Fedweek

Court: Under the suit's premise, if markets had declined, “the employee would be entitled to a smaller late payment than if it had been paid on time. Image: Proxima Studio/Shutterstock.com

A federal appeals court has rejected a suit seeking to require that employees be compensated for earnings they lost in their TSP accounts when government contributions toward those accounts were delayed due to the partial government shutdown in December 2018-January 2019.

Because of the funding lapse, what would have been regular biweekly agency contributions into TSP accounts were delayed until funding was restored and they received them then along with back pay for the shutdown period.

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However, those payments did not reflect gains the TSP funds had posted in that time; in Case No. 21-2140, a class action suit before the Third Circuit appeals court, employees were seeking additional payments reflecting earnings they would have received if the investments had been made on schedule.

The court, though, noted that under the doctrine of sovereign immunity, such a claim cannot be brought unless law specifically allows it, and found that a law allowing employees to sue to “recover benefits” applies only to retroactive payments such as the government made, but not to lost earnings. “The concrete benefit due is a percentage of salary, not the returns on that money,” it said.

It added that under the suit’s premise that back payments should reflect market performance as well as the basic contribution, if markets had declined, “the employee would be entitled to a smaller late payment than if it had been paid on time. So in a bear market, the government could save money by delaying its contributions. That cannot be right.”

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