P.S. Docket No. DCA 16-184


November 14, 2016

In the Matter of the Debt Collection Act Petition

MARVIN JOSEPH MCGEE v. UNITED STATES POSTAL SERVICE

P.S. Docket No. DCA 16-184

APPEARANCE FOR PETITIONER:
Marvin Joseph McGee

APPEARANCE FOR RESPONDENT:
Nancy D. Huber

FINAL DECISION UNDER THE DEBT COLLECTION ACT OF 1982

Petitioner Marvin McGee challenges a debt assessed by Respondent United States Postal Service seeking collection of a $1,000 retail account shortage.  I rule in favor of Mr. McGee.  In the absence of a statute, regulation, handbook, or agreement notifying employees that they may be held financially liable for a job performance error, the Postal Service cannot collect for a financial loss from its employees under the Debt Collection Act.

FINDINGS OF FACT

  1. On October 19, 2015, a customer purchased two $1,000 postal money orders from Mr. McGee, who was a Sales and Service Associate working at the retail counter of the Athens, Ohio Post Office.  The customer paid cash, using a packet of $20 bills with a “$2,000” bank band around the money.  (Petition; First Attachment to Petition; Exhibit 4).
  2. Mr. McGee counted forty-nine $20 bills.  Incorrectly thinking that the transaction was only $20 short rather than $1,020 short, Mr. McGee had the customer give him another $20 bill, and Mr. McGee issued the money orders.  (Petition; Exhibit 4).
  3. At the end of his shift, Mr. McGee again counted the money packet and realized his mistake.  Mr. McGee informed his supervisor, who told him to void one of the money orders.  Mr. McGee did so in an electronic retail accounting system. (Petition; Exhibit 4).  However, the customer already had cashed the money orders (Respondent’s October 7, 2016 Supplemental Submission).
  4. Although Mr. McGee informed his supervisor about the incident, the Postal Inspection Service was not contacted to investigate, and the Postal Service did not attempt to identify the customer or recover the shortage from the customer (Respondent’s September 14, 2016 Supplemental Submission).
  5. On May 16, 2016, the Postal Service assessed Mr. McGee with the $1,000 shortage in his retail account resulting from the October 19, 2015 money order transaction.  On July 7, 2016, the Postal Service issued Mr. McGee a Notice of Involuntary Administrative Salary Offsets seeking collection of the $1,000 shortage via salary offset.  (Second attachment to Petition).  Mr. McGee filed a timely Debt Collection Act Petition.

DECISION

Because the parties agree upon the essential facts, a hearing is unnecessary, and this case is being decided on the pleadings and other written submissions.  See Order and Memorandum of Telephone Conference, August 25, 2016.  There is no question that Mr. McGee’s retail transaction error, whether careless or manipulated by an intentional wrongdoer, resulted in a $1,000 loss to the Postal Service (Findings 2-3).  Mr. McGee’s error does not mean, however, that he is financially liable for that loss under the Debt Collection Act.  The liability determination depends on whether the Postal Service can prove that its “loss” is a “debt” owed by Mr. McGee within the meaning of the Debt Collection Act.1 

Statutes, regulations, and Debt Collection Act precedent make clear that where a Postal Service financial loss results in a benefit or gain to an employee, that employee incurs a debt that may be recoverable under the Debt Collection Act.  See, e.g., 31 U.S.C. § 3701(b)(1)(C); 5 C.F.R. § 831.1803 (an overpayment is a recoverable debt); Matthew J. Williams, Jr., AO 13-375 (I.D. March 20, 2014) (employee’s receipt of unentitled salary is a recoverable debt); 5 C.F.R. § 890.502(a) (unpaid health insurance premium is a recoverable debt); Armstrong v. United States Postal Service, AO 13-261 (I.D. February 6, 2015) (employee’s underpayment of flexible spending account is a recoverable debt); ELM § 512.721 (Postal Service’s payment of unearned annual leave to a separating employee is a recoverable debt); Pearson v. United States Postal Service, DCA 15-337 (June 24, 2016) (employee’s use of government credit card to fuel his personal vehicle creates a recoverable debt); Margaret L. Smith, AO 11-151 (I.D. February 8, 2012) (payment of relocation benefits to which employee is not entitled is a recoverable debt); Timothy L. McWilliams, AO 95-136 (I.D. December 4, 1995) (employee theft creates a recoverable debt).

However, where a Postal Service financial loss does not reflect a corresponding benefit or gain to the employee, the Postal Service must identify a legal basis, such as a statute, regulation, handbook, or agreement, sufficient to establish that the loss creates a debt owed by the employee.  See Peter G. Harris, AO 09-41 (I.D. August 26, 2009).  As explained by the United States Comptroller General:
[T]here is no authority to assess pecuniary liability against a Government employee for losses resulting from his or her error in judgment or neglect of duty unless the agency has issued administrative regulations specifically providing for such liability.  If the agency has regulations of this type, they are considered part of the employee's contract of employment.  Thus, an employee may be held liable, but only if the agency has issued regulations to that effect.  The regulations serve to put the employee on notice of the potential liability.

Walter H. Parker, Jr., B-223726, 1987 Comp. Gen. 874 (June 26, 1987).  See also Joseph S. Onechyk, B-208108, 1983 Comp. Gen. 890 (July 8, 1983) (“A government employee is not automatically liable for loss or damage to Government property, even if caused by his fault or negligence. . . .  He may be held liable only if the agency has issued administrative regulations providing for such liability.”).

Postal Service Debt Collection Act precedent is to the same effect – not every financial loss to the Postal Service subjects the employee to liability for that loss.  See Joseph Messett, AO 09-15 (I.D. October 9, 2009) (“Unless a statute, regulation, or other applicable authority imposing personal liability for poor job performance has been identified, personal liability cannot attach. . . .”); James Palagano, DCA 03-82 (June 5, 2003) (Postal Service “must articulate, and prove, a specific basis for holding Petitioner liable for the loss”); Gary A. Michalak, DCA 02-108 (June 24, 2002) (no employee debt is created for the cost of changing a lock that was required because the employee lost a key, absent a regulation imposing such liability).

Here, because there is no allegation that Mr. McGee personally gained or otherwise was complicit with the customer to create the October 19, 2015 money order transaction loss, I asked the Postal Service to identify a legal basis to hold Mr. McGee financially liable.  See Order and Memorandum of Telephone Conference, August 25, 2016.  It identified provisions of Handbook F-101, Field Accounting Procedures, involving money order sales.  Those provisions do not assign individual financial liability for retail shortages.  My own review of postal regulations revealed general accountability statements – using undefined phrases such as “accountable” or “responsible” – which do not involve money order sales, or specifically impose personal liability for retail account shortages.  See Handbook F-101 §§ 11-3.2; 13-1.2; 14-1.2; but see F-101 §§ 13-7.2, 13-8.5 (applying personal financial liability on retail associates “up to” $100.99 for shortages in cash retained credits, while higher shortages are referred to the Office of Inspector General).2 Accordingly, I find that the provisions relied on by the Postal Service are insufficient to impose personal financial liability on Petitioner.

If the Postal Service wants its retail sales associates to be personally liable for job performance errors, it must clearly and specifically impose that liability in a handbook or other regulation.  I decline to impose such liability by judicial fiat especially since doing so may affect collective bargaining terms and conditions of employment, matters with which I will not interfere.3 

As no legal basis is apparent on which to impose Petitioner’s personal liability, he is excused from any obligation to pay the Postal Service by administrative salary offset for the Postal Service’s loss resulting from the October 19, 2015 money order transaction.  While failing to collect the full amount of cash for the money order transaction may have been careless, the Debt Collection Act is available only to recover employee debts, not to address problematic job performance.4  See Jorden v. United States Postal Service, DCA 14-150 (September 29, 2014).  In this case, the Postal Service has failed to prove that Petitioner owes a debt within the meaning of the Debt Collection Act.

CONCLUSION

If the Postal Service wants to impose personal financial liability on its retail sales associates for losses resulting from retail transaction errors, it must do so expressly, in a clearly stated handbook or other regulation, collectively bargained if appropriate.  As no legal basis has been identified for Mr. McGee’s liability in this case, his Petition is granted.

ORDER

The Postal Service is prohibited from collecting the $1,000 claimed debt from Mr. McGee by involuntary administrative salary offset.

Gary E. Shapiro
Administrative Judge

1 “Debt means any amount of money, funds or property that has been determined by an appropriate official of the Federal Government to be owed to the United States by a person.” 31 C.F.R. § 5.1.  The Employee and Labor Relations Manual (ELM) similarly “defines” debt for these purposes as “any outstanding amount owed to the Postal Service by an employee.”  ELM § 451.1.

2 Retail associates work from a common inventory for which they are “not directly accountable.”  Handbook F-101 §§ 14-1, 14-2.  The Postal Service has not argued that the cash retained credit provision applies to this retail transaction loss.

3 Indeed, earlier versions of Postal Service regulations, now revoked, imposed such liability, as reflected in some of our precedent during a time when strict accountability for retail clerks was in place.  See former Handbook F-1, Post Office Accounting Procedures (November 1996), § 141 (employees are “strictly accountable for any loss unless evidence shows that they followed established postal procedures when performing their duties"); Linda Beaudry, DCA 97-392 (January 8, 1998).  However, the Postal Service expressly changed that liability standard.  See Thomas Guinee, DCA 09-42 (May 21, 2009) (accountability standard “differs from that formerly applied. . . .  The former standard had imposed strict accountability for any demonstrated loss unless evidence established that the employee followed postal procedures when performing his or her duties.”).  Furthermore, the Postal Service has imposed personal liability specifically for certain losses, for example, for those of unit reserve custodians.  See PS Form 3369 (unit reserve custodian agrees to personal liability for shortages); F-101 §§ 13-2.5; 13-3.7.2; 15-2.6.

4 Additionally, the Postal Service did not attempt to identify the customer or pursue recovery of the $1,000 shortage from that customer before proceeding against Mr. McGee (Finding 4).  Administrative Support Manual §§ 221.1 and 222.1 required reporting such losses to the Postal Inspection Service, and Domestic Mail Manual § 12.2.4 required the customer to fill in his name and address on the money order.  The record does not show that reviewing such information or trying to identify the customer would have been fruitless.  This inaction and resulting failure to mitigate separately may bar recovery.  See, e.g., Paulette Kendrick, DCA 08-82 (June 12, 2008) (“well-established” mitigation principle requires Postal Service to attempt to collect shortage resulting from a bad check from the customer before collecting from an employee); Paul Logan, DCA-105 (September 10, 1991) (Postal Service must attempt collection from person responsible for presentation of altered money order before proceeding against its employee).