April 25, 2003
In the Matter of the Petition by
GORDON R. WALKER
551 N Division Street
at
Carterville, IL 62918-1007
P.S. Docket No. AO 03-20
APPEARANCE FOR PETITIONER:
Dennis Sherfy
National Association of Postmasters
4582 Moccosin Place
Greenwood, IN 46142-5918
APPEARANCE FOR RESPONDENT:
Thomas J. Ford
Labor Relations Specialist
United States Postal Service
1720 Market Street, Room 2013
St. Louis, MO 63155-9401
Petitioner, Gordon R. Walker, a former Postal Service employee, filed a Petition for a hearing to challenge deductions made by Respondent from his terminal leave payment upon his separation from the Postal Service.[1] Respondent’s claims were based on three alleged shortages occurring before Petitioner’s separation. Petitioner also claimed in his Petition that Respondent had improperly refused to pay him the balance in his reserve account under Respondent’s Pay-for-Performance program. The parties have settled Respondent’s claims related to the three shortages, but Respondent’s refusal to release Petitioner’s reserve payout remains in dispute.
Petitioner elected to submit the case on the written record without an oral hearing. The parties supplemented the record and submitted written arguments. The following findings of fact are based on the documents submitted.
FINDINGS OF FACT
1. On May 24, 2002, Respondent issued Petitioner, then a level EAS 20 postmaster, a letter stating its intention to remove him from the Postal Service for misconduct (Petition Attachment 2). Petitioner’s representative responded to the charges, but after consideration of the response, Petitioner’s District Manager, by letter dated July 29, 2002, confirmed Respondent’s intention to remove Petitioner effective August 10, 2002. (Respondent’s Exhibit (“RX”) 1 to Respondent’s Answer).
2. In an undated letter, Petitioner resigned from the Postal Service effective August 9, 2002. In his letter, Petitioner asked the addressee to make sure that Petitioner received his terminal leave and Pay-for-Performance payments in a timely manner. (RX 2).
3. Petitioner’s resignation was accepted, and he was separated effective August 9, 2002. The official personnel action (Form 50) effecting the separation reflected that the resignation was while charges were pending. (Petitioner’s March 6, 2003 Submission).
4. Upon Petitioner’s separation, Respondent withheld from his terminal leave payment an amount necessary to satisfy three debts claimed by Respondent based on shortages occurring in Petitioner’s post office while he was in charge (RX 3, 4, 6; Petition Attachment 1).
5. Under Respondent’s Pay-for-Performance program, credits, depending on various performance factors, were made each year to reserve accounts of eligible employees. Annual payments to the employees, also based on meeting performance goals, were made, in part, from the employee’s reserve account. (Management Instruction EL-470-2001-3, July 18, 2001, p. 1, 5). After a voluntary separation, the amount remaining in the employee’s reserve account was to be paid to the employee (Management Instruction EL-470-2001-3, July 18, 2001, p. 9). The payout could be withheld pending resolution of charges against an employee and denied if the employee were separated for cause: “If the employee is separated for cause, he or she receives no payout and forfeits the reserve account. If the separation does not occur, the employee receives payout from the reserve account . . ..” An exclusion from the payout must be approved by a Postal Service vice president based on a written recommendation from the employee’s manager. (Management Instruction EL-470-2001-3, July 18, 2001, pp. 8-9).
6. Petitioner was an employee eligible for credits to a reserve account. The exact value of his reserve account is not in the record, but the parties agree it had a positive balance at the time of Petitioner’s separation. Respondent did not pay Petitioner the amount of his reserve account at the time of his separation, contending that he was separated for cause and had, therefore, forfeited his reserve account (Petition Attachment 1).
7. By letter dated January 9, 2003, Respondent advised Petitioner of the deductions it had made to satisfy the three alleged shortages and stated that Petitioner had forfeited his reserve account. The letter’s writer equated the notation on the Form 50 that Petitioner had resigned pending charges to a separation for cause. (Petition Attachment 1).
8. Petitioner filed a Petition for hearing under the Debt Collection Act, challenging the collection for the three shortages and Respondent’s refusal to pay the reserve account balance to him.
9. On March 17, 2003, the parties reached a settlement regarding the amounts withheld from the terminal leave payment on account of the three shortages (Respondent’s March 17, 2003 Submission).
DECISION
Respondent argues that under the circumstances of Petitioner’s separation, Petitioner forfeited the balance in his Pay-for-Performance reserve account. According to Respondent, a resignation while charges are pending is the equivalent of a separation for cause, which, under the rules applicable to the Pay-for-Performance program, causes forfeiture of the employee’s reserve account (Finding 5). Respondent also argues that Petitioner’s challenge to Respondent’s withholding of his reserve account balance is not a proper subject for an administrative offset proceeding.
Petitioner argues that his resignation was not a separation for cause and that Respondent permitted him to resign as part of a settlement action between the parties. Additionally, Petitioner argues that the procedural requirements requiring approval of a vice president before Petitioner may be excluded from the reserve account payout were not followed (Finding 5). Finally, Petitioner argues that there is no more appropriate forum available to Petitioner to challenge Respondent’s decision to withhold the balance of his Pay-for-Performance reserve account.
The authority of a Hearing Official to address a former employee’s challenge to Respondent’s collection of an alleged debt resides in 39 C.F.R. Part 966, Rules of Practice in Proceedings Relative to Administrative Offsets Initiated Against Former Employees of the Postal Service. Those rules apply to any hearing on Respondent’s determination of the existence or amount of a debt owed the Postal Service by a former postal employee or on the terms of the Postal Service’s proposed debt repayment schedule. 62 Fed. Reg. 63278-79, November 28, 1997; see 39 C.F.R. §966.2. The procedures set forth in Part 966 are available to a former employee before Respondent institutes an administrative offset against money owed the former employee and allow the employee to challenge Respondent’s right to collect by administrative offset. Under the procedures,
“Administrative offset refers to the withholding of money payable by the Postal Service or the United States to, or held by the Postal Service or the United States for, a former employee in order to satisfy a debt determined to be owed by the former employee to the Postal Service.”
39 C.F.R. §966.3 (a). Filing a petition under Part 966 stays further collection action by Respondent, 39 C.F.R. §966.5, and the issue to be decided by the Hearing Official is “whether the former employee is indebted to the Postal Service.” 39 C.F.R. §966.10 (a).
In this case, Respondent does not claim that Petitioner owes it a debt, and Respondent does not seek to withhold or offset money otherwise due Petitioner in order to satisfy a debt. Rather, Respondent contends that the money in issue—the balance in Petitioner’s Pay-for-Performance reserve account—is not “payable by the Postal Service.” In administrative offset cases under Part 966, it is a given that the money or fund that Respondent seeks to offset is payable to the former employee, and the proceeding addresses whether the debt claimed by Respondent to justify the offset is owed. Deciding whether Respondent has properly applied the rules regarding payout of Petitioner’s reserve account is not within the authority of a Hearing Official in an administrative offset proceeding as it does not involve determining whether Petitioner is indebted to Respondent. 39 C.F.R. §966.10 (a).[2]
Accordingly, insofar as Petitioner challenges Respondent’s withholding of his Pay-for-Performance reserve account, this matter is dismissed as beyond the scope of the rules applicable to administrative offset proceedings, 39 C.F.R. Part 966. Insofar as this matter addresses Respondent’s offset to collect the three alleged shortages, it is dismissed based on the parties’ settlement (Finding 9).
Norman D. Menegat
Administrative Judge
[1] The Petition sought a hearing under the Debt Collection Act. As a former employee, Petitioner is not subject to the Debt Collection Act procedures set forth in 39 C.F.R. Part 961, which apply to current employees. However, 39 C.F.R. Part 966 provides an avenue for former employees to challenge Respondent’s collection from funds otherwise due the former employee to satisfy debts claimed by Respondent.
[2] In view of this result, it is not necessary or appropriate to address whether Respondent properly applied the rules applicable to the Pay-for-Performance program.