November 13, 2014

In the Matter of the Administrative Offset Petition

GEORGE HARKANSON v. UNITED STATES POSTAL SERVICE

P.S. Docket No. AO 14-224

APPEARANCE FOR PETITIONER:
George Harkanson

APPEARANCE FOR RESPONDENT:
Raymond V. Daiutolo, Jr.
Labor Relations Specialist

INITIAL DECISION

Petitioner, George Harkanson, a former employee of Respondent, United States Postal Service, challenges the Postal Service’s $1,450.04 debt assessment. On October 23, 2014, I presided by telephone from the Judicial Officer courthouse in Arlington, Virginia over a hearing in Trenton, New Jersey. I rule in favor of the Postal Service.

FINDINGS OF FACT

1. The Postal Service terminated Mr. Harkanson’s employment as a city carrier effective June 13, 2013, when a grievance of his proposed termination was found to be “without merit” at Step B (Stipulation 1 (September 22, 2014 Order); Exh. 2; July Documents, pp. 12-15). Mr. Harkanson’s last day in a pay status with the Postal Service was May 17, 2013 (Stipulation 2 (September 22, 2014 Order)).
2. The Postal Service paid Mr. Harkanson after the termination for thirty-two hours of annual leave and eight hours of holiday leave between August 31, 2013, and September 6, 2013, due to an error in timekeeping. The Postal Service also mistakenly paid him for forty hours of annual leave between September 28, 2013, and October 4, 2013 (Exhs. 7-8; Tr. 10-13). At Mr. Harkanson’s salary (see Exh. 2), eighty hours of leave equates to $2,173 in gross wages (see Exh. 3; Exh. 6, p. 3; July Documents, pp. 1-11).
3. The Postal Service assessed four debts against Mr. Harkanson: $846.56 for net salary payments for the period between August 31, 2013, and September 6, 2013; $180.57 for related taxes in that period; $760.27 for net salary payments for the period between September 28, 2013, and October 4, 2013; and, $69.02 for related taxes in that period (August Exhs. 1-4; Tr. 14-17).
4. On November 22, 2013, the Postal Service separately issued Mr. Harkanson a $977.21 check for the value of his annual leave balance at the time of termination (terminal leave) (Exhs. 3-4; Tr. 19-21, 27-28). The Postal Service included Mr. Harkanson’s annual leave balance carried over from the previous year in its terminal leave calculation (compare Exh. 4 with Exh. A). The terminal leave balance for which the Postal Service paid Mr. Harkanson was not reduced for any leave posted regarding the salary payments referenced in Findings 2-3. (Exhs. 3-4; Tr. 19-20, 27-28).
5. On February 12, 2014, the Postal Service issued Mr. Harkanson a check for back pay awarded in a grievance decision. That payment included annual leave accrued during the back pay period. (Exhs. 4-6; Tr. 19-20, 23-27). This grievance decision is not in the record.
6. In response to a request by Mr. Harkanson, on May 6, 2014, the Postal Service’s Accounting Service Center determined that the assessed debts were valid (Exh. 1; Tr. 18).¹ Mr. Harkanson timely filed a Petition under 39 C.F.R. Part 966.

DECISION

To recover in this salary overpayment case, the Postal Service must satisfy an initial burden of proving that it made the salary payments to Mr. Harkanson, the amount of those payments, and that Mr. Harkanson was not entitled to the payments. If the Postal Service proves these elements, the burden shifts to Mr. Harkanson to demonstrate an excuse to retain the overpayments. See Patricia A. Skadsberg, P.S. Docket Nos. DCA 14-198, 14-200 (September 26, 2014).

Liability for debt

The Postal Service mistakenly paid Mr. Harkanson after he was terminated (Findings 1-3). It also paid him the value of his terminal leave balance without a reduction for any leave paid after termination, resulting in an overpayment (Finding 4). When an employee mistakenly is paid for days not worked, he or she is accountable to reimburse the Postal Service for those unearned payments regardless of any lack of complicity for the overpayment. See Kathryn L. Schrack, P.S. Docket Nos. DCA 11-52, 11-53, 11-54 (August 26, 2011). The Postal Service therefore has met its initial burden of proving that a debt is due. Mr. Harkanson presents four defenses to excuse liability.

First, Mr. Harkanson argues that he had an annual leave balance at the start of 2013 for which he was not credited. His premise is factually inaccurate because the Postal Service credited Mr. Harkanson with the prior year’s annual leave carry-over balance when calculating the terminal leave payment (Finding 4). The Postal Service also properly paid Mr. Harkanson for annual leave accrued during the back pay period awarded in a grievance (Finding 5).

Second, Mr. Harkanson argues that the debt should be offset by a credit that he believes the Postal Service owes him for back pay ordered in a grievance decision (see Finding 5). The record does not include the grievance decision showing the appropriate back pay recovery. I have no way to assess whether the Postal Service underpaid that grievance obligation. Regardless, I agree with the Postal Service’s argument (see Tr. 39) that the grievance payment is unrelated to the salary overpayment at issue in this case. We have held that where an offsetting underpayment is closely related to a salary overpayment, I may address such a credit, if proved, as offsetting the same debt. See Ashley A. Nokes, P.S. Docket No. DCA 14-149 (July 16, 2014). Here, though, the grievance payment covers a different time period, involves a different issue, is unrelated to the debt before me, and was not developed adequately by the parties. Accordingly, I do not consider it.²

Third, Mr. Harkanson asserts that he did not receive the $977.21 check that the Postal Service asserts it issued for terminal leave.³ As with the issue regarding back pay discussed above, the payment for terminal leave is unrelated to the salary overpayment at issue here. The sole purpose for including the finding related to terminal leave was to indicate that the terminal leave calculated was not reduced because of the overpayment here – i.e., that Mr. Harkanson did not “repay” the amount at issue here by way of any reduction in the amount due him as terminal leave (Finding 4). Whether Mr. Harkanson received that payment or even whether the Postal Service actually issued it is not relevant to the question before me in this matter.

Fourth, Mr. Harkanson asks whether he is entitled to salary payments for the pay period immediately prior to his termination (see Petition). The parties have stipulated, however, that the appropriate last day of his pay status was prior to that final pay period (Finding 1).

Debt amount

The record is poorly developed regarding calculation of the debt. The Postal Service assessed $1,856.42 of salary overpayments for the two periods in question: net salary payments of $1,606.83 ($846.56 + $760.27), and taxes of $249.59 ($180.57 + $69.02). While the Postal Service did not present documents or testimony explaining the accuracy of these figures, Mr. Harkanson did not dispute the amounts. Further, by using Mr. Harkanson’s annual salary to derive the value of the eighty hours of overpaid leave at issue and by examining other payroll documentation showing the same salary for eighty hours of work, I have concluded that he was overpaid by a gross amount ($2,173) (Finding 2), which is greater than the total assessment sought inclusive of taxes ($1,856.42). Therefore, although the salary and tax calculations were not explained by the Postal Service, the amount sought by the Postal Service is not inconsistent with the gross amount of the overpayments. See Glenda A. Higgins, P.S. Docket No. AO 13-376 (I.D. February 27, 2014).

Finally, the Postal Service reduced Mr. Harkanson’s indebtedness from $1,856.42 to $1,450.04 due to credits for unidentified prior payments (see Answer; Tr. 39-40). Although the Postal Service did not present evidence of the derivation or calculation of the credits, Mr. Harkanson does not claim a higher credit amount. I therefore reduce the award to the Postal Service to the amount it presently seeks, and rule that the $1,450.04 debt sought by the Postal Service is due.

The Petition is denied. The Postal Service may collect $1,450.04 by administrative offset.

Gary E. Shapiro
Administrative Judge

¹ Procedural documents, including the Postal Service’s formal Notice of Assessment and Mr. Harkanson’s request for reconsideration are absent from the record, although it appears that the documents exist (see, e.g., Tr. 18). The parties agreed to waive any remaining procedures referenced in 39 CFR Part 966, and agreed that I may proceed to decide this case without additional administrative process. See September 22, 2014 Order and Memorandum of Telephone Conference; Tr. 5.

² As such, this decision is not intended to impose any impediment to Mr. Harkanson pursing that matter in an appropriate forum.

³ Mr. Harkanson did not raise this defense until the hearing. Consequently, the Postal Service was unprepared to present testimony concerning the check.