D.C. Circuit Finds USPS in Violation of Postal Service Reorganization Act
This case law update was written by Victoria E. Grieshammer, an attorney at the law firm of Shaw Bransford & Roth, where since 2021 she has represented federal officials and employees in all aspects of federal personnel employment law. Ms. Grieshammer also advises federal agencies and employers on employment issues, such as proposed disciplinary actions and other employment-related litigation.
The National Association of Postal Supervisors (the Association) brought action against the U. S. Postal Service, challenging its proposed pay package for supervisory employees. Although the case was dismissed at the district court level, the United States Court of Appeals for the District of Columbia Circuit reversed and remanded, holding that the Association plausibly alleged that the Postal Service exceeded its statutory authority and failed to follow the commands of the Postal Reorganization Act (the Act).
Importantly, the Act established the Postal Service as an independent agency under the Executive Branch, and it instructs the Postal Service to set the compensation for all officers and employees.
As opposed to clerks and carriers, supervisory and managerial personnel are expressly excluded from representation in collective bargaining units. Instead, the Postal Service must provide a “program for consultation with recognized organizations of supervisory and other managerial personnel.” Here, the Association is a recognized organization. As such, the Postal Service must involve the Association in proposed compensation policies and provide it the opportunity to analyze and criticize the decisions. The Postal Service must provide reasons for rejecting any suggestions by the Association.
The Act also provides a dispute resolution process to be used when a recognized organization believes that the Postal Service is not acting in accordance with the Act. In this process, a fact finding panel convenes to review the Postal Service’s decisions and provide recommendations, and the Postal Service must consider the recommendations and explain its rejections.
In September 2017, the Postal Service sent a proposed pay package to the Association, which represents supervisory Postal Service employees, for its Field Executive and Administrative (EAS) employees. The Postal Service consulted with the Association on the package, but it rejected most of the Association’s recommendations without reason. The Association then requested that a factfinding panel review the package. The panel concluded that the Postal Service had violated the Act and made recommendations to bring the package into conformity with the Act. The Postal Service rejected most of the panel’s recommendations.
In December 2018, without consulting with the Association, the Postal Service issued a separate and “final” pay package for Area and Headquarters EAS employees. Next, during this same period, the Association attempted to represent its postmaster members in compensation negotiations. The Postal Service refused to acknowledge the Association as a representative of postmasters.
The Association brought this suit in July 2019 alleging that the 2017-2018 Postal Service processes did not follow specific provisions of the Act. At the district court, the Postal Service filed a motion to dismiss, which was granted. The Association appealed.
First, the court had to determine whether it could review the Postal Service’s actions. The Postal Service can only be subjected to judicial review when the agency acts ultra vires, meaning that it has acted outside of the authority that Congress granted. Because the Association claimed that the Postal Service was acting outside of the Act, and because the statutory provisions at issue contain explicit language stating what the Postal Service “shall” do, the actions of the Postal Service were susceptible to judicial review for ultra vires acts.
The Association first alleged that the Postal Service violated the Act by failing to maintain a supervisory pay differential and by failing to conduct a comparability analysis. The Act requires the Postal service to “provide adequate and reasonable differentials in rates of pay between employees in the clerk and carrier grades . . . and supervisory and other managerial personnel.” The court held that the Postal Service acted ultra vires by failing to maintain at least some pay differential.
The Act also requires that the Postal Service set compensation for its employees that is “comparable to the rates of compensation paid in the private sector.” The Association alleged that the Postal Service did not look into private pay rates until after the factfinding panel and that it did not study total compensation or benefits as required by the Act. The court agreed, stating that the “Postal Service’s belated and limited look at pay – and not total compensation or benefits . . . plainly fails to meet the statutory obligation” and that it acted ultra vires by issuing the package without explaining why it rejected the Association’s recommendations.
The Association’s next argument alleged that the Postal Service acted ultra vires by refusing to consult with the Association with regard to two categories of employees: (1) Area or Headquarters EAS employees, and (2) postmasters. The court held that the Postal Service’s argument that Area and Headquarter EAS employees were not supervisory or managerial employees was “nothing more than an unsupported assertion.”
Next, the court determined that the Postal Service’s refusal to consult with the Association regarding post masters was also ultra vires. The Act sets out several types of associations that may become recognized associations, one of which must represent a majority of supervisors. The court pointed out that supervisory organizations, such as the Association, must only show that they represent a majority of supervisors, and that there is no statutory language indicating that supervisory organizations may not also represent postmasters. Therefore, because postmasters fall under the broad category of supervisory and managerial employees, the Association was justified in representing postmaster employees in the compensation package process.
Find the full case here: National Association of Postal Supervisors v. United States Postal Service.
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