Background

Overtime pay is a premium that the U.S. Postal Service pays its non-management employees. It is paid at one and one-half times the employee’s hourly rate for work performed in excess of eight paid hours a day or 40 paid hours a week. In addition to overtime pay, employees may be eligible for penalty overtime pay, which is paid at two times the employee’s hourly rate, under specific conditions.

Postal Service headquarters’ field budget group establishes the agency’s annual overtime budget, which is the planned percentage of overtime allocated for each Postal Service area. Once the budget is developed, areas allocate the respective overtime budgets to each district and facility.

For fiscal years (FY) 2015 and 2016, the Northeast Area’s (area) planned percentage of overtime was 8 and 10 percent of work hours, respectively. The area reported actual overtime percentage of workhours of 12 percent annually during this timeframe, which was the highest compared to the other six areas. During these periods, the area paid employees about $836 and $837 million in overtime and penalty overtime, respectively.

Our objective was to assess the management of overtime in the Northeast Area.

What the OIG Found

Although the area improved its variance between actual overtime hours and planned overtime hours from 7.2 million to 3.9 million (46 percent) during FYs 2015 and 2016, it still exceeded its planned overtime hours by over 11 million. Accordingly, opportunities exist to address factors that contributed to overtime, specifically unscheduled leave, removing inactive non-career employees from the Human Resources’ rolls, retaining non-career employees, and managing increased package volume.

Management did not effectively manage unscheduled leave, which contributed to overtime hours. In FYs 2015 and 2016, the area’s New York and Triboro districts had the highest unscheduled leave ratios in the area, measured by the percentage of employees with 20 or more occurrences of unscheduled leave per 100 employees. Collectively, all 10 districts in the area accounted for about 4.4 million unscheduled leave hours during the same timeframe.

Management did not consistently or timely remove inactive non-career employees from the rolls. From October 2016 to March 2017, the area had 92 non-career employees who did not report workhours for 24 consecutive weeks on the rolls. Removing these inactive employees from the rolls and hiring replacements could have mitigated at least 165,000 overtime hours (or $1.3 million).

Management incurred challenges in retaining non-career employees. In FYs 2015 and 2016, the area was below its maximum complement of city carrier assistants by 19 and 14 percent, respectively. However, as of March 2017, the area was only 6 percent (435 positions) below complement due to implementing several initiatives to address employee retention. This resulted in the decrease in turnover rates compared to the prior year. Filling city carrier assistant vacancies could have mitigated at least 781,000 overtime hours (or $6.3 million).

Management experienced challenges in processing and delivering increased package volume. Between FYs 2015 and 2016, the area experienced an 18 percent increase in package growth from about 765 to 900 million pieces. During FY 2016, the five districts that reported the largest variances of actual overtime hours above plan also experienced a related increase in package growth.

Area and district management implemented actions to improve employee retention and the handling of increased package volumes; however, these factors continue to contribute to the area exceeding its planned overtime hours.

While not all inclusive, for FYs 2015 and 2016 these factors contributed to the area exceeding its planned overtime hours. As a result, the area incurred 3.5 million excessive overtime hours greater than 34 percent above the area’s calculated average amount of overtime above plan for FY 2016. This equated to $124.8 million in overtime cost. Overtime costs had a direct impact on the Postal Service’s controllable income, which primarily consists of workhours and transportation costs.

We did not assess employee assignment of overtime; however, we identified the area’s top 10 employees earning the highest overtime pay during FYs 2015 and 2016. Of the 10 employees, four were among the top 10 earners for both years. The top 10 employees received overtime and penalty overtime pay ranging from $70,435 to $112,669, which in some instances equated up to 69 percent over their gross pay and more than 200 percent of their regular salary. We referred this matter to the OIG Office of Investigations for further review.

What the OIG Recommended

We recommended management develop an action plan to promote accountability in managing the planned percentage of overtime and planned overtime hours; and address the contributing factors to overtime, to include but not limited to, unscheduled leave and inactive employees; and assess the effectiveness of management actions related to non-career employee retention and increased package volume growth.

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Comments (3)

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  • anon

    OIG, Good Report. Wish you had included mgmt also; Supervisors get T-time, non-exempt Level 17's in plants get time and a half. I bet at least half of the top 10 would be from this group if they were included. Employee overtime is managed by management, who manages management overtime?

    Sep 30, 2017
  • anon

    Hmmm? Increase in package volume parallels OT increase. So let's keep it simple and pretend you are a package. There you are. Sorted at the plant you wait patiently to be load onto a truck to go to a post office. There isn't enough room on the first truck, so you wait for the next truck. ( per prior OIG audits-the highway contracts were renewed without a review. The increase in package volume is not just numbers but it is also the shear volume and the old truck contract does not have capacity to deliver properly.) The plant has so much to go along with you (the package) that the crews on the loading dock just shove anything which fits onto each truck as it shows up at its appointed time. You ( the package) probably make the second truck. Many plants even have third trucks, so you might make that one. You, the package, don't realize that OIG has done numerous studies which show that IOP's and MAPS are missing, old or not followed. The guys on the docks just want to clear their docks. You, the package, and you buddies are just another container to get off the dock. yeah, you get to the post office on the second truck. Someone pulls you off the dock and inside. And you wait, and wait. It seems those people who have to manually empty and sort you to the carrier are kinda busy. You hear one complain that they have been shorthanded forever. You hear another complain that it takes a heck of a lot of time to sort all of these packages and every day they get more. You hear one scream to the carriers,- Hey come get some of these damn parcels you cart is full. Well finally all the sorting is done (albeit-kinda late) The carrier has trundled you over to his case area. (If the carrier is a rural carrier you have a little bit of luck. The carrier knows the route and can sort and mark in his case where you are to be delivered. City carriers can be pivoted and switched around so your carrier may have a hard time figuring out where to set you up to be delivered. Either way, the carrier now has to get you sorted , brought to his vehicle and arranged in his vehicle. All of this takes more time than sorting flats, letters, etc. Management has some sort of stupid rule that says the carrier has to be on the street by a certain time. It is not based in reality. All along the way each human who touched you was being pushed to move you along faster. By now your pretty printing of "fragile" is kinda worn. The human who sent you isn't a pro and the sides of you are beginning to collapse. Too many heavy packages have been heaped on top of you. The carrier is now rushing and you end up in order but under a heavy box of car parts. Somewhere after 7:00pm the exhausted carrier delivers you. And management months later only wonders why "engagement" is so low and why these carriers are "making" so much overtime. The carriers wonder why management is not "engaged" and see the obvious operational problems which lead to OT. And do something about them. At the end...You, the package, made it to your destination. You don't know that it was humans who did their jobs under extreme circumstances all along your journey.....The systems may not work as well as they should but the humans who moved you care.

    Sep 20, 2017
  • anon

    The report on the overtime audit was very in depth with a great analysis of operations and work hours. Speaking to the point of managers not properly removing non career employees from the roles, I agree it is a contributing factor to overtime but at the same time an area that can be controlled. To correct this issue root cause analysis into the underlying factor to as why managers are not completing this task may be warranted with countermeasures put in place to ensure compliance.

    Sep 17, 2017