[Request for Advisory Opinion on Backpay Issue]

B-220464, JAN 15, 1986, OFFICE OF GENERAL COUNSEL

COMPENSATION - REMOVALS, SUSPENSIONS, ETC. - BACKPAY - COMPUTATION DIGEST: AN EMPLOYEE REMOVED FROM CIVILIAN SERVICE OVERSEAS AND CONSEQUENTLY REQUIRED TO VACATE RENT-FREE GOVERNMENT QUARTERS IS, UPON REINSTATEMENT WITH BACKPAY, ENTITLED TO RECEIVE A LIVING QUARTERS ALLOWANCE. THE LIVING QUARTERS ALLOWANCE IS A COMPENSABLE ITEM OF BACKPAY UNDER THESE CIRCUMSTANCES BECAUSE THE LAW AND REGULATIONS GOVERNING THE HOUSING OF OVERSEAS EMPLOYEES PROVIDE THAT SUCH EMPLOYEES ARE ENTITLED TO A LIVING QUARTERS ALLOWANCE WHEN GOVERNMENT QUARTERS ARE NOT FURNISHED FREE-OF CHARGE.

MR. ROBERT E. TAYLOR:

CLERK OF THE BOARD

U.S. MERIT SYSTEMS PROTECTION BOARD

WASHINGTON, D.C. 20419

THIS IS IN RESPONSE TO YOUR REQUEST OF SEPTEMBER 23, 1985, FOR AN ADVISORY OPINION ON A BACKPAY ISSUE INVOLVED IN GRECO V. DEPARTMENT OF THE ARMY, MSPB DOCKET NO. DC07528310592 COMP-REM. SPECIFICALLY, THE ISSUE IS WHETHER AN EMPLOYEE IS ENTITLED TO RECEIVE A LIVING QUARTERS ALLOWANCE AS PART OF A BACKPAY AWARD IF HE WAS NOT RECEIVING THE ALLOWANCE BUT WAS RESIDING IN RENT-FREE GOVERNMENT QUARTERS AT THE TIME OF HIS REMOVAL. FOR THE REASONS WHICH FOLLOW, WE BELIEVE THAT A LIVING QUARTERS ALLOWANCE IS A PROPER ELEMENT OF BACKPAY UNDER THE CIRCUMSTANCES PRESENTED.

BASED ON YOUR LETTER AND THE ACCOMPANYING MATERIALS, IT APPEARS THAT THE RELEVANT FACTS ARE AS FOLLOWS. MR. ANTHONY A. GRECO WAS REMOVED FROM HIS POSITION AS SUPERVISORY EMPLOYEE RELATIONS SPECIALIST WITH THE DEPARTMENT OF THE ARMY IN GERMANY AND WAS REQUIRED TO VACATE GOVERNMENT FURNISHED QUARTERS. AFTER RETURNING TO THE UNITED STATES, MR. GRECO APPEALED HIS REMOVAL TO THE WASHINGTON REGIONAL OFFICE OF THE MERIT SYSTEMS PROTECTION BOARD (MSPB). BEFORE THE REGIONAL OFFICE ADJUDICATED THE MERITS OF THE ACTION, MR. GRECO ENTERED INTO A SETTLEMENT AGREEMENT WITH THE ARMY AND WITHDREW HIS APPEAL. THE AGREEMENT, APPROVED BY THE PRESIDING OFFICIAL, PROVIDED IN RELEVANT PART THAT:

"THE AGENCY SHALL CANCEL THE REMOVAL ACTION *** AND RESTORE APPELLANT TO DUTY EFFECTIVE 15 MARCH 1983 WITH ALL BACK PAY, LEAVE, RETIREMENT AND ALL OTHER ENTITLEMENTS THAT APPELLANT WOULD HAVE EARNED OR RECEIVED DURING THE TIME PERIOD COVERED BY THE PERSONNEL ACTIONS AT ISSUE."

MR. GRECO FILED A PETITION FOR ENFORCEMENT OF THE SETTLEMENT AGREEMENT, CONTENDING THAT THE ARMY HAD FAILED TO COMPLY WITH SEVERAL TERMS OF THE AGREEMENT. IN PARTICULAR, MR. GRECO MAINTAINED THAT UNDER THE ABOVE- QUOTED PROVISIONS HE WAS ENTITLED TO BUT HAD NOT RECEIVED A LIVING QUARTERS ALLOWANCE AND PER DIEM PAYMENTS COVERING THE PERIOD OF HIS SEPARATION. THE WASHINGTON REGIONAL OFFICE ISSUED A COMPLIANCE DECISION FINDING THAT MR. GRECO WAS NOT ENTITLED TO A LIVING QUARTERS ALLOWANCE BECAUSE HE WAS RESIDING IN GOVERNMENT QUARTERS RATHER THAN RECEIVING AN ALLOWANCE ON THE DATE HE WAS SEPARATED. THE PRESIDING OFFICIAL DISTINGUISHED THE COURT OF CLAIMS DECISION IN URBINA V. UNITED STATES, 428 F. 2D 1280 (CT.CL. 1970), DISCUSSED BELOW, STATING THAT A LIVING QUARTERS ALLOWANCE WOULD HAVE BEEN RECOVERABLE UNDER THAT DECISION ONLY IF THE APPELLANT HAD BEEN RECEIVING THE ALLOWANCE AT THE TIME OF HIS SEPARATION. ALSO, THE PRESIDING OFFICIAL FOUND THAT MR. GRECO WAS NOT ENTITLED TO RECEIVE PER DIEM EXPENSES.

MR. GRECO FILED A PETITION FOR REVIEW WITH THE MSPB. YOU STATE THAT, IN HIS PETITION, MR. GRECO CHALLENGES ONLY THE PRESIDING OFFICIAL'S DETERMINATION THAT HE IS NOT ENTITLED TO RECEIVE A LIVING QUARTERS ALLOWANCE AS PART OF THE "BACKPAY" AND "ENTITLEMENTS" AWARDED HIM UNDER THE SETTLEMENT AGREEMENT. FUNDAMENTALLY, MR. GRECO ARGUES THAT, HAD HE NOT BEEN REMOVED FROM THE ARMY, HE WOULD HAVE CONTINUED TO ENJOY THE BENEFIT OF RENT-FREE GOVERNMENT HOUSING. SINCE HE CANNOT BE AFFORDED THE BENEFIT OF GOVERNMENT HOUSING RETROACTIVELY, MR. GRECO ASSERTS THAT HE IS ENTITLED TO A LIVING QUARTERS ALLOWANCE UNDER THE PROVISIONS OF 5 U.S.C. SEC. 5923 (1982) AND ITS IMPLEMENTING REGULATIONS. AS DISCUSSED MORE FULLY BELOW, THE STATUTE AND REGULATIONS CITED BY MR. GRECO PROVIDE THAT A LIVING QUARTERS ALLOWANCE WILL BE PAID TO AN EMPLOYEE WHO IS NOT FURNISHED GOVERNMENT QUARTERS WHILE STATIONED IN A FOREIGN AREA.

MR. GRECO ARGUES ALTERNATIVELY THAT, IF A LIVING QUARTERS ALLOWANCE IS NOT PAYABLE, HE IS ENTITLED TO REIMBURSEMENT FOR THE HOUSING COSTS HE INCURRED IN THE UNITED STATES DURING THE PERIOD OF HIS SEPARATION. SUPPORT OF THIS ALTERNATIVE ARGUMENT, MR. GRECO CITES PAYNE V. PANAMA CANAL CO., 607 F.2D 155, 165 (5TH CIR. 1979). IN PAYNE, THE U.S. COURT OF APPEALS FOR THE FIFTH CIRCUIT HELD THAT AN EMPLOYEE IMPROPERLY SEPARATED FROM EMPLOYMENT IN THE CANAL ZONE WAS ENTITLED TO THE DIFFERENCE BETWEEN THE COSTS HE INCURRED FOR PRIVATE HOUSING IN THE UNITED STATES AND THE COST OF THE RENTAL HOUSING HE WOULD HAVE BEEN PROVIDED IN THE CANAL ZONE UNDER THE AUTHORITY OF U.S.C. SEC. 5911.

IN ITS RESPONSE TO MR. GRECO'S PETITION FOR REVIEW, THE DEPARTMENT OF THE ARMY MAINTAINS THAT HE IS NOT ENTITLED TO A LIVING QUARTERS ALLOWANCE BECAUSE HE WAS NOT RECEIVING THE ALLOWANCE AT THE TIME OF HIS SEPARATION. FURTHERMORE, THE ARMY LIKENS THE LIVING QUARTERS ALLOWANCE CLAIMED BY MR. GRECO TO PER DIEM AND COMMUTING EXPENSES INCURRED AS A CONSEQUENCE OF AN UNJUSTIFIED OR UNWARRANTED PERSONNEL ACTION, NOTING THAT THE COURT OF CLAIMS HAS DISALLOWED THE LATTER EXPENSES ON THE BASIS THAT THEY DO NOT CONSTITUTE "PAY, ALLOWANCES, OR DIFFERENTIALS" WITHIN THE PURVIEW OF THE BACK PAY ACT OF 1966, AS AMENDED, 5 U.S.C. SEC. 5596 (1982).

AGAINST THIS BACKGROUND, YOU HAVE ASKED FOR OUR OPINION WHETHER: (1) A LIVING QUARTERS ALLOWANCE IS A PROPER ELEMENT OF THE BACKPAY AWARDED TO MR. GRECO; AND (2) IF NOT, WHETHER HE MAY RECOVER HOUSING EXPENSES HE INCURRED DURING THE PERIOD OF HIS SEPARATION.

AT THE OUTSET, WE NOTE THAT IT IS NOT DISPUTED THAT MR. GRECO WOULD HAVE BEEN ENTITLED TO RECOVER A LIVING QUARTERS ALLOWANCE AS PART OF HIS BACKPAY AWARD IF HE HAD BEEN RECEIVING THE ALLOWANCE AT THE TIME OF HIS SEPARATION. IN URBINA V. UNITED STATES, CITED ABOVE, 428 F.2D AT 1285, THE COURT OF CLAIMS HELD THAT A WRONGFULLY DISMISSED CIVILIAN EMPLOYEE OF THE AIR FORCE WHO HAD BEEN RECEIVING A LIVING QUARTERS ALLOWANCE IN JAPAN WAS ENTITLED TO RECEIVE THE ALLOWANCE DURING THE ENTIRE PERIOD OF HIS DISMISSAL, EVEN THOUGH HE SPENT PART OF THAT PERIOD IN THE UNITED STATES. THE COURT IN URBINA REASONED THAT THE LIVING QUARTERS ALLOWANCE PAYABLE TO CIVILIAN EMPLOYEES IN FOREIGN AREAS REPRESENTS AN "ALLOWANCE" COMPENSABLE UNDER THE BACK PAY ACT, AND THAT RETROACTIVE RESTORATION OF THIS MONETARY BENEFIT COMPORTS WITH THE BACK PAY ACT'S MANDATE THAT AN EMPLOYEE "FOR ALL PURPOSES *** MUST BE DEEMED TO HAVE PERFORMED SERVICE FOR THE AGENCY" DURING THE PERIOD OF WRONGFUL SEPARATION. SEE ALSO NORMA J. RAYMOND, 59 COMP.GEN. 261 (1980), IN WHICH WE FOLLOWED URBINA WITH RESPECT TO A SIMILARLY SITUATED EMPLOYEE. ACCORDINGLY, RECOGNIZING THAT A LIVING QUARTERS ALLOWANCE CONSTITUTES A COMPENSABLE ELEMENT OF BACKPAY UNDER THE URBINA DECISION, REGARDLESS OF WHETHER THE EMPLOYEE WAS ACTUALLY PRESENT IN THE FOREIGN AREA DURING THE PERIOD OF HIS SEPARATION, THE QUESTION FOR OUR DETERMINATION IS WHETHER THE BACK PAY ACT AUTHORIZES THE ALLOWANCE FOR AN EMPLOYEE WHO WAS NOT RECEIVING IT BUT WAS RESIDING IN GOVERNMENT QUARTERS AT THE TIME HE WAS SEPARATED.

THE BACK PAY ACT OF 1966, CODIFIED AS AMENDED IN 5 U.S.C. SEC. 5596, PROVIDES IN RELEVANT PART THAT:

"(B)(1) AN EMPLOYEE OF AN AGENCY WHO, ON THE BASIS OF A TIMELY APPEAL OR AN ADMINISTRATIVE DETERMINATION *** IS FOUND BY APPROPRIATE AUTHORITY UNDER APPLICABLE LAW, RULE, REGULATION, OR COLLECTIVE BARGAINING AGREEMENT, TO HAVE BEEN AFFECTED BY AN UNJUSTIFIED OR UNWARRANTED PERSONNEL ACTION WHICH HAS RESULTED IN THE WITHDRAWAL OR REDUCTION OF ALL OR PART OF THE PAY, ALLOWANCES, OR DIFFERENTIALS OF THE EMPLOYEE--

"(A) IS ENTITLED, ON CORRECTION OF THE PERSONNEL ACTION, TO RECEIVE FOR THE PERIOD FOR WHICH THE PERSONNEL ACTION WAS IN EFFECT--

"(I) AN AMOUNT EQUAL TO ALL OR ANY PART OF THE PAY, ALLOWANCES, OR DIFFERENTIALS, AS APPLICABLE WHICH THE EMPLOYEE NORMALLY WOULD HAVE EARNED OR RECEIVED DURING THE PERIOD OF THE PERSONNEL ACTION HAD NOT OCCURRED, ***; AND

"(B) FOR ALL PURPOSES, IS DEEMED TO HAVE PERFORMED SERVICE FOR THE AGENCY DURING THAT PERIOD ***."

IN COMMENTARY ACCOMPANYING THE BACK PAY ACT, CONGRESS EXPLAINED THAT THE AUTHORITY FOR AWARDING A REINSTATED EMPLOYEE THE "PAY, ALLOWANCES, OR DIFFERENTIALS" HE WOULD HAVE RECEIVED BUT FOR AN UNJUSTIFIED OR UNWARRANTED PERSONNEL ACTION WAS DESIGNED TO ENFORCE THE PRINCIPLE THAT A GOVERNMENT EMPLOYEE SHOULD BE MADE WHOLE FOLLOWING THE CORRECTION OF SUCH AN ACTION. THUS, CONGRESS EXPRESSED THE INTENTION THAT THE PHRASE "PAY, ALLOWANCES, OR DIFFERENTIALS" WOULD "COVER EVERYTHING TO WHICH SUCH OFFICER OR EMPLOYEE NORMALLY WOULD HAVE BEEN ENTITLED IF THE PERSONNEL ACTION HAD NOT OCCURRED," BUT SUGGESTED THAT THE SCOPE OF THE REMEDY WOULD BE DEFINED MORE FULLY IN IMPLEMENTING REGULATIONS. H.R. REP. NO. 32, 89TH CONG., 1ST SESS. 5 (1965).

REGULATIONS IMPLEMENTING THE BACK PAY ACT, SET FORTH IN 5 C.F.R. SEC. 550.803, DEFINE THE "PAY, ALLOWANCES, AND DIFFERENTIALS" PAYABLE ON CORRECTION OF AN IMPROPER PERSONNEL ACTION AS "MONETARY AND EMPLOYMENT BENEFITS TO WHICH AN EMPLOYEE IS ENTITLED BY STATUTE OR REGULATION BY VIRTUE OF THE PERFORMANCE OF A FEDERAL FUNCTION." ADDITIONALLY, FEDERAL PERSONNEL MANUAL (FPM) SUPP. NO. 990-2, BK. 550, S8-3 (INST. 73, APRIL 20, 1984) STATES THAT:

"AS LONG AS A MONETARY OR EMPLOYMENT BENEFIT *** IS ONE THAT THE EMPLOYEE IS ENTITLED TO BY STATUTE OR REGULATION AND IS RECEIVED BY VIRTUE OF THE PERFORMANCE OF A FEDERAL FUNCTION, IT CONSTITUTES 'PAY, ALLOWANCES, AND DIFFERENTIALS' ***."

THE PROVISIONS OF 5 U.S.C. SEC. 5912 (1982), PERTAINING TO CIVILIAN EMPLOYEES STATIONED IN FOREIGN AREAS, STATE THAT SUCH EMPLOYEES MAY BE FURNISHED GOVERNMENT-OWNED OR RENTED QUARTERS WITHOUT CHARGE. UNDER 5 U.S.C. SEC. 5923 (1982), AN EMPLOYEE STATIONED IN A FOREIGN AREA WHO IS NOT PROVIDED GOVERNMENT QUARTERS MAY BE GRANTED A LIVING QUARTERS ALLOWANCE DESIGNED TO COVER A SUBSTANTIAL PORTION BUT NOT ALL OF HIS PRIVATE HOUSING EXPENSES. THE IMPLEMENTING REGULATIONS IN DOD INSTRUCTION 1400.25-M, CPM CH. 592 (NOVEMBER 9, 1981), PROVIDE IN RELEVANT PART THAT:

"SUBCHAPTER 2. QUARTERS ALLOWANCE

"2-1. GENERAL.

"B. THE LQA (LIVING QUARTERS ALLOWANCE) IS PAYABLE TO ELIGIBLE CIVILIAN EMPLOYEES WHEN GOVERNMENT-OWNED OR RENTED QUARTERS ARE NOT PROVIDED WITHOUT CHARGE AT THE EMPLOYEE'S PERMANENT DUTY STATION IN A FOREIGN AREA.

"2-2. ELIGIBILITY.

"A. EMPLOYEES RECRUITED IN THE UNITED STATES *** FOR DUTY IN A FOREIGN AREA EITHER WILL BE FURNISHED GOVERNMENT QUARTERS WITHOUT CHARGE OR WILL BE PAID A QUARTERS ALLOWANCE AS PRESCRIBED IN CHAPTER 100, DSSR (DEPARTMENT OF STATE STANDARDIZED REGULATIONS (GOVERNMENT CIVILIANS, FOREIGN AREAS))."

THE STANDARDIZED REGULATIONS CITED IN THE DOD INSTRUCTION PROVIDE IN SECTION 132.12 THAT:

"THE LQA GRANT TO ANY EMPLOYEE (NOT NEWLY APPOINTED OR TRANSFERRED) *** SHALL COMMENCE AS OF THE LATEST OF THE FOLLOWING DATES:

"A. THE DATE THE EMPLOYEE CEASES TO OCCUPY QUARTERS FOR WHICH HE/SHE PAYS NO RENT; (OR)

"D. THE DATE EXPENSES FOR QUARTERS ARE INCURRED."

WE INTERPRET THE ABOVE-QUOTED REGULATIONS AS VESTING AN EMPLOYEE WITH AN ENTITLEMENT TO THE LIVING QUARTERS ALLOWANCE AUTHORIZED BY 5 U.S.C. SEC. 5923 IF HE IS ASSIGNED TO DUTY IN A FOREIGN AREA AND IS NOT PROVIDED RENT- FREE GOVERNMENT HOUSING. SEE 44 COMP.GEN. 365 (1964), IN WHICH WE ADOPTED THE SAME INTERPRETATION WITH RESPECT TO THE PREDECESSOR TO 5 U.S.C. SEC. 5923 AND ITS IMPLEMENTING REGULATIONS. ACCORDINGLY, APPLYING THE BACKPAY STANDARDS DISCUSSED ABOVE, WE CONCLUDE THAT AN EMPLOYEE STATIONED IN A FOREIGN AREA WHO IS REQUIRED TO VACATE GOVERNMENT QUARTERS AS THE RESULT OF AN UNJUSTIFIED OR UNWARRANTED PERSONNEL ACTION IS ENTITLED UPON CORRECTION OF THE ACTION TO RECEIVE A LIVING QUARTERS ALLOWANCE. IT IS NOT MATERIAL THAT THE EMPLOYEE WAS NOT ACTUALLY RECEIVING A LIVING QUARTERS ALLOWANCE ON THE DATE OF HIS SEPARATION BECAUSE, UNDER 5 U.S.C. SEC. 5923 AND ITS IMPLEMENTING REGULATIONS, THE EMPLOYEE'S ENTITLEMENT TO A LIVING QUARTERS ALLOWANCE WOULD VEST AS SOON AS HE IS REQUIRED TO VACATE GOVERNMENT QUARTERS AND BEGINS TO INCUR HOUSING EXPENSES. SEE 44 COMP.GEN. 365, CITED ABOVE.

FURTHERMORE, WE DO NOT AGREE WITH THE ARMY'S SUGGESTION THAT THE LIVING QUARTERS ALLOWANCE IN QUESTION MUST BE DISALLOWED ON THE BASIS THAT IT IS AN "INCIDENTAL EXPENSE" SIMILAR TO PER DIEM AND COMMUTING EXPENSES. THE COURT OF CLAIMS AND OUR OFFICE HAVE HELD THAT PER DIEM AND MILEAGE EXPENSES ASSOCIATED WITH A SEPARATED EMPLOYEE'S INTERIM EMPLOYMENT ARE NOT COMPENSABLE UNDER THE BACK PAY ACT BECAUSE, ALTHOUGH SUCH EXPENSES MAY RESULT FROM AN IMPROPER PERSONNEL ACTION, THEY DO NOT REPRESENT BENEFITS AN EMPLOYEE WOULD HAVE RECEIVED HAD THE PERSONNEL ACTION NOT OCCURRED. SEE MORRIS V. UNITED STATES, 595 F.2D 591 (CT.CL. 1979); AND JACK M. HANING, 63 COMP.GEN. 170 (1984). IN CONTRAST, THE EFFECT OF PAYING A LIVING QUARTERS ALLOWANCE TO AN EMPLOYEE DENIED GOVERNMENT HOUSING BECAUSE OF AN IMPROPER PERSONNEL ACTION IS TO RESTORE A MONETARY BENEFIT HE WOULD HAVE RECEIVED BUT FOR THE PERSONNEL ACTION. SEE GENERALLY RALPH C. HARBIN, 61 COMP.GEN. 57 (1981). SEE ALSO FPM, CH. 550, SEC. 8-5A (INST. 262, MAY 7, 1981), DISTINGUISHING INCIDENTAL EXPENSES FROM ALLOWANCES CONSTITUTING A FORM OF REMUNERATION FOR SERVICES AN EMPLOYEE WOULD HAVE PERFORMED HAD HE NOT BEEN SEPARATED. ACCORDINGLY, FOR THE FOREGOING REASONS, WE CONCLUDE THAT MR. GRECO IS ENTITLED TO RECEIVE A LIVING QUARTERS ALLOWANCE AS PART OF THE BACKPAY AWARDED HIM UNDER HIS SETTLEMENT AGREEMENT WITH THE ARMY. IN VIEW OF THIS CONCLUSION, WE NEED NOT ADDRESS MR. GRECO'S ALTERNATIVE ARGUMENT THAT HE IS ENTITLED TO RECOVER HOUSING COSTS INCURRED IN THE UNITED STATES BASED ON PAYNE V. PANAMA CANAL CO., DISCUSSED PREVIOUSLY.

FINALLY, WE RECENTLY RECEIVED CORRESPONDENCE FROM MR. GRECO'S COUNSEL DATED NOVEMBER 21, 1985, A COPY OF WHICH WAS SENT TO YOU. THE LETTER EXPRESSES SOME DISAGREEMENT WITH THE CONTENT OF YOUR REQUEST FOR OUR ADVISORY OPINION. SPECIFICALLY, MR. GRECO'S COUNSEL ALLEGES THAT: (1) YOUR REQUEST OMITS SOME FACTUAL INFORMATION PERTAINING TO MR. GRECO'S CLAIM FOR A LIVING QUARTERS ALLOWANCE; AND (2) YOUR REQUEST INCORRECTLY SUGGESTS THAT THE ISSUE OF MR. GRECO'S ENTITLEMENT TO PER DIEM WAS NOT PRESENTED IN HIS PETITION FOR REVIEW. WE HAVE EVALUATED THE FACTUAL INFORMATION PRESENTED BY MR. GRECO'S COUNSEL, BUT HAVE FOUND THAT IT DOES NOT AFFECT THE LEGAL CONCLUSIONS WE HAVE REACHED. FURTHERMORE, WE DECLINE TO COMMENT ON THE QUESTION OF MR. GRECO'S ENTITLEMENT TO PER DIEM, SINCE YOU HAVE NOT PRESENTED THAT QUESTION TO US.