B-155460, OCT. 18, 1965

B-155460, OCT. 18, 1965

TO MR. WILLIAM J. HURLEY:

REFERENCE IS MADE TO YOUR LETTER OF SEPTEMBER 17, 1965, REQUESTING REVIEW OF THE MATTER OF YOUR INDEBTEDNESS FOR AN OVERPAYMENT OF SALARY RESULTING FROM THE RETROACTIVE EFFECT OF THE FEDERAL EMPLOYEES SALARY REFORM ACT OF 1964 TO YOUR REINSTATEMENT IN THE FEDERAL SERVICE ON JULY 21, 1964. YOUR LETTER YOU EXPRESS DOUBT WHETHER THE GOVERNMENT'S CLAIM FOR REFUND OF A $602.56 OVERPAYMENT IS LEGAL.

IT APPEARS THAT YOU WERE REEMPLOYED IN THE FEDERAL SERVICE AS A REEMPLOYED ANNUITANT ON JULY 21, 1964, IN STEP 4 OF A GRADE GS-15 POSITION UNDER THE CLASSIFICATION ACT OF 1949, AS AMENDED. THE FIXING OF YOUR SALARY RATE IN GRADE GS-15 AT A RATE ABOVE THE MINIMUM OF THE GRADE WAS IN CONSONANCE WITH THE HIGHEST PREVIOUS RATE RULE AS SET FORTH IN REGULATIONS OF THE CIVIL SERVICE COMMISSION WHICH PERMITS THE USE OF THE HIGHEST SALARY RATE ATTAINED IN CERTAIN PRIOR POSITIONS (NOT CONSULTANTS) TO ARRIVE AT A PROPER SALARY RATE IN THE POSITION IN WHICH REEMPLOYED. THE HIGHEST SALARY RATE PREVIOUSLY ATTAINED BY YOU (OTHER THAN IN A CONSULTING POSITION) WAS THE SALARY RATE APPLICABLE TO GRADE GS-14, STEP 8 OR $16,765 PER ANNUM AT THE TIME OF YOUR REINSTATEMENT. THAT RATE WHEN COMPARED TO THE SALARY RATES IN GRADE GS-15 FELL BETWEEN STEPS 3 AND 4 OF THAT GRADE AND IN ACCORDANCE WITH THE USUAL PROCEDURE YOU WERE ADVANCED TO THE NEXT HIGHER STEP (STEP 4) AT A SALARY RATE OF $17,210 PER ANNUM.

HOWEVER, ON AUGUST 14, 1964, THE FEDERAL EMPLOYEES SALARY ACT OF 1964 WAS ENACTED WHICH CARRIED A RETROACTIVE DATE FOR THE NEW SALARY RATES ESTABLISHED THEREBY, THAT IS, THE FIRST DAY OF THE FIRST PAY PERIOD WHICH BEGAN ON AND AFTER JULY 1, 1964, OR JULY 5, 1964, IN MOST CASES. THUS, THE INCREASED SALARY RATES AUTHORIZED BY THAT ACT HAD TO BE ESTABLISHED BACK TO JULY 5, 1964, AND YOU AND OTHER EMPLOYEES WERE PAID ADDITIONAL COMPENSATION FOR THE RETROACTIVE PERIOD.

SINCE 1951 WE HAVE CONSISTENTLY HELD THAT REINSTATEMENTS, PROMOTIONS AND OTHER PERSONNEL ACTIONS INVOLVING SALARY RATES OCCURRING DURING A RETROACTIVE PERIOD OF A SALARY INCREASE ACT MUST BE REEXAMINED FOR POSSIBLE ADJUSTMENT OF SALARY RATES ON THE BASIS THAT THE NEW INCREASED SALARY RATES ESTABLISHED BY A SALARY INCREASE ACT RETROACTIVE TO A CERTAIN DATE MUST BE REGARDED AS HAVING BEEN IN EFFECT FROM THAT DATE. SEE 31 COMP. GEN. 166; 38 ID. 188; B-155068, SEPTEMBER 24, 1964, 44 COMP. GEN. - . THAT IS, THE NEW RATES MUST BE SUBSTITUTED FOR THE OLD RATES AND ADJUSTMENTS MADE AS THOUGH SUCH NEW RATES HAD ACTUALLY BEEN IN EFFECT AT THE TIME A PERSONNEL ACTION WAS EFFECTED. THE APPLICATION OF THAT RULE IN MOST CASES IS TO THE BENEFIT OF THE EMPLOYEE WHILE IN A FEW OTHERS IT IS TO THEIR DETRIMENT TO THE EXTENT THAT AN EMPLOYEE MAY RECEIVE A SMALLER SALARY INCREASE THAN HE WOULD HAVE RECEIVED IF ENTITLED TO AN INCREASE ON THE STEP IN THE GRADE IN WHICH ORIGINALLY PLACED.

IN YOUR CASE BY SUBSTITUTING AS OF JULY 21, 1964, THE NEW RATE APPLICABLE TO GRADE GS-14, STEP 8 ($17,600) AND THEN COMPARING THAT WITH THE NEW RATES IN GRADE GS-15, WE FIND THAT YOU WERE ONLY ENTITLED TO BE PLACED IN STEP 3 OF THE GRADE GS-15, WHICH CARRIES AN EQUIVALENT SALARY RATE OF $17,600. THAT IS THE RATE TO WHICH YOU WOULD HAVE BEEN ENTITLED HAD THE NEW RATES ACTUALLY BEEN ESTABLISHED BEFORE JULY 21, 1964.

UNDER THE CIRCUMSTANCES WE DO NOT BELIEVE THERE WAS ANY LACK OF GOOD FAITH OR BREACH OF YOUR CONTRACT OF EMPLOYMENT SUCH AS CONTENDED BY YOU. YOUR SALARY WAS FIXED AT STEP 4 OF GRADE GS-15 INITIALLY--- INSTEAD OF THE FIRST STEP OF THAT GRADE AS NORMALLY REQUIRED UNDER NEW APPOINTMENTS--- BY REASON OF THE DISCRETIONARY OPERATION OF THE HIGHEST PREVIOUS RATE RULE AND NOT BY ANY MANDATORY REQUIREMENT OF LAW. THUS, THE SELECTION AND ACCEPTANCE OF THE SALARY RATE OF STEP 4 OF GRADE GS-15 ON JULY 21, 1964. IN YOUR CASE NECESSARILY WAS SUBJECT TO ANY ADJUSTMENT REQUIRED BY OPERATION OF LAW, AS LONG AS IT DID NOT RESULT IN AN ACTUAL DECREASE IN THE COMPENSATION YOU WERE RECEIVING BEFORE ENACTMENT OF THE SALARY INCREASE LAW. YOUR SALARY RATE AT THE TIME OF THE ENACTMENT OF THE FEDERAL SALARY INCREASE ACT OF 1964 WAS $17,210 AND THE ADJUSTMENT REQUIRED BY THAT ACT AS INTERPRETED BY OUR DECISIONS RESULTS IN A SALARY OF $17,600, AN ACTUAL INCREASE OF $390 PER ANNUM.

BECAUSE OF THE FOREGOING WE MUST HOLD THAT YOU WERE LEGALLY ENTITLED ONLY TO THE SALARY RATE APPLICABLE TO STEP 3 OF GRADE GS-15 ON AND AFTER JULY 21, 1964, THAT IS, $17,600 PER ANNUM, AND YOUR INDEBTEDNESS TO THE UNITED STATES FOR OVERPAYMENT OF SALARY IS SUSTAINED.