B-157102, AUG. 31, 1965

B-157102: Aug 31, 1965

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THE EMPLOYEE WAS DEMOTED EFFECTIVE NOVEMBER 12. HIS RETAINED SALARY RATE AT THE THIRD STEP OF GRADE GS-13 WAS INCREASED TO $11. THE EMPLOYEE'S SALARY RATE WAS ADJUSTED EFFECTIVE NOVEMBER 10. THAT ADJUSTMENT WAS BASED UPON AWARDING THE EMPLOYEE STEP 6 (F) OF GRADE GS-12 AS OF THE DATE OF THE DEMOTION (NOVEMBER 12. THE EMPLOYEE CONTENDS THAT THE ADJUSTMENT SHOULD HAVE BEEN TO STEP 9. UNDER THE LAW IN EFFECT AT THE TIME OF THE DEMOTION THE WITHIN-GRADE RATE RANGE WAS DIVIDED INTO "SCHEDULED RATES" (A THROUGH F FOR GRADEGS 12) AND "LONGEVITY RATES" (X. NUMERICAL DESIGNATIONS FOR THE STEPS WERE SUBSTITUTED FOR THE LETTER DESIGNATIONS PREVIOUSLY USED. NINE STEPS WERE PROVIDED FOR GRADE GS-12.

B-157102, AUG. 31, 1965

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

ON JUNE 24, 1965, YOUR ASSISTANT ADMINISTRATOR (ADMINISTRATION) REQUESTED OUR DECISION CONCERNING THE ESTABLISHMENT OF THE PROPER SALARY RATE FOR A CERTAIN EMPLOYEE UPON TERMINATION OF THE SALARY RETENTION PERIOD FOLLOWING HIS DEMOTION, UNDER THE CIRCUMSTANCES OUTLINED BELOW.

THE EMPLOYEE WAS DEMOTED EFFECTIVE NOVEMBER 12, 1961, FROM THE POSITION OF FISCAL MANAGEMENT OFFICER, GRADE GS-13, THIRD STEP (C), $11,155 PER ANNUM, TO FISCAL MANAGEMENT ANALYST, GRADE GS-12 (NO STEP DESIGNATION) WITH RETAINED OR SAVED RATE EQUAL TO THAT RECEIVED IN THE GS-13 POSITION FOR THE TWO-YEAR RETENTION PERIOD PROVIDED BY SECTION 507 OF THE CLASSIFICATION ACT OF 1949, AS AMENDED, 5 U.S.C. 1107. IN ACCORDANCE WITH THE POSTAL SERVICE AND FEDERAL EMPLOYEES SALARY ACT OF 1962, PUB.L. 87- 793, APPROVED OCTOBER 11, 1962, 76 STAT. 832, 843, HIS RETAINED SALARY RATE AT THE THIRD STEP OF GRADE GS-13 WAS INCREASED TO $11,880 PER ANNUM.

AT THE TERMINATION OF THE TWO-YEAR SALARY RETENTION PERIOD, THE EMPLOYEE'S SALARY RATE WAS ADJUSTED EFFECTIVE NOVEMBER 10, 1963, TO STEP 7, GRADE GS-12, $11,365 PER ANNUM. THAT ADJUSTMENT WAS BASED UPON AWARDING THE EMPLOYEE STEP 6 (F) OF GRADE GS-12 AS OF THE DATE OF THE DEMOTION (NOVEMBER 12, 1961), AND ACCORDING AN INCREASE TO STEP 7 OF GRADE GS-12 UNDER THE TERMS OF THE 1962 SALARY ACT REQUIRING A TWO YEAR (104 CALENDAR WEEKS) WAITING PERIOD FOR AN INCREASE FROM STEP 6 TO STEP 7. THE EMPLOYEE CONTENDS THAT THE ADJUSTMENT SHOULD HAVE BEEN TO STEP 9, $11,995 PER ANNUM.

UNDER THE LAW IN EFFECT AT THE TIME OF THE DEMOTION THE WITHIN-GRADE RATE RANGE WAS DIVIDED INTO "SCHEDULED RATES" (A THROUGH F FOR GRADEGS 12) AND "LONGEVITY RATES" (X, Y AND Z). THE 1962 SALARY ACT ELIMINATED THE LONGEVITY STEPS AS SUCH AND INCLUDED THEM IN THE REGULAR RATE RANGE. ALSO, NUMERICAL DESIGNATIONS FOR THE STEPS WERE SUBSTITUTED FOR THE LETTER DESIGNATIONS PREVIOUSLY USED. NINE STEPS WERE PROVIDED FOR GRADE GS-12.

SECTION 25.103 (B) OF THE FEDERAL EMPLOYEES PAY REGULATIONS, 5 CFR, REV. AS OF JANUARY 1, 1961, 25.103 (B), IN EFFECT AT THE TIME OF THE SUBJECT DEMOTION, PROVIDED IN PERTINENT PART THAT A DEMOTED EMPLOYEE COULD BE PAID AT ANY "SCHEDULED RATE" FOR HIS GRADE WHICH DID NOT EXCEED HIS HIGHEST PREVIOUS RATE. THUS, STEP F (THE SIXTH STEP) WAS THE HIGHEST RATE THAT COULD HAVE BEEN FIXED FOR THE EMPLOYEE AT THE TIME OF HIS DEMOTION, BUT FOR HIS SALARY RETENTION RIGHTS--- THAT STEP HAVING BEEN THE TOP "SCHEDULED RATE" FOR GRADE GS-12.

WE HAVE HELD THAT IT WAS THE DUTY OF THE ADMINISTRATIVE AGENCY IN SALARY RETENTION CASES TO SELECT, AT THE TIME OF DEMOTION, THE RATE IN THE LOWER GRADE WHICH THE EMPLOYEE WOULD HAVE BEEN GIVEN BUT FOR THE SALARY RETENTION PROVISIONS AND TO PROCESS ON THAT RATE ANY STEP OR LONGEVITY INCREASE WHICH OCCURRED DURING THE RETENTION PERIOD. B 152040, AUGUST 20, 1963, 43 COMP. GEN. 169, CITED BY THE ASSISTANT ADMINISTRATOR. IN THAT SAME DECISION WE HELD THAT THE RATE THUS SELECTED DETERMINED THE RATE TO WHICH THE EMPLOYEE WAS ENTITLED UPON TERMINATION OF SALARY RETENTION, NOTWITHSTANDING THE INTERVENING CHANGES IN STEP-RATE STRUCTURE EFFECTED BY THE 1962 SALARY ACT. SEE ALSO, B-151785, AUGUST 1, 1963, 43 COMP. GEN. 103, AND CF. B-155567, NOVEMBER 27, 1964, 44 COMP. GEN. 315. IN CASES IN WHICH, AS IN THIS CASE, THERE WAS A FAILURE OF RATE SELECTION AT THE TIME OF DEMOTION, WE HAVE NOT OBJECTED TO POST-RETENTION ADJUSTMENT ON THE BASIS OF THE HIGHEST RATE PERMISSIBLE UNDER SECTION 25.103 (B), CITED ABOVE, AT THE TIME OF DEMOTION, IN THE ABSENCE OF AN ADMINISTRATIVE REGULATION OR POLICY TO THE CONTRARY.

THE EMPLOYEE CONTENDS THAT SINCE NO ADMINISTRATIVE ACTION WAS TAKEN AT THE TIME OF HIS DEMOTION TO SELECT A SPECIFIC STEP RATE FOR HIM IN GRADE GS-12, HE IS ENTITLED TO HAVE HIS RATE FIXED, UPON TERMINATION OF SALARY RETENTION, IN ACCORDANCE WITH SECTION 25.412 OF THE PAY REGULATIONS AS CONSTITUTED AT THE TIME OF SUCH TERMINATION. SAID SECTION AS PROMULGATED IN THE FEDERAL REGISTER OF MAY 10, 1963, 28 F.R. 4696, READS IN PERTINENT PART AS FOLLOWS:

"SECTION 25.412 RATE DETERMINATION.

"/A) AT THE TIME OF THE EMPLOYEE'S DEMOTION, HIS DEPARTMENT SHALL SELECT A RATE IN THE GRADE TO WHICH HE IS DEMOTED WHICH WOULD HAVE BEEN THE EMPLOYEE'S RATE OF BASIC COMPENSATION IF HE WERE NOT ENTITLED TO A RETAINED RATE. WHEN THE DEPARTMENT DOES NOT SELECT A HIGHER RATE PERMISSIBLE UNDER THE PROVISIONS OF SECTION 25.103 (B), THE RATE SHALL BE DETERMINED AS FOLLOWS:

"/1) WHEN THE EMPLOYEE'S RETAINED RATE IS EQUAL TO A RATE IN THE GRADE TO WHICH HE IS DEMOTED, THAT RATE SHALL BE SELECTED.

"/2) WHEN THE EMPLOYEE'S RETAINED RATE FALLS BETWEEN TWO RATES OF THE GRADE TO WHICH HE IS DEMOTED, THE LOWER OF THE TWO RATES SHALL BE SELECTED.

"/3) WHEN THE EMPLOYEE'S RETAINED RATE IS ABOVE THE MAXIMUM RATE OF THE GRADE TO WHICH HE IS DEMOTED, THE MAXIMUM RATE SHALL BE SELECTED.'

THE PAY REGULATIONS HAD NOT PREVIOUSLY CONTAINED COMPARABLE PROVISIONS AND AT PAGE 4695 OF THE REGISTER IT IS SPECIFICALLY STATED THAT THE NEW REGULATIONS WERE TO BE EFFECTIVE MAY 10, 1963.

IN ORDER TO SUSTAIN THE EMPLOYEE'S CLAIM TO ENTITLEMENT TO STEP 9 OF GRADE GS-12 UPON TERMINATION OF SALARY RETENTION IT WOULD BE NECESSARY TO HOLD THAT THE REVISED REGULATIONS OPERATE IN THE CASE OF SALARY RETENTION PERIODS TERMINATING ON OR AFTER MAY 10, 1963, EVEN THOUGH DEMOTION UPON WHICH SALARY RETENTION WAS BASED OCCURRED PRIOR THERETO. WE CANNOT ACCEPT THAT VIEW. THE REGULATIONS ARE FOR APPLICATION ONLY AS TO THOSE CASES IN WHICH THE DEMOTION OCCURS ON OR AFTER MAY 10, 1963. WE HOLD THAT THOSE REGULATIONS, INSOFAR AS THEY AUTHORIZE ANY RATE WITHIN THE RATE STRUCTURE OF THE 1962 SALARY ACT (AS CONTRASTED WITH "SCHEDULED RATES" AND "LONGEVITY RATES" UNDER PRIOR LAWS), ARE NOT APPLICABLE IN CASES IN WHICH AT THE TIME OF THE DEMOTION THE LAWS AND REGULATIONS LIMITED TO A LESSER RATE THE RATE THAT COULD BE FIXED IN THE LOWER GRADE BUT FOR SALARY RETENTION RIGHTS. CF. DECISION OF NOVEMBER 27, 1964, ABOVE.

IN SUMMARY, OUR VIEW IS THAT, UPON TERMINATION OF THE SALARY RETENTION PERIOD IN THIS CASE, THE EMPLOYEE'S SALARY RATE WAS REQUIRED TO BE ADJUSTED ON THE BASIS OF A RATE NOT IN EXCESS OF THE HIGHEST RATE THAT COULD LAWFULLY HAVE BEEN ACCORDED IN THE LOWER GRADE AT THE TIME OF DEMOTION, SUCH RATE HAVING BEEN THAT OF THE SIXTH STEP OF GRADE GS-12. SINCE HIS POST-RETENTION RATE HAS BEEN ADMINISTRATIVELY ADJUSTED IN ACCORDANCE WITH THAT VIEW, IT FOLLOWS THAT THERE IS NO BASIS FOR PAYMENT OF HIS CLAIM FOR ADDITIONAL COMPENSATION BASED UPON STEP 9, $11,995 PER ANNUM, OF GRADE GS-12.

WE HAVE CAREFULLY NOTED THE VARIOUS CONTENTIONS OF THE EMPLOYEE AND UNION REPRESENTATIVE SET FORTH IN CORRESPONDENCE ENCLOSED WITH THE ASSISTANT ADMINISTRATOR'S LETTER, BUT WE FIND NOTHING ..END :