10/06: As you know, NTEU had been bargaining with SEC management for a new compensation agreement for months without reaching agreement. Due to SEC management proposals that NTEU believed were in violation of federal labor law, the parties failed to reach agreement on a new compensation package.

In the federal sector, once an impasse in negotiations is reached, the Federal Services Impasses Panel of seven presidential appointees (who are not subject to Senate confirmation) makes a final decision in the matter. Since 2001, the current Panel has consistently ruled in favor of management and against federal employees. In this case, NTEU asserted that the Panel lacked legal authority to take jurisdiction over the dispute, part of which involved management’s proposal that it have unilateral discretion to change working conditions. NTEU argued that this violated our statutory rights to bargain over these matters. In fact, NTEU still has an unfair labor practice charge pending before the Federal Labor Relations Authority (FLRA) in connection with the Panel’s consideration of this dispute, and we will continue to press this argument before the FLRA.

Nevertheless, the Panel issued an order yesterday regarding a new compensation package for all SEC employees. Importantly, the Panel rejected the SEC’s most extreme position, that it should have unilateral discretion over how to allocate its budget in the determination of pay increases and employee benefits. Instead, the Panel’s order limits the agency’s discretion by providing that, if management alleges that it has insufficient funds available under its congressional appropriation, it must first brief NTEU, and thereafter it must either re-open negotiations or use available funds to maintain current pay and benefit levels, and then provide compensation increases in a prescribed manner.

With respect to the merit pay system, however, the Panel’s order was a mixed bag for SEC employees. On the one hand, the Panel required that future merit pay increases must be tied to employee ratings under a new five-level performance evaluation system, which will be redesigned based on recommendations from a joint labor-management committee, and the SEC must maintain funding levels for merit increases. On the other hand, the Panel’s order also would allow management to unilaterally determine the pay increase associated with each rating level. The Panel’s political appointees ignored the compelling legal arguments put forth by NTEU that clearly established the illegality of this agency proposal, which would eliminate our statutory right to bargain over changes in conditions of employment.

The Panel also generally denied our attempts to provide further improvements to employee benefits. However, the order does contain a clause that provides for improved retirement benefits, through an additional 2 percent SEC match to employee contributions to the Thrift Savings Plan. This change would require an amendment to the statute covering the federal TSP program. NTEU has already had preliminary conversations with congressional staff about this, and we will redouble these efforts in light of this new provision.

In another provision of importance to many employees, the new compensation package also includes a uniform pay increase of 6 percent, or to the minimum salary for the next grade, for employees promoted to the next grade. During the negotiations, NTEU raised the issue of how this would affect employees whose minimum pay in grade has been set as Step 14 (previously identified as “Securities Industry,” or “SI”). As a result, a grandfather clause was inserted to continue the agency’s past practice regarding career ladder promotions for these employees. SEC management has assured NTEU that this provision applies regardless of whether the employee has a formal “SI” designation, and NTEU will work to ensure that this clause is properly applied and implemented.

NTEU attorneys are currently exploring all possible options for overturning this decision. Nevertheless, we expect management to implement what the Panel ordered, while we continue to vigorously pursue legal challenges that might result in retroactive pay increases for SEC employees. During this uphill battle, we will continue to keep you updated. NTEU greatly appreciates your continued support of its efforts to obtain the best possible compensation package for all SEC employees.