NOTE: For information regarding travel debts, refer to Chapter VII of FSIS Directive 3900.1, Temporary Duty Travel.

CANCELLATIONS
FSIS Directive 3730.1, Recovery of Employee Indebtedness, 7/26/84

FSIS Directive 3730.2, Waiver of Claims Against Employees Arising from Erroneous Payments of Pay and Allowances, 4/22/14

BACKGROUND
The instructions in this directive are consistent with Department Regulations (DR) DR 2570-002, Waiver of Employee Overpayments, 7 CFR Subpart G, Federal Salary Offset, and 5 USC Section 5584, Claims for Overpayment of Pay and Allowances, and of Travel, Transportation and Relocation Expenses and Allowances.

RECOVERY OF EMPLOYEE INDEBTEDNESS

1. Notification to Employee. The National Finance Center (NFC) will provide written notification to employees of any debt (generally via NFC-1100, Notice of Overpayment of Salary and Demand for Payment). The notification will provide a minimum of 30 days written notice informing the employee of the nature, amount of indebtedness, NFC’s intent to collect the debt and related interest by salary offset, and an explanation of the employee's rights to:

   1. Review records related to the debt;

   2. Establish a written repayment plan with FSIS;

   3. Request a salary offset hearing with a USDA administrative law judge regarding the existence or the amount of the debt, and USDA’s proposed salary offset schedule; and

   4. Request a waiver. A waiver will not be granted if the employee knew or should have known of the overpayment (e.g., based on FSIS’ expectation that employees regularly review their Earnings and Leave statements). 

2. Record Review. If an employee wishes to review records and calculations regarding their debt, they are to contact FSISHR1@usda.gov within 30 days of the date on their notification. The Office of Human Resources (OHR) is responsible for providing appropriate records regarding personnel actions. Employees have access to their Time & Attendance (T&A) information stored in the T&A system as well as Earnings and Leave statements via the Employee Personal Page (EPP).

3. Salary Offset Hearing. If an employee wishes to convene a hearing regarding the debt, they are to notify FSISHR1@usda.gov within 30 days of the date on their notification. OHR will pause the payroll deductions or other collection actions until the hearing is completed. OHR will represent the Agency during the hearing.

4. Payment of Debt.

   1. Automatic Deduction. If an employee does not act within 30 days of the notice, NFC will automatically deduct up to 15 percent of each paycheck until the debt is satisfied.

   2. Repayment Agreement. Employees can request a repayment agreement to satisfy the debt.

      1. More than 15 percent. The employee is to complete Form NFC-1101, Notice of Intent to Offset Salary and Repayment Agreement, that is sent with the notification of debt, sign, and return it to the address on the form.

      2. Less Than 15 Percent. The employee is to complete Form NFC-1101, sign, and send to FSCGeneral@usda.gov for approval by the Office of the Chief Financial Officer (OCFO). Generally, OCFO is to confirm any approved request minimally ensures:

         1. The debt will be liquidated within 3 years and;

         2. The per-pay period deduction is $50 or greater.

   3. One-Time Payment. Employees can make a one-time payment by following the instructions sent to them on the bill (NFC-1100).

WAIVER OF CLAIMS

1. Waiver of Claims against employees. The Director of the Office of Management and Budget (OMB) has delegated OMB’s waiver authority to the executive agency that made the erroneous payment in question. OMB also delegated to the Chief Financial Officer (CFO) of the executive agency the authority to waive erroneous overpayments of pay and allowance under the provisions of Public Law 104-316.

2. Conditions of a Waiver. Under this law, waiver requests will be considered for approval under the following conditions:

   1. No Fault. There is no indication of fraud, misrepresentation, fault, or lack of good faith on the part of the employee seeking a waiver. If the employee knew, or reasonably should have known the payment was erroneous, a waiver cannot be granted; and
   2. The Provision of Equity. Collection would not be fair, in good conscience, or in the best interest of the United States, including:
      1. The debt is substantial;
      2. Recovery of the claim would be unconscionable under the circumstances; and
      3. Collection of the debt will impose an undue financial burden on the employee.
         
         NOTE: In general, an employee is to satisfy both standards above. An administrative error, such as incorrectly entered locality codes resulting in a change in salary, is not in and of itself a reason for a waiver. Employees have a responsibility to review their Earnings and Leave statements for accuracy. 
3. A waiver request will be denied when:
   1. The claim was not submitted within three years of the discovery of the error (see 5 USC Section 5584(b)); or
   2. There is an indication of fraud, misrepresentation, fault, or lack of good faith on the part of the employee seeking a waiver; or
   3. It is determined that a waiver is not in the best interest of the United States.
4. Indebted employees’ responsibilities during the waiver process include:
   1. Initiating a request for a waiver by contacting OCFO at FSCGeneral@usda.gov. 
   2. Providing a written request to OCFO that addresses the circumstances surrounding the overpayment including the following:
      1. Full name, home and office address, and home and office telephone numbers; 
      2. A statement explaining when the employee became aware of the overpayment;
      3. A description of all actions taken by the employee upon discovery of the error;
      4. Any additional information (example: Earnings and Leave statements, travel vouchers, NFC’s Notice of Intent to Offset Salary, or other documentation); and
      5. If applicable, a justification of why repayment of the debt would create financial burden to the indebted employee.
5. To the extent possible, OHR is to submit to OCFO a chronological summary of the facts and circumstances of the overpayment, including the date of discovery, when the employee was notified, documentation that explains how the overpayment occurred, and any corrective action taken. OHR also is to provide any relevant documents to OCFO.
6. OCFO is to:
   1. Coordinate with any applicable offices, including OHR, to request documentation relevant to the debt;
   2. Determine the validity of debt and cancel the bill when appropriate;
   3. Serve as the final authority regarding the disposition of waivers;
   4. Suspend debt collection during the review of all waiver requests;
   5. Extend the suspension of collections when additional time is needed to complete the investigation of the facts leading to the overpayment;
   6. Prepare the administrative report that contains sufficient information for a waiver decision;
   7. Prepare and submit Form AD-3041, Waiver/Cancellation Request, if the waiver is approved or bill is subject to cancelation;
   8. Determine whether to approve or deny the waiver in part or in whole; and 
   9. Provide notification of the decision to the employee.
7. Appeal of Waiver Decision. An employee can appeal the Agency’s decision to the CFO. An appeal is to be submitted to OCFO, within six months of the date of the denial. Employees are to be aware that a decision will not be overturned unless it is arbitrary, capricious, or contrary to law or regulation. Appeals are to be sent to FSCGeneral@usda.gov for processing.

1. Interest. Interest will be assessed on the unpaid balance of the debt under rates established quarterly by the Department of Treasury.
2. Other Penalties. Additional charges, not to exceed six percent per year, may be assessed to cover the cost of processing delinquent claims and for failure to pay any portion of a debt over 90 days past due. See 7 CFR Section 3.17.

1. Employees Transferring Within FSIS or USDA. When an indebted employee transfers within FSIS or USDA, the existing salary deductions or arrangements will continue until the debt is paid in full.
2. Employees Leaving USDA. NFC will contact the receiving department to set up arrangements.
3. Separation/Termination Actions. When an employee retires, resigns, or employment otherwise ends, before collection of the indebtedness is complete, the deduction will be made from subsequent payments of any nature paid to the individual from USDA.