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IRS Ordered to Restore Telework After Walking Out of Its Own Arbitration

federal employees federal news irs telework irs workplace issues union rights Jul 21, 2026

Federal employees at the IRS just won a major telework fight — and the agency didn't even show up to defend itself. An independent arbitrator ruled that the IRS violated its collective bargaining agreement when it cancelled telework and remote work arrangements for most bargaining-unit employees in 2025, and ordered those arrangements restored.

What the Arbitrator Found

The National Treasury Employees Union (NTEU) filed a grievance after the IRS ended telework and remote work agreements en masse in 2025. In March 2026, the IRS told the arbitrator he was "no longer authorized" to hear NTEU's grievances and withdrew from the proceeding entirely. The arbitrator held the hearing anyway, as the parties' contract allowed, and ruled against the agency that chose not to appear.

The arbitrator rejected two of the IRS's core arguments. First, the agency claimed that because the collective bargaining agreement had since been terminated, the telework rights under it were gone. The arbitrator disagreed, explaining that "expiration of a collective bargaining agreement does not terminate rights and obligations arising under the contract during its term" — the dispute began while the contract was still in force, so it survives. Second, the IRS argued telework is purely a "management right" it can cancel at will. The arbitrator called that an "unqualified overstatement," noting that telework governs where an employee works, not what work they do or how they do it.

Why the IRS's Withdrawal Didn't Matter

Walking away from an arbitration hearing is not a defense — it's a forfeiture of the chance to make your case. Because the IRS chose not to participate, the arbitrator decided the matter based on the record NTEU presented, and issued a ruling accordingly. The IRS was ordered to restore the cancelled telework and remote work agreements and to rescind any discipline connected to the cancellations.

This is the latest in a string of similar arbitration losses for agencies that unwound telework arrangements after return-to-office directives, following comparable rulings against the Department of Health and Human Services, the Department of Housing and Urban Development, the Social Security Administration, and the U.S. Forest Service.

What This Means if You Lost Telework

The IRS has 30 days to appeal this decision to the Federal Labor Relations Authority, so the ruling may not be the final word. In the meantime, federal employees covered by a union contract who lost telework — or who were charged with being absent without leave (AWOL) after a return-to-office order — should know that relief in these situations generally runs through the grievance and arbitration process under your union, not through an individual lawsuit.

If you believe your agency cancelled a negotiated telework or remote work arrangement without following your contract, talk to your union representative promptly. And if that cancellation led to discipline against you individually, that is a different, more time-sensitive matter — one worth getting advice on before any deadlines run.

Southworth PC represents federal employees nationwide in disputes over telework, discipline, and other employment actions. If you're facing discipline, attorneys for federal employees at Southworth PC are available for a consultation.

Legal Disclaimer: This content is for general informational purposes only and does not constitute legal advice. Federal employment situations are fact-specific and time-sensitive. Please consult a qualified federal employment attorney about your specific situation.

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