**Federal Labor Ruling Forces IRS to Restore Telework and Remote Work Options**
A recent arbitration decision has mandated the Internal Revenue Service (IRS) to restore telework and remote work options for its tens of thousands of bargaining unit employees. This ruling comes after the IRS moved to mandate full-time, in-office work starting in March 2025, a move that a federal arbitrator has now deemed a violation of its collective bargaining agreement and an unfair labor practice.
### The Arbitrator’s Ruling
On July 17, Arbitrator Christopher Shulman issued a decision siding with the National Treasury Employees Union (NTEU). The arbitrator found that the IRS had violated its collective bargaining agreement and committed an unfair labor practice (ULP) by ignoring a memorandum of understanding (MOU) with the union. Consequently, the order requires the IRS to reinstate telework and remote work arrangements to the levels that existed prior to the return-to-office mandate. The ruling also instructs the IRS to cease any further violations of its agreement with the union.
### Background and Context
The IRS’s initial return-to-office order was a direct response to a presidential executive order calling on federal agencies to rescind telework and remote work agreements “consistent with applicable law.” This blanket mandate led NTEU to file a grievance, arguing that the agency had violated its collective bargaining agreement.
The union contended that the agreement specifies that any suspension or termination of telework must be done “on a case-by-case basis,” and only for reasons related to “business needs or employee performance or conduct.” NTEU argued that the agency’s across-the-board elimination of telework was a clear breach of the negotiated terms, rather than a difference in interpretation of the agreement.
### Escalation and Withdrawal
After filing the grievance, the IRS withdrew from the arbitration proceedings in March 2026. This move coincided with the official rescission of its collective bargaining agreement. The IRS argued it had the authority to broadly terminate telework based on Office of Personnel Management (OPM) guidance, which encouraged agencies to proceed with return-to-office orders despite existing collective bargaining obligations. The agency asserted that decisions regarding telework are an “inherent management right.”
Subsequently, an arbitration hearing proceeded in May 2026 in the absence of an IRS representative.
### The Decision and Its Implications
Arbitrator Shulman ultimately sided with NTEU, stating that because the union filed its grievance before the collective bargaining agreement was terminated, the telework provisions remained legally binding.
> “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 ruling determined that the IRS’s actions constituted a repudiation of negotiated terms and that the agency was unjustified in ignoring both its collective bargaining agreement and the MOU. While the IRS has 30 days to decide whether to appeal the decision to the Federal Labor Relations Authority, NTEU has urged the agency to “do the right thing and comply.”
### Support for the Ruling
NTEU President Doreen Greenwald highlighted the benefits of telework, noting that successful teleworking programs save taxpayer money through reduced leasing and energy costs, increase productivity, improve employee recruitment and retention, and alleviate traffic congestion and commuting expenses. The union pointed to reports indicating that telework is beneficial for agencies, employees, and the public they serve.
This ruling aligns with similar decisions involving other federal agencies, such as the Forest Service, the Department of Health and Human Services, and the Department of Housing and Urban Development. These cases have set a precedent where independent arbitrators have ruled in favor of unions challenging return-to-office mandates. However, many agencies have appealed these rulings to the Federal Labor Relations Authority, and as of now, federal employees across various sectors continue to face in-person work requirements.
### FAQs
**Q: What did the arbitrator order the IRS to do?**
A: The arbitrator ordered the IRS to restore telework and remote work arrangements to the levels that existed before the agency’s mandate for fully in-office work.
**Q: Why did the IRS mandate a return to the office?**
A: The IRS’s move was a response to a presidential executive order that called on federal agencies to rescind telework and remote work agreements.
**Q: What legal argument did the IRS use to justify its mandate?**
A: The IRS argued that decisions regarding telework and remote work are an “inherent management right” and that it was acting in accordance with Office of Personnel Management (OPM) guidance, which instructed agencies to proceed with return-to-office orders despite collective bargaining obligations.
**Q: Can the IRS challenge the arbitrator’s decision?**
A: Yes, the IRS has 30 days to decide whether to appeal the decision to the Federal Labor Relations Authority.
**Q: What is the National Treasury Employees Union’s (NTEU) position?**
A: NTEU has urged the IRS to comply with the arbitrator’s ruling and “do the right thing,” emphasizing the proven benefits of telework for employees, agencies, and the public.
**Q: Has this happened with other federal agencies?**
A: Yes, independent arbitrators have recently ruled in favor of unions representing employees at agencies like the Forest Service, Health and Human Services, and Housing and Urban Development.
### Conclusion
The arbitrator’s order represents a significant victory for federal employee unions and telework advocates. By finding that the IRS violated its collective bargaining agreement, the ruling reinforces the principle that existing negotiated rights do not simply vanish when an agency attempts to unilaterally change workplace policies. While the IRS has a short window to appeal the decision, the case underscores a growing legal pushback against broad-based return-to-office mandates across the federal government. The outcome of this dispute will likely influence the future of remote work policies for federal employees nationwide.
