B-180021(A),L/M, MAR 20, 1975

B-180021(A),L/M: Mar 20, 1975

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S. CIVIL SERVICE COMMISSION: REFERENCE IS MADE TO YOUR UNDATED INTERAGENCY ADVISORY GROUP MEMORANDUM. WE HAVE WORKED CLOSELY WITH YOUR STAFF IN DEVELOPING THE NEW CONCEPTS CONTAINED THEREIN. I WOULD LIKE TO TAKE THIS OPPORTUNITY TO EXPRESS MY APPRECIATION AS WELL AS COMPTROLLER GENERAL STAATS' FOR THE SPLENDID COOPERATION WE HAVE HAD FROM THE CIVIL SERVICE COMMISSION IN ACHIEVING THESE SALUTORY POLICY CHANGES. ATTACHED IS AN ANALYSIS OF THE PROPOSED REGULATIONS AND IMPLEMENTING MATERIALS BY SECTION REFERENCE. WE HAVE SUGGESTED CERTAIN CHANGES IN THE DRAFT WHERE WE FEEL IT COULD BE STRENGTHENED. " WE THINK THE REGULATIONS WOULD HAVE A SOUNDER STATUTORY BASE OF SUPPORT IF THE OTHER SUBSTANTIAL BENEFITS WERE TIED TO THE WORD "ALLOWANCES.".

B-180021(A),L/M, MAR 20, 1975

OFFICE OF GENERAL COUNSEL

RAYMOND C. WEISSENBORN, U. S. CIVIL SERVICE COMMISSION:

REFERENCE IS MADE TO YOUR UNDATED INTERAGENCY ADVISORY GROUP MEMORANDUM; SUBJECT: DRAFT REGULATION - SUBJECT V, PART 550, TITLE 5, CODE OF FEDERAL REGULATIONS AND FPM SUPPLEMENT 990-2 (SUBCHAPTER 8, BOOK 550, "BACK PAY ACT"), COPY ENCLOSED, THAT REQUESTS ALL AGENCIES TO COMMENT ON THE PROPOSED REGULATIONS. AS YOU KNOW, WE HAVE WORKED CLOSELY WITH YOUR STAFF IN DEVELOPING THE NEW CONCEPTS CONTAINED THEREIN, MANY OF WHICH REFLECT OUR OWN PROPOSALS AND RECOMMENDATIONS. I WOULD LIKE TO TAKE THIS OPPORTUNITY TO EXPRESS MY APPRECIATION AS WELL AS COMPTROLLER GENERAL STAATS' FOR THE SPLENDID COOPERATION WE HAVE HAD FROM THE CIVIL SERVICE COMMISSION IN ACHIEVING THESE SALUTORY POLICY CHANGES.

ATTACHED IS AN ANALYSIS OF THE PROPOSED REGULATIONS AND IMPLEMENTING MATERIALS BY SECTION REFERENCE. WE HAVE SUGGESTED CERTAIN CHANGES IN THE DRAFT WHERE WE FEEL IT COULD BE STRENGTHENED, IMPROVED AND/OR CLARIFIED. WE APPRECIATE THE OPPORTUNITY TO SUBMIT THESE CHANGES FOR YOUR CONSIDERATION.

COMMENTS AND RECOMMENDATIONS ON DRAFT PROPOSED BACK PAY REGULATIONS AND INSTRUCTIONS.

5 C.F.R. PART 550, SUBPART H

SECTIONS 550.801(B)

SINCE THE BACK PAY ACT SPECIFIES ONLY "PAY, ALLOWANCES, AND DIFFERENTIALS" AND DOES NOT REFER TO OTHER "SUBSTANTIAL MONETARY AND EMPLOYMENT BENEFITS," WE THINK THE REGULATIONS WOULD HAVE A SOUNDER STATUTORY BASE OF SUPPORT IF THE OTHER SUBSTANTIAL BENEFITS WERE TIED TO THE WORD "ALLOWANCES." ACCORDINGLY, WE SUGGEST AMENDING LINES 3 AND 4 OF THIS SUBSECTION AS FOLLOWS:

"ALLOWANCES, AND DIFFERENTIALS AS DEFINED IN SECTION 550.802 OF THIS SUBPART ***."

SECTION 550.802(F) AND (H)

FOR THE ABOVE REASON, WE SUGGEST COMBINING SUBSECTIONS (F) AND (H), USING THE BENEFITS NOW INCLUDED IN (H) AS EXAMPLES OF A BROADENED CONCEPT OF THE TERM "ALLOWANCES."

WE RECOMMEND ADDING LIFE INSURANCE TO THE LIST OF EXAMPLES BECAUSE RESTORATION OF LIFE INSURANCE BENEFITS IS AUTHORIZED BY LAW (5 U.S.C. SEC. 8706(F)) IN THE SAME MANNER AS RESTORATION OF HEALTH INSURANCE BENEFITS.

WE ALSO SUGGEST ADDING, AFTER THE WORDS, "SUBSTANTIAL MONETARY AND EMPLOYMENT BENEFITS," THE FOLLOWING: "TO WHICH AN EMPLOYEE IS ENTITLED BY LAW OR REGULATION IN SPECIFIED CIRCUMSTANCES BY VIRTUE OF HIS FEDERAL EMPLOYMENT STATUS." WE FEEL THAT THIS WILL AVOID ANY CONFUSION OVER THE CIRCUMSTANCES IN WHICH BENEFITS MAY BE MADE A PART OF A BACK PAY ACT AWARD. THIS SUBSECTION SHOULD BE CONFINED TO THE KIND OF BENEFITS HE WOULD HAVE RECEIVED IF THE UNJUSTIFIED ACTION HAD NOT TAKEN PLACE. WE ARE NOT FULLY SATISFIED AS TO THE LEGAL BASIS OR NECESSITY OF INCLUDING TRAVEL AND TRANSPORTATION EXPENSES UNDER THE BACK PAY STATUTE AND REGULATIONS. RATHER, WE CONSIDER IT MORE APPROPRIATE TO DETERMINE ANY SUCH ENTITLEMENTS UNDER THE STATUTES AND REGULATIONS SPECIFICALLY RELATING TO THOSE EXPENSES. ACCORDINGLY, WE RECOMMEND THAT ANY REFERENCE TO TRAVEL AND TRANSPORTATION EXPENSES BE OMITTED FROM THE PROPOSED BACK PAY REGULATIONS, EXCEPT TO THE EXTENT OF REFERENCES TO TRAVEL EXPENSES TO PURSUE AN APPEAL FROM AN UNJUSTIFIED OR UNWARRANTED PERSONNEL ACTION AS HEREAFTER DISCUSSED. OUR SUGGESTED REVISION IS AS FOLLOWS:

"(F) ALLOWANCES MEANS LIVING QUARTERS ALLOWANCE, POST (COST OF LIVING) ALLOWANCE, EDUCATIONAL ALLOWANCE, EDUCATIONAL TRAVEL ALLOWANCE, SEPARATE MAINTENANCE ALLOWANCE, REMOTE WORKSITE ALLOWANCE, UNIFORM ALLOWANCE, MEDICAL TREATMENT ALLOWANCE, AND OTHER SUBSTANTIAL MONETARY AND EMPLOYMENT BENEFITS TO WHICH AN EMPLOYEE IS ENTITLED BY LAW OR REGULATION IN SPECIFIED CIRCUMSTANCES BY VIRTUE OF HIS FEDERAL EMPLOYMENT STATUS, ANNUAL LEAVE (NOT TO EXCEED THE MAXIMUM AMOUNT OF LEAVE AUTHORIZED FOR THE EMPLOYEE BY LAW OR REGULATION), SICK, HOME, COURT, MILITARY AND SHORE LEAVE, SERVICE CREDIT, HEALTH INSURANCE, AND LIFE INSURANCE."

SECTION 550.803(B)

AN EMPLOYEE WHO BELIEVES HIS AGENCY HAS WRONGFULLY DENIED HIM AN EMPLOYMENT BENEFIT TO WHICH HE FEELS HE WAS ENTITLED HAS A STATUTORY RIGHT TO APPEAL THE AGENCY DETERMINATION BY PRESENTING HIS CLAIM TO THE COMPTROLLER GENERAL FOR REVIEW AND FINAL SETTLEMENT. (31 U.S.C. SEC. 71 ET SEQ.) HOWEVER, THE TERMS "APPEALS SYSTEM" AND "GRIEVANCE SYSTEM" ARE WORDS OF ART, WITH GENERAL REFERENCE TO PROCEDURES ESTABLISHED PURSUANT TO THE ADMINISTRATIVE PROCEDURES ACT. THE COMPTROLLER GENERAL'S SETTLEMENT AUTHORITY DOES NOT APPEAR TO FIT UNDER EITHER SYSTEM. WE THEREFORE RECOMMEND THAT YOU INSERT, IMMEDIATELY AFTER THE WORD "APPEAL" IN THE FOURTH LINE OF THE SUBSECTION, THE FOLLOWING:

"TO THE COMPTROLLER GENERAL OF THE UNITED STATES FOR SETTLEMENT OF HIS CLAIM AGAINST THE GOVERNMENT, OR -"

IN THE NEXT TO THE LAST LINE OF THE SUBSECTION, AFTER THE WORD "BY," INSERT:

"THE COMPTROLLER GENERAL OR BY -"

AS AN ALTERNATIVE, WE WOULD HAVE NO OBJECTION TO REINSTATEMENT OF THE WORDING OF THE PRESENT SUBSECTION (B), WHICH REFERS TO AN APPEALS SYSTEM OR PROCEDURE ESTABLISHED BY LAW, EXECUTIVE ORDER, OR REGULATION, EXCEPT THAT YOU MAY WISH TO ADD "GRIEVANCE SYSTEM," BEFORE THE WORD "PROCEDURE," AND THE WORDS "OR COLLECTIVE BARGAINING AGREEMENT" AFTER THE WORD "REGULATION."

SECTION 550.803(C)

ALTHOUGH EARLIER VERSIONS OF THESE DRAFT REGULATIONS INCLUDED THE COMPTROLLER GENERAL AS ONE OF THE APPROPRIATE AUTHORITIES WHO MAY FIND THAT AN EMPLOYEE HAS UNDERGONE AN UNJUSTIFIED AND UNWARRANTED PERSONNEL ACTION, WE NOTE THAT THE COMPTROLLER GENERAL HAS BEEN DELETED FROM THE LATEST VERSION OF THE DRAFT REGULATIONS. AS INDICATED IN OUR COMMENTS ON SUBSECTION (B), SUPRA, THE COMPTROLLER GENERAL CAN AND OFTEN DOES APPLY THE BACK PAY STATUTE, 5 U.S.C. SEC. 5596, WHEN AN EMPLOYEE HAS ELECTED TO APPEAL A DISALLOWANCE BY HIS AGENCY AND THE COMPTROLLER GENERAL FINDS THAT THE DISALLOWANCE WAS UNJUSTIFIED OR UNWARRANTED. ACCORDINGLY, IT IS REQUESTED THAT SECTION 550.803(C) BE CHANGED TO ADD THE COMPTROLLER GENERAL, AS FOLLOWS: "*** (2) THE CIVIL SERVICE COMMISSION; (3) THE COMPTROLLER GENERAL ***."

SECTION 550.804

WE BELIEVE THAT THE FIRST SENTENCE OF THIS SECTION COULD BE MADE MORE PRECISE BY INCORPORATING THE FOLLOWING CHANGES: "(A) WHEN AN APPROPRIATE AUTHORITY CORRECTS OR DIRECTS THE CORRECTION OF AN UNJUSTIFIED OR UNWARRANTED PERSONNEL ACTION, THE AGENCY OR THE COMPTROLLER GENERAL SHALL

THERE MAY BE PERSONNEL ACTIONS WHICH ARE IN EVERY RESPECT "UNJUSTIFIED OR UNWARRANTED PERSONNEL ACTIONS" AS PRESCRIBED BY THIS SECTION BUT WHICH NEVERTHELESS SHOULD NOT BE CORRECTED BY OPERATION OF THE BACK PAY ACT BECAUSE THE LOSS SUFFERED BY THE EMPLOYEE WAS NOT THE DIRECT RESULT OF THE WRONGFUL PERSONNEL ACTION. FOR EXAMPLE, SECTION 550.803(F) INCLUDES A PERSONNEL ACTION WHICH HAS BEEN DETERMINED TO BE AN UNFAIR LABOR PRACTICE UNDER EXECUTIVE ORDER 11491. IF AN EMPLOYEE WAS DENIED AN EMPLOYMENT BENEFIT BECAUSE OF HIS UNION ACTIVITY WHICH HE WOULD OTHERWISE HAVE RECEIVED, WE HAVE NO DIFFICULTY APPLYING THE BACK PAY ACT REMEDIES. IF, HOWEVER, THE UNFAIR LABOR PRACTICE WAS A FAILURE TO CONSULT WITH THE EMPLOYEE'S UNION BEFORE SELECTING PERSONS FOR SPECIAL TRAINING, AND THERE WAS NO OTHER RESTRICTION ON THE AGENCY'S DISCRETION IN SELECTING FROM A NUMBER OF QUALIFIED APPLICANTS, THE FAILURE TO SELECT THE COMPLAINING EMPLOYEE COULD NOT BE DIRECTLY ATTRIBUTED TO THE AGENCY'S FAILURE TO CONSULT WITH THE UNION SINCE EVEN IF IT HAD DONE SO, THE PARTICULAR EMPLOYEE MIGHT NOT HAVE BEEN SELECTED.

WE THEREFORE SUGGEST THAT YOU INSERT - EITHER AS A SEPARATE DEFINITION OF THE WORDS, "DIRECTLY RESULTED," AS USED IN SECTION 550.802(C), OR AS A NEW SUBSECTION UNDER SECTION 550.803 OR SECTION 550.804, WORDS TO THIS EFFECT:

"NOTWITHSTANDING THE PROVISIONS OF SUBSECTION (D) OF SECTION 550.803, AN UNJUSTIFIED OR UNWARRANTED PERSONNEL ACTION CAN ONLY BE CORRECTED UNDER THE PROVISIONS OF SECTION 5596 OF TITLE 5, U.S.C. IF IT IS FOUND BY APPROPRIATE AUTHORITY THAT THE WITHDRAWAL, REDUCTION, OR DENIAL OF ALL OR PART OF THE PAY, ALLOWANCES, DIFFERENTIALS, OR OTHER SUBSTANTIAL MONETARY AND EMPLOYMENT BENEFITS DUE TO THE EMPLOYEE WAS THE RESULT OF AND WOULD NOT HAVE OCCURRED BUT FOR THE UNJUSTIFIED OR UNWARRANTED PERSONNEL ACTION."

SUBCHAPTER 8, BOOK 550, FPM SUPPLEMENT 990-2.

SECTION S8-3BF) AND (H)

COMMENTS AND RECOMMENDATIONS FOR 5 C.F.R. 550.802(F) AND (H), SUPRA APPLY ALSO TO THESE SECTIONS.

SECTION S8-4AB) AND (C)

COMMENTS AND RECOMMENDATIONS FOR 5 C.F.R. 550.803(B) AND 550.803(C) ABOVE APPLY ALSO TO THIS SECTION.

SECTION S8-4BC)

THIS SHOULD BE DELETED BECAUSE IT REPEATS THE PREVIOUS SUBSECTION. OTHER SUBSECTIONS THAT FOLLOW SHOULD BE REDESIGNATED.

SECTION S8-4BD)(3)

WE RECOMMEND DELETION OF THIS PARAGRAPH, EXCEPT FOR THE PART OF THE SENTENCE THAT BEGINS "THE AGENCY IS NOT PREVENTED FROM AWARDING BACK PAY ON ITS OWN INITIATIVE ETC." AS INDICATED IN OUR COMMENTS ON 5 C.F.R. 803(B), SUPRA, AN EMPLOYEE HAS A STATUTORY RIGHT TO APPEAL TO THE COMPTROLLER GENERAL FROM A DISALLOWANCE BY HIS AGENCY AND TO RECEIVE BACK PAY, IF THE COMPTROLLER GENERAL DETERMINES THAT HE IS ENTITLED TO IT, REGARDLESS OF THE FACT THAT HE COULD HAVE UTILIZED A DIFFERENT APPEAL CHANNEL BUT CHOSE NOT TO DO SO. THIS PARAGRAPH AS WRITTEN WOULD SUGGEST THAT THE COMPTROLLER GENERAL COULD NOT AWARD BACK PAY IN AN APPROPRIATE CASE IF THE EMPLOYEE HAD NOT FIRST EXHAUSTED ALL OTHER APPEAL RIGHTS AVAILABLE TO HIM. WE SEE NO JUSTIFICATION IN THE LAW OR ITS LEGISLATIVE HISTORY FOR SUCH A PROVISION AND CANNOT ACCEPT SUCH A RESTRICTION ON OUR AUTHORITY.

SECTION S8-4C(2)

THIS SHOULD BE REWORDED TO CONFORM TO THE DEFINITION OF "APPROPRIATE AUTHORITY" AS DEFINED IN SECTION S8-4AC). AS PRESENTLY WORDED IT INDICATES ONLY THE COMMISSION, THE AGENCY HEAD OR HIS DESIGNATED REPRESENTATIVE MAY BE AN APPROPRIATE AUTHORITY. ALSO THE REGULATIONS SHOULD INDICATE THAT AN ARBITRATION AWARD MAY NOT BE IMPLEMENTED IF IT IS CONTRARY TO LAW OR REGULATION. FURTHER, IN ADDITION TO THE FEDERAL LABOR RELATIONS COUNCIL, THE COMPTROLLER GENERAL MAY, PURSUANT TO AUTHORITY CONTAINED IN 31 U.S.C. 74 AND 82D, ALSO INVALIDATE ARBITRATION AWARDS. ACCORDINGLY, WE RECOMMEND THIS SECTION BE CHANGED TO READ AS FOLLOWS: "(2) APPROPRIATE AUTHORITY. IN ADDITION TO OFFICIALS SET FORTH IN 5 C.F.R. 550.803(C), AN APPROPRIATE AUTHORITY MAY BE FOUND AT A LEVEL OF AGENCY MANAGEMENT AS DEFINED IN APPLICABLE REGULATIONS AND DELEGATIONS OF AUTHORITY OF THE AGENCY. A BINDING ARBITRATION AWARD MUST BE GIVEN THE SAME EFFECT AS A DECISION RENDERED BY THE AGENCY HEAD OR ANY OTHER APPROPRIATE AUTHORITY. AN ARBITRATION AWARD MUST BE IMPLEMENTED IF IT IS VALID. ONLY THE COMPTROLLER GENERAL AND THE FEDERAL LABOR RELATIONS COUNCIL HAVE AUTHORITY TO INVALIDATE AN AWARD ON THE BASIS THAT IT IS INCONSISTENT WITH LAW OR REGULATION OR IS CONSIDERED INAPPLICABLE ON OTHER GROUNDS SIMILAR TO THOSE UPON WHICH CHALLENGES TO ARBITRATION AWARDS ARE SUSTAINED BY THE COURTS IN PRIVATE SECTOR LABOR-MANAGEMENT RELATIONS."

SECTION S8-5AA)

IN CONFORMANCE WITH OUR SUGGESTED CHANGE TO SECTION 550.801(B) OF THE REGULATIONS, WE SUGGEST AMENDING LINES 3 THROUGH 6 OF THIS SUBSECTION AS FOLLOWS:

"THE PERIOD COVERED BY THE CORRECTIVE ACTION THE PAY, ALLOWANCES (INCLUDING OTHER SUBSTANTIAL MONETARY AND EMPLOYMENT BENEFITS BUT LIMITING THE ACCUMULATION OF ANNUAL LEAVE TO THE MAXIMUM PRESCRIBED BY LAW OR REGULATION FOR THE EMPLOYEE), AND DIFFERENTIALS OF THE EMPLOYEE AS IF THE UNJUSTIFIED OR ***."

IN ADDITION, A NUMBER OF COMPTROLLER GENERAL DECISIONS HAVE HELD THAT IT IS PERMISSIBLE TO REIMBURSE AN EMPLOYEE FOR NECESSARY TRAVEL EXPENSES INCURRED IN SUCCESSFULLY PROSECUTING AN APPEAL FROM AN UNJUSTIFIED OR UNWARRANTED PERSONNEL ACTION. FOR THIS PURPOSE, HE MAY BE REGARDED AS BEING ON OFFICIAL DUTY WHILE PURSUING HIS REMEDY, AND COULD THEREFORE RECEIVE THE SAME TRAVEL AND PER DIEM ALLOWANCES USUALLY ACCORDED TO AN EMPLOYEE ASSIGNED TO TEMPORARY DUTY PURSUANT TO THE FEDERAL TRAVEL REGULATIONS. (SEE 21 COMP. GEN. 382 (1941); 31 ID. 346 (1952); 33 ID. 582 (1954); B-180469, FEB. 28, 1974.) ACCORDINGLY, YOU MAY WISH TO ADD A SENTENCE TO THIS EFFECT AT THE END OF SUBSECTION (A) OR ELSEWHERE IN THE SECTION ON CORRECTIVE ACTION.

SECTION S8-5AA)

IN CONFORMANCE WITH OUR SUGGESTED CHANGES TO SECTION 550.801(B) OF THE REGULATIONS, THIS SUBSECTION SHOULD BE REWORDED TO READ AS FOLLOWS:

"(B) IN RECOMPUTING THE PAY, ALLOWANCES (INCLUDING OTHER SUBSTANTIAL MONETARY AND EMPLOYMENT BENEFITS) AND DIFFERENTIALS OF AN EMPLOYEE UNDER PARAGRAPH (A) OF THIS SECTION, THE AGENCY WILL BE GUIDED BY THE DEFINITION OF THESE TERMS IN SECTION 550.802 OF THIS SUBPART."

SECTION S8-5D

THE CITATION AFTER FIRST SENTENCE SHOULD BE CORRECTED TO READ (44 COMP. GEN. 365). THE CITATION AFTER LAST SENTENCE SHOULD BE CORRECTED TO READ: "(40 COMP. GEN. 479, 52 ID. 860, ***."

SECTION S8-5G(1)

WE RECOMMEND THE ADDITION OF THE FOLLOWING, IMMEDIATELY AFTER THE WORDS "TAKEN PLACE,": "AND THAT BUT FOR THAT ACTION, THE EMPLOYEE WOULD HAVE BEEN PROMOTED,"

SECTION S8-5G(5) THIS IS A MISLEADING STATEMENT OF THE HOLDING IN 53 COMP. GEN. 216. AT NO TIME HAVE WE EVER BASED A RETROACTIVE PROMOTION SOLELY ON THE FAILURE OF AN AGENCY TO ACT IN TIMELY FASHION ON A SUPERVISOR'S RECOMMENDATION. IN THE CASE YOU CITE, THE EMPLOYEE'S POSITION WAS RECLASSIFIED BY THE CIVIL SERVICE COMMISSION, AND UNDER 5 C.F.R. 511.701 A CLASSIFICATION ACTION MUST BE PUT INTO EFFECT BY THE AGENCY NOT EARLIER THAN THE DATE THE AGENCY RECEIVES THE CERTIFICATE BUT NOT LATER THAN THE BEGINNING OF THE FOURTH PAY PERIOD FOLLOWING SUCH RECEIPT (IN THE ABSENCE OF AN ALTERNATIVE DATE SPECIFIED IN THE CERTIFICATE). IN PREVIOUS CASES INVOLVING SUCH RECLASSIFICATIONS, WE HELD THAT THE AGENCY HAD THE OPTION OF EITHER PROMOTING THE INCUMBENT IN ACCORDANCE WITH THE RECLASSIFICATION OR REMOVING HIM. IN THE CASE TO WHICH YOU REFER, THE AGENCY DID NEITHER. THEREFORE, WE HELD, WHEN AN AGENCY UPGRADES A POSITION IN ACCORDANCE WITH A CIVIL SERVICE CLASSIFICATION ACTION, "THE RETENTION OF THE INCUMBENT IN THAT POSITION AMOUNTS TO A DETERMINATION BY THE AGENCY THAT THE INCUMBENT IS IN FACT QUALIFIED TO PERFORM THE DUTY OF THE HIGHER GRADE." ADOPTING THE REGULATORY DEFINITION OF "REASONABLE TIME," WE HELD FURTHER THAT "THE REASONABLE TIME WITHIN WHICH MR. URBANEK SHOULD HAVE BEEN EITHER PROMOTED OR REMOVED FROM THE GS-13 POSITION EXPIRED AT THE BEGINNING OF THE FOURTH PAY PERIOD AFTER JULY 3, 1970, THE DATE OF THE RECLASSIFICATION ACTION."

SECTION S8-5M(4)

DELETE "COMPTROLLER GENERAL DECISION B-162578, MAY 6, 1974" AND CITE IT INSTEAD AS "53 COMP. GEN. 824." AFTER LAST SENTENCE IN SUBSECTION ADD CITATION AS FOLLOWS: "(UNPUBLISHED COMPTROLLER GENERAL DECISION B-178143, JULY 9, 1973)."

SECTION S8-5P

WE SUGGEST THAT THE HEADING FOR THIS SUBSECTION BE CHANGED TO READ "INTERIM EMPLOYMENT EXPENSES."

THE REFERENCE TO EXPENSES INCURRED IN CONNECTION WITH A SUCCESSFUL APPEAL OF AN UNJUSTIFIED OR UNWARRANTED SEPARATION ARE INAPPOSITE HERE SINCE THE SUBSECTION IS CONCERNED WITH INTERIM EMPLOYMENT EXPENSES.

IT IS TRUE THAT THE CASE YOU CITE, 40 COMP. GEN. 479, HOLDS THAT NEITHER EXCESS COST OF LIVING EXPENSES INCURRED IN CONNECTION WITH REPLACEMENT EMPLOYMENT AFTER A WRONGFUL SEPARATION NOR THE EXPENSES OF APPEALING THE SEPARATION ARE RECOVERABLE. HOWEVER, AS INDICATED IN OUR COMMENTS ON SECTION S8-5AA), WE HAVE TAKEN A DIFFERENT POSITION IN A NUMBER OF CASES WHICH PERMIT RECOVERY FOR TRAVEL EXPENSES AND PER DIEM NECESSARILY INCURRED IN PROSECUTING THE EMPLOYEE'S APPEAL OF THE UNJUSTIFIED OR UNWARRANTED PERSONNEL ACTION. FOR PURPOSES OF THIS ENTITLEMENT, THE EMPLOYEE WOULD BE REGARDED AS BEING ON OFFICIAL DUTY WHILE PROSECUTING HIS APPEAL AND WOULD RECEIVE THE SAME TRAVEL ALLOWANCES PRESCRIBED BY THE FEDERAL TRAVEL REGULATIONS FOR OTHER FEDERAL EMPLOYEES ASSIGNED TO TEMPORARY DUTY. WE THEREFORE SUGGEST THAT YOU DELETE THE CITATION TO 40 COMP. GEN. 479 OR USE IT ONLY TO SUPPORT THE STATEMENT THAT EXCESS COST-OF -LIVING EXPENSES ARE NOT DEDUCTIBLE FROM AN EMPLOYEE'S EARNINGS FROM OTHER EMPLOYMENT.

SECTION S8-5Q

FOR THE REASONS DISCUSSED ABOVE, WE RECOMMEND CHANGING THE REFERENCE TO "INCIDENTAL" EXPENSES OCCASIONED BY THE ADVERSE ACTION TO "LEGAL" EXPENSES, SINCE TRAVEL EXPENSES MAY BE CONSTRUED AS "INCIDENTAL."

SECTION S8-6

THE TEXT IS ACCURATELY STATED BUT THE EXAMPLE IS MISLEADING. FEDERAL AND STATE WITHHOLDING TAXES SHOULD BE LEVIED ON THE BALANCE DUE THE EMPLOYEE (AFTER RETIREMENT DEDUCTIONS AND OUTSIDE EARNINGS ARE SUBTRACTED) BUT NOT BASED ON OUTSIDE EARNINGS, WHICH PRESUMABLY HAVE ALREADY BEEN WITHHELD BY HIS OUTSIDE EMPLOYER. IN ANY CASE, A CASH BASIS TAXPAYER MUST BE TAXED ON SALARY RECEIVED IN THE CURRENT TAX YEAR (REGARDLESS OF WHEN THE SALARY WAS EARNED) AND ANY AMOUNT OWED BECAUSE OF OUTSIDE EARNINGS IN THE PREVIOUS TAX YEAR OR EVEN IN THE SAME TAX YEAR IS A MATTER TO BE SETTLED BETWEEN THE EMPLOYEE AND THE INTERNAL REVENUE SERVICE.