COMPTROUER GENERAL-OF WASHINGTON. D. c LM090609 f-_ 1 Dear Mr. Forsythe: L Pursuant to your request of June 2, 1971, we have reviewed a suggestion by your constituent, Mr. Simon S. Harris, 237 Maine Avenue, Cherry Hill, New Jersey, for modifying the manner ofcom- puting hourly pay rates for civil service employees. Mr. Harris suggested that the provisions of section 550.4 of Title 5, United States Code--biweekly pay periods and computation of pay--be amended to provide for dropping mills in computing hourly pay rates. He estimated that such a procedure could save the Govern- ment $15 million a year. Section 5504(b) provides that: "For pay computation purposes affecting an employee, the annual rate of basic pay established by or under statute is deemed payment for employment during 52 basic administrative workweeks of 40 hours. When it is necessary for computation of pay under this sub- section to convert an annual rate of basic pay to a basic hourly, daily, weekly, or biweekly rate, the following rules govern: "(1) To derive an hourly rate, divide the an- nual rate by 2,080. "(2) To derive a daily rate, multiply the hourly rate by the number of daily hours of ser- vice required. "(3) To derive a weekly or biweekly rate, mul- tiply the hourly rate by 40 or 80, as the case may be. "Rates are computed to the nearest cent, counting, one- half and over as a whole cent. ***.I' (Underscoring supplIed. The above method of computing rates resulted from the enact- ment of the Government Employees Salary Reform Act of 1964, Public Law 88-426 (H.R. 11049), approved August 14, 1964. Prior to the enactment of Public Law 88-426, all pay rates were computed in full cents, counting a fraction of a cent as the next higher cent. The conference report accompanying House bill 11049 (Report 1647, August 3, 1964), included the following re- marks concerning the computation of pay. - 50TH ANNIVERSARY 1921-1971 B-138626 "Section 103(d) of the House bill amends sec- tion 604(d)(3) of the Federal Employees Pay Act of 1945 (5 U.S.C. 944(c)(3)) to change the method of computing salary rates for all pay computation pur- poses affecting most employees *** so that in the computation of rates all remaining fractions of a cent shall be eliminated. The existing method of computing rates is to compute in full cents, count- ing any fraction of a cent as the next higher cent. [Underscoring supplied.] "Section 103(c) of the conference substitute re- quires rounding off to the nearest cent, counting one-half cent and over as the next higher cent. ***." As noted in the cited conference report, the Congress re- jected the proposal to eliminate all remaining fractions of a cent in computing rates (which was what Mr. Harris suggested) but accepted the method of rounding up or down. I The Civil Service Commission reviewed Mr. Harris' suggestion / on May 4, 1971, and recommended against its adoption for the fol- lowing reasons. 1. The Commission did not consider reductions of employees' pay as an appropriate way to achieve savings. 2. The Commission believed that it would.be inequitable if all employees were to lose money and that employees would notice the loss of 1 cent an hour in their paychecks. 3. The adoption of the suggestion would have no effect on the pay of the Government's approximately 750,000 hourly wage rate employees. 4. The Commission believed that the system of rounding off to the nearest cent was fair to employees, because over a period of time they would break about even as a result of pay-rate changes caused by periodic within-grade in- creases, promotions, demotions, and changes in pay sched- ules. In view of the expressed congressional sentiment concerning the present method of computing rates and the absence of any overriding factors indicating a need to revise this method, we see no basis for pursuing the matter further. 2 B-138626 We trust that the above information will serve the pur- pose of your request. Sincerely yours, ller General 'of the United States The Honorable Edwin B. Forsythe House of Representatives 3
Computing Hourly Pay Rates for Civil Service Employees
Published by the Government Accountability Office on 1971-07-28.
Below is a raw (and likely hideous) rendition of the original report. (PDF)