FLRA Changing Rules on the Legality of Arbitration Awards in Recent Decisions

By on October 20, 2010 in Current Events with 0 Comments

Agency representatives and attorneys occasionally send me a case to look at or a FLRA or other decision suggesting there might be an article in or around it. I have never gotten more than one such suggestion on a case until recently.

A substantial number of practitioners told me about a series of Federal Labor Relations Authority (FLRA) decisions on arbitration award appeals. I had been out of the country and hadn’t seen the cases they were talking about so I read them and as they say, wept. Not really, but close.

Anyone who reads my articles knows that I believe the FLRA both current and too often in the past has arrogated to itself broad authority, beyond that intended by the labor statute. Now it seems, the FLRA has determined to rewrite the labor law with regard to deciding arbitration appeals.

Why So Many Arbitration Award Decisions?

The most frequent case decided by FLRA in recent years has been an appeal of an arbitrator’s award usually on the basis that it was contrary to law. This may be the result of two factors. First, there was a hiatus in unfair labor practice cases and new cases may not have yet risen to the level of the FLRA (Lord, save us if they do as they have in their other decisions).

Second, agencies would have to be crazy to take a negotiability case before the current Authority since their pre-scripted decision template automatically finds almost every union proposal to be an appropriate arrangement. I am waiting for a decision granting higher retirement benefits to union representatives to be declared an appropriate arrangement. (Particularly a worry since OPM’s political cronies appear joined at the hip with their union forum partners ).

Take a look at 65 FLRA No. 27  and 65 FLRA No. 28.

65 FLRA No. 27 AKA “The Agency Must Have Intended to Violate the Law”

This case involves the FLRA’s decision in the case to change its prior precedent:

“In this case, the Authority has decided to revisit the issue of arbitrators’ remedial authority when it entertains exceptions alleging that an award or arbitral remedy impermissibly affects management rights under § 7106 of the Statute. Our focus is on the analysis that applies after the Authority has determined that an award provides a remedy for a violation of a contract provision that was negotiated pursuant to § 7106(b) of the Statute.”

The issue has to do with the legal framework that the Authority applies when analyzing arbitrators’ awards claimed to impermissibly affect management rights set forth in 5 U.S.C § 7106(a). The Authority explained its two part (prong) analysis as follows:

“Under prong I, the Authority examines whether an award that affects management rights provides a remedy for a violation of either an applicable law, within the meaning of § 7106(a)(2) of the Statute, or a contract provision that was negotiated pursuant to § 7106(b) of the Statute.” 

and

“Prong I’s companion requirement, the reconstruction prong or ‘prong II,’ focuses on whether the arbitrator’s remedy reflects a reconstruction of what management would have done if management had not violated the law or the contractual provision at issue.”

Dropping prong two, the Authority stated it’s reasoning:

“Upon reexamination of the ‘reconstruction’ standard reflected in BEP’s second prong, and as discussed in the following section, we determine that such a standard is not required by the Statute and, indeed, unduly limits the appropriate remedial authority of arbitrators. It is sufficient that an arbitrator’s award that affects management rights under § 7106(a) of the Statute provides a remedy for a violation of either an applicable law, within the meaning of § 7106(a)(2) of the Statute, or a contract provision that was negotiated pursuant to § 7106(b) of the Statute.” (MY EMPHASIS) 

I don’t think this decision can be read any other way than holding that an arbitrator’s award providing a remedy cannot be challenged as violating a management right because the agency has, in effect, waived such a right by entering into an agreement allowing virtually any meaning an arbitrator may ascribe to a provision based on 7106(b). That, friends, is absolute lunacy. 

65 FLRA No. 28 AKA “Excessive Interference is Now Deceased” 

In this case, the Authority kicks its “excessive interference test” to the curb. Here’s how they tee it up:

“Under the Authority’s current standard for reviewing arbitral enforcement of provisions allegedly negotiated under § 7106(b)(3), the Authority determines whether an arrangement is ‘appropriate’ by applying an excessive interference test. See BOP, Oklahoma City II, 58 FLRA at 110. A provision excessively interferes with the exercise of a management right if the benefits afforded employees under the provision are outweighed by burdens on the exercise of management’s rights. Id. at 111. This is consistent with the test that the Authority applies in the negotiability context.”

They then go on to say:

“On reexamination, we find, for the following reasons, that it is more appropriate to assess whether a contract provision, as interpreted and applied by an arbitrator, ‘abrogates’ – i.e., waives – management rights under § 7106(a) of the Statute.”

And:

“…neither § 7106(b)(3) nor any other provision of the Statute defines the standard to be used in determining whether an award is contrary to § 7106 and, as a result, contrary to law under § 7122(a)(1). Thus, the Statute does not expressly preclude the Authority from distinguishing between the standards used to determine whether a matter is within the duty to bargain under § 7106(b)(3) and the standard used to determine whether an award is contrary to law under § 7122(a)(1).”

Finally, “Based on the foregoing, we find that, in resolving exceptions to arbitration awards involving contract provisions alleged to be enforceable under § 7106(b)(3) of the Statute, we will assess whether the arrangement abrogates – i.e., waives – management rights. We will no longer apply an excessive-interference standard, and BOP, Oklahoma City II and other Authority decisions that have applied that standard in arbitration will no longer be followed.”

So, in essence, the case holds that should an arbitrator interpret contract language in such a way as to violate a management right, such interpretation cannot be challenged in an appeal since the Agency must have intended to “abrogate” any rights by agreeing to such language to begin with based solely on the arbitrator’s interpretation whether or not there was ant contrary intent involved.

One of the Agency folks who wrote me about these decisions said:

(Agency Representative) “…offered the following view on these two cases: Although neither case really involved a matter of contract interpretation – the agencies simply failed to follow applicable procedures or the agreement – the logical extension of the decisions and the reasoning used by the Authority seems to indicate that: if an arbitrator’s screwy interpretation and/or application of a contract provision excessively interferes with a management right under appropriate arrangement standards found in 7106(b)(3), that interpretation or application will not be found to be illegal as contrary to 7106(b)(3) so long as the interpretation does not abrogate (whatever that means) the management right and so long as the remedy is “reasonably related” to the arbitrator’s screwy interpretation. (As Member Armendariz noted in his concurring opinion in Dep’t of Justice, Federal Bureau of Prisons, 58 FLRA 109, 115 (2002), ‘in the 12 years that the abrogation standard has been in existence, the Authority has never applied that standard in such a way to find that an award was deficient. Such a uniformly one-sided application effectively renders the test meaningless and removes all of its utility.’)”

 

and

“The Authority seemed to stress the fact that once a provision is in a contract, the parties themselves balanced the burdens and benefits and therefore ought to abide by what was agreed to; and that if one of the parties did not like the “agreement,” it should not have agreed to include it in the contract. This seems to be a very naive view, since most of the exceptions filed are based on an arbitrator’s interpretation of the agreement and concern claims by parties that the arbitrator interpreted the agreement in a manner that was not intended or agreed to. So long as the arbitrator finds that the parties ‘voluntarily’ agreed to an arrangement that does not abrogate a management right, that determination will be pretty much unassailable.” 

 

Scarier Stuff Yet to Come

In a footnote (No.11), FLRA says:

“We note that our analysis calls into question whether abrogation also should be the standard applied in negotiability cases involving contract provisions (where agreement has been reached and subsequently disapproved), rather than proposals. See BOP, Oklahoma City I, 57 FLRA at 162 (“it appears appropriate to reexamine at the first opportunity the application of the excessive interference standard in cases where a provision has been disapproved under § 7114(c)”). However, as that issue is not raised here, we leave it for another day.”

One Agency advocate opined that perhaps these decisions were an attempt on FLRA’s part to easily wrap up their backlog of cases. He or she could say that, I couldn’t possibly comment.

It seems that while Mr. Berry is arm twisting Agencies to involve the union in all matters pre-decisionally, Ms. Pope and company are intent on stripping Agencies of their statutorily guaranteed rights. I guess I can’t get out of my head the words, “nothing in this chapter shall affect the authority of any management official of any agency…” Somehow, I don’t think the Supreme Court will either when cases such as these inevitably get there.

As always, if you infer an opinion from the above, it is mine and mine alone except as otherwise stated.

© 2016 Bob Gilson. All rights reserved. This article may not be reproduced without express written consent from Bob Gilson.

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About the Author

Bob Gilson is a consultant with a specialty in working with and training Federal agencies to resolve employee problems at all levels. A retired agency labor and employee relations director, Bob has authored or co-authored a number of books dealing with Federal issues and also conducts training seminars.

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