B-140583, MAR 13, 1974, 53 COMP GEN 665

B-140583, MAR 13, 1974, 53 COMP GEN 665

COMPENSATION - WAGE BOARD EMPLOYEES - PREVAILING RATE EMPLOYEES - WAGE REDUCTIONS - INDEFINITE WAGE RETENTION A GENERAL REGULATION TO PROVIDE AN INDEFINITE WAGE RETENTION FOR ALL PREVAILING RATE EMPLOYEES WHEN WAGE REDUCTIONS ARE BASED UPON DECREASES IN PREVAILING RATES AS DETERMINED BY WAGE SURVEYS, REGARDLESS OF THE PARTICULAR WAGE AREA OR CIRCUMSTANCES INVOLVED, WOULD NOT BE PROPER SINCE IT WOULD BE CONTRARY TO THE STATUTORY PROVISIONS OF THE FEDERAL WAGE SYSTEM.

IN THE MATTER OF WAGE RETENTION FOR PREVAILING RATE EMPLOYEES, MARCH 13, 1974:

THE CHAIRMAN OF THE CIVIL SERVICE COMMISSION SEEKS A DECISION AS TO THE PROPRIETY OF AMENDING FEDERAL PERSONNEL MANUAL (FPM) SUPPLEMENT 532 1 TO PROVIDE THAT A PREVAILING RATE EMPLOYEE WILL RETAIN HIS EXISTING RATE OF PAY FOR AN INDEFINITE PERIOD WHEN AN AREA WAGE SURVEY PRODUCES A WAGE SCHEDULE CONTAINING LOWER RATES THAN THOSE OF THE PRESENT WAGE SCHEDULE FOR THE AREA.

THE FEDERAL PREVAILING RATE ADVISORY COMMITTEE HAS PROPOSED THAT A POLICY BE ESTABLISHED PROVIDING THAT NO PREVAILING RATE EMPLOYEE BE REQUIRED TO SUFFER A REDUCTION IN HIS EXISTING RATE OF PAY IN SITUATIONS WHERE AN AREA WAGE SURVEY RESULTS IN A WAGE SCHEDULE CONTAINING LOWER RATES THAN THOSE OF THE PRESENT WAGE SCHEDULE FOR THE AREA. SPECIFICALLY, THE COMMITTEE RECOMMENDS AND THE CIVIL SERVICE COMMISSION HAS APPROVED, SUBJECT TO THE APPROVAL OF THE COMPTROLLER GENERAL OF THE UNITED STATES, THAT FPM SUPPLEMENT 532-1 BE AMENDED TO INCLUDE THE FOLLOWING POLICY STATEMENT:

NO EMPLOYEE SHOULD SUFFER A LOSS IN PAY AS A RESULT OF IMPLEMENTING A NEW, LOWER WAGE SCHEDULE. IF AN EMPLOYEE'S STEP RATE WITHIN HIS GRADE ON THE NEW WAGE SCHEDULE WOULD RESULT IN A LOWER RATE OF BASIC PAY THAN HE IS PRESENTLY RECEIVING, HE WILL BE ENTITLED TO A RETAINED RATE OF PAY FOR AN INDEFINITE PERIOD OF TIME. THE EMPLOYEE SHALL RECEIVE ONE HALF OF THE AMOUNT OF EACH LATER PREVAILING RATE INCREASE APPLICABLE TO THE RATE OF HIS GRADE UNTIL THE RETAINED RATE OF PAY IS TERMINATED. AN EMPLOYEE'S RETAINED RATE OF PAY WILL ALSO BE TERMINATED IF (1) THERE IS A BREAK IN SERVICE OF ONE OR MORE WORK DAYS; (2) THE EMPLOYEE TRANSFERS OUT OF THE AGENCY; (3) THERE IS SUBSEQUENT CHANGE TO LOWER GRADE OR REASSIGNMENT, EITHER OF WHICH IS EFFECTED FOR PERSONAL CAUSE, AT THE EMPLOYEE'S OWN REQUEST, OR IN A REDUCTION-IN-FORCE DUE TO LACK OF FUNDS OR CURTAILMENT OF WORK; OR (4) THE EMPLOYEE IS ENTITLED TO A SCHEDULED RATE OF PAY WHICH IS EQUAL TO OR HIGHER THAN THE RETAINED RATE BY REASON OF THE NORMAL OPERATION OF THE WAGE SYSTEM, OR ANY OTHER PERSONNEL ACTION.

UNDER THE FEDERAL WAGE SYSTEM AS ENACTED BY PUBLIC LAW 92-392, 5 U.S.C. 5341 (SUPP. II) ET SEQ., THE PAY OF PREVAILING RATE EMPLOYEES IS REQUIRED TO BE FIXED AND ADJUSTED FROM TIME TO TIME AS NEARLY AS IS CONSISTENT WITH THE PUBLIC INTEREST IN ACCORDANCE WITH PREVAILING RATES. UNDER PRIOR STATUTORY PROVISIONS, IT WAS HELD THAT SUCH LANGUAGE DID NOT REQUIRE THE PAY OF PREVAILING RATE EMPLOYEES TO BE ADJUSTED IN EVERY CASE TO CONFORM EXACTLY WITH PREVAILING LOCALITY WAGE RATES, BUT REQUIRED THE WAGES TO BE ADJUSTED "AS NEARLY AS IS CONSISTENT WITH THE PUBLIC INTERST IN ACCORDANCE WITH PREVAILING RATES." 34 COMP. GEN. 563 (1955). THUS IT WAS RECOGNIZED IN 44 COMP. GEN. 476 (1965) THAT HEADS OF DEPARTMENTS AND AGENCIES HAD DISCRETIONARY AUTHORITY TO MAKE REASONABLE DEVIATIONS FROM THE PREVAILING RATE CRITERIA WHEN THE PUBLIC INTEREST REQUIRES AN EXCEPTION TO THE RULE, PARTICULARLY WHEN A BASIS FOR SUCH DEVIATIONS IS TO BE FOUND IN COMMERCIAL OR INDUSTRIAL PRACTICE OR MAY BE DERIVED FROM ACTS OF CONGRESS IN ANALOGOUS SITUATIONS. IN THAT DECISION IT WAS HELD THAT AGENCY REGULATIONS PROVIDING PAY SAVING FOR PREVAILING RATE EMPLOYEES WHO ARE DEMOTED, OR WHOSE PAY WOULD OTHERWISE BE REDUCED BECAUSE OF A CHANGE IN PAY-FIXING METHODS, ETC., THROUGH NO FAULT OF THEIR OWN WERE NOT INVALID PER SE. THIS HOLDING WAS PRIMARILY MADE ON THE BASIS THAT ENACTMENT BY CONGRESS OF SALARY RETENTION BENEFITS FOR OTHER EMPLOYEES IN PARTICULAR CIRCUMSTANCES INDICATED A CONGRESSIONAL RECOGNITION THAT IN EQUITABLE SITUATIONS SALARY RETENTION WAS NOT PER SE CONTRARY TO THE PUBLIC INTEREST. THE ENACTMENT BY CONGRESS OF SALARY RETENTION FOR OTHER EMPLOYEES SET FORTH THE POLICY OF CONGRESS CONCERNING THE CIRCUMSTANCES AND LIMITATIONS UNDER WHICH CONGRESS CONSIDERED IT TO BE IN THE PUBLIC INTEREST TO ALLOW SALARY RETENTION. THEREFORE, 44 COMP. GEN. 476 HELD THAT THE CONDITIONS AND LIMITATIONS IN SUCH ENACTMENTS SHOULD BE GIVEN THE MOST SERIOUS CONSIDERATION IN DETERMINING WHEN AND TO WHAT EXTENT THE PUBLIC INTEREST JUSTIFIES SALARY RETENTION TO PREVAILING RATE EMPLOYEES. HOWEVER, WHERE, AS COVERED BY THE PROPOSED REGULATIONS, WAGE REDUCTIONS ARE BASED UPON DECREASES IN PREVAILING INDUSTRY RATES AS DISCLOSED BY WAGE SURVEYS, IT WAS HELD IN 44 COMP. GEN. 476, THAT WAGE RETENTION IS NOT AUTHORIZED.

ALTHOUGH THERE IS AUTHORITY UNDER THE FEDERAL WAGE SYSTEM TO MAKE REASONABLE DEVIATIONS FROM THE PREVAILING RATE CRITERIA WHEN THE PUBLIC INTEREST REQUIRES, THE PRIMARY CONSIDERATION IN ADJUSTING THE PAY OF PREVAILING RATE EMPLOYEES IS THE PREVAILING RATE. THE PROPOSED REGULATION WOULD IN EFFECT LIMIT ADJUSTMENTS IN THE PAY OF PREVAILING RATE EMPLOYEES TO INCREASES DISCLOSED BY PREVAILING RATE SURVEYS. SINCE 5 U.S.C. 5343 STATES THAT THE PAY OF PREVAILING RATE EMPLOYEES SHALL BE ADJUSTED IN ACCORDANCE WITH PREVAILING RATES, SUCH PAY SHOULD BE ADJUSTED DOWNWARD AS WELL AS UPWARD AS A RESULT OF WAGE SURVEYS. ACCORDINGLY, IT APPEARS THAT THE PROPOSED WAGE RETENTION REGULATION, WHICH IS OF GENERAL APPLICATION TO ALL PREVAILING RATE EMPLOYEES WHO WOULD RECEIVE A WAGE REDUCTION BASED UPON DECREASES IN THE PREVAILING RATES REGARDLESS OF THE WAGE AREA OR SPECIFIC CIRCUMSTANCES OF THAT AREA, MUST BE JUSTIFIED ON THE BASIS OF A POLICY OF CONGRESS THAT IT IS IN THE PUBLIC INTEREST TO PRESERVE THE COMPENSATION OF PREVAILING RATE EMPLOYEES IN SUCH CIRCUMSTANCES.

IN THIS REGARD 5 U.S.C. 5345 (SUPP. II) PROVIDES THAT UNDER CERTAIN CIRCUMSTANCES AND LIMITATIONS WAGE RETENTION BENEFITS SHALL BE GRANTED TO PREVAILING RATE EMPLOYEES WHO ARE DEMOTED OR REASSIGNED TO A LOWER PAY POSITION. CONGRESS HAS NOT, HOWEVER, PROVIDED FOR WAGE RETENTION WHERE REDUCTIONS IN PAY ARE BASED ON DECREASES IN THE PREVAILING RATES. THE WAGE RETENTION BENEFITS AUTHORIZED BY 5 U.S.C. 5345 AND THOSE WHICH HAD BEEN ADMINISTRATIVELY AUTHORIZED BEFORE THE ENACTMENT OF THAT PROVISION GENERALLY RELATE TO SITUATIONS WHERE SPECIFIC EMPLOYEES RECEIVE WAGE REDUCTIONS DUE TO DEMOTIONS OR REASSIGNMENTS OR WHERE CERTAIN GROUPS OF EMPLOYEES RECEIVE WAGE REDUCTIONS DUE TO CHANGES IN THE SYSTEM BY WHICH THEIR WAGE RATES ARE ESTABLISHED. MOREOVER, THE STATUTE PRESCRIBES A 2- YEAR PAY RETENTION PERIOD. THE PROPOSED REGULATION NOT ONLY WOULD PROVIDE WAGE RETENTION BENEFITS FOR ALL PREVAILING RATE EMPLOYEES IN SITUATIONS WHERE THE WAGE REDUCTIONS ARE A RESULT OF THE NORMAL OPERATION OF THE FEDERAL WAGE SYSTEM BUT WOULD PRESCRIBE INDEFINITE WAGE RETENTION. THUS, THE PROPOSED REGULATION MAY NOT BE REGARDED AS BEING SUFFICIENTLY ANALOGOUS TO THE STATUTORY PAY RETENTION PROVISIONS FOR THE PURPOSE OF CONCLUDING THAT THE PUBLIC INTEREST JUSTIFIES PRESERVING THE COMPENSATION OF PREVAILING RATE EMPLOYEES WHEN WAGE SURVEYS DISCLOSE LOWER WAGE RATES.

IN VIEW OF THE ABOVE, WE ARE OF THE OPINION THAT THE PROPOSED GENERAL REGULATION WOULD NOT BE PROPER.