[Appeal of Claim for Retroactive Salary Adjustment]

An Army employee appealed the Claims Group's disallowance of his claim for a retroactive salary adjustment based on the highest previous rate rule. The claimant had been employed by various government agencies as a foreign service local until 1975 when his position was abolished. Although his local grade was the equivalent to a GS-12 in terms of job responsibility, he was paid at less than the rate for a GS-1. In 1981, the claimant accepted a GS-3 civilian position with the Army. He claimed that the proper application of the highest previous rate rule would entitle him to a salary at GS-4. He further alleged that the personnel office led him to believe that he was entitled to such a salary. Under the highest previous rate rule, an agency has the authority to set the salary of an employee at the lowest step of the employee's grade that equals or exceeds the employee's highest previous rate of pay. The rule applies only to the salary rate previously earned and not the grade or step level which the employee attained. Since the salary set for the claimant at the time of his appointment exceeded the highest previous rate he had earned as a federal employee, GAO found that there had been no violation of the highest previous rate rule. Furthermore, the government is not responsible for the erroneous acts of its employees, even though they are committed in the performance of official duty. Accordingly, the Claims Group's settlement was affirmed.