B-154096, AUG. 25, 1965, 45 COMP. GEN. 88

B-154096, AUG. 25, 1965, 45 COMP. GEN. 88

COMPENSATION - WAGE BOARD EMPLOYEES - CONVERSION TO CLASSIFIED POSITIONS - HIGHEST PREVIOUS RATE - COST-OF-LIVING ALLOWANCE IN THE APPLICATION OF THE HIGHEST PREVIOUS RATE RULE WHEN EMPLOYEES IN NONFOREIGN AREAS RECEIVING A COST-OF-LIVING ALLOWANCE MOVE FROM PREVAILING RATE OR ADMINISTRATIVELY FIXED RATE POSITIONS TO POSITIONS UNDER THE THE CLASSIFICATION ACT, THE KNOWN ALLOWANCES, DIFFERENTIALS, INCENTIVE PAY, ETC., ATTRIBUTABLE TO HIGH LIVING COSTS AND INCLUDED IN THE WAGE RATES PAID THE ALASKAN EMPLOYEES ARE FOR DEDUCTION IN ESTABLISHING THE HIGHEST PREVIOUS RATE, AND THE MAXIMUM BASIC RATE ALLOWABLE TO SUCH EMPLOYEES IS THE RATE WHICH WHEN INCREASED BY A 25 PERCENT COST-OF-LIVING ALLOWANCE WILL NOT RESULT IN LOSS OF SALARY; HOWEVER, TO AVOID CREATING A HARDSHIP ON EMPLOYEES IN SUCH NONFOREIGN AREAS AS HAWAII OR PUERTO RICO WHOSE PREVAILING WAGE RATES ARE LOWER THAN THOSE PAID IN ALASKA, AND INCLUDE NONDISCERNIBLE COST-OF-LIVING ELEMENTS, THE GROSS RATE OF COMPENSATION OF SUCH EMPLOYEES MAY BE REGARDED AS THE HIGHEST PREVIOUS RATE FOR COMPARISON WITH BASIC CLASSIFICATION ACT RATES. B-154096, SEPTEMBER 23, 1964, MODIFIED.

TO THE SECRETARY OF THE INTERIOR, AUGUST 25, 1965:

WE ENCLOSE HEREWITH COPIES OF TWO SELF-EXPLANATORY LETTERS WITH RELATED DOCUMENTS FROM OFFICIALS OF THE DEPARTMENT OF THE INTERIOR CONCERNING THE APPLICATION OF THE HIGHEST PREVIOUS RATE RULE TO EMPLOYEES IN ALASKA MOVING FROM PREVAILING RATE OR ADMINISTRATIVELY FIXED RATE POSITIONS TO POSITIONS UNDER THE CLASSIFICATION ACT, 5 U.S.C. 1071 NOTE. THE GENERAL PROBLEM PRESENTED BY THESE CASES WAS THE SUBJECT OF OUR DECISION OF SEPTEMBER 23, 1964, B-154096, A COPY OF WHICH IS ENCLOSED.

IN OUR DECISION OF SEPTEMBER 23, 1964, WE RULED THAT WHEN AN EMPLOYEE UNDER THE PREVAILING RATE SYSTEM MOVES TO A POSITION UNDER THE CLASSIFICATION ACT HIS BASIC SALARY UNDER THE LATTER ACT SHOULD BE FIXED AT A RATE WHICH WHEN INCREASED BY A 25 PERCENT COST-OF-LIVING ALLOWANCE WOULD NOT CAUSE HIM TO SUFFER A LOSS IN SALARY. THE DECISION IS PREDICATED UPON THE PROPOSITION THAT WAGE BOARD RATES IN ALASKA ARE DERIVED FROM PREVAILING RATES IN THE STRUCTURE OF WHICH THERE IS INCLUDED AN UNDETERMINABLE ELEMENT ATTRIBUTABLE TO HIGH LIVING COSTS. ON THAT BASIS THE USE OF A WAGE BOARD RATE TO DETERMINE AN EQUIVALENT BASIC CLASSIFICATION ACT RATE, UPON WHICH A 25 PERCENT COST-OF-LIVING ALLOWANCE IS PAID, RESULTS IN A PYRAMIDING OF RATES CONTRARY TO THE PRINCIPLE DISCUSSED IN OUR DECISION IN 37 COMP. GEN. 285.

OF THE ATTACHED CASES THAT OF MR. EDWARD D. CONKLIN CONCERNS THE MOVEMENT OF THE EMPLOYEE FROM A POSITION UNDER THE INTERIOR ALASKA SEASONAL SCHEDULE TO ONE UNDER THE CLASSIFICATION ACT. THE CASE OF MR. OTTO W. LOWE, JR., INVOLVES A TRANSFER FROM WHAT IS UNDERSTOOD TO BE A TRUE PREVAILING RATE POSITION TO ONE UNDER THE CLASSIFICATION ACT AND, THEREFORE, IS SIMILAR TO THE CASE OF MR. DONALD W. BURNS, CONSIDERED IN OUR DECISION OF SEPTEMBER 23, 1964. WE FURTHER UNDERSTAND THAT THE RATE STRUCTURE UNDER THE INTERIOR ALASKA SEASONAL SCHEDULE APPLICABLE TO MR. CONKLIN WHILE NOT ESTABLISHED UNDER A SPECIFIC FORMULA IS ON ANALYSIS FOUND TO BE COMPRISED OF THE MINIMUM STEP OF THE CORRESPONDING CLASSIFICATION ACT GRADE, PLUS 25 PERCENT, PLUS $6 PER DAY SUBSISTENCE ALLOWANCE.

THE CIVIL SERVICE COMMISSION HAS HAD AN OPPORTUNITY TO CONSIDER BOTH OF THE ATTACHED CASES AND OUR DECISION OF SEPTEMBER 23, 1964.

CONCERNING THE CONKLIN CASE, THE CIVIL SERVICE COMMISSION EXPRESSED THE VIEW THAT IT AGREED WITH THE CORRECTIVE ACTION TAKEN IN THAT CASE AND THAT IT WOULD CONSIDER AMENDING ITS REGULATIONS TO REQUIRE IN SIMILAR CASES THE DEDUCTION OF THE KNOWN ALLOWANCES, DIFFERENTIALS, INCENTIVE PAY, ETC., IN ESTABLISHING AN EMPLOYEE'S HIGHEST PREVIOUS RATE. THE COMMISSION POINTED OUT THAT ASSUMING IN THAT CASE THE COST OF-LIVING ALLOWANCE AND A PER DIEM ALLOWANCE WERE CLEARLY SEPARABLE FROM BASIC COMPENSATION TO ALLOW THE USE OF GROSS COMPENSATION IN DETERMINING THE EMPLOYEE'S HIGHEST PREVIOUS RATE FOR COMPARISON WITH BASIC CLASSIFICATION ACT RATES WOULD BE A PYRAMIDING OF ALLOWANCES.

WE CONCUR IN THE VIEW EXPRESSED BY THE COMMISSION. THEREFORE, WE HOLD THAT IN THE CONKLIN CASE THE EMPLOYEE'S RATE PROPERLY WAS CORRECTED ON JULY 5, 1964, TO THE GS-7 MINIMUM RATE OF $6,050 PER ANNUM, PLUS 25 PERCENT COST-OF-LIVING ALLOWANCE. A COPY OF THIS LETTER SHOULD BE DELIVERED TO MR. J. E. PERRY, AUTHORIZED CERTIFYING OFFICER, BONNEVILLE POWER ADMINISTRATION, PORTLAND, OREGON 97208, AS HIS AUTHORITY FOR DENYING CERTIFICATION OF THE VOUCHER FOR $69.19 IN FAVOR OF EDWARD D. CONKLIN, WHICH IS ENCLOSED HEREWITH. THE PROMOTION RULE MENTIONED IN MR. PERRY'S LETTER IS NOT APPLICABLE TO MR. CONKLIN SINCE HE WAS NOT PROMOTED FROM ONE CLASSIFICATION ACT POSITION TO ANOTHER.

AS TO THE BURNS AND LOWE CASES, THE CIVIL SERVICE COMMISSION HAS SUGGESTED A MODIFICATION OF THE RULE IN OUR DECISION OF SEPTEMBER 23, 1964, SO FAR AS IT APPLIES TO MOVEMENTS OF EMPLOYEES FROM TRUE PREVAILING RATE POSITIONS BECAUSE OF POSSIBLE HARDSHIPS THAT MAY RESULT IN NONFOREIGN AREAS OTHER THAN ALASKA, WHERE ALLOWANCES ARE PAID GRADED EMPLOYEES, SUCH AS PUERTO RICO AND HAWAII. CONCERNING ALASKA, THE COMMISSION COMMENTS AS FOLLOWS:

WHILE, AS A PRACTICAL MATTER, THE WAGE BOARD RATES PAID IN ALASKA ARE SO HIGH THAT A REDUCTION FOR PURPOSES OF APPLYING THE "HIGHEST PREVIOUS RATES" WOULD CAUSE NO HARDSHIP ON EMPLOYEES, THIS IS NOT TRUE FOR HAWAII OR PUERTO RICO. THUS, AN AGENCY AS A MATTER OF POLICY MIGHT WISH TO IMPOSE A LIMITATION ON THE USE OF THE ALASKAN WAGE BOARD RATE AS THE EMPLOYEE'S HIGHEST PREVIOUS RATE IN FIXING HIS SALARY, BUT IT WOULD PROBABLY NOT WANT TO DO SO FOR EITHER HAWAII OR PUERTO RICO.

IN LINE WITH THE COMMISSION'S SUGGESTION, THE RULE EXPRESSED IN OUR DECISION OF SEPTEMBER 23, 1964, IS HEREBY MODIFIED TO THE EXTENT THAT WHERE WAGE RATES ARE DERIVED FROM PREVAILING RATES AND THE ELEMENTS OF COST OF LIVING, DIFFERENTIAL, ETC., INCLUDED THEREIN ARE NOT DISCERNIBLE THE GROSS RATE OF COMPENSATION OF A PARTICULAR POSITION MAY BE REGARDED AS AN EMPLOYEE'S BASIC COMPENSATION (HIGHEST PREVIOUS RATE) FOR COMPARISON WITH BASIC CLASSIFICATION ACT RATES. HOWEVER, WE STRESS THAT AN AGENCY OPERATING IN ALASKA SHOULD (AND WE ARE ASKING THE COMMISSION TO EMPHASIZE THIS IN ITS REGULATIONS) LIMIT THE USE OF A HIGHEST PREVIOUS RATE THUS DETERMINED SO AS TO TAKE INTO CONSIDERATION GROSS COMPENSATION IN THE CLASSIFICATION ACT POSITION TO WHICH TRANSFERRED.

SINCE THE CORRECTED COMPENSATION OF MR. BURNS, THE EMPLOYEE INVOLVED IN THE DECISION OF SEPTEMBER 23, 1964, APPEARS TO CONFORM TO THE PRINCIPLE OUTLINED ABOVE, THAT IS A LIMITED APPLICATION OF THE HIGHEST PREVIOUS RATE RULE BY YOUR DEPARTMENT IN SUCH CASES, AS EXPRESSED IN THE LETTER TO US FROM THE CHIEF, DIVISION OF FINANCIAL MANAGEMENT, BUREAU OF LAND MANAGEMENT, DATED SEPTEMBER 16, 1964 (REFERENCE 733B), WE SEE NO REASON FOR DISTURBING THE SALARY RATE SPECIFIED IN OUR DECISION OF SEPTEMBER 23, 1964, AS HIS LEGAL SALARY RATE. REFERRING TO THE PROPER SALARY RATE FOR MR. LOWE WE VIEW HIS CASE AS SIMILAR TO THAT OF MR. BURNS. HENCE, THE ESTABLISHMENT OF A BASIC RATE OF $6,380 PER ANNUM PLUS 25 PERCENT COST-OF- LIVING ALLOWANCE MUST BE RECOGNIZED AS HIS LEGAL SALARY RATE FROM TIME OF CONVERSION TO A CLASSIFICATION ACT POSITION ON MARCH 29, 1964. HOWEVER, SINCE IT IS EVIDENT THAT A MISUNDERSTANDING EXISTED CONCERNING THE CORRECT APPLICATION OF THE DEPARTMENT'S REGULATIONS AND THE ORIGINAL ACTIONS WERE TAKEN PRIOR TO OUR DECISION OF SEPTEMBER 23, 1964, WE WOULD INTERPOSE NO OBJECTION TO THE CORRECTIVE ACTIONS IN THE CASES IN QUESTION BEING APPLIED ON A PROSPECTIVE BASIS FROM THE BEGINNING OF THE FIRST PAY PERIOD AFTER THE DATE OF THE CORRECTIONS SO AS TO OBVIATE THE NECESSITY OF COLLECTION ACTION FOR THE ADDITIONAL MONEYS PAID UNDER THE ORIGINAL DETERMINATIONS.

YOU MAY WISH TO CONSIDER AN AMENDMENT TO DEPARTMENTAL REGULATIONS TO MORE CLEARLY REFLECT THE APPLICATION IN ALASKA OF THE POLICY APPLIED HEREIN.