SEC Raised Pay Too Quickly, Court Rules

(CN) - Calling it the "sort of dispute that could only arise between public employees and a government agency," the D.C. Circuit determined that the Securities and Exchange Commission moved too quickly to give its workers raises.

The SEC in 2001 asked Congress to be allowed to adjust pay rates without following the federal government's pay scale known as the "general schedule" in an attempt to retain its rapidly departing attorneys, accountants and examiners.

Congress approved the Investor and Capital Markets Fee Relief Act in 2002. Both the National Treasury Employees Union and the SEC initially supported the legislation, but talks reached an impasse.

In May 2002, the SEC imposed the new pay system before the bargaining process ended, and in doing so terminated so-called "WIGIs," or automatic annual within-grade increases.

The union then filed two unfair labor practice lawsuits, and an administrative law judge ordered retroactive pay raises for qualified workers entitled to a WIGI on top of their new raises.

The SEC argued that it had to act fast and end the WIGIs to prevent undue windfalls. It also argued that it was administratively imperative to make the decision for the agency to function properly.

Judge Janice Brown of the federal appeals court in Washington, D.C., disagreed. "As the SEC fails to appreciate, there is a difference between what an agency finds expedient and what is necessitated by an 'overriding exigency.'"

Brown also said the SEC failed to prove that the move to pluck WIGIs before the bargaining process had ended was necessary for the agency's survival.

"The SEC simply failed to meet its burden to prove its chosen affirmative defense - that the unilateral implementation of the new salary system on May 19, 2002 was necessary to the functioning of the agency - by a preponderance of the evidence," Brown concluded.

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