B-152824, MAR. 2, 1964

B-152824, MAR. 2, 1964

TO HONORABLE ROBERT C. WEAVER, ADMINISTRATOR, HOUSING AND HOME FINANCE AGENCY:

ON NOVEMBER 4, 1963, YOU REQUESTED OUR DECISION ON CERTAIN QUESTIONS, HEREINAFTER QUOTED, CONCERNING THE PROPER SALARY RATE PAYABLE TO MR. GEORGE W. CHERKIS, AN EMPLOYEE OF THE NEW YORK MULTIFAMILY HOUSING INSURING OFFICE, FEDERAL HOUSING ADMINISTRATION.

AS INDICATED IN OUR LETTER OF NOVEMBER 21, 1963, TO YOU, WE SUBMITTED THE MATTER TO THE CIVIL SERVICE COMMISSION FOR A REPORT AND COMMENTS, SINCE AN APPEAL OF YOUR AGENCY WHICH MIGHT HAVE A BEARING ON THE QUESTIONS PRESENTED WAS PENDING THERE. THAT PART OF THE REPLY DATED NOVEMBER 29, 1963, OF THE CHAIRMAN OF THE COMMISSION'S BOARD OF APPEALS AND REVIEW SETTING FORTH THE PERTINENT FACTS IS AS FOLLOWS:

"IN OUR PRELIMINARY REVIEW OF THE APPELLATE RECORD, WE HAVE FOUND THE FOLLOWING SIGNIFICANT FACTS IN THE CASE OF MR. CHERKIS. ON NOVEMBER 12, 1961, MR. CHERKIS, A CAREER EMPLOYEE OF THE FEDERAL HOUSING ADMINISTRATION AND A PREFERENCE ELIGIBLE UNDER THE VETERANS' PREFERENCE ACT OF 1944, WAS PROMOTED FROM GRADE GS-9 AT $7425 PER ANNUM TO GRADE GS-11 AT $7820 PER ANNUM. OFFICIALS OF THE EMPLOYING AGENCY HAVE REFERRED TO THE PROMOTION AS TEMPORARY OR CONDITIONAL; HOWEVER, THE PROMOTION ACTION DID NOT MAKE ANY CHANGE IN THE STATUS OR TENURE OF MR. CHERKIS UNDER THE CIVIL SERVICE REGULATIONS. IT APPEARS THAT MR. CHERKIS HAD NOT AT THE TIME OF HIS PROMOTION PASSED AN EXAMINATION ORDINARILY REQUIRED BY THE FEDERAL HOUSING ADMINISTRATION AS A PREREQUISITE FOR SUCH PROMOTION AND THAT THE RESPONSIBLE AGENCY OFFICIALS INTENDED TO DEMOTE MR. CHERKIS BACK TO GRADE GS-9 IF HE DID NOT SUCCEED IN PASSING THE EXAMINATION WITHIN A REASONABLE PERIOD OF TIME FOLLOWING HIS PROMOTION TO GRADE GS-11.

"MR. CHERKIS DID NOT PASS THE EXAMINATION, AND ON JUNE 10, 1962, HE WAS DEMOTED FROM GRADE GS-11 AT $7820 PER ANNUM TO GRADE GS-9 AT $7425 PER ANNUM. AFTER RECEIVING AN INQUIRY FROM THE COMMISSION'S NEW YORK REGIONAL OFFICE WITH RESPECT TO THE DEMOTION OF JUNE 10, 1962, OFFICIALS OF THE FEDERAL HOUSING ADMINISTRATION FOUND THAT DEMOTION ACTION TO HAVE BEEN ACCOMPLISHED WITHOUT ADHERENCE TO THE ADVANCE NOTICE REQUIREMENTS OF SECTION 14 OF THE VETERANS' PREFERENCE ACT OF 1944, AND ON AUGUST 17, 1962, THEY THEREFORE CANCELLED THE DEMOTION RETROACTIVELY AS OF ITS EFFECTIVE DATE.

THE DEMOTION ACTION WAS REACCOMPLISHED EFFECTIVE OCTOBER 14, 1962, IN ACCORDANCE WITH THE PROCEDURAL REQUIREMENTS OF THE LAW AND OF PART 22 OF THE CIVIL SERVICE REGULATIONS. THE NEW EFFECTIVE DATE OF THE DEMOTION COINCIDED WITH THE EFFECTIVE DATE OF CHANGES IN SALARY RATES AS A RESULT OF THE FEDERAL SALARY REFORM ACT OF 1962. SINCE MR. CHERKIS WAS GIVEN THE BENEFIT OF THE HIGHEST-PREVIOUS-RATE PROVISIONS OF THE PAY REGULATIONS, HIS DEMOTION ON OCTOBER 14, 1962, FROM CONSTRUCTION COST EXAMINER GS-11 TO CONSTRUCTION COST EXAMINER GS-9 RESULTED IN AN INCREASE IN HIS SALARY FROM $7820 TO $8475 PER ANNUM.

"MR. CHERKIS ADDRESSED AN APPEAL FROM THE DEMOTION OF OCTOBER 14, 1962, TO THE COMMISSIONER, FEDERAL HOUSING ADMINISTRATION. THAT APPEAL WAS PROCESSED UNDER THE AGENCY APPEALS SYSTEM SUBJECT TO PART 77 OF THE CIVIL SERVICE REGULATIONS AND RESULTED IN A DECISION BY THE COMMISSIONER ON JANUARY 8, 1963, TO SUSTAIN THE DEMOTION OF MR. CHERKIS.

"ON DECEMBER 26, 1962, HOWEVER, THE COMMISSION'S NEW YORK REGIONAL OFFICE, WHICH HAD RECEIVED A CLASSIFICATION APPEAL FROM MR. CHERKIS, ISSUED A DECISION UNDER TITLE V OF THE CLASSIFICATION ACT OF 1949, AS AMENDED, HOLDING THAT THE POSITION IN WHICH HE WAS THEN SERVING SHOULD BE CLASSIFIED IN GRADE GS-11. SINCE MR. CHERKIS' DEMOTION OF OCTOBER 14, 1962, HAD NOT RESULTED FROM DOWNGRADING OR OTHER CLASSIFICATION ACTION, THE CLASSIFICATION DECISION OF THE COMMISSION'S NEW YORK REGIONAL OFFICE DID NOT MEET THE CONDITIONS OF SECTION 36.202 OF THE CIVIL SERVICE REGULATIONS FOR A RETROACTIVE EFFECTIVE DATE. OFFICIALS OF THE FEDERAL HOUSING ADMINISTRATION DECIDED TO IMPLEMENT THE COMMISSION CLASSIFICATION DECISION BY REPROMOTING MR. CHERKIS, EFFECTIVE FEBRUARY 17, 1963, FROM CONSTRUCTION COST EXAMINER GS-9 TO CONSTRUCTION COST EXAMINER GS-11. ACCORDANCE WITH SUBSECTION 25.104 (A) OF THE CIVIL SERVICE REGULATIONS, MR. CHERKIS' SALARY WAS THUS INCREASED FROM $8475 TO $9105 PER ANNUM.

"IN THE MEANTIME, HOWEVER, MR. CHERKIS HAD ALSO EXERCISED HIS RIGHT UNDER PART 22 OF THE CIVIL SERVICE REGULATIONS TO APPEAL TO THE COMMISSION'S NEW YORK REGIONAL OFFICE WITH RESPECT TO THE DEMOTION ACTION OF OCTOBER 14, 1962, WHICH HAD BEEN SUSTAINED BY THE APPELLATE DECISION OF THE COMMISSIONER, FEDERAL HOUSING ADMINISTRATION, ON JANUARY 8, 1963. FEBRUARY 15, 1963, THE COMMISSION'S NEW YORK REGIONAL OFFICE, HAVING BEEN OFFICIALLY INFORMED ABOUT MR. CHERKIS' REPROMOTION TO BE EFFECTIVE TWO DAYS LATER, ASKED HIM WHETHER HE DESIRED FURTHER ACTION TO BE TAKEN ON HIS APPEAL UNDER PART 22. MR. CHERKIS REPLIED UNDER DATE OF FEBRUARY 18, 1963, INDICATING THAT HE DID DESIRE TO PURSUE HIS PART 22 APPEAL SO THAT HE COULD BE RESTORED TO GRADE GS-11 RETROACTIVELY.

"THE COMMISSION'S NEW YORK REGIONAL OFFICE COMPLETED ITS ADJUDICATION OF MR. CHERKIS' PART 22 APPEAL ON MAY 9, 1963. THE DECISION OF THE REGIONAL OFFICE DID NOT SUSTAIN THE DEMOTION ACTION OF OCTOBER 14, 1962. SUBSTANCE, THE REGIONAL OFFICE FOUND THAT THE DEMOTION HAD BEEN ACCOMPLISHED IN COMPLIANCE WITH THE PROCEDURAL REQUIREMENTS OF THE LAW AND REGULATIONS, THAT THE REASONS FOR THE DEMOTION WERE SUSTAINED, THAT DEMOTION WAS NOT FOR SUCH CAUSE AS WOULD PROMOTE THE EFFICIENCY OF THE SERVICE BECAUSE MR. CHERKIS HAD NOT IN FACT BEEN ASSIGNED TO WORK AT THE LEVEL OF GRADE GS-9 WHEN DEMOTED AND HAD, ON THE CONTRARY, CONTINUED TO PERFORM AT THE LEVEL OF GRADE GS-11 WITHOUT ANY CHANGE IN HIS DUTIES AND RESPONSIBILITIES. ACCORDINGLY, THE CORRECTIVE ACTION RECOMMENDED BY THE REGIONAL OFFICE WAS ". . . THAT THE AGENCY'S RECORDS BE AMENDED TO REFLECT THE APPELLANT'S RESTORATION TO THE POSITION OF CONSTRUCTION COST EXAMINER, GS-11, OR TO A POSITION OF LIKE SENIORITY, STATUS AND PAY FOR WHICH HE IS QUALIFIED AND THAT THE CHANGE TO LOWER GRADE, EFFECTIVE OCTOBER 14, 1962, BE CANCELLED.'

"NO FURTHER APPEAL WAS MADE FROM THE REGIONAL OFFICE'S DECISION OF MAY 9, 1963, AND IT THUS BECAME MANDATORY, PURSUANT TO SUBSECTION 22.401 (F) OF THE CIVIL SERVICE REGULATIONS AND SECTION 19 OF THE VETERANS' PREFERENCE ACT OF 1944, AS AMENDED, FOR THE FEDERAL HOUSING ADMINISTRATION TO COMPLY WITH THE RECOMMENDATION FOR CORRECTIVE ACTION MADE BY THE COMMISSION'S NEW YORK REGIONAL OFFICE. ACCORDINGLY, ON MAY 16, 1963, OFFICIALS OF THE FEDERAL HOUSING ADMINISTRATION EXECUTED THREE OFFICIAL NOTIFICATIONS OF PERSONNEL ACTION WITH RESPECT TO MR. CHERKIS, AT LEAST TWO OF WHICH WERE CONSIDERED BY THE FEDERAL HOUSING ADMINISTRATION OFFICIALS TO BE REQUIRED BY THE PART 22 APPELLATE DECISION OF THE COMMISSION'S NEW YORK REGIONAL OFFICE. THE FIRST OF THE THREE OFFICIAL NOTIFICATIONS OF PERSONNEL ACTION REPORTED THE CANCELLATION OF MR. CHERKIS' CHANGE TO LOWER GRADE, EFFECTIVE OCTOBER 14, 1962, FROM CONSTRUCTION COST EXAMINER GS-11 AT $7820 PER ANNUM TO CONSTRUCTION COST EXAMINER GS-9 AT $8475 PER ANNUM. THE SECOND REPORTED THAT AS OF OCTOBER 14, 1962, THE "TEMPORARY LIMITATION" ON MR. CHERKIS' PROMOTION WAS BEING REMOVED AND HIS SALARY WAS BEING ADJUSTED UNDER PUBLIC LAW 87-793 TO $8310 PER ANNUM. THE THIRD REPORTED THE CANCELLATION OF MR. CHERKIS' PROMOTION EFFECTIVE FEBRUARY 17, 1963, FROM CONSTRUCTION COST EXAMINER GS-9 AT $8475 PER ANNUM TO CONSTRUCTION COST EXAMINER GS-11 AT $9105 PER ANNUM. THE FIRST AND THIRD OF THOSE OFFICIAL NOTIFICATIONS OF PERSONNEL ACTION WERE CONSIDERED BY THE EMPLOYING AGENCY AS NECESSARY TO COMPLY WITH THE RECOMMENDATION FOR CORRECTIVE ACTION IN THE DECISION OF MAY 9, 1963, BY THE COMMISSION'S NEW YORK REGIONAL OFFICE. A PAYROLL CHANGE SLIP WAS ALSO EXECUTED FOR THE PAYROLL PERIOD ENDING JUNE 8, 1963, SHOWING A PERIODIC STEP-INCREASE FOR MR. CHERKIS FROM $8310 TO $8575 PER ANNUM EFFECTIVE RETROACTIVELY AS OF NOVEMBER 11, 1962; THE SAME PAYROLL CHANGE SLIP ALSO SHOWED ADJUSTMENTS IN MR. CHERKIS' SALARY TO REFLECT THE SALARY CHANGES SHOWN ON THE OFFICIAL NOTIFICATIONS OF PERSONNEL ACTION EXECUTED ON MAY 16, 1963. THUS THE EFFECT OF MR. CHERKIS' DECISION TO PURSUE HIS PART 22 APPEAL AFTER HIS REPROMOTION ON FEBRUARY 17, 1963, WAS TO REDUCE HIS SALARY RATE FROM $9105 TO $8575 PER ANNUM AND TO BRING ABOUT A RETROACTIVE ADJUSTMENT OF SALARY ALREADY PAID HIM IN EXCESS OF THE SALARY HE WOULD HAVE RECEIVED IF THE DEMOTION OF OCTOBER 14, 1962, HAD NEVER TAKEN PLACE.

"ON JULY 24, 1963, MR. CHERKIS WROTE TO THE COMMISSION'S NEW YORK REGIONAL OFFICE SOLICITING ITS ASSISTANCE". . . TO RESTORE MY RETROACTIVE SALARY IN KEEPING WITH YOUR FINDINGS AND RECOMMENDATIONS.' WE ASSUME THAT YOU HAVE COPIES OF REGIONAL DIRECTOR GOOGE'S LETTER OF AUGUST 21, 1963, TO THE DIRECTOR OF PERSONNEL, FEDERAL HOUSING ADMINISTRATION, AND OF DIRECTOR OF PERSONNEL MONTGOMERY'S REPLY OF SEPTEMBER 12, 1963, TO MR. GOOGE, SETTING FORTH THEIR RESPECTIVE POSITIONS ON THE MATTER. THEREAFTER, THE COMMISSION'S NEW YORK REGIONAL OFFICE, NOTING THAT THE FEDERAL HOUSING ADMINISTRATION ACTION CANCELLING THE PROMOTION OF MR. CHERKIS WHICH HAD BEEN EFFECTIVE FEBRUARY 17, 1963, REDUCED HIS SALARY FROM $9105 TO $8575 PER ANNUM, HELD THAT CANCELLATION ACTION TO CONSTITUTEAN "ADVERSE ACTION" OF REDUCTION IN COMPENSATION WITHIN THE MEANING OF SECTION 14 OF THE VETERANS' PREFERENCE ACT OF 1944. IN A DECISION LETTER ADDRESSED TO THE DIRECTOR OF PERSONNEL, FEDERAL HOUSING ADMINISTRATION, ON SEPTEMBER 24, 1963, THE COMMISSION'S NEW YORK REGIONAL OFFICE HELD THAT SAID REDUCTION IN COMPENSATION HAD BEEN ACCOMPLISHED WITHOUT FOLLOWING THE PROCEDURAL REQUIREMENTS OF THE LAW AND REGULATIONS AND THEREFORE, WITHOUT REGARD FOR THE MERIT OF THE REASONS, COULD NOT BE SUSTAINED BECAUSE OF FATAL PROCEDURAL DEFECT. THE REGIONAL OFFICE'S RECOMMENDATION FOR CORRECTIVE ACTION WAS ". . . THAT THE APPELLANT BE RESTORED TO THE POSITION OF CONSTRUCTION COST EXAMINER, GS-11, STEP 5, $9105.00 PER ANNUM, OR TO A POSITION OF LIKE SENIORITY, STATUS, AND PAY FOR WHICH HE IS QUALIFIED AND THAT THE NOTIFICATION OF PERSONNEL ACTION, DATED MAY 16, 1963, CANCELLING THE APPELLANT'S PROMOTION TO CONSTRUCTION COST EXAMINER, GS-11, STEP 5, $9105.00, BE CANCELLED.' THE FEDERAL HOUSING ADMINISTRATION'S FURTHER APPEAL FROM THE REGIONAL OFFICE'S DECISION OF SEPTEMBER 24, 1963, IS CURRENTLY PENDING BEFORE THIS BOARD.'

THE NET EFFECT OF THE PERSONNEL ACTIONS TAKEN IN THIS CASE PRIOR TO THE APPELLATE DECISION OF MAY 9, 1963, MAY BE SUMMARIZED AS FOLLOWS: BEGINNING WITH THE 7TH STEP OF GRADE GS-9, $7,425 PER ANNUM, THE EMPLOYEE WAS GIVEN THE 2ND STEP OF GRADE GS-11, $7,820 PER ANNUM, UPON PROMOTION ON NOVEMBER 12, 1961, SO AS TO COMPLY WITH THE ONE-STEP PROMOTION INCREASE REQUIREMENT OF THE THEN-EXISTING TERMS OF SECTION 802 (B) OF THE CLASSIFICATION ACT OF 1949, 63 STAT. 969. UPON DEMOTION OF THE EMPLOYEE ON OCTOBER 14, 1962, THE EFFECTIVE DATE OF THE FEDERAL EMPLOYEES SALARY REFORM ACT OF 1962--- TITLE II OF WHICH (76 STAT. 843) ABOLISHED THE DISTINCTION BETWEEN ,SCHEDULED" RATES AND "LONGEVITY" RATES THUS PERMITTING A WIDER WITHIN- GRADE STEP RANGE FOR APPLYING THE HIGHEST PREVIOUS RATE RULE--- HIS RATE WAS ESTABLISHED AT THE 9TH STEP OF GRADE GS-9, $8,475 PER ANNUM. UPON REPROMOTION ON FEBRUARY 17, 1963, AS A RESULT OF THE "TITLE V" APPEAL, THE EMPLOYEE WAS GIVEN A TWO-STEP INCREASE (BASED UPON THE "HIGHEST PREVIOUS RATE" STEP RECEIVED IN CONNECTION WITH THE DEMOTION TO GRADE GS-9) IN ACCORDANCE WITH SECTION 802 (B) OF THE CLASSIFICATION ACT AS AMENDED BY SECTION 604 (A) OF THE 1962 ACT, 76 STAT. 847, ESTABLISHING HIS SALARY AT THE 5TH STEP OF GRADE GS-11, $9,105 PER ANNUM. THUS, THROUGH THE COMBINED OPERATION OF THE HIGHEST PREVIOUS RATE RULE AND THE STATUTORY PROMOTION INCREASE REQUIREMENT, THE EMPLOYEE WAS RECEIVING SALARY AT A RATE 3 STEPS ABOVE THAT AT WHICH HE HAD ENTERED GRADE GS-11 ON NOVEMBER 12, 1961, WITHOUT REGARD TO THE SERVICE-IN STEP REQUIREMENT OF SECTION 701 (A) OF THE CLASSIFICATION ACT, AS AMENDED, 76 STAT. 847. THAT IS TO SAY,WITHIN A PERIOD OF SLIGHTLY MORE THAN A YEAR THE EMPLOYEE HAD ATTAINED A SALARY RATE IN GRADE GS-11 WHICH WOULD HAVE TAKEN APPROXIMATELY 4 YEARS (208 WEEKS) TO HAVE ATTAINED THROUGH NORMAL OPERATION OF THE STEP INCREASE PROVISIONS OF SAID SECTION 701 (A).

THE QUESTIONS YOU PRESENT ARE AS FOLLOWS:

"1. DID THE MAY 1963 CANCELLATION OF THE OCTOBER 14, 1962, DEMOTION INVALIDATE THE $9105.00 RATE THAT HAD BEEN ESTABLISHED INCIDENT TO THE PROMOTION THAT HAD OCCURRED BETWEEN THOSE DATES (FEBRUARY 17, 1963/?

"2. IF THE ANSWER TO (1) ABOVE IS IN THE AFFIRMATIVE, MAY THE EMPLOYEE BE RESTORED TO THE $9105.00 RATE TO COMPLY WITH THE RECOMMENDATION OF THE NEW YORK CIVIL SERVICE REGION IF THAT RECOMMENDATION IS SUSTAINED BY THE BOARD OF APPEALS AND REVIEW? THE CHAIRMAN OF THE BOARD OF APPEALS AND REVIEW STATED THE FOLLOWING TENTATIVE VIEW AND SUGGESTED DISPOSITION OF YOUR QUESTIONS:

"ON THE BASIS OF ITS PRELIMINARY REVIEW OF THE APPELLATE RECORD, THE BOARD IS INCLINED TO AGREE WITH THE VIEW OF THE FEDERAL HOUSING ADMINISTRATION THAT THE ACTIONS TAKEN ADJUSTING MR. CHERKIS' COMPENSATION FOLLOWING THE NEW YORK REGIONAL OFFICE'S PART 22 APPELLATE DECISION OF MAY 9, 1963, WERE AS A MATTER OF LAW AND REGULATION REQUIRED BY THAT APPELLATE DECISION. UNDER THAT VIEW OF THE SITUATION, MR. CHERKIS' CONSEQUENT REDUCTION IN COMPENSATION WOULD NOT BE AN ADVERSE ACTION WITHIN THE PURVIEW OF SECTION 14 OF THE VETERANS' PREFERENCE ACT OF 1944, AND THE NEW YORK REGIONAL OFFICE'S ADJUDICATION OF SEPTEMBER 24, 1963, WOULD THEREFORE BE IMPROPER FOR LACK OF COMMISSION JURISDICTION.

"TO STATE THE MATTER ANOTHER WAY, IF THE PRESENT TENTATIVE VIEW OF THE BOARD IS CORRECT, THE COMPTROLLER GENERAL'S ANSWER TO THE FIRST QUESTION PRESENTED IN THE LETTER OF NOVEMBER 4, 1963, FROM THE ADMINISTRATOR, HOUSING AND HOME FINANCE AGENCY, WOULD BE AFFIRMATIVE, AND THE SECOND QUESTION WOULD BECOME MOOT WHEN THE BOARD RESCINDED THE NEW YORK REGIONAL OFFICE'S DECISION OF SEPTEMBER 24, 1963.'

WE AGREE WITH THE TENTATIVE VIEWS OF THE CHAIRMAN OF THE BOARD OF APPEALS AND REVIEW THAT THE OFFICIAL NOTIFICATIONS OF PERSONNEL ACTION EXECUTED BY YOUR AGENCY IN RESPONSE TO THE NEW YORK REGIONAL OFFICE'S APPELLATE DECISION OF MAY 9, 1963, WERE REQUIRED BY THE MANDATORY COMPLIANCE PROVISIONS OF SECTIONS 14 AND 19 OF THE VETERANS PREFERENCE ACT OF 1949, AS AMENDED, 5 U.S.C. 863, 868, AND FORMER SECTION 22.401 (F) OF THE CIVIL SERVICE REGULATIONS; THAT SUCH COMPLIANCE ACTION DID NOT REQUIRE FURTHER PROCEEDINGS UNDER SAID SECTION 14. THEREFORE, YOUR QUESTION NO. 1 IS ANSWERED IN THE AFFIRMATIVE. AS INDICATED BY THE CIVIL SERVICE COMMISSION THE SECOND QUESTION WILL BECOME MOOT IN THE EVENT ITS BOARD OF APPEALS AND REVIEW RESCINDS THE REGIONAL OFFICE'S DECISION OF SEPTEMBER 24, 1963.