SENATE BILL REPORT

SB 6552

BYSenators McCaslin, DeJarnatt and Zimmerman; by request of Office of Financial Management

Recouping overpayment of salaries to state employees.

Senate Committee on Governmental Operations

Senate Hearing Date(s):February 2, 1988; February 4, 1988

Majority Report:  That Substitute Senate Bill No. 6552 be substituted therefor, and the substitute bill do pass.

      Signed by Senators McCaslin, Chairman; Zimmerman, Vice Chairman; Garrett, Metcalf, Pullen.

Senate Staff:Barbara Howard (786-7410)

                  February 4, 1988

AS REPORTED BY COMMITTEE ON GOVERNMENTAL OPERATIONS, FEBRUARY 4, 1988

BACKGROUND:

In 1985 the state brought suit against a group of employees to recover nearly $54,000 which the Department of Transportation claimed they owed as the result of a computer programming error relating to a proposed shift premium increase.  The Supreme Court, in State v. Adams (107 Wn. 2d 611), issued two rulings with general application to all state agencies that: (1) the state has a duty to collect overpayments, but (2) "in the absence of any statutory procedures to protect the employees from an erroneous claim, the State may collect the overpayments only by bringing a civil action."

The Office of Financial Management has requested legislation which would provide a method for collecting overpayments to employees in a manner that would protect the employees' right to due process.

SUMMARY:

Whenever it is determined that an employee has received compensation beyond that to which the individual is entitled, the employing agency shall recoup the overpayment, and may deduct a reasonable amount from each payroll warrant until total recovery is made.

The agency must notify the employee of the impending reduction in pay and provide supporting documents at least 15 calendar days before the action takes effect.  In addition, the agency must give the employee an opportunity to provide evidence refuting the determination of overpayment.  The agency makes a final determination on the overpayment before commencing the recoupment procedure.

The Office of Financial Management (OFM) must adopt rules to implement this process.  The remedy provided by this process does not limit any other statutory or common law remedies available to the state for recovering overpayments to employees, including filing a civil action.

EFFECT OF PROPOSED SUBSTITUTE:

Recoupment may be waived if the cost of recovery exceeds the amount of the overpayment, and must be waived if the overpayment occurred five years before it is discovered.  An employee is given a specific right to appeal the agency's final determination under the State Administrative Procedure Act.  Recoupment is deferred until the appeals process is completed.

Appropriation:    none

Revenue:    none

Fiscal Note:      requested January 27, 1988

Senate Committee - Testified: Collum Liska, Office of Financial Management (for); Mary Jo Diaz, Assistant Attorney General (for); Mark Brown, Washington Federation of State Employees (for)