Objectives

Our objective was to assess Postal Service controls over managing overtime.

Overtime pay is a premium that eligible employees receive when they perform work in excess of eight paid hours in a day, or 40 paid hours in a week. Per union contracts, regular overtime is paid at one and one-half times an employee’s hourly rate to non-exempt employees, while penalty overtime is paid at double an employee’s hourly rate under specific conditions.

Employees must be paid for all overtime work they perform, even if that time was not authorized. Unauthorized overtime occurs when an employee’s clock time exceeds eight hours in a day or 40 hours in a week without prior authorization from a manager.

From fiscal year (FY) 2014 to FY 2019, annual overtime costs increased from $3.7 to $5 billion (or 35 percent), while overtime hours increased from 98.9 to 129.7 million hours (or 31 percent). As a result, during this time period, the Postal Service paid $25.8 billion in total overtime costs, including $23.5 billion for regular overtime and $2.3 billion for penalty overtime. The highest costs over these six fiscal years were in FY 2019 for both overtime and penalty overtime, with $4.4 billion and $574 million, respectively. In addition, regular and penalty overtime were 13 to 16 percent of total dollars spent and over 9 percent of total hours worked for labor costs in each of these six years.

Our fieldwork began before the president of the United States issued the national emergency declaration concerning the novel coronavirus disease (COVID-19) outbreak on March 13, 2020. The results of this audit do not reflect any operational changes that may have occurred as a result of the pandemic or more recent changes made to reduce inefficiencies in the network. Any future operational changes to manage overtime expenses should be coordinated and clearly communicated across the Postal Service to ensure service to customers is maintained and performance is not adversely impacted.

Findings

The Postal Service needs to strengthen controls over managing overtime to successfully contain these costs. From FY 2014 to FY 2019, overtime costs and hours have trended upward and consistently exceeded their planned overtime budgets. Although package volume grew, these costs increased despite declining mail volume and increased employee levels. Specifically, we found:

  • Between FY 2014 and FY 2019, the number of employees who earned more in total overtime pay than their pay for regular straight time hours increased from 758 to 4,008 (an increase of 3,250 employees, or 429 percent).
  • Management’s actual regular overtime costs and hours exceeded their planned overtime for each of the past six fiscal years, which ranged from $73.2 million to $801.7 million, and 2.0 million to 21.7 million hours, respectively. In addition, while management successfully managed their penalty overtime use compared to their planned hours during three of the six fiscal years, they exceeded their planned penalty overtime costs and hours during the remaining three years (FYs 2016, 2018, and 2019), which ranged from $69.2 million to $228.5 million, and 1.4 million to 4.4 million hours, respectively.
  • Management did not always effectively manage unauthorized overtime. In FY 2019, 263,694 of the Postal Service’s 633,108 career and non-career employees (42 percent) had unauthorized overtime. Five of the seven Postal Service areas had an increase in unauthorized overtime between FY 2018 and FY 2019. The Northeast Area had the highest increase of 37 percent, from 4.8 million hours to 6.6 million hours.
  • Management did not have complete, accurate, and reliable payroll workhours data for FY 2019. Specifically, about $1.2 billion, representing 44.3 million employee workhours, was not recorded for Pay Period (PP) 18 of FY 2019. This inaccuracy, which should have been corrected by management, remained undetected for about one month until the OIG’s data request and analysis identified the error.

These conditions occurred because:

  • Management did not always maintain adequate staffing levels:

- Delivery units operated below their authorized complement by up to nine employees and had up to 18 vacancies during FY 2018. On average, delivery units had a complement of about 28 employees during this timeframe.

- Management inaccurately used the Function 1 employee scheduler to calculate employee complement levels using a base week that was not representative of mail processing operations and underestimated the number of employees needed. This contributed to a decrease in overall mail processing complement by about 5,000 career positions during FY 2018. Management later addressed the decrease at the end of the year.

  • The Postal Service’s current framework for measuring key performance indicators lacks a direct deterrent that would prevent management from exceeding their overtime budget.
  • Headquarters management did not require supervisors and managers in the field to collect information on their reasons for overtime use. This would have provided analytical data to support the causes for exceeding their planned overtime and determine if they need to adjust their employee and operational schedules.
  • Management did not provide adequate supervisory oversight to ensure:

- Proper completion and maintenance of required Postal Service forms

- Adequate access and control of employee timecards.

- Timely review of Time and Attendance Collection System reports.

  • A contract employee unintentionally omitted PP 18 FY 2019 when manually updating the code used to obtain the employee payroll workhours data. While testing and validation of this information was conducted when the code was first created, there was no formal process to ensure new workhours data information was correctly entered and complete when the data file parameters were updated.

During FY 2019, the Postal Service exceeded its planned overtime and penalty overtime hours by more than 9.5 and 4.4 million hours, respectively. As a result, we estimated the Postal Service incurred about $521.6 million in questioned costs.

Recommendations

We recommended management:

  • Address staffing issues at facilities operating below their authorized complement or with excessive vacancies and identify opportunities for savings at locations with high overtime users by determining the optimal point at which hiring new staff becomes more cost efficient than using overtime.
  • Modify current policies and procedures to include performance measures or other oversight controls to hold appropriate management accountable for not reducing overtime use.
  • Implement a process to collect and monitor data that identifies the reasons for overtime use to better manage and control overtime costs.
  • Develop an action plan, with milestones, to monitor and reduce unauthorized overtime.
  • Establish and implement automated processes to update the data file parameters and validate the file for accuracy and completeness.

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Comments (13)

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  • anon

    I was T-Boned at an intersection at 10:45PM because of overtime! The fact they are busy investigating why there is so much overtime shows just how out of touch with reality the entire system is. Sure a route should be done anywhere from 4 to 8 hours, but during Covid those evals can't apply. How can we be expected to finish anything on time when final isn't called until 3pm? Or, like on the day of my accident, we are sent out to deliver mail, then called back at 4PM to get the rest of our chunks and parcels, which means organizing AGAIN then doubling back at 6PM. Then having to scan before 8PM and at that point forget the more important mail and deliver promised packages for another company! Instead of complaining about paying out overtime they should be working on a plan to limit how many parcels we should be taking a day from certian companies, figuring out why the transport trucks don't bring everything in one go, and how to stop our management from forcing us to deliver packages over mail. They should be greatful that workers keep coming to work alive and sane after working 16 hours everyday, including Sunday's for 2 to 3 weeks straight. Greatful no one has said strike. Thankful that overtime is all they've had to pay out and not death benefits to families because of thier terrible hiring/management decisions. Greatful that the unions haven't demanded more equality across the board like how CCAs recieve ot for 8hrs worked & 40hrs while RCAs only recieve ot at 40hrs. The thing that makes me most upset about all of this is that I could have died had it been a bigger car that hit me and my 3 minor kids would be left without a mom because the company is prioritizing parcels over mail and that means carrier's lives mean nothing to them since they continually have us coming back at 10 or 11PM. They are literally disregarding thier own safety standards.

    Sep 02, 2020
  • anon

    I have been waiting for a package for over a month - mailed to and within United States. I have never had to wait for this long. Additionally, my local USPS location typically had 3 counter employees, now they are operating with ONE and the lines outside of the Post office grew exponentially. It takes about 45 minutes to retrieve a package. This is an unacceptable change FOR WORSE and the responsible for these changes should be held accountable.

    Sep 01, 2020
  • anon

    Why overtime?.....Not enough bodies....Did you go into plants and ask workers why there were not enough bodies?...Looks like management has a problem filling slots... They should also be asking why.. A corelationship.... New PMG demands trucks leave on time... You can demand anything you want...But...If you do not have enough machines and people to thruput the product what do you get?.....Rocket science here....Overtime and late trucks..... Perhaps the new PMG should create a task force made up of management and workers to go area by area and look at current operations. The flow, the capabilities, the transportation schemes, etc. Then rebuild the system to do what it should be doing... Local Management is just putting out fires and slapping bandaids on. They don't have the time and capability to do a real review... If the PMG keeps on playing pubah by fiat, he is on his road to dismal failure... Time to wake up and make your reports the beginnings of action plans to make usps better. not little side show more band aid slapping...

    Aug 31, 2020
  • anon

    I can only praise the Northport NY PostOffice for their good service. We have a competent friendly delivery person and have our mail delivered in a timely manner. Thank you.

    Aug 30, 2020
  • anon

    There are multiple issues here. The very first issue should be focused on data integrity, then you'll be able to tackle other issues. My Calculus teacher understood this when she said, "Garbage in; Garbage out." Input garbage numbers into the system, the system will give you garbage results. The data you rely on is inaccurate across the board, your own report shows confirms this is occurring, and the scope is much larger than you think. You want evidence here it is: The famous 'stop-the-clock' scans are finally making national news - a product of Postmasters and Supervisors instructing carriers to make these scans so they don't get in trouble with their boss - what do you expect will happen? Back on topic. Everyone is culpable for overtime, including the USPS OIG. How that? Here's how: 1) The USPS OIG makes some ridiculous recommendations to the USPS 2) The USPS management team implements these changes 3) USPS OIG does a report 10 years later asking what the hell happened Are you serious? At the letter carrier level, here's why there's overtime. (As a side note for the public, USPS OIG knows this already, USPS management knows this already, but they still continue to pretend like it's not true, congressional records from the Postmaster General reports confirm this) There's overtime because of aggressive route inspections which encourage cutting corners during inspections. Furthermore, management has chosen to conduct the inspections during a week that is not representative of mail volume throughout the year to purposefully underestimate work hours required. Your own report acknowledges this, although it was referring to PD&C operations, "....using a base week that was not representative of mail processing operations and underestimated the number of employees needed..." This is fueled by the desire to cut jobs. The only way to eliminate overtime is to hire more people. More people requires more money. This is the conundrum the USPS faces: more people costs more money, that's why management disagreed with your recommendation, you don't know what you are talking about. It's cheaper to give Overtime to your workhorses and get the job done in 30 mins of OT than to deal with a ridiculously high turnover rate for your complement.

    Aug 28, 2020
  • anon

    I'm a Regular Rural Carrier with 20 years of service. As of March until present I've been making multiple delivery trips and throwing parcels an average of four hours per day due to a lack of staff - without compensation. And I've got it easy compared to the RCA's who have been working fourteen plus hours per day, seven days a week. New hires are constantly quiting, everyone is Burning out, and management refuses to give anyone time off or hire more help. Management also refuses to pay Regulars more than their evaluation regardless of additional duties performed. For the entire month of August, our final parcels have been sorted no earlier than 3pm and as late as 6pm. Then management mandates all parcels be scanned and delivered by 8pm. Completely moronic.

    Aug 28, 2020
  • anon

    Their are many reasons why overtime is in abundance. In my office for example we took on more carriers from a smaller office close by, but never adjusted routes to account for travel time back down to there area, so there is at a minimum 15 minutes round trip. Then remember routes were created around oh lets say a base of 91% delivery (not volume), then 12 packages not the current 50 to 60 range we have now, after all that sprs which used to be in the 25 to 50 range are now in the 85 to 150 range. All this adds time sorting out, loading trucks especially with the load truck function(there is an extra 10 to 15 minutes loading the truck scanning every parcel). So decline in mail volume doesn't mean we aren't still traveling the same distance delivering the same percentage of houses, in fact we are adding more stops to our days because of packages. It is grossly managed, by leaders who have know business leading, adding more responsibilities, but not taking into consideration the time it adds. You ask me all the management roles should be cleaned out, and anyone that wants to be in those positions should have to do a minimum of 30 days in every postal service position.

    Aug 27, 2020
  • anon

    Yes!!!!! This right here!!

    Sep 02, 2020
  • anon

    When a transportation manager is running trips she doesn't need just to give certain drivers penalty OT. When asked why by another driver on strait time, the response is "Don't worry about it" then runs empty trailers around on holidays, knowing there is no mail, something is really wrong with this - and we wonder why there is so much cost on OT????

    Aug 27, 2020
  • anon

    I'm sure OIG probably knows that there is a large amount of overtime that is paid out to employees in the form of grievance pay. In other words an employee gets passed over on the overtime desired list, the Union argues that the employee was entitled to work overtime and then files a grievance on behalf of the employee. The employee is then usually awarded the overtime pay without working the hours. This is widespread all over the country.

    Aug 27, 2020
  • anon

    I’d rather not have the OT to boot...all the forced OT caused a lot of personal life strife as a father and a husband (now ex husband). The whole forced OT because a newer employee hourly rate is lower than a senior employee is understandable from a cost perspective, and some mgmt gets it, others just do whatever they have to, to get it off “their plate” faster in a out of sight out of mind type way, with out following the NALC agreement or by utilizing each individual carriers strengths and weaknesses. There is a lot of mgmt that is not qualified in a logistics sense to perform the necessary tasks at hand...couple that with having routes that are 10-13 miles long, and adding 150-180 parcels a day on top of the letters and flats mail, and newspaper ads that are 15-20 lbs a division. I digress

    Aug 28, 2020
  • anon

    Managers spend budget dollars with no regard to efficiency. Example; substitute carrier can provide parcel assistance cheaper than overtime payments to career carrier. Manager locally are afraid to speak up to their superior. Superior management MUST be accountable to the needs of LOCAL managers.

    Aug 26, 2020
  • anon

    How about the geniuses in upper management give a thorough medical physical examination to all new hires. For the last 20 of my 35 year carrier career, most overtime is for new hires who get major physical problems within their first 6 months of hire. Then, they sit on medical restrctions, Worker Comp, etc. Then older workers get forced into ridiculous amounts of forced overtime and become injured themselves ( usually just a 40 hr/week work restrictions-they’re not pursues like the young ones). Or maybe just thin desk jockey jobs-y’ know they’re far too many of them.

    Aug 26, 2020