B-155567, NOVEMBER 27, 1964, 44 COMP. GEN. 315

B-155567: Nov 27, 1964

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WHOSE SALARY RATE WOULD HAVE BEEN SET AT STEP 5. " HAVING BEEN INVOKED AT THE TIME THE EMPLOYEE WAS DEMOTED IT MAY NOT AGAIN BE CONSIDERED UNLESS ANOTHER PERSONNEL ACTION OCCURS. AN EMPLOYEE WHOSE SALARY RATE AT THE TIME HE WAS DOWNGRADED FROM GS- 18 HAD BEEN ESTABLISHED AT SETP 5. 9 WERE ADDED TO GRADE GS-16 BY THE FEDERAL EMPLOYEES SALARY ACT OF 1964. IT IS STATED THAT MR. LOEB WAS DOWNGRADED ON OCTOBER 16. IN ACCORDANCE WITH PERTINENT CIVIL SERVICE REGULATIONS IT WAS ADMINISTRATIVELY DETERMINED THAT HIS SALARY RATE WOULD HAVE BEEN SET AT THE TOP STEP OF GRADE GS 16 IF HE HAD NOT BEEN ENTITLED TO THE SALARY RETENTION BENEFITS. WAS THE HIGHEST SALARY RATE IN GRADE GS-16. AN ADJUSTMENT OF HIS SALARY RATE IS REQUIRED.

B-155567, NOVEMBER 27, 1964, 44 COMP. GEN. 315

COMPENSATION - DOWNGRADING - SAVED COMPENSATION - STEPS SELECTION - RESELECTION. COMPENSATION - PERIODIC STEP-INCREASES - DOWNGRADED EMPLOYEES - NEW STEPS ESTABLISHED IN GRADE AN EMPLOYEE DOWNGRADED FROM GS-18, $20,000 PER ANNUM, WITH SALARY RETENTION BENEFITS THROUGH OCTOBER 15, 1964, PURSUANT TO 5 U.S.C. 1107 (A), WHOSE SALARY RATE WOULD HAVE BEEN SET AT STEP 5, THE TOP OF GRADE 16, ABSENT THE SALARY RETENTION BENEFITS, MAY NOT BE PAID UPON THE EXPIRATION OF HIS RETENTION BENEFITS AT THE HIGHEST SCHEDULED STEP OF GRADE 16, STEP 9, ESTABLISHED BY THE FEDERAL EMPLOYEES SALARY ACT OF 1964, THE "HIGHEST PREVIOUS RATE" RULE AUTHORIZING ANY SCHEDULED SALARY RATE THAT DOES NOT EXCEED THE HIGHEST PREVIOUS RATE OF EMPLOYEES "REEMPLOYED, TRANSFERRED, PROMOTED, REPROMOTED OR DEMOTED," HAVING BEEN INVOKED AT THE TIME THE EMPLOYEE WAS DEMOTED IT MAY NOT AGAIN BE CONSIDERED UNLESS ANOTHER PERSONNEL ACTION OCCURS; FURTHERMORE, IN ACCORDANCE WITH FPM LETTER NO. 531-27 (1), MAY 10, 1963, THE ORIGINAL SALARY RATE MAY NOT BE RESELECTED. UPON THE EXPIRATION OF A 2-YEAR SALARY RETENTION PERIOD ON OCTOBER 15, 1964, AN EMPLOYEE WHOSE SALARY RATE AT THE TIME HE WAS DOWNGRADED FROM GS- 18 HAD BEEN ESTABLISHED AT SETP 5, THE HIGHEST SCHEDULED STEP IN GS-16, MAY BE ADVANCED TO STEP 6 AS OF JULY 6, 1964, THE DATE STEPS 6, 7, 8, AND 9 WERE ADDED TO GRADE GS-16 BY THE FEDERAL EMPLOYEES SALARY ACT OF 1964, THE EMPLOYEE HAVING SERVED AT LEAST 2 CONTINUOUS YEARS IN GRADE GS-18 PRIOR TO HIS DEMOTION AND MORE THAN THE REQUIRED PERIOD IN GS-16 ACQUIRED THE RIGHT TO BE ADVANCED TO STEP 6, AND HIS WAITING PERIOD FOR ADVANCEMENT TO STEP 7 BEGAN ON JULY 5, 1964.

TO THE SECRETARY OF THE TREASURY, NOVEMBER 27, 1964:

ON NOVEMBER 6, 1964, THE ACTING DEPUTY ASSISTANT SECRETARY FOR ADMINISTRATION, TREASURY DEPARTMENT, REQUESTED OUR DECISION CONCERNING THE CORRECT SALARY RATE PAYABLE IN THE CASE OF MR. WILLIAM H. LOEB, ASSISTANT REGIONAL COMMISSIONER (COLLECTION), GS-16, INTERNAL REVENUE SERVICE, ATLANTA, GEORGIA.

IT IS STATED THAT MR. LOEB WAS DOWNGRADED ON OCTOBER 16, 1962, FROM GRADE GS-18, $20,000 PER ANNUM, WITH SALARY RETENTION BENEFITS OF THAT GRADE THROUGH OCTOBER 15, 1964, 5 U.S.C. 1107 (A). IN ACCORDANCE WITH PERTINENT CIVIL SERVICE REGULATIONS IT WAS ADMINISTRATIVELY DETERMINED THAT HIS SALARY RATE WOULD HAVE BEEN SET AT THE TOP STEP OF GRADE GS 16 IF HE HAD NOT BEEN ENTITLED TO THE SALARY RETENTION BENEFITS. AT THAT TIME STEP 5, $18,000 PER ANNUM, WAS THE HIGHEST SALARY RATE IN GRADE GS-16.

THE FEDERAL EMPLOYEES SALARY ACT OF 1964, PUBLIC LAW 88-426, APPROVED AUGUST 14, 1964, 78 STAT. 400, BUT SO FAR AS PERTINENT HERE MADE RETROACTIVELY EFFECTIVE TO JULY 5, 1964, ESTABLISHED ADDITIONAL STEPS 6, 7, 8 AND 9 IN GRADE GS-16. THUS STEP 9 AT $24,175 PER ANNUM BECAME THE HIGHEST SCHEDULED STEP IN THAT GRADE.

SINCE THE EMPLOYEE'S RETENTION BENEFITS BY REASON OF THE DEMOTION EXPIRED IN OCTOBER 1964, AN ADJUSTMENT OF HIS SALARY RATE IS REQUIRED. IT IS CONTENTED THAT IT WAS THE INTENTION OF THE INTERNAL REVENUE SERVICE TO GRANT HIM THE MAXIMUM SALARY AT THE TIME OF THE DOWNGRADING AND SINCE THE NEW STEPS HAVE BEEN ADDED IN THE GRADE TO WHICH HE WAS REDUCED, HE NOW SHOULD BE GIVEN THE BENEFIT THEREOF. YOU PRESENT THE FOLLOWING QUESTIONS:

(1) WOULD IRS BE JUSTIFIED IN PAYING MR. LOEB $24,175 WHICH IS THE TOP SCHEDULED STEP?

(2) IF YOUR ANSWER TO (1) IS NEGATIVE WOULD IRS BE JUSTIFIED IN PAYING MR. LOEB AT THE 6TH SCHEDULED RATE INSTEAD OF THE 5TH SCHEDULED RATE TO PROVIDE FOR A STEP INCREASE BASED ON TWO YEARS OF SERVICE IN GRADE GS-16?

THE SELECTION OF THE MAXIMUM STEP (5) OF GRADE GS-16, AS THE SALARY RATE MR. LOEB WOULD HAVE RECEIVED HAD HE NOT BEEN ENTITLED TO SALARY RETENTION AND WHICH HE WOULD BE PAID UPON TERMINATION THEREOF WAS IN CONSONANCE WITH THE "HIGHEST PREVIOUS RATE" RULE (FPM SUPPLEMENT 990 2, PAGE 531-7, FORMERLY 25.103 (B) (1), PAY REGULATIONS), WHICH FOR EMPLOYEES WHO ARE "REEMPLOYED, TRANSFERRED, PROMOTED, REPROMOTED OR DEMOTED," AUTHORIZES A SALARY AT ANY SCHEDULED RATE OF THE GRADE WHICH DOES NOT EXCEED THEIR HIGHEST PREVIOUS RATE. AS INDICATED THE RULE IS FOR APPLICATION ONLY IN CONNECTION WITH THE SPECIFIED PERSONNEL ACTIONS, AND HAVING BEEN INVOKED UPON MR. LOEB'S DEMOTION IS NOT FOR FURTHER CONSIDERATION UNLESS AND UNTIL ANOTHER OF THE STATED PERSONNEL ACTIONS OCCURS. AS TO RESELECTION OF THE RATE ORIGINALLY DETERMINED WE DIRECT YOUR ATTENTION TO FPM LETTER NO. 531- 27 (1), MAY 10, 1963, WHEREIN IT IS EXPRESSLY STATED ON PAGE 2:

THE SELECTION OF A RATE AT THE TIME OF THE DEMOTION CANNOT BE CHANGED AT A LATER DATE IN THE ABSENCE OF SOME PERSONNEL OR POSITION CHANGE. FOR EXAMPLE, PRIOR TO THE FEDERAL SALARY REFORM ACT LONGEVITY RATES WERE NOT AVAILABLE UNLESS THE EMPLOYEE HAD PREVIOUSLY EARNED A LONGEVITY RATE. EVEN THOUGH THE HIGHER RATES ARE NOT AVAILABLE AS A RESULT OF THE ELIMINATION OF LONGEVITY RATES AS SUCH, AGENCIES MAY NOT CHANGE THE RATE WHICH WAS SELECTED AT THE EMPLOYEE'S DEMOTION.

SO FAR AS PERTINENT HERE WE SEE NO BASIS FOR A DISTINCTION BETWEEN THE HIGHER RATES RESULTING FROM THE ELIMINATION OF THE LONGEVITY STEPS AND THE ADDITIONAL STEPS SUBSEQUENTLY CREATED BY PUBLIC LAW 88-426, SUPRA. THEREFORE, YOUR FIRST QUESTION IS ANSWERED IN THE NEGATIVE.

AS TO YOUR SECOND QUESTION--- SINCE THE EMPLOYEE HAD SALARY RETENTION RIGHTS IN GRADE GS-18 WE ASSUME HE HAD SERVED AT LEAST TWO CONSECUTIVE YEARS THEREIN AT THE TIME OF DEMOTION. THUS, HAVING SERVED FOR MORE THAN THE REQUIRED PERIOD IN GS-16 AND ABOVE ON JULY 5, 1964, THE DATE THE ADDITIONAL STEPS WERE ADDED TO THAT GRADE, AND ASSUMING THAT HE MET ALL OTHER REQUIREMENTS FOR A WITHIN-GRADE INCREASE, THE EMPLOYEE ACQUIRED THE RIGHT AT THAT TIME TO BE ADVANCED ONE STEP IN GRADE, THAT IS, TO STEP 6, AND HIS WAITING PERIOD FOR ADVANCEMENT TO STEP 7 BEGAN ON THAT DATE. ACCORDINGLY, THE QUESTION IS ANSWERED IN THE AFFIRMATIVE.