B-151483, APRIL 23, 1964, 43 COMP. GEN. 701

B-151483, APRIL 23, 1964, 43 COMP. GEN. 701

COMPENSATION - PERIODIC STEP INCREASES - REPROMOTION AN EMPLOYEE WHO, WHEN REPROMOTED TO A FORMER GRADE WHILE RECEIVING SALARY RETENTION BENEFITS UNDER SECTION 507 OF THE CLASSIFICATION ACT OF 1949, 5 U.S.C. 1107, DOES NOT RECEIVE AN ACTUAL INCREASE IN COMPENSATION UNDER CLAUSE (A) OF SECTION 802 (B) OF THE CLASSIFICATION ACT OF 1949, 5 U.S.C. 1132 (B), BUT CONTINUES TO RECEIVE HIS EXISTING RATE UNDER CLAUSE (B) BECAUSE IT IS HIGHER MUST, NEVERTHELESS, HAVE SUCH INCREASE UNDER THE PROMOTION CONSIDERED AN EQUIVALENT INCREASE IN COMPENSATION TO BEGIN A NEW WAITING PERIOD FOR A STEP INCREASE; HOWEVER, IN VIEW OF THE PREVIOUS UNCERTAINTY CONCERNING CONSTRUCTIVE RATE INCREASES WHICH AGGREGATE LESS THAN THE RETAINED RATE, ANY WITHIN GRADE INCREASES BASED ON SUCH RATES MADE FOR ANY PAY PERIOD BEGINNING PRIOR TO THE DATE OF THIS DECISION (APRIL 23, 1964) NEED NOT BE RECOVERED BUT CORRECTIVE ACTION SHOULD BE TAKEN PROSPECTIVELY IN ALL APPLICABLE CASES.

TO THE CHAIRMAN, UNITED STATES CIVIL SERVICE COMMISSION, APRIL 23, 1964:

ON FEBRUARY 26, 1964, YOU REQUESTED THAT WE RECONSIDER THAT PORTION OF OUR DECISION OF JANUARY 14, 1964, B-151483, 43 COMP. GEN. 507, READING AS FOLLOWS:

CONCERNING QUESTION 2, THE LAST SENTENCE OF SECTION 802 (B) OF THE CLASSIFICATION ACT OF 1949, APPROVED OCTOBER 28, 1949, CH. 782, 63 STAT. 969, AS AMENDED BY THE FEDERAL SALARY REFORM ACT OF 1962, 5 U.S.C. 1132 (B), REQUIRES THE USE OF CONSTRUCTIVE WITHIN-GRADE INCREASES IN DETERMINING THE RATE TO BE PAID AN EMPLOYEE WHO IS PROMOTED WHILE RECEIVING SAVED RATE OF COMPENSATION. THEREFORE, UPON REPROMOTION ON OCTOBER 27, 1963, THE EMPLOYEE MUST BE CONSIDERED AS HAVING RECEIVED AN EQUIVALENT INCREASE IN COMPENSATION, AND THE WAITING PERIOD FOR THE NEXT STEP INCREASE WOULD COMMENCE ON THE DATE OF THE REPROMOTION. QUESTIONS 2 AND 3 ARE ANSWERED ACCORDINGLY.

THE LAST SENTENCE OF SECTION 802 (B) OF THE CLASSIFICATION ACT OF 1949, AS AMENDED BY SECTION 604 (A) OF THE CLASSIFICATION ACT AMENDMENTS OF 1965, 5 U.S.C. 1132 (B) (TITLE II, PUBLIC LAW 87-793), IS AS FOLLOWS:

IN CASE ANY SUCH OFFICER OR EMPLOYEE SO PROMOTED OR TRANSFERRED IS RECEIVING BASIC COMPENSATION AT A RATE SAVED TO HIM UNDER SECTION 507 OF THE ACT UPON REDUCTION IN GRADE, SUCH OFFICER OR EMPLOYEE SHALL RECEIVE (A) BASIC COMPENSATION AT A RATE TWO STEPS ABOVE THE RATE WHICH HE WOULD BE RECEIVING IF SUCH SECTION 507 WERE NOT APPLICABLE IN HIS CASE, OR (B) HIS EXISTING RATE OF BASIC COMPENSATION, IF SUCH EXISTING RATE IS THE HIGHER.

WE UNDERSTAND THAT YOUR PRINCIPAL OBJECTION TO THAT PORTION OF OUR DECISION, QUOTED ABOVE, RELATES TO THOSE CASES IN WHICH AN EMPLOYEE DOES NOT RECEIVE AN ACTUAL INCREASE IN COMPENSATION UNDER CLAUSE (A) OF THE LAST SENTENCE OF SECTION 802 (B) OF THE CLASSIFICATION ACT WHEN HE IS ADVANCED TO HIS FORMER GRADE FROM THE GRADE TO WHICH HE HAD BEEN DEMOTED, BUT RATHER CONTINUES TO RECEIVE HIS EXISTING RATE UNDER CLAUSE (B).

IN CONSIDERING WHETHER A PROMOTION EFFECTS AN EQUIVALENT INCREASE IN COMPENSATION WE FEEL THAT IT IS ESSENTIAL TO EXAMINE THE STATUTES FROM WHICH THE NEW RATE OF COMPENSATION ATTACHING TO OR FLOWING FROM THE PROMOTION IS DERIVED.

SO LONG AS AN EMPLOYEE CONTINUES TO BE ENTITLED TO A RETAINED RATE, THAT RATE MUST BE REGARDED AS BEING PAYABLE BY VIRTUE OF SECTION 507 OF THE CLASSIFICATION ACT OF 1949, AS AMENDED, 5 U.S.C. 1107.

IF HE IS PROMOTED, HIS NEW RATE MUST BE REGARDED AS DERIVING FROM SECTION 604 (B) OF PUBLIC LAW 87-793, 5 U.S.C. 1132, LAST SENTENCE. THE LANGUAGE OF THE LAST SENTENCE OF 5 U.S.C. 1132, REQUIRES THAT THE EMPLOYEE RECEIVE AN INCREASE EQUAL TO AT LEAST TWO STEPS ABOVE THE RATE HE WOULD HAVE BEEN RECEIVING HAD SECTION 507 OF THE CLASSIFICATION ACT NOT BEEN APPLICABLE TO HIM.

THEREFORE, THE INCREASE IN RATE STEMMING FROM THE PROMOTION IS TO BE CONSIDERED AN EQUIVALENT INCREASE IN COMPENSATION SUCH AS TO BEGIN A NEW WAITING PERIOD REGARDLESS OF WHETHER IT OPERATES TO TERMINATE ENTITLEMENT TO THE RATE AUTHORIZED BY SECTION 507; THAT IS TO SAY, IRRESPECTIVE OF WHETHER IT RESULTS ONLY IN AN INCREASE IN A CONSTRUCTIVE RATE WHICH AGGREGATES LESS THAN THE RETAINED RATE, IN WHICH EVENT IT WOULD BEGIN A NEW WAITING PERIOD IN THE GRADE AND STEP TO WHICH PROMOTED, OR WHETHER IT CAUSES THE RETAINED RATE TO BE EQUALED OR EXCEEDED AND THEREBY TERMINATED. IN THE FORMER SITUATION 42 COMP. GEN 702 WOULD BE FOR APPLICATION; IN THE LATTER, 43 COMP. GEN. 507 WOULD CONTROL.

WE ARE INCLINED TO THE FOREGOING VIEW (1) BECAUSE IT GIVES AN EMPLOYEE WHO IS REDUCED IN GRADE AND SALARY WITHOUT A SAVED RATE EQUAL TREATMENT REGARDING THE BENEFITS OF TITLE VII OF THE CLASSIFICATION ACT UPON HIS REPROMOTION AS THOSE WHO HAVE HAD THE BENEFIT OF RETAINED RATES, (2) BECAUSE IN OUR OPINION SECTION 507 DOES NOT CONTEMPLATE THAT SERVICE AT A RETAINED RATE SHOULD OPERATE TO INCREASE THAT RATE AS SUCH BY TITLE VII INCREASES, THE SERVICE CREDIT BEING APPLICABLE TO THE GRADE TO WHICH REDUCED, AND (3) THE LAST SENTENCE OF 802 (B) CONTAINS NO LANGUAGE INDICATING SUCH SERVICE CREDIT IS FOR CONSIDERATION.

THE SAME PRINCIPLE WOULD APPLY IF THE RATE UPON PROMOTION OR REPROMOTION IS INCREASED BY AN EQUIVALENT INCREASE (FROM THE RATE OF THE GRADE TO WHICH HE WAS REDUCED) BECAUSE OF THE APPLICATION OF THE HIGHEST PREVIOUS RATE RULE.

HOWEVER, IN VIEW OF THE UNCERTAINTY CONCERNING THE INTENT OF THE CONTROLLING STATUTORY PROVISIONS WE WILL NOT REQUIRE COLLECTION OF OVERPAYMENTS MADE FOR ANY PAY PERIOD BEGINNING PRIOR TO THIS DATE. HOWEVER, CORRECTIVE ACTION SHOULD BE TAKEN PROSPECTIVELY FROM THE BEGINNING OF THE PAY PERIOD FOLLOWING THIS DECISION IN ALL APPLICABLE CASES.