B-172753, JUL 20, 1971, 51 COMP GEN 53

B-172753, JUL 20, 1971, 51 COMP GEN 53

COMPENSATION - DOWNGRADING - SAVED COMPENSATION - REVERSION RATE THE SPECIAL RATE SELECTED FOR A DEMOTED EMPLOYEE AS THE RATE HE WILL RECEIVE AT THE END OF THE 2-YEAR SAVED PAY PERIOD PRESCRIBED BY 5 U.S.C. 5337, THE SALARY RETENTION ACT, IS NOT AFFECTED PURSUANT TO 5 CFR 530.306(B)(3) BY THE FACT THE SPECIAL RATE IS DECREASED OR DISCONTINUED DURING THE RETENTION PERIOD, AND THE SPECIAL RATE IS THE RATE TO WHICH THE EMPLOYEE WILL REVERT ON THE EXPIRATION OF THE RETENTION PERIOD AND CONTINUES TO BE ENTITLED TO AS LONG AS HE REMAINS IN THE SAME POSITION OR UNTIL HE BECOMES ENTITLED TO A HIGHER RATE. THEREFORE, A GS-13 EMPLOYEE DEMOTED TO GS-11 WITH THE RETAINED SPECIAL RATE OF $18,945, FOR WHOM GS- 11, STEP 10, AT THE SPECIAL RATE OF $18,088 WAS SELECTED, A RATE SUBSEQUENTLY DECREASED TO $16,604, IS ENTITLED AT THE END OF THE RETENTION PERIOD TO $18,088 FOR AS LONG AS HE REMAINS IN THE SAME POSITION OR UNTIL HE IS ENTITLED TO A HIGHER RATE. COMPENSATION - DOWNGRADING - SPECIAL SALARY RATES - ADJUSTMENTS ON BASIS OF STATUTORY INCREASES SINCE ADJUSTMENTS IN SPECIAL SALARY RATES UNDER 5 U.S.C. 5303(D) RESULTING FROM A GENERAL INCREASE IN STATUTORY PAY SCHEDULES ARE NOT INCREASES PROVIDED BY STATUTE WITHIN THE MEANING OF 5 U.S.C. 5337(A), THE ADJUSTMENTS MAY NOT BE REFLECTED IN THE RETAINED RATES DERIVED FROM THE SPECIAL SALARY RATES ESTABLISHED FOR DEMOTED EMPLOYEES, AND IT FOLLOWS THE GENERAL CONVERSION RULE IN SECTION 531.205(A)(3) OF THE CIVIL SERVICE REGULATIONS (36 F.R. 1029) WITH RESPECT TO SALARY RATES ABOVE THE MAXIMUM RATE OF AN EMPLOYEE'S GRADE IS FOR APPLICATION IN PRESCRIBING AN INCREASE FOR EMPLOYEES RECEIVING A RETAINED SALARY RATE UNDER 5 U.S.C. 5337(A). COMPENSATION - DOWNGRADING - SAVED COMPENSATION - MORE THAN ONE DOWNGRADING ACTION WHEN AN EMPLOYEE IS RECEIVING A RETAINED RATE OF COMPENSATION BASED ON A SPECIAL RATE THAT IS LIMITED BY THE FORMULA IN 5 U.S.C. 5337(B), AN INCREASE UNDER 5 U.S.C. 5303(D) IN THE SPECIAL RATE OF THE GRADE AND STEP FROM WHICH HE WAS DEMOTED IS NOT REGARDED AS AN INCREASE PROVIDED BY STATUTE WITHIN THE MEANING OF 5 U.S.C. 5337(B), BUT THE RETAINED RATE PRESCRIBED FOR THE EMPLOYEE MAY BE INCREASED UNDER THE GENERAL CONVERSION RULE IN SECTION 531.205(A)(3) OF THE CIVIL SERVICE COMMISSION REGULATIONS. THUS APPLYING THE GENERAL CONVERSION RULE, AN EMPLOYEE REDUCED THREE GRADES WHOSE SPECIAL RATE IN GS-12, STEP 3, WAS $15,611, AND WHOSE RETAINED RATE IN GS-7, STEP 1, UNDER THE FORMULA IN 5 U.S.C. 5337(B) IS $13,828, IS ENTITLED TO A NEW RETAINED RATE OF $14,456 ($13,828, PLUS $628, THE INCREASE IN STEP 10 OF GS-7). COMPENSATION - DOWNGRADING - SPECIAL SALARY RATES - REVISION OR TERMINATION THE SALARY RATES IN EXCESS OF THE MAXIMUM REGULAR RATES UNDER CIVIL SERVICE REGULATIONS (5 CFR 530.306) AND EXECUTIVE ORDER 11073, DATED JANUARY 2, 1963, RECEIVED BY EMPLOYEES AS A RESULT OF A DOWNWARD REVISION OR TERMINATION OF SPECIAL RATE RANGES ARE NOT COVERED BY 5 U.S.C. 5337 - THE SALARY RETENTION ACT - BUT ARE SAVED RATES TO WHICH THE GENERAL CONVERSION RULES FOR STATUTORY PAY INCREASES APPLY.

TO THE CHAIRMAN, UNITED STATES CIVIL SERVICE COMMISSION, JULY 20, 1971:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF APRIL 22, 1971, REQUESTING OUR DECISION REGARDING VARIOUS QUESTIONS CONCERNING SALARY RETENTION SINCE THE ISSUANCE OF FEDERAL PERSONNEL MANUAL LETTER NO. 530 157 DISCONTINUING OR REVISING CERTAIN SPECIAL RATE RANGES UNDER 5 U.S.C. 5303.

THE SPECIFIC QUESTIONS ON WHICH YOU ASK OUR DECISION ARE AS FOLLOWS:

1. WHEN THE RATE SELECTED AT THE TIME OF AN EMPLOYEE'S DEMOTION AS THE RATE WHICH WOULD HAVE BEEN HIS RATE OF BASIC PAY IF HE WERE NOT ENTITLED TO A RETAINED RATE, UNDER REGULATION 531.512, IS A SPECIAL RATE, DOES THAT REMAIN THE RATE TO WHICH THE EMPLOYEE WILL REVERT ON EXPIRATION OF THE RETENTION PERIOD IF THE SPECIAL RATES FOR THE GRADE ARE DECREASED OR DISCONTINUED BEFORE THAT EXPIRATION?

2. (A)(1) ARE ADJUSTMENTS IN SPECIAL RATES UNDER 5 U.S.C. 5303(D) RESULTING FROM A GENERAL INCREASE IN STATUTORY PAY SCHEDULES TO BE REGARDED AS INCREASES PROVIDED BY STATUTE WITHIN THE MEANING OF 5 U.S.C. 5337(A)? (2) IF NOT, DOES A GENERAL CONVERSION RULE SUCH AS SECTION 531.205(A) OF THE COMMISSION'S REGULATIONS (36 F.R. 1029) APPLY TO A RETAINED SPECIAL RATE RECEIVED UNDER 5 U.S.C. 5337(A)?

(B)(1) WHEN AN EMPLOYEE IS RECEIVING A RETAINED RATE WHICH WAS BASED ON A SPECIAL RATE BUT IS LIMITED BY 5 U.S.C. 5337(B), IS AN INCREASE UNDER 5 U.S.C. 5303(D) IN THE SPECIAL RATE IN THE GRADE AND STEP FROM WHICH HE WAS DEMOTED TO BE REGARDED AS AN INCREASE PROVIDED BY STATUTE WITHIN THE MEANING OF 5 U.S.C. 5337(B)? (2) IF NOT, IS HIS RETAINED RATE TO BE INCREASED UNDER A GENERAL CONVERSION RULE SUCH AS SECTION 531.205(A) OF THE COMMISSION'S REGULATIONS UNDER EXECUTIVE ORDER NO. 11576? (3) IF NEITHER, IS ANY ADJUSTMENT TO BE MADE IN HIS RETAINED RATE AT THE TIME OF A GENERAL PAY INCREASE?

(C) DO THE GENERAL CONVERSION RULES FOR STATUTORY PAY INCREASES APPLY TO SAVED SPECIAL RATES RESULTING FROM DOWNWARD REVISION OF TERMINATION OF SPECIAL RATE RANGES?

BEGINNING QUESTION 1 YOU STATE THAT A GS-11 ENGINEER IS RECEIVING A RETAINED RATE OF $18,945 (A SPECIAL RATE) UNDER 5 U.S.C. 5337, THE SALARY RETENTION LAW, AS A RESULT OF HIS DEMOTION IN APRIL 1969 FROM GS 13. THE TIME OF HIS DEMOTION THE 10TH RATE IN GS-11, THEN A SPECIAL RATE OF $18,088, WAS SELECTED AS THE RATE HE WOULD RECEIVE AT THE END OF THE 2- YEAR RETENTION PERIOD. SINCE THEN THE 10TH RATE FOR GS-11 ENGINEERS HAS BECOME THE REGULAR RATE, NOW $16,404.

AT THE TIME THE EMPLOYEE WAS DEMOTED HE WOULD HAVE RECEIVED THE SPECIAL RATE OF $18,088 IF HE HAD NOT BEEN ENTITLED TO THE SAVED RATE. WHEN THE SPECIAL RATE WAS DISCONTINUED HE WOULD CONTINUE TO RECEIVE THAT RATE UNDER CIVIL SERVICE REGULATIONS (5 CFR 530.306(B)(3)) AS LONG AS HE REMAINED IN THE SAME POSITION OR UNTIL HE BECAME ENTITLED TO A HIGHER RATE. THEREFORE, THE EMPLOYEE SHOULD RECEIVE THE RATE OF $18,088 AT THE END OF THE RETENTION PERIOD UNLESS HE IS ENTITLED TO A HIGHER RATE UNDER THE CITED REGULATION.

WITH REGARD TO QUESTIONS 2(A) (1) AND (2) WE HELD IN DECISION B 167671, SEPTEMBER 17, 1969, THAT ADJUSTMENTS IN SPECIAL SALARY RATES UNDER SECTION 504 OF THE FEDERAL SALARY REFORM ACT OF 1962, AS AMENDED, NOW 5 U.S.C. 5303, ARE RATES PRESCRIBED BY ADMINISTRATIVE ACTION AND THUS MAY NOT BE REGARDED AS STATUTORY INCREASES TO BE REFLECTED IN RETAINED RATES DERIVED FROM SPECIAL RATES. THE DECISION CITED ABOVE INVOLVED A RETAINED SPECIAL RATE WHICH WAS ADJUSTED BY FEDERAL PERSONNEL MANUAL LETTER NO. 530-32, JULY 28, 1966. PARAGRAPH 2 OF THAT LETTER READS AS FOLLOWS:

IT SHOULD BE NOTED THAT ACTION HAS BEEN TAKEN TO INCREASE CERTAIN OF THE SPECIAL RANGES SO THAT THEY WOULD CONTINUE TO BEAR THE SAME RELATIONSHIP TO THE NEW REGULAR RANGES THAT THEY BORE TO THE OLD REGULAR RANGES. THIS IS THE CASE WITH THE RANGES FOR GS-5, 6, AND 7 ON TABLES I AND XV. WE MUST EMPHASIZE THAT THIS ADJUSTMENT IS NOT AUTOMATIC BUT RATHER IS BASED ON A FINDING THAT SUCH HIGHER RATES ARE NEEDED AND ARE JUSTIFIED.

FEDERAL PERSONNEL MANUAL LETTER NO. 530-156, JANUARY 29, 1971, THE MOST RECENT AUTHORIZATION UNDER 5 U.S.C. 5303(D) FOR ADJUSTMENT OF THE SALARY RATES OF EMPLOYEES COVERED BY SPECIAL RATE SCHEDULES IN CONNECTION WITH A GENERAL PAY INCREASE FOR GENERAL SCHEDULE AND OTHER STATUTORY SCHEDULE EMPLOYEES, STATES THAT "THE COMMISSION HAS DECIDED THAT THE PAY OF SUCH EMPLOYEES SHALL BE INCREASED BY AN AMOUNT FULLY EQUIVALENT TO THE GENERAL PAY INCREASE FOR GENERAL SCHEDULE EMPLOYEES AUTHORIZED BY EXECUTIVE ORDER 11576." WHILE THE LETTER DOES NOT STATE SO EXPLICITLY, IT APPEARS THAT THE INCREASED RATES WERE BASED ON AN ADMINISTRATIVE FINDING THAT SUCH INCREASED RATES WERE JUSTIFIED. THE STATUTORY LANGUAGE INVOLVED MERELY REQUIRES ADJUSTMENT IN THE SPECIAL RATE RANGES AT THE TIME OF A GENERAL INCREASE IN THE REGULAR GENERAL SCHEDULE RATES. WE UNDERSTAND THAT SUCH A GENERAL INCREASE OF SALARIES IN THE GENERAL SCHEDULE DOES NOT ALWAYS REQUIRE UPWARD ADJUSTMENT OF SALARIES IN THE SPECIAL RATE RANGES. THEREFORE, WE SEE NO BASIS FOR ANY DIFFERENT VIEW FROM THAT EXPRESSED IN THE DECISION OF SEPTEMBER 17, 1969. IN OTHER WORDS, THE INCREASES IN THE SPECIAL RATE RANGES MAY NOT BE REGARDED AS STATUTORY INCREASES. FOLLOWS THAT A GENERAL CONVERSION RULE WITH RESPECT TO SALARY RATES ABOVE THE MAXIMUM RATE OF THE EMPLOYEE'S GRADE SUCH AS SECTION 531.205(A)(3) OF THE COMMISSION'S REGULATIONS (36 F.R. 1029) WOULD BE FOR APPLICATION.

IN CONNECTION WITH QUESTIONS 2(B)(1), (2), AND (3), YOU STATE THAT THE QUESTION CONCERNS AN EMPLOYEE DEMOTED MORE THAN THREE GRADES FROM A POSITION IN WHICH HE WAS RECEIVING A SPECIAL RATE. IN ONE INSTANCE AN ENGINEER IN GS-12, STEP 3, WITH A SPECIAL RATE OF $15,611 WAS REDUCED TO GS-7 ON DECEMBER 28, 1970. UNDER THE FORMULA IN 5 U.S.C. 5337(B) HIS RETAINED RATE WAS COMPUTED AS FOLLOWS:

EMPLOYEES SPECIAL RATE IN GS-12 $15,611

REGULAR RATE OF GS-9, STEP 1 -9,881

5,730

REGULAR RATE OF GS-7, STEP 1 8,098

EMPLOYEE'S RETAINED RATE $13,828

THE LIMITING FORMULA IN 5 U.S.C. 5337(B) READS AS FOLLOWS:

(B) THE RATE OF BASIC PAY TO WHICH AN EMPLOYEE IS ENTITLED UNDER SUBSECTION (A) OF THIS SECTION WITH RESPECT TO EACH REDUCTION IN GRADE TO WHICH THIS SECTION APPLIES MAY NOT EXCEED THE SUM OF -

(1) THE MINIMUM RATE OF THE GRADE TO WHICH HE IS REDUCED UNDER EACH REDUCTION IN GRADE TO WHICH THIS SECTION APPLIES (INCLUDING EACH INCREASE IN RATE OF BASIC PAY PROVIDED BY STATUTE); AND

(2) THE DIFFERENCE BETWEEN HIS RATE IMMEDIATELY BEFORE THE FIRST REDUCTION IN GRADE TO WHICH THIS SECTION APPLIES (INCLUDING EACH INCREASE IN RATE OF BASIC PAY PROVIDED BY STATUTE) AND THE MINIMUM RATE OF THAT GRADE WHICH IS THREE GRADES LOWER THAN THE GRADE FROM WHICH HE WAS REDUCED UNDER THE FIRST OF THE REDUCTIONS IN GRADE (INCLUDING EACH INCREASE IN THE RATE OF BASIC PAY PROVIDED BY STATUTE).

SIMILAR TO THE ANSWER TO QUESTIONS 2(A) (1) AND (2) THE WORDING "INCLUDING EACH INCREASE IN RATE OF BASIC PAY PROVIDED BY STATUTE" AS USED IN THE LIMITING FORMULA IS NOT APPLICABLE TO INCREASES IN SPECIAL RANGE RATES AUTHORIZED BY ACTION OF YOUR AGENCY. THEREFORE, INCREASES IN SPECIAL RATE RANGES AS A RESULT OF A GENERAL INCREASE BY STATUTE IN THE GENERAL SCHEDULE RATES MAY NOT BE REGARDED AS STATUTORY INCREASES FOR THE PURPOSE OF APPLYING THE FORMULA IN 5 U.S.C. 5337(B). HOWEVER, WE SEE NO REASON WHY A GENERAL CONVERSION RULE SUCH AS SECTION 531.205(A)(3) OF THE COMMISSION'S REGULATIONS WOULD NOT BE APPLICABLE TO THE RETAINED RATE. THAT REGARD WE NOTE THAT YOU HAVE RECOMPUTED THE RETAINED RATE ON VARIOUS BASES USING THE FORMULA IN 5 U.S.C. 5337(B). IT IS OUR VIEW THAT WHERE ONE OF THE THREE RATES COVERED IN THAT SUBSECTION IS A SPECIAL RATE, AS IN THIS CASE, SUCH A RECOMPUTATION IS NOT NECESSARY. ACCORDINGLY, APPLYING THE GENERAL CONVERSION RULE THE EMPLOYEE WOULD BE ENTITLED TO A NEW RETAINED RATE OF $14,456 ($13,828 PLUS $628, THE INCREASE IN STEP 10 OF GS -7).

YOUR LETTER STATES THA QUESTION 2(C) INVOLVES EMPLOYEES WHO ARE RECEIVING SALARIES IN EXCESS OF THE MAXIMUM REGULAR RATES UNDER CIVIL SERVICE REGULATIONS (5 CFR 530.306) AND EXECUTIVE ORDER 11073 AS A RESULT OF A DOWNWARD REVISION OR TERMINATION OF SPECIAL RATE RANGES. SUCH RATES ARE NOT COVERED BY 5 U.S.C. 5337 AND ARE MERELY RATES WHICH ARE SAVED BY THE REGULATION CITED. WE AGREE THAT THE GENERAL CONVERSION RULES FOR STATUTORY PAY INCREASES APPLY TO SUCH SAVED RATES.