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June 18, 2001
New Pay System Brings Complaints
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ertain employer faces allegations that it improperly reduced the salaries and grade levels of some employees by assigning them to a new pay system.

That employer is the Internal Revenue Service.

IRS Commissioner Charles O. Rossotti is disputing the allegations, saying in June 1 letter to Sen. Charles Grassley, R-Iowa, that the IRS did not act improperly when it terminated an employee's temporary promotion as a result of the agency's conversion to a pay-banding system in March.

In May, before he lost chairmanship of the Senate Finance Committee, Grassley demanded to know why the IRS demoted James D'Elia, a supervisor in the agency's complaint processing and analysis group.

In May 2000, D'Elia was given a three-year temporary promotion to a GS-15 position while working on a special project at the agency, but the temporary position was terminated in March when the pay banding system took effect, the Web site reports.

D'Elia says he was downgraded to the GS-14 level, losing about $4,500 a year in income, even though he performed the same tasks in his lower position as he had in the temporary GS-15 job. He has filed a grievance.

Pay banding, also known as broad-banding, replaces the government's traditional approach to employee job classification, compensation and evaluation, according to Govexec. Job classifications have been widened into a few broad categories under the new system, with increased salary ranges.

Congress authorized the IRS to establish a pay band system for its general schedule workforce in 1998, as part of the agency's reform effort.

According to Rossotti, federal regulations restrict which temporary promotions can be converted into permanent positions. The regulations say temporary promotions cannot be made permanent without further competition, unless they are originally advertised as competitive positions with the possibility of being permanent.

"Those rules were applied without exception to all GS-14 and GS-15 employees who were on temporary promotions prior to conversion into our new senior manager pay band," Rossotti explained to Grassley in his letter. D'Elia's temporary position did not fall under the rule's exception, he said.

Thirty-two agency employees working in temporary promotion positions were similarly affected by the conversion to the pay banding system, according to IRS records. None of the permanent salaries of those employees was adversely affected, Rossotti maintained.

Rossotti also responded to Grassley's concerns that D'Elia was demoted in retaliation for previous whistleblowing.

"I can personally assure you that our actions to implement the pay band rules were in no way fashioned with Mr. D'Elia in mind, nor were they retaliatory toward Mr. D'Elia," he wrote.

To view the story, click here.
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