Recent audit report from the USPS Office of Inspector General :
Most Postal Service bargaining unit employees are represented by one of the four major unions. The national agreements signed by senior-level management and the four union presidents include grievance-arbitration procedures that Postal Service management, bargaining unit employees (also referred to as craft employees), and union representatives must follow. These procedures provide guidance for resolving workplace disputes, differences, disagreements, and complaints. The Postal Service pays millions of dollars in grievance settlements; in fiscal year (FY) 2008 and FY 2009 they paid $250 million and $179 million respectively. As a result, it is important to ensure the Postal Service has appropriate internal controls in place.
Management controls over grievance settlements and disbursements need to be strengthened. We found that grievance payments were often not supported by adequate documentation and, as a result, we identified at least $27.8 million in unsupported questioned costs. We also found that oversight of the grievance settlement process was not consistent among the districts and that union representatives received grievance payments to which they may not have been entitled. The weakness in the control environment makes it difficult to determine the propriety of settlement amounts, and
payments to employees and union officials who represent bargaining unit employees.
Documentation to Support Grievance Settlements and Payments
We reviewed 600 randomly selected grievances2 and found that 234 (or 39 percent) were not adequately supported by required documentation. The missing documentation included signed Grievance Arbitration Tracking System (GATS) decision letters that document the reason for the settlement; the Grievance Form, which explains the original grievance; and documentation that explains how management determined the amount of the payment. As a result, there is no assurance that at least $27.8 million in grievance settlement payments were justified or warranted.
Human resources managers and labor relations officials at six of the 10 districts in our sample stated that supervisors are not required to copy and maintain supporting documentation used to settle informal grievances because they can settle them verbally. Management at the remaining four districts stated the documentation was missing due to poor recordkeeping by supervisors and individuals who prepared the grievance payments.
The Postal Service requires management to maintain documentation supporting grievance files and appeals for 7 years. In addition, the Government Accountability Office (GAO) developed standards for internal controls. These standards require agencies to assess the level of risk associated with specific activities and develop nternal controls to mitigate these risks. One internal control activity includes documenting all transactions and other significant events and making the documentation readily available.
Payments to Union Representatives
We also found that union representatives received excessive payments from grievance settlements. Union representatives in four districts (Colorado/Wyoming, Alabama, Mid- America, and Capital) were involved with the allocation of class-action grievance settlements for six grievances that resulted in union representatives receiving payments that were significantly more than other members of the class. Specifically, union representatives received $33,447 (or 24 percent) of $141,639 in settlements for these six grievances. One union representative in the Mid-America District received as much as 35 percent of a grievance settlement, while other payees received less than 1 percent.
This occurred because the Postal Service has not established procedures for reviewing the allocation of settlements to ensure that payees whom the union identifies are part of a class action. Once the Postal Service negotiates a settlement, they often have no involvement with its allocation. As a result, union representatives may be receiving payments to which they are not entitled.
Inconsistent Oversight of Grievance Settlements
We identified inconsistencies in the oversight of grievance settlements among the districts we reviewed. Specifically:
- Six of the 10 districts did not encourage or expect management representatives to seek higher-level consultation during the grievance process.
- Four of the 10 districts had not established dollar thresholds indicating when consultation or approval was required. Thresholds varied among the six districts that did have established thresholds.
There was no requirement or nationwide methodology for monitoring grievances through GATS. District officials stated they each used one or more GATS reports, and seven of the 10 stated they used one or more alerts in GATS to monitor settlement amounts or prevalent issues.
We found that these inconsistencies existed, because supervisors are authorized to settle grievances at any amount; and although some Postal Service managers had implemented a consultation process, others believe oversight of grievances before settlement and documentation of any consultation would violate union contracts.
Without consistent procedures and appropriate oversight, management has no assurance that grievance settlements and disbursements are appropriate. According to GAO, internal controls provide reasonable assurance that funds are safeguarded and laws and regulations are complied with and support effective and efficient operations.
Without sufficient internal controls, the risk of fraud, waste, and abuse is high.