Troubling Issues in Settlement Negotiations

Two troubling issues arise when federal government agencies are negotiating settlements of EEO and/or MSPB cases:

The first arises when an agency demands, as a condition of the agency entering into a settlement with the employee, that the employee resign or retire from the agency’s employment.  The second and related issue arises when the agency demands as a condition of settlement that the employee or former employee never apply for employment with that agency ever again or, in some more extreme cases (which are more rare), never apply for employment with the federal government.  (A third issue with respect to settlement agreements arises from the content of confidentiality clauses and the matter of what an employee can be prohibited from disclosing; however that is a subject for a future blog.)

Both of these demands by agencies can be considered as per se reprisal because they can be seen to arise from participation in protected activity; however, whether or not these demands actually constitute reprisal, the employee to whom the demands are presented will consider them as reprisal and/or evidence of the agency’s bad faith.  When an agency makes one or both of these requirements a condition of settlement, it clearly makes resolution more difficult.

With respect to the first issue – requiring the employee to resign or retire as a condition of settlement – in our experience the matter revolves around money.  If the employee is eligible to retire, many times the agency can sweeten the deal by giving the employee a retroactive promotion to give the employee a higher “high three.”  This is legal as long as the agency makes the required contributions to the OPM retirement fund.  If the employee is not eligible to retire, then a requirement that he/she resign usually is acceptable only if the agency is willing to pay the employee an additional sum of money.

With respect to the second issue, demanding that the employee never apply for employment with the sub-agency or to the federal agency as a whole (such as DOD or HHS) is probably over-reaching by the agency.  However, a narrowly drawn clause which limits where the employee cannot apply – for example, to the organization for which the employee works or did work – may be acceptable to both parties.

Written by June Kalijarvi