[Appeal of Disallowed Waiver for Erroneous Overpayment of Merit Pay]

A Defense Logistics Agency employee appealed a settlement which disallowed a waiver for an erroneous overpayment of merit pay. GAO noted that: (1) due to an administrative error, the employee's pay rate exceeded the maximum rate authorized for his grade level; and (2) when the employee noticed that his net pay was significantly higher, he notified the payroll office and confirmed that the paid amount included a retroactive pay increase and was, therefore, correct. GAO held that: (1) there was no indication of fraud, misrepresentation, or lack of good faith on the part of the employee; (2) although the employee received a memo outlining the application of merit pay, the information was distributed on or about the time the employee received his first merit paycheck; (3) an employee cannot be held at fault where the record indicates that he did not know, at the time of the overpayment, that the merit pay rate for his grade cannot exceed the maximum rate for that grade; and (4) since the employee contacted his payroll office and was assured that his pay was correct, he could not be held at fault. Accordingly, the waiver should be allowed.