Advocates should pay attention to a new decision from the Federal Labor Relations Authority (FLRA).
The FLRA has recently, in an arbitration case, reversed the Obama and other prior FLRA’s interpretations of the law in a couple of ways.
Below, I cite the case, provide a link and state the holding and rationale so practitioners can easily find it and judge for themselves whether my take is accurate. By the way, I was very happy to be challenged on my reading of a case in the last article by some differing but thoughtful readers instead of the usual, mostly insipid name-calling from fools.
Past Practices and Arbitration Decisions
In its summary of the case, the FLRA found in SBA v. AFGE, 70 FLRA No. 107:
This case presents us with an appropriate opportunity to reexamine the Authority’s precedent regarding: (1) essence challenges to arbitrators’ procedural‑arbitrability determinations, and (2) the effect of parties’ past practices on the clear and unambiguous terms of their collective‑bargaining agreements. For the reasons discussed below, we reverse that precedent and hold that: (1) parties may file essence exceptions that directly challenge arbitrators’ procedural‑arbitrability determinations, and (2) arbitrators may not rely on past practices to overrule clear and unambiguous provisions of collective‑bargaining agreements.
The FLRA’s Rationale
Here is the FLRA’s Rationale on Challenges to an arbitrator’s “procedural-arbitrability” determination:
Procedural arbitrability involves “procedural questions, such as whether the preliminary steps of the grievance procedure have been exhausted or excused.” The Authority has found that essence challenges to procedural‑arbitrability determinations provide no basis for finding an award deficient. However, that is inconsistent with the practice of federal courts. Specifically, federal courts have applied the essence standard to review essence challenges to procedural‑arbitrability determinations. To the extent that the Authority’s existing precedent is based on an interpretation of the U.S. Supreme Court’s decision in John Wiley & Sons, Inc. v. Livingston, that interpretation is incorrect. In Wiley, the Court addressed only who – arbitrators or courts – initially decides questions of procedural arbitrability, not whether courts can review essence challenges to procedural‑arbitrability determinations once the arbitrator has made them.
Consistent with the Authority’s mandate, as relevant here, to review arbitral awards on grounds “similar to those applied by [f]ederal courts in private[-]sector labor‑management relations,” we now reexamine our precedent and hold that parties may directly challenge arbitrators’ procedural‑arbitrability determinations on essence grounds. Consequently, we will no longer follow Authority decisions holding otherwise.
Contract Language and The Role of a Past Practice
Here is the FLRA’s Rationale on the issue of failing to draw its essence from the actual contract language and past practice trumping contract language:
The Authority will find that an arbitration award is deficient as failing to draw its essence from a collective-bargaining agreement when the excepting party establishes that the award: (1) cannot in any rational way be derived from the agreement; (2) is so unfounded in reason and fact and so unconnected with the wording and purposes of the agreement as to manifest an infidelity to the obligation of the arbitrator; (3) does not represent a plausible interpretation of the agreement; or (4) evidences a manifest disregard of the agreement. The Authority has found that an award fails to draw its essence from a collective‑bargaining agreement where the award conflicts with the agreement’s plain wording.
The Agency argues that the Arbitrator erred by relying on the parties’ past practice instead of the “clearly define[d]” provisions of their agreement. The Authority has held that it is appropriate for arbitrators to find that a past practice has modified the terms of a collective‑bargaining agreement. However, the Authority has also acknowledged that judicial decisions “are mixed” on that issue. And, on reexamination, we find that certain concerns specific to the federal sector support reversing our existing precedent and holding that arbitrators may not modify the plain and unambiguous provisions of an agreement based on parties’ past practices.
First, we believe that such a rule best serves the statutory policy of providing parties “with stability and repose with respect to [the] matters [that they have] reduced to writing.” That stability is undermined when arbitrators are able to modify the clear terms of a bargained-for agreement. By contrast, precluding arbitrators from engaging in such modification enables parties to rely on the negotiated terms of their agreements.
Second, § 7114(c) of the Federal Service Labor‑Management Relations Statute (the Statute) provides for the submission of collective-bargaining agreements to the agency head for review. But past practices are not subject to that review process. Therefore, finding that an arbitrator may rely on a past practice to effectively create a new contract provision is in tension with § 7114(c) of the Statute.
Will This Rationale Be Applied to Unfair Labor Practice Rulings?
The above are significant changes in FLRA’s approach to arbitration appeals (or exceptions, if you prefer). What will be particularly interesting is whether or, more, likely when the above will be applied to unfair labor practice rulings by an administrative law judge.
If you are interested, I recently spoke on a Panel at the Heritage Foundation on the subject, Improving the Federal Workforce through Commonsense Hiring and Firing Practices. Also on the panel were Bill Valdez, the President of the Senior Executive Association, and Bob Dietrich, who also writes for FedSmith. You can watch the presentation by following this link.