Warren Goetze v. Department of the Navy 01991530 08-23-01 . Warren Goetze, Complainant, v. Robert B. Pirie, Jr., Acting Secretary, Department of the Navy, Agency. Appeal No. 01991530 Agency No. 94-60050-N05 Hearing No. 340-95-3742X DECISION On February 14, 1998, the complainant filed an appeal with this Commission from an agency determination that it was in compliance with its final decision dated December 10, 1997 which found discrimination in violation of the Age Discrimination in Employment Act of 1967 (ADEA), as amended, 29 U.S.C. § 621 et seq., and ordered relief. The appeal is accepted under 29 C.F.R. § 29 C.F.R. § 1614.504(b). ISSUES PRESENTED Whether (1) the complainant timely filed his appeal, (2) the agency properly calculated back pay, (3) the complainant is entitled to compensation for the adverse tax consequences of receiving a lump sum back pay award, (4) the agency properly denied front pay, (4) certain information should be expunged from the complainant's personnel file, and (5) proper relief included agency officials being counseled and trained. BACKGROUND The complainant formerly worked at the Marine Corps Air Station in El Toro, California. He was the Manager of the Maintenance Branch, NF-4, in the Support Division of the Morale, Welfare & Recreation (MWR) Department. In August 1992, the agency issued notices of removal effective October 2, 1992 by means of a Business Based Action (BBA) to all members of the Support Division. This included the complainant and its four highest level managers. These managers filed EEO complaints alleging discrimination, in relevant part, on the bases of their sex (male) and age when they were discharged.<1> Following a consolidated investigation of the discharge claim and separate investigations of other claims, the complainants had a consolidated hearing before an Equal Employment Opportunity Commission Administrative Judge (AJ). The AJ issued separate recommended decisions for each active complainant, which the agency adopted. The AJ and the agency found that the complainant was discriminated against on the basis of age when he was terminated by means of a BBA. The AJ found no discrimination on the basis of sex (male), and the complainant did not appeal the agency's adoption of that finding. The complainant argues that he is entitled to further relief. In response, the agency argues that the complainant's appeal is untimely and he is not entitled to further relief.<2> ANALYSIS AND FINDINGS Timeliness The final agency decision was issued on December 10, 1997. It ordered, in part, reinstatement and back pay up to the date of reinstatement. By letter dated January 14, 1998, the agency offered the complainant reinstatement to Director of the Maintenance Division, NF-4, at his former facility. By letter dated January 29, 1998, the agency advised the complainant that in light of this, his prior demand for front pay rather than reinstatement was denied. On February 1, 1998, the complainant asked questions about the offer and requested front pay. The agency replied on February 3, 1998, clarifying the offer and suggesting it was final. It averred the complainant would be paid the same rate he would have attained but for his separation, and if he believed the rate was incorrect, he could pursue the matter before this Commission. On February 9, 1998, the complainant rejected the agency's offer of reinstatement. By letter postmarked February 14, 1998, which was copied to the agency, the complainant filed the instant appeal. He argued that the agency miscalculated the salary he would have attained and by extension back pay, and encloses materials requesting front pay. As the complainant filed an appeal within 30 days of the agency's determinations of January 29, 1998 and February 3, 1998 that it was in compliance with its final decision, the appeal is timely. 29 C.F.R. § 1614.504(b). BACK PAY The agency paid back pay from October 3, 1992 through February 9, 1998, the day the complainant rejected the reinstatement offer. This period is undisputed. The subsequent period is addressed in the front pay discussion below.<3> In March 1998, the agency issued the complainant a check for back pay and interest thereon in the amount of $367,108.53. But the parties continued to engage in negotiations on the calculation of back pay and interest. This resulted in the agency issuing a check to the complainant in June 1998 in the amount of $7,820.84, and a final check in late October 1998 for $14,633.72. In November 1998, the complainant sent correspondence to the Commission delineating his concerns. Salary rate, including bonuses, is the only back pay dispute remaining. The agency based the complainant's rate of pay during the back pay period on the compensation comparative employees received during this time. This included bonuses. The complainant avers that his back pay should be based on an extrapolation of his historic pay from 1984 to October 2, 1992. He avers that the financial condition of the MWR at El Toro Exchange deteriorated because of the removal of himself and the other older male complainants. The AJ found the agency discriminated against three of the four active complainants. The AJ found unrebutted the complainants' testimony that their jobs largely consisted of financial oversight and their absence greatly contributed to the financial problems of the MWR at El Toro Exchange. This finding apparently did not apply to the instant complainant. While the complainant's function included accountability for allocation of resources in his program, he did not have the overall financial oversight function referred to by the AJ. The AJ also found testimony that the MWR at El Toro was having financial problems before the BBA was generally undisputed. The agency argues that salary history is not a good measure because the pay system changed. In approximately May 1991, the MWR switched the complainant and others from the universal annual (UA) salary plan to the pay band system. The UA plan was nondiscretionary and mirrored the federal government's general schedule (GS) pay plan. The new pay band system had a large discretionary component. Because of this change in pay systems, we find that making extrapolations from the complainant's historic pay is not an appropriate method to determine salary assumptions during the back pay period. Moreover, making extrapolations from salary levels dating to 1984 is too far removed to make a good measure. Further, the complainant failed to establish that salary assumptions should be recalculated, to the extent his removal was responsible for the financial deterioration of the Exchange, if any. The complainant failed to establish that the financial condition of the MWR at El Toro impacted salary levels. The Commission notes that in closing argument before the AJ, the complainant argued that despite the claimed deteriorating financial condition of the MWR at El Toro and the BBA, there were multiple promotions, raises and bonuses.<4> TAX CONSEQUENCES The complainant argues that he should be compensated for the alleged adverse tax consequence of receiving over five years of back pay in one year. Sears v. Atchison, Topeka & Santa Fe Railway, Company, 749 F.2d 1451, 1456 (1984), a Title VII employment discrimination case, found that a district court may include a tax component in a back pay award to compensate class members for their increased taxes as a result of receiving over 17 years of back pay in one lump sum. The court in O'Neill v. Sears, Roebuck and Company, 108 F. Supp.2d 443, 446-47 (E.D. Penn. 2000) found that make whole relief under the ADEA for a terminated employee included an award for the tax consequences of receiving back and front pay all in one year rather than income being earned over time. The court explained that the goal of the ADEA is to allow a plaintiff to keep the same amount of money he would have earned had he not been unlawfully terminated. The agency argues that the equitable remedy of an award to cover additional tax liability of receiving back pay in a lump sum is not available. In light of the above cases, we disagree. The complainant avers that he paid an additional $102,863 in taxes as a result of the lump sum back pay awards he received in March 1998. Using the 1997 total tax rates, the complainant indicated that the March1998 lump sum back payments with interest was subject to taxation by the federal government at 33.9%, and by the state of California at 8.6%. The complainant averred that the average federal and state tax rates between 1989 to 1992, respectively, were 13.6% and 3.6%, and he was entitled to reimbursement for the difference between the earlier average rates and the 1997 rates. He also indicated that subsequent lump sum payments resulted in some additional extra tax liability. But the earlier rates, for the most part, are not derived from the correct years, i.e., those during the back pay period. Further, the complainant used the 1997 tax rates for back pay received in 1998. The calculations do not indicate the amount of taxes the complainant would have paid during the back pay period had he not been removed, a probative measure. Moreover, they are not broken down by year, and do not take into account deductions and other factors that would affect his taxes. Courts that discuss claims for compensation for additional tax liability stemming from a lump sum payment have demanded probative calculations by complainants. Barbour v. Medlantic Management Corp., 952 F.Supp. 857, 865 (D.C. 1997) (denied award due to failure to provide evidence on difference between taxes paid on lump sum front pay award and amount of taxes that would have been paid had the salary been earned over time); Hukkanen v. International Union of Operating Enginners, 3 F.3d 281, 287 (8th Cir. 1993) (district court may deny award where the plaintiff failed to provide evidence on the enhancement amount or convenient way for the court to calculate it). The complainant has the burden of establishing the amount of increased tax liability. Id. at 287. This matter is remanded to the Hearings Unit of the Los Angeles EEOC district office in accordance with the order below. FRONT PAY Reinstatement into an appropriate position generally is preferred to an award of front pay. When placement into an appropriate position is not possible, the employer must make whole the victim of the discrimination until such placement is possible. Front pay may be awarded in lieu of reinstatement when: (1) no position is available; (2) a subsequent working relationship between the parties would be antagonistic; or (3) the employer has a record of long-term resistance to anti-discrimination efforts. The fact that front pay is awarded in lieu of reinstatement implies that the complainant is able to work but cannot do so because of circumstances external to the complainant. Brinkley v. United States Postal Service, EEOC Request No. 05980429 (August 12, 1999). The complainant argued that reinstatement was improper because he would have to work with agency employees who were involved in his removal and defended his removal during the EEO process, which would be hostile. There was no finding, however, that the complainant worked in a hostile environment prior to his removal, and his argument about returning to antagonistic relationships is not supported by the record. In July 1998, the Director of MWR at El Toro affirmed that the Marine Corps Air Station in El Toro was being scaled back and was scheduled to close in July 1999. He affirmed this would be mirrored at the MWR at El Toro, with closure prior to July 1999, and that the complainant's position was expected to continue at least until early 1999, and perhaps later. The complainant argued that given the impending base closure and concomitant cessation of the offered job, reinstatement was not appropriate. We disagree. The offered job was expected to last a year or more, enough to make it a reasonable offer. Accordingly, the Commission denies front pay. PERSONNEL FILE The complainant argues that because his removal was discriminatory and reinstatement was ordered, his personnel file should be expunged of references to his removal. We agree. The order of reinstatement with back pay implicitly included the requirement that references to the removal be expunged from the complainant's personnel file. If the agency has not already done so, it must do so. The complainant also argues that we should order that his personnel file be expunged of references to a misconduct investigation of him. We disagree. The AJ did not find the investigation to be discriminatory, and such relief was not recommended by the AJ or ordered by the agency. The complainant's appeal concerns compliance with the final agency decision. This is not a compliance matter. COUNSELING AND TRAINING AGENCY OFFICIALS The complainant argues that we should order agency officials involved in his discriminatory removal be counseled and trained. The AJ did not recommend this relief, and it was not ordered by the agency. Such relief is discretionary. The complainant's appeal concerns compliance with the final agency decision. This request is not a compliance matter. Moreover, the facility where the discrimination occurred has been closed. As this is solely an ADEA case, the complainant is not entitled to attorney fees. See 29 C.F.R. § 1614.501(e)(1).<5> CONCLUSION Based upon a review of the record, and for the foregoing reasons, it is the decision of the Commission that the agency is in compliance with the relief ordered in its final decision, except expunging the complainant's personnel file of references to his removal by means of a BBA in October 1992, if it has not already done so. ORDER (1) The agency must expunge the complainant's official personnel file of references to his removal by means of a BBA in October 1992. (2) The issue of compensation for the increased tax liability that the complainant sustained as a result of being paid lump sum back pay awards in 1998, if any, is REMANDED to the Hearings Unit of the Los Angeles EEOC district office. Thereafter, the AJ shall issue a decision on this matter in accordance with 29 C.F.R. § 1614.109, and the agency shall issue a final action in accordance with 29 C.F.R. § 1614.110 within forty (40) days of receipt of the AJ's decision. The burden of proof to establish the amount of additional tax liability, if any, is on the complainant. The calculation of additional tax liability must be based on the taxes the complainant would have paid had he received the back pay in the form of regular salary during the back pay period, versus the additional taxes he paid due to receiving the back pay lump sum awards in 1998. The agency shall submit copies of the AJ decision and the final agency action to the Compliance Officer at the address set forth below. (3) The complainant may petition for enforcement or clarification of this order under 29 C.F.R. § 1614.503. The petition for clarification or enforcement must be filed with the Compliance Officer, at the address referenced in the paragraph entitled "Implementation of the Commission's Decision." The agency is directed to submit a report of compliance, as provided in the paragraph entitled "Implementation of the Commission's Decision." The report must include evidence that the corrective actions have been implemented. The agency shall send a copy of the report and all its enclosures to the complainant. IMPLEMENTATION OF THE COMMISSION'S DECISION (K0501) Compliance with the Commission's corrective action is mandatory. The agency shall submit its compliance report within thirty (30) calendar days of the completion of all ordered corrective action. The report shall be submitted to the Compliance Officer, Office of Federal Operations, Equal Employment Opportunity Commission, P.O. Box 19848, Washington, D.C. 20036. The agency's report must contain supporting documentation, and the agency must send a copy of all submissions to the complainant. 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. STATEMENT OF RIGHTS - ON APPEAL RECONSIDERATION (M0900) 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 or within twenty (20) calendar days of receipt of another party's timely request for reconsideration. See 29 C.F.R. § 1614.405; Equal Employment Opportunity Management Directive for 29 C.F.R. Part 1614 (EEO MD-110), 9-18 (November 9, 1999). All requests and arguments must be submitted to the Director, Office of Federal Operations, Equal Employment Opportunity Commission, P.O. Box 19848, Washington, D.C. 20036. 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 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 (R0900) 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 (Z1199) If you decide to file a civil action, and if you do not have or cannot afford the services of an attorney, you may request that the Court appoint an attorney to represent you and that the Court permit you to file the action without payment of fees, costs, or other security. See Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000e et seq.; the Rehabilitation Act of 1973, as amended, 29 U.S.C. §§ 791, 794(c). The grant or denial of the request is within the sole discretion of the Court. Filing a request for an attorney does not extend your time in which to file a civil action. Both the request and the civil action must be filed within the time limits as stated in the paragraph above ("Right to File A Civil Action"). FOR THE COMMISSION: ______________________________ Frances M. Hart Executive Officer Executive Secretariat __08-23-01________________ Date 1They are Van Hoose, Director of the Support Division; Holler, Manager of the Accounting Branch, and Lutrell, Manager of the Operations and Compliance Branch. They have appeals pending before this Commission. The fifth manager was a former complainant who died during the pendency of his claim. He was Manager of the Property and Prepaid Branch. 2All four active complainants are represented by the same attorney. As already noted, parts of their cases were processed together. Documents applying to all the complainants can be found in different appeal files. Hence, the records of all the complainants were reviewed. They are Holler, 01982627 and 01990407; Goetze, 01991530; Lutrell, 01981988; and Van Hoose, 01982628 and 01990455. 3After the agency issued the BBA notice, the complainant applied for retirement and retired effective November 1, 1992. 4After being asked about the financial crisis, the Deputy Director of the MWR at El Toro was asked why employees received significant raises and bonuses. He responded that outstanding performers must be recognized and rewarded. (Hearing Transcript, H.T. 306). When asked about economic concerns, the Deputy Director testified that outstanding performers must be rewarded because they are the ones who will work hard to improve the situation. (H.T. 321). 5Compensatory damages are not available against the federal government under the ADEA. Falks v. Department of the Treasury, 05960250 (September 5, 1995).