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OPM Contact: Murray M. Meeker
On September 22, 1997, an employee at the [agency] in [xxx]
requested a ruling concerning the applicability of the so-called
"highest previous rate" rule, 5 C.F.R. 531.202, when
setting the pay of an employee who is being promoted from a
position in the Federal Wage System (WS) to a position in the
General Schedule (GS).
The establishment of an employee's rate of pay under the General
Schedule is governed by 5 U.S.C. 5334 and regulations issued by the
Office of Personnel Management and published in Subpart B, Part 531
of title 5, Code of Federal Regulations. In accordance with these
provisions, each employing agency has discretion to formulate its
own policies regarding the application of the highest previous rate
rule. See Donald R. Rutt, B-247265, June
5, 1992; Jean M. Drummond,
B-229165, Aug. 8, 1988; and Carma
A. Thomas, B-212833, June 4, 1984.
The employee reported that his highest previous grade level had
been WS-15, step 4; that he was subsequently employed at WS-10,
step 00, earning $23.90 per hour (while on grade retention from a
WS-14, step 5, position); and that on September 15, 1996, while
still on grade retention, he had been promoted from the WS-10, step
00, position to a GS-12 position. The employee reported further
that while his pay was initially set at GS-12, step 9, based on his
highest previous grade level of WS-15, step 4, and the receipt of
an equivalent increase, his servicing Human Resources Office at the
Shipyard had subsequently been directed to reset his pay to be
equivalent to the highest dollar amount that he had ever received,
i.e., at GS-12, step 8.
The Shipyard confirmed that it had set the employee's pay in
accordance with directions that it had received from the Department
of Defense, Defense Civilian Personnel Management Service, Field
Adsvisory Services (FAS), which directed the Shipyard to set the
employee's pay at the step that was equivalent to the highest
dollar amount that the employee had ever received, notwithstanding
that a higher step would have been used if the employee had been
promoted from a GS position.
OPM concludes that the employee's pay has been lawfully set and
that the "highest previous rate" rule does not mandate that the
employee's pay be set at a higher step. The Supreme Court has held
that the Government may apply different rules when setting the pay
for employees promoted to GS positions from WS positions as
compared with the rules used to set the pay for employees who have
been promoted from GS positions. United States v. Clark, 454 U.S. 555, 556
It is, moreover, well established that the "highest previous
rate" rule is not an entitlement. Milton Morvitz, B-192562, June
11, 1979. Indeed, an employee has no vested right to receive the
highest salary rate previously paid to him; an agency may exercise
its discretion not to set an employee's salary at the employee's
highest previous rate. See
5 C.F.R. 531.203(c) (the "highest previous rate" rule
may be used to set an employee's pay); Doris M. Arehart-Zuidema,
B-223356, August 21, 1987; and Michael F. Richardson, B-140790,
November 13, 1959.
Where internal administrative regulations restrict usage of the
highest previous rate rule and an employee's salary has been
erroneously set without regard to those restrictions, a retroactive
adjustment to lower the employee's pay rate is proper. 51 Comp.
Gen. 30 (1971). We find no evidence that by setting the employee's
pay in accordance with the directions that the [xxx] received from
[agency], there was an abuse of administrative discretion. See Rutt, supra, and Morvitz, supra. Accordingly, we find that
the employee is not entitled to have his pay set at a higher