Washington, DC

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

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Damon B. Ford
Compensation and Leave Claims
Program Manager
Agency Compliance and Evaluation
Merit System Accountability and Compliance


04/02/2019

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Date

The claimant is a Federal civilian employee of the Naval Supply Systems Command (NAVSUP) Fleet Logistic Center (FLC), Department of the Navy (Navy), in Manama, Bahrain.  She seeks a relocation incentive in the amount of $27,441, instead of the $18,294, as determined by her agency.  We received the claim on April 3, 2018, and the agency administrative report (AAR) on September 21, 2018.  For the reasons discussed herein, the claim is denied.

On April 13, 2017, the Executive Director of NAVSUP FLC Bahrain signed a Relocation Bonus Service Agreement offering a relocation bonus to the claimant, which the employee signed on April 19, 2017.  As required by title 5, Code of Federal Regulations (CFR) section 575.210, on July 2, 2017, the claimant signed a revised written Relocation Bonus Service Agreement, which among other things, specified the claimant would receive a relocation incentive equivalent to 25% of the candidate’s base salary to be paid to the claimant in bi-weekly installments.

In the remarks section (i.e., section 45) of the claimant’s relocation incentive Standard Form 50 dated October 15, 2017, the Navy determined the total amount of the relocation incentive to be $18,294, or 25 percent of a year’s basic salary ($73,177.00 x 25%) to be paid to the claimant in 38 incremental payments over the course of the agreed 18 month service period, specifically from June 12, 2017, to December 12, 2018.

The claimant believes her agency did not follow statutory and regulatory guidance in calculating her relocation incentive.  She asserts that 5 CFR 575.209(b)(1) provides a formula for determining relocation incentives, i.e., base salary ($73,177) x 25% ($18,294) x 1.5 years = total relocation bonus ($27,441).

Therefore, she concludes the relocation incentive of $18,294 specified by the agency only equates to 2/3 of the total amount of the relocation incentive she is entitled to for the 18 month service agreement because it was;

“…just one year’s worth of 25%, not a year-and-a-half’s worth as I [she] had expected.”

In its AAR, the agency responds to the claim as follows:

“…The statue and regulation do not contain a formula that an agency must use to determine the amount of the relocation incentive.  Rather, they contain a formula that tells the agency the maximum amount that it may not exceed when paying an employee a relocation incentive.  One need only read the rule as a whole to see this.  In both U.S.C. § 5753(d)( l ) and 5 C.F.R. §575.209(b)( l ), there is no comma or other break in the clause that follows the “shall or may not exceed” language that would indicate that this clause applied to only the one factor of the formula that follows.  Rather, it is clear from reading the sentence as a whole that the rule is that the product that one arrives at when one calculates the entire formula shall not exceed the maximum allowable amount.”

and,

“…The Relocation Bonus Service Agreement between the employee [claimant] and NAVSUPFLC Bahrain, establishes the existence and amount of the relocation incentive.  It does not state the dollar amount of the incentive; it states the employee would receive “a relocation bonus of 25%.”  The length of the service agreement was not included in the sentence describing the amount of the relocation bonus…”

and,

“…the internal NAVFAC FLC document executed on July 2, 2017, contains only language promising “25% of the candidate’s base salary” as a relocation bonus.  The most reasonable way to read these documents is as they are written: that the employee will receive a bonus of 25 percent and that the employee agrees to complete a period of 18 months to receive the bonus.  Further, because the relocation incentive amount , 25 percent, was not modified or further defined in the document, it was reasonable for the Navy to use the commonly accepted time period of describing salary (i.e., one year) and interpret the documents as granting a relocation incentive based on 25 percent of on year’s basic pay."

Chapter 57, subchapter IV, of title 5, United States Code (U.S.C.), and 5 CFR part 575, subpart B, establish the conditions for, and authorize the payment of relocation bonuses to eligible Federal employees.

Specifically, 5 CFR 575.209, in relevant part, provides as follows:

(b)(1) Except as provided in paragraph (c) of this section, the total amount of relocation incentive payments paid to an employee in a service period may not exceed 25 percent of the annual rate of basic pay of the employee at the beginning of the service period multiplied by the number of years (including fractions of a year) in the service period (not to exceed 4 years).

(c)(1) An authorized agency official may request that OPM waive the limitation in paragraph (b)(1) of this section for an employee based on a critical agency need…[1]

In accordance with 5 CFR 575.209, Navy issued implementing guidance in NAVSUP Instructions 12575.1, dated November 18, 2002.  Section C, “Relocation Bonus” states in relevant part:

Payment of Bonuses.  A relocation bonus shall be calculated as a percentage of the employee’s rate of basic pay.  The bonus shall be the minimum necessary to meet the activity’s requirement and shall in no event exceed 25 percent of basic pay.  It will be paid in the same manner and at the same time as basic pay (biweekly).  The total compensation amount for the calendar year, including the allowance, cannot exceed the aggregate limitation of pay.  The aggregate limitation on pay is the combination of regular salaries plus any overtime pay, bonus pay, cost of living pay, etc., which cannot exceed level 1 of the Executive schedule.  Allowances shall not be considered as part of an employee’s rate of basic pay for any purpose.

The claimant’s interpretation of 5 CFR 575.209(b)(1), would require her agency to multiply the 25 percent (of basic pay) by 1.5 (the number of years in the service period) to calculate her relocation incentive.  However, section 575.209(b)(1) effectively provides a calculation method for the maximum incentive amount that may be offered and paid to an employee as a relocation incentive.  It does not provide that a payment must be multiplied by the numbers of years in the service period in order to calculate an incentive amount.  This is a misreading and misinterpretation of the regulation.  The words in the regulation “the total amount of relocation incentive payments paid…may not exceed…” make clear that the section provides for calculating a maximum incentive amount.  See OPM File Number 16-0003, March 2, 2017.  Therefore, that the claimant misinterprets 5 CFR 575.209(b)(1) to mean the incentive should have been 25 percent of her basic pay multiplied by 1.5 years does not require the Navy to pay that amount.

We find the agency’s decision to grant $18,294 as a relocation incentive complies with 5 CFR 575.209(b)(1) in that the amount does not exceed the maximum incentive amount payable [2].

Whereas, in this case, the agency’s determination is reasonable, we will not substitute our judgment for that of the agency.  See, e.g., Jimmie D. Brewer, B-205452, Mar. 15, 1982, as cited in Philip M. Brey, B-261517, December 26, 1995.  We are, therefore, unable to find a basis for disturbing the agency’s decision and this claim is denied.

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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