United States Court of Appeals, District of Columbia Circuit
RICHARD E. LUBOW, ET AL., APPELLANTS
UNITED STATES DEPARTMENT OF STATE, ET AL., APPELLEES
Argued September 12, 2014
Appeal from the United States District Court for the District of Columbia. (No. 1:10-cv-00510).
Elliot H. Scherker argued the cause for appellants. With him on the briefs were Brigid F. Cech Samole, Rachel A. Canfield, and Joe R. Reeder.
Alan Burch, Assistant U.S. Attorney, argued the cause for appellees. With him on the brief were Ronald C. Machen Jr., U.S. Attorney, and R. Craig Lawrence, Assistant U.S. Attorney. Mercedeh Momeni, Assistant U.S. Attorney, entered an appearance.
Before: GARLAND, Chief Judge, SRINIVASAN, Circuit Judge, and SENTELLE, Senior Circuit Judge. Concurring opinion filed by Senior Circuit Judge SENTELLE.
Srinivasan, Circuit Judge
A statute limits the amount of " premium pay,"
including overtime pay, federal government employees may earn each year. A group
of State Department employees challenges the Department's decision requiring
them to repay excess overtime pay they received for work on assignment in Iraq
in 2004. We conclude that the Department permissibly construed the statute
capping premium pay when determining that the employees' overtime pay exceeded
the statutory limit. We also find that the Department did not act arbitrarily in
denying the employees a discretionary waiver of their obligation to repay the
At the time of the events in this case, the five plaintiffs--Frank Benevento,
David Bennett, Joseph Bopp, James Landis, and Richard Lubow--worked in the State Department as Diplomatic Security Special Agents. In late 2003 or early 2004, each of them responded to a call for volunteers to serve one-year assignments in Iraq under the Coalition Provisional Authority. They arrived in Iraq in February 2004.
Initially, the plaintiffs were assigned to Iraq on temporary duty status; their permanent duty station was in Washington, D.C. Consequently, the plaintiffs received " locality pay" --pay in addition to base salary intended to equalize federal employees' compensation with that of non-federal workers in the same geographic area--as if they were working in Washington, D.C. See 5 U.S.C. § § 5301, 5304. In June or July of 2004, the plaintiffs' permanent duty station changed from Washington, D.C., to the United States Embassy in Baghdad. Because the plaintiffs were now stationed in a foreign location, they no longer received locality pay. See 5 C.F.R. § 531.603.
While in Iraq, the plaintiffs worked, and received compensation for, a significant number of overtime hours. In early 2005, the plaintiffs completed their assignments in Iraq and returned to the United States.
Federal law limits the amount of " premium pay" a federal employee may receive. See 5 U.S.C. § 5547. Premium pay (as opposed to " basic pay" ) includes types of remuneration such as overtime pay, holiday pay, Sunday pay, night pay differential, and availability pay. See id. § 5547(a). As a general matter, the statutory cap applies to each pay period ( i.e., biweekly). The cap operates as a limit on the combination of an employee's basic and premium pay in a two-week period. See id.
When an employee performs " work in connection with an emergency," however, the biweekly cap in § 5547(a) does not apply. Id. § 5547(b)(1). Instead, the statute calls for calculating the cap on an annual basis. See id. § 5547(b)(2). The State Department determined that the military operations in Iraq and the aftermath qualified as an emergency. As a result, the plaintiffs were subject to the annual cap, which provides:
[N]o employee referred to in [§ 5547(b)(1)] may be paid premium pay . . . if, or to the extent that, the aggregate of the basic pay and premium pay . . . for such employee would, in any calendar year, exceed the greater of--
(A) the maximum rate of basic pay payable for GS-15 in effect at the end of such calendar year (including any applicable locality-based comparability payment . . . ); or
(B) the rate payable for level V of the Executive Schedule in effect at the end of such calendar year.
Id. § 5547(b)(2).
The statute therefore caps compensation for work in connection with an emergency based on the annual maximum basic pay rate for GS-15 or the annual pay rate for Executive Schedule level V, whichever is greater. At the end of 2004, the annual maximum GS-15 pay rate for employees receiving no locality pay was $113,674. For employees assigned to work in Washington, D.C., the annual maximum GS-15 pay rate, including the applicable locality-pay adjustment, was $130,305. At that time, the annual Executive Schedule level V rate was $128,200.
With regard to the plaintiffs in this case, if § 5547(b)(2)'s cap were calculated as if the plaintiffs received locality pay for Washington, D.C.--as they did when assigned to D.C. for the first half of 2004--
the applicable cap would be $130,305. But if the cap were calculated as if the plaintiffs received no locality-pay adjustment--as was the case for the second half of 2004 after their permanent assignment shifted to the U.S. Embassy in Baghdad--the applicable cap would be $128,200.
In September 2004, the Office of Personnel Management issued final regulations implementing § 5547. See Premium Pay Limitations, 69 Fed. Reg. 55,941 (Sept. 17, 2004). In pertinent part, the regulation implementing § 5547(b)(2) largely tracks the statute's language:
In any calendar year during which an employee has been determined to be performing emergency or mission-critical work . .., the employee may receive premium pay under this subpart . . . only to the extent that the payment does not cause the total of his or her basic pay and premium pay for the calendar year to exceed the greater of--
(1) The maximum annual rate of basic pay payable for GS-15 (including any applicable locality-based comparability payment . . . ) in effect on ...