IRS to pay employee bonuses at lower percentage rate

Monday - 2/3/2014, 6:07pm EST

(Correction: An earlier version of this article incorrectly stated that the agreement between the IRS and NTEU would reinstate canceled manager bonuses. In fact, the agreement applies only to union-employee bonuses.)

The Internal Revenue Service reached an agreement Monday with the National Treasury Employees Union to pay frontline union employees who earned performance awards last year. The awards would be paid from a pool of 1 percent of bargaining unit salaries.

"While this settlement provides an awards pool that is less than the amount called for under the parties' negotiated agreement, the settlement avoids protracted litigation over the matter," said NTEU President Colleen M. Kelley in a statement. "The payment date is expected to be this spring."

The awards in question were based on employee performance evaluations on work that had been performed since the start of 2012.

But faced with automatic spending cuts and congressional outrage last summer, then acting head of the IRS Danny Werfel announced he would cancel bonuses for IRS managers, outright, and that he would seek ways to cancel bonuses for union employees.

Werfel's decision to cancel union-employee bonuses set off legal action and protracted discussions with NTEU. The union contended that its collective bargaining agreement with IRS required the agency to set aside 1.75 percent of union salaries to pay for the bonuses.

"Ultimately, while the agency agreed to pay employees awards, it cited an Office of Management and Budget directive holding total payouts to 1 percent of bargaining unit salaries," Kelley said in the statement. "The alternative for NTEU would have been to continue litigation, which — while we believe it would have been successful — would have in all likelihood delayed for a significant time period any payments to employees and of course, with litigation, there are no guarantees."

RELATED STORIES:

IRS cancels manager bonuses; union employees could be next