Federal Court Upholds Ruling That Working Capital Fund Employees Can Be Furloughed

Agencies have "broad discretion to take actions to control spending," appeals judges say.

A federal appeals court has upheld a decision by the Merit Systems Protection Board that the Defense Department was correct in furloughing 40 employees in a unit supported by a working capital fund.

Victoria Snyder, who was a civilian mechanical engineer at the Naval Surface Warfare Center’s Dahlgren Division, was furloughed for six days in 2013 as part of the government-wide sequestration that began that year.

Snyder argued that, since she was working on a project funded entirely by defense contractor Lockheed Martin Corp., she should not have been subject to the furlough. Her case was consolidated with 39 other employees from Dahlgren.

The MSPB initially ruled against Snyder and the other workers, concluding that since the employees were paid directly by the working capital fund and not Lockheed Martin, it would be reasonable for agency officials to furlough them. And the U.S. Court of Appeals for the Federal Circuit agreed.

“Rather, we agree with the [MSPB] that the fact Ms. Snyder was a WCF employee directly paid from the WCF, bears considerable weight on the reasonableness of the agency’s furlough decision,” the ruling stated.

The appeals court found that agencies “have broad discretion to take actions to control spending, preserve flexibility and adjust priorities in response to sequestration.” In these instances, the judges said agencies are able to examine their budgets “holistically, rather than isolating the situation of each individual organization or component.”

Snyder also argued that furloughing her did not have a positive budget impact, since any funds not used by the Defense Department were returned to Lockheed Martin at the conclusion of the project in 2015. But the court rejected that reasoning as well, concluding that the need to save money quickly in the face of a sudden shortfall trumps the lack of long-term savings.

“Even though Ms. Snyder was working at the time of her furlough on a project based on funds that originated from a non-government entity, she, like the other employees at Dahlgren, was a WCF employee and, critically, her salary was paid from the WCF,” the court wrote. “Not paying Ms. Snyder’s salary on those six days in 2013 thus preserved money in the WCF, which in turn provided DoD with added flexibility to manage its budget shortfall that year.”

The court also sided with the MSPB in ruling that the agency was fair in applying the furlough.

Snyder argued that she did not receive opportunities to make the missed salary back through overtime. But the judges concluded that other employees’ fulfilled requests for overtime did not establish that she was denied the same chance, because she never requested it herself.

“Ms. Snyder presented no evidence that any of the furloughed employees had overtime requests denied and she admitted to never actually requesting overtime during the relevant time period,” the court wrote.