### Establishment of a Labor Relations System for

Employees of the Federal Labor Relations Authority

N either E xecutive O rd er N o. 11,491 n o r T itle V II o f the Civil Service R eform A ct o f 1978, nor any o th er law, precludes the F ederal L abor R elations A u th o rity and o th eroffices adm inistering Federal labor-m anagem ent relations law from establishing a c o llective bargaining system for th eir em ployees.

T h e F L R A does not need specific statu to ry authority in o rd er to bargain w ith its em ployees, in light o f the general federal policy favoring bargaining by public em ployees.

A ny labor relations system established by the F L R A m ust com ply w ith T itle V II and

o th e r relevant federal law s and executive orders.

In the absence o f specific statu to ry authorization, a labor relations system established in the federal sector m ay not provide for binding arbitration by an outside third party, because federal officials m ay not delegate to a private party decisionm aking auth o rity vested in them by C ongress; how ever, advisory arb itration w ould be legally permissible.

July 1, 1980

MEMORANDUM OPINION FOR TH E EXECUTIVE DIRECTOR,

FEDERAL LABOR RELATIONS AUTHORITY

This responds to your request for our opinion regarding the legality of establishment by the Federal Labor Relations Authority (FLRA) of a labor relations system for its employees. Specifically, you have asked (1) whether the FLRA 1 lawfully may establish for its own employees a labor relations system, including, for example, provisions for exclusive recognition of an employee representative, bargaining agreements, unfair labor practices, and negotiated grievance procedures; and (2) whether such a system lawfully could provide for the use of binding or advisory arbitration by an outside third party for the resolution of disputes arising thereunder. According to your opinion request, you have concluded that you lawfully may establish a labor relations system for FLRA employees, but that, absent a statute or executive order,provision for binding arbitration is not legal. We concur in these con1 Your opinion request extends also to the Federal Service Impasses Panel, as well as the GeneralCounsel of the FL R A . The Federal Service Impasses Panel provides assistance in resolving negotiation impasses between agencies and employee representatives. 5 U.S.C. §7119. T he G eneral Counsel o f the FL R A investigates unfair labor practices, prosecutes complaints, and exercises such other powers as the FL R A may prescribe. 5 U.S.C. § 7104(f). Further references in this memorandum to the FL R A also encompass the Impasses Panel and the General Counsel, unless otherw ise indicated.

709elusions. In our opinion, you lawfully may establish a labor relations

system for FLRA employees so long as the system does not violate any of the prohibitions in the federal service labor-management relations statute, 5 U.S.C. §7101 et seq., or delegate to a third party any final decisionmaking authority.Because you may not lawfully delegate to a third party the responsibility given you by Congress, you may not enter into an agreement tosubmit to binding arbitration. If the FLRA believes that advisory arbitration would be useful, such advisory arbitration is a lawful mechanism for the resolution of disputes.

I.

The FLRA was first created by Reorganization Plan No. 2 of 1978, 43 Fed. Reg. 36,037, as an independent establishment in the executive branch to manage the labor relations system for that branch. It assumedresponsibility for certain functions previously performed under Executive Order No. 11,491, as amended,2 by the Federal Labor Relations Council, the Civil Service Commission, and the Assistant Secretary ofLabor for Labor Management Relations. To determine which employees were covered by Reorganization Plan No. 2, and thus within the jurisdiction of the FLRA, it was necessary to refer to Executive OrderNo. 11,491.3 No mention of a labor relations system for FLRA employees was made in the Reorganization Plan. Executive Order No. 11,491, promulgated in 1969, declares in §1 that each employee of the executive branch “has the right, freely and without fear of penalty or reprisal, to form, join and assist a labor organization or to refrain from any such activity, and each employee shall be protected in the exercise of this right.” In §11, the orderprovides that an agency and a labor organization that has been accorded exclusive recognition shall meet at reasonable times and confer

2 Subsequent references in this memorandum to Executive O rder No. 11,491 refer to that order as amended, unless otherw ise indicated. 3 This reference to Executive O rder No. 11,491 is necessary because Reorganization Plan No. 2 simply transferred certain functions previously performed under that order to the FL R A . Section 304 o f the plan provided:

Subject to the provisions o f Section 306, the following functions are hereby transferred: (a) T o the A uthority— (1) T he functions of the Federal Labor Relations Council pursuant to Executive O rder 11,491, as amended; (2) The functions o f the Civil Service Commission under Section 4(a) and 6(e) of Executive O rder 11,491, as amended; (3) T he functions o f the Assistant Secretary of Labor-M anagem ent Relations, under Executive O rder 11,491, as amended except for those functions related to alleged violations o f the standards o f conduct for labor organizations pursuant to Section 6(aX4) o f said Executive O rder; and, (b) to the Panel—the functions and authorities o f the Federal Service Impasses Panel, pursuant to Executive O rder 11,491, as amended. 43 Fed. Reg. 36,037, 36,040-41 (1978). Section 306 o f the Reorganization Plan provided that the policies and procedures established under the order would remain in full force and effect.

710in good faith with respect to personnel policies and practices andmatters affecting working conditions. Negotiated procedures could provide for arbitration of grievances, but either party could file exceptions to an arbitrator’s award with the Council (now FLRA), a public body. Executive Order No. 11,491 does mention briefly organization by employees engaged in administering labor-management relations laws. In § 3(d), the order provides: “Employees engaged in administering a labor-management relations law or this Order shall not be representedby a labor organization which also represents other groups of employees under the law or this Order, or which is affiliated directly orindirectly with an organization which represents such a group of employees.” Section 3(a) states that the order applies “to all employees and agencies in the executive branch, except as provided in . . . [§ 3(d) above].” “Agency” and “employee” were broadly defined in § 2 of the order and, but for § 3(d), clearly would include employees of the FLRA. It can be argued that Executive Order No. 11,491 did not totally exclude employees engaged in administering labor-management
relations law or the order. The order could be said to extend to them as “employees,” provided only that they could not be represented by a labor organization which also represents other groups of employees under the law or the order. Apparently, no such coverage ever has
been claimed. Obvious administrative difficulties would arise if thoseresponsible for administering the order were also subject to its provisions. We note this provision of the order to indicate, however, that FLRA employees were not expressly prohibited by the Reorganization Plan or Executive Order No. 11,491 from organizing or bargaining collectively. In 1978, shortly after Reorganization Plan No. 2 was approved by Congress, the Civil Service Reform Act of 1978 was passed. Pub. L. No. 95-454, 92 Stat. 1111 (codified at 5 U.S.C. § 1101 et seq.). Title VII of the Act deals with labor-management relations in the executive branch. Section 7104 gives statutory authority to the FLRA; §7105 describes its powers and duties.4 Among other things, the FLRA is to provide leadership in establishing policies and guidance relating to matters under Title VII, and generally is responsible for carrying out the purposes of Title VII. The policies underlying Title VII are set forth in §7101. In that section, Congress finds that labor organization and collective bargaining in the civil service are in the public interest.With these general guidelines in mind, we turn to the specific references in Title VII to collective bargaining by FLRA employees. Title VII defines “agency” more narrowly than does Executive Order No.

4 Title VH did not supersede Executive O rder No. 1 ],491. Section 7J35(b) provides that **[p]oJicies, regulations, and procedures established under and decisions issued under [any executive order in effect on the effective date o f Title VII], shall remain in full force and effect until revised or revoked by the President, or unless superseded by specific provisions o f this chapter or by regulation or decisions issued pursuant to this chapter."

71111,491. It provides that “agency” means “an Executive agency . . . but

does not include . . . (F) the Federal Labor Relations Authority; or (G) the Federal Services Impasses Panel ...” 5 U.S.C. § 7103(a)(3). Thus, at the outset, Congress excluded those offices from coverage under the Act. The legislative history does not explain why they were excluded.5 It does not reveal whether Congress intended thereby to preclude them from participating in any labor relations system or whether it simply thought that such employees could not impartially participate in a system they themselves were administering. As you suggest in your request, the latter is the more reasonable interpretation. This conclusion is supported by other provisions in Title VII. In§ 7101(a), Congress finds that the right of employees to organize, bargain collectively, and participate through labor organizations of their own choosing in decisions which affect them safeguards the public interest and contributes to the effective conduct of public business. Section 7101(b) requires that Title VII be interpreted in a mannerconsistent with the requirement of an effective and efficient government, which Congress finds is promoted by collective bargaining and participation in labor organizations. Thus, if, as you state, you find that significant benefits of the type contemplated by Congress in passing Title VII would accrue both to the FLRA and to the public from a labor relations system for FLRA employees, the Act should not be construed to prevent establishment of such a system. That Title VII was not intended to prevent establishment of such a system is further supported by § 7112(b) and §7 1 12(c). Section 7112(b) provides that the FLRA shall not determine a unit to be appropriate for employee representation if it includes “an employee engaged in administering the provisions of this chapter.” Section 7112(c) provides:

Any employee who is engaged in administering any provision of law relating to labor-management relations may not be represented by a labor organization— (1) which represents other individuals to whom such provision applies; or (2) which is affiliated directly or indirectly with an organization which represents other individuals to whom such provision applies.

The inclusion of these sections, restricting unit determination to those units not including FLRA employees and specifying that an FLRA employee may not be represented by an organization which represents individuals covered by Title VII, suggests that FLRA employees may

5 T he exclusion did not appear in the early versions o f the A ct. See, e.g., H.R. 1589, § 3(c), 95th Cong., 1st Sess. (1977); H.R. 9094, § 2 , 95th Cong., 1st Sess. (1977); S. 2640, §701, 95th Cong., 2d Sess. (1978). T he subsequent am endm ent excluding the F L R A and the Impasses PaneMs not explained in the com m ittee reports. See H.R. Rep. No. 1403, 95th C ong., 2d Sess. 39 (1978); S. Rep. No. 969, 95th Cong., 2d Sess. 97 (1978).

712be represented by other labor organizations. Representative Udall, who proposed the adoption of the version containing this language, analyzed
this section as follows:

Subsection (c) of the substitute provides that any employee who is engaged in administering any provision of law relating to labor-management relations may not be represented by a labor organization which represents other individuals to whom such provision applies, orwhich is affiliated directly or indirectly with an organization which represents other individuals to whom such provision applies. This provision, which is not found inthe reported Title VII, is intended to help prevent conflicts of interest and appearances of conflicts of interest.For example, an employee of the National Labor Relations Board could not, under this provision, be represented by a labor organization which is subject to the National Labor Relations Act, or which is affiliated with an organization which is subject to the National Labor
Relations Act.

124 Cong. Rec. 29,183 (1978). If Congress intended to preclude FLRA employees from participation in any system, it is unlikely that these provisions would be included without further explanation or limitation. We conclude, therefore, that neither Executive Order No. 11,491 nor Title VII precludes the FLRA and other offices administering federallabor-management relations law from establishing a collective bargaining system for their employees. Nor does any other federal statute or judicial decision we have foundpreclude the establishment of such a system. The right of public employees to organize collectively and to select representatives for thepurposes of engaging in collective bargaining has been labeled a fundamental right. United Federation o f Postal Clerks v. Blount, 325 F. Supp. 879, 883 (D.D.C.), affd, 404 U.S. 802 (1971). At least one federal agency, the Department of the Interior, has collectively bargained withsome of its employees over a period of several decades without statutory authorization. Although this practice was reported to Congress, Congress made no attempt to halt it. See Recognition of Organizations of Postal and Federal Employees: Hearings on H.R. 6 and Related Bills, Before the House Comm, on Post Office and Civil Service, 85th Cong., 2d Sess. 275 (1958).6 In floor debate on Title VII, Representative Ford of Michigan stated: “Collective bargaining is not new to the Federal Government. Under Executive orders, 58 percent of the work force has

6 An attachm ent to H.R. Rep. No. 2311, 82d Cong., 2d Sess. 8-12 (1952), entitled “Policy M emorandum Covering General Labor Relations Policy For Ungraded Em ployees o f the D epartm ent o f the In terio r/' describes the labor relations system administered by that D epartm ent.

713been organized into exclusive bargaining units, and agreements have

been negotiated covering 89 percent of those organized.” 124 Cong. Rec. 25,721 (1978).

A substantial number of state cases have declared that absent statutory authorization, governmental bodies have no power to enter intobinding agreements with an exclusive bargaining agent of public employees. See, e.g.. International Union o f Operating Engineers, Local Union No. 321 (AFL-CIO) v. Water Works Bd., 163 So.2d 619, 622 (Ala. 1964); State Bd. of Regents v. United Packing House Food & Allied Workers, Local No. 1258, 175 N.W.2d 110, 113 (Iowa 1970); Board of

. Trustees v. Public Employees Council No. 51, AFL-CIO, 571 S.W.2d 616, 621 (Ky. 1978); Minneapolis Federation of Teachers Local 59, AFL-CIO

v. Obermeyer, 147 N.W.2d 358, 366 (Minn. 1966); City of Springfield v. Clouse, 206 S.W.2d 539, 542-47 (Mo. 1947). These courts generally have based their holdings on the principle that public employers derive their power from the legislature and they cannot abdicate or bargainaway the power thus delegated to them. From this, these courts concluded that public employers must have specific statutory authority to bargain collectively. However, these cases can be distinguished from the proposed FLRA system. Most of these state courts do recognize the right of public employees to organize and to elect agents to meet with their employers. They recognize that the employers have the option, although not the duty, to meet with representatives of employees. For the reasons stated above, the courts refused, however, to sanction either recognition of exclusive bargaining agents or binding arbitration agreements. But in none ofthese cases had the state legislature established a comprehensive laborrelations system for its employees. In none had the state legislature declared that collective bargaining in the civil service was in the public

interest. On the other hand, some other state courts have approved collectivebargaining involving public employees absent specific statutory authorization. In Chicago Division o f the Illinois Ed. Assoc, v. Board o f Education, 222 N.E.2d 243, 251 (111. App. 1966), the court concluded that the board of education did not need specific legislative authority to enter into a collective bargaining agreement with a sole bargaining agent selected by its teachers and that such an agreement was not against public policy. Apparently the court accepted the board’s arguments that the existing general legislation authorizing the board to employ theteachers was sufficient and that collective bargaining does not necessarily (and would not in that particular case) involve an illegal delegation of power to a bargaining agent or other third party. See also Local 266, International Bro. o f Electrical Workers v. Salt River Project Agric. Improvement and Power Dist., 275 P.2d 393, 397 (Ariz. 1954).

714The FLRA clearly has the authority to employ a staff to carry out its responsibilities. 5 U.S.C. § 7105(d). The Federal Service Impasses Panel also is given authority to appoint such individuals as the Panel finds necessary for the proper performance of its duties. 5 U.S.C. § 7119(c)(4). In addition, the FLRA is given broad authority to “takesuch other actions as are necessary and appropriate to effectively administer the provisions” of Title VII. 5 U.S.C. § 7105(a)(2)(I). Given the broad authority of the FLRA and its component agencies, and the clear policy established by Congress in § 7101, we conclude that the FLRA may establish a labor relations system for its employees. Such a system must, of course, comply with Title VII and other relevant laws and executive orders. The FLRA should be particularly mindful of the necessity to avoid real or apparent conflicts of interest. See p. 8, supra.

II.

As stated earlier, we concur in your view that such a labor relations system may not provide for binding arbitration by an outside third party. Whatever system may be established, final decisions legally must rest with the public employer. A federal official may not delegate to a private party decisionmaking authority which has been vested in him or her by Congress. See generally 1 K. Davis, Administrative Law Treatise § 3.12 (2d ed. 1978 & Supp. 1980). Absent a binding arbitration clause, a collective bargaining system need not shift the final decisionmakingauthority from the public employer. The FLRA, for example, reasonably could refuse to agree to terms of a bargaining agreement which it felt was not in the public interest. The government body would not be compelled to agree with the union representative, or otherwise to relinquish its decisionmaking authority. In the absence of federal authority on this question, state cases again
are instructive. In Board of Education v. Rockford Education Assoc., 280 N.E.2d 286, 287 (111. App. 1972), the court held that the board could not, through a collective bargaining agreement or otherwise, delegate to another party those matters of discretion that are vested in the board by statute, such as the matters involving the appointment of teachers and the fixing of salaries. The court explained that although the board did not need specific legislative authority to enter into a collective bargaining agreement,^ the ultimate determination of “qualification” for a given job could not be delegated by the board to any outside agency, including the American Arbitration Association. Id. at 288. In Gary

Teachers Union Local No. 4 v. School City of Gary, 284 N.E.2d 108, 114 (C.A. Ind. 1972), the court held, with one judge dissenting, that the school could enter into a binding arbitration agreement. This decisionwas based, however, on the conclusion that the Indiana Uniform Arbitration Act is broad enough to include public employment.

715Sections 13 and 17 of Executive Order No. 11,491 did allow binding

arbitration in the absence of specific legislative authorization therefor. Such arbitration was limited, however, to operation within the system established by the order. Section 17 provided that arbitration could be used by the parties only when authorized or directed by the Impasses Panel. The question whether a matter was subject to arbitration under an existing agreement could be submitted to the Assistant Secretary of Labor for decision. Executive Order No. 11,491, § 13(d). If arbitration did occur, either party could file exceptions to the arbitrator’s award
with the Federal Labor Relations Council. Id. at § 13(b). Under this system, arbitral decisions were not truly “binding” in that ultimate authority to resolve appeals was vested in an executive body. The system established by Title VII also places ultimate responsibility on an executive body—the FLRA. 5 U.S.C. § 7122(a). There is no executive body, however, to which appeals from binding arbitral decisions in FLRA disputes could be addressed. If the FLRA believes that advisory arbitration would promote the efficient and effective conduct of its affairs, such a clause legally is permissible. As early as 1962, advisory arbitration was authorized in federal employment. See Executive Order No. 10,988, § 8(b) (1962) (revoked by Executive Order No. 11,491).

L e o n U l m a n Deputy Assistant Attorney General Office of Legal Counsel

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