B-104080, MAY 16, 1962, 41 COMP. GEN. 764

B-104080, MAY 16, 1962, 41 COMP. GEN. 764

COMPENSATION - DOWNGRADING - SAVED COMPENSATION - MORE THAN ONE DOWNGRADING ACTION--- COMPENSATION - DOWNGRADING - SAVED COMPENSATION - MORE THAN ONE DOWNGRADING ACTION A SECOND REDUCTION IN GRADE ACTION FOR AN EMPLOYEE WHO, INCIDENT TO A PRIOR DEMOTION, IS RECEIVING SAVED PAY FOR A 2-YEAR PERIOD WHICH HAS NOT EXPIRED WILL BE REGARDED AS IMMEDIATELY BEGINNING A NEW 2-YEAR SALARY RETENTION PERIOD AND THE RATE OF COMPENSATION PAYABLE FOR THE PERIOD WILL BE THE RATE AUTHORIZED UNDER SECTION 507 (A) OF THE CLASSIFICATION ACT OF 1949, AS AMENDED, 5 U.S.C. 1107 (A), WHICH IS THE RATE OF BASIC COMPENSATION TO WHICH THE EMPLOYEE WAS ENTITLED IMMEDIATELY PRIOR TO THE SECOND REDUCTION, SUBJECT TO THE LIMITATION IN SECTION 507 (C) OF THE ACT, 5 U.S.C. 1107 (C), AND THE HOLDING IN 39 COMP. GEN. 193 THAT THE NEW 2- YEAR PERIOD WOULD BEGIN ON THE EXPIRATION OF THE FIRST PERIOD AND THAT THE EMPLOYEE WOULD BE ENTITLED TO A SAVED RATE BASED UPON THE COMPENSATION WHICH HE WOULD HAVE RECEIVED UPON THE EXPIRATION OF THE FIRST RETENTION PERIOD WILL NO LONGER BE FOLLOWED. 39 COMP. GEN. 193, MODIFIED. AN EMPLOYEE WHO, BEFORE THE EXPIRATION OF A 2-YEAR PERIOD OF ENTITLEMENT TO SAVED PAY FOR A THREE-GRADE DEMOTION (GS-10 TO GS-7) IS FURTHER REDUCED TWO GRADES (GS-5) SHOULD HAVE THE SECOND DEMOTION REGARDED AS IMMEDIATELY BEGINNING A NEW 2-YEAR RETENTION PERIOD AND UNDER SECTION 507 (A) OF THE CLASSIFICATION ACT OF 1949, AS AMENDED, 5 U.S.C. 1107 (A), THE RATE OF COMPENSATION PAYABLE FOR THE NEW 2-YEAR PERIOD WILL BE THE RATE AUTHORIZED UNDER SECTION 507 (A) OF THE CLASSIFICATION ACT OF 1949, AS AMENDED, 5 U.S.C. 1107 (A), WHICH IS THE BASIC RATE TO WHICH HE WAS ENTITLED IMMEDIATELY PRIOR TO THE SECOND DEMOTION ($6,315) SUBJECT TO THE LIMITATION IN SECTION 507 (C) OF THE ACT, 5 U.S.C. 1107 (C), SINCE UNDER SECTION 507 (A), WHICH AUTHORIZES A SAVED RATE UNTIL THE EMPLOYEE "IS ENTITLED TO RECEIVE BASIC COMPENSATION AT A HIGHER RATE BY REASON OF THE OPERATION OF THIS ACT," THE EMPLOYEE HAS NOT BECOME ENTITLED TO A RATE HIGHER THAN THAT INITIALLY SAVED TO HIM SO AS TO BE ENTITLED TO AN INCREASED RATE ADJUSTMENT UPON THE SECOND DEMOTION WHICH EXCEEDS THE RATE AUTHORIZED IN SECTION 507 (C).

TO THE CHAIRMAN, UNITED STATES CIVIL SERVICE COMMISSION, MAY 16, 1962:

WE REFER TO YOUR LETTER OF APRIL 18, 1962, WHEREIN YOU SAY THAT THE COMMISSION HAS BEEN ASKED FOR ADVICE ON A CASE UNDER THE SALARY RETENTION ACT (SECTION 507 (A) OF THE CLASSIFICATION ACT OF 1949, AS AMENDED, 5 U.S.C. 1107 (A) (, IN WHICH THE APPLICATION OF OUR DECISION IN 39 COMP. GEN. 193 APPEARS TO THE AGENCY CONCERNED TO LEAD TO AN UNDESIRABLE RESULT. YOU REQUEST OUR DECISION ON THE CORRECT APPLICATION OF THE SALARY RETENTION ACT TO THE CASE DESCRIBED HEREIN.

IN THE CASE TO WHICH YOUR LETTER REFERS THE EMPLOYEE WAS REDUCED FROM GRADE GS-10, $7,325 PER ANNUM, TO GRADE GS-7, ON OCTOBER 29, 1961, UNDER CIRCUMSTANCES ENTITLING HIM TO SALARY RETENTION. THE LIMITATION OF SUBSECTION 507 (C) OF THE ACT, 5 U.S.C. 1107 (C), PERMITS RETENTION OF THE RATE OF $7,325 PER ANNUM. IT HAS BEEN DETERMINED THAT AT THE END OF THE 2 -YEAR RETENTION PERIOD THE RATE OF PAY TO WHICH THE EMPLOYEE WOULD BE ENTITLED IN GRADE GS-7 UNDER CIVIL SERVICE REGULATION 25.414 WOULD BE STEP G, $6,345 PER ANNUM.

YOU SAY THAT ACTION NOW IS PENDING TO DEMOTE THE EMPLOYEE TO GRADE GS-5, AGAIN UNDER CIRCUMSTANCES ENTITLING HIM TO A RETAINED RATE. APPLYING THE LIMITATION OF SUBSECTION 507 (C), IT HAS BEEN DETERMINED THAT A RATE OF $6,315 PER ANNUM MAY BE SAVED TO HIM.

IT IS SUGGESTED THAT THE RATE RECEIVED IMMEDIATELY PRIOR TO THE SECOND REDUCTION IN GRADE, AS LIMITED BY SUBSECTION 507 (C), IS THE RATE WHICH SHOULD BE RECEIVED THROUGHOUT THE RETENTION PERIOD STEMMING FROM THE SECOND REDUCTION IN GRADE. ALTERNATIVELY, IT IS SUGGESTED THAT ENTITLEMENT TO A RETAINED RATE OF $6,345 UPON THE SECOND REDUCTION IN GRADE, BASED ON WHAT THE EMPLOYEE WOULD HAVE BEEN RECEIVING IN GRADE GS-7 IF HE HAD NOT BEEN ALREADY RECEIVING A RETAINED RATE, AMOUNTS TO ENTITLEMENT "TO RECEIVE BASIC COMPENSATION AT A HIGHER RATE BY REASON OF" THE CLASSIFICATION ACT, WITHIN THE LANGUAGE IN SECTION 507 (A), SO AS TO TERMINATE THE FIRST RETENTION PERIOD. IF THAT INTERPRETATION WAS ACCEPTED, THE EMPLOYEE IN QUESTION WOULD BEGIN HIS SECOND RETENTION PERIOD IMMEDIATELY UPON THE SECOND DEMOTION, AND WOULD RECEIVE THE SAME RATE ($6,345 PER ANNUM) THROUGH THAT WHOLE RETENTION PERIOD.

IN 39 COMP. GEN. 193 ( CASE NO. 1), WE HELD THAT AN EMPLOYEE WHO, BEFORE THE EXPIRATION OF THE 2-YEAR PERIOD DURING WHICH HE WAS ENTITLED TO RECEIVE SAVED PAY AS THE RESULT OF DEMOTION, AND WHO WAS FURTHER DEMOTED TWO MORE GRADES, COMES WITHIN THE PURVIEW OF SECTION 507 (C) OF THE CLASSIFICATION ACT OF 1949, 5 U.S.C. 1107 (C) SO THAT FOR THE REMAINDER OF THE ORIGINAL 2-YEAR RETENTION PERIOD THE EMPLOYEE WAS ENTITLED TO A RATE OF COMPENSATION NOT TO EXCEED THE LIMITATION AUTHORIZED BY SECTION 507 (C). FOR THE PERIOD BEGINNING IMMEDIATELY AFTER THE END OF THE FIRST 2- YEAR RETENTION PERIOD AND EXTENDING TO THE END OF THE 2-YEAR PERIOD IMMEDIATELY FOLLOWING THE SECOND DEMOTION WE CONCURRED IN THE COMMISSION'S VIEW THAT THE EMPLOYEE WOULD BE ENTITLED TO THE SALARY RATE WHICH HE WOULD HAVE RECEIVED UPON THE EXPIRATION OF THE FIRST RETENTION PERIOD HAD HE NOT BEEN DEMOTED A SECOND TIME.

THE FIRST SUGGESTION APPARENTLY CONTEMPLATES THAT A NEW RETENTION PERIOD BEGINS WITH THE DATE OF THE SECOND DEMOTION AND THAT A RATE OF COMPENSATION NOT EXCEEDING THAT IMPOSED BY THE LIMITATION IN SECTION 507 (C) SHALL BE PAYABLE FOR THE NEW RETENTION PERIOD.

THE ALTERNATE SUGGESTION, AS WE UNDERSTAND IT, WOULD PROVIDE FOR AN INCREASED RATE ADJUSTMENT UPON THE HAPPENING OF THE SECOND DEMOTION BASED UPON THE LANGUAGE IN SUBSECTION (A) "UNLESS OR UNTIL HE IS ENTITLED TO RECEIVE BASIC COMPENSATION AT A HIGHER RATE BY REASON OF THE OPERATION OF THIS ACT.' THE QUOTED LANGUAGE AS USED IN SECTION 507 (A) OF THE CLASSIFICATION ACT HAS BEEN AND IS REGARDED AS LANGUAGE TERMINATING ENTITLEMENT TO BOTH THE PERIOD AND RATE OF SALARY RETENTION. THE EMPLOYEE HERE HAS NOT BECOME ENTITLED, BECAUSE OF THE OPERATION OF THE ACT, TO RECEIVE A RATE HIGHER THAN THAT INITIALLY SAVED TO HIM. THUS, THE RATE OF COMPENSATION BECAUSE OF THE SECOND REDUCTION IN GRADE MAY NOT EXCEED THE RATE AUTHORIZED BY SECTION 507 (C). THEREFORE, WE BELIEVE THAT THE ALTERNATIVE PROPOSAL WOULD BE CONTRARY TO LAW.

HOWEVER, CONSIDERATION OF THE FIRST SUGGESTION LEADS TO THE CONCLUSION THAT THE PROPOSAL MORE PROPERLY CARRIES OUT THE STATUTE THAN THE HOLDING IN CASE NO. 1, 39 COMP. GEN. 193.

THEREFORE, HEREAFTER, EVERY REDUCTION IN GRADE WILL BE REGARDED AS BEGINNING A NEW 2-YEAR RETENTION PERIOD AND THE RATE OF COMPENSATION PAYABLE DURING SUCH PERIOD SHALL BE THE RATE AUTHORIZED BY SUBSECTION 507 (A) OF THE ACT, NAMELY,"THE RATE OF BASIC COMPENSATION TO WHICH HE WAS ENTITLED IMMEDIATELY PRIOR TO SUCH REDUCTION IN GRADE," SUBJECT TO THE LIMITATION IMPOSED BY SECTION 507 (C). IN THE CASE PRESENTED, THIS WOULD RESULT IN A SAVED RATE OF $6,315 FOR THE 2-YEAR PERIOD FOLLOWING THE SECOND REDUCTION IN GRADE.

THE RULE STATED IN CASE NO. 1, 39 COMP. GEN. 193, NO LONGER WILL BE FOLLOWED.

WE SUGGEST THAT THE EXPLANATION OF THE " SPECIAL FORMULA" ON PAGE P 1- 66.04 BE MODIFIED TO ACCORD MORE NEARLY WITH THE LANGUAGE OF SECTION 507 (C) OF THE ACT.