B-170675, OCT 3, 1975

B-170675, OCT 3, 1975

EMPLOYEE WAS PROMOTED FROM PREVAILING-RATE POSITION TO ONE UNDER THE GENERAL SCHEDULE (GS). THE GS RATE IN SUCH CASES IS SET SUBJECT TO THE "HIGHEST PREVIOUS RATE RULE," PART 531 OF CIVIL SERVICE COMMISSION REGULATIONS. THOSE REGULATIONS DO NOT PROVIDE FOR INCLUDING INCENTIVE AND COST-OF-LIVING ALLOWANCES AS PART OF BASIC COMPENSATION OF PREVAILING-RATE POSITIONS FROM WHICH EMPLOYEE IS CHANGING IN DETERMINING THE MAXIMUM STEP RATE OF THE GS GRADE TO WHICH EMPLOYEE IS APPOINTED. EVEN IF SUCH PROVISIONS WERE INCLUDED, THE AGENCY HAS DISCRETION TO SELECT A STEP RATE OTHER THAN THE MAXIMUM POSSIBLE UNDER THE HIGHEST-PREVIOUS-RATE RULE. SEE 52 COMP. GEN. 695, AT 697.

BERNARD L. HEVEY - PROMOTION - PREVAILING RATE TO GENERAL SCHEDULE:

THIS ACTION CONSTITUTES A REVIEW OF THE RATE OF PAY SET FOR MR. BERNARD L. HEVEY AS AN EMPLOYEE OF THE DEPARTMENT OF THE NAVY, GUAM, MARIANA ISLANDS, ON JUNE 1, 1969, WHEN HE WAS PROMOTED FROM THE POSITION OF GENERAL FOREMAN I MACHINIST, WS-34014-73, AT $6.29 PER HOUR, TO THE POSITION OF SHIPBUILDING QUALITY CONTROL SPECIALIST, GRADE GS-11, STEP 2, ANNUAL SALARY RATE OF $10,543 WITH AN ANNUAL DIFFERENTIAL "NFPD" OF $2,635.75.

MR. HEVER STATES THAT HE SUFFERED AN ADVERSE ACTION FROM THE PROMOTION. MR. HEVEY HAD BEEN NOTIFIED ON MAY 2, 1969, THAT HE HAD BEEN REACHED IN A REDUCTION IN FORCE DUE TO A REDUCTION IN WORKLOAD. HE POINTS OUT THAT THE $6.29 AN HOUR PREVAILING-RATE POSITION CONTAINED A 25 PERCENT INCENTIVE FOR EMPLOYMENT ON GUAM WHICH WAS PART OF HIS BASE PAY AND RETIREMENT DEDUCTIONS WERE MADE ACCORDINGLY. MR. HEVEY STATES THAT IN THE CHANGE FROM THE PREVAILING-RATE POSITION TO A POSITION IN THE GENERAL SCHEDULE (GS), THE 25 PERCENT INCENTIVE PAY WAS NOT USED AS PART OF HIS BASE PAY IN COMPUTING HIS GENERAL SCHEDULE PAY LEVEL WITHIN GRADE GS-11, AND THE OMISSION RESULTED IN A LOSS OF APPROXIMATELY 25 PERCENT IN PAY SUBJECT TO RETIREMENT AND LIFE INSURANCE. MR. HEVEY URGES THAT THIS "ADVERSE" ACTION IS CONTRARY TO LAW AS STATED IN DECISION B-170675, APRIL 12, 1973, NOW REPORTED AT 52 COMP. GEN. 695 (1973). HE REQUESTS RETROACTIVE CORRECTION.

THE SYLLABUS OF 52 COMP. GEN. 695, SUPRA, READS AS FOLLOWS:

"IN ESTABLISHING PAY RATES FOR WAGE BOARD (WB) EMPLOYEES IN HAWAII AND GUAM WHOSE POSITIONS ARE CONVERTED TO THE GENERAL SCHEDULE (GS), PART 539 OF THE CIVIL SERVICE COMMISSION (CSC) REGULATIONS, WHICH PROVIDES FOR SETTING AN EMPLOYEE'S GS SALARY AT A RATE CLOSEST TO HIS BASIC WB RATE PRIOR TO CONVERSION IS FOR APPLICATION AND THUS AS THE PYRAMIDING OF COST- OF-LIVING ALLOWANCES CANNOT BE AVOIDED, THE EMPLOYEE IS ASSURED OF RETAINING HIS BASIC COMPENSATION FOR RETIREMENT PURPOSES. HOWEVER, WHEN EMPLOYEES TRANSFER TO GS POSITIONS, THEIR SALARIES ARE DETERMINED PURSUANT TO THE 'HIGHEST PREVIOUS RATE RULE' IN PART 531 OF THE CSC REGULATIONS AND, THEREFORE, ONLY IF THE COMMISSION AMENDS THE RULE TO THE EFFECT THAT THE BASIC (GROSS) COMPENSATION OF A WB POSITION FROM WHICH AN EMPLOYEE TRANSFERS SHOULD BE RELATED TO THE STATUTORY STEP RATES OF THE GS GRADE WITHOUT REGARD TO THE COST-OF LIVING ALLOWANCE, WILL 45 COMP. GEN. 88 BE CONSIDERED SUPERSEDED."

MR. HEVEY'S PREVAILING RATE POSITION - WAGE BOARD - WAS NOT CONVERTED TO A GENERAL SCHEDULE POSITION. RATHER HE WAS CHANGED TO A DIFFERENT POSITION UNDER THE GENERAL SCHEDULE AND THUS HIS PAY RATE AT THE TIME OF PROMOTION TO GRADE GS-11 WAS FOR DETERMINATION UNDER THE "HIGHEST PREVIOUS RATE RULE." THAT RULE - 5 C.F.R. SEC. 531.203(C) - IN PERTINENT PART READS AS FOLLOWS:

"*** WHEN AN EMPLOYEE IS *** TRANSFERRED *** PROMOTED *** THE AGENCY MAY PAY HIM AT ANY RATE OF HIS GRADE WHICH DOES NOT EXCEED HIS HIGHEST PREVIOUS RATE; HOWEVER, IF HIS HIGHEST PREVIOUS RATE FALLS BETWEEN TWO RATES OF HIS GRADE, THE AGENCY MAY PAY HIM AT THE HIGHER RATE. ***"

WITH RESPECT TO THE 25 PERCENT RECRUITMENT AND RETENTION INCENTIVE FOR WAGE BOARD EMPLOYEES ON GUAM, 52 COMP. GEN. 695 IN PERTINENT PART READS AS FOLLOWS:

"THE SECOND DECISION REFERRED TO IS 45 COMP. GEN. 88 (1965) WHICH PERMITTED AN EXCEPTION TO OUR HOLDING IN B-154096, SEPTEMBER 23, 1964. THE LATTER CITED DECISION HAD INDICATED THAT WHEN AN EMPLOYEE UNDER THE PREVAILING RATE (WAGE BOARD) SYSTEM MOVES - BUT NOT HIS POSITION - TO A POSITION UNDER THE GENERAL SCHEDULE HIS BASIC SALARY SHOULD BE FIXED AT A RATE WHICH WHEN INCREASED BY A 25 PERCENT COST-OF-LIVING ALLOWANCE (PAYABLE TO GS EMPLOYEES IN ALASKA) WOULD NOT CAUSE HIM TO SUFFER A LOSS IN SALARY. THAT HOLDING WAS DESIGNED TO AVOID THE PYRAMIDING OF RATES OCCASIONED ONLY BY A CHANGE IN PAY SYSTEM. SEE 37 COMP. GEN. 285 (1957). THE EXCEPTION SET FORTH IN 45 COMP. GEN. 88 IS TO THE EFFECT THAT WHERE WAGE RATES ARE DERIVED FROM PREVAILING RATES AND THE ELEMENTS OF COST-OF- LIVING DIFFERENTIALS AND THE LIKE INCLUDED THEREIN ARE NOT DISCERNIBLE IT WOULD NOT BE NECESSARY TO COMPARE THE GROSS RATE OF COMPENSATION OF A WAGE BOARD POSITION (BASIC COMPENSATION) WITH THE GROSS COMPENSATION OF THE GS POSITION (BASIC COMPENSATION PLUS COST-OF LIVING ALLOWANCE) FOR PURPOSES OF DETERMINING THE EMPLOYEE'S BASIC SALARY RATE IN THE GS POSITION. THUS RECOGNIZED THAT IN CERTAIN SITUATIONS A BASIC RATE IN THE GS POSITION COULD BE SELECTED COMPARABLE TO THE SALARY RECEIVED IN THE WAGE BOARD POSITION AND THAT AN EMPLOYEE WOULD THEN BE ENTITLED TO A COST-OF-LIVING ALLOWANCE ON THE BASIC RATE OF THE GS POSITION.

"WITH REFERENCE TO ACTIONS INVOLVING THE HIGHEST PREVIOUS RATE RULE UNDER PART 531 OF THE COMMISSION REGULATIONS, WE DO NOT ON THE RECORD BEFORE US CONCUR THAT THE DECISION IN 45 COMP. GEN. 88 SHOULD BE REVERSED. HOWEVER, IF THE COMMISSION WOULD AMEND ITS REGULATIONS CONCERNING THE HIGHEST PREVIOUS RATE RULE TO INDICATE THAT IN SITUATIONS INVOLVING SUCH RULE THE BASIC COMPENSATION (GROSS COMPENSATION) OF THE WAGE BOARD POSITION FROM WHICH AN EMPLOYEE IS TRANSFERRING SHOULD BE RELATED TO THE STATUTORY STEP RATES OF THE GS GRADE WITHOUT REGARD TO THE COST-OF-LIVING ALLOWANCE THEN WE WOULD REGARD 45 COMP. GEN. 88 AS BEING SUPERSEDED. IN THIS CONNECTION WE POINT OUT THAT AN AGENCY WOULD STILL BE ABLE TO SELECT A LOWER SALARY RATE APPLICABLE TO ANY OTHER STEP IN THE GS GRADE TO WHICH THE EMPLOYEE IS TRANSFERRING."

THE CIVIL SERVICE COMMISSION HAS NOT AMENDED ITS REGULATIONS ALONG THE LINES INDICATED IN 52 COMP. GEN. 695. SINCE THE 25 PERCENT INCENTIVE DIFFERENTIAL IS CLEARLY DISCERNIBLE, THE RULE SET FORTH IN B 154096, SEPTEMBER 23, 1964, AS MODIFIED BY 45 COMP. GEN. 88 (1965) IS FOR APPLICATION. MR. HEVEY'S WAGE RATE OF $6.29 AN HOUR WHICH INCLUDES THE 25 PERCENT DIFFERENTIAL ($9,812.40 BASIC PAY PLUS $3,270.80 25 PERCENT DIFFERENTIAL) EQUALS $13,083.20 GROSS ANNUAL COMPENSATION. THE RATE SET IN GRADE GS-11, STEP 2, OF $10,543 WHEN INCREASED BY THE DIFFERENTIAL OF $2,635.75 PROVIDES A GROSS ANNUAL RATE OF $13,178.75 WHICH ACCORDS WITH THE RULE DISCUSSED ABOVE. THAT IS, WHEN AN EMPLOYEE UNDER THE PREVAILING RATE SYSTEM MOVES - BUT NOT HIS POSITION - TO A POSITION UNDER THE GENERAL SCHEDULE, HIS BASIC SALARY SHOULD BE FIXED AT A RATE WHICH WHEN INCREASED BY THE APPLICABLE DIFFERENTIAL WOULD NOT RESULT IN A LOSS OF SALARY.

ACCORDINGLY, THERE IS NO AUTHORITY FOR RETROACTIVE CHANGE IN RATE AS REQUESTED BY MR. HEVEY.