Claims for Additional Compensation on Change From Wage Grade to General Schedule Positions

Four federal employees appealed a settlement denying their claims for additional compensation incident to their movement from Wage Grade positions to General Schedule (GS) positions and their subsequent promotions within the General Schedule. The employees entered an employee development program and, since the rate of pay in their new GS position was less than the rate each received in his Wage Grade position, they were accorded salary retention. After 1 year in grade, each employee was promoted to a higher GS position. The prior settlement held that the employees were demoted when they underwent the change from a Wage Grade to a GS position and that they were not entitled to a two-step increase from their retained rates of pay. The employees argued that they were promoted and were improperly denied two-step increases on each promotion. GAO held that, since the employees were moving to lower-paying GS positions, those actions could not be considered promotions for purposes of applying the two-step increase rule. Further, where an employee is demoted, receives salary retention, and is later repromoted, the two-step increase for computing the subsequent promotion must be based upon the reduced grade. Therefore, the employees' rate of pay was properly based on a two-step increase from the lower GS position. Accordingly, the settlement denying the employees' claims for additional compensation was sustained.