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MOUNTAINOUS AREAS ARE UNAUTHORIZED AND SHOULD BE REVISED TO PROVIDE ONLY FOR PAYMENT OF COMPENSATION. 1956: REFERENCE IS MADE TO A LETTER FROM THE ASSISTANT SECRETARY FOR ADMINISTRATION DATED JUNE 8. THE EMPLOYEES IN QUESTION ARE NORMALLY HIRED DURING THE SUMMER MONTHS FOR A PERIOD NOT TO EXCEED 180 DAYS IN CONNECTION WITH DIRECT FEDERAL CONSTRUCTION PROGRAMS INCLUDING THE SURVEY. THE PROGRAMS ARE LARGELY CARRIED ON IN MOUNTAINOUS. SPARSELY POPULATED AREAS AT HIGH ELEVATION WHERE THE CONSTRUCTION SEASON IS LIMITED TO A LITTLE MORE THAN THE SUMMER MONTHS. THESE POSITIONS ARE EXEMPT FROM THE PROVISIONS OF THE CLASSIFICATION ACT OF 1949. THE EMPLOYEES ARE PAID PURSUANT TO AN EMPLOYMENT CONTRACT WHICH PROVIDES FOR SALARIES EQUIVALENT TO THOSE FOR SIMILAR POSITIONS UNDER THE CLASSIFICATION ACT OF 1949.

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B-123354, AUGUST 24, 1956, 36 COMP. GEN. 161

CONTRACT EMPLOYEES - TRANSPORTATION AND SUBSISTENCE EXPENSES IN ADDITION TO SALARY SEASONAL EMPLOYMENT CONTRACTS WHICH PROVIDE FOR THE PAYMENT OF TRANSPORTATION EXPENSES AND PER DIEM IN LIEU OF SUBSISTENCE IN ADDITION TO SALARIES FOR TEMPORARY EMPLOYEES ENGAGED ON ROAD CONSTRUCTION PROJECTS IN SPARSELY POPULATED, MOUNTAINOUS AREAS ARE UNAUTHORIZED AND SHOULD BE REVISED TO PROVIDE ONLY FOR PAYMENT OF COMPENSATION.

TO THE SECRETARY OF COMMERCE, AUGUST 24, 1956:

REFERENCE IS MADE TO A LETTER FROM THE ASSISTANT SECRETARY FOR ADMINISTRATION DATED JUNE 8, 1956, REGARDING COMPENSATION PAID TO TEMPORARY UNCLASSIFIED EMPLOYEES HIRED BY THE BUREAU OF PUBLIC ROADS AS ENGINEERS AND ENGINEERING ASSISTANTS.

THE EMPLOYEES IN QUESTION ARE NORMALLY HIRED DURING THE SUMMER MONTHS FOR A PERIOD NOT TO EXCEED 180 DAYS IN CONNECTION WITH DIRECT FEDERAL CONSTRUCTION PROGRAMS INCLUDING THE SURVEY, DESIGN, CONSTRUCTION AND MAINTENANCE OF FOREST HIGHWAYS AND OTHER ROADS AND HIGHWAYS. THE PROGRAMS ARE LARGELY CARRIED ON IN MOUNTAINOUS, SPARSELY POPULATED AREAS AT HIGH ELEVATION WHERE THE CONSTRUCTION SEASON IS LIMITED TO A LITTLE MORE THAN THE SUMMER MONTHS. THESE POSITIONS ARE EXEMPT FROM THE PROVISIONS OF THE CLASSIFICATION ACT OF 1949, AS AMENDED, 5 U.S.C. 1082 (28). THE EMPLOYEES ARE PAID PURSUANT TO AN EMPLOYMENT CONTRACT WHICH PROVIDES FOR SALARIES EQUIVALENT TO THOSE FOR SIMILAR POSITIONS UNDER THE CLASSIFICATION ACT OF 1949, AS AMENDED, PLUS SUBSISTENCE OR PER DIEM IN LIEU OF SUBSISTENCE FOR THE ENTIRE PERIOD AWAY FROM POINT OF HIRE TO PROJECT ASSIGNMENT AND RETURN. THE "POINT OF HIRE" IS THE PUBLIC ROADS' DIVISION OR DISTRICT OFFICE TO WHICH THE EMPLOYEE REPORTS FOR ENTRANCE ON DUTY. THE EMPLOYEES REPORT TO THAT OFFICE AT THEIR OWN EXPENSE. THE GREATER NUMBER OF THESE EMPLOYEES REMAIN ON THE SAME ROAD PROJECT DURING THE ENTIRE PERIOD OF EMPLOYMENT, ALTHOUGH A NOT INCONSEQUENTIAL NUMBER ARE MOVED BETWEEN TWO OR THREE PROJECTS DURING THEIR EMPLOYMENT PERIOD. NO WORK IS PERFORMED AND NO PER DIEM IS PAID FOR TIME SPENT AT POINT OF HIRE.

AS INDICATED IN THE LETTER OF JUNE 8, 1956, OUR OFFICE, ON OCTOBER 13, 1955, B-123354, OCTOBER 13, 1955, ADDRESSED A LETTER TO THE BUREAU OF PUBLIC ROADS RECOMMENDING THAT THE PORTIONS OF THE COMPENSATION LABELED TRANSPORTATION AND PER DIEM BE THEREAFTER INCLUDED ON PAYROLLS AS WAGES SUBJECT TO WITHHOLDING. SUBSEQUENTLY, THE BUREAU OF PUBLIC ROADS RECEIVED FROM THE INTERNAL REVENUE SERVICE ON APRIL 17, 1956, A LETTER INDICATING THAT THE TRANSPORTATION EXPENSES AND THE PER DIEM ALLOWANCES PAID THE EMPLOYEES ARE NOT WAGES SUBJECT TO INCOME TAX WITHHOLDING UNDER SECTION 3402 OF THE INTERNAL REVENUE CODE OF 1954, 26 U.S.C., SUPP. III, 3402.

WE CONSTRUE THE INTERNAL REVENUE SERVICE STATEMENT TO MEAN THAT AMOUNTS PAID TO EMPLOYEES SPECIFICALLY TO COVER BONA FIDE EXPENSES INCURRED IN THE COURSE OF THE EMPLOYER'S BUSINESS, WHICH ARE SEPARATELY IDENTIFIED, ARE NOT WAGES AND, THEREFORE, ARE NOT SUBJECT TO WITHHOLDING. SUCH QUESTION IS WITHIN THE PROVINCE OF THE INTERNAL REVENUE SERVICE FOR DETERMINATION. OUR CONCERN IS WHETHER THE BUREAU OF PUBLIC ROADS MAY VALIDLY PAY SUCH TRANSPORTATION EXPENSES AND PER DIEM, AS SUCH, TO THESE EMPLOYEES.

THE RIGHT TO PER DIEM ARISES OUT OF STATUTE AND IS ADMINISTERED THROUGH VARIOUS ADMINISTRATIVE REGULATIONS. ERICKSON V. UNITED STATES, 123 C.1CLS. 163. THE ONLY APPLICABLE STATUTE AUTHORIZING PER DIEM IN LIEU OF SUBSISTENCE IS THE TRAVEL EXPENSE ACT OF 1949, AS AMENDED, 5 U.S.C. 835- 842, ADMINISTERED THROUGH THE STANDARDIZED GOVERNMENT TRAVEL REGULATIONS ISSUED BY THE BUREAU OF THE BUDGET. PARAGRAPH 46 OF THOSE REGULATIONS PROVIDES THAT," UNDER NO CIRCUMSTANCES WILL THE PER DIEM IN LIEU OF SUBSISTENCE BE ALLOWED AN EMPLOYEE AT HIS PERMANENT DUTY STATION.' AS WE STATED IN 32 COMP. GEN. 87, 88," IT CONSISTENTLY HAS BEEN HELD THAT AN EMPLOYEE'S OFFICIAL OR PERMANENT DUTY STATION IS THE PLACE AT WHICH HE ACTUALLY IS STATIONED; THAT IS, THE PLACE WHERE THE EMPLOYEE EXPECTS AND IS EXPECTED, TO SPEND THE GREATER PART OF HIS TIME.' SEE, ALSO, 31 COMP. GEN. 289; 27 COMP. GEN. 657; 19 COMP. GEN. 347. MOREOVER, WE HAVE CONSISTENTLY HELD THAT AN EMPLOYEE MUST BEAR THE EXPENSES OF TRAVEL FROM HIS PLACE OF RESIDENCE TO HIS FIRST DUTY STATION. 22 COMP. GEN. 869. ACCORDINGLY, WE CONCLUDE THAT THERE IS NO AUTHORITY TO AUTHORIZE PAYMENT OF THE TRANSPORTATION EXPENSES OR PER DIEM IN LIEU OF SUBSISTENCE TO THE EMPLOYEES IN QUESTION FOR PERFORMANCE OF DUTY AT THE PLACE WHERE THE EMPLOYEE IS EXPECTED TO SPEND THE GREATER PORTION OF HIS TIME.

THE FACTORS INCLUDED IN THE RATE OF COMPENSATION PAID TO THESE SEASONAL EMPLOYEES IS A MATTER PRIMARILY FOR DETERMINATION BY THE BUREAU OF PUBLIC ROADS. REMUNERATION FOR ALL SUCH FACTORS, HOWEVER, MUST BE INCLUDED AS PART OF AN EMPLOYEE'S TOTAL COMPENSATION. 21 COMP. GEN. 330, 332. THE TERM "COMPENSATION," AS USED IN THIS SENSE, IS SYNONYMOUS WITH "PAY" OR "SALARY.' OF. 10 COMP. GEN. 302. EXCEPT TO CONSIDER THESE FACTORS AS PART OF THE AGREED COMPENSATION THEY ARE NOT ALLOWABLE. IT FOLLOWS THAT THERE IS NO AUTHORITY FOR INCLUDING IN THE EMPLOYMENT CONTRACTS FOR SUCH SEASONAL EMPLOYEES PROVISIONS FOR THE PAYMENT OF THE TRANSPORTATION EXPENSES OR PER DIEM OR ALLOWANCES, AS SUCH, IN ADDITION TO COMPENSATION.

IN VIEW OF THE COMMITMENTS ALREADY MADE TO THESE SEASONAL EMPLOYEES AND THE FACT THAT THE SEASON IS NEARLY AT AN END, NO CHANGE IN THE EMPLOYMENT CONTRACTS OR MODE OF PAYMENT NEED BE MADE AT THE PRESENT TIME. THE CONTRACT FOR FUTURE SEASONS, HOWEVER, SHOULD PROVIDE FOR THE PAYMENT OF COMPENSATION ONLY, REGARDLESS OF THE FACTORS INCLUDED IN ESTABLISHING THE COMPENSATION RATE.

ALSO, WHILE IT APPEARS THAT SUCH A REVISION TO THE CONTRACT WOULD AFFECT THE PRESENT VIEW OF THE INTERNAL REVENUE SERVICE IN THE MATTER, WE SUGGEST THAT IN ORDER TO PREVENT ANY MISUNDERSTANDING A FURTHER RULING BE OBTAINED FROM THAT AGENCY CONCERNING THE WITHHOLDING TAX UNDER THE TERMS OF THE REVISED CONTRACT. WE WOULD APPRECIATE YOUR FURNISHING US A COPY OF THE RULING.

WE WISH TO POINT OUT THAT WE FULLY REALIZE THAT THE CONCLUSION REACHED HEREIN MAY NOT BE DESIRABLE FROM AN ADMINISTRATIVE OR OPERATING VIEWPOINT. UPON THE PRESENT STATE OF THE RECORD AND LAW, HOWEVER, WE ARE UNABLE TO ARRIVE AT A DIFFERENT CONCLUSION.

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