National Treasury Employees Union v. Federal Labor Relations Authority, No. 12-2574 (4th Cir. 2013)
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The Union sought to amend its collective bargaining agreement (CBA) with the IRS to permit probationary employees to use the agreement's grievance procedures to challenge removals alleged to be in violation of statutory rights or procedures. After the IRS refused to negotiate on the grounds that the proposal would grant probationary employees greater procedural protections that were authorized under law and regulation, the Union appealed to the FLRA. The FLRA granted judgment in favor of the IRS and the Union appealed. The court declined to reverse the FLRA's judgment because such a decision would ignore the statutory and regulatory frameworks that Congress and the executive branch have put in place, create a stark circuit split, and overturn nearly thirty years of settled public-employee practice.
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PUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 12-2574 NATIONAL TREASURY EMPLOYEES UNION, Petitioner, v. FEDERAL LABOR RELATIONS AUTHORITY, Respondent. On Petition for Review of an Relations Authority. (0-NG-3158) Argued: October 29, 2013 Order of the Decided: Federal Labor December 6, 2013 Before TRAXLER, Chief Judge, and WILKINSON and FLOYD, Circuit Judges. Petition denied by published opinion. Judge Wilkinson wrote the opinion, in which Chief Judge Traxler and Judge Floyd joined. ARGUED: Peyton H.N. Lawrimore, NATIONAL TREASURY EMPLOYEES UNION, Washington, D.C., for Petitioner. Zachary Robert Henige, FEDERAL LABOR RELATIONS AUTHORITY, Washington, D.C., for Respondent. ON BRIEF: Gregory O'Duden, General Counsel, Larry J. Adkins, Deputy General Counsel, NATIONAL TREASURY EMPLOYEES UNION, Washington, D.C., for Petitioner. Rosa M. Koppel, Solicitor, FEDERAL LABOR RELATIONS AUTHORITY, Washington, D.C., for Respondent. WILKINSON, Circuit Judge: The amend National its Treasury collective Employees bargaining Union agreement (NTEU) with sought the to Internal Revenue Service (IRS) to permit probationary employees to use the agreement s grievance procedures to challenge removals alleged to be in violation of statutory rights or procedures. The IRS refused to negotiate over NTEU s proposal on the grounds that the proposal procedural regulation. would protections NTEU grant than appealed probationary were to employees authorized the Federal Authority (FLRA), which held for the IRS. under Labor greater law and Relations NTEU now asks us to reverse the FLRA and find its proposal negotiable. We decline to do so because such a decision would ignore both the statutory and regulatory frameworks that Congress and the executive branch have put in place, create a stark circuit split, and overturn nearly thirty years of settled public-employee practice. I. A. Most federal agencies, including the IRS, are required by law to negotiate in good faith with public-sector unions for the purposes of arriving at a collective bargaining agreement. 5 U.S.C. § 7114(a)(4); see also id. § 7103(a)(3) (defining agency ); id. § 7116(a)(5) (listing the refusal to negotiate in 2 good faith as an unfair labor practice); NRC v. FLRA, 25 F.3d 229, 231 (4th Cir. 1994). certain limited Such agreements must, subject to exceptions, contain procedures for the settlement of grievances, including questions of arbitrability. 5 U.S.C. § 7121(a)(1). A grievance encompasses any complaint . . . by any employee concerning any matter relating to the employment of the employee. Id. § 7103(a)(9). However, 5 U.S.C. § 7117 limits the good-faith-negotiation requirement to provisions that are not inconsistent with any Federal law or any Government-wide rule or regulation. Id. § 7117(a)(1); see also NRC, 25 F.3d at 231. Within the competitive service -- that part of the civil service whose competitive members examination, are see generally selected 5 §§ 2102(a)(1), U.S.C. by open and 3304(a), (b) -- federal law distinguishes between probationary and nonprobationary employees. 5 U.S.C. § 3321 permits the President to set up a period of probation for new employees before an appointment in the competitive service becomes final. Id. § 3321(a). The Office of Personnel Management (OPM) is tasked with establishing the rules for the competitive service. Pursuant to probationary its authority, employees (§§ 315.801-315.806). at The OPM codified C.F.R. 5 has part rules 3 set the the 315, Id. § 1301. rules subpart length of for H the probationary period at a non-extendable one year from the start of employment, 5 C.F.R. §§ 315.801(a), 315.802(a), and grant probationary employees some protections against removal, such as notice of a pending removal and limited rights of appeal to the Merit Systems 315.805, Protection 315.806. The Board (MSPB), rules do not id. §§ 315.804(a), affirmatively grant probationary employees the right to grieve removals alleged to be in violation of statutory rights or procedures. B. NTEU agreement sought with to the amend IRS to its existing permit collective-bargaining probationary employees to grieve removals where the grievance is confined to enforcing the procedures subsequent or rights arbitration contained decision is in a statute, controlled solely and any by the requirements of law and government-wide regulation such that the arbitrator is merely substituting for the federal authority that would hear the employee s challenge. NTEU, 67 F.L.R.A. 24, 24 (2012) (emphasis added). The IRS refused to negotiate over NTEU s proposal, arguing that it was outside § 7117 s duty to negotiate because it was contrary to law and regulation. Id. The IRS argued that, based on D.C. Circuit and FLRA precedent, probationary employees may not grieve removals as a matter of law, and that such a 4 procedure would be contrary to the OPM regulations. Id. at 24- 25. NTEU appealed to the FLRA, which ruled in favor of the IRS. The FLRA cited nearly three decades of FLRA precedent holding that collective-bargaining proposals violate § 3321 and the OPM regulations to the extent they grant probationary employees: (1) separation-related procedural protections beyond those required by statute or OPM regulations; or (2) the ability to grieve separation disputes. fall outside of § 7117 s Id. at 26. Such proposals thus good-faith-negotiation requirement. Relying upon two decisions by the D.C. Circuit, NTEU v. FLRA, 848 F.2d 1273 (D.C. Cir. 1988), and INS v. FLRA, 709 F.2d 724 (D.C. Cir. employees 1983), have the some rights administrative and receive minimal only separation, removals. NTEU decision FLRA reasoned to judicial which due does that challenge forums, process not while removals they in include probationary in are authorized connection with their to grieve the right to Id. (internal quotation marks omitted). appeals unless the it FLRA s is decision. arbitrary, We must capricious, uphold an discretion, or otherwise not in accordance with law. FLRA, 647 F.3d 514, 517 (4th Cir. 2011). should certain not regulations. defer to the FLRA s abuse the of NTEU v. NTEU contends that we interpretations of the OPM It argues that the regulations are outside the 5 FLRA s organic statute and regulatory domain, and beyond the [FLRA s] special area of expertise. are thus Appellant s Br. at 9 (citing Shanty Town Assoc. Ltd. P ship v. EPA, 843 F.2d 782, 790 n.12 (4th Cir. 1988)). The FLRA responds that [d]ue deference is paid to an FLRA determination of negotiability, Appellee s Br. at 8 (quoting NRC v. FLRA, 895 F.2d 152, 154 (4th Cir. 1990)), while the FLRA s interpretations of law outside its organic statute and implementing regulations should be followed to the extent the reasoning is sound, id. (quoting Ass n of Civilian Technicians, Tex. Lone Star Chapter 100 v. FLRA, 250 F.3d 778, 782 (D.C. Cir. 2001)). We need not entertain the question deference of the specific level of the FLRA should receive when interpreting the OPM regulations, however, inasmuch as we conclude that the FLRA s interpretation of the relevant law and regulations was correct. II. NTEU s exclude argument probationary employee and is simple. employees grievance in 5 Because from U.S.C. Congress the did not definitions of § 7103(a)(2), (a)(9), probationary employees are generally covered by the grievance procedure. And because Congress explicitly excluded some disputes from the procedure - such as those over examinations, certifications, or appointments, id. § 7121(c)(4), or removals 6 for national-security reasons, id. § 7121(c)(3); see also id. § 7532 - but did not explicitly exclude disputes over removals generally, probationary employees should be able to grieve such disputes where the removals are alleged to be in violation of statutory rights or procedures. See Appellant s Br. at 10-11. As we explain below, this reading of the statute runs counter to the whole statutory and regulatory scheme governing probationary employees. A. Congress has provided for a probationary period since it created the modern civil-service system with the 1883 Pendleton Act, 22 Stat. 403, ch. 27 (amended 1978). See 22 Stat. 404, ch. 27, § 2(4); see also Kato v. Ishihara, 360 F.3d 106, 113 (2d Cir. 2004); INS v. FLRA, 709 F.2d 724, 725 n.1 (D.C. Cir. 1983). Congress s continuing belief in the importance of a probationary period was reflected in the passage of the Civil Service Reform Act of 1978 (CSRA), 5 U.S.C. §§ 7101-7135, which both preserved the probationary period for new employees and expanded it to cover new appointments to managerial and supervisory positions. Compare 5 U.S.C. § 3321 (1976) (authorizing the creation of a period of probation before an appointment in the competitive service becomes absolute ), with 5 U.S.C. § 3321(a) (1982) (authorizing the creation of a probationary period for both new 7 employees and appointments to managerial and supervisory positions). As the term probationary implies, employees so designated are on probation and subject to summary dismissal. They are, of course, just as entitled to be free of illegal or discriminatory treatment from their employers as are non-probationary employees, and thus NTEU is correct in arguing that its proposal is not designed to provide any substantive legal protections to probationary employees that do not already exist. Appellant s Br. at 19. This does not mean, however, that Congress intended for the same remedies to be available probationary employees. that the law treats employees differently. explicitly excluded probationary and This is reflected in the numerous probationary and non-probationary For example, probationary employees are from the protections against demotion removal for unacceptable performance under 5 U.S.C. § 4303. 5 U.S.C. § 4303(f)(2). thirty days in non- See NTEU v. FLRA (NTEU II), 848 F.2d 1273, 1276 (D.C. Cir. 1988). ways to or See These protections include written notice advance of the adverse employment action, representation by an attorney or other representative, and a final written decision. Id. § 4303(b)(1). Probationary employees are not afforded the full rights that non-probationary employees have to appeal a removal or demotion for unacceptable 8 performance to the MSPB. See id. § 4303(e). Similarly, probationary employees do not possess the protections granted to non-probationary employees against removals for such reasons as will promote the efficiency of the service. also id. § 7511(a)(1)(A)(i). recognized, available The only As substantial to tenured Id. § 7513(a); see the protections employees D.C. indicate has Congress that Circuit made that Congress recognized and approved of the inextricable link between the effective operation of the probationary period and the agency s right to summary termination. Numerous other courts INS, 709 F.2d at 728. have recognized the important distinction between probationary and non-probationary employees and Congress s intention to provide fewer protections to the former. See, e.g., Bante v. MSPB, 966 F.2d 647, 650 (Fed. Cir. 1992) ( The language of the current statute establishes that Congress clearly probationary intends employees be review more of the limited termination than that of of other employees. ); Booher v. USPS, 843 F.2d 943, 945 (6th Cir. 1988) ( Congress, in enacting 5 U.S.C. § 7511, did not provide federal remedies for probationary postal workers nor the full panoply of administrative remedies as in the case of non-probationary workers. ); United States v. Connolly, 716 F.2d 882, 886 (Fed. Cir. 1983) probationers (noting to that challenge Congress removals 9 [in could the have Court permitted of Federal Claims], but expressly declined to do so ); Budnick v. MSPB, 643 F.2d 278, 279 n.2 (5th Cir. Unit (characterizing the distinction B 1981) between (per curiam) probationary and tenured employees as sharp ). Congress s intention to grant probationary employees fewer procedural protections against removal is clearly expressed in the legislative explains, The history of the CSRA. or trial probationary As the period Senate . . . report is an extension of the examining process to determine an employee s ability to actually perform the duties of the position. It is inappropriate to restrict an agency s authority to separate an employee who does not perform acceptably during this period. S. Rep. 95-969, at 45 (1978). NTEU argues that, while this language might support excluding removals for poor performance from the grievance procedure, congressional intent grievances protest conferred to rights. to it provides prevent removals Appellant s no evidence probationers in violation Br. at 15. from of of a filing statutorily NTEU s position ignores the real-world result of its proposal: through artful pleading, impose employees faced with substantial costs on insubstantial procedures. statutory a merit-based their violations to dismissal employers access by the could alleging grievance Thus, NTEU s proposal would substantially thwart 10 Congress s intention to probationary employees. allow summary termination of NTEU II, 848 F.2d at 1275. B. The Office of Personnel Management is the agency charged with implementing Congress s intent. 709 F.2d at 725 n.3. See 5 U.S.C. § 1301; INS, Pursuant to its statutory authority to administer the competitive service, OPM has issued regulations regarding the probationary period. reflect Congress s intention OPM s regulations faithfully for the probationary program. Granting probationary and non-probationary employees different procedural protections is necessary to accomplish the probationary period s purpose, which the regulations describe: to determine the fitness of the employee and . . . terminate his services during this period if he fails to demonstrate fully his qualifications for continued employment. 5 C.F.R. § 315.803(a). In order to balance the rights of probationary employees against unlawful removals with the government s need for flexibility and discretion in removing them, OPM has explicitly granted probationary employees a number of protections. are entitled dismissal for § 315.804(a), opportunity to written notification unsatisfactory as for well reply, and performance as notice of and notice and 11 a explanation or conduct, proposed explanation They of a id. removal, for the removal in cases where the removal is based in whole or in part on conditions arising before the probationer s employment, id. § 315.805. appeal Probationary employees also have limited rights of to the partisan MSPB: political procedures; or they may reasons other challenge removals marital status; or forms of discrimination, based on improper if such discrimination is accompanied by terminations based on partisan politics, marital status, or improper procedure. Id. § 315.806. Two features stand out from this review of OPM regulations regarding probationary employees. First, the regulations are extensive, encompassing a wide range of disputes and remedial procedures. They give probationary employees both fair notice of removal and the right to appeal those removals in certain circumstances. Second, employees to rights they challenge sharply limit removals. In probationary doing so, they preserve a meaningful distinction between probationary and nonprobationary purpose of regulations employees the in statutory indicates accordance scheme. that any with The the language structure additional of the protections and OPM not explicitly provided for -- such as those in NTEU s proposal -would conflict with the regulations and thus be outside the IRS s bargaining obligations. NTEU correctly observes that probationary remedial options beyond those granted by OPM. 12 employees have See Appellant s Br. at 16-17. Indeed, in some contexts their avenues for relief are much the same as those afforded non-federal employees. may file general charges counsel, complaints of of unfair see 5 labor U.S.C. discrimination practices with § 7118(a)(1), with the the and Equal They FLRA s may file Employment Opportunity Commission and ultimately in federal court, see 42 U.S.C. § 2000e-16(c); 29 C.F.R. § 1614.407. The availability of these remedies, however, does not imply the permissibility of other remedies, among which is NTEU s proposed expansion of the grievance procedure. * In sum, Congress has clearly granted certain remedies to all employees, including probationary ones. By contrast, Congress refrained from granting probationary employees the right to grieve removals in violation of statutory rights or procedures, thereby giving OPM, which prescribes the rules for the competitive service, the discretion whether or not to grant such a right. If we were to step in and declare proposals to grieve such allegations negotiable, when neither * NTEU cites the Supreme Court s recognition of a liberal federal policy favoring arbitration agreements to support its position. Appellant s Br. at 24 (quoting Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 25 (1991)); see also id. at 24-25 (citing pro-arbitration language in 14 Penn Plaza LLC v. Pyett, 556 U.S. 247 (2009)). But that general principle, articulated in a case between private parties under a different statute and having nothing to do with the unique employment status of federal probationary employees, can hardly require a federal agency to negotiate over a proposal that, as here, would clearly violate law and regulation. 13 Congress nor OPM has done so, we would risk unraveling what, by any measure, is a meticulously crafted statutory and regulatory scheme. III. We are not the first court to arrive at this outcome. The District of Columbia Circuit addressed this issue in a pair of cases more than twenty-five years ago. It came to the same result we arrive at today, and we find no reason to quarrel with or depart from its conclusions. The D.C. grievance Circuit procedures first for addressed the probationary availability employees of challenging removals in INS v. FLRA, 709 F.2d 724 (D.C. Cir. 1983). In that case, the INS labor union proposed that probationary employees be able to grieve all removals on the basis of whether they were reasonable and not arbitrary and capricious. 726 (internal quotation marks omitted). INS, 709 F.2d at The FLRA had ruled that permitting probationary employees to grieve terminations would not violate the statutory scheme, and thus that INS was required to negotiate over the proposal. Circuit emphasized employees with Congress s fewer In reversing the FLRA, the D.C. intent protections to provide against probationary removal incompatibility of the union s proposal with that goal. at 728-29. and the See id. As have we, it quoted from the Senate report in 14 concluding that Congress did not intend to impede the ability of managers to summarily dismiss probationary employees. See id. at 727-28. The court revisited the issue five years later, in NTEU v. FLRA (NTEU II), 848 F.2d 1273 (D.C. Cir 1988). In that case, NTEU had proposed a provision, very similar to the one at issue here, allowing probationary employees to grieve removals that were the product of unlawful discrimination. NTEU II, 848 F.2d at 1274 (emphasis and internal quotation marks omitted). The D.C. Circuit again rejected the proposed probationary employees grievance rights. expansion of It held, as it had in INS, that Congress s failure to exclude probationary employees from the definitions of employee and grievance in 5 U.S.C. § 7103(a) did not imply that probationary employees could grieve removals alleged to be discriminatory. relevant sections against the Instead, it read the background of Congress s expressed intent for the probationary period, which included agencies right to fire probationers with minimal procedural obstacles. Id. at 1276. While accepting INS, NTEU argues that NTEU II was wrongly decided. claim It bases its criticism of NTEU II in large part on the that the NTEU II court failed to consider report language that underlay the INS decision. the Senate NTEU argues that this language was limited to removals for poor performance 15 rather than those alleged to be in violation of statutory rights or procedures. See Appellant s Br. at 15. But, as we have already explained, see ante at 10, this argument ignores the reality that permitting probationary employees to grieve removals based on a mere allegation of violation of statutory rights or procedures would eviscerate the entire purpose of the probationary program. We agree fully with the approach and outcome of the aforementioned opinions, as have several of our sister circuits. See Yates v. Dep't of the Air Force, 115 F. App'x 57, 58-59 (Fed. Cir. 2004) (per curiam) (quoting INS approvingly); HHS v. FLRA, 858 F.2d 1278, 1284-85 (7th Cir. 1988) (citing INS and NTEU II approvingly). ambivalent, there would But be even costs were in our this differently and creating a circuit split. judgment area to more holding To give probationary employees different procedural rights depending on the circuit in which they live or work would create confusion and inequity in the federal civil service. See 5 U.S.C. § 7123(a) (permitting appeals of FLRA orders in the circuit in which the person resides or transacts business ). Nothing in law commands such disregard of practicality, and the practical drawbacks of petitioner s position are substantial. 16 IV. Finally, the issue of administrative precedent counsels in favor of upholding the FLRA. thirty years of FLRA NTEU would have us upset nearly decisions holding that probationary employees are not permitted under law or regulation to grieve removals. (1985); See, SSA, e.g., NFFE, Local 29, 164-65 20 F.L.R.A. (1984). 788, FLRA has 14 F.L.R.A. 164, reasserted this holding numerous decisions. See, e.g., NTEU Chapter 103, 66 F.L.R.A. 416, 418 times The 790 since those early (2011); NTEU, 45 F.L.R.A. 696, 718 (1992). The uniform course of court and agency decisions has made it clear for decades that probationary employees cannot grieve separation statutory disputes, rights or including those procedures. alleging Both violations Congress and of OPM understand this and have taken no action over these many years to change practice this remain reality. settled There practice, is value in especially having when settled the bodies that have every right to change it have made no move to do so. V. For the foregoing reasons, we hold that NTEU s proposal was contrary to law and regulation 17 and thus outside the IRS s statutory duty to negotiate. The NTEU s petition for review is hereby denied. PETITION DENIED 18
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