USPS Paid $866 Million in Grievances: Where the Money Went

Last Updated: September 13, 2026 Reading Time: 9 min

A number has been circulating on postal forums since late August: USPS paid $866 million in grievance settlements over three fiscal years. It is accurate, and it comes from the Postal Service's own Inspector General. What the number does not say on its own is where the money went, who received it, and why one district in Chicago accounts for eight of the ten largest individual payouts in the country. FedTools read the full audit and computed the comparisons the report leaves out.

FedTools computation: dollars fell 11.6% and payment count fell 11.1% from FY2022 to FY2024, so the average payment held nearly flat nationally. The savings came from fewer grievances, not cheaper ones.

The report's own caveat belongs next to the total. The tracking system records individual payments up to $99,999; anything larger is processed through the Accounting Service Center and is not captured in these figures. The $866 million understates what USPS actually pays.

Source: OIG Table 2; shares and the $250 blended average are FedTools calculations. An additional $4.3 million was paid with no union recorded, which brings the total to the $866 million headline.

Two unions tell opposite stories. NALC carriers file the most grievances by far and collect small amounts, $145 on average, consistent with routine overtime and route disputes settled in bulk. APWU clerks and maintenance employees file about 29% of the cases, receive about a fifth of the individual payments, and collect 43% of the money at nearly four times the average payment, which points to the custodial workhour and bargaining-unit-work disputes the report singles out.

The OIG notes that supervisors self-select issue codes and apply them inconsistently, so the categories are directional. The broader overtime bucket, which includes several codes, topped $252 million for the period. Employees working across crafts cost almost $80 million, with mail handlers the largest craft at $36 million. Managers performing bargaining-unit work, such as timekeeping entries reserved for lead clerks under an APWU agreement, cost at least $40 million across at least 16 districts.

One local agreement stands out. The "After 5" agreement in the Texas 2 District around Houston has been in force for more than 30 years without revision and produced about $15 million in payments over the three years, half the district's total, reaching $6.2 million in FY2025 alone.

Why Chicago Is in This Report Eight Times

The Illinois 1 District, which covers Chicago, made more than 78,000 grievance payments totaling $41.3 million over the period. That is 4.8% of the national total. It also produced eight of the ten largest individual payouts in the entire Postal Service, all to letter carriers, out of a top 10 that ran from $197,373 to $367,252 per person.

The district's trajectory was the reverse of the national one. Payments rose 246% from about $7 million in FY2022 to more than $24 million in FY2024. Non-compliance payments, made when management fails to honor an earlier settlement, rose 987%, from $661,022 to $7.2 million. Payments for failing to respond to union requests for information rose 925%. Twenty-four Chicago facilities produced 75% of the district's dollars.

A separate arbitration award adds a layer the $41.3 million does not include. Under Case 4J-19N-4J-C-22103461, USPS must pay $2,500 directly to the local NALC branch for each instance of non-compliance with a settlement, cease-and-desist order, or Step B decision. Those payments run through the Accounting Service Center, not the tracking system, and totaled more than $10 million over the period.

The report also documents the turnaround. After a new Chicago postmaster arrived and the district built a dedicated team to track information requests, non-compliance payments fell 76% from $7.2 million in FY2024 to $1.7 million by the end of FY2025, and information-request payments fell about 88%. California 1 District cut its total grievance payments 78% over a similar period. The OIG's point is that the bill is a management outcome, not a fixed cost.

What the Total Leaves Out

Two costs sit outside the $866 million, and one documentation problem sits inside it.

Arbitration. The 2,968 district-level arbitration cases in the period produced more than $166 million of the grievance payments, and arbitration itself, fees, travel, expert witnesses, and court reporting, cost about $2.8 million a year on top.

Time. Management and union steward hours spent researching and resolving grievances ran about $80 million a year by the OIG's estimate, not separately tracked by task.

Documentation (inside the total, not on top of it). Of 208 informal-grievance decision letters the OIG sampled, 199 lacked complete justification in the tracking system. Informal grievances were $336 million of the $866 million. The OIG flagged about $201 million of that $336 million as "unsupported questioned costs" for FY2023 and FY2024, money already counted in the $866 million but paid without complete paperwork. USPS management disputed that figure and said the true unverified amount is zero because the OIG did not review full physical files. Both positions are in the report.

The OIG also found that grievance payments rose as staffing fell: the quarter with the highest employee availability in the period, 80.9%, had the lowest payments at $47.9 million, and the quarter with 78.7% availability had the highest at $101.3 million. The report calls this a correlation, not a proven cause.

What This Means for a Postal Employee

The figures do not change your contract rights. They do explain where the friction is.

If you are on an overtime desired list, the single most expensive grievance category in the Postal Service is overtime assignment, and Employees Not on Overtime List is fifth. Keep your own record of the list, the assignments, and the dates. The settlements exist because the paperwork was wrong often enough to pay for.

If you are in a district the report names, Ohio 2, California 1, Colorado-Wyoming, Washington, or Illinois 1, the money is concentrated in specific facilities and specific issue codes, and management has now been told in writing which ones.

If you are a steward, Recommendation 6 is the one management refused: identifying who has authority to sign local agreements and requiring expiration and review clauses. Local agreements with no sunset, like Houston's "After 5," are where the largest per-district costs sit.

A grievance payment is taxable pay and shows up in a paycheck like any other. For the larger postal picture, the USPS financial crisis guide covers what the Postal Service's finances can and cannot reach, and the USPS early-out tracker tracks the restructuring report expected this fall.

Check Whether a Settlement Changes Your High-3

Most grievance payments, overtime and non-compliance awards included, are not basic pay and do not enter a FERS High-3. A settlement that restores basic pay, such as a corrected step or grade action with back pay, does. The High-3 Calculator takes raw salary figures, so a postal employee can enter the corrected basic pay for the affected years and see the annuity effect.

Frequently Asked Questions

Did USPS really pay $866 million in grievance settlements?

Yes. The USPS Office of Inspector General's Grievance Management audit, Report 25-068-R26 published January 15, 2026, states that the Postal Service paid more than $866 million across almost 3.5 million grievance payments in fiscal years 2022 through 2024. The union-by-union table sums to $862 million, plus $4.3 million with no union recorded.

Is the grievance bill going up or down?

Down nationally. Payments fell from $302.8 million in FY2022 to $295.8 million in FY2023 and $267.5 million in FY2024, an 11.6% decline, while the number of payments fell 11.1%. The average payment barely moved. Some districts went the other way: Illinois 1 rose 246% over the same period before management changes reversed it in FY2025.

Which union's grievances cost the most?

APWU grievances produced $372 million, 43% of the dollars, from 20% of the payments, at an average of $546 per payment. NALC produced $351 million from 70% of the payments at $145 each. NPMHU averaged $376 and NRLCA $460. A FedTools calculation puts the blended national average at about $250 per payment.

What is the biggest single reason USPS pays grievances?

Overtime. The single Overtime Work issue code accounted for $107 million across 780,563 payments, and the broader overtime-related bucket topped $252 million over the three years. Employees Not on Overtime List added $35 million more. Ohio 2, California 1, and Colorado-Wyoming were the top overtime-payment districts.

Who received the largest individual grievance payments?

The OIG found 76 employees who each received more than $100,000 in grievance payments over the three years. The top 10 ranged from $197,373 to $367,252 and totaled $2.5 million. Eight of the top 10 were Chicago letter carriers. Names are redacted in the report.

Why does Chicago keep coming up?

Illinois 1 District made more than 78,000 payments totaling $41.3 million, and its non-compliance payments rose 987% from FY2022 to FY2024. A separate arbitration award also requires USPS to pay $2,500 to the local NALC branch for every failure to comply with a settlement, which added more than $10 million outside the main total. A new postmaster and a dedicated tracking team cut non-compliance payments 76% in FY2025.

Does the $866 million include everything USPS spends on grievances?

No. It counts payments processed through the grievance tracking system, which caps individual entries at $99,999; larger payments go through the Accounting Service Center. It excludes the Chicago non-compliance award, arbitration costs of about $2.8 million a year, and roughly $80 million a year of steward and management time spent resolving cases.

What did USPS agree to change?

Management agreed with seven of the OIG's eight recommendations, with target dates from March 31, 2026 to September 30, 2027, and disagreed with one: identifying who has authority to sign local agreements and requiring expiration and review clauses. USPS also disputed the OIG's $201 million in unsupported costs tied to incomplete documentation, saying the true figure is zero.

Related Resources

• High-3 Calculator: Whether a basic-pay settlement moves your FERS High-3.
• USPS Financial Crisis Guide: What the Postal Service's finances can and cannot touch.
• USPS Early-Out Rumors vs. Confirmed: The restructuring report and what is actually authorized.
• PSHB and Medicare Part B: The postal health plan rule that can end coverage.

Sources: USPS Office of Inspector General, Grievance Management, Report 25-068-R26 (January 15, 2026), Highlights, Background, Tables 2 to 4, Figures 2 to 9, and Appendices B and C · FedTools 2026 analysis (shares, blended average, and percentage changes computed from the report's published figures).