ON PETITION FOR REVIEW OF AN ORDER OF THE UNITED STATES MERIT SYSTEMS PROTECTION BOARD
Before: ALDISERT, GIBBONS and HIGGINBOTHAM, Circuit Judges
Wilson C. Schramm, an employee of the Social Security Administration, petitions the Court of Appeals for review of a final order of the Merit Systems Protection Board (MSPB), entered on June 19, 1981, which affirmed a decision of the Social Security Administration, Department of Health and Human Services (SSA), denying Schramm his within grade pay increase as of July 19, 1979.*fn1 Schramm contends that the MSPB applied the wrong standard of review by holding that the SSA decision that Schramm failed to perform the essential requirements of his position at an acceptable level of competence need only be supported by substantial evidence. We reverse the MSPB order and hold that an agency must justify its decision to deny a within grade pay increase by a preponderance of the evidence.
Schramm is employed with the SSA as a claims representative at its District Office in Paterson, New Jersey. He was first appointed to the position as a trainee, GS-5, in May 1977. After leaving the training pool, Schramm was assigned to the Paterson Office and in June 1978, he received a career-ladder promotion to GS-7.
Late in 1978, SSA reorganized the claims representative position into specialties and Schramm became a claims representative specialist for Title XVI claims. Under 5 U.S.C. § 5335(a), Schramm was entitled to receive a within grade stop increase to GS-7, Step 2 on June 2, 1979, provided his performance was of an acceptable level of competence.*fn2
On April 5 and April 25, 1979 Schramm's first line supervisor, Ms. Vera Porter, sent him memorandums criticizing certain aspects of his job performance, including demeanor while interviewing claimants, difficulty with technical aspects of development of claims folders and lack of desk organization, and proposing to withhold his within grade salary increase effective June 2, 1979, at the end of his 12 month waiting period. On May 21, 1979, Ms. Porter sent Schramm another memo informing him that she had decided to withhold his salary increase for the deficiencies in his work performance.
Because Schramm was not given 60 days notice of the deficiencies in his performance, as required by 5 C.F.R. § 531.407(b) (2) (1978) (superseded),*fn3 Ms. Porter, in a memo dated June 4, 1979, gave Schramm until August 2, 1979 to meet an acceptable level of competence. Pursuant to § 531.407(d) (1978) (superseded), Schramm sought reconsideration of SSA's decision, and Ms. Porter in a memo dated July 19, 1979, citing "procedural error," again gave Schramm until August 2, 1979 to improve his work performance.
Schramm again sought reconsideration, and on March 18, 1980, the SSA sustained the negative determination of his performance. Thereupon, Schramm appealed to the MSPB,*fn4 which vacated the agency's reconsideration decision on the grounds of procedural error and remanded the case to the SSA for a new decision.*fn5 The SSA issued a second reconsideration decision on November 20, 1980, sustaining the negative determination. Schramm again appealed to the MSPB, a hearing was held, and on June 19, 1981, the MSPB affirmed the agency's reconsideration decision. On July 17, 1981, Schramm filed this petition for review.
The sole issue presented in this petition is the standard by which agency decisions to deny within grade pay increases because of an employee's substandard performance must be reviewed. The resolution of this issue, because of an ambiguity in the Civil Service Reform Act of 1978, 5 U.S.C. § 1101 ...