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Stewards Guide To The Promotion Pay Anomaly
Many stewards and branch officers may be unfamiliar with the anomaly because until recently, their stations did not have T-6 positions. On October 26, 1994, Arbitrator Mittenthal issued an award that extended the T-6 position to all installations where the position did not previously exist.
Because the anomaly tends to occur most frequently when carriers are promoted to T-6, all carriers in the country are now exposed to the complexities of this pay situation. (An earlier Activist article about the anomaly, which appeared in the Summer 1994 issue, dealt with many aspects of the anomaly that have now been resolved.)
Because the anomaly now potentially affects all postal facilities in the country, stewards and other branch leaders should review the facts thoroughly so they will best be able to advise carriers who have questions about their own situations.
Basically, the promotion pay anomaly is an unintended result of 1984 contract negotiations. As part of that National Agreement, the arbitration panel added several new steps to steps to postal employees' pay-grade levels. The pay schedules contained in the 1984 contract were adjusted accordingly.
However, since letter carriers were still required to begin a new waiting period for the next periodic step increase after promotion to a higher grade, the new steps added to the existing pay structure created an anomaly some promoted employees earned less in certain pay periods than if they had never been promoted. This problem affected employees who were hired after January 19, 1985, and who had been promoted from Steps AA, A, B of C of one pay grade to steps A, B or C of another grade.
For example, consider the case of a carrier hired in October 1994 at Grade 5, Step B whose first scheduled step increase (to Grade 5, Step Q was set for August 1996. In December 1995, after serving 60 weeks, she bid on a T-6 position and was required, under USPS rules, to begin a new waiting period for a step increase to Grade 6, Step C. This requirement, to start a new waiting period, is what causes the promotion pay anomaly-the irrational result that, for some period of time at least, promoted employees earn less than they would have if they had not been promoted at all.
In this case, the anomaly occurred because, despite getting an immediate pay increase of approximately $1,700 annually upon moving to Grade 6, Step 13, the carrier began losing money 36 weeks later. Had she still been in Grade 5 at that time - August 1996-her step increase to Grade 5, Step C would have raised her salary by about $2,300 annually to $31,201 per year. In other words, 36 weeks after getting promoted, the carrier was being paid $30,663 annually at Grade 6, Step B, or $538 per year less that what she would have made had she never been promoted.
In this situation, the anomaly continued even after the carrier moved to Grade 6, Step C after 60 weeks in Step C - since by that time she would have reached Step D in Grade 5 if she had not bid on the T-6 position and because the 5D salary exceeds the salary at 6C. In fact, the anomaly continued for a total of 104 weeks or two years, at which point the carrier reached Grade 6, Step D.
In 1990, the unions and the Postal Service reached an agreement to resolve the promotion pay anomaly. The settlement established a special fund to compensate eligible carriers for promotion pay losses incurred between January 19, 1985 and November 20, 1990 (which was the end of the 1987 contract). All fund payments for promotion pay anomaly losses incurred prior to November 20, 1990 have been made and the fund liquidated. The settlement further provided that all promotion pay losses incurred after November 20, 1990 would be made up through quarterly lump sum payments. The 1990 settlement agreement provided the following:
No employee will, as a consequence of a promotion, at any time be compensated less than that employee would have earned if the employee had not been promoted but had, instead, merely advanced in step increments in that employees grade as a result of fulfilling the waiting time requirements necessary for step increases. This includes affected employees who are or were promoted to a higher grade and subsequently reassigned to their former grade.
The lump sum payments provided by the settlement are calculated based on all paid hours, including paid leave. This includes straight time hours, overtime hours and any applicable premium pay. The lump sums are paid on a quarterly basis on a schedule determined at the beginning of each calendar year. The current quarters are Pay Periods 6, 12, 20, and 26. Since these quarterly lump sum payments are not part of an employee's basic pay, they are not considered when determining CSRS or FERS contributions.
Who Is Affected
Some basic facts should be made clear. First, the promotion pay anomaly ordinarily only affects carriers who are at Step C or below. Except in a few extreme cases when a carrier loses more than 88 weeks in waiting for a promotion, by the time a carrier reaches Step D the pay schedule works as intended-with each subsequent step increase resulting in an immediate and continuing pay raise, both in Grades 5 and 6. Also, carriers who are affected suffer pay losses only during the weeks that they would have been in the higher step of the lower grade.
To illustrate this point, look back at the carrier whose situation was described earlier. After 60 weeks at Grade 5, Step B, this carrier was promoted to Grade 6, Step B. The carrier's next raise will come in 96 weeks, when she goes to Grade 6, Step C. However, in another 36 weeks, the carrier would have made more money-if she had remained in Grade 5-by going to Step C. So the carrier suffers from and should be compensated for the promotion pay anomaly for only 60 weeks- not the entire time she is in the higher grade.
This anomaly period is calculated by taking the 96 weeks of the waiting period to Grade 6, Step C minus the 36 weeks until the carrier, if not promoted, would have reached Grade 5, Step C. However, if the carrier remains in Grade 6 and moves steadily up through the appropriate step increases, she will never suffer another pay anomaly after reaching Grade D.
Return To The Former Lower Grade
The settlement agreement also required that Section 422 of the Employee and Labor Relations Manual (ELM) be modified to make clear that employees returning to a former lower grade must be assigned to the step and next step increase date as if service had been uninterrupted in the lower grade. In other words, all time, including time spent in the higher grade, is credited toward determining the date of the next periodic step increase in the lower grade. As a practical matter, this means that any T-6 letter carriers who later successfully bid on a route end up exactly where they would have been had they never left Grade 5. In such situations, the time temporarily "lost" as a result of beginning a new waiting period in Grade 6 is fully restored.
Repromotion To A Higher Grade
A particularly complex situation arises in the occasional case of carriers repromoted to Grade 6-that is when periods in Grade 6 are interrupted by a period in Grade 5. This situation is controlled by the provisions of ELM Section 422.232. This section specifies that a repromoted employee is placed in the higher grade with credit toward the next periodic step increase as if the employees had remained continuously in that previously held higher grade.
For example, consider the case of a carrier who was promoted from Grade 5, Step B to Grade 6, Step B, returned to Grade 5, Step B and subsequently received a step increase to Grade 5, Step C. If the carrier successfully bids on a Grade 6 position a second time, he will not necessarily be placed in Grade 6, Step C. This is because the waiting period for the next periodic step increase in Grade 6 will be reestablished as if the carrier had never returned to Grade 5.
Generally speaking, as long as the individual service history and hours information is correct, anomaly payments will be calculated correctly. In a few cases, carriers may experience difficulty receiving the correct promotion pay anomaly payments because there are mistakes in their service histories. Although most of these problems were corrected in the course of distributing funds from the 1990 settlement, it's always a good idea in questionable cases to check a carrier's record to ensure its accuracy.
In the event it is determined that a carrier's step placement or waiting period was incorrectly established in the past, the Postal Service will calculate the amount of the resulting over or underpayments. In the case of overpayments, it is possible that the Postal Service will initiate an employer claim under the provisions of Article 28. (See the story, "Helping carriers with employer claims," in the Winter 1996 NALC Activist). In the case of underpayments, the Postal Service will make the carrier whole by making a separate payment. Such payments, which are made because of Postal Service errors, should not be confused with promotion pay anomaly payments.
Stewards will most likely find that they will have to clear up some misconceptions that carriers have about their right to quarterly anomaly payments. Refer to the two main points above-that the promotion pay anomaly only affects carriers who are at Grade 6, Step C or below, and that even these carriers are not continually affected by the anomaly. The promotion pay anomaly results from step increases being delayed following promotion, so the length of time during which the anomaly occurs can only be determined by looking at individual service histories on a case-by-case basis.
Stewards and other branch officers need to take an active role in helping carriers understand the promotion pay anomaly. Stewards should stress to carriers that despite the apparent complexity of the anomaly, three points remain clear. First, there is no dispute that when you go to a higher grade, you begin a new waiting period for promotion.
Second, the system should work so that a carrier will always get paid at least as much in the higher grade as in the lower grade-which is why the quarterly anomaly payments may be necessary.
And finally, when carriers return from a higher grade to a lower one, those carriers should always end up, in terms of pay, where they would have been if they had never been promoted.
Although the problems concerning promotion pay anomalies seem complex, the skills that NALC stewards already possess should serve them well in sorting out any confusion.
Just remember to ask thorough questions, get complete answers, follow through with management and seek help if necessary from other branch officers and your National Business Agent. Onward through the fog!
Promotion Pay Anomaly
Relevant language pertaining to the promotion pay anomaly appears in Section 422 of the Employee and Labor Relations Manual (ELM). Those provisions of the ELM include the following: "422.231. Basic rules. "c. No employee will, as a consequence of a promotion, at any time be compensated less than that employee would have earned if the employee had not been promoted but, instead, advanced in step increments in the lower grade by fulfilling the waiting time requirements necessary for step increases. This includes employees who were promoted to a higher grade and subsequently reassigned to their former grade. If during any pay period following the promotion, the employee's basic salary is less than the employee would have received for that pay period if the employee had not been promoted, the difference is paid to the employee in a lump sum payment.
"422.232. Supplemental Rules. "a. Repromotion. An employee repromoted to a previously held grade is assigned the step the employee would have attained with credit toward the next step date as if the employee had remained continuously in that previously held higher grade...
"422.25. Reductions in Grade.
"422.25 1. General. Reductions in grade include voluntary changes to lower level, management initiated changes to lower level, and demotions.
"422.252. Step and Step Date Assignment.
"a. To Former Lower Grade. The employee is assigned to the step and next step date as if service had been interrupted in the lower grade."