Before Bryson, Circuit Judge, Archer, Senior Circuit Judge, and Gajarsa, Circuit Judge.
The opinion of the court was delivered by: Gajarsa, Circuit Judge.
Appealed from: Merit Systems Protection Board
Kenneth D. Martin petitions for review of the decision of the Merit Systems Protection Board ("MSPB" or "Board"), Docket No. AT-0752-93-0255-X-2, Martin v. Department of the Air Force, 79 M.S.P.R. 380 (1998) ("Martin II"). In its decision, the Board granted the Office of Personnel Management's ("OPM's") request to intervene, vacated a Board decision finding agency noncompliance with the Board's November 19, 1993 decision, see Martin v. Department of the Air Force, 72 M.S.P.R. 88 (1996) ("Martin I"), and dismissed Martin's petition for enforcement as moot. Because we find that the Board based its decision on an unreasonable interpretation of the Back Pay Act, 5 U.S.C. § 5596 (1994), we reverse and remand for recalculation of petitioner's back pay.
On January 15, 1993, Kenneth D. Martin was removed from civilian employment with the Air Force ("the agency") as an aircraft mechanic at Warner Robins Air Logistics Center, Robins Air Force Base, Georgia. Martin appealed his removal to the MSPB. The removal was reversed, Martin was retroactively reinstated, and the agency was ordered to award Martin back pay with interest.
Martin returned to work with the agency on January 11, 1994. Between the time of his removal and the time of reinstatement, Martin was employed in several non-government positions. He was injured *fn1 while employed as a wrecker driver/mechanic with an automobile dealership and received state workers' compensation benefits from September 9, 1993 to January 10, 1994 because of the injury. When the agency reinstated Martin, he was placed on leave without pay status; he was also informed that he would not be given back pay for the period of time he was receiving workers' compensation benefits because he had been unable to work during that time period. Martin had spinal fusion neck surgery in August 1994, and was physically able to return to work with the agency in January 1995, with some lifting restrictions.
On March 30, 1994, Martin filed a petition for enforcement to the MSPB claiming that he was improperly denied back pay from September 9, 1993 through January 10, 1994. The administrative Judge ("AJ") issued a recommendation finding the agency in noncompliance. The AJ found Martin to be entitled to back pay under 5 U.S.C. § 5596 (the Back Pay Act), with an offset from the state workers' compensation payments he had received during that period. *fn2 The agency filed a disagreement with these recommendations with the full MSPB. In Martin I, the Board analogized the Back Pay Act to the back pay provisions of § 10(c) of the National Labor Relations Act (NLRA), see 29 U.S.C. §160(c) (1994), and of Title VII of the Civil Rights Act of 1964, see 42 U.S.C. § 2000e-5(g)(1) (1994). Using decisions interpreting these back pay provisions as a guide, the Board held that "an award of back pay would be appropriate where the interim disability is closely related to the nature of the interim employment or arises from the unlawful discharge and is not an usual incident of the hazards of living generally." Martin I, 72 M.S.P.R. at 93. The Board affirmed the AJ's recommendation as modified, finding the agency in noncompliance and finding Martin entitled to back pay with offset. However, the Board found that workers' compensation payments have two components, one being a payment for lost wages, the other being reparation for physical damage suffered, and only the lost wage component should be used to offset the back pay award. The Board remanded the case for further adjudication to determine the exact amounts. OPM then filed a request to intervene because the Board's decision was based on an OPM regulation implementing the Back Pay Act.
On remand, the AJ ordered the agency to award Martin back pay for the period in question, offset by $4098. *fn3 The agency filed exceptions to the recommendation to the full Board. The Board reversed the AJ's recommendation (and effectively the Board's decision in Martin I), finding that Martin was not entitled to any back pay for the period he was receiving state workers' compensation benefits. The Board noted that the OPM regulations implementing the Back Pay Act, specifically 5 C.F.R. § 550.805(c), prohibited an agency from providing back pay to an employee who was not "ready, willing, and able to perform his or her duties because of an incapacitating illness or injury." Martin II, 79 M.S.P.R. at 385. The Board found that OPM's interpretation of the regulation was consistent with the statute because the offset provision as provided in the Back Pay Act was to prevent an employee from obtaining a windfall. See id. The Board also found that under OPM's interpretation of 5 C.F.R. § 550.805(c), the circumstances surrounding a disability, or the causal connection between any injury suffered in replacement employment and an unwarranted termination, are irrelevant. See id. at 385-86. The Board recognized that in Martin I the Board had looked to the causal connection rule used in determining back pay under the NLRA. However, the Board stated that "it is also reasonable to find that such a rule is too speculative, as it is not possible to determine with certainty that the employee would not have been injured in his former job." Id. The Board therefore found that OPM's refusal to adopt a causation rule did not constitute an impermissible construction of the Back Pay Act. See id. at 386. Martin now appeals the Board's decision in Martin II.
The main issue presented in this appeal is whether, under the Back Pay Act, an employee who has been found to have been wrongfully terminated is entitled to back pay, with appropriate offsets, for a period during which he received state workers' compensation benefits for injuries suffered during interim employment. This is a matter of statutory interpretation for which the Supreme Court has instructed that [w]hen a court reviews an agency's construction of the statute which it administers, it is confronted with two questions. First, always, is the question whether Congress has directly spoken to the precise question at issue. If the intent of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress. If, however, the court determines Congress has not directly addressed the precise question at issue, the court does not simply impose its own construction on the statute, as would be necessary in the absence of an administrative interpretation. Rather, if the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency's answer is based on a permissible construction of the statute. Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-43 (1983). Therefore, if Congress has not directly spoken on the issue of state workers' compensation benefits and the Back Pay Act, we look to OPM's interpretation of the Act and its interpretation of the implementing regulations, in particular 5 C.F.R. § 550.805(c).
The Back Pay Act itself provides that the "Office of Personnel Management shall prescribe regulations to carry out this section [i.e., the Back Pay Act]." 5 U.S.C. § 5596(c). In such a situation, we give deference to the agency's construction of the regulation and "the validity of a regulation promulgated thereunder will be sustained so long as it is 'reasonably related to the purposes of the enabling legislation.'" Mourning v. Family Publications Serv., Inc., 411 U.S. 356, 369 (1973) (quoting Thorpe v. Housing Auth. of Durham, 393 U.S. 268, 280-81 (1969)). "In determining whether a particular regulation carries out the congressional mandate in a proper manner, we look to see whether the regulation harmonizes with the plain language of the statute, its origin, and its purpose." National Muffler Dealers Assoc. v. United States, 440 U.S. 472, 477 (1978); see also DeCosta v. United States, 987 F.2d 1556, 1558 (Fed. Cir. 1993) (court does not disturb agency's interpretation of a statute unless it contravenes legislative intent or is otherwise unreasonable).
The language of the Back Pay Act states in general terms that an employee who has suffered an unwarranted personnel action and properly appeals the action is entitled to back pay "equal to all or any part of the pay . . . as applicable which the employee normally would have earned or received during the period if the personnel action had not occurred, less any amounts earned by the employee through other employment during that period . . . ." 5 U.S.C. § 5596(b)(1)(A)(i). The statute itself does not address specifically how an agency is to calculate a back pay award and under what circumstances an employee who otherwise might be entitled to back pay is not to be awarded back pay by an agency. Rather, Congress authorized OPM to prescribe specific ...