B-133792, OCTOBER 29, 1957, 37 COMP. GEN. 285

B-133792: Oct 29, 1957

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OVERSEAS EMPLOYEES - COST-OF-LIVING ALLOWANCES - RECONVERSION FROM PREVAILING RATE TO CLASSIFICATION ACT POSITIONS - BASIC COMPENSATION DETERMINATION COST-OF-LIVING ALLOWANCES WHICH WERE SERVED TO OVERSEAS EMPLOYEES ON THE CONVERSION OF THE EMPLOYEE AND THE POSITION FROM A CLASSIFICATION ACT POSITION TO A PREVAILING RATE POSITION. THE LETTER STATES THAT THE POSITION OF AN OVERSEAS EMPLOYEE WAS CONVERTED ON OCTOBER 31. THE EMPLOYEE WAS PROMOTED FROM STOCKMAN. SAVED BY CIVIL SERVICE REGULATIONS OR BY ADMINISTRATIVE ACTION TO EMPLOYEES WHOSE POSITIONS ARE CONVERTED FROM THE CLASSIFICATION ACT SCHEDULE TO THE PREVAILING RATE SCHEDULE. NOW IS REGARDED AS "BASIC COMPENSATION" RATHER THAN "ADDITIONAL COMPENSATION.

B-133792, OCTOBER 29, 1957, 37 COMP. GEN. 285

OVERSEAS EMPLOYEES - COST-OF-LIVING ALLOWANCES - RECONVERSION FROM PREVAILING RATE TO CLASSIFICATION ACT POSITIONS - BASIC COMPENSATION DETERMINATION COST-OF-LIVING ALLOWANCES WHICH WERE SERVED TO OVERSEAS EMPLOYEES ON THE CONVERSION OF THE EMPLOYEE AND THE POSITION FROM A CLASSIFICATION ACT POSITION TO A PREVAILING RATE POSITION, PURSUANT TO 5 U.S.C. 1082, DO NOT CONTINUE TO BE REGARDED AS A PART OF THE BASIC COMPENSATION ON THE SUBSEQUENT PROMOTION OF THE EMPLOYEE FROM THE PREVAILING RATE POSITION TO A CLASSIFICATION ACT POSITION, AND, THEREFORE, THE COST-OF LIVING ALLOWANCE SAVED ON THE ORIGINAL CONVERSION MUST BE DEDUCTED FROM THE BASIC RATE OF COMPENSATION ESTABLISHED UNDER THE PREVAILING RATE POSITION IN DETERMINING THE BASIC RATE FOR THE CLASSIFICATION ACT POSITION.

TO THE SECRETARY OF THE NAVY, OCTOBER 29, 1957:

ON SEPTEMBER 10, 1957, THE ASSISTANT SECRETARY OF THE NAVY, REQUESTED OUR DECISION CONCERNING THE PROPER RATE OF COMPENSATION PAYABLE UPON PROMOTION OF AN EMPLOYEE FROM A PREVAILING RATE SYSTEM TO A POSITION UNDER THE GENERAL SCHEDULE OF THE CLASSIFICATION ACT OF 1949, 63 STAT. 954, 5 U.S.C. 1071, AS AMENDED BY THE ACT OF SEPTEMBER 1, 1954, 68 STAT. 1105, 5 U.S.C. 1105.

THE LETTER STATES THAT THE POSITION OF AN OVERSEAS EMPLOYEE WAS CONVERTED ON OCTOBER 31, 1955, FROM SUPERVISORY STOREKEEPER ( GENERAL), GS-2130-4, $3,840 PER ANNUM, PLUS 25 PERCENT COST-OF-LIVING ALLOWANCE ($4,800 PER ANNUM), TO STOCKMAN, $1.85 PER HOUR ($3,840 PER ANNUM) SAVED RATE, PLUS 25 PERCENT COST-OF-LIVING ($3,800 PER ANNUM). ON JANUARY 27, 1957, THE EMPLOYEE WAS PROMOTED FROM STOCKMAN, $1.85 PER HOUR, SAVED RATE, $3,840 PER ANNUM, PLUS 25 PERCENT COST-OF-LIVING ALLOWANCE ($4,800 PER ANNUM), TO SUPERVISORY STORAGE OFFICER, GS-2030-6 ($5,080 PER ANNUM), PLUS 25 PERCENT COST-OF-LIVING ALLOWANCE ($5,100 PER ANNUM).

BECAUSE OF OUR DECISION OF JANUARY 2, 1957, B-129688, 36 COMP. GEN. 482, WHICH HELD THAT TERRITORIAL COST-OF-LIVING ALLOWANCE, SAVED BY CIVIL SERVICE REGULATIONS OR BY ADMINISTRATIVE ACTION TO EMPLOYEES WHOSE POSITIONS ARE CONVERTED FROM THE CLASSIFICATION ACT SCHEDULE TO THE PREVAILING RATE SCHEDULE, NOW IS REGARDED AS "BASIC COMPENSATION" RATHER THAN "ADDITIONAL COMPENSATION," THE FOLLOWING QUESTIONS ARE SUBMITTED---

1. IS THE EMPLOYEE ENTITLED TO HAVE HIS PAY CORRECTED RETROACTIVELY TO THE DATE OF HIS PROMOTION, JANUARY 27, 1957, OR IN THE ALTERNATIVE,TO THE DATE OF RECEIPT OF THE DECISION BY THE DEPARTMENT OF THE NAVY, IN ORDER TO REFLECT HIS BASE PAY OF $4800 PER ANNUM UNDER THE COMPTROLLER GENERAL'S DECISION, SUPRA, AT THE TIME OF HIS PROMOTION?

2. IF AFFIRMATIVE, MAY HIS BASIC COMPENSATION BE SET AT $4890 PER ANNUM ($6112.50 PER ANNUM WITH THE COST-OF-LIVING ALLOWANCE UP TO 18 MAY 1957, AND $5745.75 PER ANNUM BY REASON OF THE REDUCTION IN THE COST-OF-LIVING ALLOWANCE FOR PUERTO RICO, EFFECTIVE AT THE BEGINNING OF THE FIRST PAY PERIOD AFTER 1 MAY 1957/?

THE RULING IN OUR DECISION OF JANUARY 2, 1957, 36 COMP. GEN. 482, TO WHICH YOU REFER IS, IN GENERAL, A RESTATEMENT OF THE CONCLUSIONS REACHED IN DECISIONS OF JULY 6, 1956, 36 COMP. GEN. 37, AND IN B-104523 OF JUNE 6, 1957 (UNPUBLISHED), THAT THE SAVED RATE OF COMPENSATION PAID AN EMPLOYEE CONVERTED WITH HIS POSITION UNDER SECTION 105 (A) OF THE ACT OF SEPTEMBER 1, 1954, 68 STAT. 1106, 5 U.S.C. 1082, FROM THE CLASSIFICATION ACT SCHEDULES TO THE PREVAILING RATE SYSTEM IS HIS BASIC COMPENSATION. THOSE DECISIONS OF COURSE ARE CONTROLLING ONLY SO LONG AS AN EMPLOYEE REMAINS IN HIS POSITION UNDER THE PREVAILING RATE SYSTEM.

IN OUR DECISION OF JUNE 28, 1955, B-124070, 34 COMP. GEN. 708, WE CONSIDERED POSSIBLE RAMIFICATIONS EVOLVING FROM THE CONVERSION PROGRAM AUTHORIZED AND DIRECTED BY PUBLIC LAW 763, AND OUR EXPRESSED VIEW THAT SAVED TERRITORIAL COST-OF-LIVING ALLOWANCES AND POST DIFFERENTIALS SHOULD BE REGARDED AS ADDITIONAL COMPENSATION RATHER THAN BASIC COMPENSATION WAS BASED PRIMARILY UPON THE POSSIBLE HAPPENING OF CONTINGENCIES SUCH AS ARISE IN THE CASE NOW UNDER CONSIDERATION. NOTHING IN OUR LATER DECISIONS HAS OVERRULED THAT CONCLUSION EXCEPT AS TO EMPLOYEES REMAINING UNDER THE PREVAILING RATE SYSTEM.

IN THE CASE OF BAY RIDGE COMPANY V. AARON, 334 U.S. 446, 464, THE SUPREME COURT EXPRESSED A PHILOSOPHY WHICH WE BELIEVED TO BE CONTROLLING HERE. SAID:

WHEN THE STATUTE SAYS THAT THE EMPLOYEE SHALL RECEIVE FOR HIS EXCESS HOURS ONE AND ONE-HALF TIMES THE REGULAR RATE AT WHICH HE IS EMPLOYED, IT IS CLEAR TO US THAT CONGRESS INTENDED TO EXCLUDE OVERTIME PREMIUM PAYMENTS FROM THE COMPUTATION OF THE REGULAR RATE OF PAY. TO PERMIT OVERTIME PREMIUM TO ENTER INTO THE COMPUTATION OF THE REGULAR RATE WOULD BE TO ALLOW OVERTIME PREMIUM ON OVERTIME PREMIUM--- A PYRAMIDING THAT CONGRESS COULD NOT HAVE INTENDED.

A SIMILAR PYRAMIDING OF COST-OF-LIVING ALLOWANCES WOULD IN FACT OCCUR SHOULD THE PROCEDURE PROPOSED IN THE ASSISTANT SECRETARY'S LETTER BE AUTHORIZED IN THIS CASE.

WE ARE LED TO CONCLUDE THEREFORE THAT "PREMIUM COMPENSATION" SAVED BY OTHER THAN EXPRESS STATUTORY PROVISION CANNOT BE OVERLOOKED IN DETERMINING BASIC RATES OF COMPENSATION WHEN EMPLOYEES CONVERTED WITH THEIR POSITIONS FROM THE CLASSIFICATION ACT TO THE PREVAILING RATE SYSTEM ARE LATER RECONVERTED OR PROMOTED TO POSITIONS UNDER THE CLASSIFICATION ACT. PREMIUM COMPENSATION SAVED ON THE INITIAL CONVERSION MUST BE DEDUCTED FROM THE BASIC RATE UNDER THE CLASSIFICATION ACT. THUS, QUESTION (A) MUST BE ANSWERED IN THE NEGATIVE RENDERING UNNECESSARY ANY ANSWER TO QUESTION (B). THE RATE OF THE EMPLOYEE'S COMPENSATION AS ESTABLISHED ON JANUARY 27, 1957, APPEARS PROPER AND CONSTITUTES A VALID EXERCISE OF ADMINISTRATIVE DISCRETION IN THE APPLICATION OF THE HIGHEST PREVIOUS RATE RULE.