Arbitrator orders IRS to restore 2024 telework agreements, rules agency unlawfully repudiated union contract

An independent arbitrator has ordered the Internal Revenue Service (IRS) to reinstate telework agreements from 2024, ruling that the agency unlawfully repudiated its union contract when it ended workplace flexibility last year.

Background of the Dispute

The National Treasury Employees Union (NTEU) filed a grievance in March 2025 after the IRS unilaterally cancelled telework and remote work agreements en masse. The union argued this violated a collective bargaining agreement that required a "case-by-case" review of employee eligibility, along with a detailed list of potential justifications for any cancellations.

The IRS rejected the grievance in May 2025, prompting the union to seek arbitration.

Agency's Withdrawal from Proceedings

In late March, the IRS informed arbitrator Christopher Shulman that he was "no longer authorized to accept or adjudicate any grievances involving the IRS and NTEU," and that management was withdrawing from all pending grievance proceedings.

This action coincided with:

• A push by the Office of Personnel Management (OPM) to encourage agencies to formally terminate union contracts, in line with President Trump's 2025 executive orders banning unions at most federal agencies due to national security concerns
• Efforts by some in the administration to prevent the Federal Mediation and Conciliation Service from assigning arbitrators

Arbitration Proceeds Without IRS Participation

Shulman and NTEU conducted a hearing in May with the agency absent, citing a provision in the collective bargaining agreement that allows proceedings to continue with only one party's consent.

Shulman acknowledged the broader uncertainty surrounding federal collective bargaining, as multiple lawsuits challenging the validity of Trump's anti-union executive orders remain pending in court.

"It is not hyperbole that most federal sector labor practitioners await a final judicial determination on this issue with bated breath," he wrote. "If the EO's exclusion of the agency from the federal sector labor management statute's ambit is ultimately upheld, then the agency's termination of the parties' collective bargaining agreements and subsequent withdrawal from the arbitration process will be deemed legal. If the IRS exclusion under executive order 14251 is not upheld, then the agency will likely have committed an unfair labor practice by terminating the collective bargaining agreement and withdrawing from this arbitration."

Key Legal Reasoning

Shulman noted that the IRS terminated its telework and remote work agreements before the March 2025 executive order and the March 2026 contract termination, making those later developments irrelevant to this case.

"It is black letter law that expiration of a collective bargaining agreement does not terminate rights and obligations arising under the contract during its term," Shulman wrote. "The obligation to arbitrate survives expiration where (as here) 'the dispute arose during the life of the contract but arbitration proceedings had not begun before termination. The same would be true if arbitration processes began but were not completed, during the contract's term.'"

Rebuttal of Agency's Arguments

Although the IRS did not participate, Shulman addressed the agency's likely defense: that it was compelled to implement return-to-office mandates by Trump's Jan. 20 memo and OPM's declaration that telework is a management right, making collective bargaining provisions "unenforceable."

Shulman described OPM's guidance as an "unqualified overstatement" of Federal Labor Relations Authority (FLRA) caselaw.

"As noted by the union, telework and remote work arrangements do not address what work duties employees are to perform, which employees will perform the work, how they are to do so, or when," he wrote. "Instead, these arrangements simply discuss where employees will perform assigned work. As such, FLRA and the courts have held these arrangements do not affect an agency's rights to determine mission or to assign work."

Ruling

Shulman ordered the IRS to restore bargaining unit employees' telework and remote work agreements to the status they held in 2024.