NTEU v. FLRA ( 2013 )

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 Order of the Federal Labor
Relations Authority. (0-NG-3158)
Argued: October 29, 2013 Decided: 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 National Treasury Employees Union (NTEU) sought to
amend its collective bargaining agreement with the 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 would grant probationary employees greater
procedural protections than were authorized under law and
regulation. NTEU appealed to the Federal Labor Relations
Authority (FLRA), which held for the IRS. 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
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good faith as an unfair labor practice); NRC v. FLRA, 25 F.3d
229, 231 (4th Cir. 1994). Such agreements must, subject to
certain limited 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 members are generally selected by open and
competitive examination, see 5 U.S.C. §§ 2102(a)(1), 3304(a),
(b) -- federal law distinguishes between probationary and non-
probationary 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. Id. § 1301.
Pursuant to its authority, OPM has codified the rules for
probationary employees at 5 C.F.R. part 315, subpart H
(§§ 315.801-315.806). The rules set the length of the
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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 Protection Board (MSPB), id. §§ 315.804(a),
315.805, 315.806. The rules do not affirmatively grant
probationary employees the right to grieve removals alleged to
be in violation of statutory rights or procedures.
B.
NTEU sought to amend its existing collective-bargaining
agreement with the IRS to permit probationary employees to
grieve removals where “the grievance is confined to enforcing
the procedures or rights contained in a statute, and any
subsequent arbitration decision is controlled solely 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.” Id. at 26. Such proposals thus
fall outside of § 7117’s 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. 1983), the FLRA reasoned that while probationary
employees have some rights to challenge removals in certain
administrative and judicial forums, they are authorized to
“receive only minimal due process in connection with their
separation,” which does not include the right to grieve
removals. Id. (internal quotation marks omitted).
NTEU appeals the FLRA’s decision. We must uphold the
decision “unless it is arbitrary, capricious, an abuse of
discretion, or otherwise not in accordance with law.” NTEU v.
FLRA, 647 F.3d 514, 517 (4th Cir. 2011). NTEU contends that we
should not defer to the FLRA’s interpretations of the OPM
regulations. It argues that the regulations are outside the
5
FLRA’s organic statute and regulatory domain, and are thus
“beyond the [FLRA’s] special area of expertise.” 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 of the specific level of deference 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 argument is simple. Because Congress did not
exclude probationary employees from the definitions of
“employee” and “grievance” in 5 U.S.C. § 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 to probationary and non-
probationary employees. See NTEU v. FLRA (NTEU II), 848 F.2d
1273, 1276 (D.C. Cir. 1988). This is reflected in the numerous
ways that the law treats probationary and non-probationary
employees differently. For example, probationary employees are
explicitly excluded from the protections against demotion or
removal for unacceptable performance under 5 U.S.C. § 4303. See
5 U.S.C. § 4303(f)(2). These protections include written notice
thirty days in 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.” Id. § 7513(a); see
also id. § 7511(a)(1)(A)(i). As the D.C. Circuit has
recognized, “The substantial protections that Congress made
available only to tenured employees indicate 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.” INS, 709 F.2d at 728.
Numerous other courts 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 intends review of the termination of
probationary employees be more limited than that 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) (noting that “Congress could have permitted
probationers to challenge removals [in the Court of Federal
9
Claims], but expressly declined to do so”); Budnick v. MSPB, 643
F.2d 278, 279 n.2 (5th Cir. Unit B 1981) (per curiam)
(characterizing the “distinction between probationary and
tenured employees” as “sharp”).
Congress’s intention to grant probationary employees fewer
procedural protections against removal is clearly expressed in
the legislative history of the CSRA. As the Senate report
explains, “The probationary or trial period . . . 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, “it provides no evidence of a
congressional intent to prevent probationers from filing
grievances to protest removals in violation of statutorily
conferred rights.” Appellant’s Br. at 15. NTEU’s position
ignores the real-world result of its proposal: through artful
pleading, employees faced with a merit-based dismissal could
impose substantial costs on their employers by alleging
insubstantial statutory violations to access the grievance
procedures. Thus, NTEU’s proposal would “substantially thwart
10
Congress’s intention to allow summary termination of
probationary employees.” NTEU II, 848 F.2d at 1275.
B.
The Office of Personnel Management is the agency charged
with implementing Congress’s intent. See 5 U.S.C. § 1301; INS,
709 F.2d at 725 n.3. Pursuant to its statutory authority to
administer the competitive service, OPM has issued regulations
regarding the probationary period. OPM’s regulations faithfully
reflect Congress’s intention 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. They
are entitled to written notification and explanation of a
dismissal for unsatisfactory performance or conduct, id.
§ 315.804(a), as well as notice of a proposed removal,
opportunity for reply, and notice and explanation for the
11
removal in cases where the removal is based in whole or in part
on conditions arising before the probationer’s employment, id.
§ 315.805. Probationary employees also have limited rights of
appeal to the MSPB: they may challenge removals based on
partisan political reasons or marital status; improper
procedures; or other forms of discrimination, 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, they sharply limit probationary
employees’ rights to challenge removals. In doing so, they
preserve a meaningful distinction between probationary and non-
probationary employees in accordance with the language and
purpose of the statutory scheme. The structure of the OPM
regulations indicates that any additional protections 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 employees have
remedial options beyond those granted by OPM. See Appellant’s
12
Br. at 16-17. Indeed, in some contexts their avenues for relief
are much the same as those afforded non-federal employees. They
may file charges of unfair labor practices with the FLRA’s
general counsel, see 5 U.S.C. § 7118(a)(1), and may file
complaints of discrimination with the Equal 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.
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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. Circuit first addressed the availability of
grievance procedures for probationary employees 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.” INS, 709 F.2d at
726 (internal quotation marks omitted). 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. In reversing the FLRA, the D.C.
Circuit emphasized Congress’s intent to provide probationary
employees with fewer protections against removal and the
incompatibility of the union’s proposal with that goal. See id.
at 728-29. 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 expansion of
probationary employees’ grievance rights. 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. Instead, it read the
relevant sections against 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. It bases its criticism of NTEU II in large part on the
claim that the NTEU II court failed to consider the Senate
report language that underlay the INS decision. 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). But even were our judgment more
ambivalent, there would be costs in this area to holding
differently and creating a circuit split. 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. NTEU would have us upset nearly
thirty years of FLRA decisions holding that probationary
employees are not permitted under law or regulation to grieve
removals. See, e.g., NFFE, Local 29, 20 F.L.R.A. 788, 790
(1985); SSA, 14 F.L.R.A. 164, 164-65 (1984). The FLRA has
reasserted this holding numerous times since those early
decisions. See, e.g., NTEU Chapter 103, 66 F.L.R.A. 416, 418
(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 disputes, including those alleging violations of
statutory rights or procedures. Both Congress and OPM
understand this and have taken no action over these many years
to change this reality. There is value in having settled
practice remain settled practice, especially when 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 and thus outside the IRS’s
17
statutory duty to negotiate. The NTEU’s petition for review is
hereby denied.
PETITION DENIED
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