Petitioner, v. Jeh Johnson, Secretary, Department of Homeland Security (Customs and Border Protection), Agency. Petition No. 0420140001 Request No. 05A10509 Appeal No. 01974175 Agency No. 1923116 DECISION ON A PETITION FOR ENFORCEMENT On September 6, 2013, the Equal Employment Opportunity Commission (EEOC or Commission) docketed a petition for enforcement concerning compliance with an Order set forth in Evan D. Ralph v. Department of the Treasury,1 Appeal No. 01974175 (March 6, 2001), request for reconsideration denied, Request No. 05A10509 (January 2, 2003).2 The Commission accepts this petition for enforcement pursuant to 29 C.F.R. § 1614.503. BACKGROUND At the time this matter originally arose, Petitioner was an Aircraft Pilot with the U.S. Customs Service. He was removed from this position in early 1992 because of his refusal to fly Blackhawk helicopters. The removal action was appealed to the Merit Systems Protection Board (MSPB). A MSPB Administrative Judge reversed the Agency's action and Petitioner was reinstated to his position as an Aircraft Pilot. During this time, Petitioner also had a pending EEO complaint against the Agency, which he had filed in 1991, alleging discrimination on the basis of disability. On September 8, 1993, the Agency and Petitioner entered into a settlement agreement. In exchange for Petitioner's withdrawal of his EEO complaint, the Agency agreed it would take several actions, including processing his application for disability retirement and removing references to disciplinary actions taken against Petitioner. Petitioner subsequently alleged that the Agency breached the terms of the settlement agreement. When the Agency failed to respond to Petitioner's allegations, he filed an appeal with the Commission. In EEOC Appeal No. 01974175 (March 6, 2001), the Commission found that the Agency had breached the agreement. The decision noted that the agreement provided that, in the event the Agency failed to abide by the terms of the agreement, it would reinstate Petitioner to his position. Accordingly, the Commission in EEOC Appeal No. 01974175 ordered the Agency, among other things, to reinstate Petitioner to his position, to calculate back pay, and to process an award of attorney's fees and costs. The Agency requested reconsideration on the matter which was addressed in Ralph v. Department of the Treasury, EEOC Request No. 05A10509 (January 2, 2003). In that decision, the Commission found that the Agency's request failed to meet the criteria for reconsideration. Accordingly, the Agency was again required to take the remedial steps ordered in EEOC Appeal No. 01974175. On May 16, 2003, Petitioner filed a petition for enforcement claiming that the Agency had not reinstated him to his prior position, tendered him back pay, or processed his attorney's claim for fees and costs. The Commission agreed, and found that the Agency was not in compliance with our orders. EEOC Petition No. 04A30034 (September 10, 2003). Specifically, the Commission ordered the Agency to reinstate Petitioner to his position as an Aircraft Pilot; to tender him back pay and benefits for the period from the date on which his sick leave was exhausted (January 11, 1994) until either the date on which he was reinstated to his former position or the date on which it was determined that he was not suited for employment as an Aircraft Pilot; and to process Petitioner's claim for attorney's fees and costs. On December 29, 2003, Petitioner filed a second petition for enforcement with the Commission. The Commission dismissed Petitioner's second petition for enforcement finding that the parties had made progress in their attempts to resolve the situation. Rather than stymie the progress made by the parties, the Commission chose to administratively close the petition for enforcement and provide Petitioner the opportunity to re-file a petition for enforcement if settlement attempts failed. Ralph v. Department of Homeland Security, EEOC Petition No. 04A40008 (May 25, 2005). On February 16, 2007, Petitioner filed a third petition for enforcement. Petitioner contended that the Agency had still failed to provide him with full back pay, including overtime, holiday time, weekend time, and other benefits such as contributions into the thrift savings program (TSP), and properly credit him for the time he was reinstated for retirement purposes. The Commission again found that the Agency had not complied with its previous orders. Ralph v. Department of Homeland Security, EEOC Petition No. 0420070010 (May 8, 2007). The Commission ordered that the Agency determine the appropriate amount of back pay, with interest, including appropriate step and grade salary increases that would normally been accrued and benefits for the period of June 18, 1994 through February 18, 2004, pursuant to 29 C.F.R. § 1614.501. In addition, the Agency was ordered to credit Petitioner for the purposes of retirement with a service computation date for determining both regular retirement and law enforcement retirement ("Retirement 6C Date") of April 12, 1987, the date he first began working for Customs as an aircraft pilot, and reflecting continuous service based on the reinstatement date of January 11, 1994. In making this adjustment to his service computation date, the Commission ordered that the Agency make retroactive retirement contributions on his behalf to the Federal Employees Retirement System (FERS) and deduct his retroactive contributions from his back pay award so that his FERS retirement fund was equal to what it would have been had he been continuously working since April 12, 1987. On September 6, 2013, Petitioner submitted the instant petition for enforcement. While conceding that the Agency has provided him with the back pay and other benefits ordered by the Commission, Petitioner now contends that the Agency has refused to compensate him for the increased tax liability he incurred due to the Agency's lump sum payment of back pay in 2007.3 Further, Petitioner has argued that the Agency has not properly documented the retroactive personnel actions in his personnel records and transmitted accurate and complete information to the Office of Personnel Management (OPM) to ensure that his retirement annuity payments match the changes made to his personnel records. In it January 31, 2014 response to the petition, the Agency claims that it has now made the necessary changes to Complainant's personnel records to reflect his reinstatement with back pay, that included appropriate salary increases that would have normally been accrued, as well as corresponding benefits. However, the Agency explained that it was still processing the necessary paperwork with OPM to make the appropriate changes regarding Petitioner's retirement benefits. As such, the Agency requested that the Commission "hold" the matter for at least 60 days to allow OPM to process the changes. As for the increased tax liability Petitioner experienced due to the lump sum payment in 2007, the Agency argues that Complainant is not entitled to such relief. The Agency notes that the Commission's prior orders did not expressly provide for compensation for any increased tax liability as a result of the lump sum payment of back pay. The Agency also argues that such payments have not been authorized by law in these circumstances. Finally, the Agency claims that its own calculations show that Petitioner did not, in fact, suffer any adverse tax consequences from the 2007 lump sum payment. ANALYSIS AND FINDINGS Increased Tax Liability In the federal sector administrative EEO process, the Commission has previously determined that payment for increased tax liability stemming from a lump sum back pay award may be ordered as part of consequential pecuniary compensatory damages.4 See Holler v. Department of the Navy, EEOC Appeal Nos. 01982627 and 01990407 (August 22, 2001); Van Hoose v. Department of the Navy, EEOC Appeal Nos. 01982628 and 01990455 (August 22, 2001); see also Kalra v. Department of Transportation, EEOC Appeal No. 01924002 (February 25, 1994); Lorenzo v. Department of Defense, EEOC Petition No. 04A40035 (September 29, 2005). The Commission in Holler noted that the purpose of compensatory damages is to "compensate an employee for the proximate injury caused by employment discrimination." Compensation for the adverse tax consequences of receiving a lump sum back pay award meets such criteria. Id. Therefore, we find that Petitioner's claim for payment for the adverse tax consequences of receiving the 2007 lump sum back pay award constitutes a request for pecuniary compensatory damages. As such, we must determine if Complainant is entitled to compensatory damages in this instance. Here, the Commission's orders did not arise from a finding that Petitioner had proven he had been subjected to employment discrimination. Rather, the orders stemmed from our determination that the Agency breached the term of the September 8, 1993 settlement agreement resolving Petitioner's EEO complaint. The settlement agreement, by its own terms, provided "that if the agency fails to abide by the terms (paragraphs 1-6), it will reinstate [Petitioner] to his position, effective upon exhaustion of the sick leave described in paragraph 6." As such, the remedy of retroactive reinstatement with back pay resulted from the Agency's contractual obligation rooted in the terms of its agreement with Petitioner. A review of the settlement agreement shows that the parties did not agree to provide Petitioner with compensatory damages in the event the Agency breached its terms. 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. Department of Defense, 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. Department of Veterans Affairs, EEOC Request No 05900795 (August 23, 1990). In ascertaining the intent of the parties with regard to the terms of a settlement agreement, the Commission has generally relied on the plain meaning rule. See Hyon O v. U.S. Postal Service, EEOC Request No. 05910787 (December 2, 1991). This rule states that if the writing appears to be plain and unambiguous on its face, its meaning must be determined from the four corners of the instrument without resort to extrinsic evidence of any nature. See Montgomery Elevator Co. v. Building Eng'g Servs. Co., 730 F.2d 377 (5th Cir. 1984). Since the parties here did not include compensatory damages as part of the remedy in the event of breach, Petitioner is not entitled to compensatory damages. As such, Petitioner is not entitled to an award of pecuniary compensatory damages based on any adverse tax consequence resulting from the Agency's lump sum payment of back pay. Records of Retroactive Reinstatement of Petitioner Petitioner indicated, at the time he filed his petition in September 2013, that the Agency had still not properly documented the retroactive personnel actions in his personnel records and transmitted accurate and complete information to OPM to correct his retirement records. In its response to the petition, the Agency acknowledged that, due to the unique nature of the case at hand, it has had a difficult time make the appropriate changes with OPM to ensure that Petitioner's retirement benefits accurately match the retroactive personnel changes. The Agency stated in its January 31, 2014 submission that it required at least 60 days to allow OPM to process the changes to Petitioner's records. Subsequently, in its March 28, 2014 submission to the Commission, it stated that the "Agency has been working with OPM to correct Petitioner's personnel and retirement records and believes that the issue will be resolved within a few months." To date, the Agency has failed to provide the Commission further information verifying completion of this process. As such, we determine that the Agency may still need to make the changes to Petitioner's personnel and retirement records with OPM. CONCLUSION Based upon the foregoing, the Petition for Enforcement is GRANTED in part, and the Agency is ORDERED to take further action as set forth in the Order of the Commission which follows. ORDER To the extent it has not already done so, the Agency is ordered to complete the process of properly documenting the relevant retroactive personnel actions in Petitioner's personnel records and transmitting accurate and complete information (on a Standard Form 3101 if necessary) to OPM to correct his retirement records. The Agency shall complete this process within 30 calendar days of receipt of this decision. The Agency is further directed to submit a report of compliance, as provided below in the statement entitled "Implementation of the Commission's Decision." The report shall include supporting documentation of the Agency's corrections to Petitioner's personnel and retirement records, including evidence that the corrective action has been implemented. A copy of this report shall be provided to Complainant's attorney. ATTORNEY'S FEES (H0610) If Complainant has been represented by an attorney (as defined by 29 C.F.R. § 1614.501(e)(1)(iii)), he/she 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 this decision becoming final. 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 (K1208) 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 77960, Washington, DC 20013. 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 PETITIONER'S RIGHTS - ON PETITION FOR ENFORCEMENT PETITIONER'S RIGHT TO FILE A CIVIL ACTION (P0900) This decision of the Commission is final, and there is no further right of administrative appeal from the Commission's decision. 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. RIGHT TO REQUEST COUNSEL (Z0610) 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 from the Court that the Court appoint an attorney to represent you and that the Court also 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 with the Court 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: ______________________________ Carlton M. Hadden, Director Office of Federal Operations December 5, 2014 __________________ Date 1 This matter was initially captioned Evan D. Ralph v. Department of the Treasury. Since the Commission's initial decision on appeal, the Department of Treasury's Customs Service has been absorbed into the Department of Homeland Security. 2 We note that the issue of compliance has been raised with the Commission before in EEOC Petition Nos. 0420070010, 04A40008, and 04A30034. 3 Petitioner asserts that he paid an additional $31,023 in federal income tax as a result of the 2007 lump sum payment. 4 Section 102(a) of the 1991 Civil Rights Act authorizes an award of compensatory damages for all post-Act pecuniary and non-pecuniary losses. The Commission has the authority to award such damages in the administrative process. West v. Gibson, 119 S.Ct. 1906 (1999). --------------- ------------------------------------------------------------ --------------- ------------------------------------------------------------ 2 0420140001 U.S. EQUAL EMPLOYMENT OPPORTUNITY COMMISSION Office of Federal Operations P.O. Box 77960 Washington, DC 20013 2 0420140001