Following is a portion of a recent report from the MSPB focusing on developments in the federal workplace.
The most significant external trends or issues affecting MSPB’s ability to carry out its mission to protect the Federal merit systems include changes in law and jurisdiction, changes in management and employee flexibilities, veterans’ rights and changing demographics of the workforce, and continued pressure on the Federal budget.
Changes in law and jurisdiction. One example of changes in law and jurisdiction, involves implementation of the Postal Service’s National Reassessment Project (NRP). Most Postal Service non-preference eligible employees do not have the right to appeal an adverse action to MSPB. However, appeals from NRP-related actions raise issues concerning the restoration to duty statute and regulations, which cover a much broader category of employees. Of note, on December 13, 2011, the Board heard oral arguments in Latham et al v. U.S. Postal Service, a set of cases involving restoration rights of employees suffering work-related injuries and the Board’s jurisdiction over such cases. In this case, the Board affirmed the Postal Service’s obligation, based on its own rules, to restore employees who have been injured on the job to available work that is medically suitable, and the Board affirmed that MSPB has jurisdiction over appeals involving this issue. To the degree that more injured Postal Service employees are denied restoration under the NRP, MSPB expects to continue to see an increasing number of restoration to duty appeals from Postal Service employees. Depending on how this case is interpreted, it could increase the number of restoration to duty appeals to the Board from other Federal agencies.
Changes in law, appeal rights, and appellate jurisdiction also increase the importance of MSPB’s statutory responsibility to promote merit and educate employees, supervisors, managers, and leaders on the merit systems, MSPs, PPPs, and MSPB appellate procedures, processes, and case law. Education on these issues, promoting merit, and sharing important information about appeals procedures will improve workforce management over time and reduce the cost of appeals to agencies, appellants, and the Government.
Changes in Management and Employee Flexibilities. Changes in management flexibilities could involve employees in single agencies such as those in the Department of Defense (DoD) National Security Personnel System (NSPS). The National Defense Authorization Act (NDAA) for FY 2010 (Public Law 111-84) required DoD to transfer all employees and positions from NSPS by January 1, 2012. The repeal of the NSPS and the transfer of employees from it is likely to increase MSPB’s workload as former NSPS employees may appeal what they claim to be improper reduction in pay or grade (“downgrading”) when shifted back to their old pay system. Of note, in January, 2012, the Board released its decision in Arrington v. Department of the Navy, in which it found that the transfer of the appellant from the NSPS resulted in her being improperly downgraded to GS-13, when prior to her participation in the NSPS she had been a GS-14 employee, and that under the facts of the case, this constituted an appealable reduction in grade. This ruling may increase MSPB’s workload if other transferees—of whom there are roughly 226,000—appeal to the MSPB making similar allegations.
Management flexibilities may also be directed through administrative actions such as Presidential Executive Orders. For example, President Obama issued Executive Order 13562 in December, 2010, establishing the Pathways Program. The Pathways Program creates a set of excepted service appointing authorities tailored to ease and encourage recruitment, hiring, development, and retention of students and recent graduates. The Pathways Program formally acknowledges a long-standing interest of Federal agencies and Federal managers—the ability to hire high-quality college graduates into professional and administrative occupations. It is unknown what impact the Pathways Program will have on hiring and management or if it will succeed in its goals. We note that OPM has proposed Pathways Program regulations and plans to issue final regulations in 2012. Final regulations could differ considerably from the proposed regulations. MSPB plans to closely follow the evolution and implementation of these programs.
Federal management flexibilities also emphasize the need for MSPB to continue its study of Federal merit systems and human capital management practices to ensure the flexibilities are implemented and operated in accordance with MSPs and are free from PPPs. Flexibilities and other changes in human resource management policies issued through OPM regulation make it imperative that MSPB strengthen its ability to exercise its statutory authority to review OPM regulations. Reviewing OPM regulations can save the Government in direct costs such as those associated with transferring employees in and out of more flexible systems that are later terminated, and in indirect costs associated with negative employee perceptions of the new system and possible reductions in morale. Finally, changes in management flexibilities also increase the importance of MSPB’s role in promoting and educating employees and the public about the merit system, MSPs, and PPPs.
Veterans’ Rights and Changing Demographics of the Federal Workforce. Veterans may file appeals with MSPB under various laws including Veterans’ preference in hiring for competitive service positions (5 U.S.C. § 3304(f)(1)), the Uniformed Services Employment and Reemployment Rights Act (USERRA; 38 U.S.C. § 4301 et seq.), and the Veterans Employment Opportunities Act (VEOA; 5 U.S.C. § 3309 et seq.). Veterans who seek employment in the Federal civil service and are not hired have the right to seek redress for any alleged violation of their veterans’ preference rights before the MSPB under VEOA. VEOA provides a means of redress for any violation of an individual’s rights under any statute or regulation relating to veterans’ preference. Under USERRA, individuals who left employment in the Federal civil service to serve in the military have the right to reemployment in the Federal civil service, and to challenge the terms (or denial) of reemployment before MSPB. USERRA also gives the right to challenge discrimination against an individual based on military service or the obligation to perform military service, and protection against reprisal for the exercise of any of the rights granted by USERRA. MSPB expects to continue to receive a significant number of cases under these veterans’ rights laws as more military members return from engagement in military conflicts.
The proportion of retirement-eligible Federal employees continues to increase. As the economy continues to improve, retirements will likely increase in the next few years. As retirements increase, we might expect to see an increase in retirement appeals. If Congress changes the retirement program, such as increasing the required level of employee contributions to their annuity, or changing the calculations for the annuity (such as basing the annuity on the average high five years instead of the average high three years) for current retirement-eligible employees, the Government could experience a surge in retirements, followed by a surge in retirement appeals to MSPB. Changes in Federal retirement such as the new authority that phases in the opportunity for employees in the Federal Employees Retirement System (FERS) to claim service credit toward retirement for their sick leave balance, and the potential to allow full-time Federal employees to phase their retirements or work in part-time status, may alter retirement rates, and thus may impact retirement appeals. As the government replaces retiring employees with relatively younger, less experienced employees, there is likely to be a decrease in the average age of the workforce. As this occurs, we may see an increase in appeals because less experienced employees typically experience more appealable actions than do more experienced employees.
In addition to changes in workforce demographics, Government work has continued to shift from administrative processing, to knowledge-based work. Federal human resources management systems, many designed in the 1940s and 1950s, do not have the flexibility needed to manage a knowledge-based workforce effectively. Various issues, including recruitment and hiring, performance management and pay, and training and development need to be addressed to improve and maintain a diverse workforce of highly engaged and motivated employees who can perform agency missions and serve the public. At the same time, MSPs, fair treatment, and freedom from discrimination and from PPPs must be ensured. Improvements are also needed in the selection and training of supervisors and managers who must use the existing management systems to manage a modern workforce and achieve results for the public. These changes emphasize the need for a strong merit systems studies function and increased focus on promoting and educating employees and the public about the merit systems, MSPs, and PPPs.
The Federal Budget. Governmentwide actions to decrease Federal budgets include pay freezes, severe limitations in employee awards (for performance, special acts, quality step increases, or other purposes), and limits on within grade increases. The recently enacted freeze in Federal pay may increase retirement and adversely impact employee morale and productivity. At the same time, freezing pay may also shift employees’ attention to performance appraisal systems and ratings, which could in turn increase appeals to MSPB. Budget reductions may also increase agency use of furloughs (involuntary temporary release from duty without pay), reductions in force (RIF) to decrease the size of the workforce, hiring delays or freezes, and reductions in training and development to save money. Reducing the workforce may lead to increases in the number of employees who are demoted or separated involuntarily through RIF. Historical trends indicate that increasing RIFs would lead to potentially large increases in the number of appeals to MSPB.
Freezing employee pay and possible reductions in hiring and workforce training may also have long-term impacts on MSPs such as the efficiency and effectiveness of the workforce. Employees may perform better and refrain from misconduct in an effort to keep their jobs. On the other hand, employees may experience more workplace conflict and other behavioral and performance issues due to the stress caused by economic conditions over which they have no control. Reductions or long delays in hiring and/or reductions in workforce training may also impact the efficiency and effectiveness of the workforce in terms of loss of expertise and workforce capacity to carry out the mission, from which it could take years to recover. Emphasis on merit systems studies is important to continue studying the impact of these workforce changes on adherence to MSPs and avoidance of PPPs. It is also important to promote merit and educate the workforce, especially managers and leaders, about how to adhere to MSPs and to avoid PPPs when making management decisions such as those related to reducing