MSPB finalizes major shift in federal employee misconduct cases

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1:03Tully Rinky Law firm. The Douglas factors are a list of 12 factors that the MSPB and agencies use to determine the reasonableness of a penalty. So what our federal employee is proposed for an adverse action or they've been issued an adverse action and they've appealed that adverse action to the Merit Systems Protection Board. The Merit Systems Protection Board or the agency is required to conduct a analysis of whether the penalty of potentially removal or a demotion is the appropriate penalty for misconduct cases. That analysis has stemmed from a case, double as versus a veterans administration, which provided 12 factors to use to determine whether the penalty is appropriate. So essentially, they're trying to determine, even if the conduct was proven, whether the penalty is appropriate. Those 12 factors include the prior misconduct, the nature and seriousness of

2:10the offense, potential for rehabilitation, how well the employees have been performing, and there's additional factors. But the MSPB and agencies have typically gone through those factors that apply to determine whether the penalty was appropriate. Now, of course, we have this final rule and this isn't necessarily surprising because we have the proposed regulations a couple of months ago here. But now, MSPB is looking to remove the Douglas factors, replace it with what they're calling totality of the circumstances, looking at things more in a case-by-case basis. So from your perspective and practice, what could that change look like, both from the agency and the employee perspective? It makes it a more broad discretionary standard for agencies. I think this proposed rule was provided in now a final rule because they viewed that the judges, the MSPB judges, or the agencies

3:13were applying factors that maybe weren't applicable to the situation. So this is really just giving agencies more discretion on whether a penalty is appropriate under the circumstances and what factors may apply. So the agency could still use some of the factors from the Douglas factor analysis, but it doesn't have to use them all. It could really just determine what is appropriate under the circumstances. And for the employees side, it does, I think, create a larger obstacle given that it's giving more agency discretion. They can't rely on maybe a factor that was really in their favor, such as lack of prior discipline or lack of notoriety. They really have to still prove that the penalty is unreasonable given the nature of the offense. And the reasoning that MSPB is given for

4:14this change they talk about, the Douglas factors may be being too rigid that this provides more flexibility. It could streamline the process. Do you see those as being valid arguments for the basis for making these changes? Not necessarily. I don't believe by having a list of factors that they were too rigid. Like I've said, agencies and the MSPB weren't always using all the factors. They were deciding which factors apply to each situation. In many cases, I would say in most cases, when you would review the decisions, you would see the MSPB say, well, this factor is neutral because it doesn't apply here. Having a list of factors, I believe, only helps a decision. It provides more clarity on how to analyze the penalty. Just having a list doesn't make it rigid. So with this new rule, it's more discretionary. And I believe really more broad and really more vague.

5:17And so this may lead to decisions on cases being opposite based on similar sense of facts. There's concerns from public commenters on the proposed regulations that talk about similar to what you just said. The concerns of there being subjectivity, potential, political influence that can come into this. Do you think that is a possibility? How much well things change here for employees? I do. They're attempting or have removed the objectivity behind this decision making and providing more of that subjectivity for the decision makers. And so that will lead to decisions that counter each other. I believe in a number of circumstances, even with similar charges against the employee. So that may lead to more confusion on what penalties actually do apply to certain set of facts. It will lead to confusion for employees

6:18because they won't know how to exactly challenge their removal actions or their adverse actions. And we'll see how this ultimately winds up with board case laws as well, as far as how they actually apply this new standard. We've also seen a number of lawsuits or court cases that are challenging. Some of the changes that the Trump administration has been making to these federal personal regulations. Do you imagine that this final rule is going to potentially be challenged in court? Do you see that as a possibility? I wouldn't be surprised. I mean, this is a massive change for federal employees. You know, this has been the method and determining a penalty for decades, I believe. You know, so to have this change and being that it is to the disadvantage of employees, I wouldn't be surprised if there are challenges in court to this rule.

7:24And just kind of from a broader picture perspective here as well. Do you see this working in tandem or overlapping with some of the other changes that have been made so far to federal personal regulations? Well, I think all of the final rules that have occurred this year and the changes even last year have been an effort to really restrict employees' rights to challenge these appeals. I think it's important for employees to know that they still haven't met the two appeal and can be successful. And even with under this final rule, you could still argue the factors to challenge the penalty. But to answer your question, yes, this has been an effort to restrict the due process rights for employees to reduce really the number of employees within the federal government through this rule to I think a recent rule though is finalized regarding

8:25removing MSBG jurisdiction over probationary employees and riff appeals and suitability actions to the number of executive orders that are issued last year. So I think this has, it goes along with with all those actions and an effort to restrict those employees' rights. That's Michael Fallings, a managing partner at Telly Rinky Law firm speaking with Federal News Networks to Friedman. Find more in Drew's story at FederalNewsNetwork.com. What does it take to drive transformational change in large mission-driven organizations in this episode of Lessons in Leadership? Former Treasury Fiscal Assistant Secretary David Liebrick sits down with WAPA CEO Shane Canfield to explore the answer to that question, drawing on nearly four decades of public service. Liebrick shares insights on how to maintain employee trust and accountability while striving for strategic leadership and operational excellence. He discusses his biggest lessons learned from modernizing major government systems

9:27and how he worked to break down silos and build high performing teams, all while staying rooted in character and integrity. Hello and welcome to the Lessons in Leadership podcast. I'm your host Shane Canfield CEO of WAPA. Today I'm joined by David Liebrick, former Fiscal Assistant Secretary of the Treasury, the department's most senior career position, where he spent nearly four decades help oversee and modernize the federal government's financial infrastructure, including payments, collecting, debt financing, and cash management. David, welcome and thank you for being here. It's a real pleasure to be here. So let's jump right in. What does it actually take to drive transformational change inside the federal government and related, Treasury is obviously a huge organization. What did that teach you about leadership as you drove these changes? Sure, I think one of the things that you look that you realize at time is

10:27that change and transformational change is very difficult, but it is doable. And I think sometimes we don't think that we can do big things in government and yet we can. I think over the course of my career I was enormously fortunate to work with some of the really wonderful people, some of the most preeminent people in government over the course of the last 35 years. And from them you learn a lot of really important lessons about leadership. I think early in my career what I would tell you is that I was very much new and my interacted with political appointees as a civil servant that you're really an advisor. And I had some really wonderful experiences advising some of really great people. My second job at Treasury for example was as a special assistant to J. Powell. I knew I was not going to be the most the most the smartest person in the room or the expert on many things that were going on. But what I did know is that I had a very good understanding about what it meant to navigate in government. Also what it meant to advise and provide options

11:29and analysis to decision makers. As you move up in your career and you actually take on more operational responsibility, you find out that you are a decision maker. And when you are a decision maker, you know I had a very good framework that I used throughout my career which is you as a well-led organization, the leadership had to think about three very distinct things. One was thinking strategically about where the organization was going. Not just about where it was going tomorrow and the next day but actually into the future. The second area was that you really had to be able to deliver in the operational excellence. So if you're responsible for providing a service or a product, you can do that well and you can think very purposefully about that. And the third area is really about people and about how you attract good people, how you retain good people, how you incent good people and how you really treat people. And so throughout my career I had an opportunity to see people be very effective in all three of those areas. So when it came time to do transformational change, that model worked very well. I would also say that what you learn

12:34very early on is that regardless is that you as an individual, it takes the ability to work collectively and collaboratively with a lot of people. And so some of the things that I did, for example, which were cross-government, you realize that you really didn't have authority over many of the people that you were asking to do something different. But if you had character and competence, you could actually have trust. And so I think when people looked and said, this is someone who has capability and they have character, they will actually go and reduce the friction and actually making change. And so those collaborative relationships that ability to sort of lead with purpose, I think was very important with respect to really driving transformational change. Yeah, that's an amazing perspective. I just had a chance to listen in a small room to the CEO and the chairman of the board for Mariah Corporation. And they're celebrating their 100th

13:40birthday next year. And many, most US companies don't make it to 100. And so it was, it was fascinating. Both of them were asked to what do you attribute this? And they said, both of them, with energy, it was about their people. They focused on their people and everything came back to the employees, the people that worked there, the people that they have to motivate. Do you find something similar in government? I do. I actually take, you know, oftentimes you'll hear people say people the most important asset in an organization. And there's an element of truth to that, but I also think that leadership is probably the most important aspect attribute in an organization. Because if you have the right leaders and you're using a framework, like I mentioned, you're going to be really focused on getting good people in the organization. And those people will thrive. I think the thing that you find certainly in government is that federal employees are very mission driven. And they are committed. And they, you know, there's a lot of discussion about,

14:43you know, what really motivates people, intrinsic versus extrinsic, you know, motivators. And I really do believe that, you know, when you really get a high performing organization, regardless of as private sector or public sector, it's going to be those intrinsic things which are going to actually drive employees to do great things. And so setting up those right working conditions to remind people how important they are to actually invest in their development to actually give them good feedback. You know, one of the things that is really important in an organization is if you really care about an employee and you really want to see them develop, you have to tell them not only good things, you have to tell them things they have to work on. And I think you need to set up an environment and we add a saying which is feedback as a gift and and and assume noble intent. And intent so that when someone gives you feedback, your first reaction shouldn't be defensive. It should be, let me let me make sure I can really understand why I'm getting feedback and what I can do about that. You know, I think of a story from a book called Radical Candor which the author had gone out and

15:52spent a lot of time recruiting a new executive in the organization and thought they had a perfect match. They got to six months and the executive was struggling and they ultimately fired the executive. And at the Exeter Review, she had turned to the executive and he said, well, I really was someone who had told me earlier on what I wasn't doing well. And I tell that story because I think it sort of says that if you're not giving good feedback to people, you've spent all this money on recruiting someone, all this time and we know it takes a lot of time to bring people on board. And if you're not giving them the benefit of that, you're not giving regular feedback to someone about what they can do better, then you potentially have a failure and you have another vacancy that you have to fill which is very costly and expensive. So I think you need to have an, I think there's another element of that which is in a high performing organization. If people are comfortable raising their hand when something's not going right and in my world, large scale operations and what we did every day is something doesn't go right. It's just inevitable. And the issue within a well performing,

16:57a high performing organization is that people will raise their hand and say we have a problem and we need to fix it and the leadership is receptive to that and says, okay, what do we need to do? And then after the problem is solved, you have an obligation to go back and do lessons learned, do action learning to see, hey, what could we have done differently? How could we have avoided that problem so that you have a learning organization? It's not just that you're comfortable communicating and have trust in the organization that you can communicate openly, but also that you're learning as you go along every day to improve your operations. The very first podcast we had was Cutler Dawson, who was Admiral and the Navy, charge of the Enterprise Carrier and the fleet in the beginning of Desert Storm. And then he went on to run Navy Federal, the world's largest credit union. And it was fascinating to hear you because he talked, he used an example of a problem

17:57they had on deck with airplanes on the carrier. And it was pretty serious accident that happened. His culture was exactly what you said. You've got to talk whether you're at fault or not, whether you're partly at fault. It doesn't matter. We have to have an honest conversation about this. And that doesn't mean there weren't consequences, but at the same time that honesty has to be front and center. It really is true. And I think that you raised an interesting point, which I think sometimes the word accountability has a negative connotation. You're going to be held accountable. But also, but I would have it in a different way, which is we're accountable for high performance and we're accountable to each other to make sure that we can deliver on our mission. And that's a positive attribute along the way. And I think when organizations take that seriously, the collaboration, the teamwork, the openness, the feedback, but they also have a culture of accountability that says we do things well. We're going to actually be successful at what we do. And we all have

19:00an commitment to doing that. I think you're really a high performing organization. You've been listening to a preview edition of Lessons in Leadership. To hear the rest of this conversation and all past episodes, subscribe to Lessons in Leadership, wherever you get your podcasts.