The Federal Deposit Insurance Corporation (FDIC) terminated a manager for “defalcation of obligations.”  The Board ordered the employee reinstated with back pay because FDIC ignored what we are going to call the “OGE Defense,” namely,  5 CFR 2635.105 of the Office of Government Ethics regulations.   (See Jonson v. FDIC, 2014 MSPB 22 (2014))  Here is what that all means and how you can use it to help your members.

The law establishes 14 ethical obligations for federal employees (5 CFR 2635.101) which the Office of Government Ethics has embedded into the Standard of Conduct for Federal Employees.  Individual agencies are permitted to issue supplemental standards or conduct rules, which one can find on the OGE web site for Agency Supplemental Regulations.  However, individual agencies can only supplement the standards it they get prior OGE concurrence and publish the rule in the Federal Register. (Agencies can also fire employees for violating federal statue, such as the prohibition against false statements in the matter of officialbusiness.)

FDIC issued a supplemental regulation prohibiting defalcation or defaulting on debts owed to banking institutions insured by FDIC, but the regulation only officially applied to contract employees.  In the alternative, FDIC argued that the defalcation rule was not an ethical or conduct standard, but a “minimum fitness regulation” for employees and contractors alike, which did not require OGE concurrence.  The Board dismissed that as a legal fantasy and notified the FDIC that it would not sustain disciplinary action for violation of FDIC supplemental rules unless the agency could prove OGE concurrence.  It could not.

Union reps should remember this whenever they run into an adverse action proposal letter charging an employee with violating a rule they have not heard of before.

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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