B-181968, MAR 31, 1975

B-181968, MAR 31, 1975

EMPLOYEE WHO TRANSFERRED WITH A PROMOTION TO GRADE GS-12 WITH DOD ON NOVEMBER 1, 1970, WAS PROPERLY PLACED IN STEP 4 OF THE GRADE SINCE RATE SET BY DEPARTMENT OF AGRICULTURE (DOA) FROM WHICH THE EMPLOYEE TRANSFERRED AT STEP 10 OF GRADE GS-11 WAS BASED UPON AN ERRONEOUS APPLICATION OF HIGHEST PREVIOUS RATE RULE BY DOA THAT IMPROPERLY GAVE EMPLOYEE BENEFIT OF STEP INCREASE WHICH HE COULD NOT HAVE ATTAINED WHILE EMPLOYED WITH OEO UNDER TEMPORARY APPOINTMENT. RESULTING INDEBTEDNESS SUBJECT TO WAIVER UNDER 5 U.S.C. SEC. 5584.

GERALD S. BAUMEISTER - APPLICATION OF HIGHEST PREVIOUS RATE RULE UPON TRANSFER TO LOWER GRADE POSITION:

THIS ACTION CONCERNS THE PROPER SETTING OF PAY FOR GERALD S. BAUMEISTER BY THE DEFENSE CONTRACT AUDIT AGENCY (DCAA), DEPARTMENT OF DEFENSE, AT THE TIME OF HIS SIMULTANEOUS TRANSFER AND PROMOTION TO A GS 12 POSITION IN DCAA, EFFECTIVE NOVEMBER 1, 1970.

AS SUBMITTED BY DCAA, THE RECORD SHOWS THAT ON NOVEMBER 3, 1968, WHILE EMPLOYED BY THE INTERNAL REVENUE SERVICE (IRS), MR. BAUMEISTER RECEIVED A PERIODIC STEP-INCREASE TO GRADE GS-12, STEP 2. ON AUGUST 23, 1969, HE RESIGNED HIS IRS POSITION, AND REMAINED OFF THE ROLLS OF THE GOVERNMENT UNTIL MARCH 2, 1970, WHEN HE ACCEPTED A TEMPORARY APPOINTMENT AT GRADE GS- 12, STEP 2 ($14,665 PER ANNUM), WITH THE OFFICE OF ECONOMIC OPPORTUNITY (OEO). ON JUNE 25, 1970, HE LEFT OEO TO ACCEPT A PERMANENT APPOINTMENT WITH THE DEPARTMENT OF AGRICULTURE AT GRADE GS 11, STEP 10 ($15,478), WITH A NOTATION ON THE STANDARD FORM 50: "PREVIOUSLY MET REQUIREMENTS FOR GRADE GS-12, STEP 3, MAY 1970." THE PER ANNUM RATE FOR GRADE GS-12, STEP 3, WAS THEN $15,138.

ON NOVEMBER 1, 1970, HE TRANSFERRED TO THE CHICAGO REGION OF DCAA FOR A PROMOTION TO GRADE GS-12. HIS SALARY WAS SET AT GRADE GS-12, STEP 4 ($15,611), RATHER THAN GRADE GS-12, STEP 6 ($16,557), BECAUSE DCAA OFFICIALS CONSIDERED THE GS-11, STEP 10 RATE TO WHICH MR. BAUMEISTER WAS APPOINTED BY THE DEPARTMENT OF AGRICULTURE TO HAVE BEEN IMPROPERLY SET BY THE DEPARTMENT OF AGRICULTURE. IF THE GS-11, STEP 10 RATE HAD BEEN CORRECT, THEN STEP 6 (GS-12) WOULD HAVE BEEN THE PROPER RATE UNDER 5 U.S.C. SEC. 5334(B) (1970), WHICH APPLIES TO TRANSFERS TO HIGHER GRADE POSITIONS AND GUARANTEES A PAY RATE EQUAL TO AT LEAST TWO STEP INCREASES OF THE GRADE FROM WHICH PROMOTED.

DCAA ESTABLISHED THE GRADE GS-12, STEP 4 RATE ON THE BASIS

"THAT THE DEPARTMENT OF AGRICULTURE IMPROPERLY FIXED MR. BAUMEISTER'S SALARY AS GS-11, STEP 10, WHEN THEY REINSTATED HIM BECAUSE HE DID NOT MEET ALL REQUIREMENTS FOR ATTAINING HIS GS-12, STEP 3, WITHIN GRADE INCREASE INASMUCH AS HE WAS NEVER RETURNED TO A PERMANENT GS-12 POSITION BEFORE REINSTATEMENT AS A GS-11."

MR. BAUMEISTER CONTENDS THAT THE DEPARTMENT OF AGRICULTURE PROPERLY SET HIS RATE OF COMPENSATION AT GRADE GS-11, STEP 10, SINCE HE HAD PREVIOUSLY SATISFIED THE TIME-IN-GRADE REQUIREMENTS FOR A PERIODIC STEP INCREASE TO GRADE GS-12, STEP 3, WHILE SERVING UNDER THE TEMPORARY APPOINTMENT AT OEO. CONSEQUENTLY, HE IMPLIES THAT DCAA SHOULD HAVE SET HIS RATE AT GRADE GS-12, STEP 6.

THUS, THE ISSUE IS RAISED WHETHER THE DEPARTMENT OF AGRICULTURE COULD APPLY THE HIGHEST PREVIOUS RATE RULE AND SET MR. BAUMEISTER'S PAY AT GRADE GS-11, STEP 10, ON THE BASIS THAT HIS THIRTEEN MONTHS OF CREDITABLE SERVICE AT STEP 2 OF GRADE GS-12 QUALIFIED HIM FOR COMPENSATION AT STEP 3, EVEN THOUGH HE NEVER ATTAINED THAT RATE IN EITHER HIS PERMANENT POSITION WITH IRS OR HIS TEMPORARY POSITION WITH OEO.

REGULATIONS OF THE CIVIL SERVICE COMMISSION CONTAINED IN 5 C.F.R. SEC. 531.203(C) (1971) PROVIDE THAT WHEN AN EMPLOYEE IS REEMPLOYED, TRANSFERRED, REASSIGNED, PROMOTED, OR DEMOTED, PAY MAY BE SET AT ANY RATE OF THE NEW GRADE "WHICH DOES NOT EXCEED HIS HIGHEST PREVIOUS RATE ***." WHEN THE HIGHEST PREVIOUS RATE FALLS BETWEEN TWO RATES IN THE NEW GRADE, THE AGENCY CAN SET PAY AT THE HIGHER RATE. SUBSECTION (D)(1) OF THE CITED REGULATION PERTAINS TO THE PROPER COMPUTATION OF THE HIGHEST PREVIOUS RATE AND PROVIDES IN PERTINENT PART THAT: "THE HIGHEST PREVIOUS RATE IS BASED ON A REGULAR TOUR OF DUTY AT THAT RATE ***."

THE UNDERSCORED PORTION OF THE CITED REGULATION MEANS THAT AN AGENCY'S DISCRETIONARY APPLICATION OF THE HIGHEST PREVIOUS RATE RULE IS CONDITIONED UPON AN EMPLOYEE'S ACTUALLY HAVING BEEN PAID AT THE SELECTED RATE IN A PRIOR POSITION, EITHER WHILE IN AN ACTUAL DUTY STATUS OR IN A LUMP-SUM PAYMENT FOR ANNUAL LEAVE UPON SEPARATION FROM THE POSITION. IN 28 COMP. GEN. 235 (1948) IT WAS HELD THAT A RATE OF COMPENSATION, WHICH HAD BEEN USED IN COMPUTING AN EMPLOYEE'S LUMP-SUM LEAVE PAYMENT WHEN SEPARATED FROM A PREVIOUS POSITION, COULD BE CONSIDERED AS THE HIGHEST SALARY ATTAINED WHEN HE WAS LATER REEMPLOYED IN ANOTHER GOVERNMENT POSITION. IN THAT DECISION THE EMPLOYEE COMPLETED HIS SERVICE REQUIREMENT FOR ADVANCEMENT TO THE NEXT HIGHER STEP IN HIS GRADE BUT WAS SEPARATED IN A REDUCTION IN FORCE BEFORE HE ACTUALLY WAS PAID AT THAT RATE, ALTHOUGH, AS MENTIONED, THE HIGHER RATE WAS USED TO COMPUTE HIS LUMP-SUM PAYMENT FOR ANNUAL LEAVE.

IN MR. BAUMEISTER'S CASE, THE HIGHEST PREVIOUS RATE WHICH HE HAD ATTAINED WAS GRADE GS-12, STEP 2 ($14,665). AT THE TIME OF HIS TRANSFER TO A PERMANENT POSITION IN GRADE GS-11, HE HAD OVER 13 MONTHS OF CREDITABLE SERVICE IN GRADE GS-12, STEP 2. HAD HE TRANSFERRED TO A GRADE GS-12 PERMANENT POSITION HE COULD HAVE BEEN PLACED IN GRADE GS 12, STEP 3, SINCE 5 C.F.R. SEC. 531.404(A) (1971) PROVIDES THAT SERVICE UNDER A TEMPORARY APPOINTMENT IS CREDITABLE TOWARDS THE REQUISITE WAITING PERIOD FOR A STEP INCREASE IN A PERMANENT POSITION. SEE 39 COMP. GEN. 211 (1959). HOWEVER, WHILE EMPLOYED UNDER THE TEMPORARY APPOINTMENT WITH OEO, MR. BAUMEISTER NEVER ACQUIRED ELIGIBILITY FOR ADVANCEMENT TO STEP 3 OF GRADE GS-12 ($15,138), SINCE 5 U.S.C. SEC. 5335(A) (1970) PROVIDES ELIGIBILITY FOR STEP-INCREASES ONLY TO EMPLOYEES OCCUPYING PERMANENT POSITIONS. MOREOVER, 5 C.F.R. SEC. 316.401, ET SEQ., RELATING TO TEMPORARY EMPLOYMENT, GRANTS NO ELIGIBILITY FOR WITHIN-GRADE INCREASES TO TEMPORARY EMPLOYEES. THEREFORE, HE WAS PRECLUDED FROM ATTAINING THE STEP 3 RATE OF GRADE GS 12 WHILE EMPLOYED AT OEO, AND THE DEPARTMENT OF AGRICULTURE HAD NO BASIS IN LAW OR REGULATION FOR CONSTRUCTIVELY GRANTING HIM THAT RATE FOR PURPOSES OF APPLYING THE HIGHEST PREVIOUS RATE RULE TO FIX HIS RATE AT STEP 10 OF GRADE GS-11 ($15,478) AT THE TIME OF HIS TRANSFER AND APPOINTMENT TO THE PERMANENT POSITION.

SIGNIFICANTLY, WE NOTE THAT PROPER APPLICATION OF THE HIGHEST PREVIOUS RATE RULE BY THE DEPARTMENT OF AGRICULTURE WOULD HAVE PLACED MR. BAUMEISTER IN GRADE GS-11, STEP 8 ($14,684), AND UPON TRANSFER AND PROMOTION TO GRADE GS-12, STEP 4, AT DCAA HE WOULD BE IN APPROXIMATELY THE SAME POSITION AS IF HE HAD EXPERIENCED THE USUAL WITHIN-GRADE ADVANCEMENT IN GRADE GS-12. BY CONTRAST, IF THE RATE ESTABLISHED AT GRADE GS-11, STEP 10, WERE DEEMED PROPER, MR. BAUMEISTER WOULD, IN EFFECT, HAVE GAINED FOUR STEPS IN GRADE GS-12 (FROM STEP 2 TO 6) IN ONLY 2 YEARS INSTEAD OF 6, SOLELY ON ACCOUNT OF HIS APPROXIMATELY 4 MONTHS IN A GRADE GS-11 POSITION. WE CANNOT PERCEIVE ANY BASIS FOR HOLDING THAT APPLICATION OF THE HIGHEST PREVIOUS RATE RULE WAS INTENDED TO PRODUCE SUCH A RESULT UNDER THE CIRCUMSTANCES PRESENTED HEREIN.

IN VIEW OF THE FOREGOING, WE CONCLUDE THAT THE DEPARTMENT OF AGRICULTURE ERRONEOUSLY APPLIED THE HIGHEST PREVIOUS RATE RULE WHEN IT SET MR. BAUMEISTER'S SALARY IN THE GRADE GS-11 POSITION ON THE BASIS OF A RATE IN GRADE GS-12 AT WHICH HE WAS NEVER ACTUALLY PAID AND THE PERSONNEL RECORDS SHOULD BE CORRECTED ACCORDINGLY. WE FURTHER CONCLUDE THAT THE ACTION OF DCAA IN SETTING MR. BAUMEISTER'S SALARY AT GRADE GS 12, STEP 4, WAS PROPER UNDER 5 U.S.C. SEC. 5334(B) (1970).

ANY INDEBTEDNESS ARISING FROM THE ERRONEOUS PAYMENT OF COMPENSATION TO MR. BAUMEISTER WOULD BE SUBJECT TO WAIVER UNDER 5 U.S.C. SEC. 5584 (1970), AND REGULATIONS PROMULGATED THEREUNDER IN PART 91 OF TITLE 4, CODE OF FEDERAL REGULATIONS (1974).