A-59885, FEBRUARY 11, 1935, 14 COMP. GEN. 621

A-59885: Feb 11, 1935

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

TRANSMITTED HEREWITH IS COPY OF MEMORANDUM OF NOVEMBER 27. YOUR DECISION ON THE QUESTIONS RAISED IN THE MEMORANDUM OF NOVEMBER 27FROM THE LEGAL DIVISION OF THE CORPORATION WILL BE GREATLY APPRECIATED BY THE DEPARTMENT. THERE HAVE BEEN RECEIVED IN THIS OFFICE ONLY THE FIRST TWO PAGES OF THE MEMORANDUM OF NOVEMBER 27. THE QUESTION INVOLVED IS UNDERSTOOD TO BE WHETHER THE 5 PERCENT ECONOMY ACT DEDUCTION SHOULD BE MADE FROM THE REDUCED BASIC SALARY RATES RECENTLY FIXED ADMINISTRATIVELY FOR CERTAIN POSITIONS UNDER THE MERCHANT FLEET CORPORATION IN ORDER THAT SUCH BASIC SALARY RATES WOULD CONFORM MORE NEARLY WITH THOSE FIXED FOR COMPARABLE POSITIONS IN THE SEVERAL BRANCHES IN THE DEPARTMENT OF COMMERCE.

A-59885, FEBRUARY 11, 1935, 14 COMP. GEN. 621

COMPENSATION - MERCHANT FLEET CORPORATION - ECONOMY ACT DEDUCTIONS THE AUTHORITY CONTAINED IN SECTION 6 OF THE ACT OF MARCH 20, 1933, 48 STAT. 15, FOR MAKING PROPER ALLOWANCES FOR ANY REDUCTION IN THE COMPENSATION OF EMPLOYEES OF FEDERAL CORPORATIONS SINCE DECEMBER 31, 1931, WHEN APPLYING THE PROVISIONS OF THE ECONOMY ACT REQUIRING A PERCENTAGE REDUCTION, RELATES ONLY TO DEDUCTIONS IN THE BASIC SALARY RATES OF FEDERAL CORPORATION EMPLOYEES MADE AFTER DECEMBER 31, 1931, AND PRIOR TO MARCH 20, 1933, THE DATE OF THE ACT, AND DOES NOT CONSTITUTE CONTINUING AUTHORITY FOR EXEMPTING FROM THE PERCENTAGE DEDUCTIONS BASIC RATES OF COMPENSATION ADMINISTRATIVELY REDUCED AFTER MARCH 20, 1933.

COMPTROLLER GENERAL MCCARL TO THE SECRETARY OF COMMERCE, FEBRUARY 11, 1935:

THERE HAS BEEN RECEIVED YOUR LETTER OF JANUARY 16, 1935, AS FOLLOWS:

THE DEPARTMENT RECENTLY COMPLETED A SURVEY OF POSITIONS UNDER THE MERCHANT FLEET CORPORATION WITH A VIEW TO ADJUSTING THE COMPENSATION OF SUCH POSITIONS TO CONFORM MORE NEARLY TO COMPARABLE POSITIONS IN THE SEVERAL BRANCHES OF THE DEPARTMENT. AS A RESULT OF THAT SURVEY THE SALARY OF VARIOUS EMPLOYEES UNDER THE MERCHANT FLEET CORPORATION HAS BEEN REDUCED, PRACTICALLY ALL DECREASES BEING IN EXCESS OF THE FIVE PERCENT LEGISLATIVE DEDUCTION REQUIRED UNDER EXISTING LAW.

TRANSMITTED HEREWITH IS COPY OF MEMORANDUM OF NOVEMBER 27, 1934, FROM THE LEGAL DIVISION OF THE CORPORATION TOGETHER WITH COPIES OF ITS ACCOMPANYING ENCLOSURES OF MARCH 30 AND JUNE 26, 1933, SUGGESTING THAT IN VIEW OF THE PROVISIONS OF SECTION 6 OF THE ACT APPROVED MARCH 20, 1933, THE FIVE PERCENT ECONOMY ACT DEDUCTION FROM COMPENSATION SHOULD NOT BE APPLIED TO ANY EMPLOYEE OF THE CORPORATION WHOSE SALARY HAS BEEN REDUCED MORE THAN FIVE PERCENT SINCE DECEMBER 31, 1931.

YOUR DECISION ON THE QUESTIONS RAISED IN THE MEMORANDUM OF NOVEMBER 27FROM THE LEGAL DIVISION OF THE CORPORATION WILL BE GREATLY APPRECIATED BY THE DEPARTMENT.

THERE HAVE BEEN RECEIVED IN THIS OFFICE ONLY THE FIRST TWO PAGES OF THE MEMORANDUM OF NOVEMBER 27, 1934, REFERRED TO AND NEITHER OF THE OTHER ENCLOSURES MENTIONED. HOWEVER, FROM YOUR LETTER AND THAT PART OF THE MEMORANDUM OF NOVEMBER 27, 1934, TRANSMITTED, THE QUESTION INVOLVED IS UNDERSTOOD TO BE WHETHER THE 5 PERCENT ECONOMY ACT DEDUCTION SHOULD BE MADE FROM THE REDUCED BASIC SALARY RATES RECENTLY FIXED ADMINISTRATIVELY FOR CERTAIN POSITIONS UNDER THE MERCHANT FLEET CORPORATION IN ORDER THAT SUCH BASIC SALARY RATES WOULD CONFORM MORE NEARLY WITH THOSE FIXED FOR COMPARABLE POSITIONS IN THE SEVERAL BRANCHES IN THE DEPARTMENT OF COMMERCE.

SECTIONS 2 AND 3, TITLE II, OF THE ACT OF MARCH 20, 1933, 48 STAT. 12, CONTAINED THE PROVISIONS FOR THE ECONOMY ACT DEDUCTIONS OF NOT TO EXCEED 15 PERCENT OF THE COMPENSATION OF FEDERAL OFFICERS AND EMPLOYEES. SECTION 6 OF THE SAME ACT AND TITLE, 48 STAT. 15, PROVIDES AS FOLLOWS:

IN THE CASE OF A CORPORATION THE MAJORITY OF THE STOCK OF WHICH IS OWNED BY THE UNITED STATES, THE HOLDERS OF THE STOCK ON BEHALF OF THE UNITED STATES, OR SUCH PERSONS AS REPRESENT THE INTEREST OF THE UNITED STATES IN SUCH CORPORATION, SHALL TAKE SUCH ACTION AS MAY BE NECESSARY TO APPLY THE PROVISIONS OF THIS TITLE TO OFFICES, POSITIONS, AND EMPLOYMENTS UNDER SUCH CORPORATION AND TO OFFICERS AND EMPLOYEES THEREOF, WITH PROPER ALLOWANCE FOR ANY REDUCTION IN COMPENSATION SINCE DECEMBER 31, 1931.

SECTION 21, TITLE II, OF THE ACT OF MARCH 28, 1934, 48 STAT. 521, REDUCED THE MAXIMUM RATE OF THE ECONOMY ACT DEDUCTION TO 5 PERCENT, EFFECTIVE JULY 1, 1934, AND DURING THE CURRENT FISCAL YEAR.

THE MEMORANDUM ACCOMPANYING YOUR LETTER STRESSES, PARTICULARLY THE LAST CLAUSE OF SECTION 6 OF THE ACT OF MARCH 20, 1933, AS AUTHORITY FOR NOT REQUIRING THE 5 PERCENT ECONOMY ACT DEDUCTION FROM THE REDUCED BASIC COMPENSATION OF THE EMPLOYEES OF THE MERCHANT FLEET CORPORATION. THE AUTHORITY CONTAINED IN SECTION 6 RELATES ONLY TO DEDUCTIONS IN BASIC SALARY RATES OF FEDERAL CORPORATION EMPLOYEES MADE AFTER DECEMBER 31, 1931, AND PRIOR TO MARCH 20, 1933, THE DATE OF THE ACT, AND DOES NOT CONSTITUTE CONTINUING AUTHORITY FOR EXEMPTING FROM THE PERCENTAGE DEDUCTIONS BASIC RATES OF COMPENSATION REDUCED AFTER MARCH 20, 1933, AS A RESULT OF AN ADMINISTRATIVE RECLASSIFICATION OR REVALUATION OF THE POSITIONS BASED ON THE DUTIES AND RESPONSIBILITIES PERFORMED. IF THE 5 PERCENT ECONOMY ACT DEDUCTION WERE PERMITTED TO BE ABSORBED IN THE ADMINISTRATIVE REDUCTION IN THE BASIC SALARY RATES, THERE WOULD RESULT NO RECLASSIFICATION OR REVALUATION OF THE POSITIONS AND THE VERY PURPOSE OF THE SALARY ADJUSTMENTS--- UNIFORMITY OF SALARY RATES THROUGHOUT THE DEPARTMENT--- WOULD BE DEFEATED. THE DECISIONS OF THIS OFFICE CITED IN THE PORTION OF THE MEMORANDUM TRANSMITTED RELATE TO IMPOUNDING OF FUNDS AND HAVE NO APPLICATION HERE.

YOU ARE ADVISED, THEREFORE, THAT THE 5 PERCENT ECONOMY ACT DEDUCTION SHOULD BE MADE FROM THE REDUCED BASIC SALARY RATES OF THE EMPLOYEES OF THE MERCHANT FLEET CORPORATION IN QUESTION.