B-211166, AUG 25, 1983

B-211166: Aug 25, 1983

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EMPLOYEE SHOULD HAVE BEEN RETURNED TO HER FORMER GRADE AND STEP. AGENCY'S ERROR WAS COMPOUNDED WHEN EMPLOYEE WAS LATER TEMPORARILY PROMOTED FROM GRADE GS-6. STEP 6 (SHOULD HAVE BEEN STEP 3). WAIVER OF RESULTING OVERPAYMENT IS GRANTED SINCE THERE IS NO EVIDENCE THAT EMPLOYEE WAS AWARE SHE HAD BEEN PLACED IN WRONG STEP OF GRADE. SHE WAS FURTHER ADVISED THAT. " SHE WOULD BE ENTITLED TO RECEIVE ANY WITHIN-GRADE INCREASES SHE WOULD HAVE EARNED HAD SHE REMAINED IN HER ORIGINAL GRADE. PESINKOWSKI'S CASE WAS ERRONEOUS. REGULATIONS PERTAINING TO THE SO-CALLED "HIGHEST PREVIOUS RATE" ARE FOUND IN 5 C.F.R. SEC. 531.203(C) (1983) AND PROVIDE THAT THE SALARY TO BE PAID AN EMPLOYEE WHO IS REEMPLOYED.

B-211166, AUG 25, 1983

DIGEST: UPON TERMINATION OF EMPLOYEE'S TEMPORARY PROMOTION FROM GRADE GS-6, STEP 4, TO GRADE GS-7, STEP 3, AGENCY ERRONEOUSLY ESTABLISHED HER STEP RATE AT STEP 7 OF GRADE GS-6, BASED ON HIGHEST PREVIOUS RATE EARNED DURING TEMPORARY PROMOTION. UNDER AGENCY REGULATIONS, EMPLOYEE SHOULD HAVE BEEN RETURNED TO HER FORMER GRADE AND STEP. AGENCY'S ERROR WAS COMPOUNDED WHEN EMPLOYEE WAS LATER TEMPORARILY PROMOTED FROM GRADE GS-6, STEP 7, TO GRADE GS-7, STEP 6 (SHOULD HAVE BEEN STEP 3). WAIVER OF RESULTING OVERPAYMENT IS GRANTED SINCE THERE IS NO EVIDENCE THAT EMPLOYEE WAS AWARE SHE HAD BEEN PLACED IN WRONG STEP OF GRADE, AND SINCE PERSONNEL RECORDS FURNISHED TO EMPLOYEE DID NOT DISCLOSE ERROR.

ANNE PESINKOWSKI - WAIVER OF ERRONEOUS

OVERPAYMENTS OF PAY:

MS. ANNE PESINKOWSKI, AN EMPLOYEE OF THE INTERNAL REVENUE SERVICE (IRS), HAS APPEALED OUR CLAIMS GROUP SETTLEMENT, DATED AUGUST 4, 1982, WHICH DENIED HER REQUEST FOR WAIVER OF OVERPAYMENTS OF PAY TOTALLING $1,528.88. FOR THE REASONS STATED BELOW, WE REVERSE OUR CLAIMS GROUP'S DETERMINATION.

EFFECTIVE DECEMBER 17, 1978, MS. PESINKOWSKI RECEIVED A TEMPORARY PROMOTION, NOT TO EXCEED 1 YEAR, FROM SUPERVISORY DATA TRANSCRIBER, GRADE GS-6, STEP 4, TO SUPERVISORY CLERK, GRADE GS-7, STEP 3. SHORTLY THEREAFTER, THE EMPLOYEE SIGNED A STATEMENT ACKNOWLEDGING THAT, UPON TERMINATION OF THE TEMPORARY PROMOTION, SHE WOULD BE RETURNED TO A POSITION AT HER PREVIOUS OR AN INTERVENING GRADE, AND THAT HER SALARY WOULD BE ADJUSTED IN ACCORDANCE WITH "NORMAL PAY REGULATIONS." SHE WAS FURTHER ADVISED THAT, "AT A MINIMUM," SHE WOULD BE ENTITLED TO RECEIVE ANY WITHIN-GRADE INCREASES SHE WOULD HAVE EARNED HAD SHE REMAINED IN HER ORIGINAL GRADE.

ON NOVEMBER 18, 1979, IRS TERMINATED MS. PESINKOWSKI'S TEMPORARY PROMOTION. THE AGENCY DID NOT RETURN HER TO THE POSITION SHE HAD FORMERLY OCCUPIED (SUPERVISORY DATA TRANSCRIBER, GRADE GS-6, STEP 4), BUT ASSIGNED HER TO THE POSITION OF TAX EXAMINER (ACCOUNTS), GRADE GS 6, STEP 7. THE NOTIFICATION OF PERSONNEL ACTION EFFECTING TERMINATION OF THE EMPLOYEE'S TEMPORARY PROMOTION INDICATED THAT HER SALARY HAD BEEN SET AT A HIGHER STEP OF HER FORMER GRADE IN ACCORDANCE WITH THE HIGHEST PREVIOUS RATE RULE.

APPLICATION OF THE HIGHEST PREVIOUS RATE RULE IN MS. PESINKOWSKI'S CASE WAS ERRONEOUS. REGULATIONS PERTAINING TO THE SO-CALLED "HIGHEST PREVIOUS RATE" ARE FOUND IN 5 C.F.R. SEC. 531.203(C) (1983) AND PROVIDE THAT THE SALARY TO BE PAID AN EMPLOYEE WHO IS REEMPLOYED, REASSIGNED, PROMOTED, OR DEMOTED MAY BE ESTABLISHED AT ANY RATE OF HIS GRADE WHICH DOES NOT EXCEED HIS HIGHEST PREVIOUS RATE. AGENCY AUTHORITY UNDER THE HIGHEST PREVIOUS RATE RULE IS DISCRETIONARY, AND, IN INTERNAL REVENUE MANUAL SEC. 0531.56, IRS HAS SET FORTH ITS POLICY REGARDING USE OF THE RULE IN ESTABLISHING SALARY RATES UPON THE EXPIRATION OF TEMPORARY PROMOTIONS. UNDER THOSE REGULATIONS, AN EMPLOYEE'S SALARY MAY BE ESTABLISHED AT A HIGHER STEP OF HIS FORMER GRADE BASED ON THE RATE HE RECEIVED WHILE TEMPORARILY PROMOTED, HIS HIGHEST PREVIOUS RATE, ONLY IF THE TEMPORARY PROMOTION LASTED FOR 1 YEAR OR MORE. WHERE A TEMPORARY PROMOTION LASTS FOR LESS THAN 1 YEAR, THE EMPLOYEE IS ENTITLED ONLY TO THE SALARY HE WOULD HAVE RECEIVED HAD THE TEMPORARY PROMOTION NOT OCCURRED, INCLUDING ANY WITHIN-GRADE INCREASES HE WOULD HAVE RECEIVED IN THE ORIGINAL GRADE. SINCE MS. PESINKOWSKI'S TEMPORARY PROMOTION LASTED FOR LESS THAN 1 YEAR, AND SHE APPARENTLY WOULD NOT HAVE BEEN ELIGIBLE FOR A WITHIN-GRADE INCREASE HAD SHE REMAINED IN HER ORIGINAL GRADE, IRS SHOULD HAVE RETURNED HER TO THE GRADE AND STEP (GRADE GS-6, STEP 4) SHE OCCUPIED PRIOR TO THE TEMPORARY PROMOTION.

THE IRS'S ERROR IN ASSIGNING MS. PESINKOWSKI TO A HIGHER STEP OF HER FORMER GRADE WAS COMPOUNDED ON DECEMBER 2, 1979, WHEN THE EMPLOYEE WAS TEMPORARILY PROMOTED FROM GRADE GS-6, STEP 7, TO GRADE GS-7, STEP 6 (SHOULD HAVE BEEN STEP 3), FOR A PERIOD NOT TO EXCEED DECEMBER 1, 1980. THE AGENCY'S PERSONNEL OFFICE DISCOVERED ITS ORIGINAL ERROR IN NOVEMBER 1980, AND DETERMINED THAT THE ERROR HAD CAUSED MS. PESINKOWSKI TO BE OVERPAID IN THE TOTAL AMOUNT OF $1,528.88 BETWEEN NOVEMBER 1979 AND NOVEMBER 1980.

THE IRS FORWARDED MS. PESINKOWSKI'S REQUEST FOR WAIVER OF THE OVERPAYMENT TO OUR CLAIMS GROUP WITH THE RECOMMENDATION THAT IT BE WAIVED. OUR CLAIMS GROUP DENIED WAIVER, DETERMINING THAT THE EMPLOYEE SHOULD HAVE KNOWN THAT SHE HAD BEEN PLACED IN THE WRONG STEP OF HER GRADE FOLLOWING THE TERMINATION OF HER TEMPORARY PROMOTION ON NOVEMBER 18, 1979, AND THAT SHE SHOULD HAVE PROMPTLY QUESTIONED APPROPRIATE OFFICIALS.

MS. PESINKOWSKI STATES THAT SHE WAS NOT AWARE THAT SHE HAD BEEN PLACED IN THE WRONG STEP OF THE GRADE TO WHICH SHE WAS RETURNED UPON TERMINATION OF HER TEMPORARY PROMOTION. THE EMPLOYEE INDICATES THAT SHE HAS RECEIVED A NUMBER OF TEMPORARY PROMOTIONS DURING HER 10 YEARS OF EMPLOYMENT WITH IRS, AND THAT, IN EACH INSTANCE, SHE HAS BEEN RETURNED TO A HIGHER STEP OF HER FORMER GRADE BASED ON THE RATE SHE RECEIVED WHILE TEMPORARILY PROMOTED. SHE FURTHER CONTENDS THAT SHE SHOULD NOT HAVE BEEN EXPECTED TO BE AWARE OF THE ERROR SINCE THE PAY REGULATIONS WHICH WERE MISAPPLIED ARE HIGHLY TECHNICAL IN NATURE.

UNDER THE AUTHORITY OF 5 U.S.C. SEC. 5584 (1976 & SUPP. IV 1980), THIS OFFICE MAY WAIVE OVERPAYMENTS OF PAY AND ALLOWANCES RECEIVED BY AN EMPLOYEE IF COLLECTION ACTION "WOULD BE AGAINST EQUITY AND GOOD CONSCIENCE AND NOT IN THE BEST INTERESTS OF THE UNITED STATES." HOWEVER, THAT AUTHORITY MAY NOT BE EXERCISED IF THERE IS AN INDICATION OF FAULT ON THE PART OF THE EMPLOYEE IN THE MATTER. "FAULT" IS CONSIDERED TO EXIST IF IT IS DETERMINED THAT THE EMPLOYEE KNEW OR SHOULD HAVE KNOWN THAT AN ERROR EXISTED BUT FAILED TO TAKE CORRECTIVE ACTION. SEE 4 C.F.R. SEC. 91.5 (1983).

WHEN AN EMPLOYEE HAS BEEN ASSIGNED TO THE WRONG STEP WITHIN A GRADE UPON A PROMOTION, DEMOTION, OR THE ASSUMPTION OF A NEW POSITION, WE HAVE USUALLY WAIVED ANY RESULTING OVERPAYMENTS. THE REASON FOR THIS IS THAT MOST EMPLOYEES CANNOT REASONABLY BE EXPECTED TO KNOW THE FINER POINTS OF PAY REGULATIONS GOVERNING THOSE PERSONNEL ACTIONS, AND THEY ARE GENERALLY NOT FURNISHED WITH ANY PAY OR PERSONNEL RECORDS WHICH, ON THEIR FACE, ARE ERRONEOUS OR SHOW ASSIGNMENT TO THE WRONG STEP WITHIN A GRADE. HENCE, UNDER THESE CIRCUMSTANCES, WE HAVE ORDINARILY GRANTED WAIVER ON THE BASIS OF A CONCLUSION THAT THE EMPLOYEE COULD NOT REASONABLY HAVE BEEN EXPECTED TO KNOW OR SUSPECT HE WAS BEING OVERPAID AND WAS THEREFORE WITHOUT FAULT. SEE, FOR EXAMPLE, RUPERT C. KING, B-198760, APRIL 27, 1981; AND ROBERT L. ZERR, B-184182, JULY 22, 1976. SEE GENERALLY 51 COMP.GEN. 30 (1971). ON THE OTHER HAND, FAVORABLE CONSIDERATION FOR WAIVER WILL NOT BE GIVEN TO AN EMPLOYEE ASSIGNED TO THE WRONG STEP WITHIN A GRADE IF THERE IS EVIDENCE INDICATING THAT THE EMPLOYEE ACTUALLY KNEW OF THE ERROR, OR WAS FURNISHED WITH PAY AND PERSONNEL RECORDS WHICH, ON THEIR FACE, SHOWED THE EXISTENCE OF THE ERROR. SEE BEATRICE M. LANSDOWN, B-201815, MARCH 25, 1981; AND PETER D. BOURGOIS, B-198562, AUGUST 28, 1980.

AS NOTED PREVIOUSLY, IRS ADVISED MS. PESINKOWSKI THAT, UPON THE TERMINATION OF HER TEMPORARY PROMOTION FROM GRADE GS-6, STEP 4, TO GRADE GS-7, STEP 3, HER SALARY WOULD BE ADJUSTED IN ACCORDANCE WITH "NORMAL PAY REGULATIONS," AND THAT, "AT A MINIMUM," SHE WOULD RECEIVE ANY WITHIN-GRADE INCREASES SHE WOULD HAVE EARNED HAD THE TEMPORARY PROMOTION NOT OCCURRED. THE EMPLOYEE WAS NOT SPECIFICALLY INFORMED THAT SHE WOULD BE RETURNED TO HER FORMER GRADE AND STEP IF THE TEMPORARY PROMOTION LASTED FOR LESS THAN 1 YEAR. THE NOTIFICATION OF PERSONNEL ACTION EFFECTING THE TERMINATION OF MS. PESINKOWSKI'S TEMPORARY PROMOTION SHOWED HER RATE OF PAY UPON DEMOTION TO BE THAT PRESCRIBED FOR STEP 7 OF GRADE GS-6, AND EXPLAINED THAT HER SALARY HAD BEEN ADJUSTED IN ACCORDANCE WITH THE HIGHEST PREVIOUS RATE RULE. HER SUBSEQUENT TEMPORARY PROMOTION FROM GRADE GS-6, STEP 7, TO GRADE GS-7, STEP 6, WAS ACCOMPLISHED BY A NOTIFICATION OF PERSONNEL ACTION WHICH DID NOT, ON ITS FACE, SHOW THAT THE EMPLOYEE HAD BEEN PLACED IN THE WRONG STEP OF THE HIGHER GRADE.

UNDER THESE CIRCUMSTANCES, MS. PESINKOWSKI REASONABLY COULD HAVE ASSUMED THAT, UPON TERMINATION OF HER TEMPORARY PROMOTION FROM GRADE GS 6, STEP 4, TO GRADE GS-7, STEP 3, HER ASSIGNMENT TO A POSITION AT STEP 7 OF GRADE GS- 6 WAS EFFECTED IN ACCORDANCE WITH NORMAL PAY RULES AND PRACTICES. CONSEQUENTLY, SHE WOULD HAVE HAD NO REASON TO QUESTION THE CORRECTNESS OF HER SUBSEQUENT TEMPORARY PROMOTION FROM GRADE GS-6, STEP 7, TO GRADE GS-7, STEP 6. THEREFORE, WE FIND NO BASIS FOR CONCLUDING THAT THE EMPLOYEE KNEW OR SHOULD HAVE KNOWN THAT SHE WAS BEING OVERPAID.

ACCORDINGLY, SINCE THERE WAS AN ADMINISTRATIVE ERROR AND THERE IS NO INDICATION OF FAULT ON THE PART OF MS. PESINKOWSKI, THE DETERMINATION OF OUR CLAIMS GROUP IS REVERSED AND COLLECTION OF THE OVERPAYMENT IN THE AMOUNT OF $1,528.88 IS WAIVED.