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(This article was first published in the January/February 2007 issue of The American Postal Worker magazine.)

Union Wins Debt-Collection Arbitration

Greg Bell, Director
Industrial Relations

In a recent national-level award, arbitrator Linda Byars found that the Postal Service violated the National Agreement and a 1993 Memorandum of Understanding (MOU) when it changed the regulations for collecting debts from postal employees.

Debt-collection procedures are found in Article 28 of the National Agreement, as well as in Chapter 460 of the Employee and Labor Relations Manuals (ELM).

Article 28 spells out the procedures that the Postal Service must follow – no matter what the nature of the debt – before it can demand payment from an employee for any reason. In addition, Article 28 states that "no more than 15 percent of an employee's disposable pay or 20 percent of the employee's biweekly gross pay, whichever is lower, may be deducted each pay period to satisfy a postal debt, unless the parties agree, in writing, to a different amount."

Unilateral Revisions Revisited

The initial grievance was filed in 1995 when the Postal Service proposed revisions to ELM Chapter 460, revisions necessitated by a 1993 Memorandum of Understanding in which the parties agreed to the payment limitations (15 or 20 percent of pay) that appear in Article 28. The 1993 Memorandum produced language that both parties agreed would be inserted into Article 28 of the National Agreement and ELM Chapter 460.

Soon after the MOU was signed by the Postal Service, management provided the APWU with proposed revisions to the ELM, supposedly based on the MOU. Included in the revisions, however, was Section 462.35 of the ELM (currently Section 462.42), which provided that "Except as specified below, the maximum salary offset to collect a debt that is owed to the Employer, and for which the Postal Service has not been granted a federal court judgment, is 15 percent of an employee's biweekly disposable pay, or 20 percent of the employee's biweekly gross pay, whichever amount is lower when the salary offset is started." [Emphasis added]

The "as specified" language referenced above refers to ELM 463.1, which was in effect at the time and provides that, "In accordance with section 124 of Public Law 97-276 (October 2, 1982), 5 U.S.C. 5514 note (1982), the Postal Service may deduct up to one-fourth (25%) of an employee's ‘current pay' in monthly installments or at officially established pay periods to satisfy a debt determined by a federal court owed to the Postal Service." [Emphasis added]

Also in effect at the time was ELM Section 463.21, which provides that, "The requirements governing the collection of employer claims specified by a pertinent collective bargaining agreement are not applicable to the collection by salary offset of a Postal Service claim if a federal court has granted judgment upholding the debt."

The APWU objected to any exception that would permit the Postal Service to collect more than the agreed-to percentages, as well as to the language regarding "when the salary offset is started," the effect of which would be to establish a fixed amount to be deducted each pay period, regardless of the amount of an employee's biweekly gross pay. When the parties were unable to resolve our differences, the dispute was submitted to arbitration.

The 1982 Debt Collection Act

In arbitration, the Postal Service agreed to remove the language allowing the offset to be calculated on a one-time basis at the time the offset is started.

However, it continued to maintain that it had a statutory right under the 1982 Debt Collection Act and related provisions to offset up to 25 percent of an employee's current pay to collect federal court judgments, and that it did not waive that right when it agreed to the 1993 Memorandum.

The Postal Service maintained that "there are two distinct procedures for collecting debt, the administrative salary offset procedure, which was addressed during discussions leading up to the signing of the MOU, and the court judgment offset procedure, which the Postal Service maintains was not part of the APWU's initial protest of ELM 460 and was not addressed during the negotiations of the MOU."

The Postal Service argued that Union had the burden of proving that the language of the 1993 Memorandum constituted an intentional waiver of management's statutory rights. The Postal Service further contended that it could not have agreed to waive the statutory right to offset up to 25 percent of pay in order to collect a debt upheld by federal court judgment because that right belongs not only to the Postal Service but to other federal agencies collecting such claims from postal employees.

The union, on the other hand, maintained that when we agreed to language limiting the amount that can be deducted from an employee's pay to "satisfy a postal debt," we did so with the understanding that the language meant any and all postal debt, whether it was determined administratively or by court judgment.

The APWU's position was that the language of the Memorandum is clear and is controlling. The parties did agree, however, that this case applies only to debt owed by a postal employee to the Postal Service.

The Favorable Findings

In finding for the union, the arbitrator first noted that "there is no language in the MOU or in Article 28.4.B of the National Agreement for an exception based on court judgment salary offsets." The arbitrator also found that there was "no evidence that such a distinction was made by the Postal Service to the unions when they negotiated" the MOU.

According to the arbitrator, "The best evidence of the parties' intention is the MOU," and that "On its face, the MOU is clear and unambiguous."

"The Postal Service's acknowledgement that the practice has been to apply the limits of Article 28.4.B to all postal debt including that upheld by federal court judgment during the twelve years since the parties entered into the MOU also demonstrates," the arbitrator wrote, " an agreement to waive any right the Postal Service may have had to collect up to 25 percent of an employee's pay to recover a postal debt." The arbitrator found that "There are two distinct ways of determining postal debt, as the Postal Service maintains, but there is only one way of collecting it by payroll deduction and that is the method outlined and agreed upon in Article 28.4 of the National Agreement."

Accordingly, Arbitrator Byars ruled that the evidence established that "when the Postal Service entered into the MOU, it waived any right it may have had to collect in increments of more than that agreed to in ... the MOU for any debt owed by a postal employee to the Postal Service."

She observed that even though ELM 460 contained Section 463.21, which excluded federal court judgments from requirements of collective bargaining agreements, "once the parties agreed to ... the MOU, the APWU could reasonably rely on the agreed upon language as an exception to section 463.21 of the ELM."

The arbitrator noted, however, that the legal right of other federal agencies to collect debts from postal employees with federal court judgments has not been waived by the Postal Service's actions.

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