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Update on Meritorious Service Increase Disputes

On Sept. 3, the Foreign Service Grievance Board ruled in favor

of AFSA’s implementation dispute, which it had filed on behalf

of the 554 Foreign Service employees who never received the

monetary component of their Meritorious Service Increases

awarded by the 2013 selection boards.

The FSGB decision found that the Department of State

breached a provision regarding MSIs in the 2013 procedural

precepts for the selection boards—a negotiated agreement

with AFSA. In its ruling, the board directed the department to

retroactively pay the 2013 MSIs, with interest, dating back to

Nov. 3, 2013—the effective date of promotions.

On Oct. 3, the department responded by filing excep-

tions to the FSGB’s decision with the Foreign Service Labor

Relations Board. It also requested that the FSGB temporarily

stay its order to retroactively pay the 2013 MSIs, pending an

FSLRB decision. The Grievance Board granted the request.

Thus, 2013 MSI payments continue to be withheld, though

interest is still accruing.

The FSLRB must now assess whether the Grievance

Board’s decision is deficient because it is contrary to any

law, rule or regulation, or on other grounds similar to those

applied by federal courts in private-sector labor-management

relations. AFSA has 30 days to respond to the department’s



For more than 30 years the department and AFSA have

negotiated and agreed on the procedural precepts (i.e., the

“ground rules” for selection boards). The precepts include

provisions relating to the award of MSIs to employees who

were not promoted, but whose performance was of sufficient

quality that an MSI was deemed appropriate by the selection

boards. For approximately 30 years prior to 2013, MSIs

were paid to whatever number of employees the selection

boards recommended, up to a percentage limitation of the

competitive class specified in the precepts.

2013 Sequester:

In February 2013, as the federal

government instituted precautionary financial measures in

preparation for the 2013 sequester, the Office of Management

and Budget issued a memo to the heads of all agencies

stating that “increased scrutiny” should be paid by agencies in

“issuing discretionary monetary awards to employees, which

should occur only if legally required, until further notice.”

On March 1, 2013, President Barack Obama signed an order

issuing a budget sequestration. On March 8, 2013, the under

secretary for management issued a directive ordering a freeze

on monetary awards to department employees.

On April 4, 2013, OMB issued another memo stating that

discretionary monetary awards should not be issued while

sequestration is in place, unless issuance of such awards is

legally required. OMB said, “[l]egal requirements include com-

pliance with provisions in collective bargaining agreements

governing awards.” OMB also said that quality step increases

(the civil service equivalent of an MSI) were not considered

discretionary awards.

On April 9, 2013, the department proposed the inclusion

of new language in the precepts relating to MSIs. The new

language stated that “If restricted by policy, regulation or

budget from granting step increases of cash awards,” the

department would recognize employees through a statement

to their files, annotation of their scorecards and granting of

bidding privileges. The proposal also stated, “if authorized,

[the Bureau of Human Resources] will implement all MSIs and

cash payments in lieu thereof as of the effective date of the


AFSA agreed to the department’s proposal due to its

concerns that employees would be furloughed if it did not

agree to suspend MSIs during sequestration. However, AFSA

understood the new language to refer to policy, regulations

or budget restrictions imposed by OMB, and that once these

restrictions were lifted, HR would implement MSIs and cash

payments as of the effective date of the promotion.

When OMB and the Office of Personnel Management

jointly issued a memo establishing budgetary limits on

awards paid during fiscal year 2014 on Nov. 1, 2013, and when

the president signed the fiscal year 2014 appropriations act

on Jan. 17, 2014, AFSA argued that the conditions in the pre-

cepts had been met and State was required to pay the 2013


The department declined to do so, arguing that the Foreign

Service Act of 1980 gave the department the sole discretion

to either pay or not pay MSIs and that the “if authorized” lan-

guage in the precepts referred to the department’s discretion,

and not to any action by OMB or OPM.

Dispute Details:

AFSA filed an implementation dispute

with the department on May 16, 2014. On June 30, 2014, the