TERESITA D. LORENZO, PETITIONER,
v.
DONALD H. RUMSFELD, SECRETARY, DEPARTMENT OF DEFENSE (EDUCATION ACTIVITY), AGENCY.

Petition No. 
04A40035
Request No. 05950931
Appeal No. 01944324
Hearing No. 100-94-7091x
Agency No. DEFY9301

September 29, 2005

DECISION ON PETITION FOR ENFORCEMENT

The Commission has docketed the above-captioned matter to review compliance with its decision in Teresita D. Lorenzo v. Department of Defense (Education Activity), EEOC Request No. 05950931 (November 6, 1997). In EEOC Request No. 05950931, the Commission directed the Department of Defense (Education Activity) (agency) to redress Teresita D. Lorenzo (petitioner) following a finding that agency officials had discriminated against petitioner on the basis of race/national origin (Asian/Philippines) in violation of Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. §2000e et seq. This petition for enforcement is governed by the Commission's regulations. 29 C.F.R. § 1614.503.

The Commission found that the agency discriminated against petitioner when she was not selected for a teaching position as a 'CONUS' employee in 1989, for a position in Japan, and directed the agency, in relevant part, to pay petitioner "back pay, interest, and other benefits" retroactive to August 1, 1989. [FN1] According to the agency, in 1998 and 1999, it paid petitioner back pay, living quarters allowances (LQA), and post allowances.

In the instant petition, petitioner made two claims. First, petitioner contended that she should be reimbursed for moving costs and travel expenses that would have been paid to her had she been hired in 1989. Next, she sought reimbursement for the increased federal and state tax liability incurred when the agency paid her lump-sum amounts in 1998 and 1999.

Additional Expenses
Petitioner testified that she moved to Germany in 1989, returning in 1993. Petitioner did not explain the circumstances or reasons for her move, but the record indicates that petitioner had a job in Texas through the end of 1989, and that she did not move to Germany until the summer of 1990. Once in Germany, she began working as a local hire at an agency school in Mannheim, Germany, and correspondence in the record indicates that she continued working as a local hire in Germany through the 1993-1994 school year. [FN2] Petitioner asserted entitlement to reimbursement for moving/transfer and travel expenses as if she had been an agency employee at the time as part of her make-whole remedy. She stated she did not have any receipts and suggested that the agency give her what it paid a five-person family for moving and living in Germany for four years. The agency argued that she was not entitled to any reimbursement for her move, as it was voluntary and not authorized by the agency, and which occurred before she initiated the EEO process in this matter. The record shows that upon her placement in the position pursuant to our decision, petitioner and her husband were issued a travel voucher on June 26, 1998, in the amount of $14,600, to move to Japan for the August 1998, start of the school year.

In the first instance, make-whole remedies do not include payment for entitlements that were never incurred or unjustly enrich a petitioner or petitioner. [FN3] See Albemarle Paper Co. v Moody, 422 U.S. 405, 418 (1975). Further, the type of costs for which petitioner seeks reimbursement, i.e., moving and travel costs, are compensatory damages. See Enforcement Guidance: Compensatory and Punitive Damages Available under § 102 of the Civil Rights Act of 1991 (July 14, 1992), p. 8. Compensatory damages are not available for discriminatory activity occurring prior to November 21, 1991, the effective date of the CRA. Laverdure v. Department of the Interior, EEOC Request No. 05931186 (June 17, 1994). In this matter, therefore, we find that petitioner is not entitled to costs for the moving and travel expenses incident to her move to Germany in 1989.

Liability for Excess Taxes
The Commission has held that where an agency pays back pay and other income payments in a lump sum payment the agency is responsible for a petitioner's proven increased income tax burden. See Goetze v. Department of the Navy, EEOC Appeal No. 01991530 (August 22, 2001); Holler v Department of the Navy, EEOC Appeal Nos. 01982627 & 01990407 (August 22, 2001). In these cases, the Commission held that an award to cover additional tax liability for receipt of back pay in a lump sum is available and that the petitioner bears the burden to prove the amount to which s/he claims entitlement. We find, therefore, that the agency is liable to petitioner for proven adverse federal income tax consequences as a result of its lump sum payments to petitioner in 1998 and 1999.

Petitioner will have the burden of establishing the amount of her increased federal income tax liability to the agency. [FN4] Courts that have discussed claims for compensation for additional tax liability stemming from a lump sum payment have demanded probative calculations by Petitioners. 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).

Petitioner also argues that she is entitled to reimbursement for income taxes paid to the state of California, her state of domicile at the time the back pay was awarded. Having reviewed the record, we reject as too speculative petitioner's argument that, but for discrimination, she would not have incurred liability for state taxes.

CONCLUSION

Based upon a review of the record, and for the foregoing reasons, it is the decision of the Commission to remand the question of petitioner's entitlement to reimbursement for her increased federal income tax liability to the agency for determination. The agency is directed to comply with the Order, below.

ORDER

The agency is ordered to take the following actions, unless this matter is otherwise resolved:

A. The issue of compensation for the increased tax liability for federal income taxes that the Petitioner sustained as a result of being paid lump sum back pay awards, if any, is REMANDED to the agency. Within thirty (30) days after this decision becomes final, the agency shall request that petitioner submit her claim for compensation for all additional federal income tax liability. The agency shall afford Petitioner ninety (90) calendar days to submit her claim and supporting documents. Thereafter, the agency shall issue a decision on this matter within forty (40) days in accordance with 29 C.F.R. § 1614.110(b). The burden of proof to establish the amount of additional tax liability, if any, is on the Petitioner. The calculation of additional tax liability must be based on the taxes the 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 awards in 1998-1999.

B. The agency shall send a copy of its letter and final decision to the Compliance Officer as referenced below.

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 petitioner. If the agency does not comply with the Commission's order, the petitioner may petition the Commission for enforcement of the order. 29 C.F.R. § 1614.503(a). The petitioner 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 petitioner 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 petitioner 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 (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:

Stephen Llewellyn
Acting Executive Officer
Executive Secretariat

FN1. In addition, the Order directed that the agency offer petitioner a position retroactive to August 1, 1989, to post a non-discrimination notice, to pay attorney's fees, if any, and to report its compliance to the Commission. These provisions are not at issue and will not be addressed.

FN2. The record indicates that the family moved to Germany prior to petitioner's move, but there is no information in the record explaining these discrepancies or the reasons for her or her family's move to Germany.

FN3. The Office of Federal Operations (OFO) has held that a complainant is not entitled to expenses which s/he did not incur or which unjustly enrich and that 'benefits' awarded in conjunction with back pay include retirement contributions, overtime, out of schedule pay, and other equitable relief. See Taber v. USPS, 04A20038 (August 14, 2003); Laber v. Department of the Army, 04A00020 (January 23, 2002).

FN4. In her petition, petitioner included a letter from her accountant written in November 1999. A more detailed record is required to support her claim for adverse federal tax consequences as a result of a lump sum payment. See Goetze, supra, and Holler, supra.