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Washington, D.C.—In a major victory, the National Treasury Employees Union (NTEU) has won an arbitration decision that could put $6.7 million in the hands of Internal Revenue Service (IRS) employees whose performance awards were underpaid in fiscal 2003. More than 40,000 IRS employees could receive additional money.

An arbitrator agreed with NTEU that the agency had under-funded its award pool in fiscal 2003 by some $6.7 million; he gave the parties 30 days to determine how to implement his decision, and reserved the right to issue a decision on the payouts if the parties fail to reach agreement.

“I’m delighted to say that we won everything we wanted in connection with this issue,” said NTEU President Colleen M. Kelley. “People were short-changed when the IRS failed to properly fund the program because it wrongly calculated the amount of money that employees were due,” she added.

The arbitrator accepted NTEU’s evidence that included the bargaining history of the awards program and IRS spreadsheets showing what the agency paid employees in performance awards versus the amounts it actually should have paid. Essentially, and among other related issues, the agency based its awards calculations on outdated employee salary figures.

In another aspect of this case, NTEU objected to a deduction by the IRS of more than $1 million in grievance settlements for 2002 from the 2003 award entitlement. While the arbitrator ruled in favor of the IRS on that point on grounds of past practice, NTEU is continuing to pursue this issue with the agency.

The national grievance arose after NTEU’s analysis of the distribution by the IRS of performance awards as called for in the union’s national agreement with the agency.

NTEU has had to monitor the contractual awards program closely. In 2002, the union filed a mass grievance alleging a variety of problems, including failure of divisions and functions to spend all budgeted funds.

That grievance was held in abeyance while a joint union-management committee worked to resolve a variety of issues that surfaced in the 2002 awards program.

NTEU is the largest independent federal union, representing some 150,000 employees in 30 agencies and departments, including some 98,000 in the IRS.