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Thousands of former Department of Veterans Affairs employees will soon have the option to return to work, after the VA reached a settlement agreement with the American Federation of Government Employees.

The agreement will let former VA employees who were terminated for minor offenses under the 2017 VA Accountability and Whistleblower Protection Act choose between either getting reinstated at VA or receiving compensation. Hundreds of other former employees whom VA and AFGE agree had engaged in grievous misconduct will have their terminations upheld.

The department said it expects the total cost of the settlement agreement with AFGE to be in the hundreds of millions of dollars. The exact amount, though, could take years to determine, depending on how many former employees ultimately choose to return to their VA jobs.

The settlement comes years after AFGE, which represents more than 291,000 VA employees, filed a grievance against the department in 2018. The union said the agency’s implementation of the VA Accountability and Whistleblower Protection Act, which aimed to speed up the firing process for poor-performing VA employees, violated their collective bargaining agreement.

At the time, AFGE said its agreement with VA included a process for how the two parties should measure employee performance and hold workers accountable to performance standards. According to the labor-management agreement, VA supervisors were required to identify any deficiencies in an employee’s performance, and then work with both the employee and a local union representative to develop a performance improvement plan.

But in implementing the 2017 law, AFGE said the department, in many cases, instead of using a performance improvement plan, was firing, demoting or suspending employees without giving them an opportunity to improve performance.

The Federal Labor Relations Authority, in 2020, found that VA had violated its collective bargaining agreement with AFGE and failed to bargain with the union, and ordered the department to start reinstating the impacted employees.

Earlier this year, VA stopped using the law’s authorities altogether — department officials said it had become mostly ineffective and unusable after years of litigation and adverse administrative and court decisions following its passage in 2017.

In response, Republicans on the House Veterans Affairs Committee reintroduced a bill aiming to reinstate similar authorities for VA to fast-track firings, which cleared the committee along party lines. But VA said it already has the authorities needed to manage its workforce and hold employees accountable for misconduct and poor performance.

Both VA and AFGE said the new settlement was a positive step for labor-management relations going forward.

“This agreement will allow VA and AFGE to move forward and focus on what matters most: delivering world-class care and benefits to veterans, their families, caregivers and survivors,” VA Secretary Denis McDonough said in a statement Friday. “Union employees are the backbone of VA’s workforce, and we are proud to support them.”

“This historic settlement shows what’s possible when labor and management come to the table in good faith to solve problems together,” AFGE National President Everett Kelley said in a statement. “AFGE members are eager to put this matter to rest, move forward in a spirit of cooperation and focus on continuing to deliver world class health care for our nation’s heroes.”

FLRA’s Office of the General Counsel in a press release said it was “pleased” about the announcement, adding that the settlement provides near-term remedies for impacted employees, an end date to the accrual of damages and “should eliminate the need for further negotiation or litigation concerning implementation of the arbitrator’s award.”

VA and AFGE in April also reached an agreement on a new master bargaining agreement, after years of negotiations. AFGE members ratified the agreement in June, and it’s now awaiting a final sign-off from agency leaders. The agreement will make several changes to the union contract, largely aiming to expedite the VA’s hiring process as the department prepares to staff up amid a rapidly increasing workload.

“The new agreement will help VA’s dedicated public servants continue delivering more care and more benefits to more veterans than ever before in our nation’s history,” VA said. “It will also help VA better retain employees, hire more quickly and add the staff required to implement the PACT Act.”

Drew Friedman is a workforce, pay and benefits reporter for Federal News Network.