In the Matter of the Petition by
RANDY C. PETERS
2307 Brooks Drive, Apartment 203
at
Suitland, MD 20746-1010
P. S. Docket No. DCA 04-105

APPEARANCE FOR PETITIONER:
Charles Scialla
453 Preakness Avenue #5
Paterson, NJ  07502-1121

APPEARANCE FOR RESPONDENT:
Dean Rogers
Labor Relations Specialist
United States Postal Service
8409 Lee Highway
Merrifield, VA  22081-9401

FINAL DECISION UNDER THE DEBT COLLECTION ACT OF 1982

            Petitioner, Randy Peters, filed a Petition for Hearing on July 20, 2004, complaining that money had been withheld from his pay to collect an alleged debt without a Notice of Involuntary Administrative Salary Offsets having been issued to him, as is required by Postal Service debt collection procedures.  A Notice of Involuntary Administrative Salary Offsets was issued by Petitioner’s supervisor on July 27, 2004.  This Notice stated the Postal Service's intention to withhold $25,093.90 from Petitioner's salary to recover a shortage in an account at Petitioner’s post office.

            Respondent filed an Answer to the Petition and a hearing was scheduled.  Petitioner filed some additional documents, and the hearing was twice postponed to give the parties additional time to explore settlement.  During a telephone conference on November 19, 2004, the parties agreed to have the case decided on the written record and both parties stated that they had no additional documents to file.  The following findings of fact are based on all the material submitted by the parties.

FINDINGS OF FACT

            1.  At the time pertinent to this case, Petitioner was Manager of Customer Service at the South Station Post Office in Arlington, Virginia.  (Letter of Debt Determination, January 9, 2004, attached to Petition).

            2.  On or about July 31, 2003, Petitioner and an acting supervisor, Ms. Wesley, conducted an audit of the unit reserve stock at South Station.  At that time, Ms. Wesley was the custodian of the unit reserve account.  The audit revealed a shortage of $25,093.90.[1]  (PS Exs. 1, 3, 6 and 7).

            3.  As a result of an Internal Control Group review of financial practices at South Station in October 2003, proposed disciplinary action against Petitioner was initiated.  Part of the basis for this action was Petitioner’s failure to issue a letter of demand to Ms. Wesley for the apparent loss and failure to complete a PS Form 571 to report the apparent loss to the Postal Inspection Service.  The proposed disciplinary action also alleged other instances of Petitioner’s failure to perform the duties of his position.  (PS Exs. 5-7 and 9).

            4.  In a December 23, 2003 memorandum to the Manager of Post Office Operations, the Office-in-Charge of the Arlington Post Office summarized some of the discrepancies found by the Internal Control Group and the corrective action taken.  With regard to the $25,093.90 shortage, the OIC stated, “After reviewing the facts, the shortage was handled incorrectly.  The redeemed stock was not included in the count.  This is what caused the shortage.  .  .  .   The shortage should have been put in suspense and the 571 completed.  The shortage could have been offset once the error was found.”  (PS Ex. 6).

            5.  On January 9, 2004, Petitioner’s supervisor issued Petitioner a Letter of Debt Determination, stating that Petitioner owed the Postal Service $25,093.90.  The letter referred to a unit reserve shortage at South Station on May 20, 2003, and cited several failures to follow proper accounting procedures, including “failing to count redeemed stock, and failing to issue a letter of demand to Ms. Wesley for the shortage identified.”  (Letter of Debt Determination, January 9, 2004, attached to Petition).

            6.  Petitioner was issued the Notice of Involuntary Administrative Salary Offsets for the same amount on July 27, 2004.  (Copy filed by Petitioner on August 9, 2004).

            7.  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. 2, pp. 3-4, Petitioner’s October 7, 2004 submission).

            8.  A second memorandum dated September 16, 1987, from two Assistant Postmasters General to regional directors of finance and human resources further states:

“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. 2, pp. 1-2, Petitioner’s October 7, 2004 submission).

 

DECISION
 

            Respondent has failed to carry its burden to prove an actual loss to the Postal Service of the amount alleged and its burden to establish Petitioner’s liability for the alleged loss.

            Respondent presented no audit records, or witness statements, that adequately explain how the alleged loss was calculated.  Respondent seeks to excuse its failure to present sufficient documentary evidence by arguing that Petitioner was responsible for keeping the pertinent records and failed to do so.  That may be true, but when Respondent issues a Notice of Involuntary Administrative Salary Offsets to an employee, Respondent must be prepared to prove its case if the employee asks for a hearing.  In addition, the OIC’s December 23, 2003 memorandum casts significant doubt on whether there was a loss, at least of the amount alleged (see Finding #4).

            Respondent concedes that Petitioner was not the custodian of the unit reserve during the time pertinent to this case.  To hold a manager or supervisor personally liable under the circumstances shown here is clearly contrary to the policies stated in the two quoted memoranda (see Findings #7 and #8).  Respondent has made no argument that these memoranda are no longer current or do not apply in this case.  James Palagano, P. S. Docket No. DCA 03-213 (July 29, 2003); Nicholas J. Frank, P. S. Docket No. DCA 00-406 (June 15, 2001).

            If Petitioner has not properly performed his duties as a station manager, other action may be appropriate, but there is nothing in this record to support holding him personally liable for the debt that is alleged.  The Petition is granted.  Respondent may not collect $25,093.90 from Petitioner’s salary.  Any money withheld from Petitioner’s salary on account of this debt must be returned to him.

            Bruce R. Houston
            Chief Administrative Law Judge

[1]  Some documents indicate that this count was done on July 31, 2003, others that it was done on August 4, 2003.  (PS Exs. 1, 3, 6 and 7).