PAYROLL DEBT FOLLOWS FED TO THE GRAVE & BEYOND
The U.S. Court of Appeals recently issued a decision that should serve as a warning to any federal employee who thinks s/he might be getting too much money in a paycheck. Union leaders should also take notice because illegally structured grievance settlements distributing money improperly to members can also create employee debts that their survivors might have to pay off, with interest, after the fed dies.
On March 18, 2015, OPM notified Mr. Anderson that he had received overpayments amounting to $101,718 for the period between September 1, 2005 and February 28, 2015. Consequently, it ordered him to make monthly repayment in 471 installments of $215.87 with a final installment of $43.23. When Anderson appealed, the MSPB adjusted his payment schedule to 806 monthly installments of $125. That works out to be 64 years of indebtedness. (See Vincent B. Anderson v. OPM) Assuming Mr. Anderson dies before the debt is paid off, the remainder will be taken out of his estate. A party responsible for any debt remaining upon the appellant’s death may include an heir (spouse, child, or other) who is deriving a benefit from the appellant’s Federal benefits, an heir or other person acting as the representative of the appellant’s estate if, for example, the representative fails to pay the United States before paying the claims of other creditors in accordance with 31 U.S.C. § 3713(b), or transferees or distributers of the appellant’s estate. The court upheld the MSPB decision noting that even though the employee was without fault in the creation of the overpayment, policy provides that individuals who know or suspect that they are receiving overpayments are expected to set aside the amount overpaid pending recoupment, and that in the absence of exceptional circumstances — which do not include financial hardship — recovery in these cases is not against equity and good conscience.