B-143546, SEP. 20, 1960

B-143546, SEP. 20, 1960

TO CAPTAIN W. C. STONE, FINANCE AND ACCOUNTING OFFICER:

YOUR LETTER OF JULY 11, 1960, REQUESTS OUR DECISION AS TO THE PROPRIETY OF PAYMENT OF SALARY RETENTION, UNDER SECTION 507 OF THE CLASSIFICATION ACT OF 1949, AS AMENDED BY PUBLIC LAW 737, 85TH CONGRESS, 2D SESSION, APPROVED AUGUST 23, 1958, 72 STAT. 830, 5 U.S.C. 1107, TO A CIVILIAN EMPLOYEE OF THE DEPARTMENT OF THE ARMY REDUCED FROM GRADE GS-10, STEP G, $6,725 PER ANNUM, TO GRADE GS-9, STEP G, $6,250 PER ANNUM, ON JUNE 1, 1958, IN A REDUCTION IN FORCE.

SECTION 507 (A) OF THE CLASSIFICATION ACT OF 1949, AS AMENDED BY PUBLIC LAW 737, READS AS FOLLOWS:

"/A) PERSONS REDUCED IN GRADE AFTER JUNE 17, 1956.

"SUBJECT TO THE LIMITATION CONTAINED IN SUBSECTION (C) OF THIS SECTION, EACH OFFICER OR EMPLOYEE SUBJECT TO THIS CHAPTER---

"/1) WHO AT ANY TIME AFTER JUNE 17, 1956, IS OR WAS REDUCED IN GRADE FROM ANY GRADE OF A BASIC COMPENSATION SCHEDULE OF THIS CHAPTER (OTHER THAN GRADE 16, 17, OR 18 OF THE GENERAL SCHEDULE);

"/2) WHO, ON THE EFFECTIVE DATE OF SUCH REDUCTION IN GRADE, HOLDS OR HELD A CAREER OR CAREER-CONDITIONAL APPOINTMENT IN THE COMPETITIVE CIVIL SERVICE OR AN APPOINTMENT OF EQUIVALENT TENURE IN THE EXCEPTED SERVICE OR HOLDS OR HELD A POSITION OUTSIDE THE COMPETITIVE CIVIL SERVICE AND THE EXCEPTED SERVICE AS AN OFFICER OR EMPLOYEE OF THE LIBRARY OF CONGRESS, OF THE ARCHITECT OF THE CAPITOL, OF THE BOTANIC GARDEN, OR OF THE MUNICIPAL GOVERNMENT OF THE DISTRICT OF COLUMBIA;

"/3) WHOSE REDUCTION IN GRADE IS NOT OR WAS NOT CAUSED BY A DEMOTION FOR PERSONAL CAUSE, IS NOT OR WAS NOT AT HIS OWN REQUEST, AND IS NOT OR WAS NOT EFFECTED IN A REDUCTION IN FORCE DUE TO LACK OF FUNDS OR CURTAILMENT OF WORK;

"/4) WHO, FOR TWO CONTINUOUS YEARS IMMEDIATELY PRIOR TO SUCH REDUCTION IN GRADE, SERVED (A) IN THE SAME DEPARTMENT AND (B) IN THE SAME GRADE OR IN THE SAME AND HIGHER GRADES; AND

"/5) WHOSE PERFORMANCE OF WORK AT ALL TIMES DURING SUCH PERIOD OF TWO YEARS IS OR WAS SATISFACTORY OR BETTER THAN SATISFACTORY,

SHALL BE ENTITLED, AS OF THE EFFECTIVE DATE OF SUCH REDUCTION IN GRADE OR AS OF THE FIRST DAY OF THE FIRST PAY PERIOD WHICH BEGINS AFTER AUGUST 23, 1958, WHICHEVER IS LATER, UNLESS OR UNTIL HE IS ENTITLED TO RECEIVE BASIC COMPENSATION AT A HIGHER RATE BY REASON OF THE OPERATION OF THIS CHAPTER, OR UNTIL THE EXPIRATION OF A PERIOD OF TWO YEARS IMMEDIATELY FOLLOWING THE EFFECTIVE DATE OF SUCH REDUCTION IN GRADE OR IMMEDIATELY FOLLOWING THE FIRST DAY OF SUCH FIRST PAY PERIOD, AS APPLICABLE, TO RECEIVE THE RATE OF BASIC COMPENSATION TO WHICH HE WAS ENTITLED IMMEDIATELY PRIOR TO SUCH REDUCTION IN GRADE SO LONG AS HE CONTINUES IN THE SAME DEPARTMENT WITHOUT ANY BREAK IN SERVICE OF ONE WORKDAY OR MORE AND IS NOT DEMOTED OR REASSIGNED FOR PERSONAL CAUSE, AT HIS OWN REQUEST, OR IN A REDUCTION IN FORCE DUE TO LACK OF FUNDS OR CURTAILMENT OF WORK.'

THE FACTS AS REPORTED IN YOUR LETTER INDICATE THAT PRIOR TO JUNE 1, 1958, THE EMPLOYEE (SIEGFRIED TAUBER) OCCUPIED A POSITION AS SUPERVISORY AUDITOR, GRADE GS-10, STEP G, $6,725 PER ANNUM. HE WAS SERVING UNDER A CAREER APPOINTMENT AND HAD SERVED IN GRADE GS-10 SINCE DECEMBER 4, 1955. HE HAD NOT RECEIVED A PERFORMANCE RATING OF LESS THAN SATISFACTORY DURING THE TWO YEAR PERIOD ENDING JUNE 1, 1958. ON APRIL 18, 1958, THE EMPLOYEE WAS ISSUED A REDUCTION IN FORCE NOTICE IN WHICH HE WAS NOTIFIED THAT HIS POSITION WAS ELIMINATED AS THE RESULT OF A MERGER OF THE HEADQUARTERS AREA COMMAND AND THE NORTHERN AREA COMMAND. THE MERGER OF THE TWO COMMANDS RESULTED IN A CURTAILMENT OF MAN HOURS BUT WAS NOT CAUSED BY A CURTAILMENT OF MAN HOURS. ON JUNE 1, 1958, DURING THE NOTICE PERIOD, THE EMPLOYEE WAS OFFERED AND ACCEPTED A POSITION AS AUDITOR, GRADE GS-9, STEP G, $6,250 PER ANNUM, WITH THE SPECIAL ACTIVITIES DIVISION. HE IS PRESENTLY ASSIGNED TO THE SPECIAL ACTIVITIES DIVISION, HEADQUARTERS, U.S. ARMY, EUROPE, APO 245, NEW YORK, NEW YORK.

THE MATTER OF WHETHER AN EMPLOYEE IS ENTITLED TO A SALARY RETENTION UNDER PUBLIC LAW 737 BECAUSE OF A REDUCTION IN GRADE IS PRIMARILY FOR DETERMINATION BY THE AGENCY CONCERNED SUBJECT TO THE RIGHT OF AN EMPLOYEE TO APPEAL SUCH DETERMINATION TO THE CIVIL SERVICE COMMISSION IF SALARY RETENTION IS DENIED. SEE SECTION 25.415 OF THE REGULATIONS OF THE CIVIL SERVICE COMMISSION, CHAPTER Z1-330.06 OF THE FEDERAL PERSONNEL MANUAL.

SINCE YOU SAY THAT THE EMPLOYEE HERE INVOLVED WAS DEMOTED IN A REDUCTION IN FORCE NOT CLEARLY CAUSED BY A LACK OF FUNDS OR CURTAILMENT OF WORK AND MEETS THE OTHER REQUIREMENTS SPECIFIED IN PUBLIC LAW 737, THERE APPEARS TO BE A SUBSTANTIAL BASIS FOR A DETERMINATION BY YOUR AGENCY THAT HE IS ENTITLED TO SALARY RETENTION UNDER SECTION 507A OF THE CLASSIFICATION ACT OF 1949, AS AMENDED BY PUBLIC LAW 737. SEE H.REPT. NO. 2269, 85TH CONGRESS, 2D SESSION, ON H.R. 1168, WHICH BECAME PUBLIC LAW 85-737, WHICH CLEARLY INDICATES THAT SALARY RETENTION IS APPLICABLE WHEN A REDUCTION IS DUE TO A REORGANIZATION.

ASSUMING THAT OFFICIALS OF THE DEPARTMENT OF THE ARMY HAVE DETERMINED OR WILL DETERMINE THAT THE SALARY RETENTION PROVISIONS OF PUBLIC LAW 85-737 ARE APPLICABLE IN MR. TAUBER'S CASE, THE PROPER SALARY RATE TO WHICH HE WAS ENTITLED BEGINNING THE FIRST PAY PERIOD AFTER AUGUST 23, 1958, THE ENACTMENT DATE OF PUBLIC LAW 85-737, WOULD BE $7,405 PER ANNUM, THE SALARY RATE HE WAS RECEIVING (AT THE TIME OF THE DOWNGRADING) BY VIRTUE OF THE RETROACTIVE PROVISIONS OF THE FEDERAL EMPLOYEES SALARY INCREASE ACT OF 1958. WE VIEW RETAINED SALARY RATES UNDER PUBLIC LAW 85-737 AS HAVING BEEN INCREASED ON THE FIRST DAY OF THE FIRST PAY PERIOD BEGINNING ON OR AFTER JULY 1, 1960, BY THE PROVISIONS OF THE FEDERAL EMPLOYEES SALARY INCREASE ACT OF 1960. THUS, UNDER SECTION 112 (B) (3) OF THAT ACT THE SALARY RATE OF $7,405 PER ANNUM WAS INCREASED TO $7,990 PER ANNUM ($7,405 PLUS ($7,920 MINUS $7,335) ). OF COURSE, SUCH RETAINED SALARY RATES, IN ACCORDANCE WITH THE PROVISIONS OF PUBLIC LAW 85-737, EXPIRE AFTER A TWO YEAR PERIOD, AT WHICH TIME AN EMPLOYEE REVERTS TO THE STEP OF THE GRADE IN WHICH HE OTHERWISE WAS ENTITLED TO BE PLACED (INCLUDING ANY AUTHORIZED INCREASES THEREIN) HAD IT NOT BEEN FOR THE PROVISIONS OF PUBLIC LAW 85- 737.

A COPY OF PUBLIC LAW 737, 85TH CONGRESS, 2D SESSION, IS ENCLOSED. ALSO, RETURNED HEREWITH IS DD FORM 590, SUBMITTED WITH YOUR LETTER.