B-108735, APRIL 15, 1952, 31 COMP. GEN. 519

B-108735: Apr 15, 1952

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IS NOT IN CONTRAVENTION OF SECTION 202 (7) OF THE ACT OF OCTOBER 28. 1952: REFERENCE IS MADE TO LETTER OF MARCH 24. IT IS STATED IN THE LETTER THAT THE PROPOSED SYSTEM. IT IS STATED THAT OVERHEAD AND INDIRECT LABOR COSTS WILL RISE ONLY SLIGHTLY AND THAT. THE GREATER PRODUCTION EXPECTED TO BE REALIZED WILL RESULT IN LOWER UNITS COSTS. OF THE PROPOSAL PROVIDES THAT EMPLOYEES WILL BE PAID AT A RATE EQUIVALENT TO THEIR AVERAGE EARNING RATES FOR THE PREVIOUS THREE -MONTH PERIOD FOR NON-PRODUCTIVE WORK. IT IS FURTHER POINTED OUT IN THE LETTER THAT THE "PREVIOUS THREE- MONTH PERIOD" HAS BEEN SELECTED BECAUSE (1) THE TURNOVER OF WORKERS WOULD IN MANY INSTANCES MAKE IT IMPOSSIBLE TO ESTABLISH THE ACTUAL EARNINGS OVER THE PERIOD OF A PREVIOUS YEAR.

B-108735, APRIL 15, 1952, 31 COMP. GEN. 519

COMPENSATION - INCENTIVE PAY - WAGE BOARD, ETC., EMPLOYEES THE PROPOSED WAGE INCENTIVE SYSTEM, WHICH INCLUDES A PLAN FOR ESTABLISHING THE RATE TO BE PAID FOR SICK, ANNUAL, AND TERMINAL LEAVE, HOLIDAYS, TRAINING AND CONFERENCE PERIODS AND OTHER NONPRODUCTIVE WORK FOR WAGE BOARD EMPLOYEES OF NAVAL SUPPLY ACTIVITIES, IS NOT IN CONTRAVENTION OF SECTION 202 (7) OF THE ACT OF OCTOBER 28, 1949, RELATING TO COMPENSATION OF EMPLOYEES SUBJECT TO WAGE BOARDS OR OTHER WAGE-FIXING AUTHORITIES AND, THEREFORE, THE SYSTEM MAY BE ADOPTED WITHOUT OBTAINING PRIOR LEGISLATIVE AUTHORITY.

ACTING COMPTROLLER GENERAL YATES TO THE SECRETARY OF THE NAVY, APRIL 15, 1952:

REFERENCE IS MADE TO LETTER OF MARCH 24, 1952, FROM THE ASSISTANT SECRETARY OF THE NAVY FOR AIR, FORWARDING COPY OF A " PROPOSED WAGE INCENTIVE SYSTEM FOR THE NAVAL SUPPLY ACTIVITIES, BROOKLYN, NEW YORK," AND REQUESTING AN OPINION AS TO ITS LEGALITY.

IT IS STATED IN THE LETTER THAT THE PROPOSED SYSTEM, IF APPROVED BY THE UNDER SECRETARY OF THE NAVY, AS CONFORMING WITH COMMERCIAL PRACTICES IN THE AREA, APPEARS OTHERWISE TO BE PROPER IN ACCORDANCE WITH THE LAW, SECTION 202 (7) OF THE ACT OF OCTOBER 28, 1949, 63 STAT. 954, 955, RELATING TO THE COMPENSATION OF FEDERAL EMPLOYEES OF THE TYPE HERE IN QUESTION, AND THAT PROVISIONAL APPROVAL OF THE WAGE STABILIZATION BOARD HAS BEEN RECEIVED.

FROM AN EXAMINATION OF THE SUBMITTED COPY OF THE SUBJECT PROPOSAL, IT APPEARS THAT THERE NOW EXISTS A FIVE-STEP RATING SYSTEM BASED UPON WORK QUOTAS BUT WHICH FAILS TO PROVIDE ANY METHOD OF COMPENSATING THE WORKER FOR ITEMS PRODUCED BETWEEN QUOTAS. THE PROPOSED SYSTEM WOULD PROVIDE AN INCENTIVE FOR THE EMPLOYEES SINCE THEY WOULD BE COMPENSATED FOR WORK PERFORMED BETWEEN QUOTAS AND FOR WORK PERFORMED IN EXCESS OF THE QUOTA FOR THE TOP (FIFTH) STEP UPON A PROPORTIONAL BASIS IN ACCORDANCE WITH THE FORMULA SPECIFIED IN THE PROPOSAL. IT IS STATED THAT OVERHEAD AND INDIRECT LABOR COSTS WILL RISE ONLY SLIGHTLY AND THAT, THEREFORE, THE GREATER PRODUCTION EXPECTED TO BE REALIZED WILL RESULT IN LOWER UNITS COSTS. SECTION C.5. OF THE PROPOSAL PROVIDES THAT EMPLOYEES WILL BE PAID AT A RATE EQUIVALENT TO THEIR AVERAGE EARNING RATES FOR THE PREVIOUS THREE -MONTH PERIOD FOR NON-PRODUCTIVE WORK--- SICK, ANNUAL, AND TERMINAL LEAVE, HOLIDAYS, TRAINING AND CONFERENCE PERIODS, OTHER AUTHORIZED NONPRODUCTIVE WORK. IT IS FURTHER POINTED OUT IN THE LETTER THAT THE "PREVIOUS THREE- MONTH PERIOD" HAS BEEN SELECTED BECAUSE (1) THE TURNOVER OF WORKERS WOULD IN MANY INSTANCES MAKE IT IMPOSSIBLE TO ESTABLISH THE ACTUAL EARNINGS OVER THE PERIOD OF A PREVIOUS YEAR, (2) IT WOULD SEEM TO BE SUFFICIENT TO ESTABLISH A REASONABLY ACCURATE ESTIMATE OF WHAT AN EMPLOYEE'S ANNUAL RATE OF EARNING WILL BE, AND (3) IT CONFORMS WITH GENERAL COMMERCIAL PRACTICES.

AS INDICATED IN THE ABOVE-MENTIONED LETTER, THE GENERAL ACCOUNTING OFFICE HAS RECOGNIZED THAT ELEMENTS OF A WAGE PROGRAM FOR FEDERAL EMPLOYEES IN THE RECOGNIZED TRADES OR CRAFTS MAY BE FIXED TO CONFORM WITH COMMERCIAL PRACTICES GENERALLY, WITHOUT OBTAINING PRIOR LEGISLATIVE AUTHORITY THEREFOR, PROVIDED SUCH WAGE ELEMENTS ARE NOT IN CONTRAVENTION OF LAW OR ESTABLISHED RULE APPLICABLE TO FEDERAL PERSONNEL. SEE 25 COMP. GEN. 584. MOREOVER, THE "PREVAILING RATES" CRITERION IS SPECIFIED IN SECTION 202 (7), SUPRA.

EXAMINATION OF THE PROPOSED INCENTIVE WAGE SYSTEM HAS BEEN MADE AND NO LEGAL OBJECTION IS PERCEIVED TO ITS ADOPTION AS A WHOLE. HOWEVER, IT IS NOTED THAT THE COMPUTATION OF LEAVE RATE PROVISION (SECTION C.6.) AUTHORIZES DEDUCTION OF NIGHT DIFFERENTIAL PAY IN ARRIVING AT THE APPLICABLE RATE. IN LINE WITH 24 COMP. GEN. 39, AND 26 ID. 212, AND UPON THE EXISTING RECORD, EXCLUSION OF NIGHT DIFFERENTIAL FROM THE COMPUTATION IS NOT REQUIRED.