Given the recent pronouncements about the buyout offer by the President, dubbed the “Fork in the Road Directive”, and the recent federal court stay of the buyout plan, I thought I would pivot a bit from commercial law issues to talk about the legalities and other issues raised by the President’s proposed actions.
So, can the president unilaterally offer severance packages with payments extending beyond many agencies’ currently appropriated funding?
The short answer: It’s complicated, but probably not.
As a former Chief Counsel of a federal agency, I had to oversee budgetary issues and advise the agency on spending as well as Human Resources matters. Unlike private-sector companies that generally hire “at will” and have broad discretion in offering severance to departing employees, federal agencies operate under strict budgetary and legal constraints. In most cases, (as there are exceptions), federal government funds must be spent in accordance with congressional appropriations, meaning an agency generally cannot commit to payments beyond what has been allocated and can only spend in accordance with any limitations in the appropriation.
The buyout raises several legal and practical challenges, several of which have been placed before the Federal District Court in Massachusetts:
The Anti-Deficiency Act – This law prohibits federal officials from obligating funds that have not been appropriated. Offering buyout payments beyond the currently approved and appropriated budget could violate this statute unless additional funding is secured. Penalties for violation include fines, imprisonment, or both.
Administrative Procedures Act (APA) – The APA generally governs the formal actions of administrative agencies within the federal government and establishes a judicial review standard that requires courts to overturn agency action (in this case the Office of Personnel Management) that is “arbitrary or capricious.”
Separation of Powers – Generally speaking (again, subject to limited exceptions), Congress, not the president, controls the purse. The administration thus cannot unilaterally extend payments beyond the approved and appropriated budget.
Union and Civil Service Protections – Many federal employees are protected by collective bargaining agreements or civil service laws, which impose due process requirements for layoffs and may limit unilateral severance offers. Several unions have already filed suit in the Federal District Court, including the American Federation of Government Employees; AFGE Local 3707; the American Federation of State, County and Municipal Employees; and the National Association of Government Employees.
Political and Legal Backlash – In addition, there is the political and legal backlash resulting from the Directive, which is playing out with the current lawsuit, pushback by several members of Congress and public reaction.
So, where does that leave us? Well, it will be up to the courts to analyze the Directive and apply governing law to determine whether the Fork in the Road Directive is legally supportable or must be struck down. If that is the case, the big question remains, what happens next? Your guess is as good as mine!