B-163548, MAY 1, 1968

B-163548, MAY 1, 1968

TO MR. MCKEE:

YOUR LETTER OF APRIL 10, 1968, ASKS OUR DECISION AS TO THE CORRECTNESS OF THE SALARY ADJUSTMENT EFFECTED JULY 5, 1964, UNDER SECTION 102 (B) (3) OF THE FEDERAL EMPLOYEES SALARY ACT OF 1964, PUBLIC LAW 88-426, APPROVED AUGUST 14, 1964, IN THE CASE OF AN OFFICER OR EMPLOYEE OF THE FEDERAL AVIATION ADMINISTRATION.

EFFECTIVE JANUARY 5, 1964, THE EMPLOYEE CONCERNED WAS INVOLUNTARILY REDUCED IN GRADE FROM GS-17, STEP 4, $19,500 PER ANNUM TO GRADE GS-16, STEP 5, THE THEN MAXIMUM WITHIN GRADE STEP OF GRADE GS-16. AT THE TIME OF THE DOWNGRADING THE EMPLOYEE WAS GRANTED SALARY RETENTION BENEFITS UNDER 5 U.S.C. 1107 (NOW 5 U.S.C. 5337) AND THEREBY BECAME ENTITLED TO CONTINUE TO RECEIVE BASIC PAY AT THE RATE OF $19,500 PER ANNUM, INCLUDING SUBSEQUENT STATUTORY INCREASES IN THAT RATE FOR A PERIOD OF 2 YEARS FROM THE EFFECTIVE DATE OF THE REDUCTION IN GRADE.

THE GENERAL SCHEDULE PROVIDED BY PUBLIC LAW 88-426, APPROVED AUGUST 14, 1964, ADDED 4 WITHIN GRADE STEPS TO GRADE GS-16 MAKING THE NINTH STEP OF THAT GRADE THE MAXIMUM WITH A BASIC RATE OF $24,175 PER ANNUM.

ON AUGUST 14, 1964, EFFECTIVE JULY 5, 1964, THE SALARY RATE OF THE EMPLOYEE IN THIS CASE WAS INCREASED FROM $19,500 TO $24,175, THE NEW MAXIMUM STEP RATE OF GRADE GS-16, PURPORTEDLY UNDER AUTHORITY OF SUBSECTION 102 (B) (3) OF PUBLIC LAW 88-426.

THAT SUBSECTION SO FAR AS HERE PERTINENT READS AS FOLLOWS:

"* * * THE RATES OF BASIC COMPENSATION OF OFFICERS AND EMPLOYEES TO WHOM THE COMPENSATION SCHEDULE SET FORTH IN SUBSECTION (A) OF THIS SECTION APPLIES SHALL BE INITIALLY ADJUSTED AS OF THE EFFECTIVE DATE OF THIS SECTION, AS FOLLOWS:

"/3) IF THE OFFICER OR EMPLOYEE IS RECEIVING BASIC COMPENSATION IMMEDIATELY PRIOR TO THE EFFECTIVE DATE OF THIS SECTION AT A RATE IN EXCESS OF THE MAXIMUM RATE FOR HIS GRADE, HE SHALL RECEIVE (A) THE MAXIMUM RATE FOR HIS GRADE IN THE NEW SCHEDULE, OR (B) HIS EXISTING RATE OF BASIC COMPENSATION IF SUCH EXISTING RATE IS HIGHER.'

UNDER WHAT WAS UNDERSTOOD TO BE THE LITERAL MEANING OF SUBSECTION 102 (B) (3) AND ITS LEGISLATIVE HISTORY (SEE COMMENT ON SUBSECTION 102 (B) (3) IN SENATE REPORT NO. 1124, 88TH CONGRESS, PAGE 11) THE EMPLOYEE'S SALARY RATE INITIALLY WAS ADJUSTED TO THE NINTH STEP OF GRADE GS-16, $24,175 PER ANNUM. SUBSEQUENTLY HIS RATE WAS FURTHER ADJUSTED IN ACCORDANCE WITH PROVISIONS OF THE PAY INCREASE STATUTES ENACTED SINCE THE EFFECTIVE DATE OF PUBLIC LAW 88-426.

THE CORRECTNESS OF THE INITIAL ADJUSTMENT IN JULY 1964 WAS QUESTIONED IN THE AUDIT OF THE AGENCY'S ACCOUNTS BY THE GENERAL ACCOUNTING OFFICE AND THUS RAISED AN ISSUE AS TO THE LEGALITY OF THE SALARY RATES PAID TO THE EMPLOYEE SINCE JULY 5, 1964.

PROVISIONS SIMILAR TO THOSE FOUND IN SUBSECTION 102 (B) OF PUBLIC LAW 88- 426 HAVE BEEN INCLUDED IN ALL SALARY INCREASE STATUTES APPARENTLY BEGINNING WITH THE ACT OF OCTOBER 24, 1951, 65 STAT. 612, PUBLIC LAW 201. SUBSECTION (B) (2) (B) OF THAT STATUTE PROVIDED A SPECIAL INCREASE IN COMPENSATION FOR THOSE EMPLOYEES WHOSE RATES IMMEDIATELY PRIOR TO THE EFFECTIVE DATE OF THAT ACT WERE IN EXCESS OF THE APPROPRIATE LONGEVITY RATES.

EMPLOYEES WHO ARE RECEIVING RETAINED OR SAVED SALARIES UNDER 5 U.S.C. 5337 EXPRESSLY ARE ENTITLED TO "EACH INCREASE IN RATE OF BASIC PAY PROVIDED BY STATUTE.' THAT BENEFIT RELATING SOLELY TO EMPLOYEES RECEIVING SALARY RETENTION UNDER SECTION 507 OF THE CLASSIFICATION ACT OF 1949 WAS CONFERRED BY THE ACT OF SEPTEMBER 21, 1961, 75 STAT. 567, PUBLIC LAW 87- 270, AND HAS BEEN IN EFFECT SINCE THAT DATE. THUS THE RIGHTS OF SUCH EMPLOYEES MUST BE MEASURED BY THE EXPLICIT LANGUAGE OF 5 U.S.C. 5337 RATHER THAN BY THE MORE GENERAL LANGUAGE OF THE INITIAL ADJUSTMENT PROVISIONS OF THE SALARY INCREASE STATUTES.

THE EMPLOYEE IN THE INSTANT CASE IMMEDIATELY PRIOR TO THE EFFECTIVE DATE OF PUBLIC LAW 88-426 WAS RECEIVING BASIC COMPENSATION OF $19,500, THE GENERAL SCHEDULE RATE OF GRADE GS-17, STEP 4. BY VIRTUE OF THE NEW GENERAL SCHEDULE ENACTED BY PUBLIC LAW 88-426 THE BASIC RATE OF GRADE GS- 17, STEP 4, WAS INCREASED TO $23,695. IN CONSONANCE WITH THE REQUIREMENTS OF 5 U.S.C. 5337 THE ONLY NEW RATE THAT LAWFULLY COULD HAVE BEEN GRANTED TO THE EMPLOYEE EFFECTIVE JULY 5, 1964, WAS $23,695.

BY PUBLIC LAW 89-301, APPROVED OCTOBER 29, 1965, EFFECTIVE ON THE FIRST DAY OF THE FIRST PAY PERIOD BEGINNING ON OR AFTER OCTOBER 1, 1965, THE BASIC RATE FOR STEP 4, GRADE GS-17 WAS INCREASED TO $24,548 PER ANNUM. PRESUMABLY THAT RATE WOULD HAVE CONTINUED FOR THE EMPLOYEE CONCERNED FOR THE REMAINDER OF THE SALARY RETENTION PERIOD.

WE NOTE FROM YOUR LETTER, HOWEVER, THAT ON AUGUST 15, 1965, THE EMPLOYEE WAS REASSIGNED LATERALLY TO ANOTHER POSITION IN GRADE GS-16, PURSUANT TO APPROVAL OF THE UNITED STATES CIVIL SERVICE COMMISSION ON JULY 30, 1965, UNDER 5 CFR 335.102. BECAUSE OF THE CIRCUMSTANCES PRESENT IN THE CASE AT THAT TIME, NO ADMINISTRATIVE CONSIDERATION WAS GIVEN, UNDER THE HIGHEST PREVIOUS RATE RULE, TO ESTABLISHING A HIGHER STEP RATE IN GRADE GS-16. SEE FPM SUPPLEMENT 990-2, BOOK 531, S2-4, PAGE 531-8.01. AS INDICATED ABOVE AS OF THE DATE OF THE REASSIGNMENT THE EMPLOYEE WAS RECEIVING THE EXISTING NINTH STEP OF GRADE GS-16, A HIGHER STEP THAN HE WAS THEN ENTITLED TO BY VIRTUE OF A SAVED RATE BUT EQUAL TO THE RATE HE COULD HAVE BEEN ALLOWED UPON REASSIGNMENT IN ACCORDANCE WITH THE ABOVE-CITED REGULATION.

THEREFORE, WE INTERPOSE NO OBJECTION, EFFECTIVE AUGUST 15, 1965, THE DATE OF THE REASSIGNMENT, TO THE SALARY PAID TO THE EMPLOYEE (STEP 9, GRADE GS- 16, $24,175) AND AS THEREAFTER INCREASED BY THE STATUTORY SALARY INCREASES.

WE REGRET THAT WE CANNOT CONCUR IN THE VIEW THAT SECTION 102 (B) (3) OF PUBLIC LAW 88-426 REPEALED ANY PART OF WHAT IS NOW 5 U.S.C. 5337, OR THAT IT AFFORDED AN ALTERNATIVE METHOD OF LAWFULLY ADJUSTING, INCIDENT TO THE ENACTMENT OF PAY INCREASE STATUTES, THE RETAINED SALARY RATES ESTABLISHED UNDER SECTION 5337.

ACTION SHOULD BE TAKEN TO RECOVER THE OVERPAYMENT OF COMPENSATION FOR THE PERIOD JULY 5, 1964, THROUGH AUGUST 14, 1965.