B-151483, JUNE 18, 1963, 42 COMP. GEN. 702

B-151483, JUNE 18, 1963, 42 COMP. GEN. 702

COMPENSATION - PROMOTIONS - SUBSEQUENT TO DOWNGRADING UNDER THE PROMOTION INCREASE RULES IN SECTION 802 (B) OF THE CLASSIFICATION ACT OF 1949, AS AMENDED BY SECTION 604 (A) OF THE CLASSIFICATION ACT AMENDMENTS OF 1962, 5 U.S.C. 1132 (B), AN EMPLOYEE WHO HAD BEEN DEMOTED MORE THAN TWO GRADES AND THEN WAS PROMOTED TO AN INTERVENING GRADE WHILE RECEIVING A SAVED RATE OF COMPENSATION UNDER SECTION 507 OF THE ACT, WHICH RATE EXCEEDS THE MAXIMUM RATE OF THE GRADE TO WHICH PROMOTED, MAY NOT HAVE THE SAVED RATE CONSIDERED AS A PERMANENT OR INDEFINITE RATE IN THE ABSENCE OF ANY INDICATION THAT THE SALARY RETENTION PROVISIONS WERE AMENDED BY THE 1962 AMENDMENT TO SECTION 802 (B), AND, THEREFORE, UPON THE EXPIRATION OF 2 YEARS FROM THE DATE OF THE DEMOTION ACTION, THE EMPLOYEE'S RATE OF COMPENSATION IS FOR COMPUTATION UNDER PART (A) OF SECTION 802 (B), WHICH PROVIDES FOR A RATE OF COMPENSATION TWO-STEPS ABOVE THE RATE OF THE GRADE FROM WHICH PROMOTED.

TO THE CHAIRMAN, UNITED STATES CIVIL SERVICE COMMISSION, JUNE 18, 1963:

YOUR LETTER OF MAY 7, 1963, REQUESTS OUR DECISION ON A QUESTION UNDER THE PROMOTION RULE OF THE CLASSIFICATION ACT, SECTION 802 (B) AS AMENDED BY SECTION 604 (A) OF PUBLIC LAW 87-793, 76 STAT. 847, 5 U.S.C. 1132 (B).

YOU POINT OUT THAT BEFORE THE 1962 AMENDMENTS SECTION 802 (B) PROVIDED THAT UPON PROMOTION AN EMPLOYEE WAS ENTITLED TO "RECEIVE BASIC COMPENSATION AT THE LOWEST RATE OF SUCH HIGHER GRADE WHICH EXCEEDS HIS EXISTING RATE * * * BY NOT LESS THAN ONE STEP-INCREASE OF THE GRADE FROM WHICH PROMOTED; " WHEREAS, UNDER THE AMENDMENT HE "SHALL RECEIVE BASIC COMPENSATION AT THE LOWEST RATE OF SUCH HIGHER GRADE WHICH EXCEEDS HIS EXISTING RATE OF BASIC COMPENSATION BY NOT LESS THAN TWO STEP-INCREASES OF THE GRADE FROM WHICH HE IS PROMOTED * * *.' IN ADDITION, SECTION 604 (A), PUBLIC LAW 87-793 ADDED THE FOLLOWING LANGUAGE TO SECTION 802 (B):

* * * IN CASE ANY SUCH OFFICER OR EMPLOYEE SO PROMOTED OR TRANSFERRED IS RECEIVING BASIC COMPENSATION AT A RATE SAVED TO HIM UNDER SECTION 507 OF THIS ACT UPON REDUCTION IN GRADE, SUCH OFFICER OR EMPLOYEE SHALL RECEIVE (A) BASIC COMPENSATION AT A RATE TWO STEPS ABOVE THE RATE WHICH HE WOULD BE RECEIVING IF SUCH SECTION 507 WERE NOT APPLICABLE IN HIS CASE, OR (B) HIS EXISTING RATE OF BASIC COMPENSATION, IF SUCH EXISTING RATE IS THE HIGHER.

THE REMAINDER OF YOUR LETTER READS, IN PERTINENT PART, AS FOLLOWS:

WE HAVE ASSUMED THAT WHEN AN EMPLOYEE'S COMPENSATION IS FIXED UPON PROMOTION UNDER THE PROMOTION RULE THE RATE THUS FIXED IS A PERMANENT RATE (SUBJECT, OF COURSE, TO FURTHER EARNED STEP-INCREASES WHEN THE RATE SO FIXED IS BELOW THE MAXIMUM OF THE GRADE).

HOWEVER, IT HAS BEEN POINTED OUT THAT IT IS POSSIBLE FOR AN EMPLOYEE WHO HAD BEEN DEMOTED MORE THAN ONE GRADE, WITH A RETAINED RATE UNDER SECTION 507 (A), TO BE PROMOTED TO AN INTERVENING GRADE IN WHICH HIS EXISTING RATE WOULD BE ABOVE THE MAXIMUM RATE. DOUBT HAS BEEN EXPRESSED THAT IN SUCH A CASE THE RATE SHOULD BE CONTINUED BEYOND THE TWO-YEAR PERIOD THAT IT WOULD HAVE CONTINUED AS A RETAINED RATE.

IS A RATE ESTABLISHED IN ACCORDANCE WITH SECTION 802 (B) SUBJECT TO EXPIRATION WHEN BASED ON A RETAINED RATE UNDER SECTION 507 (A/?

THE QUESTION POSED MAY BE ILLUSTRATED AS FOLLOWS: CHART

EXAMPLE EMPLOYEE IS IN GS-10, STEP 10 AT- - - - - - - - - - - - - - - - $9,495

ON 11/1/62 HE IS DEMOTED TO GS-8, STEP 10 ($7,935 P.A.)

WITH RETAINED SALARY - - - - - - - - - - - - - - - - - - $9,495 ON 4/1/63 HE IS PROMOTED TO GRADE GS-9. UNDER 604 (A)

(PUBLIC LAW 87-793) HE IS ENTITLED TO (A) $7,935 AND

$410 EQUAL $8,345, ADJUSTED TO SCHEDULED RATE $8,475,

OR (B), HIS HIGHER EXISTING RATE - - - - - - - - - - - - - - - $9,495 AFTER THE EXPIRATION OF 2 YEARS FROM DATE OF REDUCTION

IN GRADE DOES THE EMPLOYEE'S EXISTING RATE REVERT TO - - - - - $8,475

UPON THE ONE GRADE PROMOTION THE SALARY RATE OF THE EMPLOYEE HERE INVOLVED WOULD BE COVERED BY THE PROVISIONS OF "/B)," 5 U.S.C. 1132 (B) (B), QUOTED ABOVE, THUS CONTINUING HIS SALARY AT THE HIGHER RATE, AND THE QUESTION ARISES WHETHER THE EXISTING RATE THEN BECOMES A PERMANENT OR INDEFINITE RATE AS FIRST PROVIDED IN SECTION 507 OF THE CLASSIFICATION ACT OF 1949, AS ADDED BY PUBLIC LAW 594, APPROVED JUNE 18, 1956, 5 U.S.C. 1107. THERE IS NO EVIDENCE IN THE LEGISLATIVE HISTORY OF THE QUOTED PROVISION THAT SUCH A FAR-REACHING AMENDMENT TO SECTION 507, AS AMENDED, WAS CONTEMPLATED AND THERE IS NOTHING IN SECTION 605 OF PUBLIC LAW 87-793, OTHERWISE AMENDING SECTION 507, TO SUPPORT A CONCLUSION THAT SECTION 604 (A) WAS INTENDED TO SO AMEND THE SALARY RETENTION LAW.

THEREFORE, WE ARE OF THE VIEW THAT THE THIRD SENTENCE OF SECTION 604 (A) IS A SPECIAL COMPENSATION RULE TO BE CONSTRUED IN THE LIGHT OF SECTION 507 OF THE CLASSIFICATION ACT OF 1949, AS AMENDED. CONSIDERING THE EXAMPLE GIVEN FROM THAT ASPECT THE SO-CALLED EXISTING RATE BECOMES IDENTICAL WITH THE RETAINED RATE AND, UNLESS OR UNTIL INCREASED BY OTHER APPLICABLE PROVISION OF LAW TO EXCEED THE RETAINED RATE, CONTINUES TO BE THE EMPLOYEE'S BASIC RATE OF COMPENSATION UNTIL THE EXPIRATION OF 2 YEARS FROM THE EFFECTIVE DATE OF THE ORIGINAL SALARY RETENTION.

UPON THE EXPIRATION OF 2 YEARS THE EMPLOYEE'S BASIC RATE REVERTS TO THE RATE COMPUTED UNDER ,/A)," 5 U.S.C. 1132 (B) (A), AS TO THE RATE COMPUTED UNDER "/A)" , 5 U.S.C. 1132/B) (A), AS INCREASED BY ANY STEP INCREASES TO WHICH HE THEN MAY BE ENTITLED.