Senator questions pay cuts for IRS managers

Senate Finance Committee Chairman Charles Grassley, R-Iowa, sent the Internal Revenue Service a letter this week expressing concern over the agency's decision to reduce the salaries and grade levels of some of its employees under its new pay system.

In a May 16 letter to IRS Commissioner Charles O. Rossotti, Grassley asked why the agency demoted James D'Elia, a supervisor in the IRS' complaint processing and analysis group, when it implemented its pay-banding system in March.

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 two months ago 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. 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 broad-band system for its General Schedule workforce as part of the agency's reform effort.

The Office of Personnel Management published its final rules on the IRS pay- banding system in December, including one that says employees "may not suffer a reduction in total pay upon initial conversion to a broad-banding system."

Grassley asked Rossotti to provide agency guidelines on pay-banding in general and for employees in the temporary promotion status. He also requested a "detailed explanation" of why D'Elia was demoted and a list of all IRS employees who have been similarly affected.

D'Elia acknowledged that although the IRS has 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.

"The IRS gave me a technical explanation for my demotion, which was that it could terminate my temporary promotion position at will. But it is not addressing the real issue-the spirit of pay-banding. Pay-banding is supposed to operate as an incentive to retain your best managers, and what the IRS did to me goes against that [philosophy] completely," D'Elia said.

"It appears as though the IRS, while phasing in 'pay-banding,' has fashioned a policy to address Mr. D'Elia's situation that may only be technically supportable," Grassley said in his letter.

D'Elia said about 100 agency employees who were working in temporary promotion positions may have been affected, but some who were assigned to temporary positions for only one year may not be as concerned about the pay and grade cuts.

"My annuity will be based on my salary, and since I am close to retirement, this is important to me," D'Elia said.

"It is of little consolation to Mr. D'Elia that his new rate of pay may be closely comparable to that which he was previously receiving … what is of particular importance to Mr. D'Elia is not only the calculation of his retirement annuity, but the reduction in career status resulting from this action," Grassley wrote in his letter.

Grassley also questioned whether D'Elia's demotion was in retaliation for previous whistleblowing.

Anthony Burke, a spokesman for the IRS, said the agency would not comment on D'Elia's allegations or Grassley's letter at this time.