BNUMBER:  B-260912
DATE:  October 17, 1995
TITLE:  Billy P. Clayton

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Matter of:Billy P. Clayton

File:     B-260912

Date:     October 17, 1995

DIGEST

A transferred employee was overpaid salary because his interim 
"locality pay" salary increase at his old duty station was erroneously 
continued at his new station.  The employee was immediately notified 
upon discovery of the error; however, the adjustment/correction was 
not made for approximately 6 months.  Waiver of the debt prior to 
notice was granted, but denied for the period following notice.  The 
employee seeks waiver of the remaining debt, arguing that the 
overpayment resulted from administrative error over which he had no 
control and that he cannot afford to repay the money.  Waiver of the 
remaining debt is denied.  Since the employee accepted payments known 
to be erroneous, he should have made provision for eventual repayment.  
Financial hardship cannot establish a basis for waiver.

DECISION

Mr. Billy P. Clayton, an employee of the Department of State, appeals 
our claims settlement, Z-2927436, Sept. 30, 1994, which disallowed 
waiver of part of his debt to the United States for salary 
overpayments.  We sustain the disallowance for the following reasons.

Briefly, the facts are that when Mr. Clayton was transferred from New 
York, New York, to Seattle, Washington, in January 1992, his special 
New York interim geographic salary increase of 8 percent was 
erroneously continued.  Although the error was discovered in November 
1992 and he was notified of the error by letter dated November 13, 
1992, the adjustment/correction was not made until May 3, 1993.  It 
was thereafter determined that he had been overpaid $3,450.40 during 
the period January 12, 1992, through May 3, 1993.

Based on the investigation and recommendation of the Office of 
Compensation and Pension, Department of State, we waived $2,083.20 of 
the debt, representing the salary overpayment for the period January 
12 through November 13, 1992, the date he was notified of the error, 
and we denied waiver of the overpayment made for the period November 
14, 1992, through May 3, 1993, totaling $1,367.20.

Mr. Clayton has appealed that denial on the basis that, since all of 
the overpayments were caused by administrative error over which he had 
no control, he should not be required to repay any part of the 
overpayments.  Further, he claims that he cannot afford repayment 
because he has already spent the money.

Section 5584 of title 5, United States Code (1994), authorizes the 
Comptroller General to waive, in whole or in part, claims of the 
United States against employees for overpayments of pay when 
collection would be against equity and good conscience and not in the 
best interests of the United States, provided there is no indication 
of fraud, misrepresentation, fault, or lack of good faith on the part 
of the employee.  In the present case, the agency determined the 
overpayments were due to administrative error and that there is 
nothing to suggest that the error was induced by Mr. Clayton.  
Notwithstanding that, the record shows that he was notified that he 
was being overpaid on November 13, 1992.

We have held that an employee who is on notice of an overpayment of 
pay and who thereafter accepts payments known to be erroneous cannot 
reasonably expect to retain them and should make provision for 
eventual repayment.[1]  We have also held that financial hardship does 
not provide a basis to grant waiver of an indebtedness.[2]  In view 
thereof, recovery of the overpayments made to Mr. Clayton after 
November 13, 1992, is not against equity and good conscience nor 
contrary to the interests of the United States.  Accordingly, we 
sustain the denial of waiver of $1,367.20 in Mr. Clayton's case.

/s/Seymour Efros
for Robert P. Murphy
General Counsel

1. Hubert G. Calloway, B-257971, Mar. 3, 1995, and decisions cited.

2. Dr. Joella Campbell, B-259660, June 8, 1995, citing to David L. 
Williams, 70 Comp. Gen. 699 (1991).