NTEU Wins PLUS Loan Arbitration


1/31/07: NTEU prevailed on the PLUS Loan Arbitration this week. In a well reasoned decision, Arbitrator Joseph M. Sharnoff ruled in favor of NTEU on all issues. Click here, PLUS Loan Arbitration Decision, to read the decision.

The road leading to this important decision began when NTEU filed a national grievance to challenge the agency's 2005 elimination of Direct PLUS Loans from the list of loans that are eligible for repayment under the Student Loan Repayment Program (click here to review the terms of this popular program). Direct PLUS loans are loans that are taken out by parents to pay for the education of their children. NTEU asserted that the SEC’s decision to eliminate the PLUS Loans from the program, after it had originally included them: (i) constituted an unfair labor practice because the change was not bargained for in good faith; (ii) violated the Age Discrimination in Employment Act of 1967 ("ADEA"), because the change had a disparate impact upon the SEC’s employees over the age of forty; and (iii) violated the SEC's Collective Bargaining Agreement with NTEU, because implementation of the change did not adhere to merit system principles. On June 26, 2006, representatives from the SEC and NTEU argued the case before Arbitrator Sharnoff.

Just last month, while the 2005 case was pending before the arbitrator, the SEC again unilaterally denied its employees' 2006 PLUS Loan reimbursement applications, this time distributing the denial notices just a few days before Christmas (click here to review this story).

Arbitrator Sharnoff concluded that the SEC failed to bargain in good faith and thereby engaged in conduct violative of 5 U.S.C. Section 7116(a)(1), (5) and (8), when it sought to change a term of the Collective Bargaining Agreement between the parties (Article 25) by unilaterally terminating the repayment of PLUS Loans, where it had contractual mechanisms available to review any issues that it may have had with the program. He also ruled that the SEC violated the ADEA by engaging in the unlawful disparate treatment of the protected class of employees over the age of forty, which constituted a prohibited personnel act under 5 U.S.C. Section 2302(b)(1)(B). Finally, he found that the agency's unilateral elimination of the repayment of PLUS Loans was inconsistent with the express terms of Article 25 of the Collective Bargaining Agreement, as well as the terms and purposes of the Student Loan Repayment Program.

The arbitrator has now remanded the matter to NTEU and the SEC to resolve the issue of how the agency should recompense affected employees. However, Arbitrator Sharnoff has retained jurisdiction, in case the parties are unable to resolve the issue of an appropriate remedy within 45 days.

This case is the latest example of NTEU's willingness to utilize its resources to fight effectively for the rights of SEC employees when it is necessary to do so. It also underscores why the agency should adhere to federal labor laws when policy changes are made that will affect the rights of its employees. Chapter 293 continues to believe that SEC management could seek to build a partnership with NTEU, rather than acting in a unilateral fashion.

Please check Chapter 293's website for updates regarding the status of the remedy and other developments in this case.