In the Matter of the Petition by

DALE MAY
11430 Gideon Lane

at

Cincinnati, OH 45249-1654

P.S. Docket No. DCA 02-381

APPEARANCE FOR PETITIONER:
William Brown
12 Mount Run
Tinton Falls, NJ 07753-7674

APPEARANCE FOR RESPONDENT:
Michael M. Dempsey
Labor Relations Specialist
United States Postal Service
1591 Dalton Avenue, Room 206-T
Cincinnati, OH 45234-9401

FINAL DECISION UNDER THE DEBT COLLECTION ACT OF 1982

            Petitioner, Dale May, filed a timely Petition for Hearing after receiving a Notice of Involuntary Administrative Salary Offsets dated July 22, 2002.  This Notice stated the Postal Service's intention to withhold $27,602.05 from Petitioner's salary to recover a shortage in an account for which Petitioner was responsible.

            A hearing was held in Cincinnati, OH, on October 3, 2002.[1]  The Postal Service presented testimony from J. J. Christopfel, District Manager of Accounting Operations, Vincent Angilecchia, Acting Manager at the Sharonville Branch Post Office, and Debra Morris, a Postal Systems Supervisor.  Petitioner testified in his own behalf, and the Hearing Official called Gary Brummett, District Manager of Customer Service Operations.[2]  Both sides also relied on documents filed as a supplement to Respondent's Answer.  The following findings of fact are based on the entire record.

FINDINGS OF FACT

            1.  Petitioner has been a Postal Service employee for nearly 36 years.  He has been a customer service supervisor for approximately two years, and became custodian of the unit reserve stock at the Sharonville Post Office in Cincinnati, OH in November 2001.  (Tr. 28, 41-42, 86-87, 92, 101).[3]

            2.  Sharonville operates on what is known as a segmented inventory system.  This means that only the unit reserve custodian has access to the unit reserve stock, but the custodian is responsible for issuing stock to the "floor," where all clerks who make sales to the public have access to it.  Individual clerks do not have individual stamp stock accounts.  (Tr. 57, 76-77, 89).

            3.  The proper procedure for issuing stock from the unit reserve to the floor is for the custodian to have a clerk verify the amount being issued and for the custodian to make entries into the computer system (POS) to record the amount being withdrawn from the unit reserve and placed into the floor account.  (Tr. 59, 77-79, 107).

            4.  The Sharonville office has a history, at least back to September 2000, of shortages in the floor stock account.  On April 4, 2002, Debra Morris and Petitioner conducted an audit of the floor stock at Sharonville and found it to be short $60,253.45.  Office records showed that $142,068.55 should have been present, but their count showed only $81,815.10 present.  (Tr. 49-50, 62, 78; PS Exs. A-4.6 and A-7).

            5.  On April 8, 2002, Debra Morris and Petitioner counted the unit reserve stock and found an overage of $14,848.16.  The alleged debt of $27,602.05 was arrived at by subtracting this $14,848.16 overage, as well as other overages in the floor stock found on January 16, 2002 ($17,693.94) and April 8, 2002 ($163.40) from the $60,253.45 shortage, and then adding another floor stock shortage ($54.10) from April 19, 2002.  There was no testimony given to explain how or when these other overages and shortage were found.  (Tr. 54-55; PS Ex. A-4, A-4.4, and A-6.5).

            6.  While she was at the Sharonville office, Ms. Morris brought some stock security matters to Petitioner's attention.  She noted that some stock that should have been in a locked safe or other container was unsecured.  It is unclear whether this was stock that was still part of the unit reserve or stock that had been issued to the floor stock, but Ms. Morris emphasized to Petitioner the need to maintain the security of all the stock.  She also reminded him of the importance of making the required entries into the POS system every time stock is issued from the unit reserve to the floor.  (Tr. 27-28, 43, 51-52, 57-59, 79-80).

            7.  Postal Service Handbook F-1, Post Office Accounting Procedures (November 1996, With Revisions Through November 15, 2001) contains the following provisions pertaining to offices with "Segmented Inventory Accountability:"

482  Responsibility for Retail Unit Operations

The postmaster/unit manager or supervisor is responsible for compliance with the procedures defined in this section.  Key elements of this responsibility include establishing and controlling segments within the unit, monitoring inventory levels, ensuring proper entry of all financial transactions, remittance of all funds in excess of authorized reserves, and monitoring of operations including count procedures. The postmaster/unit manager is responsible for providing adequate security for all accountable items.

482.2  Responsibility for Inventory Items

 It is the responsibility of all employees to ensure:

        Financial integrity.

        Security of all postal stock, funds, equipment, and facilities.

                                            *  *  *

Employees are accountable for:

        Cash directly assigned to them.

        Money order stock directly assigned to them.

        Stamp stock directly assigned to them.

Correct collection and remittal of all funds due the Postal Service.

483  Unit Reserve Responsibility

                                            *  *  *

3  The individual assigned to the unit reserve is referred to as the unit reserve custodian.  The unit reserve custodian is directly accountable for the value of all the items in the unit reserve stock.

                                    *  *  *

484.2  Segments Assigned from the Unit Reserve

        Segments assigned from the unit reserve include:

                                            *  *  *

Retail Floor Stock - Stock for this inventory is issued from the unit reserve.  The purpose is to provide a common inventory for use by the associates in units as defined in section 481.1.  This credit is not accountable to any individual.

DECISION

            Respondent's theory of liability is that Petitioner did not follow proper procedures in managing his unit reserve and issuing stock to the floor.  Respondent argues that because Petitioner did not keep the stock, including stock that was already part of the floor stock, as secure as required, and because he did not always make POS entries when he should, he is liable for the loss.  To hold a unit reserve custodian liable for a loss from the floor stock, however, is contrary to the regulations quoted above.  (See §484.2).

            We have said many times that the Debt Collection Act is not a vehicle to punish poor job performance.  It may be that Petitioner did not perform his job well, but postal regulations do not make him personally liable, under a strict liability standard, for losses from an account that is not assigned to him.  Under the regulations quoted above, it is important to note the difference between being "responsible" for complying with procedures and for the security of postal property, and being "accountable" for losses.

            Assuming without deciding that Petitioner could be held liable for a floor stock loss if it were proved that some specific act of negligence by him directly caused the loss, Respondent's evidence falls far short of that.  The record contains only a general statement from Ms. Morris that she saw stock left where unauthorized people might have access to it.  As we do not know what happened to the "missing" stock, we cannot simply assume that Petitioner's actions caused a loss.

            As another example of Petitioner's failure to follow procedures, Ms. Morris testified that he told her he sometimes issued stock to the floor without making the required entries into the POS system.  There is no doubt that this is improper, but it does not demonstrate that this failure caused the loss.  In fact, it would seem that this failure would cause an apparent shortage in the unit reserve, not in the floor stock.

            Respondent has not established a basis for holding Petitioner liable for a loss from the floor stock.  The Petition is granted.  Respondent may not withhold money from Petitioner's salary on account of the $27,602.05 shortage.

                                                                        Bruce R. Houston
                                                                        Chief Administrative Law Judge

     [1]  The hearing was conducted by the undersigned Administrative Law Judge via speaker telephone from Arlington, Virginia.  All other participants, including the court reporter, were present in a conference room at the hearing site.

     [2]  Mr. Brummett had been listed by Respondent as a witness, but Respondent's representative elected not to call him.

     [3] References to the hearing transcript are "Tr._."  References to the exhibits attached to Respondent's Answer will be "PS Ex._."