Grievance Settlement Affords FDIC Employees New Rights In Debt Collections

A settlement agreement between NTEU Chapter 274 and the FDIC will provide FDIC employees with new due process rights when the Agency seeks to collect a debt from an employee. In the agreement, the FDIC has pledged to comply with the requirements of the Debt Collection Act, contained in 5 U.S.C. 5514. The issue of the FDIC's compliance with the Act arose in connection with the case of an individual employee, whose dispute was also resolved by the Agreement.

This statute requires that a Federal agency, which determines to offset an employee's salary for the payment of an alleged debt, must first provide 30-day notice of that intent. The notice must also contain a statement regarding the employee's right to a hearing to determine the validity of the debt. In addition, once a hearing official has determined that the debt is valid, the salary offset amount may not be anymore than 15% of an employee's disposable (net) income. Previously, the FDIC had a policy of deducting 66 2/3% of an employee's gross pay to satisfy repayment of a debt to the Agency. They have agreed, however, to amend their General Travel Regulations and promulgate regulations required to implement the provisions of 5 U.S.C. 5514.

Chapter 274 President Bob Hoshaw, expressed his pleasure with the agreement. "This settlement is proof positive that NTEU can work with the FDIC in the true spirit of partnership," said Hoshaw. "When the agency and the union can put aside their differences and find common ground, everyone wins," Hoshaw added.