FINAL DECISION UNDER THE DEBT COLLECTION ACT OF 1982

Petitioner, Richard G. Dreher, filed this Petition on July 1, 1997, after receiving a Notice of Involuntary Administrative Salary Offsets from Ed Neal, Manager, Customer Service. The Notice stated the Postal Service's intention to withhold $764.09 from Petitioner's salary to recover a shortage in Petitioner's window credit found in an audit of his account on June 19, 1996.

A hearing was held in Boca Raton, Florida on August 22, 1997. The Postal Service presented testimony from Mr. Neal, and Ms. Valentine-Eaton, who performed the audit on June 19, 1996. Mr. Dreher testified in his own behalf and also presented testimony from two other window clerks, Ms. Beloit and Mr. White. No documentary evidence, other than that filed with the Petition and the Answer, was offered. Both representatives made oral arguments at the close of the hearing. The following findings of fact are based on the entire record, including observation of the witnesses and their demeanor.

FINDINGS OF FACT

1. Petitioner is a window clerk at what is known as the "downtown" station in Boca Raton, Florida. There are nine or ten window clerks at that office. (Tr. 45, 90).⁽¹⁾

2. Petitioner has held this position since June 1995, but has been a Postal Service employee for many years, including serving as postmaster of a one-person office in Alabama for about one-and-one-half years. (Tr. 94-96, 124). From January-June 1995 he was a window clerk at another Boca Raton post office. (Tr. 100).

3. On June 9, 1995, Petitioner was assigned accountability for stamp stock by Ed Neal. A PS Form 3368, Stamp Credit Examination Record, was issued. (Tr. 9; PS Ex. 4).

4. Petitioner's account was audited by his supervisor, Mr. Douglas, on October 18, 1995, and again on February 13, 1996. The account was "within tolerance" each time. (PS Ex. 4).

5. Petitioner was next audited on June 19, 1996 by Ms. Eaton, a supervisor from another post office brought in to assist the downtown office. This audit, as reflected on PS Form 3294 (PS Ex. 3), showed the account to be $764.09 short. This is determined by subtracting the amount of stock and cash on hand, from the "opening balance" - the amount that should be present. (Tr. 31-32).⁽²⁾ Petitioner participated in the count and agreed with the result. (Tr. 33, 92; PS Ex. 3).

6. Postal Service Handbook F-50, Examination of Stamp Credits and Main or Unit Reserve Stocks, states, in section 211:

Stamp credits maintained by bargaining unit employees must
be examined by supervisory personnel no less frequently than
once every 4 months as provided in Article 28, Employer Claims,
Section 1E of the Agreement between the Postal Service and the
employee organizations. (PS Ex. 1).

Article 28 of the Agreement states:

Employees who are assigned fixed credits or vending credits
shall be strictly accountable for the amount of the credit. If
any shortage occurs, the employee shall be financially liable
unless the employee exercises reasonable care in the
performance of his duties. In this regard, the Employer
agrees to:

. . .

E. Audit each employee's fixed credit no less frequently
than once every four months. (PS Ex. 2).

7. The time between audits, February 13-June 19, exceeded four months.

8. The procedure for the clerks at the Boca Raton downtown station to replenish their stamp stock during the time relevant to this case was for the clerks to fill out a PS Form 17 requesting what stamps they needed and give it to the supervisor. During this time, the supervisor was not always timely in providing stock to the clerks. The clerks, therefore, sometimes acquired stock from each other in order to fill the demands from customers. (Tr. 59-61, 74-77, 119-20). Among the clerks who did this were Mr. Dreher, Ms. Beloit and Mr. White. In obtaining stock this way, the clerks attempted to insure that equal amounts of stock or cash were exchanged, but they did not document such exchanges on PS Form 17, as required by Postal Service rules.⁽³⁾ They all testified that it is possible mistakes were made, and that such mistakes could have caused shortages in one account and overages in others. (Tr. 10, 61, 65-68, 76, 79-83, 129).

9. Ms. Beloit and Mr. White were both audited by Mr. Douglas on June 20, 1996. Ms. Beloit's account had an overage of more than $300.00, and Mr. White had an overage of more than $400.00.⁽⁴⁾ (Tr. 56-57, 73-74, 79).

Contentions of the Parties

Respondent argues that the June 19, 1996 audit establishes that there was a shortage in the stock for which Petitioner was accountable, and that the evidence presented by Petitioner, as well as by Ms. Beloit and Mr. White, shows that Petitioner did not exercise reasonable care in performing his duties. Exchange of stock among clerks, without following proper procedures to document such exchanges, Respondent argues, constitutes lack of reasonable care. As to the matter of the overages in the accounts of the other clerks, Respondent argues that Petitioner must prove a direct relationship between the overages and the shortage, and that Petitioner was unable to do this.

On the matter of the audit being late, Respondent concedes that it was, but argues that this does not relieve an employee from liability for a shortage unless there is evidence that management's failure to audit within four months somehow caused the shortage. Respondent points out that nothing in the union agreement says that an employee cannot be held liable if an audit is late.

Petitioner makes three arguments, any one of which, he contends, would relieve him of liability. First, his position on the late audit is that an employee must be absolved of liability for any shortage found on an audit that was not conducted in accordance with the terms of the union agreement. Second, he contends that he exercised reasonable care in the performance of his duties. He argues that the exchanges of stock among clerks, discussed in Finding of Fact #8, were reasonable under the circumstances, considering the supervisor's failure to provide stock in a timely manner, the fact that February-June is a very busy time of year in Boca Raton, and that the clerks' primary mission was to provide service to their customers. Third, he argues that the overages in Ms. Beloit's and Mr. White's accounts at the same time, and in nearly the same amount, that he was short should be credited against his shortage.

DECISION

The standard for determining liability of Postal Service employees in matters such as this is contained in Handbook F-1, Post Office Accounting Procedures, Section 130 - Liability.⁽⁵⁾ Subsection 131 applies to postmasters, and subsection 132 to other employees:⁽⁶⁾

132 Other Employees

The postmaster consigns postal funds and accountable paper to other employees. Employees are held strictly accountable for any loss unless evidence establishes they exercised reasonable care in the performance of their duties.

Respondent's burden of proof, in cases of unexplained shortages such as this, is to establish a loss, and to show that Petitioner was accountable for the stock from which the loss occurred. Petitioner does not dispute the fact that he was accountable for the stock in question. When a properly conducted inventory, or audit, shows a stock shortage relative to a previously established balance, this constitutes proof of loss unless other evidence raises sufficient doubt about the accuracy of the inventory or the previously established balance, or otherwise suggests that there may have been no actual loss. In this case, the overages in the accounts of the two other clerks raises sufficient doubt about whether the Postal Service suffered a loss.

Handbook F-1 states that employees should be required to replace a shortage, "[u]nless the shortage is related to an overage in another accountability of the same employee or a current overage in another employee's accountability."⁽⁷⁾ This provision does not define when a shortage and an overage are "related," but another section states, "[m]anagers should exercise judgment when determining the existence of a relationship that may warrant offsetting overages."⁽⁸⁾ Respondent argues that Petitioner must prove, with some degree of certainty, that the excess stock in the other clerks' accounts came from his account. In this case, Respondent argues that the clerks' failure to keep proper records of their transactions prevents Petitioner from supplying this necessary element of proof.

Petitioner argues that the necessary relationship between the shortage and the overages is established by the undisputed testimony of the three clerks that they did exchange stock with each other many times, that they may have made errors, and that the total of the two overages, on audits conducted one day after Petitioner's audit, is very close to the amount of Petitioner's shortage.

I find Petitioner's argument on this issue more persuasive. It is consistent with the quoted portion of Handbook F-1, on exercise of "judgment." The evidence need only show a likelihood that the shortage and overages represent the same stock. It would rarely be possible to prove this conclusively, and it is not necessary to do so. In this case, the fact that the shortage and the overages were found at the same time and in nearly equal amounts, plus the probability that errors were committed when exchanges were made in the informal, rushed manner described by all three witnesses, establishes a sufficient relationship to warrant offsetting the overages against the shortage. See James Loehwing, P.S. Docket No. DCA 97-98 (May 23, 1997); Kenneth Pederson, P.S. Docket No. DCA 96-387 (January 2, 1996); Donald G. Maus, P.S. Docket No. DCA-83 (December 28, 1990).

As I find that the matter of the overages dictates a result in favor of Petitioner, I need not address the other issues.

CONCLUSION

The Petition is sustained. Respondent may not collect $764.09 from Petitioner's salary.

Bruce R. Houston
Chief Administrative Law Judge

1. References to the hearing transcript are "Tr. _." References to documentary evidence are to documents attached to Respondent's Answer, "PS Ex. _."

2. Petitioner's opening balance was $43,910.66, and only $43,137.57 was present. (PS Ex. 3). My arithmetic makes the shortage $773.09, rather than $764.09, but this difference is of no consequence.

3. See Handbook F-50, Section 221b.

4. Neither party presented any documents to show the precise amounts of either of these overages.

5. The F-1 Handbook was revised effective November 1996. However, because the events relevant to this case arose before then, the April 1991 edition applies. References in this decision to the F-1 Handbook are to the 1991 edition.

6. The same standards are found in the Financial Management Manual (FMM), Sections 341 and 842.

7. Handbook F-1, Section 472.222.

8. Handbook F-1, Section 472.221.