WAIVING OVERPAYMENTS

Description

Under 5 U.S.C. 5584, an authorized official may waive recovery of overpayments resulting from erroneous payment to an employee of (1) pay or allowances or (2) travel, transportation, or relocation expenses and allowances. Use of the waiver authority is discretionary on the part of the authorized official. An employee's overpayment debt may be waived in whole or in part. A waiver decision must be based on a finding that collection would be against equity and good conscience and not in the best interests of the United States. An erroneous payment for which collection is waived is deemed to be a valid payment.

NOTE: While § 5584 applies to certain legislative and judicial branch agencies, this fact sheet focuses on application of § 5584 to executive branch agencies.

Waiver Authority

The heads of Executive agencies have full authority to waive the overpayment debts owed to their respective agency regardless of the amount of the debt. The head of each Executive agency is responsible for establishing waiver policies and standards and determining levels of approval. Agency policies must be consistent with statutory requirements. All § 5584 waiver requests must be directed to the agency that made the erroneous payment resulting in an overpayment debt.

Background

Under 5 U.S.C. 5584(a)(2), the head of an Executive agency is authorized to waive an amount not more than $1,500 (per individual claim), while higher amounts must be waived by an "authorized official," which under § 5584(g)(2) is the Director of the Office of Management and Budget (OMB). (This higher-level waiver authority was previously held by the Comptroller General of the former General Accounting Office, now the Government Accountability Office (GAO). OMB was given this authority by section 103(d) of Public Law 104-316, October 19, 1996.)

The Director of OMB has delegated OMB's waiver authority (including the § 5584(a)(2)(B) authority to prescribe standards) to the Executive agency that made the erroneous payment in question. (See OMB determination memorandum, Determination with Respect to Transfer of Functions Pursuant to Public Law 104-316, December 17, 1996.)

U.S. Office of Personnel Management (OPM)

OPM is responsible for regulating various types of pay and allowances and also issues claims settlement decisions regarding compensation and leave matters both within and outside OPM-regulated programs (5 CFR part 178, subpart A). However, OPM does not have authority under § 5584 to waive overpayment debts resulting from erroneous payments of pay and allowances, except for such overpayment debts owed to OPM by its own employees. OPM claims decisions may be involved in determining whether erroneous payments have been made-i.e., whether an overpayment debt actually exists. OPM generally would become involved in such determinations in individual claims only after the affected employee has received a final agency-level decision. (See www.opm.gov/Payclaims for additional information.) Any request to waive an overpayment debt involving pay and allowances must be directed to the agency that made the erroneous payment, and any agency waiver decision is not subject to review by OPM.

General Services Administration (GSA)

While GSA has authority to settle claims involving expenses incurred by Federal civilian employees for official travel, transportation, and relocation, the GSA Civilian Board of Contract appeals has acknowledged that GSA does not have authority under § 5584 to waive overpayment debts resulting from erroneous payments of travel, transportation and relocation expenses and allowances. Any waiver request involving such matters must be directed to the agency that made the erroneous payment, and any agency waiver decision is not subject to review by GSA.

Coverage

The waiver authority applies to employees of an Executive agency. The term "employee" has the meaning given it in 5 U.S.C. 2105. (See 5 U.S.C. 5581, 5584(a), and 5584(g).) While the erroneous payment must be directed to a current employee (i.e., compensation for service as an employee) in order for § 5584 to apply, a former employee may pursue waiver of collection of a covered erroneous payment. Also, an employee's surviving beneficiary or estate that is liable for repayment of an erroneous payment directed to the employee (based on service performed before death) may also seek a waiver.

Statutory Conditions

Section 5584 establishes the following conditions for exercise of the waiver authority:

• A waiver may be granted only if the authorized official determines that collection of the overpayment debt would be against equity and good conscience and not in the best interests of the United States.

• A waiver may not be granted if, in the opinion of the authorized official, there is an indication of fraud, misrepresentation, fault, or lack of good faith on the part of the employee or any other person with an interest in obtaining a waiver, in connection with the overpayment debt. (In connection with the issues of fault and good faith, formerly applicable GAO policy considered whether an employee knew or reasonably should have known that an erroneous payment had occurred and whether an employee reasonably could have been expected to make inquiries regarding an unexplained increase.)

• A waiver may not be granted unless an application for waiver is received within 3 years of the date on which the erroneous payment was discovered.

Refunds of Amounts Collected Prior to Waiver

If an agency collected some or all of an overpayment debt prior to the granting of a waiver, the agency must refund any amount covered by the waiver if an application for refund is made within 2 years of the date of the waiver. (See 5 U.S.C. 5584(c).)

Effect on Retirement Contributions and Benefits

While waiver makes an erroneous payment a valid payment, it does not make the payment creditable basic pay in computing retirement contributions and benefits. Under the retirement law, OPM may credit only basic pay that is properly paid under applicable law. See 5 U.S.C. 8331(3), which defines "basic pay" as excluding any "pay given in addition to the base pay of the position as fixed by law or regulation," except for certain properly paid premium payments identified in the paragraph.

Disposition of Overpayment Debts Not Waived

Overpayment debts not waived by the head of an agency may be recovered by offsetting a current Federal employee's salary payment to collect the overpayment debt (i.e., "salary offset"), subject to applicable statutory and regulatory requirements. See 5 U.S.C. 5514; OPM regulations at 5 CFR part 550, subpart K; and applicable agency regulations. See also the Federal Claims Collection Standards at 31 CFR parts 900-904, which are regulations promulgated jointly by the Department of the Treasury and the Department of Justice. Those standards provide rules governing Federal debt collections, including rules addressing (1) the collection of debt from other Federal payments and (2) the possibilities of compromising a claim or suspending or terminating collection activity.

Key Terms

"Pay and allowances" - Although not defined in law, this term has been broadly interpreted to encompass all types of employee compensation for services, including paid leave. (See former GAO regulations in effect before Public Law 104-316, 4 CFR parts 91 and 92.)

"Waiver" means the cancellation, forgiveness, or non-recovery of a debt owed by an employee to an agency.

References

• 5 U.S.C. 2105, 5514, 5581, and 5584

• Section 103(d) of the General Accounting Office Act of 1996, Public Law 104-316, October 19, 1996

• Office of Management and Budget's memorandum "Determination with Respect to Transfer of Functions Pursuant to Public Law 104-316," December 17, 1996 located at www.whitehouse.gov/omb/assets/omb/foia/gc_dec17.pdf

• GAO regulatory action (65 FR 33737, May 25, 2000) to remove its § 5584 waiver regulations formerly found in 4 CFR parts 91-92

• Salary offset law and regulations: 5 U.S.C. 5514 and 5 CFR part 550, subpart K

• Federal Claims Collection Law: 31 U.S.C. 3711-3720E

• Federal Claims Collection Standards: 31 CFR parts 900-904

Notes Regarding Other Waiver Authorities

Other laws may establish an independent authority to waive collection of certain other compensation-related debts owed to employing agencies by Federal employees. For example:

• The law governing Federal student loan repayment benefits for Federal employees provides discretionary authority to waive, in whole or in part, collection of a debt resulting from an employee's failure to complete the required period of service-if it is shown that recovery would be against equity and good conscience or against the public interest. (See 5 U.S.C. 5379(c)(3) and 5 CFR 537.109(e).) This waiver authority is subject to OPM policy guidance.

• The law governing recruitment and relocation incentives provides OPM authority to prescribe regulations relating to the repayment of incentives in appropriate circumstances when the agreed-upon service period has not been completed. OPM regulations provide discretionary authority to waive the requirement to repay all or part of a recruitment or relocation incentive for an employee who does not complete the agreed-upon service period when the agency determines collection would be against equity and good conscience and not in the best interest of the United States. (See 5 U.S.C. 5753(g) and 5 CFR 575.111 and 575.211.)

• The law governing physicians comparability allowances provides that a physician who fails to complete at least 1 year of service is liable to refund allowances received unless the head of the agency waives the liability based on a determination that such failure is necessitated by circumstances beyond the control of the physician. (See 5 U.S.C. 5948(e).) While this waiver authority is not addressed in OPM regulations in 5 CFR part 595, subpart A, these waivers are subject to OPM policy guidance.

• The law governing OPM-approved voluntary separation incentive payments ("VSIP" or "buyouts") provides that OPM may waive repayment of the gross amount of the VSIP when re-employment with the Government of the United States triggers the repayment requirement. (See 5 U.S.C. 3524(c) and 5 CFR 576.203.)

  • If the proposed re-employment is with an Executive agency, before the effective date of the reemployment the head of the hiring agency may request a repayment waiver from OPM if the individual to be hired (1) possesses unique abilities and is the only qualified applicant or (2) is working on a temporary basis to help resolve an emergency involving a direct threat to life or property and is using directly related skills. There is no authority to request waiver of the VSIP repayment requirement resulting from work under a personal services or other direct contract.

  • If the proposed re-employment is with an organization in the legislative branch, the head of the organization or the appointing official may waive the repayment of the OPM-approved VSIP if the individual involved possesses unique abilities and is the only qualified applicant available for the position.

  • If the proposed re-employment is with the judicial branch, the Director of the Administrative Office of the U.S. Courts may waive the repayment of the OPM-approved VSIP if the individual involved possesses unique abilities and is the only qualified applicant available for the position.

Note: Some agencies have their own VSIP laws that do not require OPM approval to offer buyouts (e.g., the Department of Defense) or other buyouts under authority of their enabling legislation (FDIC). The provisions of the applicable VSIP law cover (1) whether repayment is required before re-employment with the Government of the United States and, if so, (2) the agency-specific buyout repayment waiver procedures.