Continuing Delays in Merit Pay Awards Reflect Fundamental Human Capital Problems at the SEC


8/15/11: In late June, NTEU Chapter 293 reported that the SEC had confirmed that 1.9% merit pay awards, retroactive to January 2, 2011, would be awarded to SEC employees for their performance in FY 2010, and that all employees who were employed at the agency by August 31, 2010 who received an "acceptable" rating would receive these merit-based awards. The Union also reported at that time that the SEC had agreed that, for those bargaining unit employees who are at the top of their current pay grade, the agency would provide a permanent increase in their base pay rather than a single, one-time lump sum payment (together with a lump sum payment for retroactive pay back to January 2)  --  )).  Over the past several weeks, SEC management has continued to confirm these basic facts about the merit pay awards to Union leadership.

Over the summer, the agency also reported to the Union that the delay in processing the merit pay awards was due to questions about how to deal with the pay raise for SEC managers. As you know, the compensation agreement that Chapter 293 negotiated for non-management employees back in 2009 requires the SEC to give bargaining unit employees actual pay raises when they are at the top of their grades and receive merit pay awards, rather than one-time lump sum payments. Effectively, this agreement raised the caps on bargaining unit pay grades, to move them toward comparability with the FDIC salary structure. SEC managers, however, do not have the benefit of such a union-negotiated contract. For that reason, senior management at the SEC has struggled all summer with the question of whether it should also raise the caps on grades for managers when it does so for the bargaining unit employees receiving merit pay awards.

Weeks ago, Chapter 293 leadership urged management to raise the caps for everyone, including management, because the SEC has independent salary authority and it is the right thing to do. Indeed, it makes little sense to have a dual salary system at the agency.

Last month, the SEC communicated to the Union that senior management was continuing to struggle with how to deal with this issue, and that the agency was seeking guidance from OPM before proceeding. Two weeks ago, however, NTEU communicated directly with OPM about this issue. Early last week, OPM reported back to the Union that it had already advised the SEC that, in its view, the agency should move expeditiously to provide any pay increases that are required under the Union's collective bargaining agreement.

Thus, there appears to be no reason for any further delays at this point. The agency has repeatedly communicated that it understands that it is obligated to provide the merit pay awards. There is no dispute about that obligation. Nevertheless, the delays continue. NTEU has notified the SEC that it will file a national grievance for breach of its existing compensation agreement with the Union if the agency fails to provide the permanent merit pay increase as it has agreed to do.

The rating period for FY 2010 ended almost a year ago. As the Union has previously reported, merit-based awards have been a priority this year in other federal financial regulatory agencies, all of which have long ago provided such awards to their employees, including regulators such as CFTC, FDIC, OCC and NCUA.  

The SEC's continuing delays in providing the 2010 merit pay awards reflects a fundamental lack of concern for the well being and morale of the frontline SEC employees who deliver on our agency's mission every day. During a period in which federal employees' salaries have been frozen, and in which they have faced the threat of a government shutdown and potential loss of income not once but twice, it is unfathomable how senior SEC management could fail to comprehend the importance of providing their employees, in a timely fashion, the merit pay awards that they earned last year.

The Union will continue to press this matter, and we hope to get it resolved this week. Thank you to the majority of SEC employees who support the Union as dues-paying members, without whom we would have no advocate regarding these important compensation issues. We hope that others will continue to join our growing ranks, to help reduce the recurrence of these types of human capital issues at the SEC.