IRS denies improper use of new pay banding system

IRS Commissioner Charles O. Rossotti disputed allegations lodged last month that his agency improperly reduced the salaries and grade levels of some of its employees by assigning them to a new pay system. In a June 1 letter to Sen. Charles Grassley, R-Iowa, Rossotti said 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. Grassley, who was chairman of the Finance Committee before the Democrats took control of the Senate earlier this month, sent Rossotti a letter in May asking 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. D'Elia says he was downgraded to the GS-14 level, losing about $4,500 a year in income, though he performed the same tasks in his lower position as he had in the temporary GS-15 job. He has filed a grievance with the agency. Pay banding, also known as broad-banding, replaces the government's traditional approach to employee job classification, compensation and evaluation. Job classifications are widened into a few broad categories with increased salary ranges. In 1998, Congress authorized the IRS to establish a pay band system for its General Schedule workforce as part of the agency's reform effort. Rossotti said federal regulations place restrictions on which type of temporary promotions can be converted into permanent positions. According to the regulations, 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," said Rossotti in his letter. Rossotti said D'Elia's temporary position did not fall under the rule's exception. Thirty-two agency employees working in temporary promotion positions were similarly affected by the conversion to the pay banding system, according to IRS records. According to Rossotti, none of the permanent salaries of those employees was adversely affected. D'Elia has acknowledged that although the IRS had the right to terminate his temporary position at any time, he was told the demotion was a result of the implementation of the pay banding system. "I didn't find any rule or regulation in what the IRS provided that states a temporary promotion must be terminated for pay banding, or one that says an employee cannot be put into pay banding while still in a temporary position," said D'Elia in response to Rossotti's letter. Rossotti also responded to Grassley's concerns that D'Elia's demotion was 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.