U.S. Office of Personnel Management - Ensuring the Federal Government has an effective civilian workforce

Department of the Treasury, Customs Service, Port of New York and Newark and National Treasury Employees Union, Chapter 161, 0-AR-3384, March 20, 2002, 57 FLRA No. 151.

The Authority set aside the arbitrator's interim and final awards in which the arbitrator, after finding that the agency didn't give the union adequate notice of a proposed change in working conditions (temporary discontinuance of ship boarding on overtime), awarded backpay. FLRA found: (1) that the union did, in fact, receive adequate notice; (2) that by its failure to request negotiations it had waived the right to bargain over the change; (3) that the arbitrator misinterpreted the contract; and (4) that the final award violated the Back Pay Act.

The agency temporarily suspended the practice of having Customs Inspectors board vessels in Port Newark/New York while on overtime. Before doing so, it sent a letter to the union's president on April 1, 1999, indicating that, due to financial problems, the routine boarding of vessels during overtime hours would stop, effective April 15 (the change actually took place April 26) and would last until the end of the fiscal year. The union didn't request negotiations. It instead filed a grievance on April 19, alleging that discontinuance of the practice violated both the Statute and the collective bargaining agreement.

In his interim award, the arbitrator held, despite the agency's having provided documentary notice of the intended change in its April 1 letter, and despite finding that the letter was "sufficiently specific as to the Agency's plan of action," that the notice wasn't adequate, given that the union was confused about the agency's intentions because of recently completed national and local agreements relating to vessel boarding. The arbitrator held that, under those circumstances, the agency was required to give the union "a clear and unequivocal notice that it is meeting its obligation to bargain as opposed to providing information." He ordered backpay. Given the absence of relevant data, he made an interim award and retained jurisdiction to enable the agency and union to provide additional data.

In his final award, the arbitrator awarded total backpay of $146,502 for lost overtime pay. Fifty percent of the award was to be distributed among the 79 inspectors who were part of the overtime pool involved in boarding vessels and the other 50% among 151 inspectors who were displaced from their own overtime pools by the members of the first group.

The agency filed exceptions, claiming that: (1) the notice was "adequate" under the standard set forth in Army Corps of Engineers, Memphis District, 53 FLRA 79; (2) the award didn't draw its essence from the agreement because the arbitrator's "totality of the circumstances" analysis exceeded the terms of the agreement's requirement that the agency provide reasonable advance notice of intended changes; and (3) the award wasn't consistent with the Back Pay Act. The Authority agreed and set aside both the interim and final awards.

Objective vs. subjective standard. Regarding the adequacy of the notice, FLRA found that the arbitrator misapplied the statutory notice requirements as set forth in Corps of Engineers, 53 FLRA at 82, and replaced an objective standard with a subjective standard. In its letter to the union, the agency "conveyed to the Union the scope and nature of the proposed change, the certainty of the change, and the planned implementation date[.]"

When viewed objectively, this notice satisfied the statutory standard. The Arbitrator's determination, based on the Union president's confused state of mind, that the Agency was required in these circumstances to provide the Union with "clear and unequivocal" notice, is inconsistent with law because it establishes a different standard from the standard set forth in the Statute.

Bargaining waiver. Regarding the bargaining waiver, FLRA noted that "a union is deemed to have waived its bargaining rights if it fails to request negotiations after receiving adequate notice from the agency of a planned change in a past practice. Corps of Engineers, 53 FLRA at 82." Here, the union conceded it made no bargaining request and there was no claim that there was a contractual obligation that would have excused the union from failing to request negotiations.

Essence violation (misinterpretation of contract). The union didn't contend that the notice requirements of the contract were different from the statutory requirements. FLRA accordingly found that "the contractual notice requirements are intended to be interpreted in the same manner as the statutory notice requirements."

Because we find that the Arbitrator erred in finding that the Agency violated the Statute, and as there is no argument to distinguish the statutory notice requirements from contractual notice requirements, the Arbitrator's finding of a contractual violation cannot stand. Therefore, we find that the award does not represent a plausible interpretation of the agreement.

Back Pay Act violation. Although a violation of the contract "can constitute, in appropriate circumstances, an unjustified or unwarranted personnel action resulting in the withdrawal or reduction of an employee's pay, allowances or differentials[,]" that didn't apply here, given that FLRA found that there was neither a violation of the Statute nor a contract violation.