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AAFES officials are considering advocating that the Defense Department change a policy requiring cost-of-living allowances for Americans hired overseas in order to avoid paying millions of dollars a year to those employees, according to a copy of a document obtained by Stars and Stripes.

If the department agreed to the change, a month-old decision to force the Army and Air Force Exchange Service and other nonappropriated fund employers to pay post allowances to Americans hired overseas for full-time jobs would be reversed. The consequences would extend beyond the Air Force and AAFES.

Such a reversal would strip the allowance from overseas employees working for the Army, which has paid the allowance for years, as required by DOD policy. Other NAF employers, which haven’t been paying the allowance, would get off the hook.

Titled “Policy Action Plan Post Allowance,” the document was written after the Defense Department delivered its March 21 ruling on post allowance, directing all NAF employers to pay the post allowance. A search of the document’s properties indicates it was written by Ken Moon, the exchange’s vice president for government and industry affairs.

When asked about the document Friday, AAFES responded by saying, “The document in your possession is a draft work product and does not accurately reflect the current AAFES position.”

The Defense Department did not respond to queries about the document by the newspaper’s deadline Friday.

Since the March 21 ruling, AAFES has started paying the allowance to 967 overseas hires, who will see the allowance in their May 2 paychecks.

According to the document, payments to employees affected by the decision will cost the exchange about $5 million a year. But the document expresses that AAFES doesn’t agree that it should have to make those payments.

“Paying (post allowance) to associates who AAFES did not cause to be assigned to a foreign overseas location is contrary to the basic intent of a (post allowance),” the document states. It goes on to say the allowance is only required for full-time U.S. citizen employees who are recruited elsewhere and then transferred into an overseas position.

That interpretation is at odds with the regulation, but AAFES relied on this rationale for years to avoid making post allowance payments.

The DOD regulation requiring post allowance for overseas Americans has been in place since at least 1996, but AAFES, the Air Force, Navy Exchange Service Command, the Navy and Marines have, until recently, avoided paying it to all who qualify. Only the Army has been paying post allowance to all of its full-time employees.

AAFES, in the document, said it advised the Defense Department in 1996 that it didn’t think it had to pay post allowance to Americans hired overseas, and that the department didn’t argue with that interpretation.

A decade went by before the department advised AAFES that it should be paying post allowance, according to the memo.

“In May 2006, AAFES received a message from the DOD nonappropriated Personnel Policy Division reminding NAF employers that (post allowance) for locally hired citizens is a mandatory payment per DOD 1400.25-M,” the document says.

AAFES again tried to make a case that those payments weren’t required, but the Defense Department shot down the argument on March 21, reiterating the requirements of the 1995 regulation requiring post allowance payments to all eligible U.S. citizens unless they are part-time, intermittent, or U.S. family member seasonal employees.

The decision also requires NAF employers to make back payments of post allowance to those who weren’t getting the allowance but should have. AAFES will have to pay an additional $30 million “if back pay is mandated,” the document states.

AAFES officials also are enlisting the Air Force in its fight, according to the document.

“Additionally, the Washington Office is coordinating a joint letter between AAFES and Air Force Services to send to DOD, which reiterates AAFES’ original request for reconsideration of the DOD requirement to pay (post allowance),” the document states.

At Yokota, Japan, the Air Force last year reclassified some NAF employees to part-time status from full-time, guaranteeing them just 20 hours a week instead of 40.

A memo given to Stars and Stripes by an anonymous NAF employee stated the reason for the reclassification was “to maintain consistency in this organization by offering only a guarantee of 20 hours per week to all regular employees. This is neither a disciplinary action nor a reflection of your work performance.” The action was effective July 30, 2007. Employees were asked to sign it, acknowledging their receipt of the memo.

By that time, the Air Force knew that it was supposed to pay post allowance to all Americans hired overseas for full-time positions, but still hadn’t complied with the DOD regulation. Employees found out about their eligibility this month.

By changing the employees’ status to part time, the Air Force avoided having to pay them post allowance — at least for the time being.

“DOD NAF employers have responsibility for staffing and scheduling their workforces, including the responsibility to establish the definition of what constitutes a part-time or full-time work schedule within the Component,” Lt. Col. Les’ Melnyk, a DOD spokesman, wrote in an e-mail.

See the text of the AAFES document here

Stars and Stripes reporter Jennifer Svan contributed to this report.

Related article:

Some NAF employees who work 40-hour weeks don’t qualify to get post allowance

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