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Court Affirms Agencies Don't Have to Negotiate Over Performance Appraisals

Management can shift the number of appraisal levels without bargaining with unions, court says.

A top federal court has affirmed that federal agencies do not need to negotiate with the unions that represent their workforces over changes to performance evaluations, ending a fight that has been ongoing for several years. 

Customs and Border Protection management was well within its rights to unilaterally overhaul the pass-fail appraisal system that it had used for decades, the U.S. Court of Appeals for the D.C. Circuit said in a ruling on Tuesday. The court rejected a petition for review brought by the National Treasury Employees Union, which had previously lost its case in front of the Federal Labor Relations Authority. NTEU first raised objections to CBP's changes in 2016. 

Under federal law, agencies are able to bypass their requirement to bargain with labor groups in order to “direct employees” and “assign work.” FLRA ruled, and the appeals court affirmed, that adjustments to performance evaluations fall under those two categories. The three-judge panel—with two members appointed by Democratic presidents and one appointed by President Trump—said FLRA’s decision was “eminently reasonable” as performance metrics enable agencies to communicate job requirements and collect information. Evaluating and setting standards for performance are “indisputable incidents of the rights to direct employees and assign work,” the judges said. 

“Management’s appraisal system—if understood by employees—can help to clarify or reinforce its directions and assignments,” Senior Circuit Judge Harry Edwards wrote on behalf of the panel. “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.” 

That includes, he added, the number of rating levels included in the system. 

“We are disappointed that the [court] ruled that Customs and Border Protection does not have to negotiate major changes to its employee appraisal system,” said Tony Reardon, NTEU’s president. “For decades, NTEU and CBP—and the Customs Service before that—successfully used a pass-fail appraisal system. CBP’s proposal to replace that appraisal system should have been negotiated through the collective bargaining process.”

NTEU argued that creating a rating above “successful” is a form of rewarding superior work, similar to incentive pay. Agency management must negotiate over rewarding such work, the union said. The court disagreed. 

“The union is mistaken in suggesting that a superior rating is simply another ‘reward’ for superior performance,” Edwards said. “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.”

Without the ability to measure and evaluate its employees, the panel said, an agency would be “limited in making effective decisions about how (and to whom) to assign work or how to supervise and guide its employees.” 

Reardon said that despite the setback, NTEU will continue to fight any effort to “narrow the scope” of what is negotiable during collective bargaining.