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B-143029, SEP. 28, 1960

B-143029 Sep 28, 1960
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WAS PAID UNDER HIS CONTRACT OF EMPLOYMENT WITH YOUR REGIONAL OFFICE. THE FACTS INVOLVED ARE AS FOLLOWS: MR. SIMPSON WAS RETIRED FROM HIS POSITION AS SUPERVISORY APPRAISER WITH YOUR SAN ANTONIO OFFICE ON SEPTEMBER 30. HE ENTERED INTO A CONTRACT WITH THAT REGIONAL OFFICE TO PERFORM DUTIES AS A CONSTRUCTION AND VALUATION TECHNICIAN ON THE FOLLOWING DAY AND WAS PAID AT THE PER DIEM RATE OF $25 FOR 197 DAYS BETWEEN OCTOBER 1. SIMPSON WAS OF THE TYPE CONTEMPLATED BY THE VETERANS ADMINISTRATION MANUAL M4A-8. SECTION 13 (B) OF THE CIVIL SERVICE RETIREMENT ACT IS APPLICABLE TO ALL ANNUITANTS WHO ARE EMPLOYED BY THE GOVERNMENT WHETHER SUCH EMPLOYMENT IS BY APPOINTMENT OR CONTRACT (OTHER THAN INDEPENDENT CONTRACT).

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B-143029, SEP. 28, 1960

TO SUMNER G. WHITTIER, ADMINISTRATOR, VETERANS ADMINISTRATION:

ON MAY 26, 1960, YOU REQUESTED OUR DECISION WHETHER THE BASIS UPON WHICH MR. LOUIS J. SIMPSON, A RETIRED EMPLOYEE, WAS PAID UNDER HIS CONTRACT OF EMPLOYMENT WITH YOUR REGIONAL OFFICE, SAN ANTONIO, TEXAS, MAY BE CHANGED RETROACTIVELY SO AS TO REMOVE THE OBJECTION TO PAYMENT OF THE FULL AMOUNT PROVIDED BY THE CONTRACT WITHOUT DEDUCTION OF A SUM EQUAL TO HIS RETIREMENT ANNUITY ALLOCABLE TO THE PERIOD OF EMPLOYMENT.

THE FACTS INVOLVED ARE AS FOLLOWS: MR. SIMPSON WAS RETIRED FROM HIS POSITION AS SUPERVISORY APPRAISER WITH YOUR SAN ANTONIO OFFICE ON SEPTEMBER 30, 1958. HE ENTERED INTO A CONTRACT WITH THAT REGIONAL OFFICE TO PERFORM DUTIES AS A CONSTRUCTION AND VALUATION TECHNICIAN ON THE FOLLOWING DAY AND WAS PAID AT THE PER DIEM RATE OF $25 FOR 197 DAYS BETWEEN OCTOBER 1, 1958, AND OCTOBER 23, 1959. ON MARCH 3, 1960, OUR REGIONAL OFFICE, DALLAS, TEXAS, ISSUED A NOTICE OF EXCEPTION TO PAYMENTS MADE TO MR. SIMPSON UNDER THE CONTRACT SO FAR AS THE AMOUNT OF ANNUITY HE RECEIVED WHILE PERFORMING SERVICES UNDER THE CONTRACT HAD NOT BEEN DEDUCTED FROM SUCH PAYMENTS AS REQUIRED BY SECTION 13 (B) OF THE CIVIL SERVICE RETIREMENT ACT AS AMENDED BY SECTION 401 OF THE ACT OF JULY 31, 1956, 70 STAT. 757, 5 U.S.C. 2263.

YOU SAY THAT THE WORK PERFORMED BY MR. SIMPSON WAS OF THE TYPE CONTEMPLATED BY THE VETERANS ADMINISTRATION MANUAL M4A-8, PART II, PARAGRAPH 2.70 WHICH PROVIDES FOR THE PROCUREMENT OF THE SERVICES OF ENGINEERS AND ARCHITECTS, AND OTHER TECHNICAL SERVICES BY CONTRACT AND DIRECTS THAT PAYMENT FOR SUCH SERVICES BE MADE ON A PER JOB RATHER THAN PER DIEM BASIS.

SECTION 13 (B) OF THE CIVIL SERVICE RETIREMENT ACT IS APPLICABLE TO ALL ANNUITANTS WHO ARE EMPLOYED BY THE GOVERNMENT WHETHER SUCH EMPLOYMENT IS BY APPOINTMENT OR CONTRACT (OTHER THAN INDEPENDENT CONTRACT). THUS, IF THE CONTRACT BETWEEN AN ANNUITANT AND THE GOVERNMENT ESTABLISHES AN EMPLOYER-EMPLOYEE RELATIONSHIP RATHER THAN THAT OF AN INDEPENDENT CONTRACTOR THE COMPENSATION OF THE ANNUITANT MUST BE REDUCED BY THE AMOUNT OF HIS ANNUITY FOR THE PERIOD. 39 COMP. GEN. 681.

THE CONTRACT INVOLVED (LETTER FORM) PROVIDES IN PART:

"THIS IS TO CONFIRM ENGAGING YOU ON A CONTRACTUAL FEE BASIS TO RENDER SERVICES IN THE LOAN GUARANTY DIVISION AS A CONSTRUCTION AND VALUATION TECHNICIAN, MAKING COST BREAKDOWNS, REVIEWING PLANS AND SPECIFICATIONS FOR MINIMUM PROPERTY REQUIREMENTS COMPLIANCE, AND PERFORMING OTHER RELATED DUTIES AS REQUIRED.

"YOU WILL RECEIVE $25 PER DAY FOR SERVICES RENDERED. * * * RATE OF PRODUCTION WILL BE EQUIVALENT TO THAT EXPECTED OF STAFF TECHNICIANS. DUTY HOURS WILL BE THE SAME.'

THAT AGREEMENT ON ITS FACE ESTABLISHES AN EMPLOYER-EMPLOYEE RELATIONSHIP NOT ONLY BECAUSE IT PROVIDES FOR PAYMENT ON A PER DIEM BASIS RATHER THAN ON A PER JOB BASIS, BUT ALSO BECAUSE IT INDICATES THAT THE WORK PERFORMED BY MR. SIMPSON WILL BE ASSIGNED AS REQUIRED BY THE GOVERNMENT, THAT HE IS TO WORK SPECIFIC HOURS, AND THAT THE QUANTITY OF WORK TO BE DONE SHALL BE EQUAL TO THAT PRODUCED BY THE EMPLOYEES WITH WHOM HE WORKS. A REPORT FROM OUR REGIONAL OFFICE STATES THAT MR. SIMPSON WORKED WITH A GROUP OF CIVIL SERVICE EMPLOYEES AND PERFORMED DUTIES IDENTICAL WITH THOSE EMPLOYEES. ALSO, HE APPARENTLY RECEIVED THE SAME SUPERVISION AND DIRECTION AS THE OTHER REGULAR EMPLOYEES.

SINCE ALL THE EVIDENCE BEFORE US POINTS TO THE CONCLUSION THAT THE PERFORMANCE OF THE CONTRACT REQUIRED AN EMPLOYER-EMPLOYEE RELATIONSHIP BETWEEN MR. SIMPSON AND THE GOVERNMENT A RETROACTIVE CHANGE IN THE BASIS OF PAYMENT WOULD NOT MAKE HIM AN INDEPENDENT CONTRACTOR SO AS TO MAKE THE PROVISIONS OF SECTION 13 (B) OF THE CIVIL SERVICE RETIREMENT ACT INAPPLICABLE.

THEREFORE, THE EXCEPTION TAKEN BY OUR OFFICE TO THE PAYMENTS MADE TO MR. SIMPSON IS SUSTAINED.

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