GovernmentExecutive.com

Federal agencies have the legal authority to set strict standards for employee performance as long as managers apply those standards reasonably, a federal appeals court ruled Wednesday.

The ruling conflicts with previous Merit Systems Protection Board decisions indicating that agencies generally lack the right to set "absolute" performance standards - those where an employee's failure to meet one expectation leads to poor performance marks. Office of Personnel Management officials can grant exceptions for pilot projects and for situations where one mistake could result in death, injury, a security breach or significant monetary loss, former rulings have established.

But these interpretations are misleading, the Court of Appeals for the Federal Circuit decided. "We think that the board has misconstrued the statute and erroneously created a prohibition of nearly all performance standards that it deems absolute," appeals judges wrote in the ruling.

Title 5, Section 4302(b)(1) of the U.S. Code only asks that performance standards "to the maximum extent feasible, permit the accurate evaluation of job performance on the basis of objective criteria," the appeals court reasoned.

Congressional reports on the 1978 Civil Service Reform Act indicate that lawmakers wanted agencies to have "great flexibility to choose or develop their own [performance rating] systems," the appeals judges noted. The lawmakers did not express opposition to absolute standards, the judges added.

The appeals court ruling responded to a Navy engineer's challenge of a March 2003 MSPB decision. Cynthia Guillebeau, a GS-13 level employee developing Web pages as part of a demonstration project in Panama City, Fla., claimed the Navy illegally set absolute performance standards for her and then improperly fired her when she failed to meet them.

In last year's ruling, MSPB noted that the Navy had in fact established some absolute performance standards for Guillebeau, but fired her largely for another reason: her failure to "complete her assigned work, despite several deadline extensions." Dismissal on that basis was permissible, the board found.

The federal appeals court upheld this ruling Wednesday, but added to the decision comments dismissing the board's previous stances against absolute performance standards.

The statute "cannot be read to bar absolute performance standards," the appeals judges wrote. "However, there is an extensive body of law, both in our court and at the board, holding that performance standards must be reasonable, based on objective criteria and communicated to the employee in advance. Thus, we do not suggest that an agency may adopt an unreasonable standard, or that absolute performance standards are always reasonable."

Cynthia A. Guillebeau v. Navy, U.S. Court of Appeals for the Federal Circuit (03-3220), March 24, 2004