May 10, 2006
In the Matter of the Petition
by
ANGELA D. RHODES
P.S. Docket No. DCA 06-23
APPEARANCE FOR PETITIONER:
Sheila Hunter
APPEARANCE FOR RESPONDENT:
Sandra D. Duncan
Labor Relations Specialist
United States Postal Service
FINAL DECISION UNDER THE DEBT COLLECTION
ACT OF 1982
Petitioner, Angela Rhodes, filed a Petition for Hearing after receiving a Notice of Involuntary Administrative Salary Offsets from her supervisor, dated January 25, 2006. This Notice stated the Postal Service’s intention to withhold $81,841.16 from Petitioner’s salary to recover a shortage in the vending machine account at Petitioner’s post office.
Petitioner elected to have the case decided on written submissions. The parties were given time to file additional evidence and argument, beyond that filed with the Petition and the Answer. Petitioner filed her sworn Declaration and some additional documents. Respondent filed a statement from a supervisor. The following findings of fact are based on the entire record.
FINDINGS
OF FACT
1. At the time pertinent to this case, Petitioner was a supervisor at the Alpharetta, Georgia Post Office. She had held that position since June 2001. (Rhodes Declaration).
2. In June 2004, a Postal Service Internal Controls Group conducted a financial review of the Alpharetta office and found a shortage of more than $81,000 in the vending machine account. The group made some written recommendations to the postmaster as to certain corrections in procedure that should be made, and also recommended that a full audit be conducted immediately. (Answer, Ex 1 – Postal Inspection Service Investigative Memorandum (IM); IM, Ex. 1).
3. In a response to an email follow-up in November, 2004, the postmaster stated that an audit of all the vending machines would be conducted by Petitioner and the clerk assigned to the vending account. (IM, Ex. 2).
4. Petitioner and the vending clerk performed the audit on or about November 16, 2004, and a shortage of $81,841.16 in the vending account was posted on November 17, 2004. (Answer, Ex. 1 (the documents used to record this audit are not included in the case file, although they are listed as an attachment to the Inspection Service Investigative Memorandum)).
5. The clerk at the Alpharetta Post Office who had the assigned accountability for the vending machines in 2004 had held that account for approximately 12 years. The vending account was never assigned to Petitioner, although it was her responsibility as a supervisor to audit the account every four months. (Answer, Ex. 1; Answer, Ex. 2 – excerpt from PS Handbook PO-102, Self Service Vending Operational and Marketing Program).
6. Petitioner did not audit the vending account as often as required. Records reviewed by the postal inspectors showed only four vending account audits during the time Petitioner was the supervisor, and the records pertaining to those audits are incomplete. (Answer, Ex. 1; IM, Exs. 12-15).
7. Beginning in December 2003, the vending clerk gave Petitioner his keys to the vending machines during his absences so that she could remove cash from the machines, if necessary. On about three occasions, Petitioner removed money from the machines, and secured it with the unit reserve, of which she was the custodian. When the clerk returned, she turned the money over to him. The record is unclear what safeguards, if any, Petitioner used to record or verify these transfers of money. (Answer, Ex. 1; Rhodes Declaration).
8. On February 18, 2005, a Letter of Demand for $81,841.16 was issued to the vending clerk. His union filed a grievance on his behalf and, because management had failed to audit his account in accordance with Handbook PO-102, the clerk was relieved of liability and the letter was rescinded on August 30, 2005. (Answer, Ex. 3).
9. On October 24, 2005, Petitioner was issued a Notice of Proposed Reduction in Grade, based on unsatisfactory performance in supervising the vending account. The record does not show the result of this action. (Answer, Ex. 4).
10. On December 5, 2005, Petitioner’s supervisor issued her a Notice of Debt Determination, stating that she would be held liable for the $81,841.16 vending shortage. Petitioner asked for reconsideration, which was denied on January 9, 2006, and the Notice of Involuntary Administrative Salary Offsets was issued to her on January 25, 2006. (Petitioner’s Exhibits 1-3).
11. Postal Service Handbook PO-102, Self Service Vending Operational and Marketing Program, May 1999, Updated with Postal Bulletin Revisions Through September 15, 2005, states, in the sections dealing with shortages:
643 Shortages
* * *
643.12 Other Operational Problems
Servicing personnel do not have complete control, at all times, of the assigned credit; therefore, shortages must be assumed to be the result of machine malfunction, unless the following can be determined:
a. Fire, theft, robbery, errors on PS Forms 17, Stamp Requisition, customer refunds, acceptance
of bogus and/or foreign coin-like and bill-like objects, or any other procedural errors.
b. The loss was the direct result of negligence on the part of the servicing personnel.
c. Theft, embezzlement, etc., by the servicing personnel with sufficient evidence to prefer charges.
12. A December 4, 1985 memorandum from the Senior Assistant Postmaster General to regional Postmasters General states, in pertinent part:
“Normally, it is the policy of the Postal Service not to hold supervisors and postmasters personally accountable for employee shortages, if they do not have direct responsibility for the shortage. While this does not relieve management’s responsibility for auditing and supervising credits assigned to employees, other action should be taken based on the circumstances of each case, bearing in mind our basic principle that, in the administration of discipline, our actions should be corrective in nature rather than punitive.” (Ex. 5A, Petitioner’s supplemental submission).
13.
A second memorandum dated
“It has been brought to our attention that there is some confusion in regard to the policy of the Postal Service concerning the personal accountability of postmasters and supervisors in situations involving employee credit shortages where contractual or other reasons preclude collection of the shortage from the employee.
The Postal Service will not normally hold postmasters and supervisors personally accountable for such employee shortages if they do not have direct access to the credit or are not involved in collusion with the employee. That policy was enunciated in a December 4, 1985, memorandum from former Senior Assistant Postmaster General for the Employee and Labor Relations Group, Michael S. Coughlin, and it has not been withdrawn or modified. The policy is not intended to absolve a postmaster, supervisor or others who have financial accountability for postal funds and accountable paper from conscientiously enforcing Postal Service policies and procedures. However, rather than issuing a letter of demand to these individuals, it is more appropriate to consider counseling or discipline for failure to properly carry out the duties of their position. The action warranted should be determined on a case by case basis depending upon the particular circumstances.” (Ex. 5B, Petitioner’s supplemental submission).
DECISION
Petitioner argues that the standard of liability set out in Handbook PO-102 (see Finding #11) precludes holding Petitioner liable because there is no evidence of theft or embezzlement by her, and no evidence that the loss was the direct result of negligence on her part. Further, Petitioner argues that this case is squarely within the parameters of the 1985 and 1987 policy memoranda, stating the Postal Service policy against holding supervisors liable for losses from accounts assigned to subordinates.
Respondent’s theory of liability is that Petitioner’s failure to perform her duties by conducting timely and accurate audits of the vending account constitutes negligence that contributed to the loss. Respondent distinguishes the 1985 and 1987 policy memoranda by arguing that, although Petitioner did not have direct responsibility for the vending account, she had access to the account and did not properly verify or account for money that she removed from the machines.
The standard of liability for losses from vending machines, unlike losses from main stock or clerk credits, is not a strict liability standard. It requires evidence that the loss was caused by the negligence or wrongdoing of the assigned employee (see Finding #11). Rose Benjamin, P. S. Docket No. DCA 06-10 (March 22, 2006); Alissa Moore, P. S. Docket No. DCA 04-123 (December 2, 2004); Andrea Quinn, P. S. Docket No. DCA 01-76/77 (June 14, 2001); Beverly M. Dennis, P. S. Docket No. DCA 97-107 (May 22, 1997). It would be incongruous to use a lesser standard to hold the assigned employee’s supervisor liable. There is no evidence of theft or embezzlement by Petitioner, and while there is evidence that she did not follow prescribed rules and procedures for maintaining control over the vending account, thereby making it difficult to determine when the loss may have occurred, the evidence does not show that the shortage was the “direct result” of her actions. (Alvetta S. Callis, P. S. Docket No. DCA 02-125 (June 6, 2002)).
To attempt to shift the liability for this loss to Petitioner, after first charging the vending clerk and having to withdraw that action, is also contrary to the policy stated in the policy memoranda quoted above. If Petitioner did not properly perform her duties as a supervisor, other action may be appropriate, but this record does not support holding her personally liable for the debt that is alleged. The Petition is granted. Respondent may not collect $81,841.16 from Petitioner’s salary.
Bruce R. Houston
Chief Administrative Law Judge