Washington, DC
U.S. Office of Personnel Management
Compensation Claim Decision
Under section 3702 of title 31, United States Code
Naples, Italy
Damon B. Ford
Compensation and Leave Claims Program Manager
Agency Compliance and Evaluation
Merit System Accountability and Compliance
09/24/2024
Date
The claimant is a Federal civilian employee of the U.S. Department of the Navy (DON), in Naples, Italy. He requests the U.S. Office of Personnel Management (OPM) reconsider his employing agency’s denial of living quarters allowance (LQA). We received the claimant’s request on May 14, 2023, and the agency administrative report (AAR) on May 30, 2023. For the reasons discussed herein, the claim is denied.
On March 3, 2022, the claimant was ordered to report to Naples, Italy for active duty service as a military reservist with the Navy, as evidenced by his DD Form 214, Certificate of Release or Discharge From Active Duty, showing his place of entry into active duty as Olympia, Washington. While residing in Italy, he applied for the position of Program Analyst, GS-0343-13 with the agency between the job announcement open period of May 20, 2022, to May 26, 2022. The claimant completed 175 days of active duty military service on September 6, 2022. The agency asserts that after completion of his required service on September 6, 2022, the claimant used his military return transportation entitlement to return to the United States. The claimant received the tentative job offer for the position on December 21, 2022. The agency determined the claimant ineligible for LQA on February 13, 2023. Navy reserve orders included in the record show the claimant was ordered to report to Norfolk, Virginia for active duty training during the period of November 13, 2022, to March 2, 2023, and then again to active duty service in Wiesbaden, Germany, during the period of March 15, 2023, to September 11, 2023. The claimant was subsequently appointed to his position effective November 5, 2023.
In its decision dated March 20, 2023, the agency explains the claimant was determined ineligible for LQA because he did not meet the requirements of the Department of State Standardized Regulations (DSSR) section 031.11 for employees recruited in the United States, in connection with the definition of “U.S. hire” in the Department of Defense Instruction (DoDI) 1400.25, V1250, and criteria in paragraph 1.a. of the Under Secretary of Defense New LQA Guidance dated February 23, 2018, as it relates to U.S. hires and temporary absences from the United States. Specifically, the agency determined the claimant could not be considered a “U.S. hire” because he was not physically residing in the United States when he applied for the position or on a temporary duty (TDY) assignment overseas of a clearly short duration up to 90 days. The agency further notes that the claimant’s orders “funded a Permanent change of Station Allowances to Italy.” Thus, the agency states the claimant’s ineligibility falls under paragraph 2.b. of the new LQA guidance, which states that applicants, including deployed or mobilized military reservist, who applied for a position while in a foreign area (including a combat zone) and then transition back to the United States during the recruitment process are ineligible for LQA as U.S. hires under DSSR section 031.11.
The claimant was also determined ineligible for LQA under DSSR section 031.12, for employees recruited outside the United States because he did not meet the requirements of section 031.12b. The agency explains its decision as follows:
…. Based on the documentation submitted, you meet the conditions of 031.12a. However, you failed to meet the conditions of 031.12b. Even though you were recruited in the United States by the Armed Forces prior to the appointment, you did not maintain continuous employment by such employer. Your employment was terminated in September 2022 when you utilized transportation to return to the United States. Both references (b) [DoDI 1400.25, Vol. 1250 dated February 23, 2012]and (d)[Deputy Assistance Secretary of the Navy Memo “Use of Return Transportation and Living Quarters Allowance Eligibility” dated March 20, 2017], clearly state that if the return transportation entitlement or any portion of it is used, the employee can no longer be considered “substantially continuously employed” and would not qualify for LQA under DSSR section 031.12.
The claimant disagrees with the agency determination to deny the LQA under DSSR section 031.11. He states that the agency’s decision “included errors in methodology with regard to determining residency and non-temporary status.” To support his eligibility for LQA under DSSR section 031.11, he states his initial military orders to Naples, Italy were for 62 days which were extended due to mission requirements, but he remained in a TDY status. Furthermore, in response to the agency’s statement that he was authorized a PCS to Italy, he explains that at the time his orders were modified, an oversight was made, incorrectly noting he was authorized a PCS.[1] Additionally, the claimant states, “My orders were written leaving and returning to my permanent place of residence. I have maintained my residence in Washington State for the past eight years and have not conducted a Permanent Change of Station (PCS) move away from it.” Regarding his ineligibility as an employee recruited outside the United States under DSSR section 031.12, the claimant does not address the agency’s determination that he fails to meet criteria under DSSR section 031.12b.
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. Thus, agency implementing regulations such as those contained in DoDI 1400.25, Volume 1250, may impose additional requirements to further restrict LQA eligibility, but may not exceed the scope of the DSSR; i.e., allow for the granting of LQA in cases not otherwise permitted under the DSSR. Therefore, an LQA applicant must fully meet the relevant provisions of the DSSR before the supplemental requirements of the DoDI or other agency implementing guidance may be applied.
DSSR section 031.11 states LQA may be granted to employees recruited in the United States:
Quarters allowances prescribed in Chapter 100 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.
Relative to these criteria, DoDI 1400.25 V1250 defines “U.S. hire” as follows:
A person who physically resided permanently in the United States or the Commonwealth of 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.
The agency also adheres to specific LQA guidance outlined in the Under Secretary of Defense memorandum, dated January 3, 2018. It states U.S. hires include:
a. Employees on temporary duty (TDY) orders (or the private sector equivalent) of a clearly short duration, up to 90 days, for any portion of the recruitment process who otherwise occupy a position at a United States duty station, reside permanently in the United States, and are expected to return to their United States duty station at the conclusion of the TDY assignment.
An employee’s status as a U.S. hire is based on physical residency at the time of recruitment for the position in question. Therefore, an employee must be physically residing in the United States for the entire recruitment period, i.e., from the time of application until acceptance of a formal job offer. As a result, whether an employee is deemed to be recruited in or outside the United States is dependent on the location of the employee when recruited, not on the existence of a legal residence at some place other than where the employee is located at that time. Therefore, the claimant’s maintenance of a permanent residence in the state of Washington has no bearing on his LQA eligibility. In this case, the claimant was physically residing in Italy as opposed to the United States when he applied for his Federal civilian position with DON, thus he was not in the United States during the entire recruitment period. Further, the claimant’s absence from the United States resulting from his TDY assignment was for 175 days, thus inconsistent with that of a TDY assignment of a clearly short duration of up to 90 days as established by the agency’s new LQA guidance. Therefore, the claimant may not be considered a U.S. hire for LQA purposes under DSSR section 031.11, implementing regulations of the DoDI, and agency LQA guidance dated January 3, 2018. Consequently, he is ineligible for LQA under section 031.11 of the DSSR.
DSSR section 031.12 states, in relevant part, that LQA may be granted to employees recruited outside the United States provided that:
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. [Italics added.]
Relative to these criteria, DoDI 1400.25-V1250, defines “substantially continuous employment” as follows:
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.
The claimant meets DSSR section 031.12a because his presence in Italy is attributable to his employment with the DON. However, the claimant must also meet all the requirements specified in DSSR section 031.12b to be considered eligible for LQA. There is no dispute that prior to appointment, the claimant was recruited in the United States by a qualifying employer, the U.S. Armed Forces (Navy) as required by DSSR section 031.12b. However, as confirmed by the claimant in an email dated January 4, 2023, to the agency’s Human Resources Officer, he “returned to the US on 06 September and came off of active duty.” Further, the claimant does not provide information or documentation to contradict the agency’s assertion that he used his military return transportation entitlement to return to the United States at the conclusion of his military assignment. Therefore, once the claimant used his military transportation entitlement to return to the United States, he would no longer be considered to have “substantially continuous employment” by such employer under conditions which provided for his return transportation to the United States as required by the DoDI and consistent to the provisions of DSSR section 031.12b. Consequently, he is also ineligible for LQA under section 031.12 of the DSSR.
DoDI 1400.25-V1250 specifies that overseas allowances are not automatic salary supplements, nor are they entitlements. Furthermore, 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 OPM. Nothing in this settlement limits the claimant’s right to bring an action in an appropriate United States court.
[1] Whether or not the claimant’s orders authorized a PCS to Italy does not affect our claim decision. As later discussed, the claimant is ineligible for LQA because he may not be considered a U.S. hire under DSSR section 031.11 and supplemental agency LQA guidance.