Court Opinion

ID: 4120375
Source: CourtListenerOpinion
Date Created: 2017-01-27 22:47:12.665753+00
Date Added: 2024-06-11T14:19:50.664863
License: Public Domain

November 29, 1978

78-62 MEMORANDUM OPINION FOR THE
      DIRECTOR, PRESIDENT’S COMMISSION ON
      WHITE HOUSE FELLOWSHIPS
      Supplementation of Salary of Government Employees
      (18 U.S.C. § 209)—Propriety of Employer Providing
      Certain Benefits to Employee Serving as a White
      House Fellow

   This responds to questions raised by your Office and the General Counsel of
 an Executive department regarding certain benefits an employer proposes to
 make available to one of its employees in connection with service as a White
 House Fellow. The suggested arrangements are embodied in the employer’s
 guidelines on leave of absence contracts for its employees on temporary
 Government assignments. We are unable to accept as legally permissible a
 number of its features.
   Apparently, the most important aspects of the proposed arrangement from
the employee’s point of view are those providing for the employer to reimburse
her for the cost of temporary living quarters while in Washington and for travel
to her home during the year. We understand that her husband will continue to
work in New Jersey and live in their home there during the year. The employee
points out that her husband’s desire to keep his present job and his resulting
inability to move to Washington will occasion the trips home, and likewise
prevent her from renting the house in New Jersey thereby avoiding lodging
expenses for the family in two locations. While we sympathize with the
employee’s situation, we do not believe that these special arrangements are
permissible under 13 U.S.C. § 209.
   Whatever the reasons, the decision of the employee to reside in two different
locations is a personal one. As a legal matter, § 209, in our opinion, prohibits a
private employer from providing at its expense a Federal employee with travel
for personal reasons where, as here, that travel is furnished on account of the
employee’s Federal assignment. Whether the travel is for vacation, family, or
other personal reasons is irrelevant for purpose of the statute.
   Similarly, we do not believe that the employee may be reimbursed for
temporary living quarters in Washington. The payment of a Government
                                       267
 employee’s living expenses due to his Government service is a classic example
 of a supplementation of Government salary prohibited by § 209.
    It has been suggested that the employer’s rental of an apartment in
 Washington is merely a payment in lieu of the cost of moving household
 belongings to Washington. Because payment of moving expenses has previously
 been authorized by us, the argument proceeds that the payment of living
 expenses in Washington in lieu of moving costs should also be permitted.
    We recognize that our 1976 letter to your predecessor stated that a company
 may pay a participant’s moving expenses to the location of the fellowship
 assignment and back at the conclusion of the year. Upon reexamination, we no
 longer believe that the policy of paying all moving expenses conforms to the
 intent of § 209. However, we see no legal objection to the payment of the actual
 expenses of returning to the employer’s place of business at the conclusion of
 the fellowship year because the payment of relocation expenses is a rather
 common practice in the private sector.
    However, payment of expenses of moving to Washington to work for the
 Government presents a different question. As a rule, the Government cannot
 pay moving costs; newly hired Federal employees must ordinarily bear those
 expenses themselves. Payment of these expenses by a private firm therefore
 would bestow a substantial benefit on the individual. When this benefit accrues
solely because of Federal service, § 209 prohibits the arrangement.
    We recognize that White House Fellows enter Federal service for only a brief
period with the expectation of returning to their previous employers. By
 § 209(c), Congress created an exception from the prohibitions in § 209(a) for
special Government employees, who are persons employed or retained for not
to exceed 130 out of any ensuing period of 365 days. In view of Congress’
express recognition of the unique status of certain short-term employees, it is
not legally possible to fashion additional exceptions administratively for other
short-term employees who do not fall within that exception.
   Nor do we believe that a special construction of § 209(a) is warranted in
order to further the purposes of the White House Fellows program. If that
program had any special statutory authorization indicating that certain outside
financial assistance is permissible, then perhaps modifications in the applica­
tion of § 209(a) would be warranted. But the program, which is authorized only
by Executive order, warrants no implied exception to an act of Congress.
   We also recognize that current participants in the White House Fellows
program may have relied upon past practice in accepting moving expense
reimbursement. But we would suggest that next year’s participants be advised
in advance of the legal restrictions identified herein.
   In the interim, we are unable to extend the reasoning of the 1976 letter to
other reimbursements, such as those for apartment rental in Washington. We
should point out that the letter did not suggest that every participant in the
fellowship program is entitled to some reimbursement from his previous
employer, or that the payment can be for a variety of purposes, such as moving
expenses, rent, or for some other items. Regardless of the controversy over the
legality of paying moving expenses under § 209(a), the payment of a Federal
                                      268
employee’s living expenses while in Washington is, as pointed out above, a
classic example of salary supplementation and therefore § 209(a) applies.
   It has also been suggested that payment of expenses for temporary quarters in
Washington is no different in principle from a firm renting an employee’s
permanent residence which he vacates during his period of absence as a White
House Fellow, which we concluded in the 1976 letter is lawful. We must
disagree. When the company arranges for the rent of the permanent residence,
or rents the residence itself, the employee should be left in no better position
than he would be in if he rented the residence directly to an individual tenant.
For example, the employee should bear any rental or management fees entailed
in the firm’s renting the residence to an individual tenant; and if the
arrangement provides for the firm to rent the residence and leave it
unoccupied, the fair market rental should be reduced by a reasonable estimate
of maintenance and other costs that forseeably will not be incurred.
   Implicit in the conclusion stated in our 1976 letter that it is permissible for a
company to rent the vacated permanent residence of a White House Fellow was
the understanding that the arrangement must be essentially the same as though
the residence were rented on the open market and that the employee will
therefore not have the use of the residence during the rental period.1 In this
case, however, the family will have the use of the permanent residence. The
employer could not, therefore, properly pay the employee the rental value of
the home; this would confer a windfall that would not otherwise result. Thus,
the reimbursement of temporary lodging costs in Washington cannot be
justified by reference to situations in which the private employer may rent the
White House Fellow’s permanent residence.
   Several other aspects of the employer’s guidelines are also troublesome. We
may question, for example, the continuation of concession telephone service
provided by the company for a person in Government service. Section 209(b)
permits a Government employee to continue to participate in a “ bona fide
pension, retirement, group life, health or accident insurance, profit-sharing,
stock bonus, or other employee welfare or benefit plan maintained by a former
employer.” It may be argued that concession telephone service is a “ benefit
plan” maintained by the employer. However, the purpose of § 209(b),
suggested by the enumeration of benefit plans in the subsection itself, is to
permit persons entering Federal service to continue established security
arrangements that are often essential to long-range financial planning for the
family. See R. Perkins, The New Federal Conflict-of-interest Law, 76 Harv. L.
Rev. 1113, 1139-42 (1963). Concession telephone service is, we believe, far
removed from this purpose.
   We also note that the suggestion in the guidelines that a person returning to
the employer after Government service would be entitled to vacation days in an
amount equal to the difference between what he would have accrued and what
   'Also implicit was the understanding that the employee was prepared to rent the house to a tenant
who would reside there, so that the employer would not be paying the employee for a residence the
employee intended to leave vacant. In the latter situation, the employer’s payment of rent may
disguise a supplementation of Government salary.
                                               269
he actually used (or was paid for) while in Government service is inconsistent
with the advice of our 1976 letter. We continue to believe that the accrual of
vacation time from a private employer under these circumstances constitutes a
supplementation of salary prohibited by § 209. For similar reasons, we do not
believe that the employer may pay for sick leave due to any absence on account
of service over the amount accrued from the Government, as is contemplated in
the guidelines. We do not, however, object to the provision for termination of
the leave of absence and reinstatement on the employer’s payroll in the event of
a long-term absence.
   In our view, a problem of salary supplementation also arises in those portions
of the guidelines providing that coverage under the basic group life insurance
plan and death and pension benefit plans will be calculated on the higher of the
employee’s Government or his private salary. Section 209(b) permits “ contin­
ued participation” in a “ bona fide” benefit plan maintained by a former
employer. The concept of “ continued participation” would appear to require
that participation is to be based on the employee’s private salary under all
circumstances. The salaiy on which these figures are based must in turn be
calculated without reference to Government service.
   Several other features of the guidelines are unclear. It is provided that the
employer will make a lump sum payment equal to the contribution that would
have been made to the employer’s savings plan had the employee remained on
its payroll. To whom is the lump sum to be paid? If the payment is to be made
directly to the employee under circumstances in which he would not otherwise
be entitled to have access to the funds, this would not appear to be “ continued”
participation in the savings plan. Similar questions are raised by the provision
of the guidelines for payment of the cash equivalent of the Employees Stock
Ownership Plan participation the individual would have earned at his previous
year’s salary. In both these provisions and in the provision dealing with net
credited-service, we also have some doubt that an employee actually “ contin­
ues” to participate in the benefit plans if he does not receive credit for the
period of Federal employment until he returns to the company.
   A final ambiguity concerns the meaning of the term “ educational fees” in
the guidelines. Some further justification of miscellaneous reentry expenses
mentioned also seems necessary.2
                                                         Larry A. H am m ond
                                                Deputy Assistant Attorney General
                                                              Office of Legal Counsel

  2Public Law 96-174, 93 Stat. 1288(1979), amends 18 U.S.C. § 209 by providing that it does not
prohibit the payment of actual relocation expenses of participants in an executive exchange or fellow­
ship program. See H. Rept. No. 96-674 (1979).
                                                270