Labor: No workers' comp for feds if USPS defaults

Monday - 8/29/2011, 5:47pm EDT

By Jolie Lee
Federal News Radio

The Labor Department warns it won't be able to make workers' comp payments to federal employees if the Postal Service fails to make a $1.2 billion payment by October.

In June, USPS said it would suspend advance payments to the Federal Employees Retirement System in order to have cash on hand to pay employees and bills.

USPS has repeatedly claimed that it has a FERS account surplus of $6.9 billion.

But in a letter to Rep. Darrell Issa (R-Calif.), chairman of the House Committee on Oversight and Government Reform, Labor said 2 million feds would be directly impacted if USPS defaults on its next payment, due Oct. 1, Reuters reports. Labor said it would not be able to pay any benefits in the last four months of fiscal year 2012 without USPS payments.

Federal News Radio has requested a copy of the letter from Labor.

The Postal Service has said it plans to make the payment but might not have enough money if Congress does not interject.

USPS has reported $3.1 billion in losses in the third quarter of the fiscal year and anticipates a total of $9 billion in losses this year.

As mail volumes decline and revenues continue to fall, USPS is working on a plan to cut 220,000 positions by 2015 and pull employees out of the federal health benefits plan to create its own health care plan.

These proposed cutbacks, however, do nothing to ease the approaching deadline to make the $1.2 billion payment.

Reuters reports the letter from Labor to Issa could "apply more pressure on Congress to provide financial relief to the Postal Service."

Issa has introduced a bill he said would save the USPS at least $6 billion per year through restructuring the Postal Service and renegotiating existing collective bargaining agreements.