USPS Grievance Payments Reached $866 Million in Three Years

The Postal Service's own inspector general put a number on three years of labor disputes: USPS paid more than $866 million in grievance payments from fiscal 2022 through fiscal 2024⧉, spread across almost 3.5 million individual payments.▸ The total declined every year -- from $302.8 million in FY2022 to $267.5 million in FY2024 -- but the audit found the money kept moving for the same structural reasons: unresolved overtime disputes, employees assigned outside their job category, local deals that never expire, and grievance files management can't always document.

Of every issue code Postal Service supervisors can select when logging a grievance, "Overtime Work" drew the most money and the most payments of any single code: $107,151,236 across 780,563 payments⧉ from FY2022 through FY2024.▸ Overtime-related issues more broadly -- disputes over hours, assignments, and the "overtime desired list" that's supposed to distribute extra shifts fairly -- accounted for more than $252 million of the three-year total⧉. By district, the Ohio 2 District paid the most, $15.2 million, followed by California 1 at about $13 million and the Colorado-Wyoming District at $12.3 million⧉.

The Postal Service already owns a tool built to prevent this: a prior OIG audit found that at one facility, using the Overtime Administration (OT Admin) system -- which flags who's eligible for overtime under each union contract -- cut grievance costs by 94% and the number of grievances by 93% over two years⧉.▸ Managers elsewhere told auditors they skipped it anyway: not required, not user-friendly, not always accurate. The pattern held at the staffing level too -- in the quarter with the highest employee availability (80.9%), the Postal Service paid the least in grievances ($47.9 million); in the quarter with the lowest availability (78.7%), it paid the most ($101.3 million)⧉.

National union contracts generally bar a mail handler from doing a clerk's job, or a clerk from doing a carrier's, without a documented exception -- crossing those lines is a contract violation.▸ It happened often enough to cost $79,708,064 across 295,359 grievance payments from FY2022 through FY2024, with the mail handlers craft alone drawing $36,133,186 of it -- about 45% of the total, more than clerks ($31,068,617) or carriers ($9,900,831) individually⧉. District and facility managers told auditors the driver was usually staffing: understaffed shifts led supervisors to reassign whoever was on hand, which triggered both overtime and cross-craft grievances at once. A related pattern layered on top: management itself performed bargaining-unit work in at least 16 districts, in violation of an agreement over who is authorized to log employee time -- driving at least $40 million more in grievance payments⧉.

Altogether, the OIG attributes about $83 million in FY2022-2024 overtime and cross-craft grievance payments directly to violations of the Postal Service's own national agreements⧉ -- money paid out because management didn't follow rules it had already signed.▸ None of that counts the roughly $80 million a year the Postal Service estimates it spends on management and union staff time just researching and resolving grievances⧉, or the 2,968 grievances that escalated to arbitration from FY2022-2024, resulting in more than $166 million in payments and an average $2.8 million a year in arbitration expenses -- fees, travel, expert witnesses, court reporting⧉.

Field managers can also negotiate their own local memoranda of understanding on top of the national contracts, and the audit found several that outlived the problem they were written to solve.▸ One agreement in a Texas district, in place for more than 30 years without revision, still pays carriers extra for delivering mail after 5 p.m.; it cost about $15 million from FY2022-2024 -- half of that district's total grievance payments -- and kept climbing, from $3.2 million in FY2015 to $5.3 million in FY2024, even after a new processing facility changed the mail flow the agreement was originally written to manage⧉.

Elsewhere, a 2001 agreement requiring free food for an entire post office staff whenever paperwork was filed late has escalated on its own: the required order grew from four dozen bagels and three pounds of assorted meats in FY2006 to seven dozen doughnuts or bagels, eight pounds of meat, and four pounds of Swiss and cheddar cheese by FY2023⧉.▸ A separate agreement in California still pays carriers extra for delivering mail outside their assigned ZIP code -- a provision district management says made sense when mail volume was higher but hasn't been revisited as volume has declined⧉.

Two of the eight district labor relations offices auditors visited couldn't produce copies of their own local agreements on request, and no district maintained a standardized repository⧉.▸ Postal Service management disagreed this was a problem worth fixing, telling the OIG most local deals are "routine administrative instruments with no policy consequence" -- the OIG's reply: it had already found one agreement alone generating "millions of dollars in perpetual payments annually"⧉.

Auditors pulled 208 grievance payments settled at the lowest, most informal step of the process and checked whether the required justification was on file.▸ 199 of them -- 96% -- were missing required information: 174 lacked the payee's name, 163 lacked the date the contract violation occurred, and 106 lacked the actual payment amount⧉. Those informal, supervisor-level settlements aren't a small slice of the total -- they made up $336 million, 39%, of the full three-year total⧉ -- and the OIG attributes about $201 million in FY2023-2024 grievance payments to incomplete decision letters it could not verify as accurate⧉.

The gap traces back to training: of 624 managers and supervisors reviewed, 569 -- 91% -- had not completed the Postal Service's own "Grievance Prevention" course, and 557 -- 89% -- had not completed the course covering the grievance-arbitration article of the national agreements⧉.▸ Management agreed with seven of the OIG's eight recommendations -- refresher training, wider use of the OT Admin tool, required decision-letter fields -- and disagreed with only one: a mandate to catalog every local agreement, which management called unnecessary for what it considers mostly routine paperwork, and which the OIG says it will keep pressing through the audit resolution process⧉.