Washington, DC
U.S. Office of Personnel Management
Compensation Claim Decision
Under section 3702 of title 31, United States Code
Diego Garcia Island, British Indian
Ocean Territory
Damon B. Ford
Compensation and Leave Claims
Program Manager
Agency Compliance and Evaluation
Merit System Accountability and Compliance
07/20/2021
Date
The claimant was a foreign national (FN) employee with the Naval Supply Systems Command on Diego Garcia Island, British Indian Ocean Territory. He requests the U.S. Office of Personnel Management (OPM) direct his former employer to provide him with $13,677.11 in back pay due to salary underpayment. Specifically, he states his agency failed to apply the correct currency exchange rate when making the Philippine peso and U.S. dollar conversion to his salary, resulting in its underpayment from January 1, 2011, to May 31, 2014. We received his claim on May 31, 2016, and accepted it on November 16, 2019. We received the agency administrative report on June 9, 2020. For reasons discussed herein, the claim is denied.
The claimant was assigned to the Diego Garcia Island, British Indian Ocean Territory from October 26, 2009, to October 23, 2015, while employed as a FN employee with the Naval Supply Systems Command. On December 22, 2010, former President Barack Obama signed legislation to prohibit statutory pay adjustments for most Federal civilian employees that would have otherwise taken effect in 2011 and 2012. The pay freeze statute prohibited statutory pay adjustments including across-the-board adjustments under section 5303 of title 5, United States Code (U.S.C.), locality pay adjustments under 5 U.S.C. 5304 or 5304a, prevailing rate adjustments under 5 U.S.C. 5343(a), and any similar pay adjustments required by statute with respect to covered employees in an Executive agency. President Obama also issued a memorandum which directed OPM to issue guidance on implementing the pay freeze. OPM provided the guidance via CPM 2010-24, dated December 30, 2010, Subject: Freeze on Pay Adjustments for Federal Civilian Employees.
On March 26, 2013, President Obama signed legislation to continue the freeze on statutory pay adjustments for most Federal civilian employees until December 31, 2013. Consistent with the Act, the President issued a memorandum on April 5, 2013, stating that any increase in pay systems or pay schedules covering executive branch employees or any general increases in covered employees’ rates of pay that could otherwise take effect as a result of the exercise of administrative discretion should not be made until after December 31, 2013. The President directed OPM to issue any necessary guidance on implementing the memorandum, which OPM did in CPM 2013-05, dated April 5, 2013, Subject: Continued Freeze on Pay Adjustments for Federal Civilian Employees. It stated that agencies should continue to apply the guidance in CPM 2010-24.
To support his assertion that the agency applied the incorrect currency exchange rate when making the peso and dollar conversion to his salary from 2011 to 2014, the claimant states his agency failed to comply with OPM’s memorandum. Attachment 3 of CPM 2010-24 provides the following exclusion from the two-year pay freeze:
Adjustments in foreign areas to maintain a constant salary rate in U.S. dollars or local currency or to respond to foreign labor laws are not affected by the pay freeze.
In addition, the claimant submitted a document, apparently drafted by him, titled “Point Paper – Payment of Back Wages Due,” asserting that from January 2011 to May 2014, FN employees failed to receive the correct salary compensation in Philippine pesos when converted to U.S. dollars. The point paper includes a worksheet to show calculations based on the stated currency exchange rate for the timeframe specified and the resulting differences in salary due to him. The claimant also provided a copy of the Diego Garcia Offshore Philippine General Schedule (OG) annual pay schedule, issued July 4, 2010, which identifies the dollar-to-peso conversion rate of $1 to 46.42 Philippine pesos. The point paper states, “Because of [the Offshore Labor Agreement between U.S. and R.P.] requirement that wages shall be paid in U.S. dollar, the peso salary is converted using P46.42 exchange rate as of the issuance date of the salary schedule.” In addition, the claimant provided the May 30, 2014, memorandum which provided the Diego Garcia Offshore Philippine General Schedule (OG) annual pay schedule, issued June 1, 2014. The memorandum states:
This schedule contains the same Philippine peso rates as [COMPACFLT ltr 12500 Ser N1CP/0680 of 08 Jul 10], but removes the U.S. dollar rates and static dollar/peso exchange rate. In order to remain consistent with [USPACOMINST 0201.1 J133 of 24 Aug 05] provision that remittances to employees in offshore employment shall be paid in U.S. dollars, current exchange rates should be used.
We also note the memorandum states, “Enclosure (1) of [COMPACFLT ltr 12500 Ser N1CP/0680 of 08 Jul 10] is cancelled and superseded.” The record thus shows the agency adopted an actual currency exchange rate of $1 to 46.42 Philippine pesos from July 4, 2010, to May 31, 2014.
The agency denied the claimant’s request for additional compensation stating that in accordance with the United States Pacific Command (USPACOM) Instruction 0201.1, “the sole authority to authorize a change to [FN] compensation for Diego Garcia FN direct hire employees is held by the PACOM Joint Labor Affairs Committee [(JLAC)].” The agency decision further explains:
Proposals by USPACOM Service Component Commanders to change FN compensation must be forwarded to USPACOM for Joint-Service review and coordination. An element of this review and coordination requires a legal review to validate compliance with all applicable laws and regulations to include the appropriations laws for the subject period.
In its October 2019 decision, the agency explains the pay freeze involving FN employees as follows:
During U.S. fiscal years (FY) 2011-2013, the U.S. Government authorized a zero percent (0%) increase for civilian service employees. The 2011-2013 Appropriations Acts specifically stated “salary increases granted to direct and indirect hire [FN] employees of the Department of Defense [(DOD)] funded by this Act shall not be at a rate in excess of the percentage increase authorized by law for civilian employees of the [DOD].” OPM guidance though considered, cannot override U.S. law. As a result, pay increases for the Diego Garcia FN direct hire employees were not authorized during FY 2011-2013. Accordingly, no changes were made to the applicable pay schedules to include the effective exchange rate.
USPACOM INSTRUCTION 0201.1, dated August 24, 2005, prescribes policy for the administration of FN civilian employees in USPACOM foreign areas. Paragraph 8. Joint Council/Committees, provides in pertinent part:
- An area JLAC will be established by the subordinate unified commander or [U.S. Defense Representatives (USDR)] for countries/foreign areas where two or more of the Services employ FNs. The JLAC will serve as the medium through which In-country Service component commanders coordinate the development of FN personnel policies, coordinate the plans for implementing approved policies, coordinate negotiations with employee unions, coordinate plans for wage and other surveys, recommend compensation schedules and conditions of employment, and otherwise coordinate the administration of a uniform personnel system within the country or area. Each JLAC will operate under and be responsible to the Subordinate Unified Commander or USDR.
As an initial matter, an examination of USPACOM INSTRUCTION 0201.1 makes clear that the JLAC is an established authority sharing joint responsibility to approve compensation matters for FN employees assigned to Diego Garcia Island. Therefore, any adjustment to the claimant’s compensation must have been coordinated with and approved by the JLAC. The information presented in the claim does not establish any such coordination and approval ever occurred. Therefore, since JLAC did not approve a compensation adjustment authorizing additional compensation based on pay increases or adjustments to the exchange rate for FN civilian employees in foreign areas, no such adjustment is payable.
OPM’s December 2010 memorandum, which excludes certain foreign area adjustments from the two-year pay freeze, must be read together with the pay freeze law, the President’s memorandum, and any other applicable laws and agency policies. In this instance, salary increases were not authorized under the appropriations laws applicable during the relevant period to FN DOD employees since any such increases were limited to no more than the increase authorized for General Schedule (GS) employees of DOD. See, e.g., Consolidated Appropriations Act, 2012, Pub. L. No. 112-74, sec. 8002 (“salary increases granted to direct and indirect hire foreign national employees of the Department of Defense funded by this Act shall not be at a rate in excess of the percentage increase authorized by law for civilian employees of the Department of Defense whose pay is computed under the provisions of section 5332 of title 5, United States Code”). Under the pay freeze law, no statutory pay increases were authorized for GS employees, including the civilian employees of DOD referenced under sec. 8002 of the appropriations act, during the relevant period. Thus, no salary increase was authorized for FN DOD employees. This is consistent with the pay freeze law, President’s memorandum, and OPM’s memorandum.
In addition, the OPM pay freeze guidance regarding the exclusion of certain pay adjustments in foreign areas does not authorize pay increases in foreign areas. Such increases are governed by applicable laws and agency policies, such as foreign labor laws or agreements. Rather, the referenced language in the OPM pay freeze guidance was included to recognize that adjustments in foreign areas to maintain a constant salary rate in U.S. dollars or local currency may be handled separately from pay adjustments to a salary schedule and to recognize that the United States Government must still abide by any foreign labor laws that apply in any country in which it operates. Therefore, the language regarding exclusion from the pay freeze law does not apply to authorize adjustments as asserted by claimant-- such adjustments must be made in accordance with the relevant laws and agency policies applicable to employees in foreign areas. The agency decision denying backpay was made in accordance with the relevant laws and agency policies. The claimant has failed to meet his burden of proof to establish the liability of the United States and his right to payment as required by section 178.105, of title 5, Code of Federal Regulations, and the 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.