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Unions win broad victory over DHS labor relations system

Appeals court decision could open doors to bargaining over pay, union officials say.

An appeals court on Tuesday rendered a severe blow to the Homeland Security Department's attempt to curb collective bargaining rights for employees, unanimously upholding and even broadening a lower court decision to strike down large parts of the department's new labor relations system.

The unions that brought the lawsuit said the decision could mean they would now have the ability to bargain over pay -- something only a few federal agencies do -- if DHS continues to implement its new pay-for-performance system.

A three-judge panel in the U.S. Court of Appeals for the District of Columbia found, like the lower court, that DHS' proposed system would illegally curtail collective bargaining rights for employees by giving management the ability to cancel negotiated agreements after the fact.

But the panel, which includes two Republican-appointed judges, went even further than the lower court by ruling that DHS unlawfully limited the scope of employee bargaining.

"The regulations effectively eliminate all meaningful bargaining over fundamental working conditions," Judge Harry Edwards wrote in the opinion. "In no sense can such a limited scope of bargaining be viewed as consistent with the [Congress'] mandate that DHS 'ensure' collective bargaining rights for its employees."

Edwards' strongly worded decision called the labor relations system "utterly unreasonable" and said it "makes no sense on its own terms."

A group of five unions sued DHS last year when it published final regulations to implement a new labor relations system as part of a larger human resources overhaul authorized by Congress when it created the department. Last summer, District Court Judge Rosemary Collyer enjoined the labor system before it even began, and the department appealed.

Lawyers for the National Treasury Employees Union and the American Federation of Government Employees, two of the largest unions in the group that brought the case, said the appeals decision is likely the last word. The government could ask the full appeals court, the Supreme Court or both to reconsider, but the unanimous decision and its agreement with the lower court make the acceptance of such an appeal unlikely.

DHS officials are "discussing the impact of today's ruling and potential next steps with the Department of Justice and the Office of Personnel Management," a department spokesman said. He said DHS is pushing forward with training and logistics for the pay portion of the personnel overhaul.

Without a new labor relations system to accompany pay for performance, market-based pay, paybands and other personnel reforms included in DHS' larger package, the department actually may have to bargain over those reforms with labor groups, union lawyers said.

"To the extent they now have the discretion…to decide how people are paid or compensated, then in theory they are required to bargain with the unions over setting pay," said Elaine Kaplan, a lawyer for NTEU. "It's something we would want to take a close look at. It certainly opens up possibilities over the union's ability to negotiate over the new pay system."

The appeals judges also agreed with Collyer that DHS changed the role of the Federal Labor Relations Authority -- an independent agency that oversees federal management-labor disputes -- without having the authority to do so. DHS set up its own internal Homeland Security Labor Relations Board, with members appointed by the secretary, to handle the disputes, and relegated the FLRA to an appellate role.

The unions suffered one setback, although it may be temporary. Collyer had ruled that DHS' standard for the Merit Systems Protection Board -- a quasi-judicial independent federal agency -- to lessen penalties for employee misconduct was too tough. DHS' system would only allow the MSPB to do so if the penalty was "wholly without justification." The appeals judges, though, reversed Collyer's decision because the issue was not ripe for review, and said the unions should bring it to court again when a specific employee has a case.

The appeals decision may have legal implications for a similar case regarding the Defense Department's proposed labor relations reforms. The Pentagon lost its first round of that case in the district court, and the appeals court has yet to set a date for arguments.

"There's just no question that this decision will be the roadmap for that decision," AFGE lawyer Mark Roth said. "One appeals panel is bound by a previous appeals panel's decision. So in this case it would be highly unlikely, almost unprecedented, for the [National Security Personnel System] panel to issue a decision contrary to the DHS decision."

A spokeswoman for NSPS said the department is reviewing the DHS decision.

Casting drama over the already stirring situation, the FLRA on Tuesday morning began to count ballots in a race between NTEU and AFGE to represent 20,000 employees in the Customs and Border Protection unit of DHS. If NTEU loses, it will represent at most a few employees in the whole department.

NTEU President Colleen Kelley told reporters she is operating under the assumption that her union will win, and is sending a letter Tuesday to DHS Secretary Michael Chertoff asking for a meeting to discuss the decision. AFGE officials said this decision leaves them satisfied with status quo, and they have not requested such a meeting.