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


11/01/2016

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Date

The claimant was employed during the claim period as an Administrative/Technical Specialist, NT-905-6, with the Department of the Navy, Naval Undersea Warfare Center Division, in Newport, Rhode Island.  The claimant seeks to be paid $3,499.60, the difference between the salary he received in calendar year 2013 and what he believes he should have been paid.  The U.S. Office of Personnel Management (OPM) received the claim request on July 14, 2015, the agency administrative report (AAR) on August 25, 2015, and the claimant’s comments on the AAR on September 2, 2015.  For the reasons discussed herein, the claim is denied.

In his July 8, 2015, claim request, the claimant states:

….my annual rate of pay in Calendar Year 2013 as an employee in the Boston locality pay area was $161,637.22.  However, my annual salary was capped in Calendar Year 2013 by 5 USC 5304(g) at $155,500.00.  In anticipation that I would work 2087 hours during Calendar Year 2013, my agency paid me an hourly rate of $74.51 which is derived by dividing $155,500.00 by 2087.  That would have been fine were it not for the fact that I was furloughed and only allowed to work 2040 hours during Calendar Year 2013.  As is explained in furlough guidance published on the OPM web site, this reduction in hours and its corresponding reduction in both basic and locality pay allowed pay that was blocked by the annual salary cap to become payable.  As such, I should have been paid at an hourly rate derived by dividing $155,500.00 by the hours I actually worked or $76.23.

The claimant also asserts “the definition of locality pay”[1] in section 531.602 of title 5, Code of Federal Regulations (CFR), states that locality pay is determined before applying the annual salary cap in 5 CFR 531.606.[2]  Consequently, he reasons that his “annual rate of pay during Calendar Year 2013 before applying any maximum pay limitation actually was $161,637.22,” and therefore his “derived hourly rate of pay before applying any maximum pay limitation should have been $77.45” (i.e., $161,637.22 divided by 2087 hours).  He thus concludes he “should have been allowed to earn up to the annual maximum limitation of $155,500.00” for calendar year 2013.[3] In his response to the AAR, the claimant states:

….the Agency response failed to take into account the actual language of 5 U.S.C. 5301 through 5304.  Those sections comprise a pay mandating statute that required my Agency to pay me comparability payments during Calendar Year 2013 equal to 24.8% of my scheduled annual rate of basic pay with one caveat.  That one caveat, found in 5 U.S.C. Section 5304(g), is that comparability payments may not be paid at a rate which, when added to my rate of basic pay otherwise payable to me, would cause the total to exceed the rate of basic pay payable for level IV of the Executive Schedule.

The claimant is conflating the methodology for computing a locality payment with the methodology for computing an hourly locality rate.  Under 5 CFR 531.602, cited by the claimant, “locality pay percentage” is defined as “the percentage authorized for a locality pay area under 5 U.S.C. 5304 or 5304a which is used to compute a locality payment (before applying any maximum pay limitations under § 531.606).”  This simply means that the locality payment thus derived is then subject to the maximum limits on locality rates under 5 CFR 531.606.  See also 5 CFR 531.604 for determining an employee’s annual locality rate.  However, an hourly locality rate is determined by using the methodology in 5 CFR 531.607(a)(1), part of the regulations implementing locality-based comparability payments under 5 U.S.C. § 5304, which states: “To derive an hourly rate, divide the annual locality rate by 2,087 and round to the nearest cent, counting one-half cent and over as the next higher cent.”  In the claimant’s case, his “annual locality rate” was the “capped” rate under 5 CFR 531.606, or $155,500.00, not $161,637.22.  In other words, the claimant’s pre-cap salary cannot be treated as his annual locality rate because, under 5 CFR 531.606(a), “a locality rate may not exceed the rate of basic pay payable for level IV of the Executive Schedule.”  Therefore, the claimant’s hourly rate was properly derived by dividing $155,500 by 2,087.

The claimant’s assertions that 5 U.S.C. §§ 5301-5304 mandate that he receive “comparability payments during Calendar Year 2013 equal to 24.8% of [his] scheduled annual rate of basic pay” is misplaced.  Section 5304 makes mandatory the identification and reduction of pay disparities through the determination of locality-based comparability payments.  The claimant’s annual locality rate was accordingly set at $155,500.00, the maximum allowable under 5 U.S.C. 5304(g)(1) and 5 CFR 531.606(a).  However, the plain language of § 5304 does not mandate that individual employees receive the full dollar value of the locality-based comparability payment regardless of the number of hours actually worked as the claimant appears to suggest. 

As 5 CFR 531.604(a) makes clear, a locality rate is set on a per annum basis and under 5 CFR 531.607(a)(1), the applicable per annum locality rate is divided by 2,087 to derive an employee’s hourly locality rate, not by the number of hours worked by an employee in a year, as asserted by the claimant in his efforts to create an hourly rate of pay ensuring he would receive the full amount of capped pay in his locality pay area for 2013, i.e., $155,500.00.[4]  Thus, the claimant was properly paid for all hours worked in 2013 at the hourly rate of $74.51 under the  pay cap mandated by 5 U.S.C. § 5304(g)(1), divided by the 2087 hours stipulated in 5 CFR 531.607(a)(1).

The claimant states that because his hours were reduced by 48 hours in 2013 due to furlough,[5] the reduction in his pay allows a portion of his capped annual salary to be paid to him according to guidance on the OPM website.  He refers to the response to one of the questions in the "Guidance for Administrative Furloughs" issued by the OPM Pay and Leave office and posted on the OPM website.  However, this guidance concerns the biweekly cap on premium pay[6] rather than the annual locality pay cap, and therefore is not applicable to the claimant's situation.

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 the agency decision to deny the claim was made in accordance with established law and regulation, there is no basis upon which to reverse the decision.

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

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