OPM modifies rules for figuring certain employees' retirement benefits

The Office of Personnel Management is changing the way it calculates service toward retirement for certain employees on workers' compensation, agency officials announced last week.

According to an OPM benefits administration letter, federal employees on workers' compensation who hold a full-time appointment but are able to work only part-time now will be credited for full-time service.

OPM's previous interpretation of civil service law held that these employees were not entitled to full-time credit when they worked, for example, four hours per day and received workers' compensation benefits for the other four hours. But a 2005 decision by the Merit Systems Protection Board struck down OPM's interpretation and ruled that full-time credit should be allowed since these employees initially were given full-time appointments.

In the case, David Hatch v. OPM, Hatch was elected to a full-time position with the U.S. Postal Service in 1966, but was injured on the job in 1990 and was carried on the payroll in leave without pay status for almost three years. Hatch received payments through workers' compensation for that period, and in 1993, returned to work at USPS in a limited duty assignment. He was reassigned to a modified letter carrier position in 1995. Hatch was able to work only four hours a day in each assignment and received workers' compensation for the remaining four hours of each day the agency placed him in a leave without pay status.

Hatch retired in 2002, only to find that OPM determined that his service between the date he returned to work and the date of his retirement should be considered part-time service, thus reducing his annuity. MSPB determined that OPM was required by law to award Hatch retirement credit for full-time service for the time he was in a leave without pay status.

The decision now requires OPM to credit service as full-time, provided an employee holds a full-time appointment, is on approved leave without pay for part of the day and receives workers' compensation benefits. If an employee is not under a full-time appointment, the usual part-time rules apply, according to OPM. Also, the decision does not apply to reemployed annuitants, the letter stated.

OPM asked that agencies review payroll files and other records and compile a list of current employees whose retirements are pending who may be affected by the Hatch decision. Additionally, agencies should include those employees who have recently retired and former employees who may be affected by the decision, the letter stated.

"To the extent that agencies can provide their own records on those who have recently retired or are in the process of retiring, it would be retroactive," said OPM spokesman Mike Orenstein.