Best Practices for Negotiating Federal Sector Settlements

Cathy Harris, Kator, Parks, Weiser & Harris, PLLCJoe Kaplan, Passman & Kaplan, PCFebruary 24, 2014

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Clean Records• A “clean record” is valuable and desirable for federal

employees who have been subjected to:• unwarranted disciplinary action

• Reprimand• Suspension• Demotion• Termination

• performance actions• bad performance appraisal• performance-based termination or demotion

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Additional actions where a clean record may be desirable• Reassignments• Suitability• IG Investigations• Sexual Harassment Investigations• Hostile work environment cases• Negative ESI• IRA appeals

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What files are to be cleaned?• OPF: maintained for 65 years after employee’s separation

from the federal service.• Performance files (“EPF”)• “Supervisor” or “desk” files• HR files• OGC files?• ESI• IG files• Security files• Contractor files: Phillips v DHS, 118 MSPR 515 (2012)

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Disclosure: to whom?• Cannot explicitly or by implication signal that there is

something odd about the record. Pagan, 170 F.3d 1368 (Fed. Cir. 1999).• But see Godwin v. DOD, 228 F.3d 1332 (Fed. Cir. 2000)

• Third party communications: Torres v DHS 110 MSPR 482 (2009)

• Intra-agency communications• Shirley v. Interior, 2013 MSPB 76.• Sena v. DOD, 66 MSPR 458 (1995).

• Benefits• OWCP: Allen v. VA– “disclosures as required by law.” • But see Phillips: it depends!

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Disclosure: by whom?• Supervisors• HR• Co-workers• Point of contact

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Exceptions• Criminal referrals -Fomby Denson (Fed. Cir. 2001).• Allegations of criminal activity in background checks or

suitability investigations: Gizzarelli• cooperating with EEOC• Gag orders?• OPM (artifice)

• Disability retirement• OIG

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SF 50s• What will the new SF 50 say?• What codes will be used to designate the new personnel

action?• Nature of Action codes• Legal Authority codes

• Practice Tip: Specify what codes will be used on the SF-50 in the settlement agreement, or attach a mock up of the SF-50 to the settlement agreement. Look up OPM’s “Nature of Action” codes to make sure that they are neutral; i.e. not indicative of an action taken pursuant to a settlement agreement.

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MSPB Clean Record Study• Clean Record Settlements and the Law, Dec. 2013.

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How to Respond to Questions• OF 306• SF 85P• SF 86

• OPM was asked by MSPB how applicants should respond when removed, but then had the removal changed to a resignation pursuant to a settlement agreement. OPM responded that the applicant should respond, "yes."

• OPM's letter is not attached to the study.• Pappas, Rigsbee, Wolfbauer

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•Would the answer be different if the agreement states that the removal was "rescinded and expunged," rather than "changed?"

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• OPM's position appears inconsistent with King v. Dept of Navy, 130 F.3d 1031, 1033 (Fed. Cir. 1997) ("[w]hen an employee voluntarily resigns in exchange for purging of the records that show the prior adverse action, the employee's goal, to which the agency has agreed, is to eliminate this information as it may affect future employment with the government or elsewhere.")

• King cited in the Board's study.

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Best practices for settlement language for “clean records”• “Rescind and expunge”– gold standard language

• Conant v. OPM, 255 F.3d 1371 (Fed. Cir. 2001): “rescind” means erase the removal and all reasons for the removal from the agency’s records.

• Be wary of using the term “change.” But see Kitt v. Navy, 116 MSPR 680 (2011)• To “change” means to “cancel” which means to remove any record of the prior

action.

• Designated contact person at the Agency for prospective and current employers• Identify where the bad documents are and state what files are to be cleaned.• Segregate any remaining bad records in confidential file in OGC.• Dictate what can be said and what cannot be said.

• OPM?• Taxing authorities?• Unemployment?• Security Clearances?

• Who will be informed of the provisions of the agreement?

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Questions

• What exactly is the point of a clean record if one must disclose a rescinded removal on a subsequent federal government employment application?

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Advising Clients on Clean Record Provisions and Disclosures• Case by case approach• Fact specific to the form• Telling the truth• Security clearances

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OTHER ISSUES IN NEGOTIATING FEDERAL SECTOR SETTLEMENTS

There is no way around it . . .

Negotiating settlement agreements is not like

negotiations in the private sector.

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Federal Sector Context vs. Private Sector• In the private sector, there are very few

legal impediments to incorporating settlement terms voluntarily agreed to by the parties.

• In contrast, in the federal sector, there are a plethora of statutory and regulatory obstacles to settlement terms.

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“NO” DOESN’T NECESSARILY MEAN “NO”

Not all “no’s” are created equal! It is important to understand what the opposition to a proposed solution really is. Consequently, you must distinguish the

“CAN’T DO”FROM

“WON’T DO”

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“NO” DOESN’T NECESSARILY MEAN “NO”

• In other words, is the other side saying that it is opposed to your proposal…..

WON’T AGREE TO IT

• Or that it is not opposed to the proposal, but that there is some legal bar to agreeing to it…..

CAN’T AGREE TO IT

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“Can’t do”•Here, the party is objecting to your proposal on the grounds that it may not legally implement your desired solution

•What to do?

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“Can’t do”•Get an explanation:

• Is the objection to your proposed provision in its entirety, or only to a portion?

• Get full explanation as to what the party believes the legal obstacles to be

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“Can’t do”•Problem solve:

•Ensure the reasoning is based on correct information

•Check each aspect/component

• Talk with person who says it cannot be done

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“Can’t Do”Bring in your own technical expert,

if that’s feasible• Use examples from other

agreements• Suggest the use of a third-party

evaluative process

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“Won’t Do”• Here, the party is objecting to your

proposal because it does not want to implement your solution; this may be based on an evaluation of the merits, or may simply be a “position.”

• What to do?

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“Won’t Do”• Determine why

• What is reason agency won’t agree• Who is the reason agency won’t agree

• Use argument, facts, or precedence to overcome objection

• Would a third-party process help?

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OTHER STRATEGIES:The “sub-components”

In negotiations, we rarely get “full relief.” Each side makes compromises.

The risks of litigation/case evaluation, legal impediments, and personal animosities will likely mean that if the case is to settle only some of what your client hopes to achieve in litigation can be achieved short of that.

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OTHER STRATEGIES:The “sub-components”Therefore, it is important to understand the

“sub-components” of the personnel action at the heart of the dispute.

These “sub-components” can present opportunities for “fall-back” positions so that your client achieves a settlement of value or one that addresses the client’s more important concerns.

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The “sub-components” e.g., Removal• Back pay• Time on the rolls• Future employability• “Clean” record• Retirement/Annuity• Unemployment Insurance Co

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The “sub-components”e.g., Promotion• Retroactivity• Back pay• Current promotion• Next promotion• Priority consideration• Recognition – enhanced promotability Co

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Define Terms• Some commonly-used terms in the federal

sector may not have a uniform of commonly understood definition.

• The Parties should define exactly what they mean, or else you may find the EEOC defines it differently when you allege a breach.

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Define Terms

Examples of some commonly-used terms without a uniform definition:

• Priority consideration• Clean record• Destroying all negative documents• Neutral reference

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SPECIAL CONSIDERATIONS:IMPACT ON ANNUITY• Because annuity rights are specifically provided

for statute, a federal agency and a litigant cannot bargain for provisions that provide for greater annuity rights than the employee is entitled to.

• See OPM’s Settlement Guidance at:http://www.opm.gov/policy-data-oversight/settlement-guidelines Co

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IMPACT ON ANNUITY --OPM’s Guidance:• A fundamental principle of settlement authority is

that the Retirement Fund is not a litigation settlement fund.

• Settlement terms may not be more detrimental to the Retirement Fund than the court or administrative body could impose.

• Settlements must abide by the annuity calculation formulas and limitations on retirement eligibility that Congress has imposed by statute.

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IMPACT ON ANNUITY --OPM’s Guidance:• A settlement affecting employee benefits must provide for full

payment directly to OPM for the amounts of applicable employee deductions and agency contributions for OPM administered programs

• OPM will not be bound to a settlement that evades the statutory requirements for entitlement to an annuity. See Parker v. OPM, 93 MSPR 529 (2003); Stevenson v. OPM, 103 MSPR 481 (2006).

• In doubt about whether OPM will approve???? Send an email outlining all of the operative facts and circumstances, with questions to: settlementguidelines@opm.gov.

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THE END

CATHY HARRIS&

JOE KAPLAN

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