Navy Employees Lose Furlough Case on Appeal

Navy civilian employees who appealed their 2013 furloughs as a result of sequestration have lost their case.

The U.S. Court of Appeals for the Federal Circuit upheld a February 2015 Merit Systems Protection Board ruling that affirmed the Navy’s decision to furlough employees for six days in July and August 2013. Gregory Einboden, a civilian worker at the Naval Surface Warfare Center at Dahlgren in Virginia, claimed the agency had improperly furloughed him, in part because Dahlgren is a working capital fund, and thus exempt from the governmentwide automatic spending cuts that began in March 2013. MSPB consolidated the complaints from Einboden and other Dahlgren civilian employees into one case.

“The Board interpreted the statute’s requirement that the furlough ‘will promote the efficiency of the service’ as requiring that the decision be a reasonable management solution to the financial restrictions placed on the agency, and that the agency determine which employees to furlough in a fair and even manner,” the appeals court said in its Oct. 1 decision. “This interpretation is correct.”

Defense has several working capital funds, which are revolving funds financing operations that the department runs like a business, such as weapons production and depot maintenance. Sales revenue from customers sustains the revolving funds rather than direct congressional appropriations. About 180,000 civilians work in WCF units.

“While working capital funds were treated as being exempt from sequestration, sequestration was applied to agencies that would be paying working capital fund entities (like Dahlgren),” the appeals decision said. “When agencies ordering services from Dahlgren had their budgets sequestered, those agencies could and would prioritize their spending, and Dahlgren could have anticipated receiving less funding from those agencies and thus suffering a funding shortfall.”

Einboden also argued that the Navy should have been required to show what it did with the savings achieved through the furlough – an argument the appeals court rejected. “It is not our role to second guess agency decisions as to how to prioritize funding when faced with a budget shortfall,” the court said. 

In 2013, the Pentagon said that civilian employees at working capital fund units are subject to furloughs. Short-term unpaid leave for those Defense Department employees is “legal” and reduces personnel costs, said Defense Comptroller Robert Hale in a July 5, 2013 response to several members of Congress. A bipartisan group of 31 lawmakers had asked then-Defense Secretary Chuck Hagel in June whether the department could legally furlough working capital fund employees since their units do not operate on direct funding from Congress. The lawmakers, who count working capital fund employees among their constituents, questioned whether the Pentagon considers such workers to be “indirectly funded” government employees of Defense as defined under law (Title 10, Section 129).

MSPB had been tasked with processing 32,400 initial furlough appeals filed in fiscal 2013 – 90 percent of the furlough cases have been completed, the agency said.

The latest decision from the appeals court upholding MSBP’s ruling in Einboden indicates that other employees still fighting their furloughs in 2013 and seeking back pay shouldn’t expect to prevail. 

(Image via sergign / Shutterstock.com)