Our objective was to determine whether the Postal Service complied with applicable maximum total compensation provisions of the Postal Accountability and Enhancement Act of 2006 (PAEA) and related Postal Service policies and guidelines for calendar year (CY) 2020.
For CY 2020, the annual salary of each Postal Service employee was limited to Executive Schedule Level 1, or $219,200. For this salary limit, compensation includes any federal annuity received. Two exceptions granted under PAEA allow the Postal Service to exceed this limit. The first exception provides for bonuses or other rewards such that the employee’s total compensation does not exceed $253,300 (the salary of the U.S Vice President). The second exception allows the Postal Service to exceed the salary of the U.S. Vice President by 20 percent ($303,960) for up to 12 critical senior executives.
Under the two exceptions, total compensation includes merit lump sum, incentive and recruitment bonuses, and executive detail bonus payments, as well as the value of non-cash awards such as gift certificates or stamp yearbooks.
Excluded from total compensation is the value of benefits such as grievance payments, overtime, premium pay, or the cash value of benefits like health benefits, life insurance, increased annual leave exchange hours, free financial counseling, wellness benefit, parking, and other perquisites that are not subject to PAEA compensation guidelines.
Each year the Postal Service is required to report on compensation in an annual comprehensive statement. Since we did not perform this audit in fiscal year 2020, we did not have the CY 2019 data necessary to assess the accuracy of the Postal Service’s report on compensation as it appeared in the Fiscal Year 2020 Comprehensive Statement of Postal Operations. However, we reviewed the Postal Service’s compliance with these reporting requirements for CY 2018 compensation as it appeared in the Fiscal Year 2019 Comprehensive Statement of Postal Operations.
The Postal Service complied with the applicable maximum total compensation provisions of PAEA in CY 2020 based on recent practices, with one exception. The Postal Service paid one employee a basic annual salary that exceeded the basic annual salary limit. Management did not designate the employee’s position in the annual report to Congress and the Office of Personnel Management as a critical, senior executive in order to pay basic salary compensation in excess of the salary limit.
Management stated that they did not identify the employee as required in the CY 2020 report because the appointment was made late in the year and total compensation did not exceed the bonus exception limit. However, since the basic annual salary limit for this employee was exceeded without bonuses or rewards, the bonus exception did not apply.
In addition, the Postal Service did not pursue recovery of a portion of a $10,000 recruitment incentive bonus following noncompliance with the terms of the recruitment incentive agreement. Management initially advised that the employee was not required to repay the incentive bonus because the separation was involuntary. However, after further discussion, management advised they would pursue recovery of a portion of the bonus and planned to clarify the language of future employment agreements. We calculated that the Postal Service is due $5,833 from the former employee.
We recommended Postal Service management:
- Coordinate with the Board of Governors to issue an amended Report to Congress and Office of Personnel Management for CY 2020 that includes the employee identified in the report.
- Collect the prorated portion of the recruitment incentive bonus identified in this report.
- Clarify the language on repayment of incentives for contract noncompliance in the standard templates used for employment, recruitment, and retention agreements.