B-167395, AUG. 6, 1969

B-167395, AUG. 6, 1969

CIVIL PAY - BACK PAY - RETIREMENT, ETC., DEDUCTIONS DECISION TO CHAIRMAN OF THE CIVIL SERVICE COMMISSION. EMPLOYEES WHO ARE RESTORED TO DUTY FOLLOWING ERRONEOUS SEPARATIONS FROM SERVICE ARE REQUIRED TO REMIT AN APPROPRIATE AMOUNT OF RETIREMENT FUND CONTRIBUTIONS TO RECEIVE FULL CREDIT FOR THE PERIOD OF SEPARATION. IF THE EMPLOYEE DOES NOT REFUND THE AMOUNT, THE RETIREMENT ANNUITY MUST BE REDUCED BY 10 PERCENT OF THE UNPAID DEPOSIT, UNLESS THE EMPLOYEE ELECTS TO ELIMINATE THE SERVICE FROM CREDIT. IN CASE OF LIFE INSURANCE COVERAGE THE LIABILITY FOR PREMIUMS IS NOT EXTINGUISHED BY THE FACT THAT NO BACK PAY IS DUE. IN SUCH CASE, THE EMPLOYEE MUST REFUND THE EMPLOYEE'S SHARE FOR LIFE INSURANCE COVERAGE. LUMP-SUM LEAVE PAYMENTS MUST BE REFUNDED WHEN CANCELLATION ACTION IS EFFECTED.

TO MR. HAMPTON:

WE REFER TO YOUR LETTER OF JUNE 26, 1969, REQUESTING OUR DECISION AS TO THE PROPER CORRECTIVE ACTION TO BE TAKEN IN THE CASE OF AN EMPLOYEE WHOSE OUTSIDE EARNINGS DURING A PERIOD OF ERRONEOUS SEPARATION FROM THE SERVICE EXCEEDED THE BACK PAY OTHERWISE DUE HIM UNDER 5 U.S.C. 5596. SPECIFICALLY, YOU ASK WHETHER, IN SUCH CIRCUMSTANCES, THE EMPLOYEE IS REQUIRED TO REMIT TO THE GOVERNMENT AN AMOUNT REPRESENTING THE CIVIL SERVICE RETIREMENT AND GROUP LIFE INSURANCE DEDUCTIONS WHICH ORDINARILY WOULD HAVE BEEN WITHHELD FROM HIS SALARY DURING THE PERIOD OF SEPARATION AND, ALSO, THE AMOUNT OF THE LUMP-SUM LEAVE PAYMENT HE RECEIVED UPON SEPARATION FROM THE SERVICE.

WHEN AN EMPLOYEE IS RESTORED TO DUTY FOLLOWING AN ERRONEOUS SEPARATION FROM THE SERVICE HE IS DEEMED FOR ALL PURPOSES TO HAVE PERFORMED SERVICE FOR THE GOVERNMENT DURING THE PERIOD OF ERRONEOUS REMOVAL AND SUCH PERIOD IS CREDITABLE FOR RETIREMENT PURPOSES. 5 U.S.C. 5596 (B) (2); FEDERAL PERSONNEL MANUAL SUPPLEMENT 831-1, SUBCHAPTER S3, PARAGRAPH S3-4J. ORDINARILY, THE APPROPRIATE RETIREMENT FUND CONTRIBUTIONS COVERING THE PERIOD OF SEPARATION ARE DEDUCTED FROM THE BACK PAY OTHERWISE DUE THE EMPLOYEE. SEE 28 COMP. GEN. 333; ID. 563; 34 ID. 657. EVEN IF NO AMOUNT OF BACK PAY IS DUE THE EMPLOYEE BECAUSE OF EXCESSIVE OUTSIDE EARNINGS DURING THE PERIOD OF SEPARATION, THE EMPLOYEE MUST REMIT THE APPROPRIATE AMOUNT OF RETIREMENT FUND CONTRIBUTIONS TO THE AGENCY IN ORDER TO RECEIVE FULL CREDIT FOR THE PERIOD OF SEPARATION. 5 U.S.C. 8334 (C); 34 COMP. GEN. 657. IF THE EMPLOYEE CHOOSES NOT TO DEPOSIT THE NECESSARY AMOUNT TO COVER THE PERIOD OF SEPARATION, THE RETIREMENT ANNUITY OTHERWISE DUE HIM MUST BE REDUCED BY 10 PERCENT OF THE UNPAID DEPOSIT, UNLESS THE EMPLOYEE ELECTS TO ELIMINATE THE SERVICE IN QUESTION FROM CREDIT FOR ANNUITY COMPUTATION PURPOSES. 5 U.S.C. 8339 (H); FPM SUPPLEMENT 831-1 SUBCHAPTER S4, PARAGRAPH S4-1.

THE QUESTION OF WHETHER LIFE INSURANCE PREMIUMS SHOULD BE DEDUCTED FROM AN AWARD OF BACK PAY WAS INVOLVED IN OUR DECISION 36 COMP. GEN. 225. EXPRESSED THE VIEW THEREIN THAT AN EMPLOYEE WHO IS RESTORED TO DUTY FOLLOWING AN ERRONEOUS SEPARATION ACTION IS TO BE REGARDED AS HAVING BEEN COVERED BY THE LIFE INSURANCE ACT DURING THE PERIOD OF SEPARATION AND THAT, THEREFORE, A DEDUCTION OF THE PREMIUM FOR SUCH PERIOD IS REQUIRED. ALSO, SEE PAROCZAY V UNITED STATES, 177 CT. CL. 754 (DECEMBER 16, 1966). IN THAT CASE THE COURT HELD THAT AS BETWEEN THE PLAINTIFF (AN ERRONEOUSLY SEPARATED EMPLOYEE) AND THE GOVERNMENT THE LIFE INSURANCE WAS IN EFFECT AS A MATTER OF LAW DURING THE PERIOD OF SEPARATION AND, THEREFORE, THE PLAINTIFF WAS REQUIRED TO PAY HIS SHARE OF THE INSURANCE PREMIUMS.

THUS, AN EMPLOYEE'S LIABILITY FOR THE COST OF LIFE INSURANCE COVERAGE DURING THE SEPARATION PERIOD IS NOT EXTINGUISHED BY THE FACT THAT, BECAUSE OF HIS OUTSIDE EARNINGS, NO AMOUNT OF BACK PAY IS DUE HIM FOR THE PERIOD IN QUESTION. WHENEVER THE BACK PAY DUE AN EMPLOYEE IS INSUFFICIENT TO COVER THE APPROPRIATE DEDUCTIONS FOR LIFE INSURANCE, THE EMPLOYEE SHOULD BE REQUIRED TO REMIT THE NECESSARY AMOUNT TO THE GOVERNMENT.

WITH RESPECT TO THE LUMP-SUM LEAVE PAYMENT RECEIVED BY THE EMPLOYEE UPON SEPARATION FROM THE SERVICE, IT IS WELL ESTABLISHED THAT SUCH PAYMENT MUST BE REFUNDED BY THE EMPLOYEE UPON CANCELLATION OF THE SEPARATION ACTION. THIS IS SO BECAUSE THE LUMP-SUM PAYMENT FOR ANNUAL LEAVE IS AUTHORIZED UNDER 5 U.S.C. 5551 (A) ONLY UPON SEPARATION FROM THE SERVICE. ACCORDINGLY, WHEN THE SEPARATION IS CANCELLED AND THE EMPLOYEE IS RESTORED TO DUTY AS OF THE DATE OF SEPARATION, THE LUMP-SUM LEAVE PAYMENT BECOMES UNAUTHORIZED. SEE 28 COMP. GEN. 333; 34 ID. 303; ID. 657; LEVERETTE V UNITED STATES, 135 CT. CL. 207; PECHETTE V UNITED STATES, 145 CT. CL. 189.

IN THE CASE PRESENTED BY YOU THE EMPLOYEE SHOULD BE REQUIRED TO REFUND THE AMOUNT OF THE LUMP-SUM PAYMENT WITH THE LEAVE SO REPRESENTED BEING RECREDITED TO HIS ACCOUNT SUBJECT TO THE MAXIMUM ACCUMULATION RESTRICTIONS OF 5 U.S.C. 6304 (A).