B-51389, AUGUST 14, 1945, 25 COMP. GEN. 188

B-51389: Aug 14, 1945

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A COMPENSATION DIFFERENTIAL PAID TO AN OFFICER OR EMPLOYEE STATIONED OUTSIDE THE CONTINENTAL UNITED STATES IS A PART OF HIS BASIC COMPENSATION TO BE INCLUDED IN APPLYING THE $10. HAVE NO APPLICATION TO AN OFFICER OR EMPLOYEE WHO ACTUALLY HAS BEEN REDUCED TO A POSITION SEPARATE AND DISTINCT FROM THE ONE HE OCCUPIED ON JUNE 30. 1945: I HAVE YOUR LETTER OF JULY 21. WHOSE POST OF DUTY IS IN THE TERRITORY OF HAWAII. HIS PRESENT GROSS RATE OF PAY IS $10. WE ARE PLANNING TO COMPENSATE THIS EMPLOYEE HEREAFTER AT A GRADE CAF 14. PLUS THE OVERTIME WHICH IS FIGURED ON THE BASIS OF A 44-HOUR WEEK. EXCEPT THAT (1) ANY OFFICER OR EMPLOYEE WHO WAS RECEIVING OVERTIME COMPENSATION ON JUNE 30. WHOSE AGGREGATE RATE OF COMPENSATION ON SUCH DATE WAS IN EXCESS OF $10.

B-51389, AUGUST 14, 1945, 25 COMP. GEN. 188

FEDERAL EMPLOYEES PAY ACT OF 1945 - AGGREGATE COMPENSATION LIMITATION AS APPLIED TO COMPENSATION DIFFERENTIAL FOR DUTY OUTSIDE U.S. A COMPENSATION DIFFERENTIAL PAID TO AN OFFICER OR EMPLOYEE STATIONED OUTSIDE THE CONTINENTAL UNITED STATES IS A PART OF HIS BASIC COMPENSATION TO BE INCLUDED IN APPLYING THE $10,000 PER ANNUM AGGREGATE COMPENSATION LIMITATION IMPOSED BY SECTION 603 (B) OF THE FEDERAL EMPLOYEES PAY ACT OF 1945. THE PROVISIONS OF SECTION 603 (B) OF THE FEDERAL EMPLOYEES PAY ACT OF 1945 EXCEPTING FROM THE $10,000 PER ANNUM AGGREGATE COMPENSATION LIMITATION PRESCRIBED THEREIN CERTAIN OFFICERS AND EMPLOYEES WHOSE AGGREGATE COMPENSATION ON JUNE 30, 1945, EXCEEDED SUCH LIMITATION, SUBJECT TO THE REQUIREMENT THAT THEY REMAIN IN THE SAME POSITIONS, HAVE NO APPLICATION TO AN OFFICER OR EMPLOYEE WHO ACTUALLY HAS BEEN REDUCED TO A POSITION SEPARATE AND DISTINCT FROM THE ONE HE OCCUPIED ON JUNE 30, 1945. IN VIEW OF THE PROVISIONS OF SECTION 603 (B) OF THE FEDERAL EMPLOYEES PAY ACT OF 1945 LIMITING TO $10,000 PER ANNUM THE AGGREGATE RATE OF COMPENSATION WHICH MAY BE PAID "BY REASON OF THE ENACTMENT OF THIS ACT," AN OFFICER OR EMPLOYEE, NOT WITHIN THE EXCEPTIONS TO SUCH LIMITATION, ON DUTY OUTSIDE THE CONTINENTAL UNITED STATES MAY NOT BE PAID IN EXCESS OF $10,000 PER ANNUM WHERE THE BASIC COMPENSATION ATTACHED TO THE POSITION ON JUNE 30, 1945 (REGULAR BASIC RATE PLUS COMPENSATION DIFFERENTIAL), WOULD BE INCREASED BY OPERATION OF SECTION 405 OF SAID ACT TO A RATE EXCEEDING THE LIMITATION.

COMPTROLLER GENERAL WARREN TO THE CHAIRMAN, NATIONAL WAR LABOR BOARD, AUGUST 14, 1945:

I HAVE YOUR LETTER OF JULY 21, 1945, AS FOLLOWS:

ONE OF THE WAR LABOR BOARD EMPLOYEES, WHOSE POST OF DUTY IS IN THE TERRITORY OF HAWAII, HAS BEEN EMPLOYED AS CO-CHAIRMAN, GRADE CAF-15, $8,750 PER ANNUM, PLUS 25 PERCENT DIFFERENTIAL IN ACCORDANCE WITH SECTION 681 (C), TITLE 5 U.S.C. HIS PRESENT GROSS RATE OF PAY IS $10,628.33 PER ANNUM, SINCE UNDER THE TERMS OF PUBLIC LAW 106, 79TH CONGRESS, HE MAY NOT RECEIVE MORE THAN HIS RATE OF COMPENSATION AS OF JUNE 30, 1945.

WE ARE PLANNING TO COMPENSATE THIS EMPLOYEE HEREAFTER AT A GRADE CAF 14, VICE-CHAIRMAN, TOP OF THE GRADE, $8,225, PLUS 25 PERCENT DIFFERENTIAL IN ACCORDANCE WITH THE ABOVE CITED SECTION, PLUS THE OVERTIME WHICH IS FIGURED ON THE BASIS OF A 44-HOUR WEEK. AS A RESULT HE WOULD RECEIVE A TOTAL SALARY OF $10,595.17.

HOWEVER, P.L. 106, 79TH CONGRESS, STATES IN PART:

"SEC. 603 (B). NOTWITHSTANDING ANY OTHER PROVISION OF THIS ACT, NO OFFICER OR EMPLOYEE SHALL, BY REASON OF THE ENACTMENT OF THIS ACT, BE PAID, WITH RESPECT TO ANY PAY PERIOD, BASIC COMPENSATION, OR BASIC COMPENSATION PLUS ANY ADDITIONAL COMPENSATION PROVIDED BY THIS ACT, AT A RATE IN EXCESS OF $10,000 PER ANNUM, EXCEPT THAT (1) ANY OFFICER OR EMPLOYEE WHO WAS RECEIVING OVERTIME COMPENSATION ON JUNE 30, 1945, AND WHOSE AGGREGATE RATE OF COMPENSATION ON SUCH DATE WAS IN EXCESS OF $10,000 PER ANNUM MAY RECEIVE OVERTIME COMPENSATION AT SUCH RATE AS WILL NOT CAUSE HIS AGGREGATE RATE OF COMPENSATION FOR ANY PAY PERIOD TO EXCEED THE AGGREGATE RATE OF COMPENSATION HE WAS RECEIVING ON JUNE 30, 1945, UNTIL HE CEASES TO OCCUPY THE OFFICE OR POSITION HE OCCUPIED ON SUCH DATE OR UNTIL THE OVERTIME HOURS OF WORK IN HIS ADMINISTRATIVE WORKWEEK ARE REDUCED BY ACTION OF THE HEAD OF HIS DEPARTMENT OR INDEPENDENT ESTABLISHMENT OR AGENCY, OR GOVERNMENT-OWNED OR CONTROLLED CORPORATION, AND WHEN SUCH OVERTIME HOURS ARE REDUCED SUCH RATE OF OVERTIME COMPENSATION SHALL BE REDUCED PROPORTIONATELY, AND (2) ANY OFFICER OR EMPLOYEE WHO, BECAUSE OF THE RECEIPT OF ADDITIONAL COMPENSATION IN LIEU OF OVERTIME COMPENSATION WAS RECEIVING AGGREGATE COMPENSATION AT A RATE IN EXCESS OF $10,000 PER ANNUM ON JUNE 30, 1945, MAY CONTINUE TO RECEIVE SUCH RATE OF AGGREGATE COMPENSATION SO LONG AS HE CONTINUES TO OCCUPY THE OFFICE OR POSITION HE OCCUPIED ON SUCH DATE BUT IN NO CASE BEYOND JUNE 30, 1947.'

THE QUESTION IS PRESENTED WHETHER SECTION 603, SUBSECTION (B) OF THE FEDERAL EMPLOYEES PAY ACT OF 1945 WILL OPERATE TO PROHIBIT THE PAYMENT OF THE AMOUNT IN EXCESS OF $10,000 TO THIS EMPLOYEE--- NAMELY, $595.17--- SINCE THE 25 PERCENT DIFFERENTIAL OF $2,056 PLUS THE OVERTIME OF $314.17 WHEN ADDED TO THE BASE PAY OF $8,225 WILL TOTAL $10,595.17. IT APPEARS TO US THAT THE ANSWER TO THIS QUESTION DEPENDS ON WHETHER OR NOT THE 25 PERCENT DIFFERENTIAL PAID IN HAWAII IS TO BE CONSIDERED AS "BASIC COMPENSATION.' IF IT IS "BASIC COMPENSATION," THE FURTHER QUESTION IS PRESENTED WHETHER THE EXCEPTION IN SECTION 603 (B) (1), QUOTED ABOVE, APPLIES SO AS TO PERMIT THE CONTINUED PAYMENT TO THIS EMPLOYEE OF AGGREGATE COMPENSATION IN EXCESS OF $10,000.

THIS OFFICE HAS BEEN ADVISED INFORMALLY BY YOUR OFFICE THAT THE SALARY OF $8,750 STATED IN THE FIRST PARAGRAPH OF YOUR LETTER REFERS TO THE EMPLOYEE'S NEW SALARY RATE AS OF JULY 1, 1945, AND THAT ON JUNE 30, 1945, HE ACTUALLY WAS RECEIVING $8,000, PLUS DIFFERENTIAL OF $2,000, PLUS OVERTIME COMPENSATION.

THE DIFFERENTIAL NOT TO EXCEED 25 PERCENT PAID TO EMPLOYEES WITH STATIONS OUTSIDE THE CONTINENTAL UNITED STATES (NOT PURSUANT TO 5 U.S.C. 681 (C), 54 STAT. 1213, AS STATED IN YOUR LETTER--- THAT STATUTE NEVER HAVING BEEN PUT INTO OPERATION--- BUT RATHER, PURSUANT TO A LONG EXISTING ADMINISTRATIVE PRACTICE WHICH HAS BEEN RECOGNIZED IN A NUMBER OF DECISIONS OF THIS OFFICE) IS A PART OF BASIC COMPENSATION. SEE DECISION OF FEBRUARY 8, 1943, 22 COMP. GEN. 769, WHEREIN IT WAS STATED, AT PAGE 770, AS FOLLOWS:

* * * THE 25 PERCENT DIFFERENTIAL CONSTITUTES A PART OF BASE COMPENSATION OF AN EMPLOYEE FROM WHICH RETIREMENT DEDUCTIONS ARE REQUIRED TO BE MADE (10 COMP. GEN. 519, 521), AND ON THE BASIS OF WHICH THE INCREASE IN COMPENSATION AND THE SALARY LIMITATIONS PURSUANT TO THE JOINT RESOLUTION OF DECEMBER 22, 1942, 56 STAT. 1068, PUBLIC LAW 821, SHOULD BE COMPUTED (LETTER DATED DECEMBER 24, 1942, B-31212, TO THE SECRETARY OF WAR). SEE, ALSO, 24 COMP. GEN. 181, AND DECISION OF AUGUST 7, 1945, B-51218, 25 COMP. GEN. 151, QUESTION AND ANSWER 5, TO THE PRICE ADMINISTRATOR.

SECTION 603 (B) (1) OF THE FEDERAL EMPLOYEES PAY ACT OF 1945, 59 STAT. 303, CONTAINING AN EXCEPTION TO THE LIMITATION PRESCRIBED BY THE FIRST PART OF SAID SUBSECTION APPLIES ONLY "UNTIL HE CEASES TO OCCUPY THE OFFICE OR POSITION HE OCCUPIED ON SUCH DATE"--- "SUCH DATE" BEING JUNE 30, 1945. SINCE YOU STATE IN THE FIRST TWO PARAGRAPHS OF YOUR LETTER THAT IT IS PLANNED TO REDUCE THE EMPLOYEE FROM THE POSITION OF CO-CHAIRMAN, GRADE CAF 15, TO THE POSITION OF VICE-CHAIRMAN, GRADE CAF 14, IT IS ASSUMED FOR THE PURPOSE OF THIS DECISION THAT THE EMPLOYEE WOULD CEASE TO OCCUPY THE SAME POSITION HE OCCUPIED JUNE 30, 1945, WITHIN THE MEANING OF THE STATUTE. COMP. GEN. 474, 475; 8 ID. 496; 13 ID. 1. COMPARE ANSWER TO QUESTION 3 UNDER THE HEADING "SECTION 603 (A)" IN DECISION OF JULY 18, 1945, B-50927, 25 COMP. GEN. 62, TO THE FEDERAL WORKS ADMINISTRATOR.

THEREFORE, IF, AS IS UNDERSTOOD, IT IS PLANNED TO REDUCE THE EMPLOYEE TO A POSITION SEPARATE AND DISTINCT FROM THE ONE HE OCCUPIED JUNE 30, 1945, HE WOULD NOT BE ENTITLED TO THE BENEFIT OF EXCEPTION (1) TO SECTION 603 (B) OF THE STATUTE. THE SALARY IN THE NEW POSITION WOULD BE LIMITED TO THE RATE OF $10,000 PER ANNUM, ALL OF WHICH WOULD BE BASIC COMPENSATION, THE REASON THAT THE BASIC COMPENSATION OF THE NEW POSITION AS OF JUNE 30, 1945 ($7,500 PLUS $1,875 DIFFERENTIAL) $9,375, WOULD HAVE BEEN INCREASED IN THE AMOUNT OF $725 PER ANNUM "BY REASON OF THIS ACT"--- SECTION 405 OF THE STATUTE, 59 STAT. 300--- TO THE RATE OF $10,000 HAD IT NOT BEEN FOR THE LIMITATION IN SECTION 603 (B) OF THE STATUTE. IN OTHER WORDS, SINCE THE INCREASE IN THE BASIC COMPENSATION OF THE NEW POSITION TO BE OCCUPIED WOULD EXCEED $10,000, BY APPLICATION OF THE FORMULA CONTAINED IN SECTION 405 OF THE NEW PAY STATUTE, THE FIRST PART OF SECTION 603 (B) OF THE STATUTE HAS THE EFFECT OF LIMITING THE RATE OF COMPENSATION OF THE EMPLOYEE IN THE NEW POSITION TO $10,000 PER ANNUM BASIC COMPENSATION--- WITH NO OVERTIME COMPENSATION.