Michelina C.,1 Petitioner,v.James N. Mattis, Secretary, Department of Defense (Defense Threat Reduction Agency), Agency.

Equal Employment Opportunity Commission

Nov 13, 2018

0420180002 (E.E.O.C. Nov. 13, 2018)

U.S. EQUAL EMPLOYMENT OPPORTUNITY COMMISSION
Office of Federal Operations
P.O. Box 77960
Washington, DC 20013

Michelina C.,1
Petitioner,

v.

James N. Mattis,
Secretary,
Department of Defense
(Defense Threat Reduction Agency),
Agency.

Petition No. 0420180002
Request No. 0520160045
Appeal No. 0720140009
Agency No. DTRA-09-007

DECISION ON A PETITION FOR ENFORCEMENT

On October 31, 2017, the Equal Employment Opportunity Commission (EEOC or Commission)
docketed a petition for enforcement to examine the enforcement of an Order set forth in EEOC
Request No. 0520160045 (April 5, 2016). The Commission accepts this petition for enforcement
pursuant to 29 C.F.R. § 1614.503. Petitioner alleged that the Agency failed to fully comply with
the Commission’s order in EEOC Request No. 0520160045. The matter is REMANDED to the
Agency for the Agency to show compliance with our prior Order.

BACKGROUND

At the time of events giving rise to this complaint, Petitioner worked as a Training Instructor, GS-
1712-12, for the Operations Support Division (OSP) in the Agency’s headquarters at Fort Belvoir,
Virginia. Petitioner filed a complaint in which she alleged that the Agency discriminated against
her and subjected her to harassment on the bases of sex, disability, and in reprisal for prior
protected EEO activity in violation of Title VII of the Civil Rights Act of 1964 (Title VII), as
amended, 42 U.S.C. § 2000e et seq. and Section 501 of the Rehabilitation Act of 1973
(Rehabilitation Act), as amended, 29 U.S.C. § 791 et seq. The Agency framed the events
comprising the harassment claim as follows:

1 This case has been randomly assigned a pseudonym which will replace Petitioner’s name when
the decision is published to non-parties and the Commission’s website.
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(1) On June 8, 2009, her supervisor denied her request to change her duty hours;

(2) On May 31, 2009, her supervisor presented her with an interim performance review
that contained negative ratings due to her inability to travel by air;

(3) On May 20, 2009, she was issued a formal letter of reprimand for insolence and
discourteous behavior;

(4) On May 7, 2009, she was denied participation in a physical training session;

(5) On May 24, 2009, her supervisor issued her a memorandum of counseling for
violating a Letter of Requirement for her use of leave;

(6) In February 2009, her supervisor denied her leave request; and

(7) In November 2008, her supervisor issued a performance appraisal downgrading her
rating.

Following a hearing, an EEOC Administrative Judge (AJ), issued a decision finding discrimination
regarding claims (1) – (5) and (7). The AJ also found Petitioner was subjected to a work
environment “permeated” with discrimination due to sex, disability, and in reprisal for prior EEO
activity. The AJ found no discrimination regarding claim (6).

As a result of the findings of discrimination, the AJ awarded Petitioner damages and attorney’s
fees and costs. In relevant part, the Agency was ordered to pay Petitioner $25,000 in nonpecuniary
damages; $25,216.50 in past pecuniary damages; attorney’s fees of $98,084 (between three
attorneys); and costs of $3,383.65. The Agency also was ordered to calculate and restore annual
and sick leave taken as a result of the discrimination. In addition, the Agency was ordered to
calculate back pay plus interest for the period of September 1, 2009, to June 17, 2013.

Thereafter, the Agency and Petitioner both filed appeals with the Commission. In EEOC Appeal
No. 0720140009 (September 22, 2015), the Commission determined the AJ’s findings of
discrimination and harassment were supported by substantial evidence. The Commission noted
that on appeal the Agency did not dispute the remedies, damages, or attorney’s fees and costs
awarded by the AJ. The Commission found that there was no reason to disturb the AJ’s award.

Upon receipt of the Commission’s decision, both Petitioner and the Agency requested
reconsideration of the decision in EEOC Appeal No. 0720140009 (September 22, 2015). In EEOC
Request No. 0520160045 (April 5, 2016), the Commission denied the Agency’s request. However,
the Commission found it inadvertently failed to include Petitioner’s rights to attorney’s fees and
costs for her successful appeal from the Agency’s final order and modified the decision to include
the Order of Attorney’s Fees inadvertently excluded from its prior decision.
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The Commission noted as Petitioner was represented by legal counsel in her request for
reconsideration, she was also entitled to attorney’s fees and costs for the successful prosecution of
her request for reconsideration.

The Order also specified, in relevant part, that the Agency had to determine the appropriate amount
of back pay, plus interest, and other benefits due Petitioner for the period of September 1, 2009 to
June 17, 2013. The Agency was also ordered to calculate and restore annual and sick leave taken
as a result of the discrimination.

On October 11, 2017, Petitioner submitted the petition for enforcement at issue. Petitioner noted
that she received a check from the Agency dated March 24, 2017, in the amount of $140,986.70.
She stated shortly thereafter, she received another check in the amount of $866 dated April 7, 2017.
Petitioner states that the Agency failed to provide an explanation of how back pay was calculated.
However, Petitioner contends the Agency did not correctly calculate the amount of back pay owed
to her from September 1, 2009 to June 17, 2013. Specifically, Petitioner notes the Agency
erroneously applied offsets for disability payments she received from the Office of Personnel
Management (OPM) in the amount of $113,012.02.

Petitioner also argues that the Agency failed to retroactively provide her with the same employee
awards as received by other Agency employees during the relevant period.

Petitioner also states the Agency failed to pay her a lump sum for the restored sick leave. She
notes the Agency also failed to calculate interest on her restored annual leave.

Finally, Petitioner requests the Commission order the Agency to compensate her for additional
taxes she will owe as the result of the lump sum payment of back pay, which will increase her tax
base for the applicable year.

The Agency did not submit a response to Petitioner’s petition for enforcement.

ANALYSIS AND FINDINGS

Back pay

Petitioner contends the Agency improperly offset disability payments from her back pay award.
The record contains a “Summary Report – Back Pay Interest Computation” listing the gross back
pay amount as $321,212.80 and deducting $113,012.02 for “Outside Earnings Offset” for an
adjusted gross back pay amount of $208,200.78. The record also contains a Defense Finance and
Accounting Service (DFAS) “Settlement Data” printout from 2009 – 2013 indicating
“Interim/Outside Earnings” during the relevant time totaled $113,012.02. In addition, there is a
summary from DFAS listing the gross back pay amount of $321,212.80 was reduced by
$113,011.98 for “Lump Sum Leave and/or Additional Lump Sum Leave” for a total adjusted gross
back pay amount of $208,200.80. Further, a “Remedy Ticket” in the file identifies $113,011.98
was the amount of retirement annuity payments received by Complainant.
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While Complainant contends the Agency’s deduction of $113,012.02 was for disability payments
received from OPM, we are unable to determine this with any certainty from the record. The record
lists different labels to this amount, so it is unclear if it is really for disability payments. Thus, we
remand the matter for further processing. On remand, the Agency shall provide an explanation
and documentation indicating whether its deduction of $113,012.02 (or $113,011.98) was for lump
sum leave/and or additional lump sum leave, for interim/outside earnings, or for disability
retirement benefits.

Further, we note to the extent the Agency deducted retirement benefits from Petitioner’s back pay
award, we note such an action would be improper. Liza B. v. Dept. of Agriculture, EEOC Appeal
No. 0120152098 (Aug. 31, 2017) (found social security retirement payments are not deductible
from back pay) (citing Arnelson v. Social Security Administration, 128 F. 3d 1243, 1248 (8th Cir.
1997)); Complainant v. United States Postal Serv., Petition No. 04A20006 (Jan. 28, 2003) (found
agency improperly deducted disability retirement payments received by petitioner from the gross
amount of back pay); Complainant v. United States Postal Serv., Petition No. 04990044 (Mar. 28,
2000) (found improper to deduct from petitioner’s back pay award any disability retirement
benefits).

Awards

We find Complainant did not show that the Agency failed to provide her with the same employee
awards as received by other Agency employees during the relevant time frame. Specifically, we
note Complainant did not identify any particular award received by other Agency employees
between September 1, 2009 to June 17, 2013, that she did not receive.

Leave

The Commission’s prior Order stated the Agency shall calculate and restore annual and sick leave
taken as a result of the discrimination set forth in the decision. Petitioner contends the Agency
failed to pay her a lump sum for the restored sick leave.

The record contains a “Remedy” ticket listing annual leave accrued during the relevant time and
annual leave that should have been accrued. The chart indicates the “Credit/Reduction” total was
586 hours. The form indicates that 586 hours of annual leave is to be paid out as lump sum leave
at a rate of $43.05 for a total of $25,227.30. The record contains a DFAS listing in the record
indicating a lump sum leave payout for 586 hours in the amount of $25,227.30.

The record contains a “Remedy” ticket listing the sick leave accrued during the relevant time and
the sick leave that should have been accrued. The chart indicates the “Credit/Reduction” total was
383 hours. The form indicates that “Manual 1150 needs to be created to show ending balance of
383 hours of Sick Leave upon separation.”

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A Standard Form 1150 “Record of Leave Data” contains a summary of annual and sick leave.
Line 9 lists a total of 586 hours for annual leave. Line 13 for “Total Hours Paid in Lump Sum”
lists 586 annual hours and line 14 lists $43.05 for salary rate per hour (which would total
$25,227.30). Line 9 also lists a total of 383 hours for sick leave. However, on line 13 for “Total
Hours Paid in Lump Sum,” the box appears to have been altered and is blank. On line 12 the
“balance” listed is 383 sick hours. The DFAS listing does not indicate a lump sum leave payout
for sick leave.

Upon review, we cannot determine whether the Agency has complied with our previous Order
regarding sick leave. Thus, this matter is remanded for further processing. On remand the Agency
should also address Petitioner’s contention that it failed to calculate and pay her interest on the
restored annual leave.

Tax Liability

Petitioner maintains that she is entitled to be paid for increased tax liability incurred because of a
lump sum back pay award. The Commission has held that an award to cover additional tax liability
from a lump-sum payment of back pay is available to petitioners. Complainant v. Dep’t of the
Navy, EEOC Appeal No. 01991530 (Aug. 22, 2001); Complainant v. Dep’t of the Navy, EEOC
Appeal Nos. 01982627 and 01990407 (Aug. 22, 2001); Complainant v. Dep’t of the Navy, EEOC
Appeal Nos. 01982628 and 01990455 (Aug. 22, 2001). This award is available even if a decision
does not explicitly order it. See Emerson S. v. United States Postal Serv., EEOC Petition No.
0420130026 (Nov. 20, 2015) (noting that decisions on petitions for enforcement have permitted
claims for additional tax liability in cases where the Commission has not mentioned it in the
original order); Cecile S. v. United States Postal Serv., EEOC Petition No. 0420120013 (Nov. 4,
2015) (agency erroneously found that petitioner was not entitled to an award for tax liability merely
because AJ did not specifically order it as a remedy); Complainant v. Dep’t of Veterans Affairs,
EEOC Appeal No. 0120113377 (May 14, 2014) (complainant entitled to reimbursement for
additional tax liability even though AJ’s order was silent on the matter).

In the case of a lump-sum back-pay award, individuals are compensated for the extra tax that they
are required to pay as a result of receiving a lump-sum award, as opposed to the actual amount of
taxes that they would have paid if they had received the funds over a period of time, usually several
years. It is the receipt of the funds in one lump sum that causes the extra tax liability, not the back-
pay award itself. The Commission has found that a petitioner has the burden to prove the amount
to which she or he claims entitlement, and courts have demanded probative calculations. The tax-
liability calculation must be based on the taxes that the individual would have paid if he or she had
received the back pay as a regular salary during the back-pay period. See Complainant v. Dep’t
of Transp., EEOC Petition No. 04A30015 (Oct. 12, 2004) (citing Hukkanen v. Int’l Union of
Operating Engineers, 3 F.3d 231, 237 (8th Cir. 1993); Barbour v. Medlantic Mgmt. Corp., 952 F.
Supp. 857, 865 (D.D.C. 1997), aff’d, 132 F.3d 1430 (D.C. Cir. 1997)).

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In this case, we find Petitioner is entitled to compensation for the proven tax consequences of her
receipt of a lump-sum back-pay award. Because the Agency did not issue a determination
concerning the amount due to Petitioner to compensate her for the additional tax liability, we find
it necessary to remand the matter to the Agency for such a determination.

On remand, the Agency shall give Petitioner the opportunity to provide evidence concerning her
entitlement to compensation for increased tax liability. Petitioner, who bears the burden of proof,
must submit evidence showing the difference between the taxes that she paid on the lump-sum
payment and the taxes that she would have paid had the salary been earned over time. See Darlene
F. v. Soc. Sec. Admin., EEOC Petition No. 0420140010 (Apr. 8, 2016) (“It is Petitioner’s burden
to establish the amount of increased tax liability, if any.”). That is, Petitioner must show more than
the total tax liability arising from her receipt of the lump-sum award; she must show the differential
between this tax burden and the taxes that she would have paid if she had received the back pay as
part of her salary. Complainant v. Envtl. Prot. Agency, EEOC Petition No. 0420060035 (Nov. 5,
2007). Petitioner must “provide exact and detailed calculations showing the amount he is
claiming.” Emerson S. v. United States Postal Serv., EEOC Petition No. 0420130026 (Nov. 20,
2015). For example, Petitioner should submit detailed calculations showing the tax liability that
she actually incurred for each year of the back-pay period, the tax liability that she would have
incurred in each of those years if she had received the back pay in the form of a regular salary, and
the tax liability that she incurred solely as a result of her receipt of the lump-sum back-pay award.
Following receipt of Petitioner’s claim and supporting documents, the Agency shall issue a
decision on the tax-liability matter.

CONCLUSION

Based upon a review of the record and the Petitioner’s petition, the Commission has determined
that additional information is necessary to determine the Agency’s compliance with its Order in
EEOC Request No. 0520160045 (April 5, 2016). The Agency is directed to comply with the Order
herein.

ORDER

Within 60 days of the date this decision is issued, the Agency shall:

(1) Provide Petitioner a full explanation of its back pay calculations, all employment
benefits, and interest. If more payments are due Petitioner, the Agency shall make
those payments.
(2) Provide Petitioner a full explanation of its calculation and restoration of annual and
sick leave, including whether it paid interest on leave restored. If more
payments/restoration for the leave are due Petitioner, the Agency shall make those
payments/restoration.
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(3) Request that Petitioner submit her claim for compensation for all additional
income-tax liability. The Agency shall afford Petitioner 60 days to submit her claim
and supporting documents. The burden of proof to establish the amount of
additional tax liability, if any, is on Petitioner. The calculation of additional tax
liability must be based on the taxes Petitioner would have paid had she received the
back pay in the form of regular salary during the back pay period, versus the
additional taxes she paid due to receiving the back pay lump sum award.
Thereafter, the Agency shall issue a decision on this matter and any amount of
proven additional tax liability within 60 days of receipt of Petitioner’s claim for
additional tax liability. The Agency shall provide a copy of its final decision, and
proof of payment, to the Compliance Officer as referenced herein.

A copy of the Agency’s evidence of compliance and new final decision must be sent to the
Compliance Officer as referenced herein.

ATTORNEY'S FEES (H1016)

If Complainant has been represented by an attorney (as defined by 29 C.F.R. § 1614.501(e)(1)(iii)),
he is entitled to an award of reasonable attorney's fees incurred in the processing of the complaint.
29 C.F.R. § 1614.501(e). The award of attorney's fees shall be paid by the Agency. The attorney
shall submit a verified statement of fees to the Agency -- not to the Equal Employment Opportunity
Commission, Office of Federal Operations -- within thirty (30) calendar days of the date this
decision was issued. The Agency shall then process the claim for attorney's fees in accordance
with 29 C.F.R. § 1614.501.

IMPLEMENTATION OF THE COMMISSION’S DECISION (K0618)

Under 29 C.F.R. § 1614.405(c) and § 1614.502, compliance with the Commission’s corrective
action is mandatory. Within seven (7) calendar days of the completion of each ordered corrective
action, the Agency shall submit via the Federal Sector EEO Portal (FedSEP) supporting documents
in the digital format required by the Commission, referencing the compliance docket number under
which compliance was being monitored. Once all compliance is complete, the Agency shall
submit via FedSEP a final compliance report in the digital format required by the Commission.
See 29 C.F.R. § 1614.403(g). The Agency’s final report must contain supporting documentation
when previously not uploaded, and the Agency must send a copy of all submissions to the
Complainant and his/her representative.
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If the Agency does not comply with the Commission’s order, the Complainant may petition the
Commission for enforcement of the order. 29 C.F.R. § 1614.503(a). The Complainant also has
the right to file a civil action to enforce compliance with the Commission’s order prior to or
following an administrative petition for enforcement. See 29 C.F.R. §§ 1614.407, 1614.408, and
29 C.F.R. § 1614.503(g). Alternatively, the Complainant has the right to file a civil action on the
underlying complaint in accordance with the paragraph below entitled “Right to File a Civil
Action.” 29 C.F.R. §§ 1614.407 and 1614.408. A civil action for enforcement or a civil action on
the underlying complaint is subject to the deadline stated in 42 U.S.C. 2000e-16(c) (1994 & Supp.
IV 1999). If the Complainant files a civil action, the administrative processing of the
complaint, including any petition for enforcement, will be terminated. See 29 C.F.R.
§ 1614.409.

COMPLAINANT’S RIGHT TO FILE A CIVIL ACTION (R0610)

This is a decision requiring the Agency to continue its administrative processing of your complaint.
However, if you wish to file a civil action, you have the right to file such action in an appropriate
United States District Court within ninety (90) calendar days from the date that you receive this
decision. In the alternative, you may file a civil action after one hundred and eighty (180)
calendar days of the date you filed your complaint with the Agency, or filed your appeal with the
Commission. If you file a civil action, you must name as the defendant in the complaint the person
who is the official Agency head or department head, identifying that person by his or her full name
and official title. Failure to do so may result in the dismissal of your case in court. “Agency” or
“department” means the national organization, and not the local office, facility or department in
which you work. Filing a civil action will terminate the administrative processing of your
complaint.

RIGHT TO REQUEST COUNSEL (Z0815)

If you want to file a civil action but cannot pay the fees, costs, or security to do so, you may request
permission from the court to proceed with the civil action without paying these fees or costs.
Similarly, if you cannot afford an attorney to represent you in the civil action, you may request the
court to appoint an attorney for you. You must submit the requests for waiver of court costs or
appointment of an attorney directly to the court, not the Commission.
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The court has the sole discretion to grant or deny these types of requests. Such requests do not alter
the time limits for filing a civil action (please read the paragraph titled Complainant’s Right to File
a Civil Action for the specific time limits).
FOR THE COMMISSION:

______________________________ Carlton M. Hadden’s signature
Carlton M. Hadden, Director
Office of Federal Operations

November 13, 2018
Date