B-180997, OCT 30, 1974, 54 COMP GEN 310

B-180997: Oct 30, 1974

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THE DATE HE WAS REPROMOTED TO GS-15. THE AGENCY IS OF THE OPINION IT CANNOT MAKE THE ABOVE WITHIN-GRADE ADJUSTMENT WITHOUT AUTHORIZATION OF OUR OFFICE IN VIEW OF OUR DECISIONS TO THE EFFECT THAT WHEN NO ADMINISTRATIVE ERROR OCCURS AT THE TIME THE INITIAL SALARY RATE IS FIXED INCIDENT TO A PERSONNEL ACTION. THERE IS NO AUTHORITY TO CHANGE SUCH INITIAL RATE EITHER RETROACTIVELY OR PROSPECTIVELY. ADMINISTRATIVE ERROR IS CONSTRUED AS FAILURE OF AN AGENCY TO CARRY OUT WRITTEN ADMINISTRATIVE POLICY OF A NONDISCRETIONARY NATURE OR TO COMPLY WITH ADMINISTRATIVE REGULATIONS HAVING MANDATORY EFFECT. SEVERAL DECISIONS ARE CITED TO SUBSTANTIATE THE AGENCY'S VIEW. WAS REDUCED IN GRADE FROM GS-15. LEVINE WAS APPARENTLY THE ONLY EMPLOYEE TO WHOM THE RIF APPLIED.

B-180997, OCT 30, 1974, 54 COMP GEN 310

COMPENSATION - RATES - HIGHEST PREVIOUS RATE - ADJUSTMENT - RETROACTIVE IN SETTING A PAY RATE UNDER THE AUTHORITY OF SECTION 531.203(C), TITLE 5, CODE OF FEDERAL REGULATIONS - HIGHEST PREVIOUS RATE RULE - AN AGENCY MAY NOT REQUIRE AN EMPLOYEE TO TERMINATE AGENCY AND COURT ACTIONS INITIATED BY HIM TO RESOLVE GRIEVANCES WITH THE AGENCY IN EXCHANGE FOR THE EMPLOYEE RECEIVING THE BENEFIT OF THE HIGHEST RATE, ALTHOUGH WITHIN AGENCY DISCRETION, SINCE SUCH AGENCY ACTION CONSTITUTES AN UNWARRANTED EXERCISE OF ITS DISCRETION AND A RATE SET AT THE MINIMUM OF THE GRADE UNDER SUCH CIRCUMSTANCES MAY BE ADJUSTED RETROACTIVELY TO THE HIGHEST PREVIOUS RATE TO ACCORD WITH AGENCY RECOMMENDATION FOR CORRECTION.

IN THE MATTER OF A RETROACTIVE ADJUSTMENT - UNWARRANTED EXERCISE OF DISCRETIONARY AUTHORITY, OCTOBER 30, 1974:

THE FEDERAL RAILROAD ADMINISTRATION, DEPARTMENT OF TRANSPORTATION, REQUESTED OUR DECISION AS TO WHETHER IT MAY ADJUST RETROACTIVELY THE RATE OF PAY OF HAROLD E. LEVINE FROM GRADE GS-15, STEP 1, TO STEP 5, EFFECTIVE MAY 13, 1973, THE DATE HE WAS REPROMOTED TO GS-15, TO ACCORD WITH THE RECOMMENDATION OF THE AGENCY EXAMINER IN A FORMAL GRIEVANCE PROCEEDING ON THE MATTER.

THE AGENCY IS OF THE OPINION IT CANNOT MAKE THE ABOVE WITHIN-GRADE ADJUSTMENT WITHOUT AUTHORIZATION OF OUR OFFICE IN VIEW OF OUR DECISIONS TO THE EFFECT THAT WHEN NO ADMINISTRATIVE ERROR OCCURS AT THE TIME THE INITIAL SALARY RATE IS FIXED INCIDENT TO A PERSONNEL ACTION, THERE IS NO AUTHORITY TO CHANGE SUCH INITIAL RATE EITHER RETROACTIVELY OR PROSPECTIVELY. IN THIS CONTEXT, ADMINISTRATIVE ERROR IS CONSTRUED AS FAILURE OF AN AGENCY TO CARRY OUT WRITTEN ADMINISTRATIVE POLICY OF A NONDISCRETIONARY NATURE OR TO COMPLY WITH ADMINISTRATIVE REGULATIONS HAVING MANDATORY EFFECT. SEVERAL DECISIONS ARE CITED TO SUBSTANTIATE THE AGENCY'S VIEW, INCLUDING 31 COMP. GEN. 15 (1951); 52 ID. 920 (1973); AND B -173815, APRIL 18, 1973.

AS A STATEMENT OF THE FACTS IN THE CASE THE AGENCY SUBMITTED A COPY OF THE EXAMINER'S REPORT ON THE GRIEVANCE WHICH SHOWS THAT MR. LEVINE, THROUGH A REDUCTION-IN-FORCE (RIF), WAS REDUCED IN GRADE FROM GS-15, STEP 5, TO GS-12, STEP 10. MR. LEVINE WAS APPARENTLY THE ONLY EMPLOYEE TO WHOM THE RIF APPLIED. THE RIF ACTION WAS SUSTAINED ON APPEAL TO THE CIVIL SERVICE COMMISSION; HOWEVER, THE CASE APPARENTLY HAS BEEN REMANDED BY A COURT ACTION TO THE COMMISSION. ADDITIONALLY, IT IS STATED THAT MR. LEVINE HAS BEEN INVOLVED IN AT LEAST TWO UNION ARBITRATION CASES AND, AS A RESULT OF ONE OF THESE, HE WAS PROMOTED TO GRADE GS-15, STEP 1, ON MAY 13, 1973. MR. LEVINE FILED A FORMAL GRIEVANCE ALLEGING THAT UNDER THE HIGHEST PREVIOUS RATE RULE HE IS ENTITLED TO GS-15, STEP 5, AS OF MAY 13, 1973. IT IS THE REPORT ON THAT GRIEVANCE WHICH IS BEFORE US. WE ASSUME THAT THE AGENCY ADOPTS THE FINDINGS OF FACT OF THE EXAMINER, IN THE ABSENCE OF ANY STATEMENT TO THE CONTRARY.

THE EXAMINER CONCLUDES THAT THERE WAS NO ADMINISTRATIVE ERROR AS DEFINED IN THE COMPTROLLER GENERAL DECISIONS CITED ABOVE WHICH WOULD PERMIT THE RETROACTIVE ADJUSTMENT SOUGHT. HE STATES, HOWEVER, THAT THE AGENCY ACTED DELIBERATELY IN A DISCRETIONARY AREA TO DENY MR. LEVINE STEP 5 AND HE FOUND:

*** THAT THE AGENCY ACTION IN DENYING THE GRIEVANT STEP 5 OF GS-15 WAS UNFAIR AND BIASED, AND WAS MADE WITH LITTLE, IF ANY, REGARD FOR THE MERITS OF THE ACTION, ITSELF. THE AGENCY WAS CONCERNED PRIMARILY WITH MAKING A DEAL WITH THE GRIEVANT ON A QUID PRO QUO BASIS. WHEN THE GRIEVANT WOULD NOT GIVE THE AGENCY WHAT IT WANTED - THE DROPPING OF ARBITRATION AND COURT CASES - THE AGENCY DID NOT GIVE THE GRIEVANT WHAT HE WANTED: STEP 5 OF GS- 15.

THE EXAMINER RECOMMENDED THAT THE AGENCY DO WHATEVER IS NECESSARY TO GIVE MR. LEVINE STEP 5 OF GS-15 AS OF MAY 13, 1973. THE AGENCY ADMINISTRATOR WISHES TO COMPLY WITH THE EXAMINER'S RECOMMENDATION.

WE CONCUR THAT NO ADMINISTRATIVE ERROR OCCURRED. IT DOES NOT FOLLOW, HOWEVER, THAT SUCH FACT DISPOSES FULLY OF THE MATTER. THE QUESTION REMAINS WHETHER AN AGENCY MAY, IN EXERCISING ITS DISCRETIONARY AUTHORITY TO SET A PAY RATE WITHIN A GRADE INCIDENT TO A PERSONNEL ACTION, REQUIRE AN EMPLOYEE TO TERMINATE AGENCY AND COURT ACTIONS INITIATED BY HIM IN ORDER TO RECEIVE THE BENEFIT OF THE HIGHEST PREVIOUS RATE RULE. WE THINK NOT.

AS THE EXAMINER POINTS OUT, SECTION 531.203(C), TITLE 5, CODE OF FEDERAL REGULATIONS, GIVES BROAD DISCRETION TO AGENCY APPOINTING OFFICIALS TO GRANT OR DENY THE HIGHEST PREVIOUS RATE IN A VARIETY OF PERSONNEL ACTIONS, INCLUDING THE SUBJECT ACTION. WHERE AGENCY ACTION IS THUS COMMITTED TO AGENCY DISCRETION, THE STANDARD TO BE APPLIED BY THE REVIEWING AUTHROITY IN REVIEWING THE ACTION OF THE AGENCY IS WHETHER THE ACTION IS ARBITRARY, CAPRICIOUS, AN ABUSE OF DISCRETION OR OTHERWISE NOT IN ACCORDANCE WITH LAW. WARREN BANK V. CAMP, 396 F.2D 52 (1968). ARBITRARINESS AND CAPRICIOUSNESS EXIST IF AGENCY ACTION LACKS A RATIONAL BASIS. PACE CO., DIVISION OF AMBAC INDUSTRIES, INC. V. DEPARTMENT OF THE ARMY OF THE UNITED STATES, 344 F. SUPP. 787, CASE REMANDED 453 F.2D 890, CERT. DENIED 405 U.S. 974 (1971).

AN EMPLOYEE'S RIGHT OF ACCESS TO ESTABLISHED AGENCY PROCEDURES SUCH AS ARBITRATION AND TO THE COURTS IN THE RESOLUTION OF HIS GRIEVANCES WITH THE AGENCY ARE NOT, IN OUR OPINION, PROPER ITEMS OF NEGOTIATION BY AN AGENCY WITH AN EMPLOYEE IN DETERMINING WHAT STEP RATE IT SHALL GRANT WITHIN ITS DISCRETIONARY AUTHORITY UNDER THE SUBJECT HIGHEST PREVIOUS RATE RULE. REQUIRE THE EMPLOYEE TO FOREGO SUCH ACTIONS IN ORDER FOR HIM TO OBTAIN THE BENEFIT OF THE AGENCY'S DISCRETION DOES NOT FORM A RATIONAL BASIS FOR THE AGENCY TO PREDICATE AN EXERCISE OF ITS DISCRETION AND WOULD BE MANIFESTLY UNFAIR TO THE EMPLOYEE AS WELL AS UNWARRANTED EXERCISE OF AGENCY DISCRETION. IN THE CIRCUMSTANCES WE FIND THE ACTION SETTING MR. LEVINE'S SALARY AT STEP 1 RATHER THAN 5 OF GRADE GS-15 TO BE AN UNWARRANTED PERSONNEL ACTION AND AS SUCH REQUIRES CORRECTION IN ACCORDANCE WITH THE BACK PAY ACT OF 1966, CODIFIED IN 5 U.S.C. 5596. ACCORDINGLY, WE MAKE NO OBJECTION TO A RETROACTIVE ADJUSTMENT OF MR. LEVINE'S COMPENSATION TO THE DATE OF HIS REPROMOTION.