Kelley on Merit Pay Settlement


10/6/2008: I am pleased to be able to tell you that NTEU has reached a favorable settlement — including $2.7 million in back pay, as well as salary adjustments — in resolution of its grievances challenging the lawfulness of the SEC’s arbitrary and subjective merit pay program.

Most obviously, hundreds of employees will receive back pay and current salary adjustments under the settlement, but in the broader picture, this is a major victory for all SEC employees, and will serve everyone well moving ahead.

I say that this is a victory for all SEC employees because it exposed the inherent unfairness of basing pay increases on vague and subjective criteria. The end result is that the flawed merit pay system has been suspended and SEC and NTEU are negotiating a new merit pay system that will address the flaws of the past system.

NTEU reached the settlement with the SEC in the wake of NTEU’s arbitration victory last September declaring that the SEC’s unilaterally designed merit pay program, which employed subjective and amorphous standards to determine merit pay increases, was unlawful under both Title VII of the Civil Rights Act and the Age Discrimination in Employment Act.

Specifically, the arbitrator found that the program had an adverse impact against African-American employees grades 8 and above and employees at all grades who were age 40 and older. He further found that the subjective procedures and standards employed in the program were not justified by a business necessity or even reasonable.

That arbitration covered the merit pay program in place for 2003; pending NTEU grievances against this program for the ensuing years through 2007 were held in abeyance pending resolution of the 2003 case. The pending grievances which were based on age or race discrimination are also resolved by this settlement.

As you know, earlier this year the SEC temporarily suspended its merit pay system until it can develop and implement a new performance management program. NTEU is currently working with the SEC to construct a system that is fair, credible and transparent.

Taken together, these developments show that SEC employees can make a difference when they speak to management with a single voice on these key issues and others that affect their work lives. I want to recognize the efforts of the leadership of Chapter 293 in working with NTEU’s legal team and field operations to bring these grievances to a successful conclusion.

In a separate communication, Greg Gilman, NTEU Chapter 293 president, has outlined the timeline and other details of the plan. NTEU’s goals for performance management systems are to achieve clarity, transparency, objectivity and fairness. With your active support and energy as an NTEU member, we can succeed together. As always, thank you for your support of NTEU.