SETTLEMENTS BACK PAY ACT

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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. 4/15/2015 Integrity - Service - Innovation 2

3 SETTLEMENTS BACK PAY ACT SOURCES 5 USC CFR IRS Publication 15-A Page 11, Back Pay 4/15/2015 Integrity - Service - Innovation 3

4 WHAT IS A SETTLEMENT AGREEMENT? A settlement agreement is a legal document which outlines a remedy or series of remedies handed down by a judge, or agreed upon by a Union Representative or Legal Representative of the employee and the Agency to alleviate a grievance. 4/15/2015 Integrity - Service - Innovation 4

5 TYPES OF SETTLEMENTS Court Ordered/MSPB A case has been presented to a judge, and a decision has been determined. The judge has handed down a court order detailing the decision and remedy, if any, to be complied by the agency. These actions are time-sensitive, as there is usually a date set in which the agency MUST comply. Union / Mediator A grievance has been submitted by the employee, and the Union or Mediator has presented a remedy to the grievance which both the agency and the employee agree with. This type of settlement is usually reached in an effort to avoid further legal involvement, including a court order. These actions are regarded by DFAS as legal Settlement Agreements. 4/15/2015 Integrity - Service - Innovation 5

6 TYPES OF SETTLEMENTS (Con t) Agency Decision - Often, if the agency is aware of a pending grievance, actions will be submitted by the agency in an effort to comply with the wishes of the employee, and to avoid further legal involvement. These actions should be submitted as a memorandum detailing the actions to be processed and should be signed by an authorized official. (Director, HR Officer, EEO officer, etc.) Group Arbitration- These settlements are normally due to a decision which effects more than one employee at an agency. Please submit one separate Remedy ticket per employee, including all documentation required to process the request. Please also indicate in the remedy ticket that it is part of a group arbitration. If group settlement is larger than a reasonable number to put on individual remedy tickets, please contact your DFAS Civilian Pay POC to discuss submission options. 4/15/2015 Integrity - Service - Innovation 6

7 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 responses is 15 business days from the submission of the ticket. Please keep in mind the due date of when the Back Pay Award needs to be issued to the employee to be in compliance with the agreement. Please submit Remedy ticket far enough in advance to assure settlement is in compliance with the judgment. Please allow for ample time for proper calculations per the guidance from the 5 CFR, as the settlement could include several years of back pay, which may require manual calculations. Submit all documentation required through Remedy and/or Imaging. 4/15/2015 Integrity - Service - Innovation 7

8 REMEDY REQUEST - DETAILS SECTION In the Details section of the Remedy request, please include Statement if unemployment benefits are to be deducted, with the dollar amount, address, and POC. This may be validated if all W2 s or pay stubs are attached. Statement that employee was counseled concerning health benefits, FEGLI and TSP. Statement if interest is payable with beginning date of accrual. 4/15/2015 Integrity - Service - Innovation 8

9 REMEDY REQUEST ATTACHMENTS REQUIRED The documents that will need to be attached to the remedy ticket for processing. Copy of the settlement agreement, administrative determination, or order requiring the payment of back pay Corrected or cancelled SF50 s For deceased employees; if DFAS doesn t already have a file for the beneficiary, then all required documentation for Unpaid Wages & Compensation will need to be submitted. Election forms for Health benefits (FEHB) and/or TSP, if applicable Benefits counseling statement is required in regard to how to handle FEHB and TSP. FEHB and TSP are considered voluntary debts and require employee approval prior to establishing and collecting indebtedness from retroactive pay 4/15/2015 Integrity - Service - Innovation 9

10 REMEDY REQUEST ATTACHMENTS REQUIRED Per 5 CFR , Life insurance premiums are collected if: Coverage continued during a period of erroneous retirement Coverage was stopped during an erroneous suspension or separation and the employee suffered death or accidental dismemberment during the period. Additional premiums are owed because of a retroactive increase in basic pay. Note: If none of the above circumstances apply, Life insurance (FEGLI) should not be collected from back pay. 4/15/2015 Integrity - Service - Innovation 10

11 REMEDY REQUEST ATTACHMENTS REQUIRED (Continued) If the employee was unable to work during any part of the period involved, certification of the type and amount of leave to be charged Please attach all corrected timecards for period that employee is required to charge leave Copy of all W2s for compensation received from another source (also known as Interim earnings) during prior year period. If the employee worked during the current year, a copy of all pay stubs should be submitted as documentation (This includes unemployment benefits received) Statement if unemployment benefits are to be withheld, with the dollar amount, address, and POC. Ensure that the employee understands that an offset of unemployment benefits against the award can reduce their award amount. 4/15/2015 Integrity - Service - Innovation 11 4/15/2015 Integrity - Service - Innovation 11

12 REMEDY REQUEST ATTACHMENTS REQUIRED For interim earnings, the documents required are: Official Letter from OPM if retirement annuities have 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 the spreadsheet if the Back pay award is from a pre-conversion time period. 4/15/2015 Integrity - Service - Innovation 12

13 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. Timecard, or Corrected time and attendance records, if applicable, including overtime, night differential, shift premium, etc., with number of hours and dates for each entitlement. Payroll is required to obtain all certified timecards prior to performing the pay audit to assure accuracy of back pay and leave 4/15/2015 Integrity - Service - Innovation 13

14 REMEDY REQUEST ATTACHMENTS REQUIRED (Continued) Please note if any lump sum leave was paid out due to the erroneous separation/action, the payroll office will collect this debt from the back pay (per 5 CFR ) and the annual leave will be restored to the employee. Any annual leave that exceeds the annual leave ceiling will be restored to the proper account following the guidance of 5 CFR NOTE: Not all of these required items may apply and will depend on each specific situation. 4/15/2015 Integrity - Service - Innovation 14

15 EMPLOYEE S STATEMENT RELATIVE TO BACK PAY 4/15/2015 Integrity - Service - Innovation 15

16 EMPLOYEE S STATEMENT RELATIVE TO BACK PAY (Con t) 4/15/2015 Integrity - Service - Innovation 16

17 REMEDY REQUEST ATTACHMENTS REQUIRED, EXAMPLE 4/15/2015 Integrity - Service - Innovation 17

18 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. 4/15/2015 Integrity - Service - Innovation 18

19 INFORMATION ABOUT SF50 S AND TIMESHEETS Online SF50 s should be processed through to DCPS via the Personnel/Payroll interface. Preferably, this process should 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. 4/15/2015 Integrity - Service - Innovation 19

20 INFORMATION ABOUT SF50 S AND TIMESHEETS, EXAMPLE 4/15/2015 Integrity - Service - Innovation 20

21 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 only. Use of multiple titles will increase the risk of duplicate processing. If submitting a Remedy ticket for corrections to a previous settlement payment, please indicate this in the Remedy ticket, and also indicate the actions that are correct, as well as the actions that need correcting. 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. 4/15/2015 Integrity - Service - Innovation 21

22 QUESTIONS 4/15/2015 Integrity - Service - Innovation 22