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Paying Awards Made Easy

For years, agencies have had the option of using electronic fund transfer (EFT) payments to grant cash awards to Federal employees. It simply makes sense that if an employee uses direct deposit for their pay check, they can efficiently and effectively receive other payments the same way. Now, because of the Debt Collection Improvement Act, all Federal payments, with the exception of tax refunds, should be made by EFT after January 2, 1999. This includes monetary awards (unless a waiver is obtained for a specific employee). The Act is another step toward making all Federal payments as simple as the direct deposit of paychecks.

Awards included under the Act

With the exception of tax refunds, the Act applies to all Federal payments. So, although awards are not specifically mentioned, they are considered Federal payments

Issue awards in the form of a check

An individual may continue to receive a check if receiving the payment electronically would cause a hardship. The Act also includes a waiver for instances when the cost of using EFT for non-recurring payments would be greater than the cost of paying by check.

Awards still have the same significance without a check to hand to the awardee

Awards can still be meaningful even without the presentation of a paper check. Research indicates that employees often value the recognition as much as, if not more than, the cash award, so be creative. A variety of options are possible. For example, since there won't be a check to present, the supervisor could present a certificate and the withholding statement in an envelope at a ceremony. This gives the employee public recognition as well as something tangible showing the cash they will receive. The public presentation can have the added advantage of showing other employees what behaviors, results, or competencies are valued by the organization. The statement can include the gross and net award amounts as well as the date the payroll office expects to deposit the money into the recipient's account. Supervisors should make sure that employees never receive the award amount via EFT before they know they are receiving an award. If this happens, employees may have no idea where the money came from or what they have done to merit the award.

The new requirement to use EFT for award payments only curtails the presentation of the check, not the granting of the award. This requirement should not lessen the sense of achievement an employee feels when he or she receives the award, provided the presentation still conveys that message.

Benefits of EFT

Recipients will find EFT is faster, safer, easier, and more convenient than receiving "old-fashioned" checks. Problems replacing lost or stolen checks or trying to find time to get to the bank will soon become distant memories.

EFT also provides benefits for the Government. When problems do occur with EFT payments, the problems are much easier to correct and are often resolved in less than 24 hours (as compared to 2 weeks for paper checks). Last year alone, the Government experienced $60 million in forged checks, $2 million in counterfeit checks, and $3 million in altered checks. These issues no longer will be a problem when Federal payments are made by EFT. Finally, the Government will realize savings in excess of $1 million a year when all eligible payments are converted to EFT. The Government will have a greatly improved cash management system that is easier to audit and that will enable it to provide better customer service.

Monitor agency compliance

The Department of Treasury will monitor the percent of EFT participation for each agency to ensure that agencies are complying with the requirements of the Act.

More information

For more information on the Debt Collection Improvement Act, contact Sally Phillips or Matthew Friend of the Department of Treasury at 202-874-6590. Information is also available on the EFT web pages at http://www.fms.treas.gov/eft. This site includes frequently asked questions, additional contacts, and links to other related topics.