Trump Team Offers Tested Incentives to Boost Employee Exits (1)

The Trump administration’s latest moves to encourage departures of federal employees is poised to be its most effective as its more grounded in the law than the earlier deferred resignation proposal that failed to convince enough workers to leave.

Federal agencies including those that oversee health and Social Security are giving their employees the option to retire early and offering other staff up to $25,000 to leave.

These offers differ from the January proposal, called “Fork in the Road,” that federal employment lawyers called legally dubious. Federal agencies have used buyouts in the past to downsize, albeit on a smaller scale.

This time, “you have assurance it will actually take place as advertised as opposed to deferred resignation is a complete gamble,” said Heather White, a federal sector employment attorney.

The offers are part of the Trump administration’s broader efforts to shrink the size of the federal government and eliminate programs the president opposes without Congressional approval.

Early Retirement, Legal Buyouts

By law, agencies can offer employees older than 50 the option to retire early if they’ve worked for the federal government for at least 20 years, with some exceptions.

The offer is known as Voluntary Early Retirement Authority. Employees that accept can keep their health insurance and collect payments from their retirement plan.

The Social Security Administration and the Department of Health and Human Services said employees could opt into early retirement.

Federal agencies have also proposed buyouts to their employees, known officially as Voluntary Separation Incentive Payments. These are lump sums paid out to workers when they resign. They’re designed to minimize involuntary layoffs.

These payments are capped at $25,000 — about a quarter of the average federal employee’s salary.

The Securities and Exchange Commission, however, is offering workers $50,000 to resign or retire by April 4, far beyond the government-wide cap. The proposal reflects the agency’s contract with its unionized employees.

HHS is also offering $25,000 in addition to eight weeks of paid administrative leave for employees to leave the agency this week. Workers will receive full pay and benefits for the two months, according to an HHS email viewed by Bloomberg.

OPM’s website says agencies have “broad authority” to excuse employees without loss of pay and benefits.

The Trump administration in January offered employees the choice to quit voluntarily and keep their pay through Sept. 30, rather than wait out future layoffs. They called it “Fork in the Road” and “deferred resignation.”

Employees given the option to retire early or take the buyouts might feel more security in these options than “Fork in the Road” because they’re more established methods of reducing the size of the government, said Keir Bickerstaffe, a federal sector employment attorney with Kalijarvi, Chuzi, Newman & Fitch PC.

“The ‘fork’ was just such a different animal with much more basis for concern,” Bickerstaffe said.

Agencies can pay for buyouts with their regular allocation from Congress, White said, adding that they don’t have to immediately pay employees that opt to retire early. In contrast, Congress hasn’t set aside money to pay for the Trump administration’s “fork” offer beyond March 14, and federal sector employment lawyers questioned whether it had the authority to propose it in the first place.

In their lawsuit challenging the arrangement, unions highlighted the Anti-Deficiency Act, the law that prohibits federal agencies from spending money before Congress approves it, and the Impoundment Control Act, which limits the president’s control over federal spending. A federal court didn’t weigh in on the merits of those claims because judges said the unions didn’t have standing to challenge the offer.

Narrow Appeals Path

With “Fork in the Road,” OPM’s sample resignation agreement demanded employees give up the right to challenge the Trump administration if it failed to uphold its side of the deal.

With the more traditional programs, workers can seek relief from the Merit Systems Protection Board if they believe their bosses pressured them to exit, according to statements published by OPM in 2017.

Laid-off employees entitled to severance payments are also supposed to be able to bring their disputes to the MSPB. The law requires agencies to use specific formulas to calculate severance payments depending on worker tenure and age but it cannot exceed a worker’s annual salary. The average yearly pay across the entire federal workforce is $106,000, according to Pew Research Center, though salary varies considerably based on job.

But many attorneys question whether the board will be a viable path for recourse after Trump attempted to fire Cathy Harris, the board chair, and with federal judges rebuffing unions’ attempts to bring labor disputes to the courts. Without Harris, the MSPB wouldn’t have a quorum and would be unable to issue decisions.

A federal judge said Harris can return as a member while her case proceeds in court. The Trump administration appealed the decision.

“This whole thing is steeped in irony because, in the name of cutting fraud and waste, we’re going to be wasting a lot of money on lawyers and back pay,” said David Super, an administrative law professor at Georgetown University.