B-222776, JUN 16, 1986

B-222776: Jun 16, 1986

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DEBT COLLECTIONS - WAIVER - CIVILIAN EMPLOYEES - COMPENSATION OVERPAYMENTS - COLLECTION AGAINST EQUITY AND GOOD CONSCIENCE DIGEST: FEDERAL EMPLOYEE PAY COMPUTATION STATUTE WAS AMENDED TO CHANGE THE DIVISOR FROM 2. ALTHOUGH THE AMENDMENT WAS ENACTED APRIL 7. COLLECTION OF THESE OVERPAYMENTS IS HEREBY WAIVED UNDER THE WAIVER AUTHORITY CONTAINED IN 5 U.S.C. WE HOLD THAT COLLECTION OF THE RESULTING OVERPAYMENTS IS WAIVED UNDER OUR AUTHORITY TO WAIVE OVERPAYMENTS OF PAY AND ALLOWANCES. THIS DECISION IS IN RESPONSE TO A REQUEST FROM THE HONORABLE WILLIAM D. MOST FEDERAL EMPLOYEES ARE PAID ON A BIWEEKLY PAY PERIOD BASIS UNDER THE PROVISIONS OF 5 U.S.C. AN EMPLOYEE'S ANNUAL RATE OF PAY IS DIVIDED BY A NUMBER (DIVISOR) TO DERIVE AN HOURLY RATE.

B-222776, JUN 16, 1986

DEBT COLLECTIONS - WAIVER - CIVILIAN EMPLOYEES - COMPENSATION OVERPAYMENTS - COLLECTION AGAINST EQUITY AND GOOD CONSCIENCE DIGEST: FEDERAL EMPLOYEE PAY COMPUTATION STATUTE WAS AMENDED TO CHANGE THE DIVISOR FROM 2,080 HOURS TO 2,087 HOURS WHICH RESULTED IN A SMALL REDUCTION IN PAY. ALTHOUGH THE AMENDMENT WAS ENACTED APRIL 7, 1986, RESULTING IN OVERPAYMENTS OF PAY TO MOST FEDERAL EMPLOYEES. COLLECTION OF THESE OVERPAYMENTS IS HEREBY WAIVED UNDER THE WAIVER AUTHORITY CONTAINED IN 5 U.S.C. SEC. 5584 AND 4 C.F.R. PARTS 91-93.

PAY COMPUTATION - RETROACTIVE CHANGE - WAIVER OF ERRONEOUS PAYMENTS:

THIS ISSUE PRESENTED IN THIS DECISION CONCERNS THE OVERPAYMENTS OF PAY TO MOST FEDERAL EMPLOYEES WHICH OCCURRED WHEN THE CONGRESS ON APRIL 7, 1986, CHANGED THE STATUTORY PAY COMPUTATION FACTOR FROM 2,080 HOURS TO 2,087 HOURS AND THEREBY REDUCED THEIR HOURLY RATE OF PAY RETROACTIVELY TO THE FIRST PAY PERIOD COMMENCING ON OR AFTER MARCH 1, 1986. WE HOLD THAT COLLECTION OF THE RESULTING OVERPAYMENTS IS WAIVED UNDER OUR AUTHORITY TO WAIVE OVERPAYMENTS OF PAY AND ALLOWANCES.

THIS DECISION IS IN RESPONSE TO A REQUEST FROM THE HONORABLE WILLIAM D. FORD, CHAIRMAN, HOUSE POST OFFICE AND CIVIL SERVICE COMMITTEE, CONCERNING A RETROACTIVE CHANGE IN THE STATUTORY PAY COMPUTATION FACTOR. THE CHAIRMAN REQUESTS THAT WE WAIVE COLLECTION OF THE SMALL OVERPAYMENTS TO FEDERAL EMPLOYEES WHICH RESULTED FROM THIS STATUTORY CHANGE IN VIEW OF THE ADMINISTRATIVE COST AND BURDEN OF RECOVERING THESE OVERPAYMENTS.

MOST FEDERAL EMPLOYEES ARE PAID ON A BIWEEKLY PAY PERIOD BASIS UNDER THE PROVISIONS OF 5 U.S.C. SEC. 5504 WHICH SETS FORTH CERTAIN PAY COMPUTATION RULES. UNDER SECTION 5504, AN EMPLOYEE'S ANNUAL RATE OF PAY IS DIVIDED BY A NUMBER (DIVISOR) TO DERIVE AN HOURLY RATE, AND THAT HOURLY RATE IS THEN MULTIPLIED BY 40 OR 80 TO DERIVE A WEEKLY OR BIWEEKLY RATE. SEE 5 U.S.C. SEC. 5504(B). FOR FISCAL YEARS 1984 AND 1985, A DIVISOR OF 2,087 WAS SUBSTITUTED FOR THE 2,080 DIVISOR SET FORTH IN SUBSECTION 5504(B), RESULTING IN A SLIGHT REDUCTION IN THE EMPLOYEE'S RATE OF PAY. SEE 5 U.S.C. SEC. 5504 NOTE. HOWEVER, EFFECTIVE OCTOBER 1, 1985, THE BEGINNING OF FISCAL YEAR 1986, THE AUTHORITY TO USE 2,087 AS A DIVISOR EXPIRED, AND AS OF THAT DATE THE PAY OF MOST FEDERAL EMPLOYEES WAS AGAIN COMPUTED ON THE BASIS OF THE 2,080 DIVISOR.

WITH THE ENACTMENT OF THE CONSOLIDATED OMNIBUS BUDGET RECONCILIATION ACT OF 1985, PUBLIC LAW 99-272, APRIL 7, 1986, SECTION 5504(B) HAS BEEN AMENDED TO SUBSTITUTE THE 2,087 DIVISOR FOR THE 2,080 DIVISOR EFFECTIVE FOR PAY PERIODS COMMENCING ON OR AFTER MARCH 1, 1986. SEE SECTION 15203 OF PUBLIC LAW 99-272, REPRINTED IN 132 CONG. REC. S3799, S3874 (DAILY ED. APR. 8, 1986). THE RESULT OF THIS STATUTORY CHANGE IS THAT MOST FEDERAL EMPLOYEES WERE OVERPAID BY SMALL AMOUNTS FROM THE FIRST FULL PAY PERIOD ON OR AFTER MARCH 1 UNTIL THEIR AGENCIES CONVERTED THEIR PAYROLL SYSTEMS TO REFLECT THE NEW DIVISOR. /1/ THE AMOUNT OF THE OVERPAYMENT VARIES; FOR EXAMPLE, THE DIFFERENCE IS 2 CENTS PER HOUR OR $1.60 PER BIWEEKLY PAY PERIOD FOR A GRADE GS-5, STEP 1, EMPLOYEE WHILE IT IS 6 CENTS PER HOUR OR $4.80 PER BIWEEKLY PAY PERIOD FOR A GRADE GS-13, STEP 1, EMPLOYEE.

OUR AUTHORITY TO WAIVE COLLECTION OF ERRONEOUS PAYMENTS OF FEDERAL EMPLOYEE PAY AND ALLOWANCES IS CONTAINED IN 5 U.S.C. SEC. 5584 AND 4 C.F.R. PARTS 91-93 (1986). UNDER THAT AUTHORITY, ERRONEOUS PAYMENTS MAY BE WAIVED IF COLLECTION WOULD BE AGAINST EQUITY AND GOOD CONSCIENCE AND NOT IN THE BEST INTERESTS OF THE UNITED STATES.

WE BELIEVE IT WOULD BE AGAINST EQUITY AND GOOD CONSCIENCE AND NOT IN THE BEST INTERESTS OF THE UNITED STATES TO COLLECT THESE RELATIVELY SMALL OVERPAYMENTS. OUR REVIEW OF THE LEGISLATIVE HISTORY OF THIS PAY COMPUTATION AMENDMENT SHOWS THAT THE CONGRESS WAS CLEARLY MOVING TOWARD PROSPECTIVE APPLICATION OF THIS PAY CHANGE. THE BUDGET BILL AS AGREED TO IN SENATE-HOUSE CONFERENCE COMMITTEE IN DECEMBER 1985 PROVIDED FOR A MARCH 1, 1986, EFFECTIVE DATE FOR THIS PAY COMPUTATION CHANGE. H.R. REPT. NO. 99-453, 99TH CONG., 1ST SESS. 306-307, 669. THE AMENDMENT BECAME RETROACTIVELY EFFECTIVE ONLY BECAUSE OF THE SUBSEQUENT UNFORESEEN DELAY IN ENACTING THIS LEGISLATION DUE TO THE INABILITY OF THE SENATE AND HOUSE OF REPRESENTATIVES TO AGREE ON AMENDMENTS UNRELATED TO THE PAY COMPUTATION CHANGE. SEE, FOR EXAMPLE, 132 CONG. REC. H15233-1524 (DAILY ED. MAR. 20, 1986) (STATEMENT OF REP. ROSTENKOWSKI). THEREFORE, WE CONCLUDE THAT UNDER THESE CIRCUMSTANCES IT IS APPROPRIATE TO GRANT WAIVER FOR THESE ERRONEOUS PAYMENTS.

IN OUR PRIOR DECISIONS INVOLVING WAIVERS OF UNKNOWN AMOUNTS FOR LARGE GROUPS OF UNIDENTIFIED EMPLOYEES, WE HAVE DECLINED TO GRANT A "BLANKET" WAIVER UNDER 5 U.S.C. SEC. 5584 SINCE THE STATUTE CONTEMPLATES CONSIDERATION OF INDIVIDUAL CASES WHERE THE IDENTITY OF THE INDIVIDUAL, THE AMOUNT OF THE DEBT, AND THE CIRCUMSTANCES OF EACH CASE MAY BE EXAMINED. SEE MARINE OFFICERS, B-184947, MARCH 21, 1978; AND CANAL ZONE POSITIONS, B-188000, OCTOBER 12, 1977. HOWEVER, WE BELIEVE THOSE DECISIONS MAY BE DISTINGUISHED FROM THIS CASE SINCE THE CIRCUMSTANCES RESULTING IN THE OVERPAYMENT-- A RETROACTIVE CHANGE IN THE STATUTE-- CLEARLY APPLY TO ALL AFFECTED EMPLOYEES.

FINALLY, WE NOTE, THAT, NORMALLY, WAIVER CLAIMS FOR AMOUNTS OF LESS THAN $500 ARE FIRST CONSIDERED BY THE HEAD OF THE AGENCY INVOLVED. SEE 4 C.F.R. SEC. 92.3. HOWEVER, SINCE SO MANY FEDERAL EMPLOYEES ARE AFFECTED BY THIS STATUTORY CHANGE AND IN THE INTEREST OF UNIFORMITY, WE WILL EXERCISE OUR AUTHORITY UNDER THE STATUTE AND REGULATIONS TO WAIVE THESE OVERPAYMENTS.

ACCORDINGLY, THE OVERPAYMENTS OF PAY TO MOST FEDERAL EMPLOYEES RESULTING FROM THE RETROACTIVE STATUTORY CHANGE IN THE COMPUTATION OF PAY TO FEDERAL EMPLOYEES ARE HEREBY WAIVED.

/1/ IN ANTICIPATION THAT THE STATUTORY AUTHORITY FOR THE USE OF 2,087 WOULD BE EXTENDED, THE DEPARTMENT OF HEALTH AND HUMAN SERVICES AND SEVERAL OTHER FEDERAL AGENCIES FAILED TO CONVERT THEIR PAYROLL SYSTEMS BACK TO THE 2,080 DIVISOR AFTER OCTOBER 1, 1985. THUS, THE EMPLOYEES OF THESE AGENCIES WERE NOT OVERPAID AFTER MARCH 1, 1986. SEE B-221651, MAY 27, 1986.

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