TITLE:	Temporary Employees' Allotments
BNUMBER:	   B-289496
DATE:		   December 21, 2001
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 Temporary Employees' Allotments, B-289496, December 21, 2001

B-289496



December 21, 2001

Mr. Alan M. Hantman
Architect of the Capitol
Washington, D.C.  20515

Subject:  Temporary Employees' Allotments

Dear Mr. Hantman:

This responds to your December 5, 2001, request for our opinion concerning
your authority to transfer fringe benefit payments of temporary employees to
union employee benefit trust funds on a pretax basis.  For the reasons
discussed below, you are authorized under current law to make direct
payments on behalf of temporary employees to such trust funds, provided the
employees have elected to make allotments and assignments of pay to the
trust funds.  However, such direct payments may be made on a pretax basis
only where specifically authorized by statute or regulation.

The Office of the Architect of the Capitol (Office of the Architect) has
followed the practice of hiring, on a temporary basis, employees who are
members of unions.  Private employers typically agree to make contributions
on behalf of their unionized employees into various employee benefit trust
funds established by the unions that provide medical, welfare, training and
other assistance to union members.  The Office of the Architect has in the
past paid to its temporary employees, in addition to their normal wages, an
amount for fringe benefits equivalent to that contributed by private
employers to the trust funds.  As pointed out in your letter, a decision by
this Office (B-189553, October 13, 1977) held that the Office of the
Architect did not have the authority to make contributions directly into
employee benefit trust funds.  However, recently enacted legislation
(Legislative Branch Appropriations Act, Fiscal Year 2002, Pub. L. No.
107-68, ï¿½ 133(b), 115 Stat. 560, 582 (2001)) gave the Office of the
Architect authority to permit employees to make allotments and assignments
from their pay.  Accordingly, you are of the view that your agency may
transmit directly to union employee benefit trust funds that portion of
employees' pay that represents fringe benefits.  Your letter further
indicates that your office and several labor unions disagree over whether
the recently enacted legislation authorizes your office to deduct fringe
benefit payments from employees' pay and deposit such allotments directly
into union employee benefit trust funds before making deductions for Federal
Insurance Contributions Act (FICA) and federal income taxes.

In our 1977 decision holding that the Office of the Architect was precluded
from making contributions into employee benefit trust funds, we pointed out
that under 31 U.S.C. ï¿½ 492(a) (currently codified at 31 U.S.C. ï¿½ 3322(a)),
disbursing officials can only make payments of public moneys to persons who
are legally entitled to such payments.  As we recognized in that decision,
Congress has enacted several exceptions to this general rule.  One
exception, currently found at 5 U.S.C. ï¿½ 5525, authorizes heads of agencies
to establish procedures under which employees may make allotments and
assignments out of their pay for such purposes as the head of the agency
considers appropriate.  At the time of our 1977 decision, the Office of the
Architect was not authorized to allow employees to make allotments or
assignments out of their pay because the definition of "agency" for purposes
of 5 U.S.C. ï¿½ 5525 did not include the Office of the Architect.  5 U.S.C.
ï¿½ 5521.  Congress recently amended 5 U.S.C. ï¿½ 5525 to include the Office of
the Architect within the definition of agency to permit allotments and
assignments of pay by its employees.  Legislative Branch Appropriations Act,
Fiscal Year 2002, Pub. L. No. 107-68, ï¿½ 133(b), 115 Stat. 560, 582 (2001).
Accordingly, we agree that you are now authorized to allow employees,
including temporary employees, to make allotments and assignments and,
provided the employees make the appropriate allotments and assignments, your
agency may transmit that portion of their pay representing fringe benefits
directly to union employee benefit trust funds.

The regulations implementing 5 U.S.C. ï¿½ 5525, including when an agency may
make pretax allotments for fringe benefits, are established by the Office of
Personnel Management (OPM) for executive agencies and the head of the agency
concerned for agencies outside the executive branch.  5 U.S.C. ï¿½ 5527(b).
We understand from your letter that the Office of the Architect follows the
OPM regulations.

OPM's implementing regulations (5 C.F.R. part 550, subpart C, "Allotments
and Assignments from Federal Employees") specifically permit pay deductions
for labor organization dues, dues to an association of management officials,
charitable contributions, income tax withholding, savings, alimony and child
support, and an employee's share of health benefits premiums.  5 C.F.R.
ï¿½ 550.311(a).  In addition, an
agency may permit allotments "for any legal purpose deemed appropriate by
the head of the agency," but this authority "does not extend to allotments
to the paying agency for the purpose of reducing taxable income, except
where there is an authority
specific to Federal employees (statute, Executive order, Presidential
directive, or
OPM regulations) permitting agencies to provide the pretax benefit in
question." 5 C.F.R. ï¿½ 550.311(b).  Significantly, 5 C.F.R. ï¿½ 550.313(a)
directs that:

"[A]n agency must deduct allotments from any net pay remaining after
applying all deductions authorized by law, including any deductions for
retirement and other benefits, Social Security and income tax withholdings,
collection of a debt to the Government via levy or salary offset, and
garnishment."
See also B-251181, B-251181.2, January 14, 1994 (federal employees are
permitted to make assignments and allotments pursuant to 5 U.S.C. ï¿½ 5525
from their "disposable pay" subject to collection of income and other
required taxes).  The regulations specify that an agency must deduct an
allotment for an employee's share of Federal Employees Health Benefits
premiums on a pretax basis.  5 C.F.R. ï¿½ 550.313(b).

Pursuant to the Congressional Accountability Act of 1995, Pub. L. No. 104-1,
ï¿½ 220, 109 Stat. 3, 19 (1995), and 5 U.S.C. ï¿½ 7102, the employees of the
Office of the Architect have the right to join labor organizations and to
engage in collective bargaining with the agency.  The Office of the
Architect has a duty to bargain in good faith, but may not enter into a
bargaining agreement that is inconsistent with any federal law or
government-wide rule or regulation.  5 U.S.C. ï¿½ 7117.  Although the OPM
regulations do not address pretax allotments to union-established fringe
benefit trust funds, they clearly would permit pretax allotments to pay an
employee's share of Federal Employees Health Benefits premiums.  5 C.F.R.
ï¿½ï¿½ 550.313(b), 550.311(a)(8).  Assuming for the purposes of this opinion
that your temporary union employees do not participate in the Federal
Employees Health Benefits Program, this authority would not be available to
your union employees.  OPM regulations permit allotments on a pretax basis
only where there is authority specific to federal employees.

As noted above, pursuant to 5 U.S.C. ï¿½ 5527(b), the Architect of the
Capitol, as the head of the agency concerned, may choose to establish the
procedures for allotments and assignments of employees of the Office of the
Architect.  Any procedures the Office of the Architect devises, however,
must be consistent with federal laws, including those that govern pretax
benefits.  Therefore, any agreement to make pretax allotments must cite
clear authority permitting the pretax benefit in question.  See Dept. of the
Navy-Payment for Commercial Driver's License Fees, B?249061, May 17, 1993.
In this regard, the Internal Revenue Code, 26 U.S.C. Subtitle A, ch. 1,
 subchapter B, parts I?III, addresses the tax implications of fringe
benefits and
whether benefits may be excluded from taxable income.[1]

In conclusion, you are now authorized to make direct payments to trust
funds.  If you choose to devise your own procedures, you may make direct
payments on a pretax basis only when specifically authorized by statute.
With respect to your authority to make any particular fringe benefit
allotment before deducting FICA and federal income taxes, you should consult
with the Internal Revenue Service.

We trust this is responsive to your question.

Sincerely yours,
Anthony H. Gamboa
General Counsel

                          -------------------------

[1]See, e.g., 26 U.S.C. ï¿½ 61 ("gross income" defined as including fringe
benefits); 26 U.S.C. ï¿½ 63 ("taxable income" defined); 26 U.S.C. ï¿½ 125
("cafeteria plan" benefits specifically excluded from gross income); and 26
U.S.C. ï¿½ 132 ("certain fringe benefits" specifically excluded from gross
income).