What Happens if You Are Accidentally Overpaid?

iuThe stunning news that nearly 10,000 soldiers have been asked to repay enlistment bonuses they received years ago has a lot of folks asking what happens if they are overpaid through no fault of their own. Large-scale overpayments such as this one are not common, but individual and group overpayments do happen. Agencies handle them in different ways, but the basic processes are similar.

When an agency overpays an employee, the agency is required to notify the employee of the overpayment, how it happened, the amount, and the process for repaying the money or requesting a waiver to avoid paying it. The law authorizing most waivers of overpayments is 5 U.S. Code § 5584. It says, in part, “A claim of the United States against a person arising out of an erroneous payment of pay or allowances made on or after July 1, 1960, or arising out of an erroneous payment of travel, transportation or relocation expenses and allowances, to an employee of an agency, the collection of which would be against equity and good conscience and not in the best interests of the United States, may be waived in whole or in part….”

In an ideal world we would never have overpayments. This is not an ideal world. They happen due to carelessness, bad training, simple mistakes, and sometimes deliberately. Many of the enlistment bonus overpayments appear to be deliberate. The critical factor in dealing with overpayments is what the person who was overpaid knew or reasonably should have known. The Defense Finance and Accounting Service (DFAS) outlines the DoD civilian employee process for waivers on its website.

Waivers are not appropriate and are not/should not be granted when the employee should have known it was an overpayment. If, for example, your pay suddenly goes up for no reason (such as a within grade increase that you know is not due for a year), you are required to advise the agency that it happened. One case I remember from my Navy experience was a woman who had been overpaid for several years. When we discovered the overpayment, we told her about it and told her she would have to repay the money unless a waiver was approved. She said she knew it was an overpayment and had saved all of the extra money, but she wanted a waiver anyway because it was the government’s mistake. She did not get her waiver.

But what happens when employees act in good faith and have no idea that they were not entitled to the money they received? When I was HR Director for the the Defense Logistics Agency (DLA), we had an example of an overpayment and the way I believe an agency should respond to them. DLA found that its police officers were on the wrong pay scale. The people who made the mistake were not trying to pull a fast one – they simply made a mistake. Dozens of police officers were affected. The officers were hired in good faith, did their jobs, and could not reasonably be expected to know they were on the wrong pay scale. The agency could not continue to use the wrong pay scale and was required to notify the officers that they had been overpaid.

The normal process would be to notify the employees, tell them how much they owed, and what the process for requesting a waiver would be. That approach is fine when someone is overpaid a few dollars, but when it is thousands of dollars, it falls apart. Imagine being told you were overpaid 5 or 10 or 20 thousand dollars or more. The typical middle-class family cannot just write a check for thousands of dollars. The financial impact is devastating. The emotional distress can be equally damaging.

Recognizing that the overpayment would create so much turmoil for our officers, we decided on a different approach. First, we notified all of the employees in a group meeting. We explained exactly what happened, how it happened, and what the agency was going to do to try to make it right. Rather than giving them a letter that said they could apply for a waiver, we wrote the waiver letters for them. We also talked with senior officials at DFAS to ensure they knew what happened and that the waiver requests would be approved. At the same time, we began working on a long-term fix to the pay cuts that switching pay scales would create. Every action we took was intended to keep these good men and women from suffering because of the agency’s mistake.

I can’t help but think there should have been a similar approach to the enlistment bonus overpayments. If there was ever a case where, as the law says, “the collection of which would be against equity and good conscience and not in the best interests of the United States” this is it.

You Are Elected President – Now What?

This post is not about the election. I promise. Instead, let’s think ahead to January and what the next President is going to do.

He or she will not have to worry about a lack of advice, whether it is for people to staff the Administration or the policy direction s/he should pursue. There are many groups focusing on providing transition advice, with some of the best coordinating their efforts to provide a cohesive set of recommendations. I have been involved with several of the organizations and had the honor of co-leading (with GSA’s Paul Tsagaroulis) the team that developed Human Capital transition recommendations for the American Council for Technology-Industry Advisory Council (ACT-IAC) Presidential Transition Project. ACT-IAC is a non-profit educational organization established to create a more effective and innovative government. ACT-IAC provides a unique, objective, and trusted forum where government and industry executives work together to improve public services and agency operations through the use of technology.

act-iac-logoThe ACT-IAC Institute for Innovation has produced a report, Transforming Government Through Technology, to identify a number of steps the next Administration can take to use technology to deliver the quality of services the American people have become accustomed to getting from leading companies, such as Apple, Google, and Amazon. The introduction of the report says “Effective, innovative use of information technology has revolutionized private sector business models over the last 20 years. Not only have most business-to-business and business-to-consumer interactions moved online, but entire industries have been transformed through business model changes enabled by information technology. Government has largely failed to keep pace with industry’s business transformation and information technology revolution. Despite spending over $80 billion annually on information technology, most federal agencies have seen little change in how they perform their work or interact and transact with citizens, businesses, and other governments. Where change has happened, it has typically been the automation of current processes or providing information through websites. The lack of change is caused by federal laws, processes, and culture that inhibit or even penalize risk taking, change, and innovation.

The themes of this election year make it clear that voters believe government, and particularly its outcomes, must change. Accustomed to dealing with modern Internet-age companies like Amazon, Apple, and Google, customers that encounter old-school federal government processes are frequently left confused, frustrated, and angered. This reinforces citizen perceptions that government is ineffective and unable to address today’s societal needs.

What sort of dramatic steps will it take to get government to raise its level of capability and performance? This report lays out a strategy for change that encompasses the skills, practices, and culture that private sector companies have demonstrated are necessary for success. While many of the recommendations can be implemented by the new Administration immediately, as part of its overall management plan, others will require longer-term cooperation between the Congress, the Administration, and the private sector.

Technology solutions require people to make them happen. That is the reason ACT-IAC included a human capital section in the report. The government needs to rethink how it approaches its own workforce and how it incorporates industry support. Information technology is one of the areas where government uses a blended workforce of federal employees and contractors. That approach generally serves the government well, but there are many areas where improvements are needed. To make that happen, the report calls for a 4-point plan to:

  • Staff the Administration rapidly
  • Make better use of existing hiring processes now
  • Embrace the industry employee base as a critical talent asset, and
  • Initiate a long-term comprehensive civil service reform initiative

GAO’s 2015 High Risk Report states “Mission-critical skills gaps in such occupations as cybersecurity and acquisition pose a high-risk to the nation: whether within specific federal agencies or across the federal workforce, they impede federal agencies from cost-effectively serving the public and achieving results.” Those gaps are growing as the workforce ages and government continues to fall short on recruiting younger talent. In fact, only 43% of feds believe their agencies can recruit the talent they need for mission-critical occupations (MCOs). The problem with recruiting younger workers is particularly acute. The number of under-30 federal workers dropped from 234K in 2009 to 162K in 2016. The problem is even worse in the IT workforce, where 50% are over age 50 and only 3.4% are under age 30.

Staffing the Administration rapidly is a a critical issue to which the Partnership for Public Service has devoted considerable attention. Their work on the issue has been so thorough that the ACT-IAC report recommends adopting all of their recommendations, including filling the top 100 positions soon after inauguration, and an additional 300 more by the congressional recess in August.

Existing hiring processes will be the means by which the government fills its vacancies for at least the next year or two. The ACT-IAC report recommends several steps the Administration can take get immediate improvements. They include:

  • Move vacant positions in the hardest to fill MCOs from the competitive civil service to the excepted service
  • Use existing critical position pay, special salary rates and recruiting/retention allowances to enable the government to compete for in-demand talent
  • Designate agencies as “Recruiting Managers” for key MCOs

Industry and grantee talent is a crucial segment of today’s technology workforce. Most agencies use a mix of their own employees, contractors and grantees to deliver IT services and tools. Yet, few agencies manage those assets as a single workforce. Agencies that do workforce planning, for example, typically focus only on their own employees. Planning for contract workers or grantees is typically left to the program managers or acquisition professionals. Because the work is delivered by a blended workforce, it requires a similar approach to planning.

Comprehensive civil service reform is necessary to bring government talent management into the 21st century. Even if the Administration fully embraces the first three recommendations, the government is still left with mid-20th century civil service laws that were designed for a mostly clerical workforce that we no longer have.  The ACT-IAC report recommends that the next President President create a Commission on Public Service, with experts from government, industry, and academia, to design a comprehensive, budget-neutral approach to civil service reform that includes:

  • A modern, flexible process for job classification process that reduces the current 400+ job classifications by at least 75% and supports significant delayering of the bureaucracy
  • Market-based pay that allows the government to compete for and retain talent
  • Performance incentives for individual and organizational excellence
  • Streamlined hiring practices that preserve merit as the cornerstone of public service and recognize the highly mobile nature of post-baby boom generations
  • A performance culture that uses outcome-based measures to support reward systems
  • Accountability measures to ensure poor performance and misconduct are addressed
  • An approach to leadership that holds supervisors and managers accountable for employee engagement and organizational performance
  • An effective process to allow government and industry to exchange talent; and
  • A reimagined 21st century Senior Executive Service that includes greater accountability, a peer review process for adverse actions (much like the US armed forces processes for general/flag officers), and a performance-based pay process that directly links executive pay with agency outcomes.

There is much more detail, along with the ACT-IAC recommendations in other areas, in the full report. I encourage anyone interested in transition to take a look.

The change of Administrations always offers an opportunity for the federal government to do a bit of a reset. What does not reset is the federal workforce that carries out presidential programs. Every Administration learns, sometimes far too late, that the federal workforce has many talented people who can be tremendous assets. If the next President recognizes that on day one, and adopts this set of recommendations, s/he will have a much greater likelihood of making his/her policy objectives happen.



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