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OPM Plans to Limit Attorney Fees for Federal Workers

October 9, 2020 | Posted in : Coverage of Fees, Fee Award, Fee Entitlement / Recoverability, Legislation / Politics

A recent Law 360 story by Jon Steingart, “OPM Plans to Limit Back Pay, Attorney Fees for Federal Workers,” reports that the U.S. Office of Personnel Management unveiled a proposal that would narrow the circumstances when federal employees can recover back pay and attorney fees after management makes a mistake that causes them to be underpaid.

The notice of proposed rulemaking from the U.S. government's central human resources agency would retool Back Pay Act regulations that allow federal employees to be made whole if they are underpaid because their employer didn't comply with a legal requirement or a collective bargaining agreement.  The OPM said current regulations exceed Congress' intent for the law to have a narrow scope that covers only alleged underpayment connected to an action such as a suspension, termination or a demotion.  "By extending the Back Pay Act's coverage beyond personnel actions they encourage and subsidize expensive litigation over any matter that affects employee pay," the OPM wrote in the notice.

As an example of a scenario that is not covered by the Back Pay Act, the OPM identified a situation where the U.S. Department of Defense clawed back too much when it recouped a housing allowance that it overpaid to a teacher working on an overseas military base.  The employee couldn't get a refund under the Back Pay Act because a miscalculated recoupment isn't a personnel action, the OPM noted.

In another example of a situation that Congress didn't intend the Back Pay Act to cover, the OPM identified a case where an arbitrator found that a Veterans Affairs hospital didn't give a performance award to an employee who earned it.  The arbitrator ordered the hospital to pay the employee $1,000 for the award and $30,387 in attorney fees under the act, the notice said. 

"Requiring agencies to pay tens of thousands of dollars in attorney fees in litigation over much smaller performance awards wastes agency resources," the OPM said.  "It also encourages agencies to broadly distribute performance awards, to avoid litigation.  This undermines the purpose of performance awards, which is to recognize, reward, and incentivize high performance."

The proposed rule would also specify that a union cannot collect attorney fees under a Back Pay Act regulation that permits them for an "employee or an employee's personal representative."  The OPM explained that courts have interpreted this regulation to include labor organizations, but that wasn't what the OPM meant when it wrote the rule in 1981.