National Treasury Employees Union v. Federal Labor Relations Authority

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued September 23, 2019 Decided December 3, 2019
No. 18-1239
NATIONAL TREASURY E MPLOYEES UNION ,
P ETITIONER
v.
FEDERAL LABOR R ELATIONS AUTHORITY ,
R ESPONDENT
UNITED S TATES D EPARTMENT OF HOMELAND S ECURITY,
C USTOMS AND B ORDER P ROTECTION,
INTERVENOR
On Petition for Review of a Decision and
Order of the Federal Labor Relations Authority
Allison C. Giles argued the cause for petitioner. With her
on the briefs were Gregory O’Duden and Julie M. Wilson.
Noah B. Peters, Solicitor, Federal Labor Relations
Authority, argued the cause for respondent. On the brief were
Rebecca J. Osborne, Acting Deputy Solicitor, and Tabitha G.
Macko, Attorney.
Melissa N. Patterson, Attorney, U.S. Department of
Justice, argued the cause for intervenor. On the brief were
H. Thomas Byron III and Tyce R. Walters, Attorneys.

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Before: M ILLETT and R AO, Circuit Judges, and EDWARDS ,
Senior Circuit Judge.
Opinion for the Court filed by Senior Circuit Judge
EDWARDS .
EDWARDS , Senior Circuit Judge: The Federal Service
Labor-Management Relations Statute (the “Statute”) generally
governs collective bargaining between certain federal agencies
and labor organizations representing agency employees. See 5
U.S.C. §§ 7101-7135 (2018). In enacting the Statute, Congress
found that it was in the public interest to protect the right of
employees in the federal government “to organize, bargain
collectively, and participate through labor organizations of
their own choosing in decisions which affect them[.]” Id.
§ 7101(a)(1). The Statute provides that, inter alia, covered
employees have a right “to engage in collective bargaining with
respect to conditions of employment through representatives
chosen by employees[.]” Id. § 7102(2). Agency officials are
thus required to “meet and negotiate in good faith” with their
employees’ exclusive representative “for the purposes of
arriving at a collective bargaining agreement.” Id.
§ 7114(a)(4). The required scope of bargaining under the
Statute is limited, however.
Agencies and employees’ bargaining representatives have
a “duty to bargain in good faith” with respect to conditions of
employment that are subject to collective bargaining under the
Statute. Id. § 7117(a)(1). Agency officials have no duty to
bargain, however, over certain management rights reserved to
agencies by the Statute. See id. § 7106(a). The dispute in this
case involves two such management rights – the right to “direct
employees” and the right to “assign work.” Id.
§ 7106(a)(2)(A)-(B).

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Petitioner National Treasury Employees Union (“Union”)
is the bargaining representative for persons employed by the
U.S. Department of Homeland Security, Customs and Border
Protection (“Agency”). In negotiations over a new collective
bargaining agreement, the Union proposed that, in appraising
employee work performance, the Agency not use any
“performance appraisal rating levels above the Successful
rating level for purposes of the annual appraisal process.”
Agency representatives declined to negotiate over the matter.
The Union then filed a negotiability petition with the Federal
Labor Relations Authority (“Authority” or “FLRA”),
challenging the Agency’s refusal to bargain. The Authority
denied the Union’s petition because, in its view, the number of
rating levels for both individual elements of the job and overall
performance are essential aspects of an agency’s rights to direct
employees and assign work. Nat’l Treasury Emps. Union, 70
F.L.R.A. 701 (2018).
The Union now petitions this court to reverse the
Authority’s decision and find that the disputed proposal falls
within the Agency’s duty to bargain. Because we find that the
FLRA’s decision is based on a permissible and reasonable
interpretation of the Statute and is consistent with well-
established precedent, we deny the petition for review.
I. B ACKGROUND
A. Legal Framework
As noted above, the Statute governs collective bargaining
between certain federal agencies and their employees’
exclusive bargaining representatives. See 5 U.S.C. §§ 7101-
7135. Among other things, the Statute requires agencies to
bargain in good faith over various conditions of employment.
See id. § 7114(a)(4), (b) (imposing and defining the duty to

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“meet and negotiate in good faith”); id. § 7117 (defining
further the “duty to bargain in good faith”); id. § 7116(a)(5)
(making an agency’s failure to do so an “unfair labor
practice”). But the duty to bargain does not extend to all
conditions of employment.
As explained at the outset of this opinion, the Statute
exempts certain “management rights” from the duty to bargain.
See id. § 7106(a). Section 7106(a)(2) states, in relevant part,
that “nothing in this chapter shall affect the authority of any
management official of any agency . . . in accordance with
applicable laws—”
(A) to hire, assign, direct, layoff, and retain
employees in the agency, or to suspend, remove,
reduce in grade or pay, or take other disciplinary
action against such employees;
(B) to assign work, to make determinations with
respect to contracting out, and to determine the
personnel by which agency operations shall be
conducted . . . .
Id. § 7106(a)(2)(A)-(B). In short, an agency has no obligation
to bargain over contract proposals that would interfere with the
two management rights at issue in this case – the rights to
“direct . . . employees” and “assign work.”
Under the Statute, the Federal Labor Relations Authority,
id. § 7104, is authorized to determine, inter alia, the
negotiability of contested collective bargaining proposals, id.
§ 7105(a)(2)(E). If an agency alleges that a proposal is
nonnegotiable – or if an agency fails to respond to a request to
negotiate within ten days, 5 C.F.R. § 2424.21(b) (2019) – the
employees’ exclusive representative may appeal to the
Authority for an expedited negotiability determination. See 5

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U.S.C. § 7117(c)(1), (6). A party aggrieved by a negotiability
decision issued by the FLRA may institute an action for judicial
review in the court of appeals in the circuit in which the party
resides or transacts business or in the United States Court of
Appeals for the District of Columbia. Id. § 7123(a).
B. Procedural History
The dispute in this case arose during the course of
collective bargaining between the Union and the Agency. On
April 10, 2016, the Union contacted the Agency with proposed
changes to the section of the parties’ contract related to the
Agency’s performance appraisal system. Joint Appendix
(“J.A.”) 7. Specifically, the Union put forward the following
two proposals:
Proposal 1
There will be no performance appraisal rating levels
above the Successful rating level for purposes of the
annual appraisal process. Nothing in this proposal
prevents the employer from establishing performance
levels between the Successful and Unacceptable
rating levels. In the event that the Agency decides to
establish such a performance level(s) it will notify and
provide [the Union] the opportunity to bargain at the
national level in accordance with law and the
procedures contained in Article 26: Bargaining.
Proposal 2
The performance rating levels set forth above do not
bar or otherwise inhibit [the Agency’s] right to define
and set the number of critical elements, core
competencies or the number of performance goals that
will be included in each performance plan. Similarly,
the performance rating levels set forth above do not

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bar or otherwise inhibit [the Agency’s] right to
determine the performance standards that must be met
for each performance goal and core competency in
order for an employee to be appraised at the two
performance rating levels set forth above. Finally, the
limitation on the number of performance levels may
not be interpreted to bar [the Agency] from assigning
work or directing its employees.
Id. The Union explained that these proposals were “designed
to maintain the parties’ 20[-]year practice of evaluating
employee performance using a Pass-Fail appraisal approach.”
Id. The Union asked the Agency to negotiate over the substance
of the proposals or to provide a “written allegation of non-
negotiability[.]” Id. On May 3, 2016, the Union, having
received no response from the Agency, petitioned the FLRA
for a negotiability determination. Id. at 1-6.
Before the Authority, the Agency challenged both the
timeliness of the Union’s petition and the merits of its position.
On the merits, the Agency argued that the Union’s proposals
were nonnegotiable because they would interfere with the
Agency’s rights to direct employees and assign work, citing the
Authority’s precedents stating that these rights include the right
to determine the number of rating levels in a performance
appraisal system. In response, the Union argued that its petition
was timely. The Union also argued that the Authority should
reconsider or distinguish its precedents, at least with respect to
rating levels above “successful.” In advancing its position, the
Union relied in part on the reasoning in National Treasury
Employees Union v. FLRA (NTEU 1986), 793 F.2d 371 (D.C.
Cir. 1986). The court in that case held that the agency had an
obligation to bargain over a proposal seeking to fix the rate of
incentive pay to be awarded to employees for superior
performance. The Union argued that the decision in NTEU

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1986 implies that agencies must also negotiate over the number
of employee appraisal rating categories for superior
performance. Finally, the Union argued that the Authority
should find, in the alternative, that its proposals were
negotiable as an appropriate arrangement for addressing the
adverse effects of the Agency’s management rights.
The Authority dismissed the Union’s negotiability
petition. See Nat’l Treasury Emps. Union, 70 F.L.R.A. 701
(2018). The Authority found the petition timely, but held that
Proposal 1 was outside the Agency’s duty to bargain because it
would interfere with the Agency’s rights to direct employees
and assign work. The Authority first interpreted Proposal 1 as
an effort to restrict the Agency’s ability to determine the
number of overall employee ratings that the Agency could use
in its performance appraisal system. It then applied its
longstanding view that “[t]he number of [rating] levels for both
individual job elements and overall performance are essential
aspects of the rights to assign work and direct employees.” Id.
at 703 (alterations in original) (quoting Am. Fed’n of State, Cty.
& Mun. Emps., Council 26 (AFSCME, Council 26), 13
F.L.R.A. 578, 580 (1984)). The Authority reasoned that
management’s control over the number of rating levels affects
its ability to “establish and communicate job requirements” and
“the range of judgments which [it] can make regarding
performance[.]” Id. (quoting AFSCME, Council 26, 13
F.L.R.A. at 580). The Authority declined to reconsider its
precedents and rejected the Union’s argument that our decision
in NTEU 1986 demands otherwise. Finally, the Authority
found that Proposal 1 was not an appropriate arrangement,
denied the Union’s request to sever part of Proposal 1, and
dismissed its petition as to Proposal 2 because it was
“inextricably intertwined” with Proposal 1.

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The Union filed a timely petition for review with this
court. The Union now challenges only the Authority’s holding
that Proposal 1 is outside the Agency’s duty to bargain. The
Authority’s decision in this case rests solely on its
interpretation of the rights to direct employees and assign work
under 5 U.S.C. § 7106(a)(2)(A)-(B). Therefore, we will focus
only on these statutory provisions in reviewing the FLRA’s
decision on negotiability.
II. ANALYSIS
A. Standard of Review
“It is well established that the court’s role in reviewing the
FLRA’s negotiability determinations is narrow.” Am. Fed’n of
Gov’t Emps., Local 2761 v. FLRA, 866 F.2d 1443, 1446 (D.C.
Cir. 1989). We will set aside the Authority’s decision only if it
is “arbitrary, capricious, an abuse of discretion, or otherwise
not in accordance with law.” 5 U.S.C. § 706(2)(A) (2018)
(incorporated by reference into 5 U.S.C. § 7123(c)). When the
Authority interprets the statute it administers, as it did here, the
Chevron framework applies. Nat’l Treasury Emps. Union v.
FLRA, 754 F.3d 1031, 1041 (D.C. Cir. 2014) (citing Chevron
U.S.A. Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837, 842-
43 (1984)). “We therefore . . . defer to the Authority’s
reasonable interpretations of the Statute and its resulting
negotiability determinations.” Ass’n of Civilian Technicians v.
FLRA, 353 F.3d 46, 50 (D.C. Cir. 2004).
B. The Authority’s Negotiability Determination
The Authority’s decision in this case is based on its
determination that an agency’s rights to “direct employees” and
“assign work” include the right to determine “[t]he number of
[rating] levels for both individual job elements and overall

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performance[.]” Nat’l Treasury Emps. Union, 70 F.L.R.A. 701,
703 (2018) (first and second alterations in original) (quoting
AFSCME, Council 26, 13 F.L.R.A. 578, 580 (1984)). In
explaining its decision, the FLRA said:
Determining a performance evaluation system’s
rating levels “directly affects the degree of precision
with which management can establish and
communicate job requirements (performance
standards), the range of judgments which
management can make regarding performance in the
context of performance appraisals, and the range of
rewards and sanctions which management can apply
to such performance.”
Id. (quoting AFSCME, Council 26, 13 F.L.R.A. at 580-81). It
is clear that the Authority’s position in this case emanates from
its decisions concerning the negotiability of proposals that
interfere with an agency’s ability to set performance standards
or determine whether (and to what degree) those standards are
being met. See, e.g., Nat’l Ass’n of Gov’t Emps. Local R1-144,
38 F.L.R.A. 456, 473 (1990) (emphasizing the connection
between the rights to direct and assign and the ability to
establish job requirements for “various levels of
performance”); Am. Fed’n of Gov’t Employees, Council of GSA
Locals Council 236, 55 F.L.R.A. 449, 452 (1999) (connecting
the “number and designation of rating levels” to “how an
agency evaluates the manner in which its employees perform
the work to which they have been assigned”).
The Authority has defined the right to “direct employees”
as the right to “supervise and guide them in the performance of
their duties[.]” Nat’l Treasury Emps. Union (Bureau of Public
Debt), 3 F.L.R.A. 768, 775 (1980), aff’d sub nom. Nat’l
Treasury Emps. Union v. FLRA (NTEU 1982), 691 F.2d 553

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(D.C. Cir. 1982). The right to “assign work,” on the other hand,
includes the right to decide what responsibilities to assign, to
whom to assign them, and on what schedule. See id. In applying
5 U.S.C. § 7106(a)(2)(A)-(B), at least in the negotiability
decisions that bear most directly on this case, the Authority
often fails to distinguish between the right to direct employees
and the right to assign work. This may be because the FLRA
sees little daylight between them. Or it may be because
directing employees often involves the assignment of work,
making it difficult to differentiate the rights in practice. See
Int’l Plate Printers Union of N. Am., Local 2, 25 F.L.R.A. 113,
119 (1987) (noting that “[t]he right to direct employees is . . .
reflected in the supervisory function of assigning work to
employees”). This court has also treated the rights to direct
employees and assign work as generally “co-extensive.” See
Overseas Educ. Ass’n v. FLRA, 827 F.2d 814, 819 (D.C. Cir.
1987) (“In general, the right to assign work and the right to
direct employees, if not actually interchangeable, will be co-
extensive.”); NTEU 1986, 793 F.2d 371, 373 n.1 (D.C. Cir.
1986).
Although the rights to direct employees and assign work
may overlap in many instances, the rights are not coterminous.
In the Authority’s view, however, these statutory terms, taken
together, generally give agencies the nonnegotiable right to
supervise their employees and determine the quality, quantity,
and timeliness of their work. See Bureau of Public Debt, 3
F.L.R.A. 768, 775-76 (1980), aff’d sub nom. NTEU 1982, 691
F.2d 553 (D.C. Cir. 1982) (discussing both together); Nat’l
Treasury Emps. Union, 39 F.L.R.A. 27, 56 (1991) (same). We
have summarized the point by saying that the rights to direct
employees and assign work amount to the “nonnegotiable right
to determine what work will be done, and by whom and when.”
691 F.2d at 562.

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Over the years, FLRA precedent has established that the
rights to direct employees and assign work include at least two
critical features that are relevant in this case. First, the
Authority has held that the Statute affords agencies a
nonnegotiable right to establish performance standards. Bureau
of Public Debt, 3 F.L.R.A. 768 (1980), aff’d sub nom. NTEU
1982, 691 F.2d 553 (D.C. Cir. 1982). On this point, the FLRA
has consistently found that performance standards allow
agencies to effectively exercise their rights to supervise
employees and determine what they must do. See NTEU 1982,
691 F.2d at 562-63; see also id. at 555-56 (explaining why
agencies must formulate “performance standards”). In the
Authority’s view, these standards play an important forward-
looking role that make them central to assigning and directing.
That is, they enable management to effectively communicate
to employees what a job requires and how it should be done –
to “mark out beforehand the amount, quality and timeliness of
the work employees are to perform.” Id. at 562.
The Authority has adopted this view about all performance
standards, not just “minimum” performance standards. See
Nat’l Treasury Emps. Union, 13 F.L.R.A. 325, 327-28 (1983)
(holding that “[a]n agency is not limited to merely prescribing
the minimum level of performance which will be required from
an employee for job retention”). We declined to address this
issue in NTEU 1986, 793 F.2d 371, 375 n.4 (D.C. Cir. 1986).
Two years later, however, we stated without qualification that
“the content of performance standards is nonnegotiable.”
Overseas Educ. Ass’n v. FLRA, 872 F.2d 1032, 1034 (D.C. Cir.
1988) (per curiam) (explaining that “[b]argaining over the
content of performance standards would interfere with
management’s formulation of the quality, quantity, and
timeliness criteria necessary to assign work and direct
employees”); see also Patent Office Prof’l Ass’n v. FLRA, 47

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F.3d 1217, 1220 (D.C. Cir. 1995) (citing NTEU 1982 for the
rule that agencies have “the right to set substantive standards”).
Second, the FLRA has held that an agency’s rights to
direct employees and assign work include the right to
determine whether (and to what degree) its employees are
meeting those standards. Without the right to “review and
evaluate employee performance of assigned duties,” the
Authority has said, the rights to direct employees and assign
work would be “virtually meaningless.” Nat’l Treasury Emps.
Union, 6 F.L.R.A. 522, 531 (1981). As a result, the Authority
has held that “[t]he evaluation of employee performance is an
exercise of management’s rights to direct employees . . . and to
assign work[.]” Am. Fed’n of Gov’t Emps., Local 1760, 28
F.L.R.A. 160, 169 (1987). In the Authority’s view, this “right
to evaluate employee performance extends to the determination
of the rating to be given[.]” Id.
The FLRA’s conclusions about the connection between
the rights to direct and assign and the right to evaluate are
eminently reasonable. For one thing, restrictions on an
agency’s ability to evaluate its employees are likely to restrict
the performance standards that management can set. See Nat’l
Treasury Emps. Union, 47 F.L.R.A. 705, 710 (1993)
(restricting an employer’s ability to enforce standards through
employee evaluations can “effectively alter the content of
th[ose] standards”); Overseas Educ. Ass’n v. FLRA, 872 F.2d
1032, 1034 (D.C. Cir. 1988) (per curiam) (restricting the use of
certain evaluative criteria “would prevent the agency from
establishing any performance standard which relied on such
[criteria]”). For another, restrictions on an agency’s ability to
evaluate its employees can interfere with its deliberative
process – interfere, that is, with an agency’s ability to collect
information, deliberate over its import, and put it to use via
updated directions and assignments. NLRB Union, 42 F.L.R.A.

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1305, 1318-19 (1991) (noting that “proposals that limit
management’s deliberations concerning employee evaluations
directly interfere with management’s right to direct employees
and assign work”), petition for review granted sub nom. NLRB
v. FLRA, 2 F.3d 1190 (D.C. Cir. 1993) (denying enforcement
of the Authority’s order on separate grounds).
With these precedents in mind, we turn back to the
Authority’s conclusion that “[t]he number of performance
levels for both individual job elements and overall performance
are essential aspects of the rights to assign work and direct
employees.” AFSCME, Council 26, 13 F.L.R.A. 578, 580
(1984). To support this view, the Authority has stressed the
connections between an agency’s ability to decide how many
rating levels to use and “the degree of precision with which [it]
can establish and communicate job requirements (performance
standards)” and “the range of judgments which [it] can make
regarding performance[.]” Id. at 580-81. In other words, the
Authority has sensibly connected an agency’s ability to control
the number of rating levels it uses to the effective exercise of
its rights to set performance standards and evaluate employee
performance – two indisputable incidents of the rights to direct
employees and assign work. See, e.g., Am. Fed’n of Gov’t
Employees, Council of GSA Locals Council 236, 55 F.L.R.A.
449, 452 (1999) (connecting the “number and designation of
rating levels” to “how an agency evaluates the manner in which
its employees perform the work to which they have been
assigned,” and connecting both evaluations and work
assignments to the rights to direct employees and assign work).
What the Authority’s decisions recognize is that the rights
to direct employees and assign work include dynamic aspects.
In general, forward-looking decisions about work assignments
and directions are based on backward-looking assessments. At
the same time, management’s appraisal system – if understood

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by employees – can help to clarify or reinforce its directions
and assignments. To effectively exercise the rights to direct
employees and assign work, then, Congress afforded agencies
latitude under the Statute to evaluate their employees as they
see fit consistent with the agencies’ lawful objectives. The
Authority has determined that this latitude involves the ability
to decide how many rating levels to include in a performance
appraisal system. We hold that this determination is based on
permissible and reasonable interpretations of § 7106(a)(2)(A)-
(B).
The Union, which does not dispute that FLRA decisions
are stacked against it, contends that the Authority’s
interpretation of the Statute is inconsistent with this court’s
decision in NTEU 1986, 793 F.2d 371, at least insofar as the
FLRA means to say that proposals concerning “superior”
ratings are nonnegotiable. In NTEU 1986, we reversed an
FLRA decision holding that the rights to direct employees and
assign work include the right to determine the rate of incentive
pay for superior work. The court reasoned as follows:
The Authority’s reasoning—that level of incentive
pay “directly relate[s] to the potential success of the
incentive in motivating the performance of particular
job tasks,” and thus “to some extent determine[s] the
priorities for accomplishing the agency’s work,”
which is the very objective of the reserved
management right to assign work—is an example of a
familiar defect of statutory construction that might be
called substituting the end for the means. It may well
be that the rights to assign work and to reward
superior performance of assigned work are both
means to the objective of enabling the agency to
determine its work priorities, just as the carrot and the
stick are both means of getting a donkey to move. But

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the similarity of purpose does not establish that when
Congress says carrot it means stick as well. It is for
Congress, and not for the Authority or the courts, to
determine what means it is willing to employ to
achieve particular ends, and it usurps that prerogative
to say that if Congress has rendered work assignment
nonbargainable, then also nonbargainable is any
activity that has the same effect as work assignment.
If the latter principle were applied consistently, it is
difficult to imagine any agency prescriptions
regarding terms and conditions of work for particular
classes of employees that would remain
bargainable . . . .
793 F.2d at 374-75 (alterations in original) (quoting Nat’l
Treasury Emps. Union, 14 F.L.R.A. 463, 470 (1984), vacated
sub nom. NTEU 1986, 793 F.2d 371). The Union submits that
the Authority’s reasoning in this case suffers from this same
defect. In the Union’s view, “giving an employee a rating
above successful,” like awarding an employee incentive pay, is
“simply another way of rewarding . . . superior work.” Br. for
Petitioner at 17. And there is no nonnegotiable management
right to reward superior work, the Union argues, even if such
rewards help the Agency get its work done.
We disagree. It is true, of course, that both incentive pay
and superior ratings may indicate that an employee’s work is
above par. But the Union is mistaken in suggesting that a
superior rating is simply another “reward” for superior
performance. Rather, a superior rating is an evaluative
judgment that enables management to more effectively
exercise its nonnegotiable rights to (re)direct employees and
(re)assign work. The fact that this evaluative judgment might
also make an employee eligible for a negotiable reward is of no
consequence. In addition, performance ratings and incentive

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pay are not necessarily two sides of the same coin. There may
be situations in which an employee earns high incentive pay
but receives less-than-favorable performance assessments due
to work deficiencies having nothing to do with the incentive
pay calculus.
The Union’s claim that the Authority’s position in this case
rests on the rationale that we rejected in NTEU 1986 misses the
mark. The Authority’s decision in this case rests on a
permissible and reasonable interpretation of 5 U.S.C.
§ 7106(a)(2)(A)-(B), which, as explained above, reasonably
accepts the view that an agency’s ability to decide how many
rating levels to use is clearly tied to its rights to direct
employees and assign work. Without the right to “review and
evaluate employee performance of assigned duties,” the rights
to direct employees and assign work would be “virtually
meaningless.” Nat’l Treasury Emps. Union, 6 F.L.R.A. 522,
531 (1981).
In sum, we have no grounds to reject the Authority’s
position that the number of rating levels in an employee
appraisal system is inextricably tied to both the right to assign
work and the right to direct employees. Both rights depend, for
their effective exercise, on an agency’s ability to measure and
evaluate its employees against pre-established performance
standards. Without this ability, an agency will be limited in
making effective decisions about how (and to whom) to assign
work or how to supervise and guide its employees. Because
proposals restricting the number of performance ratings
interfere with an agency’s ability to measure and evaluate its
employees, then, they interfere with an agency’s nonnegotiable
rights to assign work and direct employees. The Authority’s
position rests on a permissible and reasonable construction of
the Statute and it is consistent with well-established precedent.
Therefore, we find no merit in the petition for review.

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III. CONCLUSION
For the reasons set forth above, we deny the petition for
review.

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