OPM Seeks to Limit Back Pay Awards for Employees, Unions

The Office of Personnel Management announced this week that it will seek to restrict the circumstances where federal employees can seek back pay from their agency, and bar unions from receiving attorney fees in those cases.

In proposed regulations published Wednesday in the Federal Register, OPM said it wants to revise its own previous rules, established in 1981, governing how employees may seek redress for personnel and pay actions under the Back Pay Act. Officials argued that the old regulations misinterpreted Congress’ intended definition of “personnel actions” in passing the 1966 statute and changes enacted as part of the 1978 Civil Service Reform Act.

“The legislative history indicates Congress understood the Back Pay Act’s definition of personnel action was limited in scope and considered broadening it to cover all actions that affect federal employee pay but, outside the context of defining prohibited personnel practices, decided to retain the original definition with only slight modification,” OPM wrote. “OPM’s regulatory definition, which extends the Back Pay Act to cover pay actions unrelated to personnel actions, appears to contravene OPM’s statutory authority and congressional intent.”

Currently, federal employees have wide latitude to seek redress under the Back Pay Act over debt collections, improper overtime payments, failing to win cash bonuses, and denial of leave or official time requests. Under the proposed regulations, OPM would restrict Back Pay Act claims to prohibited personnel practices, actions “based on unacceptable performance,” other adverse personnel actions promotions, demotions, changes in step or grade, transfers, reassignments and changes from full-time to part-time work.

OPM argued that as a policy matter, it takes issue with the idea that employees can file grievances over what it sees as minor pay issues.

“By extending the Back Pay Act’s coverage beyond personnel actions they encourage and subsidize expensive litigation over any matter that affects employee pay, such as non-selection for a performance award,” OPM wrote. “For example, on January 12, 2020, an arbitrator held that the Jesse Brown VA hospital should have given an employee a $1,000 performance award. In addition to ordering the Department of Veterans Affairs to pay the performance award, the arbitrator also ordered $30,387.50 in attorney fees under the Back Pay Act. Requiring agencies to pay tens of thousands of dollars in attorney fees in litigation over much smaller performance awards wastes agency resources.”

But Robert Tobias, distinguished practitioner in residence at American University’s Key Executive Leadership Program and a former president of the National Treasury Employees Union, said that’s not an adequate reason for ditching the current standard.

“It seems to me that when your behavior damages another, you’re obligated to restore them fully,” he said. “Management could have avoided paying attorney fees by making the correct decision initially. It’s not the aggrieved’s fault that they were damaged, and it’s not the aggrieved’s fault that it was necessary to proceed to arbitration. It’s the agency’s fault.”

The proposed rule also would bar arbitrators from awarding attorney fees to federal employee unions, by redefining the term “employee’s personal representative” to mean only “the executor or administrator of a deceased employee.” OPM argued that various judges over the last 40 years have “misinterpreted” the definition to include labor organizations.

“This is not what OPM meant by ‘personal representative’ in its regulations,” the proposal states. “The term ‘personal representative’ is a term of art the meaning of which follows OPM’s proposed definition. It does not encompass other potential representatives, to include a collective bargaining representative.”

Tobias said the effort to prevent unions from recouping attorney fees after winning a Back Pay Act case seems discriminatory, given that they would not be barred from receiving attorney fees if they hired their own lawyer.

“OPM’s attempt to preclude employees from selecting a union attorney to represent them by denying attorney fees is really unjust,” Tobias said. “It’s unjust because if I have a relationship with my union, I trust it, and I trust the attorneys supplied by the union, they should be entitled to reimbursement just like any other lawyer. So to discriminate against union lawyers like that I think is wrong.”

OPM also took the unusual step of including a severability clause in its proposed rule, suggesting officials expect the regulations will be challenged in court.

“This would clarify that the provisions of the section are severable and that if any portion of this proposed regulation is held to be invalid that shall not affect the operability of the remaining portions,” the proposal states.