FLRA GC Investigates SEC Compliance


8/20/10: Last week, the Office of the General Counsel of the Federal Labor Relations Authority (FLRA) commenced an investigation into whether the SEC has complied with the FLRA’s order directing the SEC to make whole all employees who suffered monetary losses as a result of the SEC’s violation of the Federal Service Labor-Management Relations Statute when it illegally ceased awarding “within grade increases” (WIGIs) to hundreds of employees in 2002 in connection with its unilateral implementation of a new pay system. To date, only a small handful of these employees’ payments have been processed by the SEC, even though more than year has passed since the DC Circuit Court of Appeals issued its final decision on the SEC’s final appeal in this matter. To date, the SEC has refused to devote sufficient resources to ensure its compliance with the FLRA’s order in a timely fashion.

This case originally began when NTEU filed an Unfair Labor Practice (ULP) complaint against the SEC in 2002, asserting that the agency had violated federal labor law by unilaterally terminating WIGIs without first completing bargaining with the Union over the implementation of its new pay system. The SEC ceased giving WIGIs as of May 19, 2002, adversely affecting hundreds of SEC employees who were due to receive salary raises. This state of affairs continued for approximately six months until November 8, 2002, when the Federal Service Impasses Panel finally issued a decision regarding the compensation negotiations impasse between NTEU and the SEC. NTEU won its ULP complaint before a federal arbitrator, then went on to win on the SEC’s appeal to Federal District Court, and finally won on the SEC’s final appeal to the DC Circuit Court of Appeals. That decision by the DC Circuit came down in June 2009, more than a year ago.

On September 2nd 2009, the SEC and NTEU entered an agreement detailing how the SEC would comply with the FLRA order. The relevant terms of that agreement required that the SEC “complete all calculations of salary increases, back pay and interest and provide the same to NTEU” by December 1, 2009, with final payments to be processed by January 2010. In December 2009 the SEC informed the Union for the first time that it could not meet the deadline due to the complicated nature of the transactions and asked for an extension until June 22, 2010. The Union reluctantly agreed to the extension.

Throughout the first half of 2010, the SEC repeatedly assured the Union that it was on track to comply with this agreement. In June, however, the SEC notified the Union for the first time this year that its difficulties in complying with the FLRA’s order were continuing and that, in fact, it had completed the calculations for just a few of the over 500 impacted employees. The Union informed the SEC at that time that the pace and resources assigned to this calculation process were wholly inadequate.

At around the same time, the Union also learned that the SEC had arranged a meeting with Congressional appropriators to ask Congress to “reprogram” approximately 35% of the money allocated to the WIGI settlement so that it could use the money for other purposes during this fiscal year. The SEC did not inform NTEU of this meeting in advance. At the meeting, in agreement with NTEU's position, Congressional appropriators rejected the SEC’s reprogramming request.

To date, nearly a year after the parties entered into their agreement, and more than a year after the DC Circuit Court of Appeals issued its decision on the SEC’s last appeal in this case last summer, the WIGI payments of only approximately 1% of the impacted employees have been calculated. At this rate, it would take the SEC nearly 100 years to process payment to all the impacted employees.

“One wonders how the SEC would react if a securities law violator engaged in the same type of delays with respect to paying a penalty or disgorgement order that the agency had obtained,” NTEU attorney Ralph Talarico recently noted after receiving notice of the FLRA investigation.

The Union will keep you updated regarding this matter. And we will continue to pursue all avenues available to ensure that every SEC employee has been compensated for their losses – which they suffered almost a decade ago.