WHAT UNIONS CAN DO WHEN AGENCIES END NON-DISCRETIONARY BONUS PROGRAMS

Given the anti-employee bias, if not contempt, built into the DNA of the current FSIP many employers are taking the opportunity to terminate negotiated performance award programs, e.g., annual awards based on performance scores or gainsharing programs. There is not much unions can do to stop that, but there is something they can do to make employers regret it.

Generally, under law agencies are required to increase employees’ hourly overtime pay if they work under negotiated or otherwise non-discretionary award programs.  For example, let’s assume that an employee earns $10 an hour on straight time for a 2018 annual wage of $20,870. (2087 hours X $10.) She would get $15. an hour for each hour of overtime.  But now let’s assume that she earned a performance award of $2087. for her work in 2018.

Under law there is a good argument that when she works overtime in 2019 the agency must add her award money to her straight time hourly wage figure and use that adjusted figure to pay overtime. In our example, a $2087 bonus or award would effectively increase her hourly wage to $11 an hour and mean that when she works overtime she is entitled to more than the previous $15 hourly overtime figure.

If agencies terminate nondiscretionary award plans, forcing them to conduct this extra analysis boosts the cost of doing that.  If agencies have already terminated those plans without boosting employee overtime pay, the union could potentially file a grievance asking for back pay.  While the individual employee checks might not be big, a class action grievance could cost an agency millions—and give the union a very nice attorney fee check. (Of course, the grievance would have to be timely and being unaware of the law is not an excuse to delay filing a grievance.)

We have not heard of any union doing this yet in the federal sector, although it is old news to those who follow more than federal sector ULP law. This is another example of why the best union reps are those who study the interconnection of ULP laws with employment, civil rights, and appropriations law—which is what we try to do here at FEDSMILL.com.

Here are a few posts that will help you learn more about this.

Overtime Pay: Must bonuses be included in overtime pay calculations?

Compensation

Unintended Consequences: How Your Bonus Plan May Create Overtime Pay Liability

 

About AdminUN

FEDSMILL staff has over 40 years of federal sector labor relations experience on the union as well as management side of the table and even some time as a neutral.
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