Legal Wrangling, Implementation Woes Slow Rollout of New Pay Systems

By Stephen Barr
Tuesday, September 13, 2005

Bush administration officials claim that their plans to overhaul workplace rules at two of the government's biggest departments will permit more flexible management of employees. But before flexibility come delay and uncertainty.

The Department of Homeland Security announced last week that it would postpone the start of a performance- and occupation-based pay system until January 2007. The move means that employees in the first phase of the conversion will not see changes in their paychecks until 2008.

In early summer, the Defense Department said the launch of the personnel system, which had been scheduled for July, was being delayed until early fiscal 2006, which starts Oct. 1. But the department has not issued final rules, which will trigger a 30-day waiting period for congressional review.

Further delay could prove vexing for the Pentagon, which has said it wants to roll out its new performance and pay system in January. The first wave of employees in the new system would see their pay affected in January 2007, under the Pentagon's phased approach.

The departments, which received green lights from Congress to shake up their workplace rules, plan to shift their civil service employees into dynamic pay systems that feature broad salary ranges, rigorous job performance ratings and pay variations in occupations because of local and national labor market demands. The departments would abolish the decades-old, 15-grade General Schedule, cherished by many federal employees because it offers raises in a predictable manner.

Bush administration officials want to extend the Defense and Homeland Security models to the rest of the government, arguing that the GS system rewards all employees equally, regardless of how well they do on the job. The administration has proposed a bill and awaits a congressional hearing.

Federal unions, meanwhile, are adamantly opposed to the pay changes and related proposals to scale back union rights and streamline employees' rights to appeal. They have filed lawsuits against the departments and promise to return to court when the Pentagon issues the final rules to create the National Security Personnel System.

Last month, a federal judge issued an order preventing the Department of Homeland Security from starting its new labor-management system. In one of her findings, U.S. District Judge Rosemary M. Collyer said the department's new rules did not ensure collective bargaining rights for employees.

But she suggested that the department was on the right track with its plan to limit the number of subjects that could be put on the bargaining table for negotiations with unions and invited the department to come back with a different approach.

Late last month, the government asked the judge to narrow her order so that it applied only to the provisions that she found invalid "and allow the remainder to become effective."

The National Treasury Employees Union responded Friday, telling the judge that she was correct to block all labor-management changes because the regulatory provisions are intertwined and cannot be separated. The union contends that the department should junk its labor-management proposal and go back to the drawing board.

The government has asked Collyer for a ruling on its motion by Oct. 7. Once the judge rules, the government and the union will have 60 days to file appeals.

In the midst of the legal wrangling, Homeland Security officials told their employees that the start of the new pay system would be pushed back a year. The department said it will apply new rules for managing and rating employee performance to nonunion workers in five bureaus and at headquarters next year.

The litigation, however, might not have caused the delay in the rollout of Homeland Security's pay system. Several congressional aides and NTEU believe the department is not ready for implementation and needs to spend more time on the system's design.

In a statement, the department hinted that implementation is an issue, saying that "successful performance management is the linchpin of organizational success . . . and remains a top priority."

At the Pentagon, officials have talked of shifting 60,000 employees into a new job performance rating system next month. Officials also had planned for more restrictive union rules to take effect this month. But that won't happen because the final regulation is still pending.

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