Department of the Navy, Naval Underwater Systems Center, Petitioner, v. Federal Labor Relations Authority, Respondent, 854 F.2d 1 (1st Cir. 1988)

The Department of the Navy, Naval Underwater Systems Center ("Navy"), petitions this court to review a decision of the Federal Labor Relations Authority ("FLRA" or "Authority"). The FLRA ordered the Navy to bargain over a proposal the National Association of Government Employees, Local RI-144 ("Union"), made during the course of collective bargaining with the Navy. National Association of Government Employees, Local RI-144, and Department of the Navy, Naval Underwater Systems Center, 29 FLRA No. 47 (1987). The FLRA cross-petitions for enforcement of its order. We conclude that the order is unenforceable.

This case arises under the Federal Service Labor-Management Relations Act, 5 U.S.C. §§ 7101 et seq. (1982), which provides a statutory framework for regulating federal sector labor relations. Central to this framework is section 7103(a) (12), which obligates federal employers to bargain in good faith with respect to the "conditions of employment." Likewise important to the statutory scheme, however, is section 7106's limitation on this obligation. This section of the Act,¹  entitled "Management Rights," reserves certain powers for the agencies;²  for example, under the part of section 7106(a) relevant here, "nothing in this chapter shall affect the authority of any management official of any agency ... to hire, assign, direct, layoff, and retain employees in the agency." Therefore, a collective bargaining proposal for negotiation over the exercise of a management right is not within the agency's duty to bargain. See National Treasury Employees Union v. FLRA, 691 F.2d 553, 554 (D.C. Cir. 1982).

The Act is administered by the Federal Labor Relations Authority, an independent agency with a role in the federal employment sector analogous to the role of the National Labor Relations Board in the private sector. See Bureau of Alcohol, Tobacco & Firearms v. FLRA, 464 U.S. 89, 92-93, 104 S. Ct. 439, 441-442, 78 L. Ed. 2d 195 (1983). Among its duties, the FLRA "resolves issues relating to the duty to bargain in good faith." 5 U.S.C. § 7105(a) (2) (E).

The Navy argues in its petition for review that the FLRA erred in deciding that the Union's proposal here in issue was negotiable. Petitioner contends the proposal calls for negotiation concerning authority of Navy officials to "layoff" agency employees, a non-negotiable management right under section 7106(a) (2) (A). Under the judicial review provision of the Act, id. at Sec. 7123(c), which cross-references section 706 of the Administrative Procedure Act, we are empowered to set aside the Authority's decision only if it is "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." 5 U.S.C. § 706(2) (A).

The disputed proposal put forth by the Union contains a pair of terms that describe the status of non-working federal employees. Under the relevant terminology, a "furloughed" employee has no duties and is not paid, 5 U.S.C. § 7511(a) (5); an employee given "administrative leave," on the other hand, has no work but is paid, see Federal Personnel Manual Supplement 990-2, Chapter 630, subchapter S11-5. The Union's proposal is as follows:

Furloughs of employees will be the last resort when administrative leave cannot be given due to budgetary constraints.³ 

Although the meaning of the proposal is not altogether clear on its face, the Union, the Navy, and the Authority all seem to agree on the following meaning: employees can only be furloughed (as opposed to being placed on administrative leave) when budgetary constraints so dictate. The FLRA found, moreover, and the Union insists, that the disputed proposal was meant to apply only to short-term curtailments of Navy operations during the Christmas/New Year holiday season, although the proposal itself mentions no such limitation. Thus, the immediate effect of the adoption of the Union's proposal would apparently be to require the Navy to place superfluous employees on administrative (i.e., paid) leave when and if it temporarily shuts down operations, especially over the Christmas/New Year holiday.

Upon receiving this proposal from the Union, the Navy took the position that it was not a proper subject of bargaining as it allegedly undercut the authority conferred upon management under section 7106(a) (2) (A). The Union thereupon exercised its statutory right of appeal to the FLRA. See 5 U.S.C. § 7117(c) (negotiability appeals).

The FLRA rejected the Navy's argument that the Union's proposal would compromise its authority to lay off employees. Its analysis contained two steps. First, the Authority asserted that "an agency's decision to shut down or to curtail operations is an aspect of its decision to lay off under section 7106(a) (2) (A)." The Authority observed that an agency may also lay off employees for budgetary reasons (e.g., lack of appropriated funds, insufficient appropriation to maintain workforce); however, nothing in the Union proposal precluded the Navy from laying off employees for budgetary reasons. The Authority concludes this first part of its analysis as follows: "Thus, we find this sentence [the proposal] would not in any manner prevent the Agency from curtailing or shutting down its operations."

We reproduce the second step of the Authority's reasoning in toto:

In addition, we find that requiring employees to be placed on administrative leave instead of being placed on furlough for the period of the temporary shut down does not interfere with the Agency's right under section 7106(a) (2) (A) to lay off. Specifically, while the term "to lay off" is not defined in the Statute it generally involves placing employees in a temporary status without duties for nondisciplinary reasons. See, for example, Roberts['] Dictionary of Industrial Relations 377-78 (3d Ed.1986). There is nothing inherent in the term "to lay off" and the Agency points to no restrictions in law or regulation, which indicates that employees must be in a non-paid status during a layoff. In fact, as noted in section B.1 above, an agency may place employees on administrative leave, that is, in a status without duties but with pay and without charge to leave during short periods of curtailed operations. In other words, an agency is authorized to lay off employees with pay for brief periods of time.

Consequently, we conclude that a requirement to place employees on administrative leave for the brief period of curtailed operations contemplated in this case is consistent with the Agency's right to layoff employees. Therefore, this sentence is negotiable.

In sum, the Authority reasoned that because the Navy could always lay off employees for budgetary reasons, and could "lay off employees with pay" during shutdowns, its general right to lay off employees was unaffected by the proposal.

Although an agency's interpretation of the statute it administers is normally owed considerable deference, a reviewing court should only uphold an interpretation that is "reasonable and defensible." Bureau of Alcohol, Tobacco & Firearms v. FLRA, 464 U.S. 89, 97, 104 S. Ct. 439, 444, 78 L. Ed. 2d 195 (1983). See Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 843, 104 S. Ct. 2778, 2782, 81 L. Ed. 2d 694 (1984) ("permissible" agency interpretations must be upheld). The FLRA's interpretation seems neither. We think the Authority's decision reflects a fundamental misreading of the statute's command that "nothing in this chapter shall affect the authority of any agency ... to ... layoff ... employees in the agency." 5 U.S.C. § 7106(a) (2) (A). First, we have difficulty finding any basis for the Authority's conclusion that the term "layoff" can ordinarily be read to describe the employment status of workers on paid leave. Second, even assuming the Authority's interpretation of "layoff" is somehow supportable, we believe the Authority erred in concluding that the proposal did not "affect" the Navy's right to lay off employees.

A. The Authority cites neither precedent nor legislative history for the proposition that employees on paid administrative leave can be considered "laid off." Instead, it enlists the definition of "layoff" in Roberts' Dictionary of Industrial Relations (3d ed. 1986), which is supposed to be compelling because it does not explicitly say "laid off workers are not paid."⁴  But we find little in the Roberts' definition that supports the Authority's view. To the contrary, the definition seems to us to imply that laid off workers are normally not paid, since "layoff" is defined as a "temporary or indefinite separation from employment," and the laid off employee is described as being "generally reemployed." If a laid off employee is "separated" from employment, and is "re-employed" at the end of the layoff, one would think it unlikely that he was paid while laid off, since a person drawing regular pay (as if still working) does not meet the ordinary concept of an unemployed worker.

Not only does the Authority fail to offer any convincing support for its interpretation, but we find in other congressional enactments support for the view that Congress would have understood the term layoff, under most conditions, to describe a no duty/no pay employment status. For example, in the eligibility criteria for employee benefits under the Redwood Employee Protection Program, Title II, Redwood National Park Expansion Act of 1978 ("Redwood Act"), Pub. L. No. 95-250, Secs. 201-213, 92 Stat. 163, Congress provided the following distinction between a "total layoff" and a "partial layoff":

"total layoff" means a calendar week during which affected employers have made no work available to a covered employee and made no payment to said covered employee for time not worked, and "partial layoff" means a calendar week for which all pay received by a covered employee from affected employers is at least 10 per centum less than the layoff or vacation replacement benefit that would have been payable for that week had said covered employees suffered a total layoff.

Id. at Sec. 201(12). Under these definitions, the feature of a "partial layoff" that makes it partial is that the employee in fact receives some pay from an employer that week, and is thereby not "totally" laid off. We infer from this distinction that Congress believed the term layoff to describe a no duty/no pay employment status. We also note that in diverse contexts Congress has enacted legislation relating to the "protection" of laid off employees.⁵  Although it is conceivable that Congress would be this solicitous of the interests of workers in a paid leave status, we think it more likely Congress's concerns were directed toward workers out of work and out of wage, and therefore in need of such statutory protection.

We thus think it likely, and in accord with common parlance, that when Congress used the term layoff it intended to describe the status of a worker who is presently not working and not being paid his normal working wage. The right to lay off employees under section 7106(a) (2) (A) would mean, therefore, at least in its most usual sense, the right to place employees in a no-pay status. Under this definition of layoff it is clear that the Union proposal "affected" the Navy's right to lay off its employees. Requiring the Navy to place employees on administrative leave during shutdowns would deny--or, at the very least, would certainly restrict and limit--the Navy's authority, in the usual sense, to lay off these employees.

B. Second, even were we to accept the Authority's expanded reading of the term "layoff," we would still find the Union proposal non-negotiable. This is because the Authority paid insufficient heed to section 7106(a) (2) (A)'s explicit command that "nothing in this chapter shall affect the authority of any management official of any agency ... to ... layoff ... employees." (Emphasis added.) The Authority concedes that the Union's proposal, if adopted, would effectively forbid the Navy from carrying out that kind of layoff that would leave laid off employees without pay during shutdowns.⁶  The Authority views this limitation on the Navy's layoff power as de minimis because the Navy can still place employees on administrative leave at such times, that is, it can lay them off with pay. We disagree. Preventing Navy management from laying off employees without pay most certainly "affects" the general authority to lay off employees: a particular management layoff option is thereby foreclosed. Nor is the intrusion trivial. The Union's proposal would forbid the Navy from exercising what is surely the most ordinary type of layoff--the layoff without pay--even if it does not foreclose other management decisions that in some circumstances may arguably fall under the layoff rubric. Our conclusion here seems especially warranted in view of the statute's direction that "[t]he provisions of this chapter be interpreted in a manner consistent with the effective and efficient Government." 5 U.S.C. § 7101(b). Layoffs without pay could, in some circumstances, be more efficient than layoffs with pay. It can hardly be said that a proposal preventing the Navy from exercising a usual, sometimes more efficient, layoff option does not "affect" its layoff power.

The Authority's reasoning to the contrary is unpersuasive. Language in its opinion suggests the Authority would hold negotiable any proposal it felt did not "interfere with" or "negate" a management right. The word "affect," however, suggests a less stringent test. Compare Webster's Third New International Dictionary (1971) 35 (defining "affect" as "to act upon") with id. at 1178 (defining "interfere" as "to come into collision: to be in opposition: to run at cross-purposes); id. at 1513 (defining "negate" as "to cause to be ineffective or invalid"). Congress's choice of the verb "affect" in section 7106(a) (2) (A) suggests that it intended agency management to have plenary authority over the rights enumerated thereunder, subject to certain exceptions not relevant here.⁷  See, e.g., United States Immigration and Naturalization Service v. FLRA, 834 F.2d 515, 517 (5th Cir. 1987) (describing management's right under section 7106(a) (2) (A) to assign work as "absolute and unilateral").

The petition for review is granted, and the petition for enforcement is denied.