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From:

To:

Via:

Larry P. Hackler, Safety Director, Norfolk Naval Shipyard
Congressman Joseph H. Gaydos

Chairman, Subcommittee on Compensation, Health, and Safety
616-617 House Office Building Annex

Washington, DC 20515

(1) Commander, Norfolk Naval Shipyard

(2) Commander, Naval Sea Systems Command (0730)

Subj: Requested Information for The Official Record

Ref: (a) Oversight Hearings on FECA on 19 July 1977

1. As requested during reference (a), the following information
is submitted for the official record. Please be advised that
this information was obtained from the Safety Directors of the
below shipyards by telephone in February 1976.

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MEMORANDUM FOR CAPTAIN T. F. HAIRSTON, DIRECTOR, LEGISLATION,
OFFICE OF LEGISLATIVE AFFAIRS

Subj:

Ref:

Encl:

Recovery of erroneous payment to Navy employees for
lost time injuries

(a) OLA ltr LA-62A: sr dtd 2 Aug 1977 w/encls

(1) NAVCOMPT Manual, paragraphs 033004-4e, 033020,
and 033400-403

(2) FPM, Supp. 831-1, Subchapter S19

1. In order to verify statements made by Navy witnesses before
the House Committee on Education and Labor, Subcommittee on
Compensation, Health and Safety, concerning the withholding of
pay from civilian employees in order to recover unjustified
payments made under the Federal Employees Compensation Act
(FECA), reference (a) has requested a letter from this Office
which sets forth the extent to which such payments can be
recovered by the Navy. Specifically, the Office of Legislative
Affairs requires information on whether overpayments can be
set-off, with or without the consent of the employee, from:

2.

a.

b.

C.

salary due such employees;

retirement income due such employees; and

the retirement account, if any, of an employee
who neither returns to work nor is entitled to
retired pay.

Under the provisions of the Federal Employees Compensation Act, if a claim for wage loss due to a traumatic injury is denied by the Department of Labor, payments of continued wages which were made prior to the Secretary of Labor's determination "shall at the option of the employee, be charged to sick or annual leave or shall be deemed overpayments of pay within the meaning of section 5584 of title 5, United States Code." 5 U.S.C. §8118.

Subj:

Recovery of erroneous payment to Navy employees for
lost time injuries

3. If the employee's accumulated annual and sick leave is insufficient to cover the overpayment, a waiver of the Government's claim for overpayment may be sought under paragraphs 033400 through 033403 of the NAVCOMPT Manual (enclosure (1)), which implement 5 U.S.C. $5584. If the waiver is not sought

or is denied, the overpayment may be set off, voluntarily or involuntarily, against the employee's pay in accordance with paragraph 033020 of the NAVCOMPT Manual (enclosure (1)) which implements 5 U.S.C. $5514, the statutory authority for set-offs against the current pay of Federal employees.

4. The statement on page 556 of the hearing manuscript,
"If she doesn't repay it as a lump sum or make arrangements
to do it by installments, then it would be withheld from
her pay", is somewhat oversimplified in that it assumes the
employee has exhausted her accumulated leave and was denied
or did not seek a waiver. However, it is not an untrue
statement.

5. With regard to retirement income, an indebtedness for overpayment may be set-off by the Civil Service Commission on behalf of the Department of the Navy, upon certification by the Navy that the annuitant has been given: (1) an opportunity for reconsideration before collection begins, and (2) an opportunity for de novo evidentiary hearing after collections begin. This requirement became effective in May, 1977.

gainst his retirement account

6. Where the employee neither returns to work nor is entitled to retired pay, the Civil Service Commission may be requested to set-off the indebtedness, in accordance with NAVCOMPT Manual, paragraphs 033020-2d(3) (c) and 033004-4e, and subchapter S19 of the Federal Personnel Manual, Supplement 831-1 (enclosure (2)).

1.

The statement in the transcript on setting off a claim against the employee's retirement account is correct.

Any imamusa

AMY SHIMAMURA
Assistant Counsel

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2. effective date and new base salary rate whenever changed (columns (1), (2), and (3)), as indicated on personnel action forms processed;

3. for the calendar year 1948 and subsequent years, appropriate entries will be made on Standard Form 2806, showing for ungraded employees the total time in hours that the employees were in a nonpay status during the calendar year, and for graded employees period of nonpay status when in excess of 6 months in any calendar year; however, no entry will be made in the event a particular employee is in a pay status for the entire year (column (8));

4. when a graded or ungraded employee is carried on the rolls in a nonpay status while receiving benefits under the Employees Compensation Act, such periods will be posted on Standard Form 2806 as leave without pay, and footnoted "Receiving benefits under Employees Compensation Act";

5. in the case of employees applying for retirement annuity or who die in the service, the same information indicated in item 3 will be furnished beginning with the fiscal year 1944, and will be divided thereafter to coincide with the same periods for which retirement fund deductions are posted to Standard Form 2806;

6. for pieceworkers only, number of days in a pay status for each calendar year (column (8));

7. effective date and nature of separation (columns (1) and (2));

8. a note will be made of action taken with respect to any indebtedness reported on Standard Forms 2806 received from other naval activities.

Changes in basic pay caused by temporary assignments either to additional pay duties or to a night shift will not be recorded on the service history side of Standard Form 2806.

d. Fiscal Data. The following fiscal data will be recorded on retirement records for all employees subject to the retirement act:

1. calendar year (column (5));

2. total deductions for retirement during the calendar year (column (6));

3. accumulative total of retirement salary deductions (column (7));

4. remarks, if any (column (8)).

In the case of wage board employees not permanently assigned to additional pay duties

033004

but whose earnings during the year include additional pay either for specific positions or particular classes of work, as authorized in NCPI 531.5, or for night differential the letters "APS" (Additional Pay Status) will be inserted in the unruled space at the bottom of the Standard Form 2806. An asterisk will be used in column (6) of the Standard Form 2806 to identify calendar year deductions which include those taken while the employee was in an additional pay status. Postings will be made promptly after the close of each calendar year on all cards and at the time of separation or transfer on the card of the separated or transferred employee. After each calendar year posting of fiscal data, the total of all postings for the year must be verified with the total deductions shown on the payroll. In the case of foreign national employees subject to the Civil Service Retirement Act who are regularly paid in local currency, annuities are computed in terms of United States dollar equivalents. Since certain inequities may result from fluctuations in the foreign exchange rate, it is necessary that retirement deductions be converted to United States dollars on the payroll at the close of each pay period to facilitate posting to the Standard Form 2806 at the end of the calendar year and at time of separation (see subpar. 2d). A notation also will be made in the unruled space at the bottom of the Standard Form 2806 that the employee was paid in local currency.

e. Separations and Transfers. The following will be accomplished as separations and transfers occur:

1. post the date of the separation or transfer in column (1) and enter the nature of the action in column (2) of the Standard Form 2806;

2. post the current calendar year and cumulative salary deductions in columns (5) and (6) of Standard Form 2806;

3. compute accumulative total of salary deductions and enter in column (7) of the Standard Form 2806;

4. if the payroll office copy of the Standard Form 50 states "Possible P. L. 87-299 case" enter the same notation on the Standard Form 2806 following the separation entry; when the employee is eligible for an immediate annuity, detach all documents forwarded from the personnel office from the Standard Form 50 and transmit with the Standard Form 2806 to the Civil Service Commission; when the employee is not eligible for an immediate annuity, file all documents in the payroll jacket with the Standard Form 50 and make a notation on the

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