Washington, D.C.

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

04/04/2025

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Date

The claimant is a Federal civilian employee of the Quality Assurance Section, 374th Maintenance Group, Pacific Air Force Command, U.S. Department of the Air Force (AF), Yokota Air Base, Yokota, Japan. He requests the U.S. Office of Personnel Management (OPM) reconsider his agency’s denial of living quarters allowance (LQA). We received the claim on August 22, 2023, and the agency administrative report (AAR) on April 11, 2024. For the reasons discussed herein, the claim is denied.
On July 31, 2022, the claimant retired from active-duty military service but elected to remain in Japan.

After his retirement, the claimant applied for and on November 23, 2023, received and accepted a tentative offer of employment for a Technical Publications Assistant (TPA) position with AF at Yokota Air Base, Japan. However, for unspecified reasons, the agency cancelled the vacancy announcement, and the offer of employment was rescinded.

The agency subsequently reannounced the TPA position and the claimant reapplied.
On June 7, 2023, the claimant received and accepted a second tentative offer of employment from AF as a TPA and entered on duty in his current position on August 28, 2023.

The agency asserts the claimant is not eligible to receive LQA under the Department of State Standardized Regulations (DSSR) and implementing guidelines under the Department of Defense Instruction (DoDI) 1400.25 V 1250.25, because: 1) the period between his retirement and entering on duty in his current position with AF exceeds the one-year limitation for “substantially continuous employment” and 2) the claimant’s physical presence in Japan prior to and during the recruitment process for his current position made an overseas recruitment incentive (i.e., LQA) unnecessary.

The agency states, in relevant part:

…An applicant must meet DoDI 1400.25 v1250 2. LQA: a. Under the provisions of section 031.12b of Reference (c), 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. Your EOD was not prior to 31 Jul 2023, the substantially continuous employment has expired, and you no longer meet DSSR 031.12.b. and not eligible for LQA as a local hire…

…Your request for the [LQA] hiring incentive is denied. Because you were living in a (non-CONUS) foreign area at the time you submitted your application for the GS-07, [TPA] Position, you must meet specific criteria to qualify for LQA. DoDI 1400.25-V1250, para C4, states the intended purpose of foreign area allowances is to serve as a recruitment incentive for U.S citizen employees living in the United States to accept federal employment in a foreign area. If a person is already in the foreign area, that inducement normally is not necessary…

The claimant acknowledges his presence in Japan during the recruitment process and the fact that he entered on duty in his Federal civilian position after the one-year limitation for substantially continuous employment. Nevertheless, he requests a waiver of the one-year requirement due to “specific extenuating circumstances” and “unique constraints and delays” associated with his recruitment and LQA application processes. He states, in relevant part:

… My retirement date from active duty was 31 July 2022. Considering the “substantially continuous employment” clause, my timeline for LQA consideration would extend to 31 July 2023. My initial LQA request and subsequent follow-up both occurred well within this window. Unfortunately, the delay in forwarding my request compromised this window… Given the aforementioned factors, especially the bureaucratic delay, I believe it's justifiable to grant an exception in my case. I humbly request the committee to view this not just as a procedural request but as an appeal considering the unique constraints and delays[,] I faced, none of which were a result of my inaction…

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 section 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…

DoDI 1400.25, Volume 1250, Enclosure 2, “Procedures”, section 2(a) “LQA”, states, in relevant part:

…Under the provisions of section 031.12b of Reference (c), 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…

Section 031.12 of the DSSR provides the following guidance relative to employees recruited outside the continental United States. Employees must meet subsection (a) and either (b) or (c) to be eligible to receive LQA:

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.

DoDI 1400.25, Volume 1250, clearly indicates that an employee’s status as a “U.S. hire” is based on physical residency in the U.S. 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 U.S. during the recruitment process for the job in question. Therefore, whether an employee is deemed to be recruited inside or outside the U.S. 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 Federal civilian position while physically in Japan. Since the claimant was not physically residing in the U.S. or one of its enumerated territories or possessions throughout the entire recruitment process for his position with AF, 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 section 031.11.

The claimant meets DSSR 031.12(a) in that his presence in Japan is fairly attributable to his employment with AF.

DSSR 031.12(b), allows LQA eligibility in those instances where the employee, prior to appointment, had substantially continuous employment with one of the entities listed under b(1) through b(4), and which entity (i.e., the singular usage of “such employer”) recruited the employee in and provided return transportation to the U.S. or its territories or possessions. The claimant meets DSSR 031.12(b) in that, prior to recruitment for his TPA position with AF, the claimant had been recruited in the U.S. by AF, who provided the claimant return transportation to the U.S. or one of its enumerated territories or possessions upon completion of his active-duty service.

However, he does not meet the associated supplemental LQA guidelines for “substantially continuous employment” under DoDI 1400.25 v1250, because the period between the date he retired (i.e., July 31, 2022) and when he entered on duty as a Federal civilian employee with AF (i.e., August 28, 2023), exceeded one year. Therefore, his LQA claim is denied.

The claimant asks OPM to waive DoDI’s one-year substantially continuous employment requirement due to his particular circumstances. OPM adjudicates compensation claims for certain Federal employees under the authority of section 3702(a)(2) of title 31, United States Code (U.S.C.). The authority in 31 U.S.C. 3702(a)(2) is narrow and limited to determining if monies are owed the claimant under the controlling statutes or regulations. Section 3702 does not include the authority to waive provisions of the DSSR or DoDI, which determine LQA eligibility. Therefore, OPM may not consider the claimant’s request for a waiver within the context of the claims adjudication function it performs under section 31 U.S.C. 3702(a)(2) and his request is denied.

DoDI 1400.25, Volume 1250, 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 LQA to agency employees. Wesley L. Goecker, 58 Comp. Gen. 738 (1979). Thus, an agency has the authority to deny LQA payments to an employee when the circumstances justify such actions. OPM does not question an agency’s decision to deny a discretionary allowance, such as LQA, unless the agency’s actions are determined to be 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). In this case, the agency’s decision to deny the claimant LQA was based on the intended use of LQA as an overseas recruitment incentive and the basic requirement for “substantial continuous employment” under DoDI 1400.25, Volume 1250. Thus, the agency’s denial of LQA to the claimant cannot be construed as unreasonable, arbitrary, or capricious, as required under 5 CFR 178.105. Therefore, OPM will not disturb the agency’s decision, and 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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