SETTLEMENTS BACK PAY ACT

Transcription

1 SETTLEMENTS BACK PAY ACT Defense Finance and Accounting Service INDIANAPOLIS PAYROLL OFFICE Integrity - Service - Innovation

2 SETTLEMENTS BACK PAY ACT The Back Pay Act of 1966 permitted federal employees to be reimbursed for wrongful deprivation of pay under certain circumstances. 5 USC 5596 The Back Pay Act was amended in 1978 to include the administrative determination supporting a monetary award may include decisions relating to an unfair labor practice or grievance. 5 USC 5596(b)(1) The amendment also provides for the payment of interest on awards of back pay and attorney fees. 8/23/2016 Integrity - Service - Innovation 2

3 LEGAL RESOURCES The Back Pay Act of 1996: 5 U.S.C title5/pdf/uscode-2011-title5-partiii-subpartd-chap55-subchapix-sec5596.pdf * The Back Pay Act Regulations: 5 C.F.R. Part 550, subpart H * DoD Financial Management Regulation (DoDFMR), Volume 8, Chapter 6 section EEOC Title VII of the Civil Rights Act of IRS Publication 15-A Page 13, Back Pay IRS Publication 957, Reporting Back Pay to the Social Security Administration IRS Memorandum, Income and Employment Tax Consequences and Proper Reporting of Employment-Related Judgments and Settlements (Oct. 22, 2008) OPM Settlement Guidelines. VA Handbook 5007 Part VIII, Chapter 6 Back Pay 8/23/2016 Integrity - Service - Innovation 3

4 THE BASICS What is back pay? According to the IRS, back pay is pay received in a tax year(s) for actual or deemed employment in an earlier tax year(s). How does an employee get back pay? Filing a Claim: Employee/Former Employee asserts a claim by filing a written request, a grievance, or by filing an action in court in connection to an employment-related dispute. Agency Initiative: An agency, on its own initiative, determines the employee s pay was incorrect and makes a correction resulting in back pay. 8/23/2016 Integrity - Service - Innovation 4

5 BACK PAY DETERMINATIONS Back pay must be issued under the authority of one the following: Court Order: A Federal Court may issue an order for back pay. Agency Order: A hearing official or reviewing authority like the MSPB, EEOC and OPM may issue an order for back pay. Settlement Agreement: Parties in a case may agree to an award of back pay using a written settlement agreement. Grievance Response/Decision or Arbitrator Award: Issued to a union employee after the filing of a grievance. Appropriate Authority s Determination: An appropriate agency authority may determine under the Back Pay Act at 5 U.S.C that an employee was affected by an unjustified or unwarranted personnel action resulting in the withdrawal, reduction or denial of pay, allowances and differentials. The authority must issue a written determination. This is usually submitted as a signed statement on agency letterhead. 8/23/2016 Integrity - Service - Innovation 5

6 SETTLEMENTS BACK PAY ACT Information required by DFAS to process back pay agreed upon in settlements or as ordered by the merit systems protection board or the EEOC Provided from the Office of the General Counsel. Requests for action will be submitted through the Remedy system. The Customer Expectation for response is 15 business days from time of submission for both titles of Settlement Inquiry- New submission or Settlement Inquiry-Follow-up. Submit Remedy ticket far enough in advance to assure settlement is in compliance with the judgment. Allow ample time for PRO to perform proper calculations per the 5 CFR, as the settlement could include several years of back pay, which may require manual offline calculations. Submit all documentation required through Remedy and/or Imaging. 8/23/2016 Integrity - Service - Innovation 6

7 APAN AS A REFERENCE TOOL PRIOR TO SUBMISSION OF SETTLEMENT Select this option 8/23/2016 Integrity - Service - Innovation 7

8 APAN AS A REFERENCE TOOL PRIOR TO SUBMISSION OF SETTLEMENT Checklist and employee statement available here Training videos are available for additional guidance 8/23/2016 Integrity - Service - Innovation 8

9 SETTLEMENTS INQUIRY A new drop down box has been added to the title Settlement Inquiry Follow Up To be used for follow up inquires only. IE: To provide missing documentation or questions regarding PRO actions on a specific settlement New Submission This is to be used for all new Settlement Inquiries template has been added to assist the customer in identifying all required documentation up front. 8/23/2016 Integrity - Service - Innovation 9

10 SETTLEMENTS INQUIRY-FOLLOW UP Select FOLLOW-UP These messages will pop-up, review and select OK 8/23/2016 Integrity - Service - Innovation 10

11 SETTLEMENTS INQUIRY-SUBMISSION NEW Select Submission New from the drop down This message will pop up when the title is selected from the drop down. Select OK to proceed 8/23/2016 Integrity - Service - Innovation 11

12 Settlements Inquiry-Submission New Attach Copy of settlement agreement under legal documents field and Employee Statement Relative to back pay. These fields are mandated to proceed with a new inquiry NOTE: Edits are in effect to disallow submission of a Settlement without the required Settlement Agreement and Employee Statement Relative to Back Pay Form. 8/23/2016 Integrity - Service - Innovation 12

13 EMPLOYEE S STATEMENT RELATIVE TO BACK PAY 8/23/2016 Integrity - Service - Innovation 13

14 EMPLOYEE S STATEMENT RELATIVE TO BACK PAY (Con t) Employee signature required 8/23/2016 Integrity - Service - Innovation 14

15 Settlements Inquiry-Submission New If corrected SF-50s are required, select yes from drop down and the attachment field will appear. Continue selections for all questions on the template 8/23/2016 Integrity - Service - Innovation 15

16 REQUIRED DOCUMENTATION TO BE ATTCHED Supporting documentation should be included with all back pay requests (refer to the Settlement Checklist on APAN for additional details): A copy of the settlement agreement or order (i.e. MSPB decision, EEOC determination, or union grievance consent order or arbitration award, or agency determination on letterhead) (time frame should be included) Completed Employee Statement Relative to Back Pay New, corrected or canceled SF 50s Election forms for FEGLI, health benefits, and/or TSP, if applicable. Statement from HR indicating that employee was counseled regarding benefits. Must clarify whether the employee waived benefits during the back pay period. Certified timecards Outside Earnings Documentation (W-2 or 1099 statements, payroll records, worker s compensation statements, retirement payment records, severance pay records) 8/23/2016 Integrity - Service - Innovation 16

17 FEGLI DEDUCTIONS FEGLI is deducted from back pay only under the following circumstances: FEGLI During Erroneous Retirement: If FEGLI coverage was continued during a period of erroneous retirement, deduct the FEGLI premiums. Example: The employee retired upon separation and continued FEGLI coverage as a retiree. FEGLI premiums would be deducted for the back pay period. Employee was Suspended or Separated and Died or was Dismembered During Back Pay Period: If the Employee was erroneously suspended or separated and Employee died or had an accidental dismemberment during the back pay period, then premiums will be withheld from the back pay award. Employee dies after being fired. It was later determined she was erroneously fired and back pay was ordered. FEGLI premiums should be deducted from the back pay award. Employee was Suspended or Separated, had Option C, and Family Member Died: If the employee had Option C coverage and was erroneously suspended or separated, and a family member dies during the back pay period, premiums should be withheld from the back pay award. No Erroneous Separation or Suspension, but Employee gets Retroactive Promotion: Example: Employee was not erroneously separated or suspended without pay. Employee won a retroactive promotion case. Both employee and employer FEGLI premiums are owed. The employee must pay the premiums at the higher rate the difference in premium amount should be offset from the back pay award. References: 5 C.F.R (e); see also DoDFMR Vol. 8, ch. 11 at para and ch. 6 at /23/2016 Integrity - Service - Innovation 17

18 REMEDY REQUEST ATTACHMENTS REQUIRED Required documents for interim earnings: Official Letter from OPM if retirement annuities has been paid and will need to be collected or a 1099-R Unemployment statement or a 1099-G W2, 1099, and/or Schedule C for all outside employee earnings Indication of LSL payment on a the spreadsheet if the Back pay award is from a pre-conversion time period 8/23/2016 Integrity - Service - Innovation 18

19 REMEDY REQUEST ATTACHMENTS REQUIRED (Continued) If the employee received annuity payments during the back pay period, a statement from OPM is required to reflect the amount to collect for the erroneous annuity payment. Payroll is required to submit repayment of the annuity directly to OPM via payroll offset. If monies are insufficient, the agency will be charged and employee will be indebted to repay agency. Certified timecards or certified corrected time and attendance records, if applicable, to include overtime, night differential, shift premium, Sunday premium pay, etc. Include number of hours and dates for each entitlement. NOTE: Payroll is required to obtain all certified timecards prior to performing the pay audit to assure accuracy of back pay and leave 8/23/2016 Integrity - Service - Innovation 19

20 LUMP SUM LEAVE Lump sum payments for annual leave are issued to separated employees under the authority of 5 U.S.C There is no authority under 5 U.S.C for a reinstated employee to keep a lump sum leave payment he or she received when the separation is later reversed. NOTE: When a separation is cancelled and the employee is restored to duty, the lump-sum payment for annual leave is considered to be an erroneous payment and must be offset against the employee's back pay award and the annual leave must be reaccredited to the employee. Eaton v. Department of Air Force, 55 M.S.P.R. 12 (1992). Because the employee was reinstated, the lump-sum payment for annual leave must be deducted from his back pay award. Vincent T. Oliver, 59 Comp. Gen. 393, 396 (1980). 8/23/2016 Integrity - Service - Innovation 20

21 RESTORATION OF ANNUAL AND SICK LEAVE The General Rule: No employee may be granted more pay allowances and differentials (including leave) than he or she would have been entitled to receive if the unjustified or unwarranted personnel action had not occurred. See 5 C.F.R (b). DFAS cannot restore more leave to an employee than the employee would have earned during the back pay period. Why corrected time cards must be submitted: Ensures no more leave than what would have been earned will be awarded. Ensures AL use or lose is correctly calculated. Ensures account is audit ready. Ensures agency will be able to refute any allegations by employee of a settlement breach. Ensures employee receives proper retirement credit for any leave used. 8/23/2016 Integrity - Service - Innovation 21

22 OPM ANNUITY STATEMENT EXAMPLE 8/23/2016 Integrity - Service - Innovation 22

23 INFORMATION ABOUT SF50 S VERY IMPORTANT Online Personnel actions should not be processed through the personnel interface until the payroll office receives all documentation and advises the servicing Human Resources Office (HRO). This will ensure actions required by the Payroll Office are ready for processing when the HRO actions flow into DCPS. 8/23/2016 Integrity - Service - Innovation 23

24 INFORMATION ABOUT SF50 S AND TIMESHEETS Separated and/or deceased employee prior to date of conversion DFAS will need to process a New Hire SF50 action effective the date of conversion. Online SF50 s should be processed through to DCPS via the Personnel/Payroll interface. This process must coincide with the manual payments for any offline time periods to calculate interest properly. Time and attendance will need to be processed for the online time frame. Pre-Conversion: Offline amounts will be provided on a spreadsheet from the HRO. Amounts should not be processed through the Modified R procedure. This process inhibits correct benefit deductions. 8/23/2016 Integrity - Service - Innovation 24

25 HOW TO IDENTIFY IF PRO OR VENDER PAY WILL PROCESS Vendor Pay Processing. Any lump sum payment outside of payroll, i.e. lump sum payments, punitive and compensatory damages, and/or attorney fees are handled through DFAS Vendor Pay Generally, the employee will receive a 1099 at the end of the tax year. Civilian Pay Processing. Any award of back pay which consists of wages require SF50 interfaces online and offline and will need to be coordinated with DFAS Civilian Pay. Generally, the employee will receive a W-2. 8/23/2016 Integrity - Service - Innovation 25

26 PRECAUTIONS WHEN SUBMITTING SETTLEMENT TICKETS Please submit only one Remedy ticket per settlement agreement in an effort to avoid duplicate payments. Always use Remedy title Settlements Inquiry-New submission for all new requests and Settlement Inquiry-Follow-up for all questions or submission of missing documentation. Any new settlements submitted via the Follow-Up title will be returned with no action taken. Use of multiple titles will increase the risk of duplicate processing. Please ONLY submit interim earnings documents for items that were agreed upon to be deducted from back pay, to avoid erroneous deductions. If you are unsure, please contact your HR officer or EEO office for clarification prior to submitting the ticket. 8/23/2016 Integrity - Service - Innovation 26

27 PRECAUTIONS WHEN SUBMITTING SETTLEMENT TICKETS Please review settlement in full prior to submission. If request pertains to punitive damages paid in lump sum or attorney fees, this is NOT processed by the PRO and needs submitted to vendor pay. Be aware that requests for leave restoration in a lump sum amount must have certified timecard corrections that reflect use of hours. PRO is not authorized to restore leave that would NOT have been earned/used during the impacted period identified in the judgment. 8/23/2016 Integrity - Service - Innovation 27

28 QUESTIONS 8/23/2016 Integrity - Service - Innovation 28