Merit Pay Delayed to Pay Period 14; Union to Oppose Lump Sum Payments for Employees at Top of Grade


5/14/11: Last month, NTEU Chapter 293 reported here that, due to Congress’ approval of the FY 2011 budget compromise, the SEC had agreed to implement its previous agreement with the Union to provide retroactive 1.875%  merit pay awards for the performance period ending October 31, 2010, and that the awards would be effective within two pay periods. The SEC has now notified the Union that these awards will not be provided this pay period, but will instead be processed by pay period 14. The agency confirmed once again, however, that the merit pay awards will be 1.9%, that they will be retroactive to January 2, 2011 and that all employees who were employed at the SEC by August 31, 2010 and who received an "acceptable" rating will receive this merit-based award.

In a disturbing new development, however, the SEC also notified the Union that, although it will provide merit pay awards to everyone, for those employees who are at the top of their current pay grade the agency is now uncertain whether it will provide a permanent increase in their base pay  or instead give them a one-time lump sum payment. The Union has formally objected to this new SEC position and informed the SEC that it will file a national grievance for breach of an existing compensation agreement if employees at the top of their current grade are not provided with an actual increase in base pay.

In its communications with the Union this week, the SEC asserted that it is uncertain whether the federal employee pay freeze statute recently enacted by Congress and President Obama’s concomitant Executive Order prohibit the agency from providing merit awards as an increase in base pay for those employees who are at the top of their grades. The Union pointed out to the SEC, however, that this pay freeze only prohibits statutory pay adjustments and explicitly does not apply to existing union-negotiated compensation contracts. As OPM clearly spells out in its Guidance on Freeze on Pay Adjustments for Federal Civilian Employees, the freeze does not apply “to any increase that is required by a collective bargaining agreement that has already been executed and is in effect as of the date of the Presidential memorandum.”

The Union entered into just such an agreement with the SEC in September 2009. That agreement expressly provided that, in each year when merit pay distributions occurred, the SEC would increase the maximum salaries for each grade in an amount equal to the largest merit pay distribution that year for that grade. (Read the original report on this agreement here). Clearly, this existing 2009 agreement between the parties was not affected by the 2010 pay freeze.

It appears that the SEC’s Office of the General Counsel has only just now started to consider this issue. The agency yesterday informed the Union that it will require at least until midweek next week to reach a conclusion about the SEC's contractual obligations.

We feel that these further delays are unfortunate. Merit-based awards have been a priority this year in other federal financial regulatory agencies, all of which have already provided such awards to their employees, including the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency and the National Credit Union Administration. It is regrettable that the SEC has not placed the same priority on the merit awards earned by its employees for the most recent rating period that closed in 2010.

NTEU Chapter 293 will continue to keep you informed about this process, and we will continue to fight to ensure that you receive the merit-based award to which you are entitled for your hard work in the past year. We greatly appreciate the work that you do for our nation.

Thank you to the majority of SEC employees who now 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.