B-170675, APR 12, 1973, 52 COMP GEN 695

B-170675, APR 12, 1973, 52 COMP GEN 695

COMPENSATION - WAGE BOARD EMPLOYEES - CONVERSION TO CLASSIFIED POSITIONS - RATE ESTABLISHMENT - COST-OF-LIVING ALLOWANCES 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 GEN. 88 BE CONSIDERED SUPERSEDED.

TO THE CHAIRMAN, UNITED STATES CIVIL SERVICE COMMISSION, APRIL 12, 1973:

WE REFER FURTHER TO YOUR LETTER OF NOVEMBER 3, 1972, REQUESTING OUR VIEWS ON SEVERAL QUESTIONS BEFORE THE COMMISSION ON THE FIXING OF PAY FOR EMPLOYEES IN HAWAII AND GUAM WHOSE POSITIONS ARE CONVERTED FROM THE WAGE BOARD SYSTEM TO THE GENERAL SCHEDULE (GS), OR WHEN SUCH EMPLOYEES TRANSFER FROM WAGE BOARD POSITIONS TO POSITIONS UNDER THE GENERAL SCHEDULE.

AS YOU POINT OUT WHEN WAGE BOARD POSITIONS ARE CONVERTED TO GENERAL SCHEDULE, PART 539 OF THE CIVIL SERVICE COMMISSION REGULATIONS ARE CONTROLLING. SUCH REGULATIONS PROVIDE FOR SETTING THE EMPLOYEES' PAY AT THE RATE OF THE APPROPRIATE GS GRADE THAT IS CLOSEST TO, BUT NOT LESS THAN, THE EMPLOYEES' RATE OF BASIC PAY PRIOR TO CONVERSION. HOWEVER, WHEN EMPLOYEES TRANSFER FROM WAGE BOARD POSITIONS TO GENERAL SCHEDULE POSITIONS THEIR SALARIES ARE DETERMINED PURSUANT TO THE "HIGHEST PREVIOUS RATE RULE" AS CONTAINED IN PART 531 OF THE COMMISSION REGULATIONS.

IT APPEARS THAT THE QUESTIONS BEFORE THE COMMISSION INCLUDE (1) WAGE BOARD SUPERVISORY POSITIONS IN HAWAII WHERE IT IS STATED THE SCHEDULED RATES OF BASIC PAY FOR CERTAIN LEVELS CONTAIN AN ELEMENT RELATED TO THE COST-OF-LIVING ALLOWANCES RECEIVED BY GS EMPLOYEES THERE, AND (2) WAGE BOARD EMPLOYEES ON GUAM WHO RECEIVE A 25 PERCENT "RECRUITMENT AND RETENTION INCENTIVE." YOUR LETTER STATES WITH REFERENCE TO (2) ABOVE THAT WHILE THE INCENTIVE PROVISION IS NOT PART OF THE SCHEDULED WAGE RATES, IT IS DEFINED TO BE INCLUDED IN AN EMPLOYEE'S RATE OF BASIC PAY AND IS USED IN THE COMPUTATION OF OVERTIME AND OTHER COMPENSATION AND BENEFITS, SUCH AS RETIREMENT AND LIFE INSURANCE.

YOUR LETTER STATES THE COMMISION VIEW TO BE THAT THE COST-OF-LIVING ALLOWANCES WHICH THE EMPLOYEES WILL RECEIVE UNDER GS SHOULD NOT BE TAKEN INTO ACCOUNT IN FIXING AN EMPLOYEE'S RATE OF BASIC PAY UPON CONVERSION TO GS. WE UNDERSTAND THAT SPECIFIC DATA IS NOT AVAILABLE IN THE INVOLVED CASES TO SHOW WHAT EFFECT THIS WOULD HAVE UPON THE BASIC RATE DETERMINATION WITHIN THE GS RATE RANGE. APPARENTLY, HOWEVER, EMPLOYEES SO CONVERTED WOULD REALIZE AN APPROXIMATE INCREASE OF FROM 15 TO 25 PERCENT IN GROSS RATE. IT IS POINTED OUT, HOWEVER, THAT IF THE GS COST-OF-LIVING ALLOWANCE IS DEDUCTED FROM THE EMPLOYEE'S RATE OF BASIC PAY THE EMPLOYEE WOULD SUFFER A LOSS OF BENEFITS, SUCH AS A REDUCTION IN THE AMOUNT OF CIVIL SERVICE ANNUITY CONTRARY TO THE STATED PURPOSE OF PART 539 REGULATIONS.

ADDITIONALLY YOUR LETTER REFERS TO THREE OF OUR DECISIONS. THE FIRST DECISION IS 50 COMP. GEN. 332(1970) WHEREIN WE AGREED WITH THE COMMISSION VIEW THAT NIGHT DIFFERENTIAL BE INCLUDED IN THE RATE OF BASIC PAY FOR PURPOSES OF PART 539 REGULATIONS.

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.

WE STRESS THAT 45 COMP. GEN. 88 INVOLVES AN APPLICATION OF THE COMMISSION'S HIGHEST PREVIOUS RATE RULE UNDER PART 531 OF THE COMMISSION REGULATIONS RATHER THAN PART 539 CONVERSION REGULATIONS. THE THIRD DECISION IS 51 COMP. GEN. 656(1972), WHICH INVOLVED THE PROPER METHOD OF DETERMINING AN EMPLOYEE'S SALARY RATE IN HAWAII WHOSE WAGE BOARD POSITION WAS CONVERTED TO THE GENERAL SCHEDULE. UNDER THE GENERAL SCHEDULE THE EMPLOYEE RECEIVES A COST-OF-LIVING ALLOWANCE WHICH IS NOT A PART OF BASIC COMPENSATION. IT WAS HELD THAT THE SALARY RATE OF THE EMPLOYEE WAS FOR DETERMINATION UNDER PART 539 OF THE COMMISSION REGULATIONS RATHER THAN PART 531. WHILE NOT SPECIFICALLY SO STATED THAT DECISION RECOGNIZED THAT THE REGULATIONS IN PART 539 PRECLUDED ANY CONSIDERATION OF THE PRINCIPLE EXPRESSED IN B-154096 OF SEPTEMBER 23, 1964, AND REFERRED TO IN 45 COMP. GEN. 88 THUS, AS FAR AS CONCERNS THE APPLICATION OF PART 539 OF THE REGULATIONS THE PYRAMIDING OF COST-OF LIVING ALLOWANCES CANNOT BE AVOIDED AND AN EMPLOYEE IS ASSURED OF RETAINING HIS BASIC COMPENSATION FOR RETIREMENT PURPOSES.

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.