United States v. Clark

Background

Six federal blue-collar employees who were paid under the prevailing wage system were promoted into General Schedule (white-collar) jobs between 1973 and 1974. After promotion, some employees received what looked like a two-step increase while one was placed under a different pay rule. The Navy reexamined and recalculated pay, leading the workers to sue for additional pay. A lower court said the two-step raise applied and awarded recovery, and the Government asked the Court to review whether the two-step rule covers moves from the prevailing wage system into the General Schedule.

Reasoning

The Court asked whether Section 5334(b), which guarantees a two-step raise for a promotion to a higher General Schedule grade, covers employees promoted from the prevailing wage system. Reading the statute, the Court found §5334(b) tied to promotions "in the General Schedule" and relied on definitions and the statute’s placement in the GS pay chapter. The opinion also reviewed the history and long-standing agency practice showing Congress and agencies intended the two-step protection to correct pay problems within the General Schedule, not for moves between the two separate pay systems. Administrative regulations and past agency decisions had long limited the two-step rule to GS-to-GS promotions, so the Court held the two-step rule does not apply to prevailing-wage workers promoted into the General Schedule and reversed the lower court.

Real world impact

The ruling means agencies may treat pay for prevailing-wage employees promoted to General Schedule jobs under the highest-previous-rate approach rather than granting an automatic two-step raise. Affected workers may therefore receive smaller immediate increases, and agencies can rely on longstanding pay rules and regulations when setting or recalculating salaries.