Two-Year Pay Freeze Enacted; Final Decision on Merit Pay at the SEC Deferred to March


12/23/10: As you know, Congress has approved and President Obama has signed into law a continuing resolution (CR) funding government agencies, including the SEC, through March 4, 2011 at fiscal 2010 levels. This legislation contains a two-year pay freeze for federal employees under the General Schedule, which means that all federal employees, including all SEC employees, will not receive the usual across-the-board federal pay raise in January.

Based upon the President's memorandum regarding the pay freeze issued last night, it is NTEU’s understanding that the freeze will not apply to within grade or career ladder salary increases. Nor does it override existing compensation agreements pursuant to which NTEU has bargained over pay and benefits, including with respect to merit pay at the SEC. Accordingly, NTEU expects these agencies to follow their existing agreements and past practices—and we are prepared to do all we can to see that happens.

As you know, SEC employees' most recent rating period ended at the end of FY 2010, on September 30. All employees who received an acceptable performance rating for that rating period were supposed to receive an "equivalent share" merit pay increase. Employees have already earned this increase through their performance during 2010.

We regret to inform you that the SEC has now notified the Union that, due to continuing uncertainty regarding what the final FY 2011 budget will be when the current CR expires in March, the agency has decided to defer a final decision on merit pay for its employees until that time. The Union, however, has obtained the commitment and agreement of the SEC that, if it receives a full year CR or budget at or above the level of the FY 2010 budget, the agency will give its employees the merit pay increase, retroactive to when it should have been paid this fall.

At this time, the Union believes that the chances for an extension of the current CR at 2010 funding levels are strong, as a default position should Congress fail to reach an agreement on the budget. NTEU will be continuing to advocate for even more funding for the SEC above that amount, to ensure that the agency can meet its growing obligations under the new Dodd-Frank financial regulatory reform law. If the SEC receives less than the FY 2010 budget level for the remainder of FY 2011, however, NTEU will consider its options under our existing compensation agreement.

Extending the across-the-board federal salary freeze to an already earned merit-based salary increase for SEC employees would be a draconian measure. Accordingly, the Union has informed management that the SEC employees it represents expect to see immediate belt-tightening measures at the agency while their earned compensation is being deferred by management; expenditures for a raft of discretionary projects should be placed on hold while the agency defers paying its employees the raise that they have already earned. Furthermore, the Union is continuing to press the SEC for an extensive briefing on the agency's budget that includes line item detail.

Over the past few weeks, NTEU strongly objected to any pay freeze for federal employees. In the course of our fight against it, we made a number of additional arguments to members of Congress and the administration against applying any freeze to agencies that bargain over pay and benefits, have merit pay systems off the General Schedule scale or are funded by user fees and thus do not contribute to the federal deficit. We will continue to press these arguments as the debate over the federal budget unfolds early next year.

NTEU will keep you informed of any additional developments regarding 2011 pay increases. As always, thank you to those of you who support the Union as dues-paying members, without whom SEC employees would have no advocate regarding these important compensation issues.