Issues Arising from the
Federal Circuit's Decisions
The Federal Circuit’s interpretation of 5 U.S.C. § 7511(a)(1) has created a number of potential issues and challenges for Federal agencies. For one, agencies are still learning about the impact of Van Wersch and McCormick on assessing and terminating probationers. In addition, Federal regulations are not currently consistent with the decisions of the Federal Circuit in this area. Other concerns include the effect of the court’s decisions on the rights of certain individuals in the excepted service who may not be serving under a formal trial period, risks associated with constructing waivers of appeal rights for new hires, and the impact of the court’s decisions on merit-based hiring in the Federal civil service. The following is a brief discussion of some of the issues agencies should be aware of as a result of the decisions in Van Wersch and McCormick.
Federal Regulations are Inconsistent with
Van Wersch and McCormick
Federal regulations provide that employees with statutory procedural and appeal rights include an employee in the competitive service “who has completed a probationary or trial period,” and an employee in the competitive service “serving in an appointment that requires no probationary or trial period, and who has completed 1 year of current continuous service in the same or similar positions under other than a temporary appointment limited to 1 year or less.” These regulations also provide that a “nonpreference eligible employee serving a probationary or trial period under an initial appointment in the excepted service pending conversion to the competitive service” does not have such rights.
The above regulations either conflict with the principles set forth in Van Wersch and McCormick, or may be found in the future to conflict with the statutory language. First, the regulations provide that employees in the competitive service who have completed a probationary or trial period have procedural and appeal rights, even though the statute arguably provides such rights to a broader group of individuals, namely, those who are not serving such a period under an initial appointment. In other words, the language of 5 U.S.C. § 7511(a)(1)(A)(i), if interpreted literally by the Federal Circuit, could cover not only those individuals who have completed a probationary or trial period, but those appointees, such as temporary appointees, who are not serving a probationary or trial period because they are not required to do so. Second, the regulations provide procedural and appeal rights to employees in the competitive service who have completed 1 year of qualifying service only if they serve in appointments that do not require probationary or trial periods. This regulation is inconsistent with McCormick, where the court found that Ms. McCormick was an “employee” with appeal rights because she completed more than 1 year of current continuous service under 5 U.S.C. § 7511(a)(1)(A)(ii), even though she happened to be serving a probationary period when the agency terminated her.
Finally, the regulations continue to provide that nonpreference eligibles serving a probationary or trial period under an initial appointment in the excepted service pending conversion to the competitive service do not have appeal rights. However, the court in Van Wersch held that an individual is an “employee” if the individual is either not serving a probationary or trial period under an initial appointment pending conversion to the competitive service, or has completed 2 years of current continuous service in the same or similar positions in an Executive agency under other than a temporary appointment limited to 2 years or less. The court in Van Wersch noted that “to the extent that OPM’s regulations are contrary to the proposition that an individual is an ‘employee’ if he or she meets the requirements of either 5 U.S.C. § 7511(a)(1)(C)(i) or (ii), they are invalid.”28
Despite these Federal Circuit cases, OPM has not amended or proposed the amendment of 5 C.F.R. § 752.401. At least one Federal agency has identified and addressed this inconsistency between the regulations and the court cases. On its Civilian Personnel On-Line website, the Department of the Army explains the Federal Circuit’s decision in McCormick and tells its human resources specialists that “[s]ince 5 CFR 752.401 and 5 U.S.C. 7511 are inconsistent, we advise that you follow the recent Federal Circuit decision in the McCormick case and apply the court’s (A)(i) or (A)(ii) conclusion for your actions, until either the statute or OPM regulations change.”29
Retaining out-of-date information in a Government regulation can confuse agencies, managers, and employees and produce unintended outcomes. Human resources specialists or managers who are not experts in employee discipline may inadvertently rely on these particular regulations. Agencies may fail to use proper procedures and fail to notify employees of appeal rights. Terminations may be reversed. In addition, many adverse action notices inform the individual that the action has been taken pursuant to 5 C.F.R. Part 752. A terminated probationer who consults section 752.401 may be misled into believing that he or she does not have appeal rights to the Board when, in fact, the individual may have such appeal rights under Van Wersch and McCormick.30 For these reasons, we urge OPM to amend its regulations at 5 C.F.R. Part 752 in order to prevent any misunderstanding by the agencies or individuals who may be affected by those regulations. In the absence of such a change in the regulations, Federal agencies should issue a notice to managers and human resources specialists, much like the notice included on the Department of the Army’s website, explaining the Van Wersch and McCormick cases and recommending that managers apply the principles set forth in those cases in calculating when new hires will obtain procedural and appeal rights, and in terminating probationary employees.
Trial Periods in Certain Excepted Service Positions
The Federal Circuit’s decisions in Van Wersch and McCormick can play an increasingly important role in agency determinations with respect to the procedural and appeal rights of individuals with appointments in the excepted service pending conversion to the competitive service. Such appointments may include those in the Student Career Employment Program, FCIP, Presidential Management Fellows Program, and the Veterans Recruitment Authority.
For example, as noted in our report, Building a High-Quality Workforce: The Federal Career Intern Program, the FCIP is an increasingly popular method of hiring individuals into the excepted service pending a conversion to the competitive service. The FCIP hiring authority was created by Executive Order 13162, which provides that a successful candidate shall be appointed to a position in Schedule B of the excepted service, with the appointment generally not exceeding 2 years. Continuation in the FCIP is contingent upon satisfactory performance throughout the internship period. Service as a career intern confers no rights to further Federal employment in either the competitive or excepted service upon the expiration of the internship period. However, competitive civil service status may be granted to a career intern who satisfactorily completes the internship and meets all other requirements prescribed by OPM. The Executive order states that OPM has the responsibility to “prescribe such regulations as it determines necessary to carry out the purpose of this order,” and to “provide oversight of the Program.”31
Because the FCIP allows agencies flexibility in evaluating applicants’ qualifications, many interns may not have been rigorously evaluated. This makes the trial period during the internship critical because it can compensate for weak prior assessments. Unfortunately, the importance of the “trial period,” at least in the FCIP, appears to be inadequately emphasized or not well understood. These potential problems may be exacerbated by the fact that the Executive order establishing the FCIP and OPM’s implementing regulations32 do not explicitly refer to a probationary or trial period for career interns. In the excepted service, unlike the competitive service, there is no statutory requirement that there be a probationary or trial period for appointments. Based on the Executive order and OPM’s regulations, therefore, it would appear to be unclear whether the appointment period under a program such as the FCIP is a “probationary or trial period” within the meaning of 5 U.S.C. § 7511(a)(1)(C)(i).
Nevertheless, in a 1992 Federal Register notice implementing the Civil Service Due Process Amendments of 1990, OPM stated that nonpreference eligible employees in excepted service appointments pending conversion to the competitive service, such as at that time the Presidential Management Intern Program, the Student Work-Study Program, and Veterans Readjustment Appointments, have no procedural or appeal rights. OPM noted that such appointments provide noncompetitive conversion eligibility if the employee has demonstrated satisfactory performance or training, and that these requirements “constitute the ‘probationary or trial period’ referred to in 5 U.S.C. § 7511(a)(1)(C)(i).” 57 Fed. Reg. 20041 (May 11, 1992). The court in Van Wersch, 197 F.3d at 1150 n.6, relied upon this language in the Federal Register notice to find that Ms. Van Wersch, who was appointed under the authority of 5 C.F.R. § 213.3102(u), relating to severely physically handicapped persons who may qualify for conversion to competitive status upon completion of 2 years of satisfactory service, was serving a probationary or trial period under an initial appointment pending conversion to the competitive service and was not, therefore, an employee under 5 U.S.C. § 7511(a)(1)(C)(i).
The Board has reached similar conclusions. For example, the Board has held that for individuals serving under appointments in the Student Work-Study Programs pending conversion to the competitive service, the time spent prior to conversion is a probationary or trial period, and such employees do not gain adverse action appeal rights until they are converted into the competitive service.33 The Board has also held that when an agency terminated an individual from her position in the Student Educational Employment Program before her conversion to the competitive service, she was still serving a probationary or trial period pending conversion to the competitive service when the agency terminated her, and did not have appeal rights to challenge the agency’s action.34 More recently, the Board has held that an individual appointed to a position in the excepted service pursuant to the FCIP met the definition of “employee” under 5 U.S.C. § 7511(a)(1)(C)(i) because her prior service, in a competitive service position in the same line of work with the same agency and with no more than one break of service of less than 30 days, could be “tacked” toward the completion of her 2-year “probationary period.”35 While the above decisions may provide some support for a finding by the Board or the Federal Circuit that individuals such as FCIP interns do not have appeal rights immediately upon appointment, we nevertheless recommend that OPM and Federal agencies make it clear in the regulations and policies relating to training and development programs that the internship period and any extensions are probationary or trial periods.36
Waivers of Appeal Rights in Exchange for a New Appointment
A waiver of appeal rights is a mechanism that would relieve agencies of the procedural and legal burdens associated with terminating an employee, thereby permitting agencies to use probationary or trial periods as intended to expeditiously terminate new employees whose performance and conduct is not satisfactory. An issue that arises in light of the court’s decisions in Van Wersch and McCormick is whether an individual who meets the definitions of “employee” under 5 U.S.C. §§ 7511(a)(1)(A)(ii) or 7511(a)(1)(C)(ii) can waive appeal rights under those sections in exchange for accepting a new appointment. If so, what must such a waiver agreement include so that it is legally enforceable?
A contract is enforceable if it is based on “bargained-for consideration,” i.e., an exchange of benefits by the parties to the agreement.37 This means that any probationary period agreement that waives procedural and appeal rights must generally be signed before the individual enters on duty. If the agreement is signed after the individual has been appointed, the agreement would not enforceable because the employee likely received no benefit in exchange for signing the agreement.38 Merely informing an individual that she will be required to serve a new probationary period is not the same as a knowing and voluntary agreement on the part of that individual to serve a new probationary period or waive an appeal right.39
Additional difficulties in determining what constitutes an enforceable waiver of appeal rights arose in the case of Ramos v. Department of Justice, a non-precedential decision issued by the Federal Circuit.40 Mr. Ramos began his Federal service in March 1998 as a Border Patrol Agent, then applied for and was appointed to a Deportation Officer position effective March 11, 2001. The Standard Form 50 documenting his appointment indicated that he was subject to a 1-year probationary period in his new position. In addition, Mr. Ramos signed a Probationary Period Agreement stating that “rights . . . for adverse and disciplinary actions will be processed in accordance with . . . the code of Federal Regulations Part 315-Career and Career-Conditional Employment.” The agency removed Mr. Ramos before the 1-year probationary period expired, and the Board dismissed Mr. Ramos’ appeal of the removal for lack of jurisdiction, finding that although Mr. Ramos satisfied the requirements of 5 U.S.C. § 7511(a)(1)(A)(ii), he waived those rights by signing the Probationary Period Agreement. On appeal before the Federal Circuit, the Department of Justice rejected the contract waiver theory set forth by the Board in its decision, “confesse[d] error on behalf of the Board,” and conceded that Mr. Ramos qualified as an “employee” under McCormick, and did not make a knowing, intentional waiver of those rights when he signed the Probationary Period Agreement. The court agreed that the Board erred as a matter of law in failing to apply McCormick, found that Mr. Ramos established Board jurisdiction over his appeal, and remanded the case for further proceedings. Despite its non-precedential nature, the court’s decision in Ramos provides insight into the Federal Circuit’s thinking, which appears to be that Mr. Ramos could not have knowingly waived his right to appeal under 5 U.S.C. § 7511(a)(1)(A)(ii) and McCormick because McCormick was issued in 2002, after the Probationary Period Agreement had been signed in 2001.
The purpose of having a probationary period with limited rights is to simplify matters for an agency so that it can act with a reduced administrative burden. The more ambiguity there is in the system, the harder it becomes to use the probationary period effectively. Furthermore, as reported in our study, The Probationary Period: A Critical Assessment Opportunity, agencies are not acting as often as they should to remove probationers who do not demonstrate their fitness for continued employment. Anything that makes the process more difficult can be expected to delay or deter the termination of such probationers, and comments from some supervisors we have surveyed suggested that the complexity of the process has done precisely that. Determining whether a waiver of appeal rights is knowing and voluntary, or is otherwise enforceable, can be just as complicated as determining whether a probationary employee has appeal rights because such a determination is based on the facts in each case. Because relying on a waiver of appeal rights can therefore be unpredictable in terms of enforceability, agencies should proceed cautiously if they decide to ask new appointees to agree to serve a new probationary period and/or waive appeal rights under sections 7511(a)(1)(A)(ii) or 7511(a)(1)(C)(ii).
In fact, it is not clear whether agencies can routinely condition job offers on applicants’ willingness to sign such waivers, thereby effectively divesting the Board of jurisdiction over appeals from an ever-increasing number of “new” employees. The Board and Federal Circuit have not directly decided whether routine waivers of procedural and appeal rights by new employees, regardless of the wording, would be valid. Courts, including the U.S. Supreme Court and the Federal Circuit, have recognized that a relevant principle in cases involving the enforceability of waivers is that a waiver is unenforceable if the interest in its enforcement is outweighed in the circumstances by a public policy harmed by enforcement of the agreement. In determining whether to enforce routine waivers of appeal rights by employees accepting new positions, the Board and the Federal Circuit might have to conduct such a balancing test.
In light of the uncertainty regarding the enforceability of any particular waiver of procedural and appeal rights, OPM should consider providing guidance to agencies in this area, including a list of the criteria thought to be necessary for a valid waiver of appeal rights, and perhaps a model waiver agreement.41 This can help ensure that the process is both fair and clear. By providing such guidance, OPM may better assist agencies and employees in formulating written agreements that will have a greater likelihood of: (1) Being upheld by the Board and the Federal Circuit; and (2) creating an environment where employees are treated fairly by being given the ability to make educated decisions about their employment and appeal rights. Such guidance could also help agencies to operate more efficiently by helping them avoid complex internal debates as to whether language in a particular waiver agreement would be viewed as enforceable.
Any guidance developed by OPM could be structured in a way that is similar to the criteria set forth in the Older Workers Benefit Protection Act of 1990 for determining if a waiver of an age discrimination claim is knowing and voluntary.42 Some of the requirements that could be incorporated into such a list include: (1) Notification of the individual’s current procedural and appeal rights; (2) notification of the procedural and appeal rights the individual will have after signing the waiver agreement (such as the rights of probationary employees set forth at 5 C.F.R. Part 315, Subpart H); (3) an explanation of what is being offered to the individual in exchange for the waiver; and (4) an explanation of any right to return to a prior position, or the lack of such a right.43 In any event, agencies should standardize their policies on when waivers will be used to ensure fair competition and avoid even the perception of a prohibited personnel practice.
Possible Impact on Merit-Based Hiring
The first merit system principle provides, in relevant part, that selection should be determined solely on the basis of relative ability, knowledge, and skills, after fair and open competition. Probationary and trial periods are instrumental in observing this principle because pre-employment assessments are incomplete and imperfect. Even agencies that conduct thorough, valid assessments of their applicants cannot assure that every new hire will be satisfactory. Enabling agencies to assess and easily terminate unsatisfactory new employees recognizes this reality, and promotes two other merit system principles: Using the Federal work force efficiently and effectively; and retaining employees on the basis of the adequacy of their performance. Studies have shown that “job tryouts,” if used appropriately – i.e., for observing and evaluating performance on the job and terminating those not meeting previously established standards for satisfactory performance – have substantial value in predicting future performance.44
The court’s decisions in Van Wersch and McCormick, however, may effectively preclude the use of such tryouts for some applicants based solely on their prior experience. That is, even though an agency may intend that all applicants, if hired, be required to serve a probationary or trial period, some applicants will be subject to no period, or an abbreviated period, in which an agency can evaluate their performance and fitness for the job before those applicants acquire procedural and appeal rights under 5 U.S.C. Chapter 75. This scenario may have several unintended and undesirable consequences. First, it could encourage agencies to consider the possible presence or absence of a “job tryout” period – i.e., a factor other than demonstrated ability or performance – when making hiring decisions. Second, it may discourage agencies from hiring candidates who would have appeal rights upon, or shortly after, appointment because such candidates would be “riskier” hires. Such an outcome would not be fair to the candidate with prior qualifying service, and may result in a loss to the Government of an employee who may ultimately be the best candidate for the position. This result may be most perverse with respect to applicants for excepted service positions, because only those with prior service that is the same or similar will qualify as “employees,” and it is just these individuals who may be viewed as among the best candidates with the most relevant job experience.
When an agency wants to hire an applicant who would have appeal rights shortly after appointment, it must balance the desirability of hiring that applicant based on the assessments already made against the risk that the agency, if it later decided to terminate the applicant, would have to provide the procedural and appeal rights set forth in 5 U.S.C. Chapter 75. An agency could consider asking such an individual to sign an agreement that would constitute a knowing and voluntary waiver of his or her rights to appeal under 5 U.S.C. §§ 7511(a)(1)(A)(ii) or 7511(a)(1)(C)(ii). However, as set forth above, this approach presents a risk that the waiver will be found unenforceable. This option presents the additional risk that a prospective employee will not agree to such a waiver, and will turn down an employment offer if signing such an agreement is required. Requiring a waiver of appeal rights may also add a legalistic and unattractive step to the hiring process that could undermine agency efforts to market their missions and their jobs. The decisions in Van Wersch and McCormick could also create an incentive for agencies to offer more temporary appointments in the competitive service and temporary appointments limited to 2 years or less in the excepted service. The benefits available to persons serving in such appointments would be limited, and that fact, combined with the temporary nature of the appointment, may leave the agency with a less qualified group of applicants than it would get if the position were permanent. Still, they would be without appeal rights, even post-Van Wersch and McCormick. In short, the court’s decisions in Van Wersch and McCormick appear to leave agencies in a difficult position with no apparent satisfactory solutions.
28 Van Wersch, 197 F.3d at 1151 n.7.
29 U.S. Army CPOL, Appeal Rights During the Probationary Period,http://cpol.army.mil/library/permiss/5a121.html (last visited September 7, 2006).
30 Porter v. Department of Defense, 98 M.S.P.R. 461, ¶¶ 20-22 (2005), illustrates the unintended and likely unforeseen consequences that can arise after McCormick. In Porter, the agency informed the appellant that she would be terminated and would have no appeal rights to the Board because she was a probationer. Her appeal following her resignation led to a determination by the Board that the resignation was involuntary because, following the rule of McCormick, the appellant did have appeal rights. Thus, the Board ordered her restored to duty.
31 Exec. Order No. 13,162, 3 C.F.R. 283 (2001).
32 5 C.F.R. § 213.3202(o).
33 Taylor v. Department of the Navy, 63 M.S.P.R. 99, 102 (1994), overruled on other grounds by Van Wersch, 197 F.3d at 1151.
34 Lopez v. Department of the Navy, 103 M.S.P.R. 55, ¶ 11 (2006).
35 McCrary v. Department of the Army, 103 M.S.P.R. 266, ¶¶ 9-12 (2006).
36 Agencies that have incorporated such language into their FCIPs include the Department of Energy, http://humancapital.doe.gov/pers/cip/manager/CIPBrief.ppt#274,14,Federal Career Intern Program Authority (FCIPA), the Department of the Interior’s Bureau of Reclamation,http://www.usbr.gov/recman/hrm/hrm-p04.pdf, and the Department of the Interior’s U.S. Fish & Wildlife Service, http://www.fws.gov/policy/223fw10.html.
37 Hughes v. Social Security Administration, 99 M.S.P.R. 67, ¶ 7 (2005).
38 Hughes, 99 M.S.P.R. 67, ¶ 7; see Thompson v. Department of the Treasury, 100 M.S.P.R. 545, ¶ 9 (2005) (a waiver provision in a Notification of Probationary Period Document was not enforceable in this case because the individual already occupied a position with the agency when she signed it, and there was no evidence that she knew before starting her position that she was waiving her appeal rights).
39 Porter v. Department of Defense, 98 M.S.P.R. 461, ¶¶ 15-16 (2005).
40 Ramos v. Department of Justice, No. 04-3186, 2005 WL 1316981 (Fed. Cir. May 18, 2005) (non-precedential).
41 OPM has set forth model language in other areas, such as recommended language for court orders awarding former spouse survivor annuities. 5 C.F.R. Part 838, Subpart I, Appendix A.
42 29 U.S.C. § 626(f).
43 The FCIP and the supervisory probationary period are examples under which an agency may be required to return a probationer to the previous position if the probationer is unsuccessful in the new one.
44 Frank L. Schmidt and John E. Hunter, “The Validity and Utility of Selection Methods in Personnel Psychology: Practical and Theoretical Implications of 85 Years of Research Findings,” Psychological Bulletin, The American Psychological Association, Inc., Vol. 124, No. 2, 1998, pp. 262-274.