In the Matter of the Administrative Offset Petition

VALORIE JORDAN v. UNITED STATES POSTAL SERVICE

P.S. Docket No. AO 19-66

APPEARANCE FOR PETITIONER
Chris A. Jordan

APPEARANCE FOR RESPONDENT
Rashida T. Robinson
Labor Relations Specialist
United States Postal Service

INITIAL DECISION

The United States Postal Service assessed Valorie Jordan with two debts totaling $2,866.24 for salary overpayment and related taxes.  Inadvertently, the Postal Service paid Ms. Jordan for 80 hours of work after the effective date of her employment termination.  I rule in favor of the Postal Service, which may collect $2,491.96 for the salary overpayment and related taxes.  Ms. Jordan is credited with $374.28 which she has already paid.

FINDINGS OF FACT

1. Ms. Jordan was in a serious car accident in 1992 in which she injured her neck and back (Tr. 122, 149-50).
2. In 1993, Ms. Jordan began working for the Postal Service (Tr. 120, 122).
3. In 2008, Ms. Jordan began experiencing neck and back problems resulting from the 1992 car accident.  These problems continued to get worse over the next ten years.  (Tr. 122-23).
4. In May 2017, Ms. Jordan underwent surgery for neck and back injuries related to the 1992 car accident.  She was off work for approximately three months after the surgery.  (Tr. 123, 150, 157).
5. In accordance with the medical restrictions set by her doctor, in October 2017, Ms. Jordan returned to work on a part-time basis.  Initially, she worked 12 hours a week for about a month; then, she worked 20 hours a week.  (Tr. 123; Pet. Exh. 1).
6. Ms. Jordan sought to continue with this 20-hour a week schedule.  She requested that the Postal Service grant her a reasonable accommodation permanently reducing her normal duty schedule from 40 hours to 20 hours per week (Tr. 123-25, 150, 157; Pet. Exhs. 1, 2).
7. On January 31, 2018, the Postal Service’s Reasonable Accommodation Committee denied Ms. Jordan’s request to permanently work 20 hours per week.  On February 9, 2018, Ms. Jordan appealed this determination to a Postal Service reviewing official who denied her appeal on February 20, 2018.  (Tr. 124-26; Pet. Exh. 1; Resp. Exh. 8).
8. On March 14, 2018, the Postal Service hand delivered Ms. Jordan a Notice of Proposed Removal because she was unable to perform the necessary functions of her job, specifically working 40 hours per week.  The notice provided that the Postal Service intended to remove her from her position no sooner than 30 days from March 14, 2018.  (Tr. 127; Pet. Exh. 1; Resp. Exh. 8).
9. That same day, Ms. Jordan was escorted from the building, required to turn in her badge and keys, and told not to return.  The Postal Service placed Ms. Jordan on paid administrative leave during which she was paid for 40 hours per week from March 14 to May 11, 2018.  Ms. Jordan did not work during this period.  (Tr. 41, 174; Pet. Exh. 1; Resp. Exhs. 2, 8, 9).
10. By Letter of Decision dated May 11, 2018, the Postal Service informed Ms. Jordan that effective that same day, she was being removed from the Postal Service because of her medical inability to perform her job for 40 hours per week.  (Tr. 49-50; Resp. Exhs. 8, 9).  Ms. Jordan received this letter on May 14, 2018 (Tr. 130-31, 134).
11. The Postal Service did not promptly remove Ms. Jordan from its payroll, which inadvertently resulted in her being paid for 72 hours of administrative leave and 8 hours of holiday pay in pay periods 11-2018 and 12-2018 (after the effective date of her removal) (Tr. 29-30, 51, 53-54, 72, 135-36; Resp. Exhs. 1, 3). 
12. Ms. Jordan’s initial application for unemployment benefits was denied because the Postal Service still listed her as an employee (Tr. 133-36).
13. By invoice dated June 27, 2018, the Postal Service sought repayment of $2,245.70 for the 80 hours of salary overpayment.  The record does not include evidence that Ms. Jordan was ever advised of her rights under the Debt Collection Act or Federal Claims Collection Standards for this debt.  (Resp. Exh 3; Tr. 100-12; see also 31 U.S.C. § 3716(a); 39 C.F.R. § 966.4).
14. On January 23, 2019, the Postal Service issued an invoice for a new debt in the amount of $620.54, which represents the taxes associated with the $2,245.70.  This invoice included the Notice of Debt Determination which included an explanation of Ms. Jordan’s rights under the Debt Collection Act.¹  The Notice of Debt Determination did not reference the $2,245.70 debt.  (Tr. 101; Pet. Exh. 6; Resp. Exh. 4). 
15. Ms. Jordan first learned of the government’s intent to collect the debt through involuntary offset when she received an invoice from the Department of Treasury dated January 22, 2019 for $4,964.80.²  Upon receiving the invoice, Ms. Jordan called the Department of Treasury on January 29, 2019, and learned that the debt of $2,245.70 had been forwarded from the Postal Service to the Department of Treasury for collection.  (Tr. 110, 166-67; Pet. Exh. 4 at 1).
16. The Department of Treasury then forwarded the debt to a private collection agency, Coast Professional, Inc., for collection.  By invoice dated February 6, 2019, Coast Professional sought to collect $2,245.70 along with $516.51 for penalties and interest.  (Tr. 85; Pet. Exh. 4 at 2).  During the next three months, the Department of Treasury and Coast Professional sent four more invoices of varying amounts to Ms. Jordan.  (Tr. 85, 89, 97-98; Pet. Exh. 4 at 2, 4 at 4, 4 at 6-7).
17. On February 13, 2019, Ms. Jordan paid the government $187.14 (Tr. 86; Pet. Exh. 7).
18. On March 11, 2019, Ms. Jordan made a second payment of $187.14 to the government (Tr. 86; Pet. Exh. 7).
19. Ms. Jordan filed a timely request with the Postal Service’s Accounting Services Center seeking reconsideration of the payroll debt and the related tax debt.  The Postal Service denied her request by decision dated March 6, 2019.  (Tr. 102, 111-12; Pet. Exh. 6).
20. On March 19, 2019, Ms. Jordan filed a timely Petition challenging the two assessed debts (Petition).
21. For jurisdiction, Ms. Jordan waived the right to receive notice of her rights under the Debt Collection Act for the $2,245.70 debt (Tr. 7, 94).
22. Ms. Jordan’s credit rating has been harmed by the Postal Service’s referral of the debt to the Department of Treasury and the referral to a collection agency (Tr. 142-46).

DECISION

Procedural History and Jurisdiction
The dispute was complicated because the Postal Service forwarded the assessed debt to the Department of Treasury as part of the centralized collection process.  See 31 U.S.C. § 3711(g) (an agency must refer to the Department of Treasury for collection delinquent nontax debts).  When the debt was forwarded, the Postal Service needed to certify that the debt was “valid, legally enforceable, and that there are no legal bars to collection” and that the Postal Service had “complied with all prerequisites to a particular collection action under the laws, regulations or policies applicable to the agency . . . .”  31 C.F.R. § 285.12(i).  However, the Postal Service had not complied with all of the prerequisites because it did not provide Ms. Jordan with her rights under the Federal Claims Collections Act and the Postal Service’s implementing regulations.  See 31 U.S.C. § 3716(c)(6); 31 C.F.R. § 285.5.  Specifically, the rights include:  (1) written notice of the type and amount of the claim, the intention of the head of the agency to collect the claim by administrative offset, and an explanation of the rights of the debtor under 31 U.S.C. § 3716; (2) an opportunity to inspect and copy the records of the agency related to the claim; (3) an opportunity for a review within the agency of the decision of the agency related to the claim; (4) an opportunity to make a written agreement with the head of the agency to repay the amount of the claim; and (5) a right to petition for a hearing.  31 U.S.C. § 3716; 39 C.F.R. § 966.4. 
In short, preoffset notice of an individual’s right to challenge the debt is required to satisfy the due process requirements.  See Anderson v. White, 888 F.2d 985, 991-92 (3d Cir. 1989) citing Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 314.  To its credit, the Postal Service then worked to correct the problem.  In accordance with the regulations, it recalled the ineligible debt from the Department of Treasury.  See 31 C.F.R. § 285.12(i). 
On June 24, 2019, the Postal Service moved to dismiss because it failed to provide notice to Ms. Jordan of her rights under the Debt Collection Act.  Ms. Jordan opposed the motion because she had by that time filed her Petition seeking a hearing, received the Postal Service’s answer, and received the Postal Service’s supporting exhibits.  More importantly, the government had already collected $374.28 from Ms. Jordan and had not returned the money.  I denied the motion to dismiss on June 26, 2019, because the federal government had already collected money without advising Ms. Jordan of her rights, had not stayed all collection efforts after a timely Petition was filed, and dismissal would have left her without recourse because she would be at the whim of the Postal Service as to when she would receive her rights (particularly her right to a hearing).³  See Order and Memorandum of Telephone Conference dated June 26, 2019.  Because the assessed debt was returned to the Postal Service and the Postal Service had taken an offset, I have jurisdiction to hear the Petition.⁴ 
Even though Ms. Jordan was entitled to notice of her rights (and the opportunity to exercise those rights) she waived further notice because she wanted this matter to go to hearing.  Accord Games v. Cavazos, 737 F. Supp. 1368, 1377-79 (D. Del. 1990) citing Daniels v. Williams, 474 U.S. 327, 329 (1986)(a negligent deprivation of a right does not automatically provide a separate cause of action for deprivation of due process, i.e., a Constitutional tort, but allows latitude in developing a post deprivation remedy).  The reasonable post deprivation remedy was to allow Ms. Jordan to have a hearing on the merits. 
Salary Overpayment
To recover in a salary overpayment case, the Postal Service must prove:  (1) that it made the salary overpayments to Ms. Jordan; (2) the amount of those payments; and, (3) that Ms. Jordan is not entitled to keep those payments.  See DePumpo v. United States Postal Service, AO 14-248, 2015 WL 13647615 (I.D. January 6, 2015).  If the Postal Service proves these elements, the burden shifts to Ms. Jordan to demonstrate that she is entitled to keep the overpayment.  Id.  Ms. Jordan challenges the assessed debts, penalties, and interest.
The Postal Service has shown that it inadvertently made payments of $2,245.70 to Ms. Jordan for 80 hours of work after the effective date of her employment termination.  When a salary overpayment is made by inadvertent administrative error, through no fault of the employee, the employee is generally not entitled to keep the overpayment.  Riemer v. United States Postal Service, AO 15-286, 2016 WL 10572236 (I.D. April 15, 2016; aff’d P.S.D. May 6, 2016).
More importantly, Ms. Jordan did not work those 80 hours; therefore, she is not entitled to keep the money.  See Finding 11; see also Harkanson v. United States Postal Service, AO 14-224, 2014 WL 12767831 (I.D. November 13, 2014).
The Debt Collection Act requires that an employee be given “written notice of the type and amount of the [government’s] claim, the intention of the head of the agency to collect the claim by administrative offset, and an explanation of the rights of the debtor under [the Debt Collection Act] . . . .”  31 U.S.C. § 3716(a)(1).  The notice of rights explains that a former employee is entitled to records related to the claim, an opportunity to review the government claim within the agency, an opportunity to reach a written agreement with the agency to repay the claim, and the right to petition for a hearing.  Id.; 39 C.F.R. § 966.4(a).  These rights are further explained by the Postal Service’s regulations providing that a former employee may file a petition for hearing after receiving notice of the debt.  See 39 C.F.R. § 966.4(a)(2).  A timely petition then stays collection.  39 C.F.R. § 966.5.  Because the Postal Service failed to provide the required notice, penalties and interest caused by late payment of the assessed debts cannot accrue.  The Postal Service has proved that the government is entitled to $2,245.70 for the salary overpayment, but not the assessed penalties and interest.⁵ 
Ms. Jordan’s Defenses
The Postal Service has met its burden of proof as to the $2,245.70 for the salary overpayment.  In response, Ms. Jordan raises a series of defenses arguing that the Postal Service has not met its burden, and fairness requires that I not only deny the Postal Service the right to collect the money, but also require either additional compensation or specific performance.
Ms. Jordan makes several arguments which are beyond the scope of my review under the Debt Collection Act and the Federal Claims Collection Standards.  See 5 U.S.C. § 5514; 31 U.S.C. § 3716.  First, Ms. Jordan argues that she should not have been fired by the Postal Service.  This argument is beyond the scope of my review of the Postal Service’s assessed debt.  See 31 U.S.C. § 3716(a); 39 C.F.R. Part 966; see also Hough v. United States Postal Service, AO 17-30, 17-32, and 17-33, 2017 WL 5516565 (I.D. June 29, 2017) citing Eric Van Dyke, DCA 12-2, 2012 WL 13034259 (April 26, 2012)(resolving disputes between the parties which are not directly related to the debt is beyond the scope of a Debt Collection Act proceeding).
Second, Ms. Jordan argues that the Postal Service should have provided her with reasonable accommodations which included reducing her work schedule from 40 to 20 hours a week.  Again, this argument is beyond my scope of my review.  See id.
Third, Ms. Jordan believes that she is entitled to keep payments made to her for pay periods in late May and early June 2018 because she reasonably believed that the Postal Service reevaluated her request to work 20 hours a week and those payments would cover approximately 20 hours a week.  This argument is not persuasive because the payments were made for pay periods after May 11, 2018 – the effective date of her removal and her last day on the payroll.  In other words, Ms. Jordan seeks to keep money she did not earn.  She is simply not entitled to keep money she did not earn.  See Harkanson v. United States Postal Service, AO 14-224, 2014 WL 12767831 (I.D. November 13, 2014)(an employee may not retain a salary overpayment made after the effective date of the employee’s termination).
Fourth, Ms. Jordan argues that her credit rating was harmed because the matter was prematurely forwarded to the Department of Treasury for collection which in turn forwarded the debt to a collection agency.  I am unaware of any legal authority, and Ms. Jordan has not identified any, allowing me to waive the debt because the Postal Service made a mistake in prematurely forwarding the debt to the Department of Treasury.  See, e.g., Islam v. United States Postal Service, AO 14-264, 2015 WL 13647618 (P.S.D. July 30, 2015)(neither the hearing official nor the Judicial Officer has the authority to waive a debt in an administrative offset case).
Finally, Ms. Jordan argues that the Postal Service’s keeping her on its rolls beyond the effective date of her termination caused her to be ineligible for unemployment benefits.  Again, it appears that Ms. Jordan seeks to have the debt waived because the Postal Service did not promptly update its rolls.  A request for waiver based on such an error is beyond the scope of my review.  Id.
Taxes
With regard to taxes, because the salary overpayment debt crossed from calendar year 2018 into 2019 without being repaid, the Postal Service recalculated the debt to include an additional $620.54 to accommodate the tax consequences.  The Postal Service is required to withhold taxes on behalf of its employees and forward this money to the federal, state, and local government in the year in which the income is earned.  See 26 U.S.C. § 3402; 26 C.F.R. § 31.3402(a)-1.  It is well settled that if an employee does not repay a debt by the end of a calendar year, the agency is no longer able to recoup the taxes it forwarded to the tax authorities on behalf of the employee.  See, e.g., Salzano v. United States Postal Service, DCA 17-228, 2019 WL 479670 (January 7, 2019).  Because the Postal Service cannot recoup taxes it forwarded on behalf of the employee after the close of the calendar year, the Postal Service is entitled to recover $620.54 for the related taxes it paid to the tax authorities on Ms. Jordan’s behalf.  Ray v. United States Postal Service, DCA 18-104, 2018 WL 4220789 (August 17, 2018), citing Aaron Thorne, DCA 12-319, 2013 WL 12303256 (April 16, 2013).

ORDER

The Petition is denied.  The Postal Service is entitled to $2,866.24.  Ms. Jordan is credited with $374.28 which she has already paid reducing the balance owed to $2,491.96.  The payment schedule is remanded to the parties.

Peter Pontzer
Administrative Law Judge