B-151493, JUN. 16, 1965

B-151493, JUN. 16, 1965

TO MR. HAROLD B. CARPENTER:

THIS REFERS TO YOUR LETTER OF APRIL 5, 1965, CONCERNING YOUR INDEBTEDNESS TO THE UNITED STATES IN THE AMOUNT OF $612.80, RESULTING FROM SALARY OVERPAYMENTS MADE TO YOU AS A CIVILIAN EMPLOYEE OF THE UNITED STATES ARMY MISSILE SUPPORT COMMAND, REDSTONE ARSENAL, ALABAMA. THE OVERPAYMENTS IN QUESTION WERE DISCOVERED BY OUR OFFICE DURING THE COURSE OF A CIVILIAN PAYROLL AUDIT OF YOUR INSTALLATION COVERING THE PERIOD JUNE 17, 1962, THROUGH JUNE 27, 1964.

THE RECORD SHOWS THAT EFFECTIVE JANUARY 3, 1960, YOU WERE GRANTED A WITHIN-GRADE INCREASE FROM GRADE GS-14 (A), $11,355 PER ANNUM TO GRADE GS- 14 (B), $11,595 PER ANNUM (SUBSEQUENTLY INCREASED TO $12,470 PER ANNUM, EFFECTIVE JULY 3, 1960, BY THE FEDERAL EMPLOYEES SALARY INCREASE ACT OF 1960, PUB.L. 86-568, 74 STAT. 298). EFFECTIVE JANUARY 15, 1961, YOU WERE DEMOTED FROM GRADE GS-14 (B), $12,470 PER ANNUM TO GRADE GS-13, WITH YOUR SALARY RATE OF $12,470 RETAINED BY YOU UNDER THE ACT OF AUGUST 23, 1958, PUB.L. 85-737, 72 STAT. 830. ALTHOUGH NOT SHOWN ON THE DEMOTION PERSONNEL ACTION, THE RECORD INDICATES THAT HAD YOU NOT BEEN GRANTED SALARY RETENTION BENEFITS YOU WOULD HAVE BEEN PLACED IN STEP (F) OF GRADE GS-13, $11,935 PER ANNUM UPON YOUR DEMOTION. YOUR RETAINED RATE OF $12,470 PER ANNUM WAS INCREASED TO $13,270 PER ANNUM, EFFECTIVE OCTOBER 21, 1962, BY SECTION 602 (B) OF THE CLASSIFICATION ACT AMENDMENTS OF 1962, PUB.L. 87- 793, 76 STAT. 844. ALSO EFFECTIVE OCTOBER 21, 1962, YOU WERE GRANTED A WITHIN-GRADE INCREASE FROM GRADE GS-13, STEP 6, $12,975 (AS INCREASED BY PUB.L. 87 793) TO GRADE GS-13, STEP 7, $13,340 PER ANNUM, IN ACCORDANCE WITH SECTION 603 OF THE CLASSIFICATION ACT AMENDMENTS OF 1962, 76 STAT. 847. EFFECTIVE DECEMBER 30, 1962, YOU WERE GRANTED ANOTHER WITHIN GRADE INCREASE FROM GRADE GS-13, STEP 7, $13,340 PER ANNUM TO GRADE GS 13, STEP 8, $13,705 PER ANNUM. EFFECTIVE AUGUST 23, 1964, YOU WERE PROMOTED TO GRADE GS-14, STEP 4 ($15,640 PER ANNUM), SUCH PROMOTION BEING PREDICATED ON STEP 7 OF GRADE GS-13, IN LIEU OF STEP 8, THE ADMINISTRATIVE OFFICE APPARENTLY BEING AWARE AT THAT TIME THAT YOUR PREVIOUS ADVANCEMENT TO STEP 8 OF GS-13 WAS IMPROPER.

UPON THE BASIS OF THE FOREGOING FACTS, OUR ATLANTA REGIONAL OFFICE DETERMINED THAT SINCE YOUR WITHIN-GRADE INCREASE TO STEP 7 OF GRADE GS 13 ($13,340 PER ANNUM), EFFECTIVE OCTOBER 21, 1962, CAUSED YOUR LOWER SELECTED SALARY RATE TO EXCEED YOUR RETAINED RATE OF $13,270 PER ANNUM, THE RETAINED RATE AUTOMATICALLY TERMINATED UNDER THE PROVISIONS OF SECTION 507 (A) OF THE CLASSIFICATION ACT OF 1949, AS AMENDED, 5 U.S.C. 1107 (A). OUR REGIONAL OFFICE DETERMINED FURTHER THAT SINCE YOUR WITHIN-GRADE INCREASE TO STEP 7 OF GRADE GS-13 ON OCTOBER 21, 1962, CONSTITUTED AN EQUIVALENT INCREASE IN COMPENSATION WITHIN THE MEANING OF SECTION 701 OF THE CLASSIFICATION ACT OF 1949, AS AMENDED, 5 U.S.C. 1121, THE INCREASE TO STEP 8 OF GRADE GS-13, GRANTED ON DECEMBER 30, 1962, WAS IN VIOLATION OF LAW. ACCORDINGLY, IT WAS CONCLUDED THAT YOU HAD BEEN OVERPAID A TOTAL OF $612.80 FOR THE PERIOD DECEMBER 30, 1962, THROUGH AUGUST 22, 1964.

IN VIEW OF THE FACT THAT THE INCREASE TO STEP 7 OF GRADE GS-13 ($13,340 PER ANNUM) WHICH YOU RECEIVED ON OCTOBER 21, 1962, RESULTED IN AN ACTUAL MONETARY INCREASE OF ONLY $70 OVER YOUR RETAINED RATE OF $13,270 YOU QUESTION OUR OFFICE DETERMINATION THAT YOU RECEIVED AN "EQUIVALENT INCREASE IN COMPENSATION" ON OCTOBER 21, 1962, WHICH NECESSITATED THE COMMENCEMENT OF A NEW WAITING PERIOD FOR YOUR NEXT WITHIN-GRADE INCREASE TO STEP 8 OF GRADE GS-13.

DURING THE PERIOD AN EMPLOYEE IS IN RECEIPT OF A RETAINED RATE OF COMPENSATION UNDER SECTION 507 (A) OF THE CLASSIFICATION ACT OF 1949, SUPRA, HE IS ELIGIBLE FOR WITHIN-GRADE INCREASES ONLY IN THE GRADE IN WHICH HE IS SERVING. (SECTION 25.412 OF THE REGULATIONS OF THE UNITED STATES CIVIL SERVICE COMMISSION, APPLICABLE TO THE PERIOD HERE INVOLVED.) AN EMPLOYEE IN RECEIPT OF A HIGHER RETAINED SALARY RATE DOES NOT, OF COURSE, REALIZE ANY IMMEDIATE BENEFIT FROM THE STEP INCREASES IN THE LOWER GRADE AT THE TIME THEY ARE CONSTRUCTIVELY GRANTED. HOWEVER, UPON THE EXPIRATION OF THE SALARY RETENTION PERIOD, THE EMPLOYEE DOES BENEFIT BECAUSE HIS COMPENSATION IS FIXED IN THE LOWER GRADE SO AS TO INCLUDE THE STEP INCREASES TO WHICH HE BECAME ENTITLED DURING THE SALARY RETENTION PERIOD. THE STEP INCREASES EARNED BY THE EMPLOYEE DURING THE SALARY RETENTION PERIOD ARE GRANTED IN ACCORDANCE WITH SECTION 701 OF THE CLASSIFICATION ACT OF 1949, SUPRA, AND ARE NO LESS "EQUIVALENT INCREASES IN COMPENSATION" WITHIN THE MEANING OF THAT SECTION THAN IF SALARY RETENTION UNDER SECTION 507 (A) OF THE ACT WERE NOT APPLICABLE TO HIM.

SECTION 507 (A) PROVIDES THAT THE RETAINED RATE SHALL CONTINUE IN EFFECT FOR A 2-YEAR PERIOD UNLESS OR UNTIL THE EMPLOYEE BECOMES ENTITLED TO A HIGHER RATE BY REASON OF THE OPERATION OF THE CLASSIFICATION ACT. OCTOBER 21, 1962, THE DATE YOU RECEIVED YOUR WITHIN-GRADE INCREASE TO STEP 7 OF GRADE GS-13 UNDER SECTION 701 OF THE CLASSIFICATION ACT, YOU BECAME ENTITLED TO A RATE OF COMPENSATION HIGHER THAN YOUR RETAINED RATE AND THUS YOUR RETAINED RATE TERMINATED BY OPERATION OF LAW. NOTWITHSTANDING THE FACT THAT YOU ACTUALLY REALIZED A MONETARY INCREASE OF ONLY $70 YOU NEVERTHELESS DID RECEIVE THE BENEFIT OF A WITHIN-GRADE INCREASE IN THE GRADE IN WHICH YOU WERE SERVING, AND THAT INCREASE WAS USED IN FIXING YOUR COMPENSATION IN GRADE GS-13, STEP 7, SO AS TO TERMINATE YOUR RETAINED SALARY. IT WOULD BE ANOMALOUS TO GRANT AN EMPLOYEE UNDER SUCH CIRCUMSTANCES THE BENEFIT OF STEP INCREASES BASED ON THE GRADE AND STEP IN WHICH HE WOULD HAVE BEEN PLACED HAD IT NOT BEEN FOR THE RETAINED RATE, THE PURPOSE THEREOF BEING TO GIVE HIM A HIGHER SALARY RATE AT THE END OF THE RETAINED SALARY PERIOD, AND THEN IGNORE SUCH CONSTRUCTIVE INCREASES (OR EQUIVALENT INCREASES) WHEN THE RETAINED SALARY PERIOD IS TERMINATED. ACCORDINGLY, OUR AUDIT ACTION IN TAKING EXCEPTION TO YOUR ADVANCEMENT TO STEP 8 OF GRADE GS-13 ON DECEMBER 30, 1962, WAS CORRECT AND MUST BE SUSTAINED.

IN YOUR LETTER OF APRIL 5, 1965, YOU ASK, IN THE EVENT WE SHOULD CONCLUDE THAT YOU HAVE BEEN OVERPAID, WHETHER WE WILL WAIVE COLLECTION OF THE OVERPAYMENTS AS WE DID IN OUR OFFICE DECISION OF JANUARY 14, 1964, B- 151483. ACTUALLY, THE STATEMENT QUOTED IN YOUR LETTER APPEARED IN OUR DECISION OF APRIL 23, 1964, B-151483, 43 COMP. GEN. 701.

ON APRIL 13, 1965, A PRIVATE RELIEF BILL WAS INTRODUCED IN THE HOUSE OF REPRESENTATIVES WHICH, IF ENACTED INTO LAW, WOULD RELIEVE YOU AND THE OTHER EMPLOYEES OF YOUR INSTALLATION FROM THE OBLIGATION OF REFUNDING THE ILLEGAL PAYMENTS WHICH WERE DISCOVERED IN OUR PAYROLL AUDITS OF THE U.S. ARMY MISSILE SUPPORT COMMAND. PENDING FINAL CONSIDERATION BY THE CONGRESS OF SUCH RELIEF LEGISLATION OUR OFFICE IS NOT REQUIRING ANY FURTHER COLLECTION ACTION IN THE MATTER. THEREFORE, WE BELIEVE THAT IT WOULD BE PREMATURE TO CONSIDER AT THIS TIME YOUR QUESTION REGARDING A POSSIBLE WAIVER OF YOUR INDEBTEDNESS.