A Dispute That Could Only Arise Between Public Employees and a Governmental Agency

Federal agencies and federal employee unions have their own agendas with the result being disputes going on for years that seem to defy logic. The appeals court calls this case the “sort of dispute that could only arise between public employees and a governmental agency.”

An appeals court has refused to overturn a Federal Labor Relations Authority ruling that requires SEC to “undo” its new pay system. (Securities and Exchange Commission v. Federal Labor Relations Authority, C.A.D.C. No. 08-1256, 6/12/09)

The appeals court called it the “sort of dispute that could only arise between public employees and a governmental agency.”  

We cannot improve on the court opinion’s summary of this strange case:

“The Securities and Exchange Commission…was eager to pay its employees more money. The National Treasury Employees Union…complains the SEC implemented the raises too quickly. The Federal Labor Relations Authority…agrees with the Union and has ordered the SEC to provide back pay to atone for the affront. Counterintuitive though it may be, we agree the FLRA has properly resolved this odd controversy so we deny the petition for review and grant the Authority’s cross-application for enforcement.” (Opinion p. 2)

Let’s back up to explain how this came about.

Apparently the SEC sought and in January 2002 won special legislative authority to take it out from under the General Schedule pay requirements. The agency’s motivation was to be able to pay more so that it could improve its ability to attract and retain professional employees who often jumped ship to other higher paying agencies that had escaped the clutches of the General Schedule system. (The court pointed to Office of Thrift Supervision, FDIC and  Comptroller of the Currency as examples.) (pp. 2-3)

When the long anticipated special pay authority arrived, both management and the union were eager to get to it so pay rates could be raised. They sat down to bargain but reached an impasse within a few weeks. The NTEU took its case to the Federal Services Impasse Panel. Meanwhile, the agency’s promised May 19, 2002 start date rolled around and SEC, believing that it had to go ahead and act to keep its workforce, unilaterally implemented the new pay plan and meted out raises to its employees. (p. 3)

Six months later FSIP issued its decision on the bargaining impasse and ordered implementation of the agency’s pay plan with “slight” modifications. (p. 4)

The union filed unfair labor practice charges claiming the SEC violated the statute by unilaterally implementing its new pay system before the bargaining process—up to and including the FSIP decision—was completed. (p. 4)

By now most of you have guessed the rest—the FLRA General Counsel filed a ULP complaint, a full-blown hearing was held, and the law judge found a ULP had been committed. The FLRA ordered that retroactive within-grade increases be paid under the old GS system for the 6 months that transpired between the agency’s unilateral implementation and the FSIP order and that it retroactively recalculate the pay upward—taking into account the amount of the within grade increases–for those employees under the new agency pay system. (pp. 4-5)

The agency sought review of the FLRA order in court.

The appeals court has now upheld the FLRA. The upshot is that the agency must “re-do” part of its new pay system implementation some 7 years later. The court declined to get into the SEC’s argument that some employees may experience a windfall as a result of the FLRA ruling: “[A]ny factual questions—such as whether any of the employees who were due a within-grade increase….would actually have received higher pay under the new system had the SEC not implemented the change before the bargaining process was complete, and by how much—can be resolved in compliance proceedings.” (p. 10)

Interestingly, had the agency stayed the course and held off implementation until the FSIP issued its ruling SEC employees would presumably have missed out on 6 months of higher pay while they waited. Apparently that delay was not acceptable to the agency. We can only assume the union had its own priorities.

08-1256_SEC v. FLRA

About the Author

Susan McGuire Smith spent most of her federal legal career with NASA, serving as Chief Counsel at Marshall Space Flight Center for 14 years. Her expertise is in government contracts, ethics, and personnel law.