B-173976, FEB 23, 1972, 51 COMP GEN 525

B-173976, FEB 23, 1972, 51 COMP GEN 525

COMPENSATION - INCREASES - RETROACTIVE - INCREASES WITHHELD DURING WAGE FREEZE USE OF THE TERMS "CONTRACT" AND "EMPLOYMENT CONTRACT" IN SECTION 203(C) OF THE ECONOMIC STABILIZATION ACT AMENDMENTS OF 1971, AUTHORIZING THE PAYMENT OF WAGE OR SALARY INCREASES AGREED TO IN AN EMPLOYMENT CONTRACT EXECUTED PRIOR TO AUGUST 15, 1971, TO TAKE EFFECT PRIOR TO NOVEMBER 14, 1971, BUT WITHHELD BY REASON OF THE WAGE AND PRICE FREEZE IMPOSED BY EXECUTIVE ORDER 11615, DOES NOT EXCLUDE GENERAL SCHEDULE AND OTHER ANNUAL RATE FEDERAL EMPLOYEES FROM THE APPLICATION OF THE SECTION, AND FEDERAL WAGE BOARD EMPLOYEES ARE WITHIN THE PURVIEW OF SECTION 203(C)(2) BY REASON THAT THEIR PAY INCREASES RESULTED FROM AGREEMENT OR ESTABLISHED PRACTICE. WITHIN-GRADE INCREASES FOR BOTH STATUTORY AND WAGE BOARD EMPLOYEES MAY BE PAID RETROACTIVELY AS THE CONDITIONS OF SECTION 203(C)(3)(A) AND (B) WERE SATISFIED TO THE EFFECT THE INCREASES WERE PROVIDED BY LAW OR CONTRACT PRIOR TO AUGUST 15, 1971, AND FUNDS ARE AVAILABLE TO COVER THE INCREASES.

TO THE CHAIRMAN, UNITED STATES CIVIL SERVICE COMMISSION, FEBRUARY 23, 1972:

REFERENCE IS MADE TO YOUR LETTER DATED JANUARY 4, 1972, IN WHICH YOU REQUESTED OUR DECISION ON "THE APPLICABILITY OF SECTION 203(C) OF THE ECONOMIC STABILIZATION ACT OF 1970 (HEREINAFTER "ACT"), AS AMENDED BY THE ECONOMIC STABILIZATION ACT AMENDMENTS OF 1971, 12 U.S.C. 1904 NOTE (PUBLIC LAW 92-210), TO THE FEDERAL GOVERNMENT AND, IF SO APPLICABLE, ON THE EFFECT OF THE ACT ON WITHIN-GRADE INCREASES FOR GENERAL SCHEDULE (AND OTHER ANNUAL RATES) AND WAGE EMPLOYEES, AND TO WAGE-GRADE SCHEDULES, DURING THE PERIOD COVERED BY EXECUTIVE ORDER 11615. SPECIFICALLY, IF SECTION 203(C) IS APPLICABLE TO THE FEDERAL GOVERNMENT -

1. DOES THIS SECTION REQUIRE THE RETROACTIVE PAYMENT OF WITHIN-GRADE (INCLUDING QUALITY WITHIN-GRADE) INCREASES WHICH WOULD HAVE BEEN PAID TO GENERAL SCHEDULE AND OTHER ANNUAL RATE EMPLOYEES (E.G., DEPARTMENT OF MEDICINE AND SURGERY AND FOREIGN SERVICE EMPLOYEES) AND TO WAVE EMPLOYEES, EXCEPT FOR THE LIMITATIONS IMPOSED BY EXECUTIVE ORDER 11615?

2. DOES THIS SECTION REQUIRE THAT WAGE SCHEDULES THAT WOULD HAVE BEEN EFFECTED DURING THE PERIOD COVERED BY EXECUTIVE ORDER 11615 UNDER 5 U.S.C SEC 5343 (1970 ED.) NOW MUST BE EFFECTED (AND EMPLOYEES PAID AS REQUIRED BY 5 U.S.C. SEC 5344 (1970 ED.)) AS OF THE DATE THE SCHEDULES OTHERWISE WOULD HAVE BEEN PLACED IN EFFECT, EXCEPT FOR THE LIMITATIONS IMPOSED BY EXECUTIVE ORDER 11615?

SECTION 203(C) OF THE ECONOMIC STABILIZATION ACT AMENDMENTS OF 1971 STATES:

(C)(1) THE AUTHORITY CONFERRED ON THE PRESIDENT BY THIS SECTION SHALL NOT BE EXERCISED TO LIMIT THE LEVEL OF ANY WAGE OR SALARY (INCLUDING ANY INSURANCE OR OTHER FRINGE BENEFIT OFFERED IN CONNECTION WITH AN EMPLOYMENT CONTRACT) SCHEDULED TO TAKE EFFECT AFTER NOVEMBER 13, 1971, TO A LEVEL BELOW THAT WHICH HAS BEEN AGREED TO IN A CONTRACT WHICH (A) RELATED TO SUCH WAGE OR SALARY, AND (B) WAS EXECUTED PRIOR TO AUGUST 15, 1971, UNLESS THE PRESIDENT DETERMINES THAT THE INCREASE PROVIDED IN SUCH CONTRACT IS UNREASONABLY INCONSISTENT WITH THE STANDARDS FOR WAGE AND SALARY INCREASES PUBLISHED UNDER SUBSECTION (B).

(2) THE PRESIDENT SHALL PROMPTLY TAKE SUCH ACTION AS MAY BE NECESSARY TO PERMIT THE PAYMENT OF ANY WAGE OR SALARY INCREASE (INCLUDING ANY INSURANCE OR OTHER FRINGE BENEFIT OFFERED IN CONNECTION WITH AN EMPLOYMENT CONTRACT) WHICH (A) WAS AGREED TO IN AN EMPLOYMENT CONTRACT EXECUTED PRIOR TO AUGUST 15, 1971, (B) WAS SCHEDULED TO TAKE EFFECT PRIOR TO NOVEMBER 14, 1971, AND (C) WAS NOT PAID AS A RESULT OF ORDERS ISSUED UNDER THIS TITLE, UNLESS THE PRESIDENT DETERMINES THAT THE INCREASE PROVIDED IN SUCH CONTRACT IS UNREASONABLY INCONSISTENT WITH THE STANDARDS FOR WAGE AND SALARY INCREASES PUBLISHED UNDER SUBSECTION (B).

(3) IN ADDITION TO THE PAYMENT OF WAGE AND SALARY INCREASES PROVIDED FOR UNDER PARAGRAPHS (1) AND (2), BEGINNING ON THE DATE ON WHICH THIS SUBSECTION TAKES EFFECT, THE PRESIDENT SHALL PROMPTLY TAKE SUCH ACTION AS MAY BE NECESSARY TO REQUIRE THE PAYMENT OF ANY WAGE OR SALARY INCREASES (INCLUDING ANY INSURANCE OR OTHER FRINGE BENEFITS OFFERED IN CONNECTION WITH EMPLOYMENT) WHICH HAVE BEEN, OR IN THE ABSENCE OF THIS SUBSECTION WOULD BE, WITHHELD UNDER THE AUTHORITY OF THIS TITLE, IF THE PRESIDENT DETERMINES THAT -

(A) SUCH INCREASES WERE PROVIDED FOR BY LAW OR CONTRACT PRIOR TO AUGUST 15, 1971; AND

(B) PRICES HAVE BEEN ADVANCED, PRODUCTIVITY INCREASED, TAXES HAVE BEEN RAISED, APPROPRIATIONS HAVE BEEN MADE, OR FUNDS HAVE OTHERWISE BEEN RAISED OR PROVIDED FOR IN ORDER TO COVER SUCH INCREASES.

THE ABOVE STATUTE CONTAINS NO EXPRESS REFERENCE TO FEDERAL EMPLOYEES. HOWEVER, WE DO FIND IN ITS LEGISLATIVE HISTORY A COLLOQUY BETWEEN CONGRESSMAN PATMAN AND CONGRESSMAN UDALL ON THE FLOOR OF THE HOUSE OF REPRESENTATIVES. THAT COLLOQUY MENTIONS ONE CLASS OF FEDERAL EMPLOYEES, NAMELY OVERSEAS TEACHERS OF THE DEPARTMENT OF DEFENSE, AS BEING COVERED BY SECTION 203(C), TO THE EXTENT THEY OTHERWISE MEET THE CONDITIONS THEREOF.

ORDINARILY THE TERMS "CONTRACT" OR "EMPLOYMENT CONTRACT," AS USED IN THE STATUS, WOULD NOT EMBRACE FEDERAL EMPLOYEES WHOSE SALARIES ARE FIXED BY LAW, SUCH AS THOSE SUBJECT TO THE GENERAL SCHEDULE. OBVIOUSLY THE PROVISIONS OF SECTION 203(C) COULD NOT BE APPLICABLE TO GENERAL SALARY INCREASES IN THE GENERAL SCHEDULE AND OTHER STATUTORY SYSTEMS SINCE SUCH INCREASES WERE SPECIFICALLY COVERED BY SECTION 3 OF PUBLIC LAW 92-210, 5 U.S.C. 5305 NOTE, AND SUCH INCREASES DO NOT MEET THE CONDITIONS SPECIFIED IN SECTION 203(C). HOWEVER, IT IS NOTED THAT SECTION 3 MAKES NO MENTION OF STEP INCREASES WHICH ARE OTHERWISE PROVIDED BY LAW OR REGULATION. TO INCREASES AUTHORIZED BY ADMINISTRATIVE ACTION OR THROUGH WAGE BOARD PROCEDURES, IT CANNOT BE SAID THAT SUCH EMPLOYEES SERVE UNDER "CONTRACT" OR "EMPLOYMENT CONTRACT" IN THE LITERAL SENSE OF THOSE TERMS.

TO DETERMINE WHETHER THE CONGRESS INTENDED THE ABOVE TERMS TO BE INTERPRETED OTHER THAN IN THEIR LITERAL AND USUAL SENSE, THERE ARE FOR CONSIDERATION VARIOUS STATEMENTS OF THE LEGISLATORS IN CONNECTION WITH THE STATUE.

IN CONFERENCE REPORT NO. 92-753, HOUSE OF REPRESENTATIVES, IT WAS STATED IN PERTINENT PART:

*** THE CONFEREES INTENDED TO REQUIRE RETROACTIVE AND DEFERRED PAY UNDER EITHER THE HOUSE PROVISIONS OR THE SENATE PROVISIONS, WHICHEVER PROVISION WOULD AUTHORIZE SUCH PAYMENTS TO BE MADE. THE CONFEREES ALSO INTENDED THAT THE PROVISIONS RELATING TO EMPLOYMENT CONTRACTS ALSO APPLY TO WAGE INCREASES WHICH WERE SCHEDULED TO BE PAID AS A RESULT OF AN AGREEMENT OR AN ESTABLISHED PRACTICE BUT WHICH WERE NOT ALLOWED TO GO INTO EFFECT BECAUSE OF THE 90-DAY FREEZE OR SUBSEQUENT CONTROLS ISSUED UNDER THE AUTHORITY OF THIS TITLE.

(A SIMILAR STATEMENT APPEARS IN SENATE CONFERENCE REPORT NO. 92 579.)

IN EXPLAINING THE STATEMENT OF THE HOUSE CONFEREES, CONGRESSMAN GARRY BROWN, ONE OF THE CONFEREES, SAID:

*** WHEN WE TALKED ABOUT CONTRACTS WE WERE NOT TALKING ONLY ABOUT NEGOTIATED CONTRACTS BY ORGANIZED LABOR BUT TALKING ABOUT CONTRACTS, AGREEMENTS, AND UNDERSTANDINGS OR WHERE THERE IS A SCHEDULED INCREASE THAT IS UNDERSTOOD BY BOTH PARTIES. THE LAW DOES NOT CONTEMPLATE DISPARATE TREATMENT BETWEEN RECOGNIZED CONTRACTS, EVEN THOUGH THE FORMALITY MAY BE LACKING, NOR BETWEEN PARTIES TO A CONTRACT, BE THEY "ORGANIZED" OR NOT. CONGRESSIONAL RECORD FOR DECEMBER 14, 1971, H. 12528.

IN ADDITION, WE ALSO NOTE THAT IN HIS DISCUSSION ON SECTION 203(C), CONGRESSMAN WRIGHT PATMAN OF THE COMMITTEE OF CONFERENCE STATED AS TO THE SCOPE OF SUCH SECTION:

MR SPEAKER, THIS MEANS THAT ALL TEACHERS, PUBLIC EMPLOYEES AND OTHERS *** MUST IMMEDIATELY BE PAID THEIR WAGES AND SALARIES THAT HAVE BEEN WITHHELD BECAUSE OF ORDERS ISSUED UNDER THE ECONOMIC STABILIZATION ACT SINCE AUGUST 15. THIS LANGUAGE OBVIOUSLY COVERS ALL TEACHERS AND PUBLIC EMPLOYEES AND MOST OTHER CATEGORIES OF WORKERS ON WAGES AND SALARIES IN THIS NATION.

*** UNDER THE LANGUAGE WHICH WAS ORIGINALLY ADOPTED BY THE SENATE - AND IS NOW INCORPORATED AS PART OF THE CONFERENCE VERSION - ALL WAGE AND SALARY CONTRACTS FOR ALL CLASSES OF EMPLOYEES MUST BE ALLOWED SO LONG AS THEY DO NOT VIOLATE THE STANDARDS IN AN UNREASONABLY INCONSISTENT MANNER (CONGRESSIONAL RECORD FOR DECEMBER 14, 1971, H. 12525.)

FROM THE FOREGOING IT IS APPARENT THAT THE USE OF THE TERMS "CONTRACT" OR "EMPLOYMENT CONTRACT" DOES NOT NECESSARILY EXCLUDE FEDERAL EMPLOYEES FROM THE PROVISIONS OF SECTION 203(C). AS TO WAGE BOARD EMPLOYEES IT MAY BE SAID THAT ANY GENERAL WAGE INCREASES WHICH WOULD HAVE GONE INTO EFFECT DURING THE FREEZE PERIOD PURSUANT TO A SURVEY BEGINNING PRIOR TO AUGUST 15, 1971, MAY BE REGARDED AS INCREASES WHICH WERE SCHEDULED TO BE PAID AS A RESULT OF AN AGREEMENT OR ESTABLISHED PRACTICE. ACCORDINGLY, OUR VIEW IS THAT GENERAL PAY INCREASES FOR FEDERAL WAGE BOARD EMPLOYEES ARE WITHIN THE PURVIEW AND SUBJECT TO THE LIMITATIONS OF PARAGRAPH (2) OF SECTION 203(C).

THE PROVISIONS OF PARAGRAPH (3) OF SECTION 203(C) WOULD APPEAR TO BE FOR CONSIDERATION ONLY IF THE CONDITIONS SPECIFIED IN (A) AND (B) OF SUCH PARAGRAPH ARE MET. FOR EXAMPLE, IF A DETERMINATION IS MADE UNDER PARAGRAPH (2) THAT A PARTICULAR CLASS OF EMPLOYEES WAS NOT QUALIFIED, THEN CONSIDERATION MUST BE GIVEN AS TO WHETHER THAT CLASS WOULD QUALIFY UNDER PARAGRAPH (3). WHILE THE LEGISLATIVE HISTORY INDICATES PARAGRAPH (3) WAS AIMED AT THE PRIVATE SECTOR, NO EXCLUSION WAS PROVIDED FOR FEDERAL EMPLOYEES. UNDER THE LITERAL TERMS OF PARAGRAPH (3), WE BELIEVE BOTH CONDITIONS (A) AND (B) ARE SATISFIED WITH RESPECT TO STATUTORY AND WAGE BOARD WITHIN-GRADE INCREASES.

YOUR QUESTIONS ARE ANSWERED ACCORDINGLY.