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).
269 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.
270 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.
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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).
269 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.
270 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.
272 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