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National Treasury Employees Union v. Horner

Decided: March 7, 1989.


Appealed from: United States District Court for the District of Columbia.

Friedman, Newman and Archer, Circuit Judges.


ARCHER, Circuit Judge.

Constance Horner, Director of the Office of Personnel Management (OPM), appeals the summary judgment of the United States District Court for the District of Columbia, Nos. 83-0279 and 83-0526 (D.D.C. March 13, 1987), in favor of plaintiffs, holding that OPM unlawfully denied certain special rate employees of the federal government an annual pay adjustment to which they were entitled pursuant to 5 U.S.C. §§ 5303(d) and 5305 (1982). The Patent Office Professional Association, Sarah A. Lechok and Peter Martine (POPA) cross-appeal from the judgment of the district court that the disparity between the salary rates for special rate engineers working in the United States Patent and Trademark Office and special rate engineers working in other branches of the government is not unlawful.


Most civilian, white collar federal employees are paid in accordance with the statutory pay rates of the General Schedule (GS) which apply uniformly on a nationwide basis. When the President finds that pay rates in private enterprise are substantially above the GS rates and significantly handicap the government's recruitment or retention of well-qualified employees, he may, under 5 U.S.C. § 5303, set higher rates of pay for such employees. They are termed special rate employees.

Under 5 U.S.C. § 5305(a)(2) the President must annually "adjust the rates of pay of each statutory pay system in accordance with the principles under section 5301(a)" which in part provides that federal pay rates should be comparable with private enterprise pay rates for the same levels of work. If the President considers it inappropriate to make the pay adjustments prescribed by section 5305(a) because of national emergency or economic conditions, he may submit an "alternative plan with respect to a pay adjustment." 5 U.S.C. § 5305(c)(1).

OPM's appeal concerns the extent to which the pay adjustments under section 5305 affect special rate employees. In this regard, 5 U.S.C. § 5303(d) provides:

The rate of basic pay established under this section and received by an individual immediately before a statutory increase, which becomes effective prior to, on, or after the date of enactment of the statute, in the pay schedule applicable to such individual of any pay system specified in subsection (a) of this section, shall be initially adjusted, effective on the effective date of the statutory increase, under conversion rules prescribed by the President or by such agency as the President may designate.

Prior to 1982, the OPM regulation prescribed an increase in the special rates when the GS rates were raised under § 5305, but only "to the nearest rate in the new pay schedule which does not result in a decrease." 5 C.F.R. § 530.307(a) (1982). In 1982, this regulation was amended to provide that a revision in the GS rates "will have no effect on special salary rate schedules." 47 Fed. Reg. 42549 (1982) (codified at 5 C.F.R. § 530.307(a) (1983)).

NTEU and POPA filed separate actions, later consolidated in the United States District Court for the District of Columbia asserting that special rate employees must have their pay adjusted if there is an increase in regular pay rates under 5 U.S.C. § 5305. The plaintiffs contended that the failure of OPM to make automatic adjustments in special rates at the time of the October 1982 and January 1984 GS pay raises violated 5 U.S.C. § 5303(d) and that to the extent 5 C.F.R. § 530.307(a), as amended, permits the withholding of these pay increases, that regulation is invalid.

The district court in granting summary judgment to the plaintiffs on this issue, held:

All parties agree that special salary rate employees cannot ride two income escalators and receive a special schedule revision in addition to a general statutory increase. In the other extreme nothing in the legislative history reflects [OPM's] position that an increase in the statutory pay schedule would have no effect on the special salary pay rates. The plain language of section 5303(d) controverts this conclusion. Further, if Congress wanted the statutory pay increase to have no effect on special salary rates then the language could easily have stated such an intent.

Slip op. at 9.

The court went on to conclude that because "section 5303(d) states unequivocably [sic] that the special rate employee's basic pay 'shall' be adjusted under conversion rules . . . Congress intended that a change in the statutory pay schedule would affect the special pay rate schedules." Id. at 9-10. Further, according to the district court,

the conversion formulas referred to in section 5303(d) were meant to adjust special salary pay rates so that there would be an increase for that year in an amount at least equal to the increase given under section 5305.

Id. at 10. In further explanation of its ruling, the district court in footnote 4 to its opinion said:

4. By this conclusion a pay raise to the regular statutory system does not mandate a raise to the special rate if for instance the special salary rate has been already increased that year by an amount equal to or more than the general increase.

Id. at 14.

POPA, which represents special rate engineers employed by the United States Patent and Trademark Office (Patent Office engineers or patent engineers), further contended in the district court that special rate Patent Office engineers are entitled to salaries comparable to the salaries of other ...

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