Washington, DC

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

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Kimberly A. Steide, DPA
Principal Deputy Associate Director
Agency Compliance and Evaluation
Merit System Accountability and Compliance


04/08/2025

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Date

The claimant is a Federal civilian employee of the Directorate of Plans and Policies; Strategic Plans; Commander U.S. Forces, Japan; U.S. Department of the Navy (Navy), in Fussa, Japan. He requests the U.S. Office of Personnel Management (OPM) reconsider the agency’s denial of living quarters allowance (LQA). We received the claim on July 12, 2023, and the agency administrative report (AAR) on February 15, 2024. For the reasons discussed herein, the claim is denied.

Prior to December 2010, the claimant served simultaneously as an officer with the United States Air Force Reserves (USAFR) at Homestead Air Reserve Base, Florida, and as a Border Patrol Agent (BPA), GS-1896-12, with the U.S. Customs and Border Protection (USCBP).

In December 2010, the claimant received active-duty orders to report to the U.S. Army Garrison in Stuttgart, Germany, from December 15, 2010, through October 9, 2011, which included return transportation benefits to his home of record in Florida.

In October 2011, while still in Germany, the claimant extended his military service and reported for active duty to Yokota AB, Japan from October 10, 2011, through March 30, 2012, after which he returned to his BPA position with the USCBP in Germany.

In September 2012, while in Germany, the claimant received orders to report for active duty to Yokota AB in Japan from September 26 through October 8, 2012, for military training, after which the claimant returned to Germany.

On December 13, 2012, the claimant extended his military reserve service through April 26, 2013.

Sometime between December 2012, and March 2013, the claimant was recruited for a position as a Counter Narcotics Plans and Operations Specialist (CNPOS), GS-0301-13, with the U.S. Department of the Army (Army) in Germany. The claimant accepted Army’s job offer, terminated his BPA position with USCBP on March 23, 2013, and entered on duty (EOD) as a CNPOS with Army in Germany on March 24, 2013.

In May 2016, the claimant extended his military reserve service agreement and subsequently received orders to report for active duty to Yokota, Air Base, Japan from May 2, 2016, through April 30, 2017, after which he remained in Japan.

In June 2017, the claimant received active-duty orders to return to Yokota, AB, Japan from June 5, 2017, through June 17, 2017.

On June 23, 2017, the claimant officially separated from his CNPOS position with Army in Germany and took up residence in Japan.

In October 2017, the claimant was ordered to report for active duty at Yokota, AB, Japan from October 2, 2017, until March 30, 2018.

From July 30, 2018, through August 11, 2018, the claimant was ordered to active duty at Yokota AB, Japan.

From around September 2, 2018, until October 4, 2018, the claimant traveled outside of Japan, after which he returned to Japan.

From October 10, 2018, until April 5, 2019, the claimant was ordered to active duty at Yokota, AB, Japan.

Sometime between October 2018, and November 2018, the claimant was recruited for his current position as an International Relations Specialist (IRS), GS-0131-13, with the U.S. Department of the Navy (agency) in Fussa, Japan.

On November 8, 2018, the claimant accepted Navy’s offer of employment and entered on duty in his current position on January 13, 2020.

On November 27, 2018, 374th Logistics and Readiness Squadron issued a memorandum certifying that the claimant had not exercised his military transportation entitlements to return to the United States as of the date of the memorandum.

On February 4, 2019, the agency determined the claimant ineligible to receive LQA in his current position.

Between April 2019, and February 2023, the claimant twice requested Navy to reconsider his eligibility to receive LQA. However, in memos dated April 23, 2019, and February 23, 2023, the agency found the claimant ineligible to receive LQA in his current position.

In its AAR to OPM, Navy asserts the claimant did not meet basic eligibility requirements for LQA as a U.S. hire under the Department of State Standardized Regulations (DSSR), and the Department of Defense Instruction (DoDI); emphasized the agency’s discretionary authority with regard to granting LQA; and explained that LQA’s intended use was to be a recruitment incentive for US civilian employees, who are residing in the United States, to accept Federal employment in a foreign area. The Navy (agency) states, in relevant part:

… On 4 February 2019, [claimant] was issued an eligibility determination for overseas allowances via email from USA Staffing, enclosure (1). This email stated that based upon your situation and the documents you had provided, you were eligible for Post Allowance, but were found ineligible for Living Quarters Allowance (LQA)…

…In accordance with [DSSR] section 031.11, LQA may be granted to employees recruited in the United States by the employing government agency, the Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana Islands, and the possessions of the United States. Reference (b), section 2.c. stipulates that applicants, including deployed or mobilized military reservists, who apply while in a foreign area…and do not transition from the foreign areas…during the recruitment process are not eligible for LQA under [DSSR], section 031.11…

…[Department of Defense Instructions (DoDI) 1400.25, Volume 1250] clearly states that overseas allowances and differentials are not automatic salary supplements, nor are they entitlements. They are specifically intended to be recruitment incentives for US civilian employees, who are residing in the United States, to accept Federal employment in a foreign area…

The claimant’s legal representative (representative) asserts that the claimant meets sections 031.11 and 031.12 of the DSSR. The representative states, in relevant part:

… the Agency’s determination that [The claimant] did not meet the requirements set forth by DSSR sections 031.11-031.12 is unfounded…

…The Agency reasoned that while [The claimant] could meet the requirements set forth in [DSSR 031.12(a)], he could not meet the requirements set forth in [DSSR 031.12(b)] or [DSSR031.12(c)]. The Agency believed that [The claimant] could not meet (b) because he had failed to maintain substantially continuous employment as he has left his [CNPOS] position in June 2017…[and could not meet] (c) because at the time, [The claimant] was not employed by a federal agency under a mobility agreement for a federal agency; or, under direction of federal employment to move to Japan…

… [The claimant] has had only one single qualifying employer since he was recruited within the United States, the United States of America by and through the Department of Defense. Furthermore, [The claimant’s] break in service stemmed from an order to report for active-duty service…

…Moreover, and contrary to the Agency’s contentions, [The claimant’s] 2017 resignation to his civil employment with [CNPOS] should not be determinative of break in service because even if [The claimant] did not resign to said position, he could not be employed in a civilian capacity with the Government while on active duty…

…since [the claimant] had in fact maintained substantially continuous employment, there is no reason to further discuss the requirements set forth [DSSR 031.12(c)]…

The representative also expresses concern that the agency may have violated the claimant’s rights under the Uniformed Services Employment and Reemployment Rights Act (USERRA) by denying him LQA in connection to his current position. The representative states, in relevant part:

…Even if the Agency believes that [the claimant’s] LQA Determination was properly founded, the denial of [the claimant’s] LQA based on his overseas employment is in direct violation of USERRA. Since, [the claimant’s] break in service resulted from his reporting as a military reservist called to active duty, [the claimant’s] break in service should be seen as a protected right under 38 U.S.C. §§4301, et. seq. USERRA provides, in pertinent part, that a service member “shall not be denied . . . any benefit of employment by an employer on the basis of that membership, application for membership, performance of service, application for service, or obligation.” See 38 U.S.C. §4311(a). An employer is deemed to have unlawfully discriminated against an employee if the service member’s “membership, application for membership, service, application for service, or obligation for service in the uniformed service is a motivating factor in the employer’s action, unless the employer can prove that the action would have been taken in the absence of such membership, application for membership, service, application for service, or obligation for service” See 38 U.S.C. §4311(c).

OPM’s authority under section 3702 of title 31, United States Code (U.S.C.), to adjudicate compensation and leave claims brought by employees who seek to challenge pay or leave decisions made by their employing agency is narrow and does not extend to settling claims brought under the USERRA. Therefore, USERRA issues identified by the representative will not be discussed in this decision. 

Both representative and the agency express concern over the possible impact of Comptroller General decisions and the Secretary of Defense, New Living Quarters Allowance Guidance, dated January 3, 2018, on LQA eligibility in their submissions to OPM. However, relevant provisions of the DSSR must be fully met before additional supplemental guidance can be applied. As discussed later in this decision, the claimant does not meet basic requirements for LQA under the DSSR. Therefore, Comptroller General decisions and the Secretary of Defense, New Living Quarters Allowance Guidance, are not applicable in determining the claimant’s eligibility to receive LQA and will not be addressed further.

The DSSR contains the governing regulations for allowances, differentials, and defraying of official residence expenses in foreign areas.

Section 031.11 of the DSSR states in relevant part:

“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 DSSR 031.11 criteria, DoDI 1400.25, Volume 1250 defines “U.S. Hire” as:

…A person who physically resided permanently in the United States or the Commonwealth of the Northern Mariana Islands from the time the employee applied for employment until and including the date the employee accepted a formal offer of employment…

DoDI 1400.25, Volume 1250(A)(2)(c), “Overseas Allowances and Differentials” states:

… Overseas allowances and differentials are not automatic salary supplements, nor are they entitlements. They are specifically intended to be recruitment incentives for U.S. citizen civilian employees living in the United States to accept Federal employment in a foreign area. If a person is already living in the foreign area, that inducement is normally unnecessary. Individuals shall not automatically be granted these benefits simply because they meet eligibility requirements…

Section 031.12 of the DSSR provides the following guidance relative to employees recruited outside the United States:

Quarters allowances prescribed in Chapter 100 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.

c. as a condition of employment by a government agency, the employee was required by that agency to move to another area, in cases specifically authorized by the head of agency.

The claimant does not meet the requirements for U.S. hire under DSSR 031.11.

The DoDI 1400.25, Volume 1250, clearly indicates that an employee’s status as a “U.S. hire” is based on physical residency in the United States or one of its enumerated territories or possessions during the entire recruitment (i.e., application, selection, and acceptance of tentative and formal job offers) for the position in question. Thus, an employee must be physically residing in the United States during the recruitment process for the position in question. Therefore, whether an employee is deemed to be recruited inside or outside the United States depends upon the physical location of the employee throughout the entire recruitment process. See OPM file Number 18-0027, dated March 5, 2019, and 21-0016, dated January 27, 2022.

The record shows the claimant applied for, accepted, and entered on duty in his current position while living and working in Japan. Since the claimant was not physically residing in the United States or one of its enumerated territories or possessions throughout the entire recruitment process for his current position in Japan, he does not meet the definition of U.S. Hire under DoDI 1400.25, Volume 1250, and is not eligible to receive LQA under DSSR 031.11.

The claimant meets DSSR 031.12(a) in that his presence in Japan is fairly attributable to his current employment as an International Relations Specialist, GS-0131-13, in Fussa, Japan.

DSSR section 031.12(b) specifies the conditions under which employees recruited outside the United States may be granted LQA. Although agencies may not lessen LQA requirements stated in the DSSR, they can increase LQA eligibility restrictions. Such is the case with supplemental implementing guidelines developed by the Department of Defense under DoDI 1400.25, Volume 1250(A)(2)(c), which stipulates that overseas benefits, such as LQA, are specifically intended as recruitment incentives for U.S. citizen civilian employees living in the United States to accept Federal employment in a foreign area and that if a person is already living in a foreign area, that inducement is normally unnecessary. The record shows the claimant resided in Japan prior to and throughout the entire recruitment for his current position. Since LQA cannot be construed as the incentive for his presence in Japan at the time of his recruitment for the position in question, the claimant does not meet the intent of LQA recruitment incentives under DoDI 1400.25, Volume 1250(A)(2)(c). Therefore, the question of whether or not the claimant meets LQA eligibility under DSSR 031.12(b), is irrelevant in this case.

The claimant does not meet DSSR section 031.12(c), which applies exclusively to existing employees of Government agencies who are stationed overseas and have not otherwise qualified for LQA under section 031.12(b), but who are subsequently required by their agencies to relocate from one overseas area to another in cases specifically authorized by the head of the agency (see OPM Decision No. 13-0040). There is no evidence in the record that the claimant was required, as a condition of employment by Navy, to relocate in order to accept his current position. Therefore, the claimant’s circumstances do not meet the LQA eligibility requirements under DSSR 031.12(c).

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. In this case, the agency’s decision was made in accordance with LQA eligibility guidelines associated with overseas hires under DoDI 1400.25, Volume 1250(A)(2)(c). Thus, its decision to deny the claimant LQA for his current position cannot be considered arbitrary, capricious, or unreasonable and there is no basis upon which to reverse the agency’s decision. Therefore, the claim is denied

This settlement is final. No further administrative review is available within the OPM. Nothing in this settlement limits the claimant’s right to bring an action in an appropriate United States court.

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