Washington, DC

U.S. Office of Personnel Management
Compensation Claim Decision
Under section 3702 of title 31, United States Code

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Robert D. Hendler
Classification and Pay Claims
Program Manager
Agency Compliance and Evaluation
Merit System Accountability and Compliance


10/19/2015

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Date

The claimant is a Federal civilian employee of the Department of the Army (DA) in Daegu, Republic of Korea (Korea).  He requests the U.S. Office of Personnel Management (OPM) reconsider his agency’s termination of his living quarters allowance (LQA) and post differential and their retroactive denial of the temporary quarters subsistence allowance (TQSA) he received upon his transfer to Korea.  We received the claim on April 3, 2014, and the agency administrative report (AAR) on June 23, 2015.  For the reasons discussed herein, the claim is denied.

The claimant was an active duty military member stationed in Korea when he applied for his current Federal position, located in Daegu, Korea, through the on-line USAjobs portal.[1]  He states that on February 22, 2013 (while on military terminal leave pending his military separation), he used his military transportation benefits to return to the United States, following shipment of his household goods on February 19, 2013, and separated from military service on March 3, 2013.  After his return to the United States, he was interviewed and subsequently offered and accepted the position.  As a result, he relocated back to Korea and was appointed to the position effective May 20, 2013.  He was initially found eligible for and granted LQA.  In May 2013 the claimant was notified that, as a result of a Department of Defense (DoD)-directed LQA audit, a review of his records had revealed he had been improperly granted LQA and did not meet the definition of "U.S. hire" in Department of Defense Instruction (DoDI) 1400.25, Volume 1250, because he was "not physically present in the United States at the time of application."  The agency states in its AAR that "LQA was improperly granted in part based on erroneous information provided by the employee at the time of hire;" specifically, he had “indicated that he was in the United States when he applied for the position.”

The claimant asserts that he qualifies as a U.S. hire under the Department of State Standardized Regulations (DSSR) section 031.11 because he was living in the United States when he was offered the position, or alternatively as an employee recruited outside the United States under DSSR section 031.12b because "the place of residency and employment were both in Daegu, Republic of Korea."

The DSSR contains the governing regulations for allowances, differentials, and defraying of official residence expenses in foreign areas.  Within the scope of these regulations, the head of an agency may issue further implementing instructions for the guidance of the agency with regard to the granting of and accounting for these payments. Department of Defense Instruction (DoDI) 1400.25, Volume 1250, implements the provisions of the DSSR for DoD employees.  Because LQA is a discretionary allowance, agency implementing regulations may be more restrictive, but not more permissive, than the DSSR; i.e., they may impose additional limitations on the granting of LQA but may not extend benefits that are not otherwise permitted by the DSSR. 

DSSR section 031.11 permits the granting of LQA to employees recruited in the United States as follows:

Quarters allowances... may be granted to employees who were recruited by the employing government agency in the United States, the Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana Islands, and the possessions of the United States.  

The claimant does not meet DSSR section 031.11 because, as he acknowledges, he was stationed in Korea when he applied for the position there.  The plain language of "recruited in the United States" or one of the other qualifying locations is construed to encompass the entire recruitment process commencing with the action of applying for the position, as specified in DoDI 1400.25, Volume 1250, which defines a "U.S. hire" as "[a] person who physically resided permanently in the United States or the Northern Mariana Islands from the time he or she applied for employment until and including the date he or she accepted a formal offer of employment." 

Section 031.12 of the Department of State Standardized Regulations (DSSR) permits the granting of LQA to employees recruited outside the United States under the following conditions, in relevant part:

a. the employee's actual place of residence in the place to which the quarters allowance applies at the time of receipt thereof shall be fairly attributable to his/her employment by the United States Government; and

b. prior to appointment, the employee was recruited in the United   States, the Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana Islands, the former Canal Zone, or a possession of the United States, by:

(1) the United States Government, including its Armed Forces;

(2) a United States firm, organization, or interest;

(3) an international organization in which the United States Government participates; or

(4) a foreign government

and had been in substantially continuous employment by such employer under conditions which provided for his/her return transportation to the United States, the Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana Islands, the former Canal Zone, or a possession of the United States. 

DoDI 1400.25, Volume 1250, Enclosure 2.1.a., expands upon the term "substantially continuous employment," in relevant part, as follows:

Under the provisions of section 031.12b of [the DSSR], former military and civilian members shall be considered to have "substantially continuous employment" for up to 1 year from the date of separation or when transportation entitlement is lost, or until the retired or separated member or employee uses any portion of the entitlement for Government transportation back to the United States, whichever occurs first.

DSSR section 031.12b specifies the conditions under which employees "recruited outside the United States" may be granted LQA.  In the claimant's case, the recruitment process began while he was in Korea and applied for the position, but continued and concluded after he had returned to the United States, where he was interviewed and offered the position.  Thus, upon his return to the United States he could no longer be considered to have been recruited outside the United States for purposes of section 031.12b and the employment conditions it describes, which are based on the premise that, prior to appointment, the employee is physically located overseas and employed by one of the qualifying entities with return transportation benefits to the United States.[2]   Although the claimant began the recruitment process as an employee “recruited outside the United States,” he concluded the process as an employee “recruited in the United States,” albeit not fully meeting the requirements of DSSR section 031.11 as implemented by DoDI 1400.25, Volume 1250. 

DSSR section 031.3 stipulates, in relevant part, that "[p]ost differential prescribed in Chapter 500 may be granted to employees who are described in Sections 031.11 and 031.12 (eligible for quarters allowances)."  Thus, LQA eligibility is a prerequisite for any consideration of the granting of post differential.  Since the claimant is not eligible for LQA under either DSSR section 031.11 or 031.12, as implemented by DoDI 1400.25, Volume 1250, he may not be granted post differential.

DSSR Section 111 defines “quarters allowance” as an allowance granted under sections 120 (TQSA) or 130 (LQA) of these regulations.  Eligibility requirements for quarters allowances set forth in Section 031 do not distinguish between LQA and TQSA, the latter of which covers only transient quarters occupied before the permanent quarters covered by LQA are secured.  Thus, eligibility for TQSA is dependent on eligibility for LQA and may not be considered separately.  However, we may not render a decision on this matter in that TQSA is a lodging expense.  As such, TQSA claims fall under the jurisdiction of the General Services Administration’s Civilian Board of Contract Appeals.

The statutory and regulatory languages are permissive and give agency heads considerable discretion in determining whether to grant LQAs to agency employees.  Wesley L. Goecker, 58 Comp. Gen. 738 (1979).  Thus, an agency may withhold LQA payments from an employee when it finds that the circumstances justify such action, and the agency’s action will not be questioned unless it is determined that the agency’s action was arbitrary, capricious, or unreasonable.  Under 5 CFR 178.105, the burden is upon the claimant to establish the liability of the United States and the claimant’s right to payment.  Joseph P. Carrigan, 60 Comp. Gen. 243, 247 (1981); Wesley L. Goecker, 58 Comp. Gen. 738 (1979).  As discussed previously, the claimant has failed to do so.  Since an agency decision made in accordance with established regulations as is evident in the present case cannot be considered arbitrary, capricious, or unreasonable, there is no basis upon which to reverse the decision.

This settlement is final.  No further administrative review is available within the OPM.  Nothing in this settlement limits the claimant’s right to bring an action in an appropriate United States court.

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