Requirement to Hold Evidentiary Hearing Before Withholding Wages of Federal Employee in Satisfaction of Debt Allegedly Owed the United States ( 1979 )

June 28, 1979
79-46 MEMORANDUM OPINION FOR THE ACTING
COMMISSIONER, IMMIGRATION AND
NATURALIZATION SERVICE
Due Process—United States (as Creditor)—
Withholding Wages of Federal Employee (as
Debtor) in Satisfaction of Debt Allegedly Owed the
Government
This responds to your request for our guidance whether the Immigra­
tion and Naturalization Service (INS) must accord its employees a full
evidentiary hearing before INS withholds, pursuant to 5 U.S.C.
§ 5512(a),1 the wages of such employees in satisfaction of a debt allegedly
owed the United States. In a conversation with your Office we were in­
formed that more precisely the question is what kind of due process hear­
ing is required. Before we prooeed with our legalanalysis and discussion it
would be useful to delineate briefly the relevant factual situation. The INS
believed that one of its employees was obligated to reimburse the Govern­
ment for the loss of certain funds for which INS deemed her accountable.
Based upon an investigation, INS decided that the employee was account­
able for $2,175.00, funds found to be missing from a district office. Of
that amount, $655.00 was recovered, thus leaving the amount un­
accounted for at $1,520.00. The investigation concluded that the employee
failed to follow adequate procedures to safeguard the funds.
The Federal Bureau of Investigation, by way of a separate investigation,
concluded that the evidence was inconclusive and thus recommended
against criminal prosecution. The INS, however, decided to recover the
missing $1,520.00 by withholding from the employee’s pay a designated
sum each pay period. We understand that it so advised the employee
1 T hat provision reads as follows:
The pay o f an individual in arrears to the United States shall be withheld until he has ac­
counted for and paid into the Treasury o f the United States all sums for which he is liable.
See 26 O p. A tt’y. G en. 77 (1906).
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who responded by filing a Federal civil action seeking to enjoin INS from
withholding any part of the pay. The U.S. Attorney handling the case ad­
vised INS that he believed case law requires a “ due process” hearing prior
to administrative wage-withholding. Thereafter the Government and the
employee stipulated that the case should be dismissed without prejudice
and that INS, which had not yet withheld any pay, would accord the
employee a fulll evidentiary hearing through its grievance procedures.
While this stipulation moots your questions as to this particular case, you
state that you seek guidance for future cases.
The Supreme Court in recent years has considered in a variety of cir­
cumstances what due process requirements apply where deprivation of
property interests are involved. The case that is most relevant here is
Sniadach v. Family Finance Corp., 395 U.S. 337 (1969). That case dealt
with hearing requirements involving garnishment of wages. The court con­
sidered a Wisconsin law allowing a garnishment to be instituted by the
creditor’s lawyer by requesting the clerk of the state court to issue a sum­
mons. Service of the summons upon the garnishee (the employer) effec­
tively froze the employee’s (the alleged debtor’s) wages.
The Court stated:
[The wages] may, it is true, be unfrozen if the trial of the main
suit is ever had and the wage earner wins on the merits. But in the
interim the wage earner is deprived of his enjoyment of earned
wages without any opportunity to be heard and to tender any
defense he may have, whether it be fraud or otherwise. [395 U.S.
at 339.]
The Court noted that there may be extraordinary circumstances justifying
a summary procedure, e.g., in order to protect the creditor against perma­
nent loss. However, it found no such circumstances in the case.2 In ana­
lyzing the requirements of due process with respect to attachments and
other like processes, the Court stressed the unique nature of wages—“ a
specialized type of property presenting distinct problems in our economic
system.” Id. at 340. The Court stated:
[A] prejudgment garnishment of the Wisconsin type may as a
practical matter drive a wage-earning family to the wall. Where
the taking of one’s property is so obvious, it needs no extended
argument to conclude that absent notice and a prior hear­
ing * * * this prejudgment garnishment procedure violates the
fundamental principles of due process. [Id. at 341-342.]
Hence what the Government seeks is essentially a recoupment or a
setoff. However, this does not distinguish it from garnishment since both
may “ as a practical matter drive a wage-earning family to the wall.”
1 In the usual case there probably would be no extraordinary circumstances warranting
such a summary procedure because the persons from whom the withholdings are to be made
are G overnm ent employees who have a substantial interest in their jobs and are unlikely to
abscond to avoid repaym ent.
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The Court’s evident concern was that wages should not be withheld
without a due process hearing. This is because wages, in most cases, sus­
tain the wage earner and his family from week to week and any depriva­
tion thereof could have potentially severe consequences.3
It may be noted that 5 U.S.C. § 5512, the provision authorizing the
withholding here, does not expressly provide for a hearing of any kind.
The section speaks of an “ individual in arrears to the United States,” not
of one suspected of being in arrears. But it does not deal with the due proc­
ess requirement governing the determination of the individual’s liability.
Accordingly, the process involved in the determination of liability must be
considered apart from § 5512. Further, the Sniadach rule is constitution­
ally based and cannot be undermined by statute. It is well established
that if at all possible a statute will be construed to avoid constitutional
difficulties. Thus, where a provision entails depriving individuals of
property rights but fails to expressly provide for notice and a hearing,
it must be read as embodying the procedural rights implicit in the due
process clause. Pan American World Airways, Inc. v. Marshall, 439 F.
Supp. 487 (S.D.N.Y. 1977). By reading § 5512 as consistent with the due
process clause it becomes clear that notice and a hearing are necessary
before administrative withholding o f a Federal employee’s pay can be
effected.
Your precise question, as noted above, is whether a “ full evidentiary
hearing” is required. Although Sniadach did not discuss in detail the hear­
ing requirements needed for a wage-withholding, the Court did hold that
an “ opportunity to be heard and to tender any defense” were required. Id.
at 339. It is our opinion that a hearing similar to that required in Goldberg
v. Kelly, 397 U.S. 254 (1970) (termination of welfare benefits) is necessary
here, that is, a hearing closely approximating a judicial trial. The
Goldberg hearing procedure was summarized in Mathews v. Eldridge, 424
U.S. 319, 325 n. 5 (1976) as follows:
(1) “ timely and adequate notice detailing the reasons for a pro­
posed [Government action]” ; (2) “ an effective oppor­
tunity * * * to defend by confronting any adverse witnesses
and by presenting his own arguments and evidence orally” ;
(3) retained counsel, if desired; (4) an “ impartial” decision­
maker; (5) a decision resting “ solely on the legal rules and
evidence adduced at the hearing” ; (6) a statement of reasons for
the decision and the evidence relied on. 397 U.S., at 266-271.
1 U nder the Wisconsin procedure, up to one-half o f a d ebtor’s wages could be frozen
under the garnishment procedure. T hus, an argument can be made that freezing or
withholding a significantly lesser portion o f a person’s wages would not require the same
level o f due process protection. However, we believe that the better view is to consider any
deprivation o f wages as substantial. Indeed, the C ourt in Sniadach did not appear to consider
the potential severity o f the deprivation with respect to individual debtors. Rather, the focus
was on the importance o f wages as a general m atter.
271
The Court in Mathews stated that the dictates of due process generally
require consideration of three distinct factors:
First, the private interest that will be affected by the official ac­
tion; second, the risk o f an erroneous deprivation of such interest
through the procedures used, and the probable value, if any, of
additional or substitute procedural safeguards; and finally, the
Government’s interest, including the function involved and the
fiscal and administrative burdens that the additional or substi­
tute procedural requirement would entail. [Id. at 355.]
The private interest that may be adversely affected here by your agency’s
action is potentially substantial. This is because wages are “ a specialized
type of property presenting distinct problems in our economic system.”
Sniadach, at 340.
Moreover, as we understand it, the proposed wage-withholding in­
volved here would constitute the final agency action. Thus, unless the
employee sought judicial review and prevailed, the administrative depriva­
tion will deprive the employee of the withheld wages. This is unlike
Goldberg v. Kelly and Mathews v. Eldridge, in that the official action in
those cases was temporary and subject to further administrative review
which afforded the claimant an evidentiary hearing much like that ordered
in Goldberg.* Accordingly, the deprivation would be final insofar as
agency action was concerned so that heightened solicitude for the private
interest is required. See, North Georgia Finishing, Inc. v. Di-Chem, Inc.,
419 U.S. 601, 606 (1975), where the Court noted that “ the length or sever­
ity of a deprivation of use or possession [of property] would be another
factor to weigh in determining the appropriate form of hearing * *
Concerning the second factor in Mathews, i.e., the value of additional
procedural safeguards, it would seem that a wage-withholding hearing
might frequently involve disputed factual issues and questions of credibil­
ity. Thus, the hearing must be structured so as to provide for their resolu­
tion. Mathews at 343-345. We do not know, of course, whether such
issues will arise in a particular case.
Finally, the cost to the Government of a Goldberg-type evidentiary
hearing probably would not result in a significant burden on the Govern­
ment. The Court in Mathews noted that the cost to the Government of
providing statutory benefits to ineligible recipients pending decision would
not be insubstantial. 424 U.S. at 347. This concern would be inapplicable
in wage-withholding actions because the employee is otherwise clearly en­
titled to his or her wages. Further, it seems unlikely that the costs of the
hearings themselves would impose a significant burden on the Government.
4 While the welfare recipient in Goldberg was entitled to an evidentiary hearing, the
primary issue was whether the hearing was required before the term ination o f benefits or
whether term ination could be m ade subject to a subsequent evidentiary hearing. 397 U .S. at
259-260.
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For these reasons, w e believe that a Goldberg v. Kelly-type hearing is re­
quired in adm inistrative wage w ithholdings.
Leon U lm an
Deputy Assistant Attorney General
Office o f Legal Counsel
273