By Rodney F. Tonkovic, J.D.
The National Treasury Employees Union has submitted a petition to the SEC to extend the protection afforded to federal employees. Federal law protects most federal employees from "prohibited personnel practices." The NTEU's petition would have the SEC extend that protection to two categories of employees not covered by the current regulations.
Prohibited practices. Federal law, under 5 U.S.C. Section 2302, protects federal employees from "prohibited personnel practices." This means protection from personnel actions motivated by discrimination, reprisal, political coercion, improper influence, or obstruction of rights. There is, however, a category of employees who fall outside the statute's coverage. The NTEU's proposal would extend coverage to these employees: those who are excepted from the competitive service because (1) their position is of a confidential, policy-determining, policy-making, or policy-advocating character; or (2) their position is excluded from the competitive service by a President based on a determination that such exclusion is necessary and warranted by conditions of good administration (see 5 U.S.C. Section 2302(a)(2)(B)(i)-(ii)).
Proposed protection. Subpart M of 17 CFR part 200 contains regulations concerning the conduct of members and employees and former members and employees of the Commission. The NTEU proposes to add a new subsection (i) to 17 C.F.R.200.735-3, which contains general provisions about conduct. Among other directives, Section 200.735-3 provides that Commission personnel comply with conduct requirements broadly applicable to all public servants. There are also Commission-specific provisions, such as prohibitions against engaging in business transactions for personal profit and divulging Commission documents before their release.
Proposed new Subsection 200.735-3(i) would apply to "covered employees," meaning those excepted service employees in 5 U.S.C. Section 2302(a)(2)(B)(i)-(ii). If adopted, the provision would prevent the SEC from taking personnel action against covered employees based on the same prohibited personnel practices that apply to other federal employees. The new subsection also sets out the process by which a claim may be raised.
The proposal notes that the SEC has broad authority to promulgate regulations and that nothing restricts the agency from extending protection against prohibited personnel practices to additional groups of employees. The NTEU also observes that President's Trump's administration explicitly expanded prohibited personnel practice protections to the very category of excepted service employees that NTEU’s proposal covers, but this order was rescinded by the next administration. Some agencies, however, have already promulgated the types of regulations proposed by the NTEU.
The petition is No. 4-805.