Washington, DC
U.S. Office of Personnel Management
Compensation Claim Decision
Under section 3702 of title 31, United States Code
Commission
New York, New York
Damon B. Ford
Compensation and Leave Claims Program Manager
Agency Compliance and Evaluation
Merit System Accountability and Compliance
03/06/2018
Date
The claimant occupies a Program Analyst, GS-343-15, position with the Equal Employment Opportunity Commission (EEOC) in New York, New York. She seeks to correct the setting of her pay from step 7 to step 10 upon appointment to the GS-15 grade level, and to be granted back pay.
The claimant was previously employed as a Supervisory Program Analyst, SK-343-15, with the Securities and Exchange Commission (SEC) in New York, New York. When she resigned from the SEC, effective September 29, 2015, her basic pay was $121,449, with a locality adjustment of $37,333, for a total salary of $158,782. Upon appointment to the EEOC, the agency used the GS maximum payable rate (MPR) rule to set the claimant’s pay at the GS-15, step 7, rate with basic pay of $121,958, locality adjustment of $35,026, for a total salary of $156,984.
As provided for by section 531.221(a) of title 5, Code of Federal Regulations (CFR), the MPR rule allows an agency to set pay for a GS employee above the rate that would be established using normal rules, based on a higher rate of pay the employee previously received in another Federal job; i.e., his or her highest previous rate (HPR). The MPR rule may be used for various pay actions including reemployment, transfer, reassignment, promotion, demotion, change in appointment type, and movement from a non-GS pay system. The pay set under the MPR rule may not exceed the rate for step 10 of the GS grade of the position in which the employee is being placed or be less than the rate to which the employee would be entitled under normal pay-setting rules.
In its June 15, 2016, decision, the agency explains its consideration of the claimant’s HPR from the SEC to determine the MPR, as follows:
The process used to set your pay involved matching your basic pay at the time of your separation from SEC on September 29, 2015 of $121,449 with the basic pay of a GS-15. The new basic pay on the [GS] was $123,178 which equates to a GS-15, step 7. Once the basic pay is established, we converted this pay to the salary table that includes locality pay. Given that your duty station is New York, New York, this will establish your adjusted pay to $159,146.
The agency further explains in its administrative report to OPM:
[EEOC] carefully reviewed all documentations and has determined that the GS-15, step 7 is accurate and in compliance with the 5 CFR 531.221. The 5 CFR 531.221 (d) (1)(2) states “When an employee’s highest previous rate is based on a rate of “basis” [sic] pay in a non-GS pay system, the agency must determine the maximum payable rate of basic pay that may be paid to the employee in his or her current GS position of record.” EEOC used [the claimant's] SEC base pay of $121,449 and determined the [MPR] of basic pay at the $121,958 which is the 2015 GS base salary for GS-15, step 7. The determination was made based on [the claimant's] losing and gaining positions and making the conversion at the GS-15, step 7.
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Without official SEC documents to support if [the claimant's] grade is equivalent to the GS-14 or GS-15, EEOC made its own determination on [the claimant's] grade by using the 5 CFR 531.221 and the 5 CFR Subpart F – Locality-Based Comparability Payments. When EEOC did the conversion, [the claimant's] total compensation came to $156,984, a $1,798 reduction. EEOC cannot apply the SEC locality rate of 30.74% and must apply the GS locality rate of 28.72% which is provided by OPM to Federal Agencies as outlined in the 5 CFR 531.603 (b) (32) and 5 CFR 531.604.
Because the claimant’s SEC rate is under a non-GS pay system, the provisions applicable to determine her MPR are 5 CFR 531.221(d), which state:
When an employee’s [HPR] (as provided in §531.222) is based on a rate of basic pay in a non-GS pay system, the agency must determine the [MPR] of basic pay that may be paid to the employee in his or her current GS position of record… [Emphasis added]
The EEOC determined the claimant’s HPR using $121,449 as the “basic pay” identified by the Standard Form 50, dated September 29, 2015, documenting the claimant’s resignation from the SEC. However, the HPR is to be based on a “rate of basic pay” as defined in 5 CFR 531.203 as:
…the rate of pay fixed by law or administrative action for the position held by a GS employee before any deductions, including a GS rate, [a law enforcement officer] special base rate, a special rate, a locality rate, and a retained rate, but exclusive of additional pay of any other kind. For the purpose of applying the [MPR] rules in §§531.216 and 531.221 using a rate under a non-GS pay system as an employee’s [HPR], rate of basic pay means a rate of pay under other legal authority which is equivalent to a rate of basic pay for GS employees, as described in this definition, excluding a rate under §531.223.
The definitions provided in 5 CFR 531.203 explain the terms used in 5 CFR part 531, subpart B, which includes the MPR rule in 5 CFR 531.221. Based on the “rate of basic pay” definition of 5 CFR 531.203, it is evident the non-GS rate of basic pay is intended to include a locality rate if applicable. The claimant’s SEC HPR is $158,782 (total of basic pay and locality adjustment), and not the $121,449 identified by EEOC. Since this SEC rate is under a non-GS pay system, provisions under 5 CFR 531.221(d) (in addition to the implementing instructions provided by OPM for pay administration guidance found at /policy-data-oversight/pay-leave/pay-administration/fact-sheets/maximum-payable-rate-rule/) are applied to determine MPR as follows:
Step A: Compare the HPR to the highest applicable rate range in effect at the time and place where the HPR was earned. The highest applicable rate range is determined as if the employee held the current GS position of record (including the grade in which pay is being set) at that time and place. The term “highest applicable rate range” is defined in 5 CFR 531.203 and includes a locality rate or special rate range.
Since the claimant’s SEC rate was earned in 2015, the highest applicable rate range for comparison is the GS-15 rate range on Salary Table 2015-NY (locality pay area of New York-Newark-Bridgeport, NY-NJ-CT-PA) (NY locality pay table).
Step B: Identify the lowest step rate in that range that was equal to or higher than the HPR (or the step 10 rate if the HPR exceeded the range maximum).
As restricted by section 5304(g)(1) of title 5, United States Code (U.S.C.), locality-based comparability payments may not be paid at a rate which would cause the total to exceed the rate of basic pay payable for level IV of the Executive Schedule (EX-IV). In 2015, the rate for EX-IV was $158,700. The GS-15 rate range on the 2015 NY locality pay table was capped at steps 8-10 at $158,700.
In 2015, the NY locality payment was 28.72%. Increasing the base GS-15, step 8, rate of $125,346 by 28.72% would result in $161,345. Thus, the GS-15, step 8, on the 2015 NY locality pay table would have been the lowest step in that range that was equal to or higher than the SEC HPR notwithstanding the 5 U.S.C. 5304(g)(1) locality pay caps.
Step C: Convert the step rate identified in step B to a corresponding rate (same step) on the current highest applicable rate range for the employee’s current GS position of record and official worksite. That step rate is the employee’s MPR of basic pay.
No conversion is required.
Step D: After setting the employee's rate of basic pay in the current highest applicable rate range (not to exceed the MPR identified in step C), determine any underlying rate of basic pay to which the employee is entitled at the determined step rate.
The underlying rate of basic pay at step 8 from the 2015 General Schedule is $125,346.
The maximum rate of pay the claimant could have been offered by the EEOC based on her SEC rate was GS-15, step 8 ($158,700).
Each agency is permitted to formulate its own policy regarding application of the MPR rule. B-186554, December 28, 1976. Where an agency has not relinquished that discretion through adoption of a mandatory policy or administrative regulation, the agency is under no obligation to set an employee’s pay at the MPR. At OPM’s request for agency policies applicable to the claimant’s situation, the EEOC forwarded an October 1, 1979, memorandum titled “General Agency Pay-Fixing Policy,” which instructs:
When an employee moves into a position by any means other than an initial appointment to the Federal Government, Chapter 531 of the Federal Personnel Manual provides authority to pay the employee at any rate for the grade that does not exceed his or her [HPR] earned as an employee of the Federal Government. If the highest previous rate falls between two rates of the new grade, the employee may be paid at the higher rate. Although this provision is presented as an option to agencies, it has been and continues to be the policy of EEOC to use the [HPR] in setting salaries of any new employee to whom the provisions apply.
Since the claimant states in her initial claim to OPM that she was previously employed with EEOC and subsequently with SEC prior to her “rejoin[ing]” the EEOC, her appointment to the excepted service with EEOC on September 30, 2015, cannot be characterized as an “initial appointment to the Federal Government” identified as the exception to the agency’s use of HPR. We thus conclude the agency’s pay-setting policy requires application of the GS HPR under the MPR rule in the claimant’s situation.
Relevant to the claimant’s situation, 5 CFR 531.221(a) states:
A payable rate set under this section must take effect on the effective date of the action involved. This section may not be used to set an employee’s rate of basic pay retroactively unless a retroactive action is required to comply with a nondiscretionary agency policy.
Since EEOC adopted a mandatory policy regarding HPR, a retroactive action under 5 CFR 531.221(a) is required to have the claimant’s pay set at the maximum rate of pay (GS-15, step 8) that should have been offered by EEOC based on her SEC rate. Accordingly, the agency is directed to correct the claimant’s rate of pay for the subject appointment action and any subsequent actions affected. The claimant is also owed back pay with interest computed under 5 U.S.C. 5596 and 5 CFR part 550, subpart H. If the claimant believes the agency has computed the amount incorrectly, she may file a new claim with this office.
This settlement is final. No further administrative review is available with OPM. Nothing in this settlement limits the claimant’s right to bring an action in an appropriate United States court.