ISSUES AT IMPASSE⁽²⁾

POSITIONS OF THE PARTIES

1. Competitive Areas

    a. The Employer's Position

    The Employer proposes that: (1) Headquarters offices in the Washington, D.C., metropolitan area make up one competitive area, with the exception of the Office of the Inspector General which would be "a separate competitive area unto itself;" and (2) competitive areas outside the Washington, D.C., metropolitan area be "defined geographically by local commuting area." Preliminarily, it argues that the Union’s proposal is nonnegotiable under "the Authority’s rationale in OPM." Since the Panel cannot resolve the negotiability question consistent with Commander, Carswell AFB, Texas and American Federation of Government Employees, Local 1364, 31 FLRA 620 (1988)(Carswell), it should relinquish jurisdiction over the matter.

    RIFs cause "considerable disruptions" in agency operations. Such disruptions, however, could be "contained" by defining competitive areas for field units in terms of local commuting areas, as it has proposed. Limiting competitive areas as such would also facilitate the administration of RIFs.

    The Union’s five proposed competitive areas for field units are unacceptable because, among other things, they would: (1) further complicate administration of RIFs; (2) cause greater disruption in agency operations because employees would have more opportunity to bump and retreat; (3) lead to more employee displacements through demotions and separations; (4) result in more relocations; (5) adversely affect employees who cannot relocate and would have to be separated in lieu thereof; and (6) "dramatically increase" employee relocation costs (which averaged over $45,000 for each GG-13 employee in 1993) as well as the expenditure of funds for severance pay for separated employees, thereby defeating the main reason for RIFs, saving funds. Moreover, these competitive areas are not "co-extensive with any existing FDIC regional operations." They are "purely arbitrary" and are "neither logical nor defensible." In this regard, the FDIC does not have "a uniform or consistent regional structure." Its various divisions have different regional configurations and do not all cover the same States or geographic areas. For example, one of its largest divisions operates in eight "discrete geographically defined regions," while another functions through outlying service centers which are not tied to a formal regional structure. Finally, in the past 16 years, the Panel has found regional areas appropriate in only two cases and in both the agencies involved had "consistent and clearly delineated regional structures."⁽³⁾

    b. The Union’s Position

    The Union’s proposal is as follows:

1. All bargaining-unit employees assigned to the FDIC Headquarters will be placed in the same competitive area.

2. For bargaining-unit employees assigned to offices in the field:

A. All bargaining-unit employees assigned to Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, Connecticut, New York, New Jersey, Pennsylvania, Delaware, Maryland, and Puerto Rico will be placed in the same competitive area.

B. All bargaining-unit employees assigned to offices in Virginia, North Carolina, South Carolina, Georgia, Florida, Alabama, Mississippi, and Tennessee will be placed in the same competitive area.

C. All bargaining-unit employees assigned to offices in Ohio, West Virginia, Kentucky, Indiana, Michigan, Wisconsin, Illinois, Missouri, Iowa, Kansas, Nebraska, North Dakota, South Dakota, and Minnesota will be placed in the same competitive area.

D. All bargaining-unit employees assigned to offices in Louisiana, Arkansas, Oklahoma, Texas, and New Mexico will be placed in the same competitive area.

E. All bargaining-unit employees assigned to offices in Alaska, Washington, Oregon, Idaho, Montana, Wyoming, Colorado, Utah, Nevada, Arizona, California, and Hawaii will be placed in the same competitive area.

3. If the FDIC determines that it will close any Service Center(s) and eliminate bargaining-unit positions through a reduction in force, the FDIC shall reconfigure the competitive areas into which bargaining-unit employees in the field will be placed, so that the number of competitive areas for bargaining-unit employees in the field is equal to the number of remaining Service Centers.⁽⁴⁾

Contrary to FDIC’s assertion, this proposal is negotiable. It does not attempt to define the competitive areas, which distinguishes it from the one found nonnegotiable by the FLRA in OPM. Also, it "expressly applies only to bargaining-unit employees and, therefore, does not ‘directly determine’ or purport to regulate the working conditions of supervisory personnel" or, for that matter, any employees outside of the bargaining unit. Rather, the proposal concerns conditions of employment of unit employees only, which is within the traditional scope of mandatory bargaining. Whatever impact the proposal may have on nonunit employees is "indirect," flowing from FDIC’s complying with the requirements of 5 C.F.R. § 351.402 (i.e., that competitive areas must include "all employees") and not from the expressed terms of the proposal. It is a well-established principle of labor law that proposals do not fall outside the scope of mandatory bargaining simply because they may have an impact on nonunit employees. See, e.g., U.S. Department of the Navy, Cherry Point, North Carolina v. Federal Labor Relations Authority, 952 F.2d 1434, 1440 (D.C. Cir. 1992). The Panel, therefore, can resolve the negotiability issue and proceed to the merits of the dispute consistent with Carswell. In the alternative, if the Panel determines that it cannot resolve that issue, it should still proceed to resolve the merits of the dispute in favor of the Union’s proposal and order its adoption "contingent upon a subsequent negotiability determination by the Authority." This alternative approach is appropriate because it: (1) furthers the statutory goal of prompt resolution of impasses, while ensuring that the Authority retains the authority to decide negotiability issues, and (2) promotes "effective labor-management relations" and "efficient agency operations."

    On the merits, its proposal should be adopted because it balances the different interests of management and employees. In this regard, it "would greatly reduce the cost and disruption of agency operations, [while] promot[ing] the retention of the most qualified and experienced employees." The proposed competitive areas are "necessary" to give employees a "fair opportunity" to exercise bump-and-retreat rights provided for by law and regulations. Moreover, the FDIC has a long history of relocating employees "when it suited its own purpose," sometimes across the country, regardless of the associated relocation costs. It would be "grossly unfair" for FDIC in RIF situations to deny employees the opportunity to relocate to save their jobs. Admittedly, confining competitive areas to local commuting areas, as the Employer proposes, would eliminate relocation costs; however, the Employer never before raised cost savings as a reason for why it is likely to implement a RIF in Fiscal Year 1997. Rather, the only reason it gave to the Union for the likelihood of a RIF was a "decline in workload." Finally, the Employer’s proposal "fails to fairly account for the dedication, service, and mobility of its permanent workforce."

DISCUSSION

    After carefully considering the evidence and arguments presented, we conclude that, on balance, the Employer’s proposal is the more reasonable one.⁽⁵⁾ Preliminarily, we note that the crux of the dispute is over the competitive areas for field offices. We recognize that the broader competitive areas proposed by the Union may provide senior employees with more opportunities to bump and retreat to positions encumbered by less senior employees of the Agency. In our view, however, such benefit alone is not enough to overcome the fact that those competitive areas would: (1) make it more costly to conduct a RIF, and (2) be more disruptive of Agency operations nationwide. Moreover, the competitive areas proposed by the Union appear to be arbitrary because they do not correspond to any existing organizational structure.

    During the informal conference, the Union raised concerns, some of which it may have submitted in the form of impact-and-implementation proposals, over how the Employer would implement a RIF. We believe that the administration of future RIFs would be facilitated if these concerns are addressed promptly. Accordingly, our recommendation is that the parties adopt the Employer’s proposal and attempt to reach an accommodation over the Union’s remaining concerns during the 30-day period following the issuance of this report.

2. Service Credit for Performance⁽⁶⁾

    a. The Employer's Position

    The Employer’s proposal provides for an employee’s actual performance ratings of record to be used to calculate additional service credit for RIF retention both under FDIC’s previous performance management system (PMS) and the current one implemented on October 1, 1995.⁽⁷⁾ Employees’ entitlement to additional service credit should be based on their actual performance ratings because it "recognize[s] above average performance by employees and allow[s them] to benefit from their achievements at a crucial time when they are facing the loss of employment or a reduction in grade." Its proposal should be adopted even though the previous PMS provided less than a satisfactory method for evaluating employees and did not put employees on notice that their ratings could be used for RIF purposes.

    The Union’s proposal is unacceptable primarily because it: (1) is "contrary to the trend within the Federal Government to emphasize performance" as much as length of service and veterans preference for job retention purposes, and (2) "factors out" performance in determining job retention, which particularly disadvantages minorities and women in professional positions who have less seniority in Government. Moreover, discounting performance in the job retention process, as the Union proposes, is inconsistent with Government-wide RIF regulations (5 C.F.R. §§ 351.501, 351.502), which are applicable to FDIC. Finally, under 5 C.F.R. § 351.504(b)(4)(i), FDIC "must specify in its performance appraisal system or other appropriate issuance the type of annual performance ratings of record that are used to determine retention standing." Since it has determined to use summary ratings to appraise employees, such ratings also must be used for job retention purposes.

    Under the Union’s proposal, a presumed rating of "fully successful" would be given to: (1) all unit employees for appraisal periods prior to October 1, 1995, and (2) unit employees with a "summary rating" of 2.0 or greater for any appraisal period beginning on or after October 1, 1995. Those employees who "receive a ‘summary rating’ of less than 2.0 for any appraisal period beginning on or after October 1, 1995, w[ould] not be given any additional service credit for that period in the event of a RIF, provided that the employee has had the opportunity to exhaust any grievance rights to contest that rating." Contrary to the Employer’s assertion, Government regulations do not require it to provide additional service credit for performance based on actual appraisals issued under its PMS. In fact, under 5 C.F.R. § 351.504(a), the annual performance ratings concerned are "those established under [5 C.F.R.] Part 430," which deals with performance management (including performance management systems, appraisals and awards) in the Federal Government. The FDIC is not covered by Part 430, and its PMS does not comply with its requirements. Specifically, FDIC’s employee performance appraisal plans do not have the system of critical elements and standards required under Part 430. Rather, the performance appraisal plans under the previous PMS were "extremely generic," i.e., they did not "distinguish by position or even by classification series, and did not include a mechanism to derive an overall summary rating."

    A joint labor-management committee, which evaluated the previous PMS with the assistance of a consulting firm, concluded that it was "unacceptable" and had to be replaced before the parties could discuss the development of a pay-for-performance system. Moreover, FDIC admittedly failed to comply with 5 C.F.R. § 351.504(b)(4)(i), which requires an agency to specify in its performance appraisal system or other issuance the types of annual performance ratings of record that are used to provide employees additional service credit for performance for job retention purposes. Thus, in the absence of the advance notice required by regulations, the Employer should be barred from using performance ratings issued under the previous PMS to determine an employee’s job retention standing. Instead, FDIC should be ordered to assume "fully successful" ratings for all employees for job retention purposes, as was initially agreed. Because no ratings have been issued under the current PMS, which was developed jointly by the parties, some "experience" is required to: (1) ensure that performance standards for employees in the same positions are being "applied consistently by different supervisors," and (2) allow for employees and supervisors to become "confident" in the systems’ ability to "fairly and accurately assess performance." In fact, the "premature" use of ratings issued under the current PMS may lead to an "inordinate" number of grievances being filed over ratings, which would lend greater "uncertainty to the development of retention registers."

    Having considered the evidence and arguments on this issue, we conclude that the parties should adopt a compromise solution to resolve their dispute. Under the compromise, all employees would be provided with presumed "fully successful" performance ratings for appraisal periods under the previous PMS which was in effect until October 1, 1995. In this regard, the facts and circumstances surrounding the previous PMS persuade us that it would be unfair to employees to use actual ratings under that system. The compromise, however, would also provide for the use of actual performance ratings issued under the current PMS after employees are again given the requisite notification that their performance ratings could be used for job retention purposes in a RIF. In our view, this is warranted because the parties’ jointly worked to develop the current PMS. We find speculative, in this connection, the Union’s argument that the use of actual ratings under the current PMS will lead to an increase in the filing of grievances which otherwise would not have occurred.

3. Assignment Rights

    a. The Employer's Position

    Under the Employer’s proposal, when two or more positions with the same representative rate are available for assignment, it may offer an employee any one of them; the employee would not have the right to choose from among them. Its proposal is consistent with Government regulations which specifically prohibit employees from selecting the positions to which they will be assigned.⁽⁸⁾

    The Union’s proposal is unacceptable because "it would allow an employee to ‘personalize’ bump and retreat rights, that is, the employee would have the option of displacing another employee for other than objective reasons." Furthermore, the assignment process would be "protracted" if employees are allowed to select their preferred positions. In this regard, FDIC would have to wait until an employee rejects a position before another employee could be assigned to or offered the same position.

    b. The Union’s Position

    The Union proposes the following:

Upon providing general notice of a reduction in force (RIF) to its employees, the FDIC will send a form to each bargaining-unit employee. This form will be used to solicit the employee’s preference(s) of positions in the applicable competitive level or which the employee previously held, to which he or she might be assigned in the event of a RIF. Whenever the Employer determines that, consistent with applicable law, regulation, and the terms of the negotiated FDIC RIF policy, a bargaining-unit employee is eligible for placement in more than one position with the same representative rate, the Employer will make its assignment determination based on the employee’s expressed preference(s) for the available positions, absent just cause.

    The OPM Handbook cited by FDIC in support of its position is "merely [an] informal guidance," which does not have the full force and effect of law. Furthermore, while law, regulations, and the Handbook do not give employees an affirmative right to select from among available positions, neither do they hinder an agency’s discretion to give them that right. Its proposal gives employees "something less" than the right to select. It simply gives them the right to express their preferences, which should be honored absent "just cause." Moreover, management used a similar procedure to place executive-level employees in its Legal Division.

    In the alternative, the Union would accept a modified version of a compromise suggested by Member Fisher during the informal conference.⁽⁹⁾ The modification would entail substituting the phrase "workload, staffing, and mission requirements" for the phrase "legitimate business factors." The former phrase represents the standard developed and used by the parties in their various CBAs. Both of its proposals, and Member Fisher’s suggested compromise, are acceptable because they strike a balance between employees’ interests in their assignment preferences being given "fair consideration" and the Employer’s need to disregard such preferences in some cases to ensure that agency operational requirements are met.

DISCUSSION

    Upon consideration of the evidence and arguments presented, we conclude that the parties should adopt the modified version of the Union’s proposal suggested by Panel Member Fisher during the informal conference to resolve their impasse on this issue. This would require the Employer to make assignment determinations based on legitimate business factors after reasonable consideration of employees’ preferences for the available positions. We are persuaded that this provides a better balance between employees’ interests in having a say in the positions to which they will be assigned, and the Employer’s in promptly meeting its operational needs. Given that the areas in which employees compete for assignments will be limited to local commuting areas, we are not convinced that the assignment (bump-and-retreat) process would be lengthened appreciably if employees’ preferences are considered before assignments are made.

4. Appeal Rights

    a. The Employer's Position

    The Employer proposes that unit employees be permitted to appeal RIF actions only through the negotiated grievance procedure; the only exception would be where an employee raises an allegation of discrimination under 5 U.S.C. § 2302(b)(1), in which case the matter would be appealable to the Merit Systems Protection Board (MSPB) or through the negotiated grievance procedure, but not through both. In negotiations over their various CBAs, the parties agreed not to exclude RIF actions from the grievance procedure. At this time, FDIC is "unwilling" to exclude such actions to allow employees to appeal them to the MSPB.⁽¹⁰⁾ In fact, it has no duty to bargain with the Union over this matter because it is already contained in the CBAs. It, however, would be amenable to discussing the "subject of exclusions from the grievance procedures" during term negotiations.

    The Union proposes that appeals of RIF actions be excluded from the negotiated grievance procedures for unit employees. Its proposal would place all employee appeals of RIF actions under the jurisdiction of the MSPB, which would reduce the parties’ costs for such appeals. Moreover, with MSPB handling RIF appeals for all employees, there would be greater "consistency in outcomes" because it has more "expertise and experience" in applying the RIF regulations than do private grievance arbitrators.

    After considering the parties’ positions on this issue, we conclude that the parties should withdraw their respective proposals because the matter is already covered by their various CBAs. In our view, the subject is more appropriately addressed during upcoming term negotiations.

RECOMMENDATIONS

    The Panel makes the following settlement recommendations:

1. Competitive Areas

    The parties shall adopt the Employer’s proposal and address the Union’s remaining concerns over its implementation during the 30-day period following receipt of this report.

2. Service Credit for Performance

    The parties shall adopt the following compromise proposal:

All employees shall receive a presumed rating of "fully successful" for the prior annual performance system which was in existence up to October 1, 1995. Everyone under the new system, after a new notice to the workforce, will be credited according to the Government-wide RIF regulations.

3. Assignment Rights

    The parties shall adopt the Union’s proposal modified as follows:

Upon providing general notice of a reduction in force (RIF) to its employees, the FDIC will send a form to each bargaining-unit employee. This form will be used to solicit the employees’ preference(s) of occupation and/or location to which he or she might be assigned in the event of a RIF. Whenever the Employer determines that, consistent with applicable law, regulations, and terms of the negotiated FDIC RIF policy, a bargaining-unit employee is eligible for placement in more than one position with the same representative rate, the Employer will make its assignment determination based on legitimate business factors after reasonable consideration of the employee’s express preference(s) for the available position.

4. Appeal Rights

    The parties shall withdraw their proposals.

By direction of the Panel.

Linda A. Lafferty

Executive Director

March 4, 1995

Washington, D.C.