It’s Becoming Rarer for Federal Agencies and Employees to Settle Over Adverse Actions

Federal employees appealing firings, suspensions and other adverse actions taken against them by their agencies are increasingly going before a judge to make their cases, rather than taking a settlement offer from their employer. 

Just 47% of initial appeals before the Merit Systems Protection Board—the quasi-judicial agency tasked with ensuring agencies follow civil service laws in their disciplinary actions and other decisions—that were not dismissed immediately ended in settlement, according to MSPB’s annual report for fiscal 2019, down from 51% in fiscal 2018 and 53% in fiscal 2017. Just five years ago, agencies and employees settled 61% of cases. 

Settlements often enable employees to resign in exchange for wiping the slate clean on their personnel records. Some lawmakers and other stakeholders have criticized the process, arguing it allows misbehaving or poorly performing employees to receive new federal jobs without the hiring agency knowing about their prior conduct. Other settlements can reduce the magnitude of a punishment, such as changing a firing to a suspension. Agencies have pursued those options to avoid the lengthy, and oftentimes costly, process of going before an MSPB administrative judge for a full hearing and decision. 

It remains uncommon for employees who take their cases to a judge to win. Just 12% of initial appeals not dismissed or settled resulted in a judge ordering a corrective action or overturning the agency’s decision altogether. That is down from 17% five years ago and 14% last year, and represented just 2% of all appeals brought before MSPB. 

The change could reflect a Trump administration initiative to reduce the number of settlements agencies offer to employees they are seeking to discipline. In an executive order issued in 2018, Trump prohibited agencies from entering into settlement agreements with employees that wipe disciplinary actions from their personnel records in order to resolve an appeal. A federal judge largely blocked that order from taking effect, but the administration is now looking to implement it after an appeals court last year overruled the judge’s decision on jurisdictional grounds. 

MSPB warned the change could reorient the nature of its work, noting it may “significantly affect [its] case processing.” Fewer settlements will result in more adjudications, a process the agency said has grown more complex. Nearly half of MSPB’s administrative judges and adjudication managers will be retirement eligible by the end of 2022, the agency said, and it is facing legal challenges concerning the constitutionality of those judges. MSPB cautioned it may not have the capacity to handle its upcoming workload with its existing staff. 

“In addition to the possible impact on MSPB’s adjudication workload and complexity, changes in law are likely to require changes in MSPB procedures, and possibly the need for additional MSPB resources,” the agency wrote. 

That all comes as MSPB’s central board has a backlog of nearly 2,500 cases, as the agency has not had any presidentially appointed, Senate-confirmed members to hear those appeals since early 2017. It is currently operating without any of its three slated board members. Trump has put forward three nominees to serve on the board, all of whom were approved in committee but are being blocked from receiving a vote on the Senate floor. If those nominees are confirmed, they would, with the help of support staff, have to sort and issue decisions on all the backlogged cases while new ones continue to pile up.