Decision 2184-2000 Bouma v. DOT

STATE OF MONTANA
BEFORE THE BOARD OF PERSONNEL APPEALS

IN THE MATTER OF DEPARTMENT OF TRANSPORTATION GRIEVANCE NO. 4-2000:

BERT H. BOUMA, ET AL., DESIGNERS,			)	Case No. 2184-2000
PRECONSTRUCTION BUREAU, ENGINEERING			)
DIVISION, MONTANA DEPARTMENT OF			)
TRANSPORTATION,			)
		Grievants,	)	FINDINGS OF FACT;
			)	CONCLUSIONS OF LAW;
	vs.		)	AND RECOMMENDED ORDER
MONTANA DEPARTMENT OF			)
TRANSPORTATION,			)
		Defendant,	)

* * * * * * * * * * * * *

I. INTRODUCTION

     Hearing Officer Gordon Bruce conducted a hearing in this matter on January 10 and 11, 2002, in Helena, Montana. The Grievants, Bert H. Bouma, and 36 other Department of Transportation employees, were represented by Carter Picotte, Legal Counsel for the Montana Public Employees' Association (MPEA). Nick Rotering, Legal Counsel for the Department of Transportation (DOT), represented the Defendant.
     Richard Letang, union representative, and Grievants Kerry Robertson, Dennis Dietrich, Charles Olson, Bert Bouma, and Richard Palmer gave sworn testimony. Russell McDonald, Administrator, DOT Human Resources Division, Jean Bond, Bureau Chief, DOT Employee Relations Bureau, Debby Williams, Personnel Specialist, DOT Employee Relations Bureau, and Marvin Dye, former DOT Director, gave sworn testimony for the Defendant.
     Exhibits A through O, Exhibits 1 through 4, and Exhibits J-1 through J-12 were admitted into the record without objections. Parties also stipulated that the entire administrative hearing file be admitted without objections.
     The parties agreed to file post-hearing briefs, and the record was deemed closed and fully submitted for decision after simultaneous filings were received on February 12, 2002.

II. ISSUE
     1. Whether DOT violated Pay Plan Rule 1827 and Article 7, Section 1 of the Master Agreement (July 1, 1997 - June 30, 1999 and current Master Agreement) when the Labor Relations Bureau or its designated labor relations representative failed to contact union representatives or negotiate with the union prior to implementing Mark Nelson's pay exception.
     2. If so, what remedy is appropriate for the violation.

     4. As a result of the pay plan exceptions for the DOT designers, positions in that class were moved to Pay Plan 68. Pay Plan 68 provided pay increments higher than employees would have received under Pay Plan 60. In addition, some employees, including some of the Grievants, received consideration, including pay increments, as a result of the resolution of a lawsuit unrelated to the present case.

     5. The DOA explained to agencies that the proposed system and pay exceptions provided increased agency flexibility in determining employee pay, broader pay ranges to address the need for market adjustments, and placement and movement of employees in the ranges based on assessments of employees' relative qualifications or competence.

     6. The DOA also informed agency directors that agencies were encouraged to apply this exception with the goals of having an employee's salary reflect the employee's competencies relative to 1) his or her value to accomplishment of agency mission, 2) market demands, and 3) the competencies of other employees doing similar work.

     7. Under the pay plan exception rules, the exception was not to apply "wherever it may be in conflict with existing collective bargaining agreements." Further, DOA notified agencies that, "Pay exceptions affecting members of a bargaining unit must be implemented by a labor relations representative (see part 6 of Rule 1827)."

     8. The exception rules also notified agencies that exceptions granted under the increased agency authority were subject to all other applicable rules contained in Pay Plan Rule 1827. This rule allows pay exceptions to the extent of 2% of the FTE in the agency to mitigate difficult recruitment and retention problems. The rule states that:

     Addenda to the CBA, A-1 and A-2, list bargaining unit salaries for fiscal years 2000 and 2001 under Pay Plan 60. The CBA contains no other substantive provisions concerning wages and salaries.

     10. Addendum B - Grievance Procedure, Rule 5 in the CBA contains an election of remedies clause that allows Grievants to use the statutory grievance procedure as an alternative to arbitration under the CBA.

     11. On October 9, 1998, the DOT informed Jim Adams, Associate Director of the MPEA, about the final draft for Pay Plan 68, and attached a copy of the draft and a list of the MPEA employees covered under the plan.

     12. On October 21, 1998, Adams responded to the October 9 letter and informed the DOT that the MPEA was not entirely happy with the pay exception, but that it "did not wish to stop any one member from receiving a much deserved pay raise through either a classification upgrade or pay exception." Adams indicated the MPEA's position was that every state employee was worthy of a much needed pay raise for his or her services.

     13. Marvin Dye, director of the DOT in 1999, regularly held informal forums with the DOT employees in large groups. During the forums, he had conversations with employees and they discussed various issues. At one of these periodic discussions, Nelson, a member of the MPEA unit covering the designers, addressed Dye with the fact that he had received a job offer and inquired about pay exceptions. Dye informed Nelson and others present that he would look into the matter.

     14. Nelson had been actively seeking work elsewhere. On April 23, 1999, the state of Washington confirmed that Nelson's appointment as a Transportation Technician 2 was effective July 1, 1999. On May 17, 1999, Nelson informed Dye by letter that the state of Washington had committed to hiring him at a starting monthly salary of $2,465.00 ($14.22/hour). The state of Washington ultimately agreed that by July 1, 1999, Nelson would be paid $2,662.20 ($16.50/hour). Nelson asked Dye to let him know as soon as possible the best salary offer the DOT could offer him. Dye informed Nelson that he was forwarding the information to Nelson's immediate supervisors for their consideration.

     15. Following discussions between Dye and Nelson's immediate supervisor, Gary Gilmore, Administrator, Highways and Engineering Division, Gilmore informed Dye by memo on June 7, 1999, that pursuant to their agreement he had offered Nelson $15.95 per hour in an effort to retain Nelson with the DOT.

     16. On June 8, 1999, Bond advised Gilmore by memo that pursuant to Dye's orders, personnel was instituting a 22.4% pay raise exception for Nelson pursuant to Pay Plan Rule 1827(2), effective pay period beginning June 5, 1999. The DOT did not inform MPEA or consult with the union before granting Nelson the pay exception. DOT also failed to request that the Labor Relations Bureau of DOA implement the exception.

     17. The DOT did not consider the impact a pay exception for Nelson would have on the existing salary relationships in the bureau. The DOT did not establish that Nelson was an exceptional employee in terms of the type of work he did, special skills or leadership potential he might have possessed, or any special length of service that qualified him for the exception. Subsequently, at another DOT forum following shortly after Nelson was granted an exception, Dye informed the audience that the pay exception had been a mistake, but did not explain the basis for his statement.

     18. On August 23, 1999, Richard Letang, Field Assistant for the MPEA, informed Dye that he had met with a group of road designers (Grievants) on June 30, 1999, concerning the individual pay exception that had been granted Nelson. Letang informed Dye that the "idea of a designer with eight years or so of experience receiving a pay exception to maximum when senior designers with 30 plus years of experience are 18%-20% below maximum is unacceptable. . . ." The union complained that the exception created pay equity and morale problems among designers with the DOT.

     19. In his letter to Dye, Letang also inquired whether he "and/or your representatives are willing to sit down and negotiate a process to accelerate all designers to maximum." Letang further indicated if the DOT desired to enter into such "negotiations," to let him know by August 31, 1999. If no solution was reached by September 30, 1999, the designers were prepared to proceed under the DOT statutory grievance procedure.

     20. On September 7, 1999, Dye responded to Letang's request for negotiations and informed Letang that he understood that Paula Stoll of the Employment Relations Bureau, and Nick Rotering, staff attorney for the DOT, had contacted him about the matter and were arranging a mutually acceptable date for all parties to meet.

     21. In September 1999, DOT/DOA and MPEA held negotiations concerning the pay exceptions given Nelson under Pay Plan 68. The union contended that all designers should be given the same exception as Nelson because their positions were no different than his, and if the DOT applied the same criteria to them as to Nelson, all designers qualified for the pay plan exception. The parties reached no consensus at the meeting and Letang offered to present the DOT with a pay proposal which the MPEA believed would address pay plan inequities experienced by the road designers. He intended to document why the entire designer series and not just one or two individuals should receive salary adjustments.

     22. Letang submitted the proposal to the DOT on November 22, 1999. He noted that pay inequity was created each time a salary adjustment was given to an employee for retention reasons but not to the entire group. As an example, Letang referenced the recent increase given to Nelson. Letang also pointed out that across-the-board increases as given with the Pay Plan 68 pay exception had increased pay inequities for designers.

     23. On December 21, 1999, the DOT sent a letter to Letang in regard to his pay equity proposal. The DOT indicated that the subject of the letter was "designer pay negotiations." The DOT informed Letang that his request to adjust the salaries of existing designers was denied. The data collected by the DOT led its managers to believe that although DOT had some difficulty recruiting designers, there was no basis to adjust all designers as requested by the MPEA in its proposal to the DOT.

     24. None of the other designers ever submitted documentation to the DOT that they had outside employment offers. Further, there was no substantive recruitment problem in the designer positions.

     25. The DOT acknowledged that it had mistakenly granted an exception to Nelson under Pay Plan 68, but decided not to rescind the pay exception due to the unique circumstances surrounding its initial decision to retain Nelson as a designer.

     26. Dye also indicated to the MPEA that the reason he did not want to grant any other pay plan increases for designers was because a study had been commissioned to examine these issues. As a further result of the discrimination case settlement, the DOT undertook the study to review descriptions for designers and civil engineers, which was completed in the summer of 2001. In order to be equitable, the DOT also decided in July 1999 to increase all designers as a result of the settlement for a period of two years.

     27. The pay increases the DOT gave to Nelson effectively put him in a much higher pay rate than a number of other more senior designers. When the federal age discrimination case settled out of court, Nelson, like the other plaintiffs in that action, received back pay, but he did not get a further upgrade because he had already received one.

28. Other past practices between the DOT and MPEA concerning their negotiations when pay exceptions were being proposed shows that the DOT typically informed MPEA of the pending exceptions, and either requested approval or comments on the changes. However, both parties were inconsistent in their handling of pay exceptions, and in most cases the union did not request negotiations. The following represent certain past practice examples contained in the record.

a) On March 6, 1995, the DOT sent a letter to Jim Adams, MPEA, requesting approval from MPEA for pay plan exceptions authorized by Dye pursuant to Rule 1827. The DOT also copied the letter to Steve Johnson, Chief, Labor and Employee Relations Bureau, DOA. The MPEA responded on April 11, 1995, and requested documentation supporting the reason for the pay exceptions. On April 14, 1995, the DOT informed MPEA that the information they requested would be prepared and sent to the union in a few weeks, but did not send the information to MPEA until September 18, 1995.

b) On January 31, 1997, the DOT wrote to Adams and asked for approval to initiate a pay exception for right of way agents authorized by Dye pursuant to Pay Plan Rule 1827(2). The parties exchanged further correspondence about the exception on February 18 and 25, 1997. On March 6, 1997, an MPEA representative wrote to the DOT informing the agency that the union approved the pay exception, contingent upon the understandings reached between the parties about the final application of the exception. The DOT sent Paula Stoll, Bureau Chief, Employee Relations Bureau, DOA, a copy of the letter.

c) On August 20, 1997, the DOT wrote to Adams and asked for approval to initiate a pay plan exception for Glendive designer salaries authorized by Dye pursuant to Pay Plan Rule 1827(2). The DOT indicated it would implement the change immediately unless MPEA objected by August 29, 1997.

d) On December 19, 1997, the DOT wrote to Adams concerning a pay exception authorized by Dye for auditors pursuant to Pay Plan Rule 1827(2). The DOT asked Adams for approval to proceed with the exception. The DOT indicated it would implement the change immediately unless MPEA objected by December 31, 1997.

e) On April 27, 1998, the DOT wrote to Adams informing him of its intention to grant pay exceptions for two engineering technician positions pursuant to 1827(2). The letter listed criteria for the exception. Subsequently, on May 21, 1998, Adams responded to the DOT and informed the agency the MPEA had "no problem" with the justification for the exception for the two employees.

f) On June 10, 1998, the DOT wrote to Adams requesting MPEA's approval of a pay exception for a temporary engineering technician authorized by Dye pursuant to Pay Plan Rule 1827(2), and explained the criteria for the exception. The DOT informed Adams if the agency did not hear from him by June 19, 1998, it would implement the exception.

g) On July 31, 1998, the DOT wrote to Adams concerning pay exceptions authorized by Dye for information technology professionals pursuant to Pay Plan Rule 1827(7). The DOT asked Adams to call the agency if he had any questions. A copy of the letter was sent to Stoll at the DOA.

h) On September 3, 1998, Adams wrote to Dye assuring him that the MPEA in "no unequivocal terms" supported the pay exception request for "most of the professional and technical employees" working for the DOT. Adams also indicated the MPEA stood ready to help the DOT in any way it could to assure approval of the pay exception from the DOA. The letter was copied to MPEA Transportation representatives.

i) On October 9, 1998, the DOT responded to Adams' September 3 letter thanking him for his support. The DOT also enclosed a copy of the final draft of the pay exception program established by the DOA, and informed Adams the agency would move certain covered classes to the 68 pay plan with an effective date of September 26, 1998.

j) On October 21, 1998, Adams wrote to the DOT thanking the agency for the notice of the pay exception and opportunity to respond. Adams informed the DOT that the exceptions presented did not conform to the original pay exception supported by MPEA. Adams further informed the DOT that he believed "preferential pay was not equitable." Adams sent copies of his letter to MPEA DOT members, Governor Marc Racicot, DOA, and certain other DOT supervisors. The DOT and MPEA met and discussed the proposal which was ultimately implemented and approved by the parties.

k) On December 17, 1998, the DOT wrote to Adams informing him of pay plan exceptions for environmental impact specialists and some other classes authorized by Dye pursuant to Pay Plan Rule 1827(2). The agency asked Adams to respond if he had any questions. Stoll at the DOA received a copy of the letter.

l) On January 15, 1999, the DOT wrote to Adams informing him of pay plan exceptions for four employees authorized by Dye pursuant to Pay Plan Rule 1827(2). The letter asked Adams to respond if he had any questions.

m) On April 16, 1999, the DOT wrote to Adams informing him of pay plan exceptions for utility agents and photogrammetry technicians authorized by Dye pursuant to Pay Plan Rule 1827(2), explaining that these classes were not included in the new Pay Plan 68. The agency backdated some of the increases to March 27, 1999 and others to February 2, 1999. The letter asked Adams to respond if he had any questions.

n) On May 7, 1999, Letang wrote to the DOT expressing MPEA's concern that engineering technicians in Kalispell had received pay exceptions without notification to MPEA. Letang indicated to the DOT that pay exceptions create disparity, and requested the DOT to seek an across-the-board exception for all its technicians.

o) On February 25, 2000, Letang wrote a letter to Stoll at the DOA advising her that he had recently received a report from the DOT on its pay movement of employees within Pay Plan 68, and pay exceptions under Pay Plan 60. Letang told Stoll that the MPEA believed that the pay exceptions were mandatory subjects of bargaining, although the union recognized that the DOA had authority to use the pay exception plan. He also requested an opportunity to negotiate with the DOT near the end of March.

p) On March 9, 2000, Stoll responded to Letang's letter of February 25. She informed Letang that the DOA believed that the "decision to grant a pay exception to an individual or class of employees rests exclusively with management; its implementation in an organized work unit is negotiable under the collective bargaining act." Stoll also informed Letang that once the DOT notifies bargaining agents that pay exceptions are granted, the union must assert its bargaining rights under § 2?18-303(9), MCA. She suggested several dates in late March and early April for possible meeting dates.

The Department of Administration has adopted the Pay Plan Rules to implement its statutory authority concerning pay plan exceptions, and, in particular, has adopted Rule 1827 to implement § 2-18-303(9), MCA. The purpose of the rule is to provide for pay plan exceptions in cases where recruitment and retention problems exist.

Rule 1827 indicates that an agency may grant a pay plan exception to the market range for the employee's pay grade if an employee, who is critical to the DOT, has applied for other employment or is being recruited by other employers and there is a significant risk that the employee will leave the DOT and take the new job. The rule also requires that in granting the exception, the agency must take into account a number of factors including existing salary relationships within the work unit. Rule 1827 requires that when an employee or when a group of employees belong to a bargaining unit, any pay exception must be implemented either by the chief of the Labor Relations Bureau or a designated labor relations representative.

Section 2-18-303(9), MCA, also requires that when an agency proposes a pay exception for an individual employee in a collective bargaining unit, the implementation of the pay plan adjustment is a matter for negotiation under § 39?31?305, MCA. Section 39-31-305, MCA, establishes the obligation of a public employer to bargain collectively in good faith with the exclusive representative of employees. Although the history of bargaining between the parties over pay exceptions reveals few instances where MPEA requested bargaining, the history does show that DOT regularly notified MPEA of proposed exceptions so MPEA would have an opportunity to request bargaining.

Grievants argue that the DOT acted improperly in moving Nelson's salary to the maximum level in Pay Plan 68, and by not doing so in their cases, DOT was in violation of the Pay Plan Rules.

The record shows that the DOT mistakenly granted Nelson an exception under Rule 1827. The pay exception was given to the maximum and DOT did not consider the effects of the exception on existing salary relationships, did not notify the MPEA of the proposed exception in order to permit bargaining, and implemented the exception itself rather than submitting the matter to the DOA chief of Labor Relations. When Dye learned of the mistake, he decided it would be unfair under the circumstances to take away the exception granted Nelson, and concluded that the decision in the matter would stand.

Having determined that DOT did violate the Pay Plan Rules and the CBA in granting the pay plan exception, the question arises as to the appropriate remedy for the violation.

MPEA argues that the only correct and just result is for the Board to order the implementation of the pay exception and a back pay award for all Grievants as of the date of the Nelson exception. Further, the union asks the Board to require the DOT to integrate employees, who are affected by such order, into the present 'broadband' pay plan in the manner and at pay levels that they would have received had a proper exception been granted and implemented.

MPEA is essentially arguing that because Nelson received an erroneous pay exception, the Grievants should receive the same erroneous increase as Nelson and benefit from that mistake. However, MPEA has failed to establish that the Grievants were similarly situated to Nelson in a way that would entitle them to the same increase. DOT granted Nelson the exception in response to the retention issue created by his offer of employment from the state of Washington. Rule 1827 is designed to address such issues. The record in this case identifies no Grievant who had a competing job offer or other basis for a pay exception under Rule 1827. Therefore, any extension of the error to the Grievants would be improper.

The appropriate relief for the DOT's violation is to order the DOT to comply with § 39?31-305, MCA, and Rule 1827 in any future individual pay exception requests involving MPEA unit members.

VI. CONCLUSIONS OF LAW