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Washington, D.C.—The National Treasury Employees Union (NTEU) today asked a federal district court to order the federal government to meet its back pay obligations to some 170,000 current and former federal employees who were paid special salary rates in the 1980s.

NTEU is asking Judge John Garrett Penn to order the government to comply promptly with a January 1998 court of appeals ruling that established the government's back pay liability to members of the class. NTEU filed the lawsuit on behalf of the class more than 18 years ago, in 1983. Since the 1998 appeals court ruling, NTEU has been prodding the government to pay class members without further court intervention.

“The fact that class members still haven’t been paid is a scandal," said NTEU National President Colleen M. Kelley. She added, "Many class members are elderly and want to know if they'll see the money owed them in their lifetimes. The whole situation is appalling."

The government’s failure to pay the class members what they are owed under the 1998 court ruling carries a high price for the American taxpayer. Because the government will be required to pay interest to the class members, the amount of its back pay liability is growing by nearly $1million every month.

NTEU President Kelley noted, “At a time when the administration is talking about giving money back to the taxpayers, everyone--government officials and taxpayers alike--should be outraged at the disregard the government has shown for taxpayer money in this case. The government's intransigence is creating an even bigger bill that will fall on taxpayers.”

In issuing its 1998 decision establishing the government's back pay liability, the court of appeals sent the case back to the district court for implementation of its ruling. Since then, NTEU has been engaged in discussions with the government regarding the appropriate means for delivery of class members' payments. Although NTEU has devoted vast resources to resolving the marathon litigation, the government has failed to equal NTEU’s commitment to getting class members paid.

NTEU now feels it is necessary for the district court to order the government to implement a back pay rule prescribed by the 1998 appeals court decision and compute the amounts owed to each individual class member based on that individual’s personnel data. If, upon review by NTEU, the elements of the calculations are determined to be correct, NTEU wants the court to require the government to pay class members immediately.

President Kelley said, "We've been trying to help the government with the logistical issues regarding the payout. But, after three years of discussions, we're tired of the foot dragging. The government needs to do the calculations and pay people now."

A status conference with Judge Penn is scheduled for today. NTEU anticipates that the judge will want to discuss NTEU’s motion at this conference.

NTEU Asks Court to Order Federal Government To Pay Monies Due 170,000

Class Members in Long-Running “Special Salary Rates” Case

ISSUE

The issue is the federal government’s failure to meet its substantial back pay obligations to a class of some 170,000 current and former federal employees under a 1998 federal court of appeals decision. Class members include federal employees who were paid special salary rates between fiscal years 1982 to 1988. As a result of the appeals court ruling, class members are eligible for back pay as compensation for the government’s application of an illegal 1982 Office of Personnel Management (“OPM”) rule that governed how their pay increases were calculated.

BACKGROUND

For 18 years, NTEU has vigorously litigated this class action, brought on behalf of special rate employees. Special salary rates are paid to federal employees who occupy positions for which the government has a difficult time recruiting or retaining employees.

This case arose in response to a 1982 OPM rule specifying that the annual statutory adjustment made to the general salary schedule would have no effect upon special rate pay schedules. The rule brought to a halt the government’s longstanding practice of passing on the entire annual general schedule increase to special rate employees. Because special rate increases were no longer triggered by the general schedule increases, but were left to OPM’s discretion, many special rate employees received no salary increases at all during this period, or received only very modest ones.

NTEU brought a suit challenging the OPM regulation in 1983, shortly after it went into effect. The case was ultimately certified as a class action covering all federal employees who had been paid special salary rates during the years the OPM regulation was in force. The regulation governed special rate increases from fiscal years 1982 through 1988. The case, now known as NTEU v. Lachance, No. 83-0279 (D.D.C.), has also been called NTEU v. Devine, NTEU v. Horner, NTEU v. Newman, and NTEU v. King, to reflect the different directors OPM has had during the pendency of the litigation.

On March 12, 1987, Judge John Garrett Penn of the U.S. District Court for the District of Columbia ("district court") issued a decision holding that the OPM rule was illegal. NTEU v. Horner, 1987 WL 8704 (D.D.C., Mar. 12, 1987). The government filed an appeal of this decision. On April 24, 1989, the U.S. Court of Appeals for the Federal Circuit ("court of appeals") affirmed the district court's decision that the OPM rule was illegal to the extent that it provided that an adjustment in the general schedule would have no effect upon special salary schedules. NTEU v. Horner, 869 F.2d 571 (Fed. Cir. 1989). In its 1989 decision, the court of

appeals, however, rejected the district court’s formulation of the rules by which special salary rate schedules should be adjusted ("conversion rules") and remanded the case to the district court for further consideration of the appropriate conversion rules and for an appropriate remedy.

After several rounds of briefing and argument, the district court issued a decision on May 5, 1995, approving a conversion rule proposed by OPM under which only a small handful of the class members would receive a nominal amount of back pay. NTEU v. King, 132 F.3d 736 (D.D.C.). NTEU appealed to the Federal Circuit court of appeals, arguing that the conversion rule approved was invalid or, in the alternative, that back pay should be determined on the basis of the conversion rule in effect before 1982.

On January 5, 1998, the court of appeals reversed the district court's back pay ruling and decided in favor of NTEU. NTEU v. King, No. 96-1263 (Fed. Cir.). The court agreed with NTEU’s argument that the district court used the wrong formula when it determined that virtually none of the members of the class were entitled to back pay. It endorsed NTEU’s alternative argument that the pre-1982 conversion rule (the "alignment rule") was a valid one and that it should be used as the measure of back pay in order to place members of the class in the positions they would have enjoyed, had the illegal 1982 regulation never been promulgated. Consequently, class members are now entitled to substantial back pay.

As the government has conceded, the January 1998 court of appeals decision finally and unequivocally established the government’s liability to the class. The court of appeals sent the case back to the district court for implementation of its decision. Since then, NTEU has been engaged in discussions with the government regarding the means for delivering class members' payments. NTEU has devoted vast resources to resolving the marathon litigation. It has taken the initiative at every step of the way to prod the government to pay the class promptly, Unfortunately, the government has not shared NTEU's commitment to resolving the case.

Not surprisingly, class members want to know whether they can expect to see their unlawfully withheld wages during their lifetimes. The 18 years of litigation have taken a toll on class members. Indeed, many class members have died without receiving their back pay, a sad fact that will obviously be compounded as time goes on.

THE NEW COURT PROCEEDINGS

In light of these circumstances, NTEU now feels compelled to seek court intervention to order the government to act. The government’s failure to resolve this case despite the clear obligations placed upon it by the court of appeals is entirely unacceptable. NTEU wants the court to order the government to implement the back pay rule prescribed by the January 1998 decision that established the government's liability to the class. NTEU is, therefore, asking that the court order the government to perform an accounting of the amounts owed to each class member, using the individual's employee personnel data. It also wants the government to explain how it calculated those amounts.

Under the court order sought by NTEU, the government would have 60 days from the date of the order to submit its accounting, and NTEU would have 60 days to review the calculations. If all elements of the calculations are correct, NTEU wants the court to require the government to pay class members immediately.

FREQUENTLY ASKED QUESTIONS

What is the legal issue in the case?

The case concerns an OPM rule that governed how pay increases were calculated for special rate employees. That rule provided that increases received by General Schedule employees would have no impact on special rate increases. In 1989, the U.S. Court of Appeals for the Federal Circuit held that OPM’s rule was invalid. The issue then turned to the rules to be used to calculate the back pay due class members. In 1998, the court held that the socalled “alignment rule,” which was in effect prior to OPM’s illegal 1982 rule, should be used.

Who are the class members?

All federal employees who were paid special pay rates under Title V of the United States Code during fiscal years 1982 to 1988 are members of the class.

What are “special rates?”

Special rates are pay rates that are higher than the general schedule rates. Special rates are paid to federal employees who occupy positions for which the government has a difficult time recruiting or retaining employees. During the period covered by the lawsuit, certain employees in a variety of occupations, such as clericals, medical officers, and engineers, received special pay rates.

What is the “alignment rule?”

The alignment rule provides that special pay rates should be aligned to the closest step on the same grade of the general schedule that does not result in a lower salary rate. The difference between the general schedule rate to which the special rate is aligned and the rate the employee was actually paid under the special rate schedule forms the foundation for that employee’s back pay award.

Why have there been settlement discussions when the case has already been decided in favor of the class?

The court of appeals decision established the government’s liability, and sent the case back to the district court for implementation of its ruling. NTEU believed that the quickest way to get class members their money was to work out an agreement with the government regarding the logistical issues associated with calculating and delivering back pay to the class. Because three years of discussions have failed to produce an agreement, NTEU is now asking the district court to order the government to meet its obligations to the class.

What happens next?

The parties have a status conference with the court today. NTEU anticipates that the judge will want to discuss NTEU’s motion at that conference.