Entitlement to Backpay Following Improper Reduction in Grade

An agency requested a decision concerning the entitlement of an employee to retroactive pay incident to an improper reduction in grade, and asked: (1) whether the employee was indebted for a higher rate of pay that he received in the lower grade prior to corrective action; and (2) whether the employee is entitled to overtime pay he would have received but for the erroneous downgrading. Legislation provides that an employee who is found to have undergone an unjustified or unwarranted personnel action resulting in reduction of pay is entitled on correction of the action to receive the pay he would have normally received if the personnel action had not occurred, less amounts he earned through other employment during that period. GAO previously held that the Government had no authority to collect back from an employee any amount earned in excess of the backpay due, and that he may retain interim earnings in excess of the backpay due him. Thus, the employee was entitled to backpay at the rate of his original grade during the period of the erroneous action and was entitled to keep his earnings in excess of that rate. GAO believed the employee was entitled to the additional overtime pay because he would have performed overtime duties had he not been unjustly deprived of doing so through the erroneous action.