B-145804, MAY 26, 1961, 40 COMP. GEN. 650

B-145804, MAY 26, 1961, 40 COMP. GEN. 650

CIVILIAN PERSONNEL - ALIENS HIRED OVERSEAS - HEALTH, LIFE INSURANCE, ETC; PLANS - AUTHORITY EVEN THOUGH THE SECRETARY OF STATE HAS NOT ISSUED ANY REGULATION AUTHORIZING A COMBINED LIFE INSURANCE AND PENSION PLAN AND A HEALTH AND MEDICAL PLAN FOR ALIEN EMPLOYEES UNDER SECTION 444 OF THE FOREIGN SERVICE ACT OF 1946, 22 U.S.C. 889, A MEDICAL AND HOSPITAL PLAN FOR THE BENEFIT OF ALIEN EMPLOYEES HIRED BY THE UNITED STATES ARMED FORCES IN BERMUDA, WHICH PLAN IS IN ACCORD WITH PREVAILING EMPLOYMENT PRACTICES SUBSTANTIALLY FOLLOWED BY LOCAL EMPLOYERS, MAY BE ESTABLISHED UNDER SECTION 444, THE LEGISLATIVE HISTORY OF THE SECTION INDICATING AN INTENT TO ALLOW GOVERNMENT AGENCIES TO ESTABLISH UNIFORMED EMPLOYMENT PRACTICES PROVIDED THAT THEY ARE CONSISTENT WITH THE PUBLIC INTEREST AND COORDINATED WITH OTHER AGENCIES IN THE LOCALITY; HOWEVER, IN THE ABSENCE OF A SHOWING THAT A COMBINED LIFE INSURANCE AND PENSION PLAN IS A CUSTOMARY LOCAL PRACTICE, SUCH PLAN MAY NOT BE ESTABLISHED.

TO THE SECRETARY OF DEFENSE, MAY 26, 1961:

ON MAY 5, 1961, THE ASSISTANT SECRETARY OF DEFENSE REQUESTED A DECISION CONCERNING THE PROPRIETY OF PLACING INTO EFFECT TWO PROPOSALS WHICH WOULD APPLY TO NATIVES EMPLOYED BY THE UNITED STATES ARMED FORCES IN BERMUDA. THE PROPOSALS ARE STATED IN THE ASSISTANT SECRETARY'S LETTER AS FOLLOWS:

(1) TO PURCHASE FROM A BERMUDA COMMERCIAL FIRM AN INSURANCE PLAN WHICH WOULD PROVIDE BOTH A PENSION AND LIFE INSURANCE PROGRAM FOR LOCAL NATIONAL EMPLOYEES; AND (2) TO PURCHASE FROM A BERMUDA COMMERCIAL FIRM AN INSURANCE PLAN WHICH WOULD PROVIDE BOTH MEDICAL AND HOSPITAL BENEFITS FOR LOCAL NATIONAL EMPLOYEES. BOTH OF THESE INSURANCE PLANS, IF IMPLEMENTED, WOUD REQUIRE THE UNITED STATES FORCES IN BERMUDA TO MAKE EMPLOYER CONTRIBUTIONS TO AND WITHHOLD EMPLOYEE DEDUCTIONS FOR SUCH PLANS.

THE STATUTORY AUTHORITY UPON WHICH THE PROPOSALS WOULD BE ISSUED IS THAT CONTAINED IN SECTION 444 OF THE FOREIGN SERVICE ACT OF 1946, AS AMENDED BY SECTION 6 OF THE ACT OF SEPTEMBER 8, 1960, PUBLIC LAW 86 723, 22 U.S.C. 889 (A) AND (B). THAT SECTION READS AS FOLLOWS:

(A) THE SECRETARY SHALL, IN ACCORDANCE WITH SUCH REGULATIONS AS HE MAY PRESCRIBE, ESTABLISH COMPENSATION PLANS FOR ALIEN EMPLOYEES OF THE SERVICE: PROVIDED, THAT SUCH COMPENSATION PLANS SHALL BE BASED UPON PREVAILING WAGE RATES AND COMPENSATION PRACTICES FOR CORRESPONDING TYPES OF POSITIONS IN THE LOCALITY, TO THE EXTENT CONSISTENT WITH THE PUBLIC INTEREST.

(B) FOR THE PURPOSE OF PERFORMING FUNCTIONS ABROAD, OTHER GOVERNMENT AGENCIES ARE AUTHORIZED TO ADMINISTER ALIEN EMPLOYEE PROGRAMS IN ACCORDANCE WITH THE APPLICABLE PROVISIONS OF THIS ACT.

THE PROVISO TO SUBSECTION (A) OF THE QUOTED STATUTE REQUIRES THAT THE COMPENSATION PLANS UNDER WHICH ALIEN EMPLOYEES OF THE FOREIGN SERVICE ARE PAID SHALL BE BASED UPON PREVAILING RATES AND COMPENSATION PRACTICES EXISTING IN THE LOCALITY OF THE EMPLOYING OFFICE TO THE EXTENT THAT THE ADOPTION OF PREVAILING RATES AND PRACTICES IS CONSISTENT WITH THE PUBLIC INTEREST, AND THE EFFECT OF SUBSECTION (B) OF THE ACT IS TO AUTHORIZE OTHER GOVERNMENT AGENCIES OPERATING ABROAD TO UTILIZE THE AUTHORITY IN SUBSECTION (A) IN ADMINISTERING COMPENSATION PLANS FOR ALIEN EMPLOYEES.

WHILE THE STATUTORY PROVISION RELIED UPON DOES NOT EXPRESSLY AUTHORIZE THE SECRETARY TO PURCHASE FROM A COMMERCIAL FIRM AN INSURANCE PLAN WHICH WOULD PROVIDE BOTH LIFE INSURANCE AND A PENSION TO NATIVE EMPLOYEES, OR A PLAN WHICH WOULD PROVIDE MEDICAL AND HOSPITAL BENEFITS FOR SUCH EMPLOYEES, WE ARE OF THE VIEW THAT THE SECRETARY COULD, BY APPROPRIATE REGULATION, PROVIDE FOR THE PURCHASE OF SUCH PLANS FROM COMMERCIAL CONCERNS IF THE GRANTING OF SIMILAR BENEFITS IS A PREVAILING LOCAL PRACTICE AND DETERMINED TO BE CONSISTENT WITH THE PUBLIC INTEREST.

WE UNDERSTAND THAT THE SECRETARY OF STATE HAS ISSUED NO REGULATIONS AUTHORIZING THE GRANTING OF FRINGE BENEFITS OF THE TYPE DESCRIBED IN YOUR LETTER (A COMBINED LIFE INSURANCE AND PENSION PLAN AND A HEALTH AND MEDICAL BENEFIT PLAN). HENCE, A QUESTION ARISES WHETHER UNDER SUBSECTION (B) OF SECTION 444 INDIVIDUAL AGENCIES MAY ISSUE REGULATIONS, INDEPENDENTLY OF THOSE OF THE DEPARTMENT OF STATE, AUTHORIZING THE GRANTING OF SUCH BENEFITS.

SUBSECTION (B) AUTHORIZES AGENCIES PERFORMING FUNCTIONS ABROAD TO "ADMINISTER ALIEN EMPLOYEE PROGRAMS IN ACCORDANCE WITH APPLICABLE PROVISIONS OF THIS ACT.' THE APPLICABLE PROVISIONS OF THIS ,ACT" ARE THOSE CONTAINED IN SUBSECTION (A) OF SECTION 444 WHICH AUTHORIZES THE SECRETARY OF STATE TO ISSUE REGULATIONS PROVIDING FOR THE ESTABLISHMENT OF COMPENSATION PLANS FOR ALIEN EMPLOYEES OF THE SERVICE. THUS, IT MIGHT BE SAID THAT THE ALIEN EMPLOYEE PROGRAMS THAT GOVERNMENT AGENCIES GENERALLY MAY ADMINISTER MUST CONFORM TO THE PLAN THE SECRETARY OF STATE ESTABLISHES FOR ALIEN EMPLOYEES OF THE FOREIGN SERVICE. HOWEVER, THE LEGISLATIVE HISTORY OF THE SECTION INDICATES A SOMEWHAT DIFFERENT INTENT. ON PAGE 17 OF HOUSE REPORT NO. 2104, 86TH CONG., AUGUST 17, 1960, THE PURPOSE OF THE AMENDMENT MADE BY PUBLIC LAW 86-723 TO SECTION 444 OF THE FOREIGN SERVICE ACT OF 1946 IS SET FORTH AS FOLLOWS:

SECTION 6. COMPENSATION PLANS FOR ALIEN EMPLOYEES (SEC. 444).

THIS SECTION IS A CLARIFICATION AND SIMPLIFICATION OF SECTION 444 OF THE ACT THAT DEALS WITH COMPENSATION FOR ALIEN EMPLOYEES HIRED OVERSEAS. THE NEW LANGUAGE WILL PERMIT THE ESTABLISHMENT OF WAGE AND SALARY SCHEDULES FOR SUCH EMPLOYEES TO BE BASED UPON LOCAL PREVAILING PAY PRACTICES FOR CORRESPONDING TYPES OF POSITIONS IN THE LOCALITY.

THE NEW PARAGRAPH (B) CONFERS AUTHORITY UPON OTHER GOVERNMENT AGENCIES TO UTILIZE THE PROVISIONS OF THIS ACT IN THEIR EMPLOYMENT OF ALIEN PERSONNEL ABROAD. THIS WILL ENABLE ALL FEDERAL AGENCIES EMPLOYING SUCH PERSONNEL TO OPERATE AS A SINGLE EMPLOYER BY PROVIDING UNIFORM EMPLOYMENT CONDITIONS FOR ALL ALIEN EMPLOYEES OF THE GOVERNMENT IN A PARTICULAR FOREIGN LABOR MARKET AREA WHO ARE WORKING UNDER SIMILAR CONDITIONS.

ON PAGE 5 OF SENATE REPORT NO. 880 OF SEPTEMBER 2, 1959, THERE IS A SIMILAR EXPLANATION OF THE AMENDMENT TO SECTION 444 OF THE FOREIGN SERVICE ACT MADE BY PUBLIC LAW 86-723. THAT EXPLANATION IS AS FOLLOWS:

SECTION 7--- PERMISSION FOR OTHER GOVERNMENT AGENCIES TO USE AUTHORITY AVAILABLE TO THE DEPARTMENT OF STATE IN THEIR EMPLOYMENT OF ALIENS OVERSEAS.--- SECTION 7 OF THE BILL WOULD ADD NEW LANGUAGE TO SECTION 444 OF THE ACT WHICH WOULD AUTHORIZE U.S. GOVERNMENT AGENCIES PERFORMING FUNCTIONS ABROAD TO ADMINISTER LOCAL EMPLOYEE PROGRAMS IN ACCORDANCE WITH THE APPLICABLE PROVISIONS OF THE FOREIGN SERVICE ACT. THE PURPOSE OF THE PROVISION IS TO FACILITATE UNIFORM EMPLOYMENT PRACTICES ABROAD BY ALL U.S. GOVERNMENT AGENCIES. THE COMMITTEE CONSIDERED DESIGNATING THE SECRETARY OF STATE AS THE SINGLE OFFICIAL OF THE GOVERNMENT EMPOWERED TO PRESCRIBE WAGE SCALES FOR LOCAL EMPLOYEES BUT UPON BEING PRESENTED WITH EVIDENCE THAT VOLUNTARY COOPERATION AMONG THE AGENCIES IS NOW WORKING SATISFACTORILY, THE COMMITTEE RECOMMENDS LEAVING THE EXISTING PRACTICE THE WAY IT IS.

WHILE THE SENATE COMMITTEE ON FOREIGN RELATIONS SPECIFICALLY CONSIDERED BUT REJECTED THE IDEA OF DESIGNATING THE SECRETARY OF STATE AS THE SINGLE OFFICIAL OF THE GOVERNMENT EMPOWERED TO PRESCRIBE WAGE SCALES FOR LOCALLY HIRED NATIVE EMPLOYEES, THE REPORTS OF BOTH THE SENATE AND HOUSE COMMITTEES CLEARLY SHOW THAT THE VARIOUS DEPARTMENTS AND AGENCIES OF THE GOVERNMENT OPERATING IN FOREIGN AREAS ARE EXPECTED TO ESTABLISH UNIFORM WAGE RATES AND EMPLOYMENT PRACTICES APPLICABLE TO NATIVE EMPLOYEES HIRED IN ANY PARTICULAR LOCAL AREA.

HENCE, BEFORE AN EMPLOYMENT PRACTICE IS ADOPTED BY AN AGENCY OPERATING IN A FOREIGN AREA THE PRACTICE SHOULD BE SUBSTANTIALLY FOLLOWED BY LOCAL EMPLOYERS IN THE AREA. THE ADOPTION OF THE PRACTICE SHOULD BE CONSISTENT WITH THE PUBLIC INTEREST AS DETERMINED BY THE HEAD OF THE AGENCY AND THE MATTER OF ADOPTING SUCH PRACTICE SHOULD BE COORDINATED WITH OTHER AGENCIES OPERATING IN THE LOCALITY SO THAT THE SAME OR A SUBSTANTIALLY SIMILAR PRACTICE WILL BE FOLLOWED BY EACH OF THE OTHER AGENCIES OPERATING IN THAT AREA.

THE PRACTICE OF EMPLOYER PARTICIPATION IN A MEDICAL AND HOSPITALIZATION PLAN FOR THE BENEFIT OF EMPLOYEES APPEARS TO BE A CUSTOMARY EMPLOYMENT PRACTICE IN BERMUDA. HENCE, IF THE OTHER REQUIREMENTS OF THE PRECEDING PARAGRAPH ARE COMPLIED WITH, WE SEE NO OBJECTION TO YOUR PLACING SUCH PROGRAM IN EFFECT.

HOWEVER, THE INFORMATION PRESENTED WITH YOUR DEPARTMENT'S LETTER DOES NOT CLEARLY ESTABLISH THAT ANY SUBSTANTIAL LOCAL PRACTICE EXISTS UNDER WHICH EMPLOYERS PAY OR CONTRIBUTE TO THE COST OF A LIFE INSURANCE PROGRAM. THE ABSENCE OF A SUBSTANTIAL PRACTICE AMONG EMPLOYERS IN THE LOCALITY, THE ESTABLISHMENT OF A COMBINED LIFE INSURANCE AND PENSION PLAN WOULD NOT APPEAR TO BE AUTHORIZED ALTHOUGH A REASONABLE BASIS MIGHT EXIST--- BASED UPON THE LOCAL PRACTICE AS DISCLOSED BY THE INFORMATION TRANSMITTED HERE WITH YOUR DEPARTMENT'S LETTER--- FOR ESTABLISHMENT OF A PENSION PLAN NOT COUPLED WITH LIFE INSURANCE.