B-176681, OCT 27, 1972

B-176681, OCT 27, 1972

CIVILIAN EMPLOYEE - REEMPLOYED ANNUITANT - SALARY RESTRICTIONS DECISION REGARDING SALARY PAYMENTS TO HANLIN A. FRITZ UNDER A PERSONAL SERVICE CONTRACT ENTERED INTO WITH THE DEPARTMENT OF STATE. SINCE THE CONTRACT INVOLVED HERE CREATED AN EMPLOYER EMPLOYEE RELATIONSHIP AND DID NOT MAKE CLAIMANT AN INDEPENDENT CONTRACTOR, HE WOULD BE SUBJECT TO THE RESTRICTIONS ON REEMPLOYED ANNUITANTS CONTAINED IN 22 U.S.C. 1112. SEE 39 COMP. GEN. 681 (1960). HOWEVER, GAO DOES NOT VIEW THE STATUTE AS REQUIRING THAT EARNINGS ATTRIBUTABLE TO CALENDAR YEAR 1971, BUT NOT PAID UNTIL 1972, BE CONSIDERED FOR PURPOSES OF THE LIMITATION AS 1972 SALARY.

TO MR. SECRETARY:

THIS REFERS TO LETTER OF AUGUST 1, 1972, WITH ENCLOSURES, FROM MR. JOSEPH F. DONELAN, ASSISTANT SECRETARY FOR ADMINISTRATION, CONCERNING SALARY PAYMENTS TO MR. HANLIN A. FRITZ UNDER A PERSONAL SERVICES CONTRACT ENTERED INTO WITH THE DEPARTMENT OF STATE.

THE INFORMATION FURNISHED SHOWS THAT EFFECTIVE SEPTEMBER 16, 1971, THE DEPARTMENT OF STATE THROUGH THE OFFICE OF FOREIGN BUILDINGS OPERATIONS (FBO) AWARDED A PERSONAL SERVICES CONTRACT TO MR. FRITZ FOR SERVICES AS A PROJECT INSPECTOR FOR CONSTRUCTION PURSUANT TO AUTHORITY CONTAINED IN SECTIONS 3 AND 5 OF THE FOREIGN SERVICE BUILDINGS ACT OF 1926, 44 STAT. 403, AS AMENDED, 22 U.S.C. 294 AND 296. THE CONTRACT PROVIDED FOR SERVICES TO BE PERFORMED ON A WHEN-ACTUALLY-EMPLOYED BASIS FOR PROJECTS TO BE SPECIFIED BY THE DEPARTMENT OF STATE.

MR. FRITZ WAS PREVIOUSLY EMPLOYED BY THE DEPARTMENT OF STATE AS A PROJECT SUPERVISOR IN FBO PERFORMING SIMILAR SERVICES UNTIL HIS RETIREMENT ON APRIL 30, 1970. AT THE TIME OF RETIREMENT HIS ANNUAL SALARY WAS $18,996. HIS RETIREMENT ANNUITY FOR 1971 WAS $9,673. SECTION 872(A) OF THE FOREIGN SERVICE ACT AS ADDED BY PUBLIC LAW 86 723, 74 STAT. 846, 22 U.S.C. 1112, PROVIDES AS FOLLOWS:

"(A) NOTWITHSTANDING ANY OTHER PROVISION OF LAW, ANY OFFICER OR EMPLOYEE OF THE SERVICE, WHO HAS RETIRED UNDER THIS CHAPTER AND IS RECEIVING AN ANNUITY PURSUANT THERETO, AND WHO IS REEMPLOYED IN THE FEDERAL GOVERNMENT SERVICE IN ANY APPOINTIVE POSITION EITHER ON A PART TIME OR FULL-TIME BASIS, SHALL BE ENTITLED TO RECEIVE THE SALARY OF THE POSITION IN WHICH HE IS SERVING PLUS SO MUCH OF HIS ANNUITY PAYABLE UNDER THIS CHAPTER WHICH WHEN COMBINED WITH SUCH SALARY DOES NOT EXCEED DURING ANY CALENDAR YEAR THE BASIC SALARY SUCH OFFICER OR EMPLOYEE WAS ENTITLED TO RECEIVE UNDER SECTIONS 867 OR 870 OF THIS TITLE, ON THE DATE OF HIS RETIREMENT FROM THE SERVICE. ANY SUCH REEMPLOYED OFFICER OR EMPLOYEE WHO RECEIVES SALARY DURING ANY CALENDAR YEAR IN EXCESS OF THE MAXIMUM AMOUNT WHICH HE MAY BE ENTITLED TO RECEIVE UNDER THIS SUBSECTION SHALL BE ENTITLED TO SUCH SALARY IN LIEU OF BENEFITS HEREUNDER."

IN VIEW OF THE CIRCUMSTANCES HEREINAFTER RELATED YOU ASK THE FOLLOWING QUESTIONS:

1. WILL THE LIMITATIONS OF 22 U.S.C. 1112 APPLY TO THE PAYMENTS UNDER THE CONTRACT?

2. MAY PAYMENTS IN THE FIRST QUARTER OF CALENDAR YEAR 1972 FOR SERVICES PERFORMED IN 1971 BE CREDITED TO THE LATTER YEAR FOR THE PURPOSES OF DETERMINING ALLOWABLE ANNUITY PAYMENTS UNDER 22 U.S.C. 1112?

PARAGRAPH 4 OF ARTICLE III OF THE EMPLOYMENT CONTRACT PROVIDES CONSISTENT WITH THE LIMITATION IN 22 U.S.C. 1112, SUPRA, THAT:

"PAYMENT FOR SERVICES SHALL NOT EXCEED $9,358 IN ANY ONE CALENDAR YEAR BEGINNING JANUARY 1 AND ENDING DECEMBER 31. SUCH PAYMENT LIMITATION IS EXCLUSIVE OF REIMBURSEMENT FOR PER DIEM AND TRAVEL."

THAT LIMITATION WAS NEGOTIATED BETWEEN THE CONTRACTOR AND FBO TO PROVIDE FOR NOT MORE THAN 125 DAYS OF PERSONAL SERVICES IN EACH CALENDAR YEAR, IN ORDER THAT PAYMENTS UNDER THE CONTRACT, TOGETHER WITH ANNUITY PAYMENTS MADE TO THE CONTRACTOR WOULD NOT EXCEED THE BASIC SALARY TO WHICH THE CONTRACTOR HAD BEEN ENTITLED TO RECEIVE ON THE DATE OF HIS RETIREMENT FROM THE SERVICE. THE INITIAL TRAVEL AUTHORIZATION ISSUED TO THE EMPLOYEE HAD REQUIRED TRAVEL TO BEGIN ON OR ABOUT SEPTEMBER 18, 1971, AND HAD CONTEMPLATED COMPLETION OF SERVICES WITHIN 60 DAYS, WHICH SUBSEQUENTLY WAS EXTENDED UNTIL THE ARRIVAL AT THE SITE OF THE REGULAR FBO PROJECT SUPERVISOR. IN ACCORDANCE WITH THE UNDERSTANDING OF THE PARTIES, IT HAD BEEN ASSUMED BOTH BY THE CONTRACTOR AND FBO THAT PAYMENT FOR SERVICES PERFORMED IN CALENDAR YEAR 1971, BUT WHICH AT THE REQUEST OF THE CONTRACTOR WAS PAID AFTER HE COMPLETED HIS SERVICES IN THE FIRST QUARTER OF 1972, WOULD BE CREDITED TO SALARY RECEIVABLE FOR CALENDAR YEAR 1971 FOR PURPOSES OF CALCULATING ALLOWABLE ANNUITY PAYMENTS FOR THE YEARS 1971 AND 1972 PURSUANT TO 22 U.S.C. 1112.

THE TIME AND ATTENDANCE WORKSHEET FURNISHED SHOWS THAT THE CONTRACTOR PERFORMED A TOTAL OF 97 DAYS OF SERVICE, EXCLUSIVE OF TRAVEL, DURING THE CALENDAR YEAR 1971 AND PERFORMED AN ADDITIONAL 15 DAYS SERVICE, EXCLUSIVE OF TRAVEL, DURING JANUARY OF 1972. SETTLEMENT BY FBO WAS MADE IN ONE PAYMENT ON THE BASIS OF A VOUCHER IN THE AMOUNT OF $9,075 DRAWN BY FBO IN JANUARY 1972 FOR THE TOTAL NUMBER OF DAYS OF WORK ON THE PROJECT. OF THE $9,075, $7,875 WAS ATTRIBUTABLE TO SERVICES PERFORMED IN THE CALENDAR YEAR 1971, AND $1,200 WAS ATTRIBUTABLE TO SERVICES PERFORMED IN 1972.

CONCERNING QUESTION NO. 1, ARTICLE II OF THE CONTRACT PROVIDES THAT THE CONTRACTOR WILL BE RESPONSIBLE TO THE FBO FOR THE PERFORMANCE OF SERVICES TO BE RENDERED ON A TEMPORARY DUTY BASIS. ARTICLE III OF THE CONTRACT PROVIDES THAT THE PROJECT INSPECTOR SHALL BE PAID $75 PER CALENDAR DAY FOR EACH DAY OF TRAVEL AND SERVICES ACTUALLY PERFORMED ON THE PROJECT AND THAT PAYMENT FOR SERVICES SHALL NOT EXCEED $9,358 IN ANY CALENDAR YEAR BEGINNING JANUARY 1 AND ENDING DECEMBER 31. AS STATED IN THE LETTER OF AUGUST 1, 1972, THE PAYMENTS UNDER THE CONTRACT TOGETHER WITH ANNUITY PAYMENTS WERE NOT TO EXCEED THE BASIC SALARY TO WHICH THE CONTRACTOR HAD BEEN ENTITLED TO ON THE DATE OF HIS RETIREMENT FROM THE SERVICE AS SET FORTH IN 22 U.S.C. 1112. THE CONTRACT CLEARLY ESTABLISHES AN EMPLOYER- EMPLOYEE RELATIONSHIP AND DOES NOT CONSTITUTE THE CLAIMANT AN INDEPENDENT CONTRACTOR. AS TO WHETHER A PERSON WHO SERVES UNDER A CONTRACT OF EMPLOYMENT, SUCH AS THE ONE HERE INVOLVED, IS TO BE CONSIDERED AS REEMPLOYED IN AN "APPOINTIVE" POSITION WITHIN THE MEANING OF 22 U.S.C. 1112, OUR DECISIONS CONSISTENTLY HAVE HELD THAT PERSONS EMPLOYED UNDER A CONTRACT OF EMPLOYMENT CREATING AN EMPLOYER-EMPLOYEE RELATIONSHIP ARE WITHIN STATUTORY PROHIBITIONS AGAINST OR RESTRICTIONS ON, THE REEMPLOYMENT OF ANNUITANTS. SEE 39 COMP. GEN. 681 (1960) AND DECISIONS CITED THEREIN.

IN VIEW OF THE FOREGOING YOUR FIRST QUESTION IS ANSWERED IN THE AFFIRMATIVE.

IN REGARD TO QUESTION NO. 2, THE STATUTE IS FRAMED IN TERMS OF SALARY THAT AN EMPLOYEE IS ENTITLED TO RECEIVE. AT THE TIME OF HIS ASSIGNMENT MR. FRITZ IN ACCORDANCE WITH THE TERMS OF THE CONTRACT WAS ENTITLED TO RECEIVE NOT TO EXCEED $9,358 IN ANY ONE CALENDAR YEAR. WE DO NOT VIEW THE STATUTE AS REQUIRING THAT EARNINGS ATTRIBUTABLE TO THE CALENDAR YEAR 1971, BUT NOT PAID UNTIL CALENDAR YEAR 1972, BE CONSIDERED FOR PURPOSES OF THE LIMITATION AS 1972 SALARY. ACCORDINGLY, YOUR SECOND QUESTION IS ANSWERED IN THE AFFIRMATIVE.