OPM, union settle special rates pay case for $173 million

After more than 19 years of legal wrangling and tense negotiations with the National Treasury Employees Union, the federal government has agreed to pay more than $173 million to settle a back pay case that affects at least 212,000 current and former "special rate" employees. "Special rate" federal employees are paid at higher levels than other workers because they work in occupations that are difficult to fill because of job duties or location. Though affected federal employees may not receive any money until late this year, the settlement filed Tuesday in the U.S. District Court for the District of Columbia may finally lay to rest a case that NTEU has pursued relentlessly since 1983. "NTEU and every staff member who touched this has reason to celebrate along with the 212,000 class members," said NTEU President Colleen Kelley. NTEU v. James originated in 1982, after the Office of Personnel Management put in place a regulation exempting special rate employees from annual pay adjustments to the General Schedule. As a result, special rate employees were denied pay increases from 1982 to 1988. NTEU challenged the OPM regulation in a 1983 class action lawsuit. The U.S. District Court for the District of Columbia ruled that the regulation was illegal in 1987. From 1987 to 1998, NTEU and OPM disagreed over what standard to use in awarding back pay to affected employees. In 1998, the U.S. Court of Appeals for the Federal Circuit ruled that employees should be compensated as though OPM's 1982 regulation never existed. Since 1998, the details of a settlement have been in negotiation. "We said all along we would stay with this case until we reached a successful conclusion," said Kelley, who likened the long and arduous settlement process to piecing together a puzzle. NTEU and the Justice Department will now transfer the case to the Court of Federal Claims, which must grant preliminary approval of the proposed settlement. Following that approval, a private sector administrator will notify class members of the settlement and allow them a chance to comment on the agreement. Those comments will then be heard in a fairness hearing, after which the court will grant final approval of the settlement. Once final approval is granted, class members will get letters telling them how much they are owed and how to claim the money. The $173.5 million settlement includes three components: back pay, an additional 3 percent to account for unpaid premium pay, and interest on those amounts. The settlement affects employees in each federal agency, with higher concentrations of affected employees in New York, Washington, San Francisco, Boston and Los Angeles, NTEU attorney Gregory O'Duden said. An estimated 40,000 members of the class action settlement are retired, he said. While all special rate workers employed from 1982 to 1988 were included in the suit, employees who were properly compensated during that period will not benefit from the settlement, according to O'Duden. At least 43,000 clerical workers in the Washington area will be compensated under the settlement, along with various engineers, medical workers and security employees across the country. Though settlement amounts are still undetermined, O'Duden estimated that clerical workers could receive from $1,000 to $3,000, while some engineers could get as much as $30,000. The settlement includes a provision allowing survivors of deceased employees to make a claim. Employees who think they are entitled to back pay but were not member of the class action lawsuit are also able to make a claim. "This was a difficult negotiation, but it's over now," O'Duden said. What we're doing now is looking ahead." For more information about the special rates back pay case, visit www.SpecialRatesSettlement.com or call NTEU's special hot line at 800-750-3406.