B-38185, NOVEMBER 30, 1943, 23 COMP. GEN. 398

B-38185: Nov 30, 1943

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- ARE ENTITLED TO THE APPLICABLE BENEFITS OF THE WAR OVERTIME PAY ACT OF 1943. SUCH A CONTRACTOR RECEIVING THE $25 MAXIMUM RATE IS ENTITLED TO THE ADDITIONAL COMPENSATION AUTHORIZED BY THE WAR OVERTIME PAY ACT OF 1943. WHILE THE NAVY DEPARTMENT IS NOT REQUIRED TO TAKE THE INITIATIVE IN ADJUSTING SHORT PAYMENTS OF COMPENSATION RESULTING FROM ADMINISTRATIVE ERROR IN DENYING ITS CONTRACT EMPLOYEES THE BENEFIT OF THE WAR OVERTIME PAY ACT OF 1943. IT IS ENTIRELY PROPER TO DO SO. - PROVIDED THE EMPLOYEES ARE NOW ON THE ROLLS. 1943: I HAVE YOUR LETTER OF NOVEMBER 4. THE ACTING COMPTROLLER GENERAL RULED THAT CONTRACT EMPLOYEES OF SUCH AGENCY WERE ENTITLED TO THE BENEFITS OF THE WAR OVERTIME PAY ACT OF 1943 ( PUBLIC LAW 49.

B-38185, NOVEMBER 30, 1943, 23 COMP. GEN. 398

WAR OVERTIME PAY ACT OF 1943 - CONTRACT SPECIALISTS CONTRACT OFFICERS OR EMPLOYEES, AS DISTINGUISHED FROM CONTRACTORS EMPLOYED ON A NONPERSONAL-SERVICE BASIS--- GENERALLY THOSE WHO DO NOT WORK UNDER THE SUPERVISION AND CONTROL OF THE GOVERNMENT--- ARE ENTITLED TO THE APPLICABLE BENEFITS OF THE WAR OVERTIME PAY ACT OF 1943, WHETHER WORKING ON A FULL TIME OR INTERMITTENT BASIS. THE LIMITATION OF $25 PER DAY IMPOSED BY THE NAVAL APPROPRIATION ACT, 1944, ON THE DAILY RATE OF COMPENSATION THAT MAY BE PAID CONTRACT SPECIALISTS RELATES ONLY TO THE BASIC COMPENSATION OF SUCH PERSONS, AND, THEREFORE, SUCH A CONTRACTOR RECEIVING THE $25 MAXIMUM RATE IS ENTITLED TO THE ADDITIONAL COMPENSATION AUTHORIZED BY THE WAR OVERTIME PAY ACT OF 1943, EVEN THOUGH HIS CONTRACT SPECIFICALLY EXCLUDES PAYMENT OF SUCH ADDITIONAL COMPENSATION. WHILE THE NAVY DEPARTMENT IS NOT REQUIRED TO TAKE THE INITIATIVE IN ADJUSTING SHORT PAYMENTS OF COMPENSATION RESULTING FROM ADMINISTRATIVE ERROR IN DENYING ITS CONTRACT EMPLOYEES THE BENEFIT OF THE WAR OVERTIME PAY ACT OF 1943, IT IS ENTIRELY PROPER TO DO SO--- THE PAYMENTS TO BE MADE BY THE DISBURSING OFFICER--- PROVIDED THE EMPLOYEES ARE NOW ON THE ROLLS.

COMPTROLLER GENERAL WARREN TO THE SECRETARY OF THE NAVY, NOVEMBER 30, 1943:

I HAVE YOUR LETTER OF NOVEMBER 4, 1943 (FILE PLD/RCMCC:JHF), AS FOLLOWS:

IN A DECISION OF JULY 12, 1943 (B-35339) (23 COMP. GEN. 17) TO THE CHAIRMAN OF THE BOARD OF ECONOMIC WARFARE, THE ACTING COMPTROLLER GENERAL RULED THAT CONTRACT EMPLOYEES OF SUCH AGENCY WERE ENTITLED TO THE BENEFITS OF THE WAR OVERTIME PAY ACT OF 1943 ( PUBLIC LAW 49, 78TH CONGRESS), APPROVED MAY 7, 1943. IN A FURTHER DECISION DATED OCTOBER 5, 1943 (B- 37154) (23 COMP. GEN. 260) YOU REMARKED THAT AN EMPLOYEE OF THE WAR DEPARTMENT, PAID AT THE RATE OF $25 PER DAY, WAS ALSO ENTITLED TO ANY ADDITIONAL COMPENSATION AS MIGHT BE PAYABLE TO HIM UNDER THE TERMS OF THE WAR OVERTIME PAY ACT OF 1943.

IT SEEMS CLEAR TO ME IN THE LIGHT OF THESE DECISIONS THAT THE PERSONS EMPLOYED BY THE NAVY DEPARTMENT ON A CONTRACT BASIS ARE ENTITLED TO ADDITIONAL COMPENSATION FOR OVERTIME WORK UNDER THE PERTINENT PROVISIONS OF THE WAR OVERTIME PAY ACT. YOU WILL NOTE, HOWEVER, FROM THE ENCLOSED DIRECTIVE OF THE ASSISTANT SECRETARY OF THE NAVY, DATED MAY 17, 1943, WITH RESPECT TO OVERTIME COMPENSATION (PARAGRAPH 3 (C) (, THAT THE NAVY DEPARTMENT EXCLUDED CONTRACT EMPLOYEES FROM THE BENEFITS OF THE ACT. WHILE THIS EXCLUSION APPEARS ERRONEOUS UNDER YOUR RECENT DECISIONS, I WANT TO HAVE YOUR ADVICE SPECIFICALLY AS TO NAVY CONTRACT EMPLOYEES, BECAUSE OF A POSSIBLE DISTINCTION BETWEEN SUCH EMPLOYEES AND THE EMPLOYEES OF THE BOARD OF ECONOMIC WARFARE AND THE WAR DEPARTMENT DISCUSSED IN YOUR EARLIER DECISIONS.

I UNDERSTAND FROM THE OFFICE OF ECONOMIC WARFARE THAT THE STATUTORY AUTHORITY FOR ITS EMPLOYMENT OF CONSULTANTS ON A CONTRACT BASIS DOES NOT IMPOSE ANY LIMIT UPON THE DAILY RATE OF PAY, BUT THAT THE BOARD OF ECONOMIC WARFARE HAD LIMITED THE TOP DAILY RATE PAID TO SUCH CONSULTANTS TO $25 BY ADMINISTRATIVE REGULATION. THE SECRETARY OF THE NAVY IS AUTHORIZED BY THE CURRENT APPROPRIATION ACT ( PUBLIC LAW 92, 78TH CONGRESS, APPROVED JUNE 26, 1943) TO EMPLOY SCIENTISTS AND TECHNICISTS "AT A RATE OF PAY NOT EXCEEDING $25 PER DIEM" (NOTE THE APPROPRIATIONS FOR THE PURPOSES OF THE SEVERAL BUREAUS AND THE GENERAL AUTHORITY GRANTED IN SECTION 114 OF THE ACT). THE PROVISIONS OF THE NAVAL APPROPRIATION ACT, 1944, ARE SUBSTANTIALLY THE SAME AS THOSE CONTAINED IN NAVAL APPROPRIATION ACTS OF PREVIOUS YEARS.

AS TO NAVY EMPLOYEES WHO ARE PAID UNDER CONTRACT AT A RATE OF LESS THAN $25 PER DAY (FROM $10 TO $22 PER DAY, FOR EXAMPLE), AND WHO WOULD BE ENTITLED, IF THE WAR OVERTIME ACT IS APPLICABLE, TO OVERTIME WHICH WOULD NOT BRING THEIR AVERAGE DAILY PAY TO AN AMOUNT OVER $25 PER DAY, I CAN SEE NO ALTERNATIVE BUT THAT YOUR DECISIONS GOVERN AND THAT SUCH EMPLOYEES ARE ENTITLED TO OVERTIME COMPENSATION.

MY MAIN QUESTION IS WHETHER NAVY CONTRACT EMPLOYEES BEING PAID $25 PER DAY, THE STATUTORY LIMIT, ARE COVERED BY THE ACT. OUR PRIMARY REASON, I SUPPOSE, FOR EXCLUDING CONTRACT EMPLOYEES FROM OVERTIME COMPENSATION IN THE MAY 17, 1943 DIRECTIVE WAS THE POSSIBLE ARGUMENT THAT CONTRACT EMPLOYEES RECEIVING $25 PER DAY UNDER THEIR CONTRACTS WOULD BE OBTAINING COMPENSATION IN EXCESS OF THE STATUTORY LIMITATION IF WE MADE PROVISION FOR OVERTIME PAYMENTS TO THEM. ALL NAVY CONTRACT EMPLOYEES ARE ENGAGED AT A STIPULATED DAILY RATE OF PAY WITH NO CONTRACT PROVISION FOR OVERTIME, WITH THE SINGLE EXCEPTION OF NAVAL RESEARCH LABORATORY EMPLOYEES, WHOSE CONTRACTS CALL FOR PAY ON THE BASIS OF AN EIGHT-HOUR DAY WITH OVERTIME AT THE RATE OF ONE-EIGHTH OF THE DAILY RATE, FOR ALL HOURS WORKED DAILY IN EXCESS OF EIGHT WITHIN THE $25 STATUTORY LIMIT.

UPON REFLECTION AND CONSIDERATION OF YOUR DECISION, I AM INCLINED TO BELIEVE THAT THIS DECISION BY THE NAVY DEPARTMENT WAS IN ERROR. THE ACT OF COURSE APPLIES TO CIVIL SERVICE EMPLOYEES, WHOSE COMPENSATION WITHIN THE SEVERAL GRADES IS FIXED AT A TOP STATUTORY LIMIT COMPARABLE TO THE TOP $25 LIMIT FOR NAVY CONTRACT EMPLOYEES ALTHOUGH THE CIVIL SERVICE CEILINGS ARE ON AN ANNUAL BASIS. THE WAR OVERTIME PAY ACT APPLIES TO ALL "CIVILIAN OFFICERS AND EMPLOYEES," AND SECTION 3 (A) WOULD APPEAR ALMOST EXPRESSLY TO COVER CONTRACT EMPLOYEES, WHO ARE NOT REGULARLY REQUIRED TO WORK A SPECIFIC MINIMUM NUMBER OF HOURS. FURTHERMORE, THE QUOTATION IN THE JULY 12, 1943 DECISION OF THE ACTING COMPTROLLER GENERAL FROM THE DECISION OF THE COMPTROLLER OF THE TREASURY DATED MARCH 24, 1921 (27 COMP. DEC. 823, 824) SEEMS PARTICULARLY APT AS APPLIED TO NAVY CONTRACTS FOR EMPLOYMENT:

" WHETHER AN EMPLOYEE CAN BE PAID THE INCREASE OF COMPENSATION (AS PROVIDED BY THE FEDERAL STATUTE) DOES NOT DEPEND ON THE TERMS OF HIS CONTRACT OF EMPLOYMENT BUT DEPENDS ON WHETHER HE COMES WITHIN THE TERMS OF THE ACT GRANTING INCREASE OF COMPENSATION.'

I WANT TO POINT OUT TO YOU ONE FURTHER POSSIBLE DISTINCTION BETWEEN NAVY CONTRACT EMPLOYEES AND THE BOARD OF ECONOMIC WARFARE CONSULTANTS DISCUSSED IN THE JULY 12, 1943 DECISION. THE LATTER WERE EMPLOYED ONLY ON AN INTERMITTENT BASIS; THE NAVY DEPARTMENT HAS CONTRACT EMPLOYEES BOTH ON AN INTERMITTENT OR PART-TIME BASIS AND ON A FULL TIME BASIS. THIS DISTINCTION WOULD NOT APPEAR TO HAVE ANY EFFECT ON THE COVERAGE OF THE ACT, ALTHOUGH THOSE EMPLOYED ON AN INTERMITTENT BASIS WOULD BE ENTITLED TO A DIFFERENT RATE OF OVERTIME COMPENSATION UNDER SECTION 3 (A) OF THE ACT FROM THE RATE PAID TO FULL-TIME EMPLOYEES.

FOR YOUR INFORMATION I ENCLOSE, IN ADDITION TO THE MAY 17, 1943, DIRECTIVE OF THE NAVY DEPARTMENT, A COPY OF A DIRECTIVE DATED SEPTEMBER 11, 1943, ESTABLISHING A UNIFORM NAVY PROCEDURE FOR MAKING PERSONAL SERVICE CONTRACTS, ATTACHED TO WHICH IS OUR CURRENT STANDARD FORM OF PERSONAL SERVICE CONTRACT.

IN THE LIGHT OF THE ABOVE DISCUSSION, WILL YOU PLEASE ADVISE THE NAVY DEPARTMENT OF YOUR OPINION AS TO:

(1) WHETHER CONTRACT EMPLOYEES OF THE NAVY DEPARTMENT, AND IN PARTICULAR THOSE EMPLOYEES RECEIVING $25 PER DAY, WHETHER DOING WORK ON AN INTERMITTENT OR ON A FULL-TIME BASIS, ARE ENTITLED TO THE BENEFITS OF THE WAR OVERTIME PAY ACT OF 1943:

(2) WHETHER THE NAVY DEPARTMENT IS AUTHORIZED TO PROVIDE SPECIFICALLY IN ITS PERSONAL SERVICE CONTRACTS THAT ITS CONTRACT EMPLOYEES ARE ENTITLED TO A FIXED RATE OF DAILY PAY WITH NO OVERTIME COMPENSATION, OR TO A FIXED RATE OF DAILY PAY WITH A SPECIFIED RATE OF OVERTIME COMPENSATION; AND

(3) WHETHER THE NAVY DEPARTMENT IS REQUIRED TO TAKE ANY ACTION WITH RESPECT TO OVERTIME COMPENSATION TO ITS CONTRACT EMPLOYEES FOR THE PERIOD FROM MAY 7, 1943, TO DATE?

YOU HAVE INTERPRETED CORRECTLY THE PROVISIONS OF THE WAR OVERTIME PAY ACT OF 1943, APPROVED MAY 7, 1943, 57 STAT. 75, 76, PUBLIC LAW 49, AND THE RULE STATED IN THE CITED DECISIONS. IN OTHER WORDS, IT MAY BE STATED THAT UNLESS AN OFFICER OR EMPLOYEE IN OR UNDER THE UNITED STATES GOVERNMENT BE EXPRESSLY EXCEPTED FROM THE TERMS OF THE ACT HE MUST BE REGARDED AS INCLUDED WITHIN ITS PROVISIONS NOTWITHSTANDING THAT HE MAY BE EMPLOYED ON A CONTRACT BASIS. CONTRACT OFFICERS OR EMPLOYEES, AS DISTINGUISHED FROM CONTRACTORS EMPLOYED ON OTHER THAN A PERSONAL SERVICE BASIS--- GENERALLY THOSE WHO DO NOT PERFORM THEIR WORK UNDER THE SUPERVISION AND CONTROL OF THE GOVERNMENT--- ARE NOT EXCLUDED BY ANY OF THE PROVISIONS OF THE ACT. ACCORDINGLY, IT MUST BE CONCLUDED THAT EMPLOYEES OF THE CLASSES REFERRED TO IN YOUR LETTER COME WITHIN THE PURVIEW OF THE OVERTIME LAW AND ARE ENTITLED TO THE ADDITIONAL COMPENSATION SOLELY BY OPERATION OF THAT STATUTE.

THE APPROPRIATION LIMITATION OF $25 PER DAY, TO WHICH YOU REFER, RELATES ONLY TO BASIC COMPENSATION, THE ADDITIONAL COMPENSATION BEING AUTHORIZED BY OPERATION OF THE OVERTIME LAW IRRESPECTIVE OF THE TERMS OF THE CONTRACT FOR PERSONAL SERVICES. SINCE THE OVERTIME COMPENSATION IS PAYABLE BY OPERATION OF LAW AND OPERATES UPON THE BASIC COMPENSATION, A PROVISION IN A CONTRACT FOR PERSONAL SERVICES TO EXCLUDE PAYMENT OF THE ADDITIONAL COMPENSATION WOULD BE NONEFFECTIVE, WHILE A PROVISION THEREIN TO INCLUDE PAYMENT OF THE OVERTIME COMPENSATION PROVIDED BY LAW WOULD CONSTITUTE MERE SURPLUSAGE.

QUESTION (1) IS ANSWERED IN THE AFFIRMATIVE; AND QUESTION (2) IN THE NEGATIVE (SUBJECT TO THE QUALIFICATION INDICATED IN THE LAST SENTENCE OF THE PRECEDING PARAGRAPH).

REFERRING TO QUESTION 3, THE WAR OVERTIME PAY ACT OF 1943 WAS EFFECTIVE MAY 1, 1943, RATHER THAN MAY 7, 1943, THE DATE OF APPROVAL OF THE STATUTE. WHILE THE NAVY DEPARTMENT IS NOT REQUIRED TO TAKE THE INITIATIVE IN ADJUSTING SHORT PAYMENTS OF COMPENSATION RESULTING FROM AN ADMINISTRATIVE ERROR, AS IN THIS INSTANCE, IT IS ENTIRELY PROPER TO DO SO- -- THE PAYMENTS TO BE MADE BY THE DISBURSING OFFICER--- PROVIDED THE EMPLOYEES ARE NOW ON THE ROLLS. SEE IN THAT CONNECTION 21 COMP. GEN. 871.