Defense Department Suspends National Guard Bonus Clawbacks

Congress calls for halt in bonus repayment

By Allen Smith, J.D. Oct 27, 2016

A financial nightmare for veterans of the National Guard and a public relations nightmare for the Department of Defense (DoD) soon may be coming to a close. Secretary of Defense Ash Carter said Oct. 26 that he will suspend efforts to recoup bonuses the DoD had maintained were overpayments. The announcement quelled a firestorm of criticism from National Guard members who had received the bonuses a decade ago in exchange for re-enlisting. But congressional action still may be needed for a permanent fix.

California Guard Let Soldier Down

It wasn't just members of the California National Guard that were affected, though they have been the ones in the spotlight recently, according to retired Maj. Robert D'Andrea of Santa Monica, Calif. "It's across the nation," he told SHRM Online.

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D'Andrea had served 14 years before he received a $20,000 bonus to be redeployed in Iraq for an additional six years. He wound up serving seven and a half more years after the bonus, he said.

Then came the letter from the California Guard in 2015, seeking recoupment of the bonus. Some people who received the same letter have been paying back their bonuses piecemeal ever since, despite great hardship, according to the Los Angeles Times.

D'Andrea refused to pay back his bonus and has run through a number of appeals, saying that a piece of paperwork showing that he was entitled to the bonus had been lost in the shuffle.

The attempted bonus clawback was "anxiety-provoking for myself and my wife," he said. "I was qualified for that bonus. I fulfilled my end of the contract."

Keeping track of the bonus paperwork wasn't on his mind as he headed back to Iraq, he said. He still has good memories, though, of his service, saying he took infantry into combat and that the soldiers were "amazing."

"I'm proud to have served my country," he said. But "it's hard to say I was a member of the California National Guard because they let me down over and over again."

Congressional Action

Carter suspended the recoupment of bonus overpayments at the urging of members of Congress. House Speaker Rep. Paul Ryan, R-Wis., noted that the House on May 18 passed a bill that would establish a statute of limitations on the military's ability to recover future overpayments and that would scrutinize the Defense Finance and Accounting Service's management of existing cases of service member debt. In some cases, the recoupment of bonuses went back 10 years, the Los Angeles Times reported. Ryan requested suspension of recoupment "so Congress has time to complete the work we began in May to protect service members from lifelong liability for DoD's mistakes."

"It is disgraceful that the men and women who answered their country's call to duty following Sept. 11 are now facing forced repayments of bonuses offered to them," said House Majority Leader Rep. Kevin McCarthy, R-Calif. "Our military heroes should not shoulder the burden of military recruiters' faults from over a decade ago."

"These re-enlistment bonuses were given to induce the service members to re-enlist," noted James McDonald Jr., an attorney with Fisher Phillips in Irvine, Calif. "In the private sector, a contract would have been executed, and it would be extremely difficult for an employer to get the money back. Where public funds are concerned, the government may have more leeway to recover the money but from a public relations standpoint, it looks terrible."

"Usually attempts to clawback a bonus are based on some accounting error in the calculation of a bonus," said Michelle Lee Flores, an attorney with Cozen O'Connor in Los Angeles. But bonus clawbacks are risky, she said, "particularly if a substantial amount of time has passed."

Acting ranking member Rep. Mark Takano, D-Calif., said, "I am appalled by the California National Guard's effort to clawback bonuses and benefits improperly paid to service members 10 years ago. Those who served in the California National Guard bear no responsibility for the mistakes and misconduct that led to these payments. It is unfair and unacceptable to hold them accountable a decade later."

He added, "The solution to this ridiculous situation is an act of Congress, and I am calling on Speaker Paul Ryan and Majority Leader Mitch McConnell [R-Ky.] to make this issue a top priority during the lame-duck session next month." Like Ryan, Takano called on the California National Guard and the DoD to immediately suspend all efforts to retrieve improper payments "while a legislative fix is passed."

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