On February 4, 2025, the Office of Personnel Management issued further guidance on the deferred resignation program, previously analyzed in this blog. The guidance, entitled “Legality of Deferred Resignation Program,” attempted to rebut or address some of the challenges raised by public commenters on the “Fork in the Road” deferred resignation program—with some rebuttals more completely addressed than others. The guidance included a draft waiver agreement for use by agencies under the program.
OPM first asserted that the agreement to participate in the program would be legally binding, citing Terban v. Dept. of Energy. This argument appears to have been intended to rebut some arguments that either the overall program or that certain clauses of the draft waiver agreement appear to render the settlement agreement unenforceable by employees in any forum. However, close examination of whether that assertion is true is called for.
So, would the agreement be enforceable against the government in the event of a breach? First, it is worth looking at whether any contract would be enforceable in this context, and then turn to whether this specific contract would be enforceable.
On the first question, a valid contract would be enforceable—but not in the way identified by OPM (which will be discussed in greater detail shortly). While section 10 of the draft waiver agreement would appear to bar enforcement of the settlement agreement by the MSPB, the MSPB would not have had any direct enforcement jurisdiction over the settlement agreement anyway, because the waiver agreements are not intended to be submitted into the record at the MSPB for purposes of enforcement under 5 C.F.R. § 1201.41(c)(2)(ii). Instead, the enforcement mechanism is the Tucker Act, 28 U.S.C. § 1491, which allows enforcement of government contracts by the Court of Federal Claims.
The courts have held that settlement agreements by civil service employees are enforceable under the Tucker Act, as previously discussed in this blog. The courts have also held that no provision of a settlement agreement can strip a court of statutory Tucker Act jurisdiction. See VanDesande v. US, 673 F. 3d 1342, 1350 (Fed.Cir. 2012). Further, no explicit provision of the waiver agreement disclaims the availability of money damages for breach, another issue for Tucker Act enforceability. See Holmes v. US, 657 F. 3d 1303, 1315-1316 (Fed.Cir. 2011). Accordingly, some breaches of the waiver agreement could be potentially enforced against the government by employees, but would require a Tucker Act lawsuit in court to do so—and certain forms of breach of the agreement could be unenforceable in this fashion. Further, the enforcement mechanism would create long-term uncertainty for agencies about future litigation risk, given that Tucker Act lawsuits have a 6-year statute of limitations.
However, Tucker Act enforcement only works if the contract is legally valid. The draft waiver agreement provided by OPM with this guidance memorandum might not be a valid and enforceable contract. Section 10 contains of the draft waiver agreement contains language which permits the agency head (but not the employee) to unilaterally rescind the agreement. This language risks rendering the entire waiver agreement invalid for reasons grounded in the common law of contract (in the legalese, an illusory contract which is unenforceable due to lack of mutuality). As for example the Supreme Court of Florida explained, “[i]t is basic hornbook law that a contract which is not mutually enforceable is an illusory contract. Where one party retains to itself the option of fulfilling or declining to fulfill its obligations under the contract, there is no valid contract and neither side may be bound.” Pan-Am Tobacco v. Department of Corrections, 471 So. 2d 4, 5 (FL 1984) (internal citations omitted).
OPM’s guidance memorandum claims that the backstop for enforceability of the agreement is that the resignation could be rescinded by the employee if the government tried to back out of its agreement, citing Terban. However, Terban was not a case concerning enforceability of a settlement, but instead whether an employee who resigned under a Voluntary Separation Incentive Program (VSIP) could then sue at the Merit Systems Protection Board (MSPB) for alleged involuntary resignation. OPM alleged that, under Terban, if the government breached, the employee could simply back out of the agreement and cancel their resignation.
Ironically, the primary holding of the chief case that OPM cites for the proposition that settlement agreements are legally binding, Green v. General Services Admin., actually says the opposite. The Green court refused to let an employee who signed a separation agreement later cancel their resignation. Green turned on the generally applicable rules for rescission of resignations before their effective date, not whether there was a separation agreement. In citing Terban, OPM described it as “holding that resignations are deemed involuntary if they are ‘the product of misinformation or deception by the agency”.
An involuntary resignation claim, however, requires an MSPB appeal to prove, and proving misrepresentation giving rise to an involuntary resignation (which is a form of constructive discharge claim) is not automatic. Additionally, it is unclear whether language in sections 10 and 13 of OPM’s draft waiver agreement would be found to waive MSPB jurisdiction over a particular involuntary retirement appeal. Further, many applicants for the deferred resignation program (including, for example, probationary employees and non-preference eligible FBI employees) might not have MSPB appeal rights to pursue the involuntary resignation claim.
Other possible claims that would give protection based on detrimental reliance on the agency’s false statements do not work well against the federal government. See generally, e.g., Heckler v. Community Health Services of Crawford Cty., Inc., 467 U.S. 51 (1984). Similarly, a personal injury-type claim (that is, a tort claim) based on the Agency’s misrepresentations is barred due to the federal government’s sovereign immunity, since the federal government’s waiver of sovereign immunity under the Federal Tort Claims Act contains an exception to that waiver (keeping sovereign immunity intact) where the tort claim is based on misrepresentations by the government employee. See 28 U.S.C. § 2680(h); Metropolitan Life Insurance Co. v. Atkins, 225 F. 3d 510, 512-513 (5th Cir. 2000).
OPM’s memorandum further alleged that no Congressional approval would be required. OPM alleged that the “program does not promise employees additional compensation that might require special congressional appropriations.” However, this argument only works to the extent that the employing agency has not exceeded its payroll budget appropriated by Congress. If the deferred resignation program were to do so for a given agency, then the agency would have to stop pay and furlough the deferred resignation employees—similar to what almost occurred, for example, in summer 2024, when the EEOC almost had to furlough staff due to a staffing budget shortfall, as reported in the press. Ultimately, Congressional approval may well be needed to provide the budget for the deferred resignation program in this fashion.
In response to criticism that the administrative leave in the deferred resignation plan violated a 2017 administrative leave statue previously discussed in this blog, OPM in part cited its language from its own final rulemaking for the implementing regulations, which in turn was quoting from a GAO report on annual leave issues. However, the GAO report at issue dated from 2014 and was describing the administrative leave system in place at that time, predating the 2017 statute which limited administrative leave (5 U.S.C. § 6329a(b)(1)). Elsewhere in the memorandum, OPM provides its statutory interpretation analysis explaining why it construes the plain text of the statute to not apply to placements on paid administrative leave other than for investigative and disciplinary purposes (such as discussed in the deferred resignation program). As the final rule was only issued in December 2024, that interpretation has also likely not been fully tested yet in court.
OPM noted its inclusion of citation to outside employment ethics and conflicts of interest rules, previously first discussed by OPM in connection with the program in updates to its Frequently Asked Questions (FAQ) page on February 2, 2025. OPM expanded on discussion first appearing in those expanded FAQs, where it asserted that its program is not only compliant with the Privacy Act, but also the E-Government Act of 2002 and other statutes. In particular, OPM alleged that the requirements of Section 208 of the E-Government Act do not apply where the information is being collected from federal government employees.
OPM’s guidance memorandum included as an attachment a draft waiver agreement for agencies to use in implementing the deferred resignation program. Sections 5 and 13 of the draft agreement provided that agencies would take no steps to separate a participant prior to their effective date other than if the participant was convicted of a felony. Although the FAQ described agencies having discretion to let participants stay in the program and extend their resignation up to December 31, 2025 if needed to meet their minimum retirement age, the draft waiver agreement only referenced the original September 30, 2025 resignation date.
Section 8 noted the possibility that the deadline for Voluntary Early Retirement Authority (VERA) eligibility could vary depending on the agency. The section also required the participant to apply for VERA, which is contrary to the structure of VERA. Under the VERA statutes, the agency (not the applicant) applies for VERA authority, OPM grants VERA authority, then the employees apply for retirement pursuant to the VERA authority.
Notably, part of the price for an employee agreeing to participate in the deferred resignation program is the waiver of other claims the employee might have against the agency, appearing in section 13. Some commenters had noted that section 13 of the waiver agreement did not specify the time range of claims waived, suggesting a risk that the agreement would waive employees’ future claims for future breaches and bad acts by the agency. However, such future waivers have been held to be void as contrary to public policy; for example, the EEOC has historically stated that settlement clauses that bar complaints for future acts of discrimination or EEO reprisal are void as contrary to public policy.
To avoid confusion on this issue, many federal sector settlement agreements include clear language stating that the settlement does not waive future claims, but OPM did not do so here. Further, the clause does not make clear that it is not intended to waive the employee’s accrued leave, retirement service credit and the like. Section 14 of the waiver agreement includes language required by the Older Workers Benefit Protection Act, without which the agreement could not waive any age discrimination claims by the employee.
Section 15 of the agreement further provides that program participants would also receive a waiver of any debt owed to their employing agency pursuant to a recruitment incentive, student loan repayment, or other service agreement, an issue previously discussed in part in this blog. The clause does not make clear which student loans are potentially discharged; as written, employees of the Department of Education participating in the program may receive a much larger windfall, as this language could be read to waive all of their college student loans issued by the Department of Education, even if unrelated to their employment.
If you are federal employee and wish to discuss your rights in conjunction with this “Fork in the Road” deferred resignation program, consider contacting Gilbert Employment Law to request an initial consultation.