In the Matter of the Petition by	) March 26, 1996
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IDA WILLIS				)
1443 West 127th Street			)
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	at				)
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Los Angeles, CA 90047-5335		) P.S. Docket No. DCA 95-388

APPEARANCE FOR PETITIONER:		Michael W. Miller
					National Association of Postal Supervisors
					P.O. Box 5445
					Walnut Creek, CA 94596-5445

APPEARANCE FOR RESPONDENT:		J. C. Andrews
					Labor Relations Specialist
					United States Postal Service
					5800 W. Century Blvd.
					Los Angeles, CA 90009-9901

Petitioner, Ida Willis, filed a petition requesting an oral hearing under the Debt Collection Act of 1982, as amended, 5 U.S.C. §5514(a), to challenge the collection by Respondent, United States Postal Service, of an alleged debt by offset from her salary. The basis for the collection was a shortage discovered in the unit reserve stock of Westchester Station in Los Angeles while Petitioner was the unit reserve custodian.

A hearing was held in Los Angeles on March 7, 1996. Because of the unavailability of one witness at that time, the record remained open, and the testimony of that witness was taken the following week by telephone. Oral closing arguments were also conducted during the telephone conference.

1. The unit reserve stock at a postal station consists of the stamps and other products held at the station that have not been consigned to a window clerk. Petitioner has been assigned responsibility for the unit reserve stock at the Westchester Station in Los Angeles since before 1994. (Transcript of Hearing, page ("Tr.") 15-17, 24; Handbook F-1, Post Office Accounting Procedures, Glossary).

2. If Respondent suffers a financial loss due to a shortage in the unit reserve, Petitioner, as the custodian of the unit reserve, is "held strictly accountable . . . unless evidence establishes [she] exercised reasonable care in the performance of [her] duties." (Handbook F-1, section 132; see Financial Management Manual, sections 341.2 and 842.2).

3. A January 19, 1994 audit of the Westchester unit reserve revealed a shortage of $1,353.91 (Tr. 17, 51-54, 59, 108; Respondent's Exhibit ("RX") 11).

4. On May 24, 1994, Respondent issued a letter of demand calling on Petitioner to make arrangements to pay the $1,353.91 within fifteen days. The letter pointed out that involuntary payroll deductions would be implemented if Petitioner did not respond within the time allowed. The letter advised, "Non-Bargaining employees' appeal procedures are contained in Section 450 of the EMPLOYEE AND LABOR RELATIONS MANUAL (ELM)." (Tr. 44, 88; Petitioner's Exhibits ("PX") L4, L5).

5. In February 1995, Respondent began withholding from Petitioner's salary and has collected the full amount of the alleged debt (Tr. 28-31, 34, 94-95).

6. The audit of the unit reserve that immediately followed that of January 19, 1994, occurred in June or July of 1995 and revealed an overage of at least $2,500 (Tr. 17-18, 69, 97, 113-114; PX R).

7. It is Respondent's policy, at least within an area that includes Westchester Station, to allow as a credit against a shortage in an employee's accountability the amount of any overage disclosed in the audit that next follows the one that resulted in the shortage (Tr. 13-14, 18, 70, 97, 109).

Respondent argues that Petitioner was issued a Notice of Involuntary Administrative Salary Offsets on May 24, 1994, and that she is now barred from contesting the offset because she failed to respond within the time allowed. However, the May 24, 1994 letter (Finding 4) was a letter of demand (See Employee and Labor Relations Manual ("ELM") 452.2) and not a Notice of Involuntary Administrative Salary Offsets. The letter was headed, "Letter of Demand," and is referred to in contemporaneous correspondence as a letter of demand. It does not meet the requirements of a Notice of Involuntary Administrative Salary Offsets as described in ELM 452.32 and ELM Exhibit 452.322, and the May 24 letter's reference to the appeal procedures of ELM section 450 (Finding 4) does not convert this letter of demand into a Notice of Involuntary Administrative Salary Offsets that would commence the employee's time to file a petition challenging the debt. Therefore, Petitioner's challenge to the debt is not barred by her failure to file a petition in response to the May 24, 1995 letter.

Moreover, issuance of the Notice of Involuntary Administrative Salary Offsets is critical to Respondent's right to collect an alleged debt by offset from an employee's current pay. If no Notice is issued, Respondent may not withhold (ELM 452.321). Therefore, Respondent's withholding of $1,353.91 from Petitioner's salary without issuing a Notice of Involuntary Administrative Salary Offsets was improper.

On the merits of the petition, I find for Petitioner. Respondent has given no reason why its general policy that employees are given credit against audit shortages for overages disclosed in the next audit should not apply to Petitioner's January 19, 1994 shortage. Her next audit, in June or July of 1995, disclosed an overage that exceeded the January 19, 1994 shortage (Findings 6, 7). Applying the above policy, I conclude she should be given credit for the overage which eliminates the shortage. Therefore, Petitioner is not liable for the $1,353.91 previously collected from her salary, and that amount is to be immediately reimbursed to her.

The petition is granted.

						Norman D. Menegat

						Administrative Judge