[Redacted], Lon R., 1 Complainant,v.Alex M. Azar II, Secretary, Department of Health and Human Services, Agency.

Equal Employment Opportunity Commission

Jan 28, 2020

Appeal No. 2019003540 (E.E.O.C. Jan. 28, 2020)

U.S. EQUAL EMPLOYMENT OPPORTUNITY COMMISSION Office of Federal Operations P.O. Box 77960 Washington, DC 20013 Lon R.,1 Complainant, v. Alex M. Azar II, Secretary, Department of Health and Human Services, Agency. Appeal No. 2019003540 Agency No. HHS-FDACBER-051-13 DECISION Complainant filed an appeal with the Equal Employment Opportunity Commission (EEOC or Commission) alleging that the Agency is in breach of the terms of the settlement agreement into which the parties entered. See 29 C.F.R. § 1614.402; 29 C.F.R. § 1614.504(b); and 29 C.F.R. § 1614.405. BACKGROUND At the time of events giving rise to this complaint, Complainant was the Deputy Division Director and Lab Chief for the Agency. Believing that the Agency subjected him to unlawful discrimination, Complainant contacted an Agency EEO Counselor to initiate the EEO complaint process. Effective March 17, 2017,2 Complainant and the Agency entered into a settlement agreement to resolve the matter. 1 This case has been randomly assigned a pseudonym which will replace Complainant’s name when the decision is published to non-parties and the Commission’s website. 2 The Agency’s previous December 19, 2017 EEO Complaint Breach of Settlement Determination, regarding an earlier and separate allegation of settlement breach, listed the settlement agreement as having been executed on March 9, 2017 and having an effective date of March 13, 2017. However, paragraph 29 of the settlement agreement lists the effective date as the later of full execution or eight (8) days following Complainant’s signature. Complainant signed on March 9, 2019003540 2 The settlement agreement provided, in pertinent part, that: 14.b. The Agency agrees to provide Complainant with back pay and benefits from March 13, 2013 until February 16, 2017. For purposes of calculating Complainant’s back pay award, the parties agree that Complainant’s back pay will be calculated at his $152,511 salary as of the date of his removal in 2013. Thereafter, for purposes of Complainant’s back pay award, he will receive a three percent pay increase for calendar years 2014 (approximately $157,086), 2015 (approximately $161,799), and 2016 (approximately $166,653). Complainant’s back pay for the first three pay periods of 2017 will remain at the $166,653 salary. Complainant understands that the Agency’s pay agent, the Defense Finance Accounting Service (“DFAS”) will process Complainant’s back pay award. Complainant understands that any income earned, including unemployment compensation, from outside employment from March 3, 2013 to February 16, 2017 will be deducted from his back pay award. Complainant agrees to timely complete any forms and provide any necessary documentation requested by the Agency or DFAS in order to calculate his back pay award, including, but not limited to, the standard DFAS employee statement relative to back pay. Additionally, Complainant understands any employee deductions for benefits, including by not limited to Federal Employee Health Benefits (“FEHB”) and Federal Group Life Insurance (“FEGLI”) Employee Life Insurance, will be deducted from his back pay award. (24) Pursuant to 29 C.F.R. § 1614.504, if Complainant believes that the Agency has breached any terms of this Agreement, he shall notify the Director, OEEO, [Agency, Address], in writing within thirty (30) calendar days of the date Complainant knew or should have known of the alleged violation. The Director will review the matter, make a determination as to whether a breach occurred, and notify both parties of such decision. (26) This Agreement constitutes the complete understanding between Complainant and the Agency with respect to the matters encompassed in tis Agreement. No other promises or agreements will be binding unless this Agreement is amended by a writing by both parties. (28) Both parties have entered into this Agreement voluntarily and with a full and complete understanding of its terms, meanings, and effect. Each of the undersigned is signing the Agreement voluntarily and freely, without coercion, having had the opportunity to read and raise questions about its meaning prior to signing. Beginning in June 2017, Complainant reached out to the Agency regarding the calculation of his back pay and retirement benefits. 2017, and it was fully executed on March 13, 2017. Therefore, the settlement agreement was not effective until March 17, 2017, 8 days after Complainant’s signature. 2019003540 3 Complainant inquired again on August 7, 2017 regarding his tax consequences resulting from the lump sum back pay. On September 12, 2017, Complainant emailed the Agency that he received a leave and earning statement, but that he still had not received a letter showing what the back pay amount was, including benefits. On September 13, 2017, the Agency emailed Complainant a copy of the back pay letter from the Defense Finance and Accounting Service (DFAS), which was responsible for the calculation and issuance of Complainant’s back pay. The back pay letter from DFAS showed that there was no interest included in Complainant’s back pay, to which Complainant responded to the Agency that it was required to include interest on the back pay amount, in accordance with 5 U.S.C. § 5596 and 5 C.F.R. § 550. The Agency responded that an audit request was sent to DFAS. On November 29, 2017, DFAS issued its audit results showing the calculation for back pay, with no interest. Approximately nine and a half months later on September 5, 2018, Complainant’s attorney reached out to the Agency’s Office of General Counsel (OGC), via email, regarding the lack of interest on Complainant’s back pay, along with the issue of tax consequences. OGC and Complainant’s attorney engaged in an email discussion about the matter, until October 15, 2018 when OGC stated that the Agency is not required to pay Complainant interest or for his additional tax liability, as Complainant did not bargain for either of those and have them included in the settlement agreement. Subsequently, by letter to the Agency dated November 13, 2018, Complainant alleged that the Agency was in breach of the settlement agreement and requested that the Agency specifically implement its terms. Specifically, Complainant alleged that the Agency failed to pay him interest on his back pay from March 13, 2013 through February 16, 2017, and the monetary offset for his subsequent increased tax liability. Complainant stated that, as of May 15, 2019, he had not received a response from the Agency to his November 13, 2018 letter giving notice of the settlement agreement breach. Complainant emailed the Commission a copy of his May 15, 2019 Petition to Enforce a Settlement Agreement, on that date. The Agency did not issue a final agency decision (FAD) on the matter. Accordingly, we will treat the Agency’s failure to respond to Complainant’s allegations of breach as a decision to reject Complainant’s allegations. CONTENTIONS ON APPEAL On appeal, Complainant alleges that the Agency breached the settlement agreement by failing to include interest on the back pay award in its payment to him. Complainant further alleges that it is the Agency’s responsibility to reimburse him for the tax consequences he incurred as a result of the lump sum award payment. Complainant states that 5 U.S.C. § 5596, the Back Pay Act; the Equal Employment Opportunity Management Directive for 29 C.F.R. Part 1614 (EEO MD-110); and numerous Office of Federal Operations (OFO) decisions require the payment of interest on back pay, whether such interest was demanded in the Agreement or not. Complainant states that he negotiated with the Agency for interest on the back pay, but that the Agency removed the interest from the back pay calculation. 2019003540 4 Complainant also argues that the Agency’s delay in paying back pay was unreasonable. Complainant alleges that the Agency took nine (9) months to compensate him for a period of almost four (4) years, from March 2, 2013 until February 26, 2017. Complainant states that the Commission has recognized that it has ordered interest on delayed payments made to complainants under settlement agreements. Complainant cites to cases surveyed under Homer B. v. Department of the Army, EEOC Appeal No. 0120161342 (May 24, 2018). In that case, the Commission found an unreasonable delay when it took anywhere from ten (10) months to two (2) years to award back pay and subsequently awarded interest, but not in a seven (7) month delay. Complainant states that the nine-month delay in his case was unreasonable, but the true delay was the almost-five years remedied by the settlement agreement. Complainant states that the additional nine months was an added insult to injury. Finally, Complainant argues that he is entitled to reimbursement for adverse tax consequences from the Agency. He states that EEO MD-110, as well as Commission decisions, have recognized the Agency’s liability to complainant for the tax consequences related to a lump sum payment. Complainant states that back pay is a form of make-whole relief available to him under Title VII. ANALYSIS A review of the record indicates that Complainant became aware of the non-payment of interest on his back pay on September 12, 2017. Pursuant to 29 C.F.R. § 1614.504(a) and paragraph 24, Complainant was required to notify the Agency’s OEEO Director, in writing within thirty (30) calendar days of the date Complainant knew or should have known of the alleged violation. However, it was not until his letter dated November 13, 2018 that Complainant notified the Agency’s OEEO Director of the alleged breach. We find that Complainant should have contacted the EEO Director by October 12, 2017, 30 days after he became aware that the Agency was not going to pay him interest. Instead, Complainant waited more than a year from the time he knew of the alleged breach, to notify in writing the proper individual, pursuant to the applicable regulation and the settlement agreement. The Commission finds the allegation of breach untimely raised.3 3 We note that even if Complainant’s breach allegation was timely, he would not have prevailed on the issues of interest on back pay or the Agency’s responsibility to reimburse him for his increased tax liability. EEOC Regulation 29 C.F.R. § 1614.504(a) provides that any settlement agreement knowingly and voluntarily agreed to by the parties, reached at any stage of the complaint process, shall be binding on both parties. The Commission has held that a settlement agreement constitutes a contract between the employee and the Agency, to which ordinary rules of contract construction apply. See Herrington v. Dep’t of Def., EEOC Request No. 05960032 (December 9, 1996). The Commission has further held that it is the intent of the parties as expressed in the contract, not some unexpressed intention, that controls the contract’s construction. Eggleston v. Dep’t of Veterans Affairs, EEOC Request No. 05900795 (August 23, 1990). While 2019003540 5 CONCLUSION We therefore find that Complainant’s allegations of breach of the settlement agreement between himself and the Agency were untimely raised with the Agency as required by 29 C.F.R. § 1614.504(a). Accordingly, the Agency’s decision not to find a breach is AFFIRMED. STATEMENT OF RIGHTS - ON APPEAL RECONSIDERATION (M0617) The Commission may, in its discretion, reconsider the decision in this case if the Complainant or the Agency submits a written request containing arguments or evidence which tend to establish that: 1. The appellate decision involved a clearly erroneous interpretation of material fact or law; or 2. The appellate decision will have a substantial impact on the policies, practices, or operations of the Agency. Requests to reconsider, with supporting statement or brief, must be filed with the Office of Federal Operations (OFO) within thirty (30) calendar days of receipt of this decision. A party shall have twenty (20) calendar days of receipt of another party’s timely request for reconsideration in which to submit a brief or statement in opposition. See 29 C.F.R. § 1614.405; Equal Employment Opportunity Management Directive for 29 C.F.R. Part 1614 (EEO MD-110), at Chap. 9 § VII.B (Aug. 5, 2015). All requests and arguments must be submitted to the Director, Office of Federal Operations, Equal Employment Opportunity Commission. Complainant’s request may be Complainant states that he and the Agency discussed the issue of interest on back pay to him, this term and the term of increased tax liability, were not included in the settlement agreement. Complainant was required to negotiate for the terms of interest and increased tax liability, and expressed these terms within the settlement agreement in order for him to now allege breach of the settlement agreement on these bases. See Kessler v. U.S. Postal Serv., EEOC Request No. 05970446 (Feb. 26, 1999)(no provision for interest on back pay.) If Complainant wanted such monies for interest, then the term should have been specifically included in the settlement agreement. Gala B. v. Dep’t of Homeland Security, EEOC Appeal No. 0120180678 (Apr. 17, 2018)(interest not part of the settlement agreement and Agency operated in good faith to process without unreasonable delay); Allen v. Dep’t of the Interior, EEOC Request No. 05970352 (Aug. 11, 1999); Bolten v Dep’t of State, EEOC Appeal No. 01962323 (Jan. 22, 1998)(where settlement agreement did not mention interest on back pay, agency did not breach by not providing); Donald v. Dep’t of the Army, EEOC Appeal No. 01965857 (Nov. 11, 1997) (Commission declined to read interest on back pay into settlement agreement). Citing Homer B. v. Dep’t of the Army, EEOC Appeal No. 0120161342 (May 24, 2018). 2019003540 6 submitted via regular mail to P.O. Box 77960, Washington, DC 20013, or by certified mail to 131 M Street, NE, Washington, DC 20507. In the absence of a legible postmark, the request to reconsider shall be deemed timely filed if it is received by mail within five days of the expiration of the applicable filing period. See 29 C.F.R. § 1614.604. The agency’s request must be submitted in digital format via the EEOC’s Federal Sector EEO Portal (FedSEP). See 29 C.F.R. § 1614.403(g). The request or opposition must also include proof of service on the other party. Failure to file within the time period will result in dismissal of your request for reconsideration as untimely, unless extenuating circumstances prevented the timely filing of the request. Any supporting documentation must be submitted with your request for reconsideration. The Commission will consider requests for reconsideration filed after the deadline only in very limited circumstances. See 29 C.F.R. § 1614.604(c). COMPLAINANT’S RIGHT TO FILE A CIVIL ACTION (S0610) You have the right to file a civil action in an appropriate United States District Court within ninety (90) calendar days from the date that you receive this decision. 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. If you file a request to reconsider and also file a civil action, 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. The court has the sole discretion to grant or deny these types of requests. 2019003540 7 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 January 28, 2020 Date