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IN ARBITRATION
In the Matter of the Arbitration Between: FEDERAL AVIATION ADMINISTRATION Union Grievance:
Agency Failure to Payand Interest on FLSA
OvertimePROFESSIONAL AVIATION SAFETY SPECIALISTS Grievance No. 103776Before M. David Vaughn, Arbitrator
FIRST INTERIM OPINION AND AWARD
This proceeding takes place pursuant to Article 5 of the
Collective Bargaining Agreement ratified on July 2, 2000 (the
“Agreement”) between the Federal Aviation Administration (“FAA” or
the “Agency”) and the Professional Airways Systems Specialists1
(“PASS” or the “Union”) (together the Agency and the Union are the
“Parties” to the proceeding) to resolve a grievance filed by the
Union on behalf of affected bargaining unit employees which
protests the Agency’s failure to pay interest when it corrected its
overtime pay calculations for employees during the period April
2004 through October 2005. The Parties were unable to resolve the
dispute through the steps of the negotiated grievance procedure and
the Union invoked arbitration. I was selected by the Parties to
hear and decide the dispute.
A hearing on the merits of the dispute was convened at the
Agency’s headquarters in Washington, D.C., on January 8, 2010, at
which the Union was represented by Assistant Counsel Dennie Rose,
Esq., and the Agency by Labor Relations Specialist Ralph H.
Goldstein, Esq. At the outset of the proceeding, the Parties
stipulated that the matter was properly in arbitration and before
me. (Tr. 6 and 8) In the proceeding, the Parties were each
afforded full opportunity to present witnesses and documents and to
cross-examine witnesses and challenge documents offered by the
other. For the Union testified PASS General Counsel Michael Derby.
Policy Division Human Resources Specialist Larry K. Staley and
The collective bargaining agreement is a bit antiquated; the Union’s name1
has been changed, as shown in the caption, to Professional Aviation SafetySpecialists.
1
Third-Party Services Director (and former Director of Labor
Relations) Michael S. Herlihy testified at the call of the Agency.
Witnesses were sworn and sequestered. Joint Exhibits 1-11 (“J. Ex.
__”), Union Exhibits 1-2 (“U. Ex. __”) and Agency Exhibits 1-8 (“A.
Ex. __”) were offered and received into the record. A court
reporter was present at the hearing; by agreement of the Parties,
the verbatim transcript (page references to which are designated
“Tr.I __”) which he caused to be prepared constitutes the official
record. At the conclusion of the hearing the evidentiary record
was complete. The Parties elected to close by written post-hearing
briefs. Upon receipt of the last post-hearing brief on March 15,
2010, the record of proceeding was declared closed.
On or about March 30, 2010, the Agency submitted a Motion to
Reopen the Hearing. It claimed that a fundamental jurisdictional
issue – the subject matter of the Union’s grievance was
substantively non-arbitrable and I therefore lacked jurisdiction to
decide the grievance – had just come to its attention (March 26,
2010) and, in its post-hearing brief, the Union had raised two new
issues – for the first time in the progression of the case through
the grievance procedure. With respect to the former, FAA’s Motion
alleged that the grievance was “substantively not arbitrable
because of clear language in all of PASS’s collective bargaining
agreements (CBAs) excluding matters relating to FLSA overtime from
the grievance procedure.” With respect to the latter, the Motion
alleged that the issues of whether the Agency “willfully” violated
the FLSA, thus justifying an extension of the backpay recovery
period from two to three years, and whether the Agency failed to
show it acted in good faith and with reasonable grounds, thus
entitling the Union to liquidated damages under the FLSA, were new
issues. The Agency requested that additional evidence be received
and additional argument be taken. It invited the Union to submit
a written response to its Motion.
The Parties agreed to conduct a further hearing on the sole
issue of the arbitrability of the subject matter of the case.
(Tr.II 6) That hearing was convened at the Agency’s headquarters in
2
Washington, D.C., on July 7, 2010, at which the Parties were
represented as before. A court reporter was again present at the
hearing; by agreement of the Parties, the verbatim transcript (page
references to which are designated “Tr.II __”) which he caused to
be prepared constitutes the official record. In the proceeding,
the Parties were each afforded full opportunity to present
witnesses and documents and to cross-examine witnesses and
challenge documents offered by the other. For the Agency again
testified Mr. Herlihy; Mr. Derby again testified at the call of the
Union. Both were sworn but neither was sequestered. At the
hearing on arbitrability, Joint Exhibits 12-17, Agency Exhibits 9-
12 and Union Exhibits 3-4 were offered and received to supplement
the previous record. At the conclusion of the hearing the
evidentiary record on the issue of arbitrability was complete. The
Parties elected to close by written post-hearing briefs confined to
the issue of arbitrability and to the record made at the second day
of hearing. Upon receipt of the post-hearing briefs on September
9, 2010, the record of proceeding on the issue of arbitrability was
declared closed.
This First Interim Opinion and Award addresses only the issues
of arbitrability of the Union’s grievance, the facts, positions of
the Parties and Discussion and Analysis are largely confined to
that issue and will be expanded at the time I address the merits of
the dispute.
ISSUES FOR DETERMINATION
The Parties agreed that the sole issue for determination in
this First Interim Opinion and Award is whether the grievance is
arbitrable.
RELEVANT CONTRACTUAL PROVISIONS
Article 5 (Grievance Procedure) of the Tech Ops Agreement (J.
Ex. 1), in relevant parts, provides:
3
Section 6. In matters relating to overtime entitlementunder the Fair Labor Standards Act, as amended, thecompliance and complaint system shall be administered inaccordance with Office of Personnel Managementregulations.
* * *
Section 11. The arbitrator shall confine himself/herselfto the precise issue submitted for arbitration and shallhave no authority to determine any other issues not sosubmitted to him/her. . . .
Article 34 (FLSA Amendments) of the Tech Ops Agreement (Id.),
in relevant part, provides:
Section 2. When a nonexempt employee has entitlementunder FLSA, the employee must be paid solely inaccordance with FLSA regulations in 5 C.F.R. Part 551, asamended.
Section 6. In matters relating to overtime entitlementunder the FLSA, as amended, the compliance and complaintsystem of the OPM shall be the procedure followed.Complaints under this Article are not subject to thenegotiated grievance procedure.
Article 5 (Grievance Procedure) of the Flight Standards
agreement (J. Ex. 2), in relevant parts, provides:
Section 3. This procedure shall not apply to anygrievance concerning:
* * *
h. Matters relating to overtime entitlement underthe Fair Labor Standards Act, as amended.
Section 10. The arbitrator is confined to the preciseissue submitted for arbitration and shall have noauthority to determine any other issues not so submittedto the arbitrator. . . .
Article 40 [Fair Labor Standards Act (FLSA) Amendments] of the
Flight Standards agreement (Id.), in relevant part, provides:
4
Section 2. When a nonexempt employee has entitlementunder both FLSA and Title 5, U.S.C., the employee shallbe paid under whichever statute provides the greaterbenefit to the employee.
Article 5 (Grievance Procedure) of the AVN agreement (J. Ex.
3), in relevant part, provides:
SECTION 6. In matters relating to overtime entitlementunder the Fair Labor Standards Act, as amended, thecompliance and complaint system shall be administered inaccordance with Office of Personnel Managementregulations.
Article 34 (FLSA Amendments) of the AVN agreement (Id.), in
relevant part, provides:
SECTION 2. When a nonexempt employee has entitlementunder both FLSA and Title 5, U.S.C., the employee shallbe paid under whichever statute provides the greaterbenefit.
* * *
SECTION 6. In matters relating to overtime entitlementunder the FLSA, as amended, the compliance and complaintsystem of the OPM shall be the procedure followed.Complaints under this Article are not subject to thenegotiated grievance procedure.
Article 5 (Grievance Procedure) of the Interim MIDO agreement
(J. Ex. 4), in relevant parts, provides:
Section 2. This Article provides the procedure for thetimely consideration of grievances. Except as limited ormodified by Sections 3, 4, 5, and 6, it shall be theexclusive procedure available to the Parties and theemployees in the unit for resolving grievances. . . .
* * *
Section 6. In matters relating to overtime entitlementunder the Fair Labor Standards Act, as amended, thecompliance and complaint system shall be administered in
5
accordance with Office of Personnel Managementregulations.
FACTUAL BACKGROUND AND FINDINGS
The Parties
The FAA is responsible for the safety of civil aviation in the
United States. Its activities include safety regulation, airspace
and air traffic management and air navigation facilities. The
Agency is responsible for building and/or installing visual and
electronic aids to air navigation; maintaining, operating and
assuring the quality of those facilities and equipment; and
sustaining other systems to support air navigation and air traffic
control, including voice and data communications equipment, radar
facilities, computer systems and visual display equipment at flight
service stations.
PASS represents approximately 11,000 employees in five
separate bargaining units nationwide and in several foreign
countries. The largest is the Technical Operations (“Tech Ops”)2
bargaining unit, most of whose 6,500 employees are classified as
Airway Transportation Systems Specialists (“ATSS”) who install,
repair, maintain, operate and certify the systems used in the Air
Traffic Control System. PASS also represents Aviation Safety
Inspectors, who are responsible for oversight of all private and
commercial aircraft, air agencies, air carriers, airmen and repair
facilities, in Flight Standards (also “FS”); Legal Examiners, who
are responsible for developing, maintaining and operating national
programs for the registration of civil aircraft and certification
of airmen, in the Civil Aviation Registry (AFS-700); Manufacturing
Inspectors within the Agency’s Manufacturing Inspection District
Office (“MIDO”), who assure safety and quality of aircraft and
associated products being manufactured and operated; and Flight
Inspection Pilots, Mission Specialists and Procedure Development
This bargaining unit was formerly known, and the Agreement still refers2
to it, as Airways Facilities.
6
Specialists in the Agency’s Aviation System Standards (“AVN”) unit,
who are responsible for the design, development and flight
inspection services for ground and space navigation systems at
airports, an Aircraft Maintenance employees, who maintain the FAA’s
fleet of aircraft.
FLSA Overtime Complaint Procedure
The Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201 et
seq., provides overtime rules for certain private sector and, since
amended in 1974, certain federal jobs. At 29 U.S.C. § 204(f), the
FLSA provides that the Director of the Office of Personnel
Management (“OPM”) is authorized to administer the FLSA with
respect to federal employees.
OPM’s FLSA enforcement regulations are published at 5 U.S.C.
Part 551. § 551.701 (Applicability) of Subpart G (FLSA Claims and
Compliance) provides language defining the scope of complaints
covered by OPM’s complaint procedures:
(a) Applicable. This subpart applies to FLSA exemptionstatus determination claims, FLSA pay claims for minimumwage or overtime pay for work performed under the Act,and complaints arising under the child labor provisionsof the Act.
2002 National Grievance
Mr. Herlihy testified that, in discussions with PASS during
2002, the Agency expressed the view that the exclusionary language
in the Parties’ Agreements (J. Exs. 1-4) meant that all disputes
relating in any way to FLSA overtime entitlement could not be
grieved and must be processed through OPM’s FLSA complaint
procedure. (Tr.II 45) The Union filed a grievance that challenged
FAA’s interpretation. (J. Exs. 12-15)
7
In a letter to PASS President Michael D. Fanfalone dated March
18, 2002 (J. Ex. 16), Director of the Office of Labor and Employee
Relations Melvin Harris stated:
C. Applicability of the grievance procedure to overtimegrievances.We wish to clarify our position concerning this issue.There is no dispute that questions about whetheremployees are exempt or non-exempt from FLSA are notcovered by the grievance procedure; nor do we disputethat questions over procedures for the assignment ofovertime work are grievable. With respect to theremaining issue of how other issues of application ofFLSA will be treated for non-exempt employees, we wouldbe willing to allow those matters to be considered underthe negotiated grievance procedures, includingarbitration if necessary, if the Union will withdraw thepending case that does not allege specific overtimeviolations.
On November 13, 2002, Mr. Herlihy provided Mr. Derby with a copy of
Mr. Harris’s letter. Relying on the representations of Mr. Harris,
Mr. Derby, by a letter dated November 14, 2002 (J. Ex. 17), agreed
to withdraw the grievance to which Mr. Harris referred:
Based on your letter dated March 18, 2002, a copy ofwhich was sent to me by Mike Herlihy on November 13,2002, and my conversation with Mr. Herlihy on November13, 2002, it is my understanding there is no disputebetween the Parties regarding the applicability of thegrievance procedure to grievances relating to overtimeclaims, regardless of whether the grievant is FLSA exemptor nonexempt. Further, the Parties are in agreement thatthe issue of whether an employee’s position is exempt ornonexempt under the FLSA is not grievable and must beresolved using some other procedure available under thelaw or regulations. If my understandings are notconsistent with your March 18, 2002 letter, please let meknow immediately. If my understandings are consistentwith your letter, PASS hereby withdraws its grievance andrequest for arbitration . . .
Mr. Derby testified that no FAA representative contacted PASS
questioning the accuracy of his understandings. (Tr.II 102)
8
Subsequent Negotiations
In 2006 Tech Ops negotiations, the Parties tentatively agreed
upon (“TAU’d”) new language for Article 34. The TAU’d language,
agreed to on February 14, 2006 (A. Ex. 12), significantly changed
Section 6:
Section 6. In matters relating to whether an employee isexempt or non-exempt under the FLSA, as amended, thecompliance and complaint system of the OPM shall be theprocedure followed. The employee may also pursue a claimconcerning his/her FLSA status through the courts.Complaints under this Article, other than those dealingwith an employee’s exempt or non-exempt status, aresubject to the negotiated grievance procedure.
In a ratification vote, this language, along with the entire
tentative agreement, was rejected by the Union and never became
effective.
The Grievance Process
By a letter dated June 12, 2009 (J. Ex. 5), the Union
protested the Agency’s failure to pay interest when it corrected
its overtime pay calculations for employees during the period April
2004 through October 2005. PASS contended that it was never
formally notified of the Agency’s error or of the Agency’s plan to
remedy the error.
As a remedy, PASS requests the following: anacknowledgment of the failure to follow collectivebargaining agreements, appropriate laws and regulationswhen compensating bargaining unit employees; completeback pay to each current and former bargaining unitemployee who were [sic] incorrectly compensated becauseof this error, including interest; and a submission tothe Union of a complete accounting of all monies owed toeach current and former bargaining unit employee.
Furthermore, under 5 USC § 7114(b)(4) and the collectivebargaining agreement, the Union officially requests thefollowing information:
9
1. List of all bargaining unit employees who werepaid incorrectly as a result of the agency’sfailure to properly compute holiday pay and/ornon-foreign COLA with FLSA overtime includingthe agency’s calculations as to how much eachemployee is owed; and
2. All laws, Office of Personnel Management (OPM)and any other government/agencypolicy/regulation that describe and/orinterpret the proper computation of holidaypay and/or non-foreign COLA with FLSAovertime.
By a letter dated August 21, 2009 (Id.), Mr. Harris denied the
Union’s grievance:
PASS’s allegations concerning the completeness of theAgency’s calculations are extremely vague and do notprovide sufficient information to enable the Agency torespond to the grievance. Moreover, the Agency has beenadvised by counsel that it is not empowered by law tomake interest payments on back pay.
Accordingly, the Agency has decided to deny the grievanceand the relief requested.
The Agency will respond separately to the informationrequest included in the grievance.
The Parties were unable to resolve the dispute through the
steps of the negotiated grievance procedure; and the Union invoked
arbitration. This proceeding followed.
POSITIONS OF THE PARTIES
The positions of the Parties are set forth at the hearing and
in their post-hearing briefs. They are summarized as follows:
The Agency argues that the subject matter of the Union’s
grievance is not arbitrable. It maintains that the scope of the
dispute is covered by the phrase, “matters relating to overtime
10
entitlement under the FLSA” and is, therefore, expressly excluded
by each of the PASS agreements. It contends, in addition, that the
2002 grievance settlement could not and did not alter the PASS
agreements to permit the current dispute to be processed through
the grievance procedure.
FAA further argues that, although the language of each is
somewhat different, all four PASS agreements expressly exclude
“matters relating to overtime entitlement under the Fair Labor
Standards Act, as amended,” from the grievance procedure, and
provide that such claims shall be processed through the OPM’s FLSA
complaint procedure. It asserts that 5 C.F.R. § 551.703 (Avenues
of review) of OPM’s FLSA complaint process regulations explains the
reasons this language was negotiated, i.e., where employees are
covered by collectively bargained agreements with grievance
procedures, such procedures are the exclusive forum for all claims
under the FLSA unless the agreement specifically excludes “matters
under the Act” from the grievance procedure. The Agency maintains
that the Parties intended to route disputes concerning “matters
relating to overtime entitlement under the FLSA” to OPM rather than
the grievance procedure and that I must give effect to that
language.
The Agency further argues that the Union’s interpretation of
the disputed language – that it refers solely to the issue of
whether an employee is exempt or non-exempt from the FLSA – is
without merit and contradicts its plain meaning. It contends that
the phrase “matters relating to overtime entitlement” is broadly
inclusive and is not restricted by any other language contained in
the four agreements. FAA asserts that the agreements do not limit
the broad scope of “entitlement” to exemption issues alone,
pointing out that this contrasts with the TAU’d language the
Parties initialed during 2006 Tech Ops negotiations that would have
barred “matters relating to whether an employee is exempt or non-
exempt under the FLSA.”
11
FAA further argues that the PASS agreements – Article 34 of
the Tech Ops agreement, Articles 4 and 34 of the AVN agreement and
Articles 5 and 40 of the Flight Standards agreement – provide
further guidance that requires FLSA overtime to be paid in
accordance with OPM’s FLSA regulations. It maintains, for
instance, that Article 34, Section 2, of the Tech Ops agreement
requires FLSA overtime to be paid in accordance with OPM’s FLSA
regulations and that two of those regulations – §§ 551.511 and
551.104 respectively – set forth the method for computing the
overtime rate of pay due under the FLSA and the FLSA’s statute of
limitations and recovery period, two of the core issues in the
instant dispute. The Agency contends that the phrase “[c]omplaints
under this Article,” contained in Article 34, Section 6, of the
Tech Ops agreement, necessarily includes those complaints
explicitly referenced within Article 34's language and, thus, must
be read to exclude from the grievance procedure complaints
concerning the computation of FLSA overtime pay and the FLSA’s
statute of limitations and recovery period.
The Agency further argues that the AVN and FS agreements
contain similar references to FLSA overtime computation issues.
With respect to the former, it asserts that Article 34, Section 6,
contains language identical to that in the Tech Ops contract –
“Complaints under this Article are not subject to the negotiated
grievance procedure” – and that, to determine an employee’s proper
pay computation pursuant to Article 34, Section 2, both OPM’s FLSA
regulations and the other pay regulations in Title 5 must be
consulted to determine which provides the greater benefit. With
respect to the latter, FAA maintains that Article 5, Section 3,
excludes claims concerning “matters relating to overtime
entitlement under the FLSA,” and that Article 40, Section 2 –
similar to AVN’s Article 34, Section 2 – expressly raises issues of
FLSA overtime computation. It contends that the language of these
agreements excludes FLSA matters from the grievance procedure in a
range of matters, including the proper calculation of FLSA
overtime.
12
FAA further argues that PASS’s contention – that an FLSA
nonexempt employee necessarily has “entitlement” under the FLSA
because “matters relating to overtime entitlement” are limited to
questions of exemption or non-exemption from the FLSA – is without
merit. It asserts that the agreements contain nearly identical
language – Article 34, Section 2, of the Tech Ops agreement begins
“When a nonexempt employee has entitlement under the FLSA, . . .”
and Article 4, Section 2, of the AVN agreement and Article 40,
Section 2, of the Flight Standards agreement begin “When a
nonexempt employee has entitlement under both FLSA and Title 5,
U.S.C., . . .” The Agency maintains that the Union’s erroneous
interpretation would render all of these provisions redundant and
non-sensical. It contends that each contract obviously
contemplates that there are times when an FLSA nonexempt employee
does have “entitlement under the FLSA” and other times when he or
she does not and, therefore, “overtime entitlement under the FLSA”
cannot mean only “exemption status” as PASS claims.
The Agency concedes that, if the 2002 grievance settlement
language is read in isolation, it might support the Union’s
position that the instant grievance is arbitrable, but maintains
that, given the language of the agreements barring FLSA overtime
entitlement claims from the grievance procedures, as well as logic,
the Union’s position is without merit. At the outset, it asserts
that accepting the Union’s interpretation would mean that the 2002
grievance settlement directly violated the PASS contracts, which
ban “matters relating to overtime entitlement under the FLSA” from
the grievance procedure. FAA maintains that the Parties do not
have authority to execute a grievance settlement that goes beyond
contract interpretation and, instead, rewrites or eliminates
existing contractual language and that, if they do, the settlement
would be void. It contends that the Parties can accomplish such a
change only through collective bargaining and execution of either
a Memorandum of Agreement or a new collective bargaining agreement.
It asserts that Article 70 of the Tech Ops agreement provides an
even stricter constraint, prohibiting the Parties from making any
agreement that increases or diminishes entitlements or otherwise
13
conflicts with any provisions of the agreement, without executing
a Memorandum of Agreement and engaging in agency head review.
FAA further argues that it was logical for the Parties to
agree, under the 2002 grievance settlement, that matters arising
under the contract and only peripherally touching FLSA overtime
might be processed through the grievance procedure. It maintains
that such an interpretation is consistent with the language of the
contract that instead sends “matters related to overtime
entitlement under the FLSA” to OPM. It contends that overtime
bypass claims and disputes concerning callback pay, back pay for
removed and restored employees or the correction of payroll errors
do not involve disputes over FLSA requirements. The Agency asserts
that allowing those matters that do not concern issues addressed by
the OPM FLSA complaint procedure to be processed through the
grievance procedure gives meaning to other contract language and
that handling them in the grievance procedure is also consistent
with the contract language that directs FLSA overtime entitlement
issues to the OPM process.
The Agency further argues that accepting the Union’s
interpretation of the 2002 settlement would shred this logic. It
maintains that the computation of FLSA overtime “entitlement” is
expressly addressed by the PASS agreements that bar FLSA overtime
entitlement claims from the grievance procedure. FAA contends that
the instant grievance did not originate with the agreements but
arose when OPM changed its own regulations and required a different
method for computing FLSA overtime and, therefore, is not a
contract dispute peripherally involving FLSA overtime. It asserts3
that it is, instead, a grievance solely over FLSA entitlements,
i.e., the computation of FLSA overtime, the FLSA statute of
limitations and questions of willfulness and liquidated damages,
At the January 2010 hearing on the merits, Mr. Staley testified at length3
about how the FAA, and other federal agencies, calculated FLSA overtime, howrevised OPM regulations changed the way overtime was to be calculated and how FAAunderstood and implemented the new regulations. (Tr.I 23-57) For purposes ofthis First Interim Opinion and Award, the nature and origin of OPM's FLSAregulations and FAA's understanding and implementation of them is not addressed.
14
and that these are issues of first impression in a national PASS-
FAA arbitration because the agreements require them to be heard
outside the grievance procedure.
FAA further argues that, although the Union made much of the
DiFalco Award, where the grievance began with a contractual4
dispute over an increase in standby hours, that case also involved
FLSA issues addressed by OPM’s regulations. It maintains that this
lone, aberrant, regional award does not create a practice or define
the Agency’s understanding of the 2002 national grievance
settlement. The Agency points out that Mr. Herlihy testified that,
although the national labor relations office where he works
provides advice to the field, the Agency’s regional labor relations
officials who litigated that grievance and decided to drop the
challenge to arbitrability did not consult with the national office
but did speak with Mr. Derby on the issue of arbitrability and the
2002 settlement. (Tr.II 104-106, 114-15 and 126-27) It points out,
in addition, that Mr. Herlihy testified that, following the 2002
grievance settlement, he advised field labor relations personnel
that contractual grievances, such as overtime bypass disputes,
“would go through the contract and OPM matters would go through
OPM.” (Tr.II 124-26)
The Agency further argues that the 2002 grievance settlement
did not address the issues contained in the instant grievance
because the Parties could not have contemplated it at the time. It
contends that it did not discover that it needed to change its FLSA
overtime computations to include holiday premium and non-foreign
COLA until 2005 and 2006, respectively, long after the Parties
settled the 2002 grievance. It points out that the Union claims it
knew nothing of these changes until the Agency announced remedial
payments in 2009. (Tr.I 13)
Finally, FAA argues that the Union knows how to craft contract
language that would permit this dispute to be processed through the
FAA and PASS, Grievance No. P-AF-NM-05-014 (John P. DiFalco, Arb.) (2006).4
15
grievance procedure. It points out that the Union negotiated new
Tech Ops language that would have explicitly barred only FLSA
exemption issues from the grievance procedure (A. Ex. 12), rather
than barring the much broader category of FLSA claims, i.e.,
“matters relating to overtime entitlement under the FLSA,” but
that, while the Parties tentatively agreed to that language, the
PASS membership rejected the tentative agreement in a ratification
vote and it never became part of an executed agreement between the
Parties. The Agency asserts that PASS should not gain in this
arbitration what it voluntarily rejected in contract negotiations.
For all of these reasons, the Agency urges that I find the
grievance to be substantively non-arbitrable.
The Union argues that the Agency’s Motion to Reopen the
Hearing was improperly filed and should be denied as being
procedurally deficient. It maintains, in addition, that I have
jurisdiction over the subject matter of the grievance and,
therefore, that I should proceed in rendering a decision on the
merits of the case based on the record at hearing and as
subsequently argued in the Parties’ post-hearing briefs.
PASS further argues that, although mooted by its agreement to
proceed to a hearing to determine the subject-matter jurisdiction
issue, it is necessary to restate its initial objection to the
Agency’s Motion to Reopen the Hearing. It contends that the
current proceeding will only resolve the issue of arbitrability and
that the Agency’s Motion also objected to the Union allegedly
raising two “brand-new” issues in its Post-Hearing Brief. The
Union asserts that the allegedly “brand-new issues” constitute
legal arguments, which it points out either Party may properly make
in a post-hearing brief. It maintains, in addition, that allowing
the Parties to file unilateral “motions” – that make additional
legal arguments or re-litigate resolved issues – would establish a
dangerous precedent that would drastically alter the Parties’
relationship and dismantle the negotiated grievance process.
16
The Union further argues that the filing of “motions” or reply
briefs is not provided for in the contracts, the practice is not a
part of the Parties’ relationship, and there is no authority to
support the Agency’s actions. It contends that the filing of
“motions” following the closing of an arbitration record threatens
the ability of the Parties to reach final resolution of issues –
setting up a continuous cycle of argumentative filings and
responses – where no argument will meet an end point and no issue
will reach final resolution. PASS asserts that such a predicament
is not envisioned by the agreements, which provide a clear
arbitration process. It maintains that, by limiting the authority
of arbitrators “to the precise issue submitted for arbitration” and
by providing that they “shall have no authority to determine any
other issues not so submitted to the arbitrator,” the Parties5
designed a system to avoid superfluous issues from clogging the
process and to set parameters around the “issue” that an arbitrator
may resolve. It contends that the Agency’s motion functions as an
addendum to the original issue statement – versions of which were
submitted by the Parties during the hearing on the merits on
January 8, 2010 – thus offending the contract’s limitation on
arbitrator authority.
PASS further argues that, although FAA had ample opportunity,
from submission of the grievance on June 12, 2009, through the
January 2010 arbitration hearing and the submission of briefs, to
bring up the jurisdictional issue, it did not do so until it filed
the instant “motion.” It points out that the Agency’s silence even
extended to its agreement at the January 2010 hearing that the
grievance was properly before me with no jurisdictional issues
(Tr.I 6), but that it then reversed this representation with the
filing of the “motion.” It asserts that, since the Agency had the
opportunity to make its case within the boundaries of the normal
arbitration process, it should not be given a “do-over” because it
missed that opportunity.
Article 5, Section 11 (J. Ex. 1), and Article 5, Section 10 (J. Ex. 2).5
17
The Union further argues that, although the Agency emphasized
the origins of FLSA and OPM’s authority, the focus should be on the
proper interpretation of the language found in the four agreements
and the fact that the Parties have already interpreted that
language. It maintains that FAA’s “motion” – that the language
found in each agreement represents a complete ban to processing
FLSA claims through the grievance process – was rejected long ago.
PASS contends that the Parties clearly intended that only
determinations whether an employee has an entitlement to overtime
under FLSA, i.e., exempt vs. non-exempt, be barred from the
grievance process while allowing any and all other FLSA overtime
disputes to be processed through the negotiated grievance
procedures.
PASS further argues that it is well-established that
arbitrators seek to interpret agreements to reflect the intent of
the parties and that they do so from various sources, including the
express language of the agreement, statements made at pre-contract
negotiations, bargaining history and past practice. It contends6
that, although the Agency contends that the contract language is
explicit and clear, the true intent of the Parties is reflected in
past dealings and joint understandings. The Union asserts that, in
2002 and without dispute, FAA’s Director of Labor and Employee
Relations concurred with the Union’s interpretation that the cited
language in each agreement means that questions about whether
employees are exempt or non-exempt from the FLSA are not covered by
the grievance procedure but that all remaining issues of how other
issues of application of FLSA will be treated for non-exempt
employees will be considered under the negotiated grievance
procedures, including arbitration if necessary. (J. Exs. 15-17)
The Union further argues that it relied on the Agency’s
representation in the letter of March 18, 2002, when it withdrew
its December 2001 national grievance and that its withdrawal was
See Elkouri and Elkouri, How Arbitration Works, Fifth Ed. (BNA,6
Washington, D.C. 1997), p. 479) (“Elkouri”).
18
undertaken with due diligence and assurances that the Parties had
reached resolution. It points out that Mr. Herlihy was the
catalyst for ensuring that the Union would carry out its end of the
deal – to withdraw the December 2001 national grievance – when he
forwarded Mr. Derby the March 18, 2002, letter containing the
understanding and the Union fulfilled its quid pro quo by
withdrawing the grievance on November 13, 2002. PASS asserts,
additionally, that, in his response, Mr. Derby reiterated the
Parties’ understanding and invited the Agency to respond if it
disagreed. It points out that, since the Agency did not respond,
indicating disagreement, the Parties understood and agreed that Mr.
Derby’s description was correct and FAA cannot try to change this
agreement eight years later.
PASS further argues that, in attempting to explain away the
Parties’ 2002 agreement, Mr. Herlihy’s testimony reflected a more
nuanced approach than the Agency’s initial contention that all FLSA
claims are comprehensively barred (Motion to Reopen the Hearing, p.
2). It points out that Mr. Herlihy testified that the contracts’
language allows for certain “contract” issues, such as overtime
bypass situations, administrative pay errors and the payment of
back pay which may include FLSA overtime pay, to be processed
through the grievance processes. (Tr.II 53-57) It maintains that,
while making a distinction with no apparent difference, Mr. Herlihy
stated that contract-based issues may be submitted to arbitration
while OPM issues go to OPM. (Tr.II 61)
The Union further argues that Mr. Herlihy’s testimony is not
supported by the expressed terms of the Parties’ 2002 letter
agreement between Mr. Fanfalone and Mr. Harris regarding the
disposition of FLSA claims. It contends that, in 2002, the Parties
agreed that there was no dispute between them, that determining
exempt/non-exempt FLSA status was not covered by the grievance
process but questions over the procedure for assignment of overtime
work was grievable. It points out that Mr. Harris stated that,
“[w]ith respect to the remaining issue of how other issues of
application of FLSA will be treated for non-exempt employees, we
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[FAA] would be willing to allow those matters to be considered
under the negotiated grievance procedures, including arbitration if
necessary . . .” PASS asserts that these words do not support Mr.
Herlihy’s attempt to “nuance” the interpretation. It maintains
that the Parties’ clear agreement – that only FLSA exempt/non-
exempt status determinations were outside the purview while all
other FLSA matters would be subjected to the grievance procedures
not only is aligned with the Union’s interpretation and is a
plausible reading of the contract language, but it completely
undercuts Mr. Herlihy’s testimony and the Agency’s “motion.” It
points out that, in response to my questions (Tr.II 85), Mr.
Herlihy acknowledged that, in 2002, the Parties agreed that certain
issues were clearly covered by the grievance process and certain
issues were not (exempt/non-exempt status) and, in resolution to
the existing grievance, the Parties agreed that all other FLSA
issues would be subject to the arbitration process.
PASS further argues that, although the FAA’s position has
varied, its position on the applicability of the disputed
contractual language has never wavered. The Union contends, for
instance, that, in December 2001 and the trigger for its national
grievance, FAA contended that all FLSA claims were exempt from the
grievance processes but that the Agency modified its position in
March 2002 and reinforced on November 13, 2002, and agreed that all
issues except exempt/non-exempt status could be grieved. Similarly,
it asserts that, nearly eight years later – in the March 2010
Motion to Reopen the Hearing – the Agency again argued for full
exemption of all FLSA claims from the grievance processes but that,
most recently, this position was modulated again through Mr.
Herlihy’s testimony that certain FLSA issues could be submitted to
arbitration. The Union maintains that its consistent position
serves as a truer guide of intent as opposed to the Agency’s
fluctuating positions based on a desired result. It contends,
citing authority, that the FLRA does not afford deference to an7
FAA and PASS, 56 FLRA No. 99 (2000).7
20
agency’s interpretation when it has acted in a manner that is
inconsistent with its current position.
Finally, the Union argues that, even if I were to adopt the
Agency’s current interpretation of the 2002 settlement agreement,
FAA’s errors in the instant situation constitute administrative pay
errors that, in applying Mr. Herlihy’s theory, would be covered by
the grievance processes. PASS asserts that, as presented at the
hearing on the merits and in its post-hearing brief, it is
undeniable and fully acknowledged by the Agency that multiple
bargaining unit employees were paid incorrectly when FLSA overtime
with the payment of COLA or holiday pay was calculated. It
maintains that the dispute between the Parties centers on the
technicalities of what each employee is owed as a result of this
pay error, specifically determining if interest is due on back pay
and the applicability of certain FLSA remedies. PASS contends that
this is the correction of pay errors which, according to Mr.
Herlihy, should be subject to the grievance procedures.
PASS urges, therefore, that the Agency’s Motion to Reopen the
Hearing be denied and that I issue an Opinion and Award on the
merits.
DISCUSSION AND ANALYSIS
It was the burden of the Agency to prove by a preponderance of
the evidence that the Union’s grievance is not arbitrable. For the
reasons which follow, I am persuaded that the Agency failed to meet
its burden.
Arbitrability
The purpose of the grievance-arbitration process is remedial
– that is, it is intended to be operated by lay participants and to
be interpreted so as to facilitate resolution of disputes. There
is in arbitration, therefore, a presumption favoring arbitrability
and a disinclination of forfeiture of claims raised and rights
21
asserted under the process. It is well-established in arbitration
that, in order to survive, procedural challenges to arbitrability
must be raised at the first available time and preserved through
the steps of the grievance process thereafter, else they be deemed
to have been waived.
Procedural challenges to arbitration are subject to waiver if
not timely asserted and preserved. I note, at the outset, that,
through the steps of the grievance process, the Agency never
discussed any issue pertaining to arbitrability. The record
establishes that the first time the Agency raised the issue of
arbitrability in the instant matter, albeit procedural
arbitrability, was at the hearing on the merits on January 8, 2010,
where the Agency identified one of the issues in the case as
“[whether] the grievances [are] untimely under the collective
bargaining agreement.” However, I take note of the fact that, in8
its Post-Hearing Brief, the Agency did not discuss the issue of
timeliness either in its statement of the issue (p. 4) or in its
argument (pp. 13-24). I am, therefore, persuaded that, if the
Agency had wished to pursue the issue of the grievance’s
timeliness, it should have timely asserted and preserved its
procedural objection. Having failed to do so, the Agency’s
challenge to timeliness would be deemed to have been waived.
I also take note of the fact that, at the outset of the
hearing on the merits in January 2010, the Agency stipulated that
the matter was properly in arbitration and before me. Nonetheless,
more than two months after the hearing on the merits, and more than
two weeks after submitting its Post-Hearing Brief, FAA submitted a
Motion to Reopen the Hearing. The Agency claims two reasons for
making its request: first, because, “[t]he Agency now believes,
based on internal legal advice received on Friday, March 26, 2010,
that the Arbitrator lacks jurisdiction to decide the subject matter
of the Union’s grievance,” and second, because “the Union has
I note that the verbatim transcript mistakenly states, “what are the8
grievances untimely under the collective bargaining agreement.” (Tr.I 17)
22
raised two brand-new issues for the first time in its post-hearing
brief: (1) the question of “willfulness” under the FLSA and the
extension of the recovery period from 2 to 3 years; and (2) a
request for liquidated damages.” I am not persuaded by either
contention.
With respect to the former, FAA provided no information that
explains why the alleged “internal legal advice” was received so
belatedly – after the stipulation was made, the evidentiary record
was complete and after the record of proceeding was declared closed
– or special circumstances that excuse its late assertion.
With respect to the latter, the Parties agreed that the only
issue to be determined in this First Interim Award and Opinion is
the issue of substantive arbitrability. The protest as to the
alleged “new issues” is not a challenge to arbitrability. Moreover,
I take note of the fact that the Agency acknowledges in its Post-
Hearing Brief that, among the issues raised by the grievance, were
the FLSA statute of limitations and questions of willfulness and
liquidated damages. (p. 24). Those legal arguments derive directly
from the governing statute and are an integral part of the remedies
provided by that statute. I conclude, therefore, that FAA’s claim
that these “two brand-new issues” were “raised for the first time”
by the Union in its initial post-hearing brief is not accurate and
the request that the hearing should be reopened to hear additional
evidence and argument on them is not warranted.
There is a doctrine that substantive challenges to
arbitrability can be raised at any time. I am not convinced that
the right to make such challenges survives an express stipulation
by the Party later challenging arbitrability. I am persuaded that
the Agency’s Motion to Reopen the Hearing should be rejected as
contrary to its express stipulation and dismissed for those
reasons. However, even if the right to make such a challenge
survives, I am convinced that the Agency’s arguments are without
merit. I turn to analysis of the Merits of the Agency’s Motion.
23
Contract Interpretation
My task in contract interpretation disputes is to ascertain
and apply the mutual intent of the parties. That intent is best
determined by looking to the language to which they agreed. The
Parties are assumed to have intended the normal and customary
meaning of the language they negotiate and to have intended the
consequences of that language. It is a principle of contract
interpretation that, if the words contained in contract language
are clear and unambiguous, conveying distinct terms, there is no
need to go outside the four corners of the document. The sources
of contract interpretation include the language of the contract
and, to the extent the language is ambiguous, pre-contract
negotiations, bargaining history, course of dealing, past practice
and previous, precedential settlements.
Agreement language is not ambiguous if its meaning can be
determined without reference to anything other than a knowledge of
the simple facts on which, from the nature of language in general,
its meaning depends. In determining the intent of the parties, the
task is to determine what the language meant to the parties when it
was written. It is that meaning, not a meaning that might possibly
be read into the language, that must be given effect.
The Parties are each entitled to the benefit of the bargain
they have mutually reached. That bargain is represented by the
entirety of the Agreement. In the instant case, the Agreement is
far from silent on the disputed issue. The Agreement contains
clear and unambiguous language. I am not allowed to ignore such
clear-cut contractual language and “may not legislate new language,
since to do so would usurp the role of the labor organization and
employer.” (Elkouri, Sixth Ed., pp. 435-36)
The Language at Issue
The dispute involved the meaning of the phrase, “matters
relating to overtime entitlement under the FLSA.” I am not
24
convinced, however, that this language, contained in one or another
form in each of the four PASS agreements, expressly excludes the
instant matter from the relevant grievance procedure. In fact, I
conclude just the opposite.
It is undisputed that “matters relating to overtime
entitlement” include issues related to whether an individual
employee or group of employees is entitled to overtime pay.
However, the Agency contends that such matters relate to more than
simply questions of status. It contends, for instance, that
Article 34, Section 2, of the Tech Ops agreement requires that FLSA
overtime be paid in accordance with OPM’s FLSA regulations and
points out that §§ 551.511 and 551.104 set forth the method for
computing the overtime rate of pay due under the FLSA and the
FLSA’s statute of limitations and recovery period. It concludes,
therefore, that the phrase “[c]omplaints under this Article,”
contained in Article 34, Section 6, of the Tech Ops agreement,
necessarily includes those complaints explicitly referenced within
Article 34's language and, thus, must be read to exclude from the
grievance procedure complaints concerning the computation of FLSA
overtime pay and the FLSA’s statute of limitations and recovery
period.
I am persuaded that the phrase “overtime entitlement” pertains
not to any specific issues of overtime pay but to the fundamental
status of an employee or class of employees entitling them to
receive overtime payments in the first place. It is one of the two
most fundamental issues embodied in the FLSA: the status of
employees as being statutorily entitled (non-exempt) or not
entitled (exempt) to overtime pay. The meaning of the phrase is9
clear and unambiguous and requires no determination of what it
meant to the Parties when it was written or resort to extraneous
means to ascertain its meaning. While it is no doubt true that
complaints concerning the computation of FLSA overtime pay and the
FLSA’s statute of limitations and recovery period relate to the
The other “fundamental issue” pertains to minimum wage.9
25
FLSA, as suggested by FAA, they do not relate to employees’
“overtime entitlement under the FLSA,” i.e., the fundamental right
of an employee to receive overtime payments in the first place.
2002 National Grievance Settlement
Both Parties appear to agree, to one extent or another, that
the disputed language does contain some ambiguity and that a
determination of what the language meant to the Parties is needed.
The best evidence of the Parties’ intent is contained in the two-
part 2002 national grievance settlement. In his letter of March
18, 2002, Mr. Harris stated that there was no dispute between the
Parties that “questions about whether employees are exempt or non-
exempt from FLSA are not covered by the grievance procedure.”
(Emphasis added.) Mr. Harris then alluded to “the remaining issue
of how other issues of application of FLSA will be treated for non-
exempt employees.” Mr. Harris clearly stated that, in exchange for
withdrawing a grievance that was pending at the time, FAA “would be
willing to allow those matters to be considered under the
negotiated grievance procedures, including arbitration if
necessary.”
A substantial amount of time passed between Mr. Harris’s
proposal and Mr. Derby’s response. However, there is nothing in
the record to indicate, and the Agency does not contend, that Mr.
Harris’s proposal was ever withdrawn, revised or revoked and, by
letter dated November 14, 2002, Mr. Derby agreed to withdraw the
grievance based on the representations of Mr. Harris, i.e., the
applicability of the grievance procedure to grievances relating to
overtime claims. The record reflects that, between Mr. Derby’s
letter in 2002 and preparation of the Agency’s Post-Hearing Brief,
FAA never challenged the Union’s understanding of this settlement
agreement. Thus, I am persuaded that the Parties themselves
reached a settlement agreement that supports the Union’s
contentions in this dispute.
26
Mr. Herlihy testified that he interpreted this exchange of
correspondence differently with regard to the future handling of
disputes concerning the FLSA statute of limitations and recovery
periods. His reasoning was as follows:
. . . I believe we finally sort of separated out thosethat are OPM issues, they go to OPM; and the contractissues go to the contract provisions for grievances. Sothat we had some clear meaning – it would give meaning tothe contract that the OPM process only encompassed whatthe regulations covered, everything else would go throughthe grievance procedure. [Tr.II 61]
Later in his testimony, Mr. Herlihy acknowledged that, in 2002, the
Parties agreed that certain issues were clearly covered by the
grievance procedure and certain issues were not (exempt/non-exempt
status) and that the Parties agreed that all other FLSA issues
would be subject to the arbitration process. (Tr.II 85) The former
testimony is rather circular and confusing; the latter testimony is
clear, on point and lends substantial credence to the Union’s
interpretation.
I am not convinced by the Agency’s contention that accepting
the Union’s interpretation of the 2002 grievance settlement means
that the 2002 grievance settlement directly violated the Parties’
four agreements, which ban “matters relating to overtime
entitlement under the FLSA” from the grievance procedure and that
the Parties do not have authority to execute a grievance settlement
that rewrites or eliminates existing contractual language. Such a
conclusion might be true if the Agency’s argument that “matters
relating to overtime entitlement” pertains to something more than
the issue of exempt/non-exempt status. However, that is the very
matter at issue; it is not proof of the matter.
The Rejected Tentatively Agreed Language
I am also unconvinced by the Agency’s reference to the TAU’d
language that was never ratified. The fact that the TAU’d language
was rejected in a ratification vote does not contradict the Union’s
27
case. The TAU’d language simply attempted – essentially – to
memorialize in the Tech Ops agreement what the Parties had agreed
to in the 2002 settlement agreement. By doing so, the Parties
would have inserted into the Tech Ops agreement the language that
the Parties had agreed to in 2002 so that the Tech Ops agreement
could serve as a stand-alone document that did not require
additional explanation. There is not indication that the Union was
abrogating that settlement. The failure to incorporate the language
into the Tech Ops agreement, for whatever reason, did not void the
2002 settlement agreement to which the Parties had already agreed.
Conclusion
The Agency asks me to conclude that the term “overtime
entitlement,” as used in the Parties’ agreements, relates to “how”
an employee is paid overtime, that is, the methodology by which
calculations are made and the components of such calculations, in
addition to whether the employee is “entitled” to overtime. I am
not persuaded. I find the grievance to be substantively
arbitrable. The Award so reflects.
INTERIM AWARD
The Agency’s claim that the grievance issubstantively non-arbitrable, as claimed in the AgencyMotion, is dismissed as contrary to its expressstipulations with respect to arbitrability. In thealternative, if the challenge were deemed to be proper,the claim is denied as without merit. The Agency failedto prove that the Union’s grievance is substantively non-arbitrable.
An Opinion and Award on the merits will issue within30 days of the date of issuance of this First InterimOpinion and Award.
Dated this 5 day of October, 2010, at Clarksville,th
Maryland.
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