March 9, 2017

In the Matter of the Debt Collection Act Petition

ARTHUR L. WALLACE, JR., v. UNITED STATES POSTAL SERVICE

P.S. Docket No. DCA 16-69

APPEARANCE FOR PETITIONER
Albert Lum
Scialla Associates, Inc.

APPEARANCE FOR RESPONDENT
Gregory Dwayne Cassel
Labor Relations Specialist

FINAL DECISION UNDER THE DEBT COLLECTION ACT OF 1982

Respondent, United States Postal Service, sought to collect from Petitioner, Arthur Wallace, Jr., a claim in the amount of $3,175.34 for an alleged overpayment of salary.  Petitioner filed a Petition for Hearing on April 5, 2016.  A hearing was conducted in Detroit, Michigan on November 8, 2016.¹  The following findings are based upon the record.

FINDINGS OF FACT

1. Petitioner was employed by Respondent as an EAS level 20 manager at the Brightmoor postal facility located in Detroit, Michigan.  His base salary in this position was $84,885. (Tr. 20).²
2. The Brightmoor facility was merged with the Old Redford facility in June 2013, and Petitioner assumed the additional workload as manager of the merged facility (Tr. 97).
3. Petitioner was placed into a detail at EAS level 22, and in accordance with Postal Service regulations, he received a five-percent increase in his salary to reflect the additional responsibilities (Tr. 22, 48; Resp. Exh. 17).
4. Petitioner received the additional salary beginning with pay period 21/2013 and continuing without interruption until pay period 3/2015 (Tr. 16). 
5. On January 30, 2015, a Postal Service Form 50 was issued to Petitioner upgrading his position to an EAS level 22 (the “Form 50”)(Tr. 33-34; Resp. Exh. 7).
6. The Form 50 was backdated to be effective September 21, 2013.  That position upgrade included a two-percent salary increase from Petitioner’s base salary at EAS level 20 retroactive to the effective date. (Tr. 34; Resp. Exh. 7).
7. The Petition was timely filed.

DECISION

In a Debt Collection Act case, Respondent carries the burden of establishing that a debt exists. Cross v. United States Postal Service, DCA 15-78 (September 14, 2015); Bruch v. United States Postal Service, DCA 14-362 (June 17, 2015).  The obligation to meet that burden in a salary overpayment case requires the agency to produce sufficient evidence that Petitioner owes the debt, and that the amount the agency seeks to collect is an accurate calculation of the debt alleged.  Price v. United States Postal Service, AO 15-212 (I.D. May 17, 2016).

The parties do not dispute that the amount calculated as an overpayment is accurate.  Rather, this dispute centers on whether the Postal Service may collect as a debt the amount it alleges it overpaid Petitioner while he was detailed in the EAS level 22 position during pay periods 21/2013 through 3/2015.  The Postal Service contends that the retroactive application of the Form 50 results in an overpayment of salary.  This unusual situation is created because while Petitioner was detailed into the EAS level 22 position for the relevant pay periods, his salary for those time periods was calculated under ELM § 417.335, which provides that an employee serving in a temporary position is entitled to receive “a salary increase equal to 5 percent of the employee’s actual salary or the minimum salary for the higher grade, whichever is greater.”  ELM § 417.335 (emphasis supplied).  However, when the Postal Service finally evaluated the upgraded position nearly two years later, it designated a salary less than the amount Petitioner received during his detail.  By applying the position upgrade retroactively, the Postal Service argues that Petitioner was overpaid during the period of his detail.

The Postal Service relies upon ELM § 413.3, which provides, in pertinent part:

When an employee’s position is upgraded through the Workload Service Credit System (WSCS), the Station Manager Evaluation Process, the job evaluation process (JEP), or job–ranking standards and guidelines, a 2 percent basic salary increase is provided. The increase is adjusted higher if necessary to bring the salary to the minimum of the new grade or the minimum salary for certain supervisory positions as described in 412.1b.Retroactively applying the two-percent salary increase provided under this ELM provision effectively negates Petitioner’s five-percent detail increase under ELM § 417.335, leaving Petitioner with an “overpayment” of salary of approximately three-percent. 

Petitioner admits that he received the payments in question, however he argues that the salary paid to him was not an “overpayment,” but rather was consistent with Postal Service policy under the ELM for the period of his detail.  As the parties agree that Petitioner was paid his five-percent detail increase consistent with ELM § 417.335 for the relevant pay periods, Petitioner contends that while the eventual position upgrade resulted in a new salary lower than the amount he was paid while on detail, his detail salary was paid correctly at the time it was made, thus no administrative error occurred and there exists no debt.  I agree.

At the time he was detailed to the EAS level 22 position, Petitioner was still classified as an EAS level 20 employee.  ELM § 417 expressly provides for a five-percent salary increase when an employee, such as Petitioner, is on temporary assignment at a higher grade.  ELM § 417.11 defines a temporary assignment as “the placement of a career employee in another established position which is vacant or from which the incumbent is absent from duty, to perform duties and responsibilities other than those specifically set forth in the employee’s position description, when the employee is not awarded the position on a regular basis.”  ELM § 417.11.  Additionally, ELM § 417.331 states that the general requirement for higher pay is that “[a] career employee who is temporarily assigned to a higher grade position must be assigned the primary or core duties and be directed to assume the major responsibilities of the higher grade position to be eligible for higher level pay under the conditions of this section.”  These provisions are consistent with testimony provided at the hearing that Petitioner assumed additional managerial responsibilities outside of his normally designated work as an EAS level 20 manager (Finding 2).  The District Finance Manager testified at the hearing that for the time period in question, Petitioner did not receive a standard promotion because at the time “it was uncertain whether or not the position was going to be upgraded.” (Tr. 52).  Indeed, it took nearly two years to determine the position upgrade.  Accordingly under ELM § 417.335, the five-percent salary increase paid to Petitioner during the period of his detail was consistent with Postal Service regulations.   

None of the Respondent’s witnesses were able to explain why or how the decision was reached to apply the position upgrade retroactively, effectively creating a debt where none existed.  In reconciling the five-percent salary increase for details under ELM § 417.335 with the two-percent salary increase for a position upgrade under ELM § 413.3, Respondent’s witnesses could not identify any rule or regulation that would dictate that the position upgrade must be applied retroactively; instead, Respondent argued that there was no rule saying that it could not be applied retroactively (Tr. 108-09).  Thus, Respondent contends that its retroactive application of the position upgrade and corresponding new salary represented an exercise of its discretion under the Postal Service’s broad personnel authority.

Assuming for the sake of argument that the Postal Service maintains the discretion to apply the position upgrade retroactively, I find that to do so under the facts of this case is an abuse of that discretion.  The payments made to Petitioner were not “an administrative error,” but rather were made in accordance with specific ELM sections, and under those ELM provisions were both appropriate and legal at the time the payments were made.  The decision by the Postal Service to apply the position upgrade retroactively does not convert an otherwise legal and proper salary payment to an overpayment in these circumstances. 

I further note that the general rule in regulatory interpretation is that regulations must be read in harmony with one another so as to give meaning to each provision.  A regulation “should be construed so that effect is given to all its provisions, so that no part will be inoperative or superfluous, void or insignificant, and so that one section will not destroy another unless the provision is the result of obvious mistake or error.” Silverman v. Eastrich Multiple Investor Fund, L.P., 51 F.3d 28, 31 (3rd Cir. 1995) quoting 2A Norman J. Singer, Sutherland, Statutes and Statutory Construction, § 46.06, at 119-20 (5th ed. 1992); Kearfott Guidance & Navigation Corp. v. Rumsfeld, 320 F.3d 1369, 1377 (Fed. Cir. 2003)(“[I]t is relevant to note the canon of construction that there is a presumption in favor of finding harmony between two regulations dealing with similar subjects.”); Rice v. Martin Marietta Corp., 13 F.3d 1563, 1568 (Fed. Cir. 1993)(“In resolving this controversy, we keep in mind the canon of statutory construction, equally applicable to regulations, that where the text permits, statutes dealing with similar subjects should be interpreted harmoniously.”).  If I were to adopt the agency’s interpretation of ELM § 413.3 permitting it to apply the regulation retroactively in its discretion, that interpretation would render the five-percent increase set forth in ELM § 417.335 meaningless, as ELM § 413.3 would always negate ELM § 417.335 salary increases whenever it was advantageous for the agency to do so.  However, by reading ELM § 413.3 as prospective in application, it maintains the harmony between the two regulations and leaves ELM § 417.335 intact. 

In this case, the detail provisions of ELM § 417.335 apply until the agency finishes its review of the position for upgrade.  Once that review is completed, a Form 50 should issue reflecting the results of that review with an appropriate effective date that mirrors the actual date when the position upgrade was completed, not an arbitrary date in the past.  Consequently, any salary adjustment as the result of that review would be applied prospectively.  Bowen v. Georgetown University Hosp., 488 U.S. 204, 208 (1988)(In general, “[r]etroactivity is not favored in the law.”).³

Whether I find that the agency’s retroactive application of ELM § 413.3 is an abuse of its discretion, or whether I find it to be in conflict with basic rules of regulatory interpretation, the result here remains the same.  Accordingly, Petitioner is entitled to judgment in his favor.

ORDER

The Petition is GRANTED.  The Postal Service is prohibited from collecting the alleged debt of $3,175.34.

James G. Gilbert
Chief Administrative Law Judge