(Corrects last word of 19th paragraph quote to "impacted" from "shafted", corrects acronym to NFFE, and corrects spelling of Philip)
WASHINGTON, March 1 (Reuters) - Labor unions are bargaining with federal government agencies in an attempt to soften the financial blow on federal employees as $85 billion in spending cuts kick in.
Some agencies, such as Customs and Border Protection, the Internal Revenue Service and the Environmental Protection Agency have notified workers they may have to take several unpaid days off work.
The Pentagon informed Congress that it planned to put most of its civilian defense employees on unpaid leave for up to 22 days if lawmakers didn't act on time to prevent the automatic cuts.
Congress and President Barack Obama have so far failed to reach a budget deal that would avert the sequester - across-the-board federal spending cuts negotiated in a deficit-reduction battle in 2011.
The sequester is due to start later on Friday.
A handful of unions for federal workers have been active in recent days, negotiating with agencies to give their employees flexibility with the furloughs.
They want employees to have the right to select which days they take unpaid leave, a system in which volunteers can offer to shoulder more of the burden and the ability to seek outside employment, among other concessions.
The National Federation of Federal Employees, National Treasury Employee Union and American Federation of Government Employees say the furloughs will hurt workers' ability to pay their bills, especially if taken over consecutive days.
The American Federation of Government Employees, which represents about 600,000 workers, said it's talking with several government agencies but hasn't reached any agreements yet.
"Our members are pretty angry," said David Borer, AFGE's general counsel. "Furloughs are going to cost them something like 20 percent of their pay over the next several months."
Members of the treasury employees union spent several days this week in Washington pleading with lawmakers to prevent what they said would cause them a lot of distress.
Philip Yamalis, an Internal Revenue Service tax specialist from Pittsburgh, Pennsylvania, was among those who lobbied Congress. He has worked for the government for 22 years and says he feels anxious about the future.
"When they say a sequester cuts across the board, they don't realize the fear they place in an ordinary middle-class citizen trying to do his job," he said.
While unions still hope that lawmakers will reach a budget deal that will undo the sequester after the fact, they have geared up to bargain to mitigate the effects.
NTEU spokeswoman Dina Long said the union plans to work with the IRS to find other budget savings that could help avoid furloughs.
In an internal IRS memo acquired by Reuters, the agency informed employees that they would have to take five to seven unpaid days off starting in the summer after the busy tax season. Workers, the agency said, will take no more than one day off per pay period.
Long said the NTEU wants the IRS to give employees the option of swapping furlough days as well as allow employees the right to voluntarily take on more unpaid days to relieve work mates who might be in more dire financial situations. It also wants the tax agency to allow furloughed employees to take outside employment.
The National Federation of Federal Employees has also sent its members bargaining guidelines.
"We're trying to make the best out of a bad situation," said Philip Snodgrass, assistant general counsel at NFFE. "Employees are probably frustrated and understandably so. Congress did this and they (employees) are the ones getting impacted."
The union wants federal employers to provide more than the required 30 days advance notice to furloughed employees. It wants agencies to first solicit volunteers if not all employees are required to take unpaid days off. The union also wants employers to allow workers to request specific furlough days when possible.
The Office of Management and Budget this week instructed agency heads to cooperate with the unions.
The best-case scenario, the union leaders said, would be if Congress reach a budget deal in coming weeks before furloughs start.
"We can't negotiate that they don't do a furlough, but that if they are going to do a furlough, we can negotiate how it will be handled," AFGE's Borer said. "If the agency refuses to negotiate with us, that would be an unfair labor practice and we could file charges against them."
A federal union has the ability to file a complaint through the Federal Labor Relations Authority, which would then investigate the complaint. (Reporting By Elvina Nawaguna, with additional reporting by Anna Yukhananov and Patrick Temple-West; Editing by Karey Wutkowski and Kenneth Barry)