The opinion
UNITED STATES OF AMERICA
MERIT SYSTEMS PROTECTION BOARD
JORGE GUZMAN, DOCKET NUMBER
Appellant, SF-0752-15-0170-X-1
v.
DEPARTMENT OF HOMELAND DATE: July 18, 2024
SECURITY,
Agency.
THIS ORDER IS NONPRECEDENTIAL 1
James P Walsh , Long Beach, California, for the appellant.
Thomas Schramm , Detroit, Michigan, for the agency.
BEFORE
Cathy A. Harris, Chairman
Raymond A. Limon, Vice Chairman
Henry J. Kener, Member
ORDER
¶1 On January 6, 2023, the Board issued an Order denying the agency’s
petition for review of the administrative judge’s August 3, 2018 compliance
initial decision. Guzman v. Department of Homeland Security, MSPB Docket
No. SF-0752-15-0170-C-1, Order (January 6, 2023); Guzman v. Department of
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A nonprecedential order is one that the Board has determined does not add
significantly to the body of MSPB case law. Parties may cite nonprecedential orders,
but such orders have no precedential value; the Board and administrative judges are not
required to follow or distinguish them in any future decisions. In contrast, a
precedential decision issued as an Opinion and Order has been identified by the Board
as significantly contributing to the Board’s case law. See 5 C.F.R. § 1201.117(c).
2
Homeland Security, MSPB Docket No. SF-0752-15-0170-C-1, Compliance File
(CF), Tab 21, Compliance Initial Decision (CID). On August 16, 2023, the Clerk
of the Board issued an order requesting that the agency submit additional
evidence and explanation regarding certain questions. Guzman v. Department of
Homeland Security, MSPB Docket No. SF-0752-15-0170-X-1, Compliance
Referral File (CRF), Tab 6. In addition, on March 15, 2024, the appellant filed a
Motion to Hold Agency in Contempt and for Show Cause Order. CRF, Tab 13.
For the reasons set forth below, we deny the appellant’s motion, find the agency
partially compliant, but require additional information from the agency on several
issues to determine whether it has met its remaining compliance obligations.
BACKGROUND
¶2 On September 29, 2017, the administrative judge issued an initial decision
granting the appellant’s request for corrective action, ordering the agency to
reverse the appellant’s removal, retroactively restore him to duty, pay the
appellant the appropriate amount of back pay, with interest, and adjust benefits
with appropriate credits and deductions. Guzman v. Department of Homeland
Security, MSPB Docket No. SF-0752-15-0170-I-2, Initial Decision (September
29, 2017). Neither party filed a petition for review, and the initial decision
became the final decision of the Board.
¶3 On December 13, 2017, the appellant filed a petition for enforcement,
alleging that he had neither been reinstated to duty nor received his backpay but,
instead, had received an email from the agency stating that he must be
mandatorily retired due to his age as of November 21, 2014. CF, Tab 1 at 4-5.
On August 3, 2018, the administrative judge issued a compliance initial decision
granting the petition for enforcement and ordering the agency to restore the
appellant to duty, provide him notice of mandatory retirement, calculate the
appropriate back pay with interest, and comply with all other aspects of the
September 29, 2017 Order. CID at 8.
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¶4 The agency timely filed a petition for review of the compliance initial
decision on October 9, 2018. Compliance Petition for Review (CPFR) File, Tab
5. On January 6, 2023, the Board issued an Order denying the agency’s petition
for review, affirmed the compliance initial decision, and modified the compliance
initial decision to set forth additional precedent and clarify the agency’s
obligation to provide the appellant with status quo ante relief. CPFR, Tab 10 at 2.
Specifically, the Board directed the agency to take the following actions:
(1) cancel the November 21, 2014 retirement; (2) provide the appellant with the
appropriate amount of back pay, with interest, and adjust his benefits with
appropriate credits and deductions, for the back pay period of November 21,
2014, through July 31, 2019; and (3) process his mandatory retirement, effective
July 31, 2019. Id. at 10.
¶5 On June 26, 2023, the agency submitted a “Narrative Statement of
Compliance” with the Board’s January 6, 2023 Order. CRF, Tab 4. The appellant
responded on July 16, 2023, challenging the agency’s assertions of compliance on
multiple grounds. CRF, Tab 5.
¶6 On August 16, 2023, the Office of the Clerk of the Board issued an order
directing the agency to submit additional evidence addressing:
(1) Whether the agency utilized the correct pay scale in calculating
back pay;
(2) Whether the agency utilized the correct interest calculations
under the Back Pay Act. The agency’s response must contain pay period-
by-pay period printouts showing the interest rate applied and the
compounded interest accrual;
(3) Whether the agency previously paid the appellant a lump sum for
annual leave at the time he was originally removed, and how this sum was
calculated;
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(4) Whether, if the agency previously paid out the appellant’s annual
leave in a lump sum, the agency erroneously deducted that amount a second
time as part of the current back pay calculations;
(5) Whether the current back pay calculations include payment for
the annual leave the appellant would have accrued during the back pay
period, and how this amount was calculated;
(6) Whether and how the sick leave the appellant would have accrued
during the back pay period has been calculated and accounted for,
including whether it was or should have been reported to the Office of
Personnel Management (OPM) as a potential factor adjusting the
appellant’s annuity;
(7) Whether the agency made its Thrift Savings Plan (TSP) basic and
matching contributions to the TSP Fund, and how such amounts were
calculated, see, e.g., 5 C.F.R. §§ 550.805(h), 1605.13;
(8) Whether the agency provided to the TSP Fund amounts the
appellant designated as retirement withholding, and how such amounts
were calculated, see, e.g., 5 C.F.R. §§ 550.805(h), 1605.13;
(9) Whether the TSP Fund received the amounts discussed in (7) and
(8) and certified that it applied appropriate breakage;
(10) Whether the appellant is entitled to any retirement contributions
separate from TSP, and how those contributions were calculated and
accounted for;
(11) A detailed accounting of how Healthcare Insurance Tax or
Medicare Tax was calculated;
(12) A detailed accounting of the calculations for Federal and state
income tax withheld; and
(13) Whether the appellant’s revised retirement date, salary
information, sick leave accrued during the back pay period, and any other
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pertinent information have been reported to OPM so as to effect any
required adjustments to his annuity.
CRF, Tab 6 at 2-3.
¶7 Following this Order, both parties filed submissions. CRF, Tabs 9, 12, 13.
On March 15, 2024, the appellant filed a motion to show cause and hold the
agency in contempt, contending that the agency had intentionally violated the
Board’s Orders and improperly issued back pay to the appellant “prior to any
decision by the Board.” CRF, Tab 13 at 15-20. The agency filed a response to the
motion on April 3, 2024, and the appellant filed a reply on April 15, 2024. For the
reasons set forth below, we find the agency in partial compliance with the
September 29, 2017 decision and deny the appellant’s motion for an order to
show cause.
ANALYSIS
¶8 When the Board finds a personnel action unwarranted or not sustainable, it
orders that the appellant be placed, as nearly as possible, in the situation he would
have been in had the wrongful personnel action not occurred. House v.
Department of the Army, 98 M.S.P.R. 530, ¶ 9 (2005). The agency bears the
burden of proving its compliance with a Board order. Vaughan v. Department of
Agriculture, 116 M.S.P.R. 319, ¶ 5 (2011). An agency’s assertions of compliance
must include a clear explanation of its compliance actions supported by
documentary evidence. Id. The appellant may rebut the agency’s evidence of
compliance by making “specific, nonconclusory, and supported assertions of
continued noncompliance.” Brown v. Office of Personnel Management,
113 M.S.P.R. 325, ¶ 5 (2010).
Backpay Calculation
¶9 The August 16, 2023 Order directed the agency to submit evidence
regarding whether it used the correct pay scales to calculate the appellant’s back
pay. CRF, Tab 6 at 2. The agency asserts that it used the correct pay scales for
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Law Enforcement Officers using the Locality Pay Tables available on the OPM
website. CRF, Tab 9 at 6-7, 17. In Exhibit C to the Narrative Response, the
agency provided a table breaking down the appellant’s wages by pay period to
arrive at a gross backpay amount of $759,010. Id. at 34-44.
¶10 In his response, the appellant does not contest that the agency used the
correct pay scales. CRF, Tab 12 at 36-37, 42. However, the appellant contends
that the correct amount of back pay wages due is $760,264.28. Id. at 37. He
asserts that the agency wrongly calculated the wages for 2014 “due to LEAP [Law
Enforcement Availability Pay] wages deducted from the biweekly pay cap,”
which resulted in an overall deficit of $752.80. Id. at 42; see also CRF, Tab 9 at
34. The agency has not addressed this contention. Accordingly, the agency must
explain why the LEAP wages of $752.80 were deducted from the 2014 back pay.
“Gross-up”
¶11 The appellant also argues that he is entitled to a “gross-up,” or “tax
consequences adjustment,” of $979,500.67 for federal taxes and $189,644.97 for
state taxes. CRF, Tab 12 at 46. However, the Board does not have the authority
to award the appellant compensation for any increase in his tax liability. See
Holtgrewe v. Federal Deposit Insurance Corporation , 65 M.S.P.R. 137, 140
(1994) (citing Harris v. Department of Agriculture, 53 M.S.P.R 78, 82 (1992),
aff’d, 988 F.2d 130 (Fed. Cir. 1993) (Table) (Board lacks the authority to order
any remedy for the tax consequences of a back pay award)). Accordingly, we
reject this claim of noncompliance and find that the agency is not required (or
permitted) to adjust the back pay amount to relieve the appellant of his tax
burden.
Interest Calculation
¶12 The August 16, 2023 Order directed the agency to provide evidence that it
used the correct interest rates to calculate the amount of back pay interest. CRF,
Tab 6 at 2. The agency states that it used the OPM Interest Back Pay Calculator to
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validate the amount of interest calculated. CRF, Tab 9 at 7-8, 17-18. The agency
also produced a Back Pay Computation Summary Report, detailing the amount of
interest accrued per pay period. 2 Id. at 47-66.
¶13 The appellant asserts that, rather than calculating interest on the appellant’s
back pay wages alone, the agency should have aggregated interest based on other
benefits, such as his lump-sum payment for unused annual leave and retirement
benefits, in addition to his wages. CRF, Tab 12 at 26-27. The appellant also
argues that the agency should have added a 3% penalty to the interest rate used in
the OPM Interest Back Pay calculator. Id. at 26.
¶14 With respect to the appellant’s first argument, the Back Pay Act and its
implementing regulations specify that interest is to be paid on back pay but not on
lump-sum payments for annual leave or retirement payments. 5 U.S.C. § 5596(b)
(2)(A) (interest is available for back pay but not for lump-sum annual leave
payments); 5 C.F.R. § 550.803 (defining “pay, allowances, and differentials” to
include “pay, leave, and other monetary employment benefits” and excluding
lump-sum payments for annual leave and retirement benefits); see also Davis v.
Department of the Interior, MSPB Docket No. AT-0752-09-0860-C-2, Order at 3
(Feb. 28, 2024) (finding the agency properly did not pay interest on a lump sum
annual leave payment). Accordingly, the agency did not err in computing interest
on the appellant’s back pay wages alone.
¶15 Moreover, we do not agree that the agency must add an additional 3%
penalty to the interest rates it used. The Back Pay Act provides for interest to be
paid at the overpayment rate in the Internal Revenue Code, 26 U.S.C. § 6621(a)
(1). 3 5 U.S.C. § 5596(b)(2)(B). A comparison of the overpayment rates
2
The agency asserted that the National Financial Center (NFC) performed the actual
calculations of the amount of interest due the appellant, but the agency was able to
confirm the amount was correct by generating its own back pay summary report. Id.
at 5, 18.
3
The overpayment rate consists of the Federal short-term rate plus three percentage
points. 26 U.S.C. § 6621(a)(1).
8
published by the Internal Revenue Service (as well as by OPM) and the rates used
in the agency’s Back Pay Computation Summary Report shows that the agency
used the correct interest rates. Thus, we find that the agency used the correct
method for calculating interest, but we cannot determine the correct interest
amount until we have determined the outcome of the appellant’s challenge to the
back pay calculation (supra).
Annual Leave and LEAP Payment
¶16 The August 16, 2023 Order directed the agency to determine whether it had
previously paid the appellant a lump sum for unused annual leave at the time of
his original removal, whether it had erroneously deducted that amount a second
time from his back pay, and whether it had paid the appellant a lump sum for
unused annual leave during the back pay period. CRF, Tab 6 at 2. The agency
responds that it paid the appellant a lump sum of annual leave and LEAP at the
time of his separation on November 21, 2014, which consisted of $15,733.52 for
209 hours of annual leave and $922.18 for 49 hours of LEAP. CRF, Tab 9 at 9.
The agency then deducted that amount once from the appellant’s back pay
calculations, in accordance with 5 C.F.R. § 550.805(e)(iv). Id. at 9-10. The
agency also submitted evidence that it had calculated that the appellant would
have accrued 976 hours of annual leave during the back pay period, in addition to
the 209 hours from the previous annual leave amount, for a total of 1185 hours of
leave (a payment of $95,167.60) and 65 hours of LEAP (a payment of $1,227.60),
resulting in a gross lump payment of $96,395.20. Id. at 10-11. The agency
asserts that the lump sum payment “extends into 2020 and is subject to the 2020
annual pay adjustment for the Los Angeles locale.” Id. at 10-11, 20.
¶17 The appellant agreed that he had accumulated 1185 hours of annual leave
but disagreed that he should have been paid at a 2020 rate for part of the lump
sum payment and contended that the agency made a similar error in calculating
the LEAP payment. CRF, Tab 12 at 22-23. Accordingly, the appellant calculated
that he was owed $94,539 as an annual leave lump-sum payment. Id. Similarly,
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the appellant contended that he was not due a 2020 LEAP payment of $1,227.60.
Id. Because the appellant contends that the agency owed him less than it paid
him, any error by the agency is in the appellant’s favor. Accordingly, we find the
agency in compliance on this point.
Sick Leave
¶18 The August 16, 2023 Order directed the agency to determine whether the
sick leave the appellant would have accrued during the back pay period had been
calculated and accounted for, including whether it had been reported to OPM as a
potential factor adjusting the appellant’s annuity. CRF, Tab 6 at 3. The agency
responds that sick leave is not paid as a lump sum but would be provided to OPM
to determine whether it would affect his annuity. CRF, Tab 9 at 11.
¶19 The appellant asserts that he is entitled to, and should receive interest on, a
lump-sum payment of unused sick leave. CRF, Tab 12 at 23-24. However, there
is nothing in the Back Pay Act that authorizes lump-sum payments for sick leave.
DeOcampo v. Department of Army, 551 Fed. App’x. 1000, 1003 (Fed. Cir. 2014)
(Table) (finding that the Back Pay Act does not authorize lump-sum payments for
sick leave). Accordingly, the appellant is not entitled to a lump-sum payment for
unused sick leave. However, the agency must provide evidence that it submitted
the appellant’s sick leave calculation to OPM, as it stated it would do.
Health Insurance Benefits
¶20 The appellant contends that to restore him to the status quo ante, he is due
the health insurance premiums that the agency would have paid him had he
remained employed. RCF, Tab 12 at 24. The Back Pay Act does not authorize
the payment of retroactive health benefit premiums unless the appellant elects to
retroactively reinstate health care coverage, in which case the appellant’s
premiums will be deducted from his back pay. 5 C.F.R. § 550.805(e)(3)(iii); see
also Sowa v. Department of Veterans Affairs, 100 M.S.P.R. 5, ¶¶ 6-7 (2005)
(determining the appellant could not receive reimbursement for healthcare
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premiums under the Back Pay Act.). The appellant does not state that he has
elected to retroactively reinstate his health care coverage. Accordingly, we find
the agency in compliance on this point.
Thrift Savings Plan
¶21 The Board’s Order directed the agency to explain whether it had made its
TSP basic and matching contributions to the TSP Fund and how such amounts
were calculated, whether the agency had provided the appellant’s retirement
withholdings to the TSP and how such amounts were calculated, and whether the
TSP Fund had received these amounts and certified that it applied appropriate
breakage. CRF, Tab 6 at 3.
¶22 The agency reported that the National Finance Center (NFC) had calculated
TSP contributions and had determined that there had previously been an error.
RCF, Tab 9 at 11. The NFC then recalculated the appellant’s TSP contributions
and provided a TSP Fund Report, detailing contributions and breakage. Id. at 12,
22, 97-104. The TSP Fund Report appears to state that the employee contribution
equaled $45,168.68, the agency’s automatic contribution equaled $9,868.73, and
the matching contribution equaled $39,477.58, for a total of $94,514.99. Id.
at 97. Notably, the agency’s back pay summary states that the appellant’s TSP
contribution was $37,950.52. Id. at 71.
¶23 The appellant calculated that the appellant’s contribution would be
$37,988.14, and the agency’s matching benefit equaled $37,988.14, for a total of
$75,976.28. Tab 12 at 46-47, 65. The appellant also noted that the agency had
listed three different amounts for the calculated wages for retirement. Id. at 48;
see also CRF, Tab 9 at 23, 44, 71. The appellant also states that the appellant
wishes to restore his $227,969 in TSP withdrawals made during separation under
5 C.F.R. § 1605.13(d). CRF, Tab 12 at 48. The agency must address the
appellant’s calculations, explain why its evidence lists three different versions of
the appellant’s wages, as well as different amounts for appellant’s TSP
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contributions, and explain whether it has enabled the restoration of the appellant’s
TSP withdrawals to his account.
Retirement Contributions Separate From TSP
¶24 The Board’s Order directed the agency to explain whether the appellant
was entitled to any retirement contributions separate from TSP and how those
contributions were calculated and accounted for. CRF, Tab 6 at 3.
¶25 The agency responded that it requested the responsive information from
NFC, which responded:
Retirement deductions based on total base wages@ .0130
FY 2014 $456,175.20 x .0130
FY 2017 $163,038.40 x .0130
FY 2018 $139,796.80 x.0130
RCF, Tab 9 at 13.
¶26 The appellant asserted in response that these numbers were not consistent
with agency-calculated wages, omitted certain years, and provided no explanation
of how the alternative wages were calculated. RCF, Tab 12 at 25-26. We agree.
NFC is the agency’s agent, and thus, the agency is responsible for ensuring that
NFC provides a clear explanation of these calculations. See Raymond v.
Department of the Navy, 116 M.S.P.R. 223, ¶¶ 14-17 (2011) (rejecting “unsworn,
vague” Defense Financial and Accounting Services (DFAS) memo and
spreadsheet as evidence of compliance, in part because they lacked narrative
explanation of calculations); see also Tichenor v. Department of the Army , 84
M.S.P.R. 386, ¶ 8 (1999) (rejecting argument that DFAS, not the agency,
improperly withheld payment from the appellant because DFAS was the agency’s
agent).
Health Insurance Tax or Medicare Tax
¶27 The Board’s Order requested a detailed accounting of how Healthcare
Insurance Tax or Medicare Tax was calculated. RCF, Tab 6 at 3. The agency
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responded that NFC stated that “Medicare wages are calculated on $200,000 x
1.45 and on wages over $200,000 deducted at 2.35%.” RCF, Tab 9 at 13. The
appellant responded that this was not a “detailed accounting.” RCF, Tab 12 at 29.
We agree. The agency must provide a detailed accounting of these taxes. See
Raymond, 116 M.S.P.R. 223, ¶¶ 14-17.
Federal and State Income Taxes
¶28 The Board ordered the agency to provide a detailed accounting of the
calculations for Federal and state income taxes. RCF, Tab 6 at 3. The agency
responded that NFC had the responsive information and stated, “Federal and state
taxes were aggregated based on the number of pay periods.” RCF, Tab 9 at 14.
Again, the agency must provide a more detailed accounting of these calculations.
See Raymond, 116 M.S.P.R. 223, ¶¶ 14-17.
Reporting Information to OPM
¶29 The Board’s Order also requested the agency disclose whether certain
relevant information had been reported to OPM “so as to effect any required
adjustments to his annuity.” RCF, Tab 6 at 3. The agency responded that NFC
possessed the responsive information but “did not provide the agency with
responsive information.” RCF, Tab 9 at 14. Again, the agency must disclose this
information so the appellant may determine whether he agrees with the
calculations. See Raymond, 116 M.S.P.R. 223, ¶¶ 14-17.
The Timing of the Agency’s Payment of the Back Pay
¶30 In his Motion for Order to Show Cause, the appellant complains that the
agency has already attempted to pay the appellant his back pay “prior to any
decision by the Board.” CRF, Tab 13 at 20. The agency, however, is complying
with the Board’s January 6, 2023 Order, which directed the agency to provide the
appellant with the appropriate amount of back pay, with interest. CPFR, Order
at 10. The agency is not acting in bad faith by paying the appellant what it has
calculated as the appellant’s back pay. If those calculations change, the agency
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will be required to account for the difference. However, as the appellant has
apparently returned the back pay he received, the agency will need to show that it
has paid him again.
ORDER
The appellant’s Motion for Order to Show Cause is denied.
Within 30 calendar days of this Order, the agency shall submit the
evidence discussed above. Specifically, the agency must:
(1) Provide an explanation of why LEAP wages of $752.80 were
deducted from the 2014 back pay amount;
(2) Recalculate the interest due if the appellant’s back pay amount
changes based on number (1) above;
(3) With respect to the appellant’s TSP account, address the appellant’s
calculations, explain why its evidence lists three different versions of
appellant’s wages, as well as different amounts for appellant’s TSP
contributions, and explain whether it has enabled the restoration of
the appellant’s TSP withdrawals to his account.
(4) Provide a clear explanation and calculation of retirement
contributions separate from the TSP;
(5) Provide a detailed accounting of how Healthcare Insurance Tax or
Medicare Tax was calculated;
(6) Provide a detailed accounting of the calculations for Federal and
state income tax withheld;
(7) Explain whether the appellant’s revised retirement date, salary
information, sick leave accrued during the back pay period, and any
other pertinent information have been reported to OPM so as to
effect any required adjustments to his annuity.
If the agency fails to submit the required information, the Board may issue
an order to show cause why sanctions should not be imposed against the
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responsible agency official pursuant to 5 U.S.C. § 2304(e)(2)(A) and 5 C.F.R. §
1201.183(c).
The appellant shall submit any response within 21 calendar days of the
date of service of the agency’s submission. If the appellant does not respond to
the agency’s submission regarding compliance within 21 calendar days, the Board
may assume that the appellant is satisfied and dismiss the petition for
enforcement.
FOR THE BOARD: ______________________________
Gina K. Grippando
Clerk of the Board
Washington, D.C.