B-140607, OCTOBER 21, 1959, 39 COMP. GEN. 302

B-140607: Oct 21, 1959

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PRECLUDES THE INCLUSION OF OVERSEAS DIFFERENTIAL IN THE COMPUTATION OF BASIC COMPENSATION WHICH IS SAVED TO EMPLOYEES UNDER THE HIGHEST PREVIOUS SALARY RATE PROVISIONS IN SECTION 802 OF THE CLASSIFICATION ACT OF 1949. THE ACTING POSTMASTER GENERAL REQUESTED OUR DECISION WHETHER THE ACTION OF THE POST OFFICE DEPARTMENT WAS PROPER IN CONSIDERING OVERSEAS DIFFERENTIAL WHEN COMPUTING AN EMPLOYEE'S HIGHEST PREVIOUS RATE OF COMPENSATION UNDER THE FOLLOWING STATED FACTS AND CIRCUMSTANCES. THE EMPLOYEE CONCERNED WAS APPOINTED TO A CAF-14. HE WAS ASSIGNED TO BERLIN. WAS PAID THE 25 PERCENT OVERSEAS DIFFERENTIAL. THIS INCREASE WAS ADDED TO THE $10. THE EMPLOYEE'S COMPENSATION WAS FIXED BY YOUR DEPARTMENT AS STEP 6 OF GS-14.

B-140607, OCTOBER 21, 1959, 39 COMP. GEN. 302

CIVILIAN PERSONNEL - COMPENSATION - HIGHEST PREVIOUS SALARY RATE RULE - OVERSEAS DIFFERENTIAL THE DESIGNATION OF OVERSEAS DIFFERENTIAL PAID TO EMPLOYEES OUTSIDE OF THE CONTINENTAL UNITED STATES AS "ADDITIONAL COMPENSATION" BY SECTION 207 OF THE INDEPENDENT OFFICES APPROPRIATION ACT, 1949, APPROVED SEPTEMBER 16, 1948, AS AMENDED, 5 U.S.C. 118H, PRECLUDES THE INCLUSION OF OVERSEAS DIFFERENTIAL IN THE COMPUTATION OF BASIC COMPENSATION WHICH IS SAVED TO EMPLOYEES UNDER THE HIGHEST PREVIOUS SALARY RATE PROVISIONS IN SECTION 802 OF THE CLASSIFICATION ACT OF 1949, 5 U.S.C. 1132 NOTE, AND MAKES UNNECESSARY THE INCLUSION IN THE DEFINITION OF "HIGHEST PREVIOUS SALARY" IN SECTION 25.102 (J) OF THE FEDERAL EMPLOYEES PAY REGULATIONS OF ANY REFERENCE TO THE OVERSEAS DIFFERENTIAL WHICH PRIOR TO SEPTEMBER 16, 1948, HAD BEEN ADMINISTRATIVELY CONSIDERED TO BE PART OF BASIC COMPENSATION.

TO THE POSTMASTER GENERAL, OCTOBER 21, 1959:

ON AUGUST 27, 1959, YOUR REFERENCE 800, THE ACTING POSTMASTER GENERAL REQUESTED OUR DECISION WHETHER THE ACTION OF THE POST OFFICE DEPARTMENT WAS PROPER IN CONSIDERING OVERSEAS DIFFERENTIAL WHEN COMPUTING AN EMPLOYEE'S HIGHEST PREVIOUS RATE OF COMPENSATION UNDER THE FOLLOWING STATED FACTS AND CIRCUMSTANCES.

THE EMPLOYEE CONCERNED WAS APPOINTED TO A CAF-14, STEP 1, POSITION AT $7,175 PER ANNUM ON MARCH 11, 1946, BY THE THEN WAR DEPARTMENT. HE WAS ASSIGNED TO BERLIN, GERMANY, AND WAS PAID THE 25 PERCENT OVERSEAS DIFFERENTIAL. THE FEDERAL EMPLOYEES PAY ACT OF 1946 INCREASED HIS SALARY RATE TO $8,179.50 PER ANNUM; HOWEVER, THE $10,000 MAXIMUM COMPENSATION CEILING IN THE ACT PREVENTED THE EMPLOYEE FROM RECEIVING COMPENSATION AT THE RATE OF $10,000 PER ANNUM UNTIL OCTOBER 20, 1946, WHEN HE ACCEPTED A CHANGE TO A LOWER GRADE. ON AUGUST 17, 1958, THE POST OFFICE DEPARTMENT APPOINTED THE EMPLOYEE TO A GS-14 POSITION AND DETERMINED TO GIVE HIM THE FULL BENEFIT OF THE HIGHEST PREVIOUS SALARY RULE. IN COMPUTING THE EMPLOYEE'S HIGHEST PREVIOUS SALARY THE DEPARTMENT INCLUDED OVERSEAS DIFFERENTIAL IN THE AMOUNT OF $1,820.50, THE DIFFERENCE BETWEEN $10,000 AND $8,179.50, THE SALARY RATE FOR CAF 14, STEP 1. SINCE JULY 1, 1946, THE COMPENSATION FOR GS-14, STEP 1, HAS BEEN INCREASED TO $11,335, AND INCREASE OF $3,155.50. THIS INCREASE WAS ADDED TO THE $10,000 TO OBTAIN A HIGHEST PREVIOUS SALARY OF $13,315.50. THE EMPLOYEE'S COMPENSATION WAS FIXED BY YOUR DEPARTMENT AS STEP 6 OF GS-14, NAMELY, $12,555 PER ANNUM. OUR AUDITORS QUESTION THE INCLUSION OF OVERSEAS DIFFERENTIAL AS BASIC COMPENSATION IN DETERMINING THE EMPLOYEE'S NEW BASIC SALARY RATE.

IN OUR DECISION OF SEPTEMBER 4, 1944, 24 COMP. GEN. 181, WE HELD THAT WHILE THE OVERSEAS DIFFERENTIAL IS REGARDED AS A PART OF THE BASIC COMPENSATION OF A POSITION LOCATED OUTSIDE THE CONTINENTAL LIMITS OF THE UNITED STATES, IT IS NOT TO BE REGARDED AS A PART OF THE BASIC COMPENSATION OF THE SAME CLASS OF POSITION OR OF ANY OTHER POSITION LOCATED WITHIN THE CONTINENTAL LIMITS OF THE UNITED STATES. IT APPEARS TO BE THE VIEW OF YOUR DEPARTMENT THAT SECTION 25.102 (J) OF THE FEDERAL EMPLOYEES PAY REGULATIONS (PAGE Z1-318 OF THE FEDERAL PERSONNEL MANUAL) ISSUED BY THE CIVIL SERVICE COMMISSION PURSUANT TO THE CLASSIFICATION ACT OF 1949, 63 STAT. 954, 5 U.S.C. 1072, WHICH DEFINES THE TERM "HIGHEST PREVIOUS RATE," IN EFFECT, NULLIFIES OUR DECISION, 24 COMP. GEN. 181. THAT VIEW IS BASED UPON THE FACT THAT THERE IS NOTHING IN SECTION 25.102 (J) WHICH IN ANY WAY INDICATES THAT THE DEFINITION OF HIGHEST PREVIOUS RATE EXCLUDED COMPENSATION WHICH AT ONE TIME WAS CLEARLY PART OF BASIC SALARY.

IT IS TRUE AS POINTED OUT BY YOUR DEPARTMENT THAT PRIOR TO SEPTEMBER 16, 1948, OVERSEAS DIFFERENTIAL WAS CONSIDERED (UNDER ADMINISTRATIVE REGULATIONS) TO BE A PART OF THE BASIC COMPENSATION OF A POSITION LOCATED OUTSIDE THE CONTINENTAL LIMITS OF THE UNITED STATES. HOWEVER, SUBSEQUENT TO SEPTEMBER 16, 1948, UNDER SECTION 207 OF THE INDEPENDENT OFFICES APPROPRIATION ACT OF 1949, AS AMENDED BY SECTION 104 OF THE SUPPLEMENTAL INDEPENDENT OFFICES APPROPRIATION ACT OF 1949, 5 U.S.C. 118H, AND THE REGULATIONS ISSUED THEREUNDER ( EXECUTIVE ORDER NO. 10000, SEPTEMBER 16, 1948), OVERSEAS DIFFERENTIAL WAS NO LONGER CONSIDERED AS COMPENSATION FIXED FOR A POSITION AND PAYABLE TO OCCUPANT OF A POSITION AS AN INCREASE IN THE RATE OF BASIC COMPENSATION, BUT AS ,ADDITIONAL COMPENSATION" PAYABLE UPON A PERSONAL BASIS. SUCH "ADDITIONAL COMPENSATION" WOULD NOT BE SAVED BY SECTION 802 OF THE CLASSIFICATION ACT OF 1949, AS AMENDED, SUPRA, 5 U.S.C. 1132, AND THE REGULATIONS ISSUED PURSUANT THERETO SINCE THEY SAVE ONLY "BASIC COMPENSATION.'

IN VIEW OF THE PROVISIONS OF SECTION 207 OF THE INDEPENDENT OFFICES APPROPRIATION ACT, 1949, AS AMENDED, SUPRA, 5 U.S.C. 118H WHICH DESIGNATED OVERSEAS DIFFERENTIAL AS "ADDITIONAL COMPENSATION," IT WAS NOT NECESSARY FOR THE CIVIL SERVICE COMMISSION TO INCLUDE IN SECTION 25.102 (J) OF THE FEDERAL EMPLOYEES PAY REGULATIONS ANY REFERENCE TO OVERSEAS DIFFERENTIAL WHICH PRIOR TO THE INDEPENDENT OFFICES APPROPRIATION ACT OF 1949, AS AMENDED, WAS CONSIDERED UNDER ADMINISTRATIVE REGULATIONS AS PART OF THE BASIC COMPENSATION OF POSITIONS LOCATED OUTSIDE THE CONTINENTAL LIMITS OF THE UNITED STATES. THEREFORE, SECTION 25.102 (J) COULD NOT HAVE HAD ANY EFFECT ON OUR DECISION 24 COMP. GEN. 181.

SINCE THE ACTION OF YOUR DEPARTMENT, WHICH INCLUDED OVERSEAS DIFFERENTIAL IN THE COMPUTATION OF THE HIGHEST PREVIOUS SALARY RATE OF THE EMPLOYEE IN QUESTION WAS IN VIOLATION OF THE STATUTES, REGULATIONS, AND OUR DECISION AS STATED ABOVE, THE REFERRED-TO EXCESS SALARY PAYMENTS ARE ILLEGAL AND WE HAVE NO AUTHORITY TO WAIVE COLLECTION THEREOF AS REQUESTED BY YOUR DEPARTMENT.