(b).
The term "grievance" is defined in section 7103(a)(9) of the
Statute as any complaint:
(A) by any employee concerning any matter relating to the
employment of the employee;
(B) by any labor organization concerning any matter relating
to the employment of any employee; or
(C) by any employee, labor organization, or agency
concerning--
(i) the effect or interpretation, or a claim of breach, of a
collective bargaining agreement; or
(ii) any claimed violation, misinterpretation, or
misapplication of any law, rule, or regulation affecting
conditions of employment(.)
Five subjects itemized in section 7121(c) of the Statute
must be excluded from the scope of the grievance procedure: (1)
any claimed violation of subchapter III of chapter 73 of title 5,
relating to prohibited political activities; (2) retirement, life
insurance, or health insurance; (3) a suspension or removal under
section 7532 of title 5; (4) any examination, certification, or
appointment; and (5) the classification of any position which
does not result in the reduction in grade or pay of an employee.
Additionally, parties' collective bargaining agreements may
"exclude any matter from the application of the grievance
procedures which are provided for in the agreement." 5 U.S.C.
7121(a)(2).
The wording of these statutory provisions reflects Congress'
intent that "(a)ll matters that under the provisions of law could
be submitted to the grievance procedures shall in fact be within
the scope of any grievance procedure negotiated by the parties
unless the parties agree as part of the collective bargaining
process that certain matters shall not be covered by the
grievance procedures." Joint Explanatory Statement of the
Committee on Conference, H.R. Rep. No. 95-1717, 95th Cong. 2d
Sess. 157 (1978), U.S. Code Cong. & Admin. News 1978, 2723, 2891.
Agreements that exclude from the negotiated grievance procedure
only the five subjects specified in section 7121(c) are referred
to as "broad scope" agreements; those that additionally exclude
other subjects are "limited scope" agreements. American
Federation of Government Employees, Locals 225, 15O4 and 3723 v.
FLRA, 712 F.2d 640, 642 (D.C. Cir. 1983).
The parties have the responsibility to determine the scope
of their negotiated grievance procedure. Scope is a mandatory
subject of bargaining. Id. at 649. "(S)ection 7121(a) singles out
grievance procedures for special attention. The first part of the
section indicates a broad scope grievance procedure as the
standard arrangement, but the second part permits the parties to
negotiate limited scope agreements in the course of bargaining."
Id. If the parties do not exclude subjects from the scope of
their grievance procedure, grievances regarding those subjects
are within the scope, if they are not mandatorily excluded by
section 7121(c) and if they meet the definition of "grievance" in
the Statute. 1
As is evident from the wording of section 7103(a)(9), the
Statute defines the term "grievance" expansively. Id. at 645. See
also General Services Administration and American Federation of
Government Employees, AFL - CIO, National Council 236, 27 FLRA 3
(1987), in which the Authority held that an arbitrator properly
found arbitrable a grievance which sought to enforce a negotiated
requirement that certain agency actions, including an agency
reorganization, be taken in accordance with laws, rules,
regulations, and the parties' agreement. That decision reaffirmed
the Authority's previous holding in American Federation of
Government Employees, Local 1904, AFL - CIO and United States
Army Communications and Electronics Materiel Readiness Command,
16 FLRA 358 (1984), that the definition of grievance in section
7103(a)(9) is "expansive" and that a complaint that an agency
failed to comply with law and regulation governing contracting
out was covered by the parties' grievance procedure.
The grievance in this case alleged that the grievant's
performance appraisal plan containing the performance elements
and standards for the grievant's position violated 5 U.S.C. 4302,
FPM Chapter 430, and AFR 40-452. Therefore, the grievance clearly
concerns a complaint by an employee concerning a claimed
violation by management of law, rule, or regulation affecting
conditions of employment within the meaning of section 7103(a)(9)
of the Statute. Moreover, the grievance does not address one of
the mandatorily excluded subjects in section 7121(c) of the
Statute. Finally, it is clear from the record in this case that
the parties did not agree to exclude the grievance from the scope
of the parties' negotiated grievance procedure.
Applying solely these provisions of the Statute to the issue
before us would lead to the conclusion that the grievance is
arbitrable. Before we are able to make that determination,
however, we must consider the effect, if any, of the following on
the arbitrability of the grievance: (1) the statutory framework
establishing performance appraisal requirements and
administrative and court decisions interpreting those
requirements and (2) Authority case law discussing the
relationship between management's rights and the arbitrability of
grievances like the one in this case.
B. Performance Appraisal System Requirements
Under 5 U.S.C. 4302(b)(1), each performance appraisal system
must provide for establishing performance standards "which will,
to the maximum extent feasible, permit the accurate evaluation of
job performance on the basis of objective criteria (which may
include the extent of courtesy demonstrated to the public)
related to the job in question for each employee or position
under the system(.)" The regulations which implement the
statutory provisions pertaining to performance appraisal systems
provide, among other things, that these systems must establish a
minimum appraisal period of not less than 90 calendar days;
critical elements, non-critical elements and performance
standards must be in writing, reviewed and approved by higher
level supervisors; and performance ratings must be in writing. 5
C.F.R. 430.204. Guidance on performance appraisal is contained in
Federal Personnel Manual Chapter 430.
Several decisions of the Federal Circuit have established
and discussed the principles to be applied in determining whether
performance standards comply with law. As recognized by those
decisions, arbitrators as well as the MSPB have the authority to
apply these principles and to determine whether performance
standards meet applicable legal requirements.
In Wilson v. Department of Health and Human Services, 770
F.2d 1048 (Fed. Cir. 1985), the court addressed the issue of what
meaning was to be given to the statutory requirement that
performance standards contain objective evaluation criteria
permitting accurate job evaluation to the maximum extent
feasible, as well as the "subissue" of what is the proper measure
by which to judge the sufficiency of contested standards. Id. at
1050. After reviewing pertinent legislative history and MSPB
decisions, the court stated:
We wholly agree with the Board's formulation . . . that
under the statute's objectivity requirement performance
standards must be reasonable, sufficient in the circumstances to
permit accurate measurements of the employee's performance, and
adequate to inform the employees of what is necessary to achieve
a satisfactory or acceptable rating. If the performance standards
satisfy this test, then they further the congressional purpose.
Id. at 1052. The court went on to reject the contention that
employees must be provided with precise quantitative or numerical
standards. The court noted that such standards would be
"unrevealing, bizarre, or counter-productive" for many positions,
and that the "rigidity of an obligation for numerical or
quantitative standards" was inconsistent with Congress' expressed
intent to allow agencies "great flexibility" to choose their own
systems and appraisal methods best suited to their needs. Id. The
court stated that "(o)f course, the agency must always live up to
the statutory demand that the standard allow for reasonably
accurate measurement of performance and protect employees against
arbitrary treatment." Id.
Applying these principles to the cases before it, the court
concluded that one standard was invalid under the statutory
mandate because it was "so vague and inexact that it is
impossible to apply in a verifiable fashion or to discover the
level of proficiency which the (agency) actually intended by the
phrase." Id. at 1053. With respect to another employee's
standard, the court found that the standard, which allowed for
some subjective managerial judgment, was "within the statute,
adequately gauged and informative to (the employee), and readily
attainable." Id. at 1055-56. The court also noted that the fact
that a more precise standard could be written does not invalidate
an existing standard; "Congress did not mandate the most exact
standard conceivable but left discretion to the agency so long as
it created an 'objective' and 'adequate' standard 'to the maximum
extent feasible(.)'" Id. at 1056 n.6 (emphasis added by court).
See also Adkins v. Department of Housing and Urban Development,
781 F.2d 891 (Fed. Cir. 1986).
In Rogers v. Department of Defense Dependents Schools,
Germany Region, 814 F.2d 1549 (Fed. Cir. 1987), an employee was
removed for unacceptable performance. He appealed that decision
to an arbitrator in lieu of the MSPB. The arbitrator sustained
the agency's decision and held that he lacked
jurisdiction to review whether the performance standards complied
with law. The Federal Circuit stated that the employee "argues,
citing Wilson v. Department of Health and Human Services, 770
F.2d 1048, 1051-52 (Fed. Cir. 1985), and the agency concedes,
that he was entitled, in the arbitration proceeding, to challenge
his performance standards as failing to meet the requirements of
4302(b)(1). We agree that the arbitrator erred in ruling that he
lacked authority to review those standards." 814 F.2d at 1553.
The court independently examined the standards and determined
that they adequately complied with law, and affirmed the
arbitrator's decision. Id. at 1553-55.
Further, in DePauw v. United States International Trade
Commission, 782 F.2d 1564 (Fed. Cir. 1986), cert. denied, 107 S.
Ct. 69 (1986), an employee removed from his position for
unacceptable performance requested arbitration. The arbitrator
sustained the removal. The court noted that under Cornelius v.
Nutt, 472 U.S. 648 (1985), the arbitrator was bound to apply the
same substantive rules that the MSPB would apply. 782 F.2d at
1565 n.2. The court affirmed the arbitrator's decision and found
that the employee's performance standards met the statutory
criteria.
Thus, it is clear that like the MSPB and the Federal
Circuit, arbitrators have the power to consider whether
performance standards comply with applicable legal requirements.
The cases which we have discussed all arose in the context of
employees' terminations or other adverse actions for performance
reasons. However, that fact simply reflects the jurisdictional
limitations on what sorts of cases can come before the MSPB and
the Federal Circuit; it does not demonstrate that an inquiry by a
third-party into the legal validity of performance standards can
occur only in that context.
As we discussed in detail above, under the Statute
grievances are not restricted to performance-based actions;
rather, they may allege violations of law as to conditions of
employment generally. Thus, if a grievance is filed by an
employee who believes that he or she has been adversely affected
by management's application of performance standards in a
performance appraisal to that particular employee, an arbitrator
could sustain a grievance alleging that management applied
standards in violation of law or regulation. Bureau of Engraving
and Printing, U.S. Department of the Treasury and Washington
Plate Printers Union, Local No. 2 IPDEU, AFL - CIO, 20 FLRA
380, 383 (1985).
However, we find no provision in the Statute which would
allow the question of the standards' conformity with law to be
addressed only after the grievant has been evaluated against the
standards, as opposed to at the time the standards have been
established for the employee and he or she will be expected to
perform under and be evaluated against those same standards. In
either situation, the question is the same: whether the standards
themselves comply with law. As the Federal Circuit stated in
Wilson, "the agency must always live up to the statutory demand
that the standard allow for reasonably accurate measurement of
performance and protect employees from arbitrary treatment." 770
F.2d at 1052. The requirement that standards comply with law does
not arise only at the time at which an employee is evaluated
against those standards; the standards must comply with law at
the time that management establishes them for employees.
C. Management's Rights Under Section 7106 of the Statute
The primary argument raised by the Activity and OPM in
opposition to the arbitrability of the grievance in this case
relates to the claimed interference with the exercise of
management's rights if the grievance is found to be arbitrable.
Relying on section 7106 of the Statute and Authority case law,
the essence of the argument is the following: (1) management has
the right under section 7106 to establish performance standards
and critical elements for positions; (2) an arbitrator may not
act in such a way as to deny management its rights under section
7106; and (3) finding a grievance which alleges that the
establishment of standards and elements violates law to be
arbitrable would be impermissible because an arbitrator would be
substituting his or her judgment for that of management as to
what the standards and elements should be. However, the Activity
and OPM acknowledge that, as we discussed above, an arbitrator
may examine the content of standards and elements for consistency
with law after an employee has been evaluated under them and has
been adversely affected by the rating (for example, by being
terminated for performance reasons).
We believe that this argument must be rejected because it
fails to take into account the distinction between an
arbitrator's decision as to the arbitrability of a grievance and
an arbitrator's decision (including remedy) resolving the
substantive issue presented by a grievance. In rejecting this
argument, we will no longer follow certain Authority
decisions in the performance standard area that, in our view,
also did not properly take this distinction into account.
Additionally, the argument does not explain satisfactorily why an
arbitrator has the power to examine the content of standards and
elements for consistency with law after an employee has had a
performance-based action taken against him or her, but should not
have that same authority before that point.
In Marine Corps Logistics Support Base, Pacific, Barstow,
California and American Federation of Government Employees, AFL -
CIO, Local 1842, 3 FLRA 397 (1980), the issue before the
arbitrator was whether the work assignment which gave rise to the
grievance was a grievable matter. The arbitrator ruled that it
was not arbitrable because management has the right to assign
work under section 7106 and therefore the assignment of personnel
is not subject to grievance and arbitration. On review, the
Authority held that the award was deficient. The Authority stated
(3 FLRA at 398-99):
(T)he arbitrability question submitted to the arbitrator
concerned whether the dispute in this case, which involved a work
assignment and allegations by the union that such assignment was
made in violation of specific provisions of the parties'
negotiated agreement, could be properly subject to arbitration.
Section 7106 of the Statute, on which the arbitrator relied in
finding the dispute nonarbitrable, specifies and enumerates
rights which are reserved to management. However, nothing in
section 7106 precludes an arbitrator from reaching the merits of
a grievance where, as in this case, the union has alleged a
violation of certain specified provisions of a collective
bargaining agreement. Thus, while an arbitrator may find, on the
merits of the grievance, that there has been no violation of the
specified provisions of the agreement because the actions taken
by management which gave rise to the grievance were within the
ambit of the rights reserved under section 7106, or that, while
there has been a violation, the scope and nature of possible
remedies available to the arbitrator is limited by section 7106,
nothing in section 7106 in and of itself prevents an arbitrator
from deciding if there has been a violation of a particular
contract provision.
The principle of Barstow was not followed in subsequent
Authority decisions addressing the nature of arbitral review in
the performance standard area. For example, the Authority held
that bargaining proposals which would subject management's
determinations concerning the identification of critical elements
of a position and the content of performance standards to the
grievance procedure and arbitral review constitute improper
interference with management's rights. American Federation of
Government Employees, AFL - CIO, Local 1968 and Department of
Transportation, Saint Lawrence Seaway Development Corporation,
Massena, New York, 5 FLRA 70, 79-80 (1981) (Proposal 4), aff'd
sub nom. AFGE, Local 1968 v. FLRA, 691 F.2d 565 (D.C. Cir.
1982), cert. denied, 461 U.S. 926 (1983). The Authority also held
that permitting arbitrators to review discretionary judgments by
management concerning the content of critical elements and
performance standards would improperly require arbitrators to
substitute their judgment as to how the agency should be run for
that of management. National Treasury Employees Union and
Department of Health and Human Services, Region 10, 13 FLRA 732,
734 (1983), aff'd sub nom. NTEU v. FLRA, 767 F.2d 1315 (9th Cir.
1985). See also, for example, Bureau of Engraving and Printing,
U.S. Department of the Treasury and Washington Plate Printers
Union, Local No. 2, IPDEU, AFL - CIO, 20 FLRA 380 (1985) and
Bureau of Prisons, Department of Justice and American Federation
of Government Employees, Local 148, 21 FLRA 74 (1986) (an
arbitrator may not determine that a grievance directly
challenging an agency's identification of job elements or
establishment of performance standards is grievable or arbitrable
and may not render an award substituting his or her judgment
concerning job elements and performance standards for that of
management); The American Federation of Government Employees,
Local 1917 and United States Immigration and Naturalization
Service, 15 FLRA 781 (1984) (a grievance which alleged that an
agency's establishment of performance standards was not in
accordance with law and regulation was not arbitrable).
However, the Authority has also recognized a similarity
between bargaining proposals concerning review of performance
plans for legal sufficiency and arbitral review of other matters,
such as the legal conformance of contracting out proposals with
applicable regulations. For example, citing American Federation
of Government Employees, AFL - CIO, National Council of EEOC
Locals and Equal Employment Opportunity Commission, 10 FLRA 3
(1982), enforced sub nom. EEOC v. FLRA, 744 F. 2d 842 (D.C. Cir.
1984), cert. dismissed, 106 S. Ct. 1678 (1986) (per curiam), the
Authority found that a bargaining proposal "limited to requiring
that performance standards be established in accordance
with applicable laws would be within the duty to bargain." AFGE
Local 1940 and Department of Agriculture, 16 FLRA 816, 820 n.6
(1984). See also General Services Administration and American
Federation of Government Employees, AFL - CIO, National Council
236, 27 FLRA 3 (1987) (finding arbitrable a grievance relating
to agency's right to determine its organization).
In our view, the reasoning set forth in Barstow applies as
well to this case. The grievance in this case alleged a violation
of applicable law and regulation in management's establishment of
the grievant's performance standards and elements. The right of
management to identify particular critical elements of positions
and to establish performance standards is derived from its rights
under section 7106(a)(2)(A) and (B) of the Statute to direct
employees and to assign work in accordance with applicable laws.
National Treasury Employees Union and Department of the Treasury,
Bureau of the Public Debt, 3 FLRA 769 (1980), affirmed sub nom.
NTEU v. FLRA, 691 F.2d 553 (D.C. Cir. 1983). The proper phase of
the arbitration proceeding in which to determine the impact or
application of section 7106 is not at the outset so as to
preclude by law an arbitrator from having jurisdiction over the
matter. Rather, the determination as to the impact or application
of section 7106 is to be made in connection with the arbitrator's
consideration of the substantive issue presented by the grievance
and any possible remedy. See U.S. Marshals Service v. FLRA, 708
F.2d at 1421 n.5 (citing the definition of grievance in section
7103(a)(9), and stating that the management rights section of the
Statute is a law affecting conditions of employment and its
meaning was properly before the arbitrator in that case).
A determination that the grievance in this case is
arbitrable is not in any way inconsistent with the provision in
section 7106 that "nothing in (the Statute) shall affect the
authority" of management under section 7106(a)(2) to exercise its
rights in accordance with applicable laws. Rather, section 7106
must be addressed in conjunction with an arbitrator's
consideration of the substantive issue and any possible remedy.
See General Services Administration, 27 FLRA 3 at 9-10 (in
finding that a grievance was arbitrable, the Authority noted that
arbitrators' awards "which resolve the merits of disputes
involving the exercise of management's rights are also subject to
the requirements of the Statute and the scope of an arbitrator's
remedial authority in such cases may be limited").
We conclude therefore that the grievance in this case, which
alleges a violation of applicable law in the establishment of the
grievant's performance appraisal plan, is arbitrable. Of course,
this finding does not affect the established rights of employees
adversely affected by the application of performance standards to
grieve that application as an appropriate arrangement resulting
from management's exercise of its rights under section 7106(a) of
the Statute. See, for example, Bureau of Prisons, Department of
Justice and American Federation of Government Employees, Local
148, 21 FLRA 74 (1986). Further, our decision does not affect
previous cases in which it has been held that bargaining
proposals which would impose requirements on management in the
performance standards area over and above those specified by law
are outside the duty to bargain. See, for example, American
Federation of Government Employees, Local 3748 v. FLRA, 797 F.2d
612 (8th Cir. 1986), affirming American Federation of Government
Employees, Local 3748, AFL - CIO and Agricultural Research
Service, Northern States Area and American Federation of
Government Employees, AFL - CIO Local 3365 and Department of
Agriculture, Forest Service, Black Hills National Forest, 20 FLRA
495 (1985).
To the extent that Saint Lawrence Seaway and other Authority
decisions such as The American Federation of Government
Employees, Local 1917 and United States Immigration and
Naturalization Service, 15 FLRA 781 (1984) and Veterans
Administration, St. Louis, Missouri and American Federation of
Government Employees, Local 2192, 19 FLRA 248 (1985) have
precluded the arbitrability of grievances like the one in this
case, those decisions will no longer be followed. Those
decisions attempted to protect management's discretion in
establishing performance standards and elements by precluding as
a matter of law all arbitral review instead of focusing on
arbitrators' awards in particular cases. As we have discussed
above, that approach is unwarranted.
Additionally, we note that the concern with arbitrators'
"substituting their judgment" for that of management presents no
basis on which to preclude the arbitrability of grievances
challenging the legality of performance standards before an
employee is evaluated against those standards. Resolution of the
grievance in this case by an arbitrator would not require an
arbitrator to do anything other than what arbitrators do
routinely in resolving other disputes, including those involving
the exercise of other management rights such as discipline. An
arbitrator would simply be examining an action by management to
determine whether that action was lawful; that is,
whether the performance standards established by management
complied with law, as it is beyond dispute that they must. This
sort of examination entails no more of a "substitution of
judgment" than does a similar inquiry by arbitrators, MSPB, or
the Federal Circuit in proceedings following performance-based
actions against employees.
This is precisely one of the functions that arbitrators
perform, and that Congress intended that arbitrators perform,
under the Statute. In requiring parties to negotiate grievance
procedures that result in binding arbitration, and in broadly
defining what grievances could encompass, Congress fully expected
arbitrators to review a wide variety of actions, including
actions taken by management pursuant to section 7106. The
argument that merely by permitting arbitrators to resolve
disputes like the one in this case would somehow allow an
impermissible substitution of judgment cannot serve as a per se
bar to arbitrability. If grievances like the one in this case are
to be excluded from the scope of parties' negotiated grievance
procedures, such exclusions will have to result from the parties'
negotiations pursuant to section 7121(a)(2) of the Statute, not
automatically by operation of law.
The question of any impermissible arbitral interference with
management's rights must be directed to the merits, including
remedy, of an arbitration decision relating to performance
standards' consistency with law. Although this case does not
involve the merits of an award, we note the following limitations
on an arbitrator's inquiry into the conformance of an employee's
performance plan with applicable legal requirements.
In deciding the merits of a grievance like the one in this
case, an arbitrator may examine the performance standards and
elements established by management for the grievant only in order
to determine whether they comply with applicable legal and
regulatory requirements, notably the provisions of 5 U.S.C. 4302
and 5 C.F.R. Chapter 430. If an arbitrator were to find that a
grievant's performance plan did not comply with applicable legal
requirements, the appropriate remedy would be for the arbitrator
to direct the Agency to establish a plan which complies with
applicable legal requirements. This type of remedy best
effectuates Congress' dual intent that management comply with the
statutory requirements and that it retain the flexibility to
determine which lawful standards best serve its needs.
An arbitrator may not determine what the content of the
employee's plan should be and may not establish new performance
standards. Further. an arbitrator could not impose requirements
on an agency beyond those mandated by applicable law and
regulation. See POPA, 25 FLRA 384, 394 (1987) (in which the
Authority held nonnegotiable a proposal that would establish
criteria governing the objectivity of performance standards and
would authorize arbitrators to review whether the agency's
standards complied with those criteria because the proposal was
more restrictive than the requirements of law and thus did not
merely implement existing legal requirements for the
establishment of performance standards).
Further, in our view, an arbitrator's award which addresses
whether an employee's performance standards comply with
applicable law should be consistent with the principles set forth
in relevant MSPB and Federal Circuit cases, including those
discussed above in section B. We would expect parties to present
relevant case law and other materials to an arbitrator to assist
in the resolution of any dispute concerning this issue. Our
review of exceptions to an arbitrator's award on such a matter
would be limited to the narrow grounds set forth in section
7122(a) of the Statute--that is, an award would be found
deficient only (1) if it is contrary to any law, rule, or
regulation, or (2) on other grounds similar to those applied by
Federal courts in private sector labor-management relations.
Finally, we reject the other assertions made by the Activity
and OPM as to why the grievance in this case should not be found
to be arbitrable. Contrary to those arguments, we do not find
that Chapter 43 of title 5 or its legislative history
demonstrates that grievances like the one in this case must by
law be excluded from the scope of the negotiated grievance and
arbitration procedure permitted by the Statute. If a party
desires to exclude from the scope of the negotiated grievance
procedure grievances alleging that an employee's performance
standards do not comply with law, it is up to that party to seek
to accomplish that result through the collective bargaining
process by negotiating for such an exclusion. Moreover, we reject
OPM's argument that the Arbitrator's award was based on the
parties' agreement and that the Union's exception taking issue
with that contract interpretation therefore provides no basis
for finding the award deficient. It is clear that the Arbitrator
based his award on an interpretation of the Statute.
VIII. Conclusion
We recognize that in rendering his award, the Arbitrator
relied on existing Authority precedent, including cases which we
have expressly overruled in this decision. Upon consideration of
the entire record in this case, including the thorough
discussions in the Arbitrator's award and the briefs of the
parties and the amicus, we conclude that the award finding that
the grievance in this case was not arbitrable is contrary to law;
that is, it is contrary to sections 7103(a)(9) and 7121(b)(3)(C)
of the Statute.
We hold that a grievance alleging that management violated
applicable law when it established a grievant's performance
standards and elements, whether or not it has evaluated the
grievant against the standards and elements, is arbitrable unless
the parties have excluded it from the scope of their negotiated
grievance procedure.
The award is remanded to the parties to permit them the
opportunity to seek a resolution of the merits of the grievance
in a manner consistent with this decision by mutual settlement or
by further arbitration.
Issued, Washington, D.C., December 29, 1987
Jerry L. Calhoun, Chairman
Jean McKee, Member
FEDERAL LABOR RELATIONS AUTHORITY
FOOTNOTES
Footnote 1 The effect of section 7106 in this area is
discussed in Part C of our discussion, below.