[Federal Register Volume 76, Number 247 (Friday, December 23, 2011)]
[Proposed Rules]
[Pages 80268-80278]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-32939]
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Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
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Federal Register / Vol. 76, No. 247 / Friday, December 23, 2011 /
Proposed Rules
[[Page 80268]]
OFFICE OF PERSONNEL MANAGEMENT
5 CFR Part 534
RIN 3206-AL88
Pay for Senior-Level and Scientific or Professional Positions
AGENCY: U.S. Office of Personnel Management.
ACTION: Proposed rule.
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SUMMARY: The U.S. Office of Personnel Management (OPM) proposes to
amend rules for setting and adjusting pay of senior-level (SL) and
scientific or professional (ST) employees. The Senior Professional
Performance Act of 2008 changes pay for these employees by providing
for rates of basic pay up to the rate payable for level III of the
Executive Schedule (EX-III), or, if the employee is under a certified
performance appraisal system, the rate payable for level II of the
Executive Schedule (EX-II). Consistent with this statutory emphasis on
performance-based pay, these regulations will provide for agencies to
set and adjust pay for SL and ST employees based on individual
performance, contribution to the agency's performance, or both, as
determined under a rigorous performance appraisal system.
DATES: OPM must receive comments on or before February 21, 2012.
ADDRESSES: You may submit comments, identified by ``RIN 3206-AL88,'' by
any of the following methods:
Federal eRulemaking Portal: http://www.regulations.gov. Follow the
instructions for submitting comments.
E- mail: [email protected]. Include ``RIN 3206-AL88'' in the
subject line of the message.
Fax: (202) 606-2548.
Mail, Hand Deliver/Courier comments: Mr. Stephen Shih, Deputy
Associate Director for Executive Resources and Employee Development,
Room 7412, 1900 E Street NW., Washington, DC 20415-9700.
FOR FURTHER INFORMATION CONTACT: William Collins by telephone at (202)
606-1642, by FAX at (202) 606-2548, or by email at
[email protected].
SUPPLEMENTARY INFORMATION: The U.S. Office of Personnel Management
(OPM) is issuing proposed regulations to revise the rules that govern
pay setting for senior-level (SL) and scientific or professional (ST)
employees. The proposed regulations conform to amendments made by
section 2 of the Senior Professional Performance Act of 2008 (Pub. L.
110-372, October 8, 2008), hereafter referred to as the ``Act.''
Section 2 of the Act amends provisions in 5 U.S.C. chapter 53 relating
to the SL/ST pay system and locality rates. These amendments became
effective on the first day of the first pay period beginning on or
after April 6, 2009--i.e., April 12, 2009.
The changes made by the Act and these proposed regulations are
designed to bring the pay system for SL and ST employees more in line
with the pay system for the Senior Executive Service (SES). The Act
raises the maximum rate of basic pay in the SL/ST pay range from the
rate for level IV of the Executive Schedule (EX) to the rate for EX-III
($165,300 in 2010). The minimum rate of basic pay in the new SL/ST pay
system continues to be 120 percent of the minimum rate of basic pay
payable for GS-15 ($119,554 in 2010).
The amended 5 U.S.C. 5376 allows an agency to establish a higher
maximum rate of basic pay in the SL/ST rate range, equal to the rate
for EX-II ($179,700 in 2010), if the agency obtains the certification
under 5 U.S.C. 5307(d) of its performance appraisal system for
employees in SL or ST positions. A certified SL/ST appraisal system
makes meaningful distinctions based on relative performance. In
addition, agencies that obtain such certification must apply to their
SL and ST employees a higher aggregate limitation on pay under 5 U.S.C.
5307(d) that is equivalent to the total annual compensation payable to
the Vice President ($230,700 in 2010). (The legislation authorizing the
higher aggregate limitation was enacted in 2002.) The regulations
prescribing the substantive and procedural requirements that an agency
must meet to receive such certification for these purposes are in 5 CFR
part 430, subpart D.
The Senior Professional Performance Act of 2008 and the later Non-
Foreign Area Retirement Equity Assurance (AREA) Act (as contained in
the National Defense Authorization Act for Fiscal Year 2010 (Pub. L.
111-84, October 28, 2009)) both amended 5 U.S.C. 5304 concerning
locality-based comparability payments for SL and ST employees. The
Senior Professional Performance Act of 2008 removed all SL and ST
positions from the list of positions for which locality-based
comparability payments may be extended. However, the Non-Foreign AREA
Act subsequently authorized extending locality pay to only those SL and
ST employees whose official worksite was in one of the nonforeign areas
listed in 5 CFR 591.205 on one specific date, January 2, 2010.
Therefore, those SL and ST employees whose official worksites were in
nonforeign areas on January 2, 2010, are entitled to receive the
locality pay rate for that area, subject to the applicable locality
rate cap established by 5 U.S.C. 5304(g)--i.e., EX-II if the employee
is covered by an appraisal system certified under 5 U.S.C. 5307(d), or
EX-III if not so covered--and other provisions of the Non-Foreign AREA
Act. Employees who are assigned to vacant SL or ST positions in the
nonforeign areas on or after January 3, 2010, are not eligible for
locality payments. Employees in SL or ST positions in the continental
United States are also not authorized to receive locality pay on or
after April 12, 2009 (the effective date of section 2 of the Senior
Professional Performance Act of 2008). We issued conforming changes to
the locality pay regulations at 5 CFR part 531, subpart F, to reflect
the most recent amendments to 5 U.S.C. 5304(h) on June 7, 2011. (See 76
FR 32859.)
Conversion to the New SL/ST Pay System
Consistent with section 2(d) of the Act, agencies converted SL and
ST employees to the new SL/ST pay system on April 12, 2009. OPM issued
guidance to agencies addressing this conversion in Compensation Policy
Memorandum 2009-06 on April 2, 2009. An SL or ST employee's converted
rate of basic pay was the employee's former rate of basic pay, plus any
applicable locality pay, in effect on April 11, 2009. For example,
[[Page 80269]]
on April 11, 2009, an SL employee who was at the maximum of the SL/ST
rate range and had an official worksite in a locality pay area received
a rate of basic pay of $153,200 (i.e., EX-IV) and a locality payment of
$9,700 for a total rate of $162,900. (The difference between the rate
for EX-III and EX-IV was $9,700; EX-III was the cap on locality rates
for SL and ST employees on April 11, 2009.) The SL employee's converted
rate of basic pay was set at $162,900 on April 12, 2009. The newly
converted SL or ST rate became the SL or ST employee's rate of basic
pay for all pay computation purposes, and the existing pay plan codes
``SL'' for senior-level employees and ``ST'' for scientific or
professional employees were retained.
Since conversion was mandated by section 2(d) of the Act,
individual conversion actions were effected without regard to
conflicting provisions of 5 CFR part 534, subpart E. For example, the
new EX-III pay maximum established under section 2(b) of the Act
overrode the conflicting EX-IV pay maximum in 5 CFR 534.502(b). The
statutory requirement for conversion on April 12, 2009, overrode the
12-month limit on pay adjustments in 5 CFR 534.503(c). However,
regulatory provisions not in conflict with the new statute continued in
force. For example, since the 12-month limit in 5 CFR 534.503(c) did
not contain an exception for pay adjustments due to conversion under
section 2(d) of the Act, most conversion pay adjustments initiated a
new 12-month waiting period for affected SL and ST employees.
Certain SL and ST employees had an official worksite on April 11,
2009, that was outside the 48 contiguous States and the District of
Columbia: i.e., their worksites were overseas or in Alaska, Hawaii,
Guam and the Commonwealth of the Northern Mariana Islands, Puerto Rico,
the U.S. Virgin Islands, or another U.S. territory or possession where
locality pay was not authorized. These employees converted to the new
SL/ST pay system at their rate of basic pay (exclusive of any locality
rate of pay) on April 12, 2009. Since their rate of basic pay did not
change, the conversion did not initiate a new 12-month limit for those
employees.
Rules for the New Pay System
Congress first provided for certification of performance appraisal
systems under section 1322 of Public Law 107-296, the Homeland Security
Act of 2002 (November 25, 2002), and applied it to both SES and SL/ST
performance appraisal systems. Upon certification, an agency could
apply a higher aggregate pay cap, i.e., the Vice President's salary
rather than level I of the Executive Schedule, to an SES, SL or ST
employee covered by the certified appraisal system. Subsequently, under
section 1125 of Public Law 108-136 (November 24, 2003), Congress
established the open range SES pay system with maximum pay caps of EX-
III or EX-II, depending on whether a performance appraisal system is
certified, and provided that a senior executive's pay shall be based on
individual performance, contribution to the agency's performance, or
both.
To implement the congressional design, OPM and OMB jointly
published interim regulations at 5 CFR part 430, subpart D, and part
1330, subpart D, to govern certification of agency appraisal systems as
making meaningful distinctions based on relative performance. (See 69
FR 45548.) Certification was based on nine criteria identified in 5 CFR
430.404(a)(1) through (9), notably including performance
differentiation and pay differentiation, such that senior employees
(i.e., SES, SL or ST) who demonstrate the highest levels of individual
performance and/or contribution to the agency's performance receive the
highest annual summary ratings or ratings of record, as applicable, as
well as the largest corresponding pay adjustments, cash awards, and
levels of pay. The same criteria were to be applied in certifying SES
appraisal systems and SL/ST appraisal systems.
Under the Senior Professional Performance Act of 2008, Congress now
also makes higher rates of basic pay available to SL and ST employees
based upon the certification of performance appraisal systems. Congress
does so without stating directly, as the SES statute does, that pay for
SL and ST employees is to be based on individual performance,
contribution to the agency's performance, or both (compare 5 U.S.C.
5376(b) with 5 U.S.C. 5382). The legislative history stated the
principal purpose of the underlying bill is to bring the pay system for
SL and ST personnel into line with that for SES members by eliminating
locality pay and authorizing an agency to use a level III or level II
pay ceiling, depending upon whether the agency appraisal system is
certified. S. Rep. No. 110-328, 110th Cong., 2nd Sess. (April 22,
2008). Given the context of certification, as implemented by OPM and
OMB, and the SES pay rules, OPM concludes that SL and ST pay should
also be based upon individual performance, contributions to the
agency's performance, or both. We propose to regulate accordingly.
The pay system established at 5 U.S.C. 5376 by the Federal
Employees Pay Comparability Act of 1990 (FEPCA), Public Law 101-509
(November 5, 1990) did not impose a 12-month restriction on pay
adjustments for SL and ST employees, even though 5 U.S.C. 5383 imposed
a 12-month restriction on SES pay adjustments that could not be waived.
OPM initially planned to let each agency decide whether to impose a
similar limit on pay adjustments for SL and ST employees; however, all
but one of the agencies we consulted recommended establishing a 12-
month limit by regulation. Accordingly, OPM imposed a 12-month
restriction on the SL/ST pay system consistent with the SES pay rules.
Then, in establishing the open range SES pay system that became
effective for most senior executives on January 11, 2004, Congress
continued the 12-month restriction for senior executives but authorized
OPM to provide for exceptions by regulation.
OPM is now proposing to remove the current regulatory 12-month
restriction on pay adjustments for SL and ST employees because Congress
has revised the SL/ST pay system and again has not imposed such a
restriction. On April 12, 2009, more than 60 percent of SL and ST
employees converted to the new SL/ST system with a basic pay rate equal
to EX-III because their rates of basic pay plus locality pay as of
April 11, 2009, were equal to the EX-III maximum permitted under the
former pay system. In place of the 12-month rule, we propose new rules
that require the following: (1) Determining SL and ST pay adjustments
based on individual performance, contributions to the agency's
performance, or both; (2) for agencies with ten or more senior
professionals, centralized review of proposed pay adjustments; and (3)
approval of the highest level SL and ST pay adjustments and of off-
cycle pay adjustments under proposed 5 CFR 534.510 by the agency head
or the designee who oversees the performance-based pay system.
Under section 5376(b)(2), an agency head is still required to
adjust rates of basic pay for SL and ST positions as the agency head
considers appropriate at the same time statutory pay adjustments are
provided for the General Schedule, which is not required for SES
positions. Currently, OPM does not restrict the amount of this
adjustment but provides that an annual adjustment that exceeds the
higher of the adjustments proposed for the General Schedule (GS) or EX
pay systems is a pay adjustment for purposes of the 12-month
restriction.
[[Page 80270]]
OPM now proposes to eliminate the 12-month restriction.
The date specified in law for the annual adjustment, i.e., the
beginning of the first applicable pay period commencing on or after the
first day of the month in which an adjustment takes effect under 5
U.S.C. 5303 in the rates of basic pay under the General Schedule,
usually coincides with adjustments in Executive Schedule pay rates and
is regularly used by most agencies to provide performance-based pay
increases for appraisal periods ending on or about September 30 of the
preceding year. OPM therefore proposes in 5 CFR 534.505(b) that each
agency must include in its written procedures a requirement to adjust
each SL or ST employee's pay under proposed 5 CFR 534.507(b), which
would prescribe rules for performance-based pay increases, on the date
specified by 5 U.S.C. 5376(b)(2).
Definition of Terms
Our proposed definition of ``agency'' in 5 CFR 534.503 reflects
that under 5 U.S.C. 5108 OPM determines the maximum number of SL
positions that may be established in an Executive agency, and under 5
U.S.C. 3104 OPM determines the maximum number of ST positions in any
agency, except for the Library of Congress, which also may establish
eight ST positions under 5 U.S.C. 3104. The definitions ``SL employee''
and ``ST employee'' do not include incumbents of SL-equivalent or ST-
equivalent positions established or compensated under other statutory
authority. We consider this necessary because OPM lacks authority to
regulate the pay system for such employees who are not compensated
under 5 U.S.C. 5376.
OPM is proposing to define the term ``authorized agency official''
in 5 CFR 534.503 as meaning the agency head or an individual authorized
to act for the agency head in the matter concerned. These officials are
to be defined in written procedures established by an agency under 5
CFR 534.505. We are also proposing restrictions on who may be delegated
authority to take certain pay actions under 5 CFR 534.505(c) and 5 CFR
534.506(c).
We propose to define ``certified'' as having the certification that
OPM, with OMB concurrence, provides to a performance appraisal system
that makes meaningful distinctions based upon performance. This means
that when OPM suspends a performance appraisal system certification,
that system is ``not certified'' (also defined in 5 CFR 534.503) for as
long as the suspension continues. Under proposed regulations at 5 CFR
534.507(d), any rating of record or performance rating must cover a
period of performance lasting at least 90 days during which the
applicable performance appraisal system is certified in order to
support an increase to a rate of basic pay above level III but equal to
or below level II of the Executive Schedule. A suspension could
therefore affect an agency's ability to grant such pay increases on a
timely basis.
We propose to define the term ``movement'' to include any
assignment from one SL or ST position to another SL or ST position,
whether within or between the competitive and excepted services or
within or between agencies, provided that the applicable requirements
for the specific assignment are met. Within this broader category, the
term ``transfer'' is more narrowly defined to mean any movement that is
a change of a senior professional employee from an SL or ST position in
one agency to an SL or ST position in another agency without a break in
service of at least 1 full workday. We define ``transfer'' separately
to clarify circumstances under which 5 CFR 534.509(a) requires
preserving a rate of basic pay above EX-III but less than or equal to
EX-II. If the movement is between agencies without a break in service
of at least 1 full workday, it does not matter whether the senior
professional position to which the individual transfers is SL or ST or
whether it is in the competitive service or excepted service.
We propose to define the term ``performance management system'' to
include, in addition to an agency's performance appraisal system for SL
and ST employees, other disciplines and activities by which the agency
implements performance management. As described in 5 CFR 430.102,
performance management is the systematic process by which an agency
involves its employees, as individuals and members of a group, in
improving organizational effectiveness in the accomplishment of agency
mission and goals. This includes processes required to address the
criteria for certification of a performance appraisal system defined in
5 CFR 430.404(a)(1) through (9). It also includes development of an
agency's Strategic Human Capital Plan and may include other processes
used by an agency to define and address its performance requirements.
Performance appraisal does not occur in isolation but within the
broader context of performance management activities by which an agency
identifies, prioritizes, defines, measures and values work to be done
and results to be achieved. Our proposed regulations are based on the
assumption that an agency developing pay policies and criteria and
determining pay adjustments does so within that broader context.
Setting Pay Upon Appointment to a New SL or ST Position
The proposed regulations in 5 CFR 534.506 treat pay setting
separately from pay increases and include, in addition to pay setting
for an individual upon initial appointment to an SL or ST position, pay
setting for a current SL or ST employee upon transfer to a new agency
and pay setting upon reappointment or reinstatement of a former SL or
ST employee to an SL or ST position in any agency. Consistent with the
SES pay rules, we provide that an agency must consider the nature and
quality of the individual's experience, qualifications and
accomplishments as they relate to requirements of the senior
professional position and its impact on the agency's performance, with
pay rates above EX-III but equal to or below EX-II being reserved to
those individuals who possess superior competencies necessary to
address key program and mission requirements, as determined by the
agency.
In general, pay may be set at any rate within the applicable rate
range under 5 CFR 534.504(a). There is one exception, in that 5 U.S.C.
5376(b)(4) precludes an employee from suffering a reduction in pay by
reason of transfer from an agency with an applicable appraisal system
that is certified to an agency in which the applicable appraisal system
is not certified. This is reflected in 5 CFR 534.506(b) and 5 CFR
534.509(a), which would require preservation of an employee's rate of
basic pay above EX-III but less than or equal to EX-II in this
circumstance. We are also proposing to require that an individual who
leaves an agency and is reappointed to the same or a successor position
in that agency within 30 days may not receive a higher rate of basic
pay, unless the agency head or the designee responsible for the
functions identified in 5 CFR 430.404(a)(6) determines it is warranted.
Annual Increases in Basic Pay
We are proposing a heading for 5 CFR 534.507 that refers to
increases in a rate of basic pay rather than pay adjustments.
References to pay adjustments could be read as including reductions in
pay. Pay reductions for SL and ST positions are taken under 5 CFR part
752, subpart D. Rules in proposed 5 CFR part 534, subpart E, therefore
generally relate to setting and increasing a rate of basic pay, and 5
CFR 534.508
[[Page 80271]]
refers the reader to 5 CFR part 752, subpart D, for reductions in pay
or grade for such cause as will increase the efficiency of the service,
or to 5 CFR part 432, for performance-based reductions in grade.
OPM proposes to provide that pay increases under 5 CFR 534.507(b)
must be based upon individual performance, contributions to agency
performance, or both, as determined by the agency under a rigorous
performance management system. As under SES pay rules, rates above EX-
III but equal to or below EX-II would be reserved for those senior
professionals who demonstrate the highest-level performance and make
the greatest contributions to agency performance.
Generally, it is our view that an SL or ST employee rated fully
successful and properly positioned within the pay range should at least
receive an increase that helps preserve the economic value of his or
her salary. This kind of increase is often provided through annual
adjustments to statutory pay systems. Accordingly, we are proposing
under 5 CFR 534.507(h) that in any year in which General Schedule pay
rates are increased under 5 U.S.C. 5303, an agency head who decides on
a ``zero'' annual pay adjustment for a senior professional rated fully
successful or above must communicate the reasons for that decision to
the senior professional in writing; however, for a senior professional
paid within the top 10% of the applicable pay range this communication
would be required only if Executive Schedule pay rates are also
increased under 5 U.S.C. 5318 and the senior professional is rated
outstanding. We propose that this written communication requirement may
not be construed to require a pay increase for any senior professional.
OPM is not proposing an appeal right or opportunity because we
understand the statute to give the agency head authority to provide the
annual adjustment he or she considers appropriate. We also propose that
a senior professional employee rated below fully successful may not
receive a pay increase except an increase required to maintain the
minimum rate of basic pay. Note that 5 CFR 451.104(a)(3) already
precludes a rating-based performance award for an employee whose most
recent rating of record is below fully successful.
Although the higher maximum pay cap applies only to SL or ST
employees covered by a certified performance appraisal system, changes
made by the Act increase every agency head's authority and discretion
over SL/ST pay whether or not an applicable performance appraisal
system is certified. Formerly, senior professionals given different
rates of basic pay by an agency head could end up with the same total
salary, i.e., a rate equivalent to EX-III, due to locality pay being
added up to the (EX-III) cap on basic pay plus locality pay. In effect,
more locality pay was automatically added to the salaries of senior
professionals with lower rates of basic pay, including senior
professionals who demonstrated relatively lower levels of performance.
Locality pay could have a proportionally greater impact on total salary
of some senior professionals with lower rates of pay and lesser
performance than it did for other senior professionals with higher
rates of basic pay and greater performance. Even if an agency head
could directly relate performance to basic pay, the relationship of
performance to total pay was ambiguous and could only be managed
indirectly. Under the new pay system, each agency head has authority
over the entire SL/ST pay range and can assign each senior professional
the rate of basic pay that reflects the agency head's valuation of that
senior professional's service to the agency.
OPM considers the Act to call for each agency head to use this
discretion to set and adjust rates based upon performance; therefore,
the regulations propose the same basic rules for making and documenting
pay determinations whether or not the applicable performance appraisal
system is certified. OPM proposes to provide an exemption at 5 CFR
534.511 from certain provisions of the proposed regulation for any
agency that makes pay adjustments for SL or ST employees or positions
that are not subject to performance appraisal. The exemption applies
only with respect to those employees or positions and only to the
extent specific proposed regulatory provisions would require the pay-
setting policy or individual pay adjustments to be based upon
performance appraisal determinations. Otherwise, the regulation would
apply. For example, the agency would be required to establish written
procedures to govern setting and increasing pay for such employees
based upon such criteria as the agency does apply, consistent with
applicable statute.
Under the proposed regulations, OPM would require each agency to
adjust pay, for SL and ST employees once each year based on
performance, contributions to the agency's performance, or both at the
time 5 U.S.C. 5376(b)(2) requires each agency head to adjust pay for SL
and ST positions in the agency. We propose that an agency must document
the basis for each pay increase under 5 CFR 534.507(b) by means of a
current rating of record, or, in the absence of a rating of record that
reflects current performance, a performance rating that covers a period
of at least 90 days.
OPM is proposing to provide that a pay increase must be based upon
an agency's determination about the value of an individual's
characteristic and continuing service to the agency. The purpose of
this provision at 5 CFR 534.507(b)(3) is to draw attention to an
agency's responsibility to determine the most appropriate reward for an
SL or ST employee's specific contributions, rather than making a pay
increase the default option. Under 5 U.S.C. chapter 45 and 5 CFR part
451, agencies may grant an SL or ST employee an award based on a rating
of record, a special act or service award, and other incentives. We
propose that pay increases be reserved for such contributions as the
agency considers characteristic of the employee's service on a
continuing basis. While stating this as a general rule, we would expect
each agency to interpret and apply it in light of patterns of work that
apply for each SL or ST position. For example, the relative infrequency
of extraordinary advances in a given field of work should not keep an
agency from using increases in a rate of basic pay to recognize
characteristic and continuous efforts, as reflected in ongoing
individual performance and contributions, by which those advances are
achieved and for which the agency depends upon a senior professional.
Rather, the intent of this provision is to preclude escalation of pay
rates by use of pay increases where other relevant statutory
authorities provide more appropriate forms of reward.
Written Procedures
OPM proposes in 5 CFR 534.505 to require that each agency develop
written procedures for setting or increasing SL and ST pay, including
criteria and administrative and management controls that ensure pay
actions conform to the statute and the requirements proposed in this
subpart. Under proposed 5 CFR 534.505(b), each agency's written
procedures would require rates of basic pay for SL and ST positions to
be adjusted under 5 CFR 534.507 on the date statutory adjustments are
made to the General Schedule. Under proposed 5 CFR 534.505(a)(5),
agency controls must include a central review process for ratings
assigned under 5 CFR 430.208 and pay increases proposed under 5 CFR
534.507(b). Under 5 CFR 430.403(d), some agencies already provide for
an agency Performance
[[Page 80272]]
Review Board (PRB) to review proposed ratings and pay increases for
their SL and ST employees. This practice, if documented in the agency's
written SL and ST pay procedures, would meet the requirement.
In 5 CFR 534.505(a)(3), we propose that an agency identify in its
written plan any criteria used to establish pay ranges applicable to
different SL or ST positions (e.g., tiers) consistent with determining
pay based upon individual performance or contributions to agency
performance. An agency could, for example, use information from its
performance management system processes to develop criteria that
distinguish pay ranges for SL or ST positions based upon the kinds or
levels of contributions to agency performance for which those positions
are accountable and place individual SL or ST positions in their
respective pay ranges accordingly.
OPM also proposes that an agency head may delegate authority for SL
and ST pay actions, except that only the agency head or the designee
who performs the functions identified in 5 CFR 430.404(a)(6) may
approve the following pay actions: (1) A pay increase resulting in a
rate of basic pay within the top 10 percent of the applicable pay
range; (2) a pay increase resulting in a rate of basic pay 10 percent
or more above the SL or ST employee's salary at the beginning of the
fiscal year, or, if more recent, upon initial appointment within the
agency; (3) a pay increase upon reappointment of a SL or ST employee
who is reappointed within 30 days to the same position or a successor
position in the agency; or (4) an off-cycle pay increase as provided in
5 CFR 534.510. We believe top level responsibility for these pay
increases is critical to achieve and maintain a reasonable distribution
of rates of basic pay within the pay range. OPM is therefore proposing
that authority to approve these pay actions may not be further
delegated.
OPM is proposing that the head of an agency may delegate to an
Inspector General (IG) authority for all pay actions for senior
professionals within the Office of Inspector General (OIG). Under the
Inspector General Reform Act of 2008, Public Law 110-409, October 14,
2008, an OIG is identified as a separate agency and the IG as the head
of that agency for purposes of SES statutes, including pay setting
under 5 U.S.C. 5382 and 5383; however, the same was not done for senior
professionals. As a result, OPM has no statutory basis to treat an IG
as the head of an agency for purposes of pay setting under 5 U.S.C.
5376, or to require an agency head to delegate authority for senior
professional pay actions to an IG. OPM nevertheless considers such
delegation as supporting the independence of the OIG by avoiding any
appearance that pay actions for senior professionals could be used to
influence OIG activities. OPM therefore is proposing to clarify in 5
CFR 534.505(e) that an agency head may delegate authority to an IG for
all pay actions for senior professionals in the OIG, including those
for which OPM proposes under 5 CFR 534.505(c) to restrict delegation to
the designee who performs the functions identified in 5 CFR
430.404(a)(6). Such delegation is supported by the fact that 5 CFR
430.404(b) provides that the IG must perform those functions for all
senior employees in an OIG. OPM further proposes that if an agency head
delegates this authority to the IG, the agency need not count OIG
senior professionals when determining whether the agency must perform
the centralized review proposed under 5 CFR 534.505(a)(5).
Pay Increases After Certification of a Performance Appraisal System
The Act makes changes to the process for certifying performance
appraisal systems that have significant implications for both current
SES pay regulations and the proposed SL/ST pay regulations. Formerly,
certification of a performance appraisal system was for a calendar
year. In effect, the statute supported viewing a certification obtained
after the beginning of a calendar year as implicitly covering
operations under the performance appraisal system during the entire
calendar year, including time elapsed prior to certification. Some
agencies have relied upon this to grant pay increases above the EX-III
level after certification of a performance appraisal system based upon
ratings that became final before the system was certified. Under the
Act, however, certification is for a period not to exceed 24 months
beginning on the date of certification, unless extended by the Director
of the Office of Personnel Management for up to 6 additional months.
OPM considers this change to mean that certification is prospective and
does not cover performance appraisal system operations prior to
certification.
OPM is therefore proposing in 5 CFR 534.507(d)(1) that a rating of
record or performance rating used to support a pay increase for an SL
or ST employee above EX-III must cover at least 90 days of performance
beginning after the date of certification. However, we are also
proposing under 5 CFR 534.507(e) to provide that OPM may waive this
restriction upon the initial certification of a performance appraisal
system and permit an agency to use an appraisal covering time prior to
certification, if OPM determines that the agency has been operating
under the same performance appraisal system in a manner supporting
certification for at least 90 days before certification was granted.
Notification of this waiver must be in writing. This waiver would not
be available upon reinstatement of a certification that has been
suspended under 5 CFR 430.405(h) or upon the subsequent certification
of a performance appraisal period for which a previous certification
has expired.
Removal of the SES ``Certification Gap'' Provision
OPM issued a final rule at 71 FR 38753, July 10, 2006, to provide
agencies with the authority to increase the rates of basic pay of
certain members of the SES whose pay was set before the agency's SES
performance appraisal system was certified for the calendar year. The
regulation at 5 CFR 534.404(e)(2) permits an agency for which a
``certification gap'' occurs between expiration of a performance
appraisal system certification at the end of a calendar year and
certification of that system for the next calendar year to revisit
certain pay actions that occur during the certification gap period and
provide an additional increase for an affected executive, if warranted,
after the system is certified. These pay adjustments may not be made
effective before the new certification date. The final rule also
provided at 5 CFR 534.404(c)(3)(v) that this kind of increase is not
considered a pay adjustment for purposes of the 12-month rule
applicable to SES pay adjustments.
We conclude that the change from calendar year certification to
prospective certification removes any basis for OPM to authorize an
agency to revisit and adjust pay to rates above EX-III but less than or
equal to EX-II for a pay action that precedes certification. When
certification was on a calendar year basis, time prior to certification
but within the calendar year could eventually be viewed as being
covered by a certification occurring later in the calendar year. That
is no longer the case. Accordingly, we propose to remove and reserve 5
CFR 534.404(e)(2) and 5 CFR 534.404(c)(3)(v) of the SES pay regulations
in 5 CFR part 534, subpart D. We propose this approach, as opposed to
deletion and revision or re-designation of affected paragraphs, for the
administrative convenience of users,
[[Page 80273]]
so that paragraph references that previously designated or referred to
certain types of pay actions may continue to be used after publication
of final regulations to designate or refer to those same types of pay
actions in agency documentation.
Preservation of an Established Rate of Basic Pay
We specifically define limits on pay setting upon transfer in
proposed 5 CFR 534.509(a). These limits implement the statutory
restriction against an individual losing pay when moving from an agency
with an applicable certified appraisal system to one without an
applicable certified appraisal system. We also specify that an agency
may retain an employee's rate of pay above EX-III that has been
properly established during service under a certified system in the
event that certification expires or is suspended or upon the SL or ST
employee's movement to an SL or ST position that is not under a
certified system. We consider this an appropriate extension of the
principle that Congress does not intend for an employee with a pay rate
above EX-III in a certified system to lose pay upon transfer due to the
new agency's failure to obtain certification for its system. However,
the employee is not eligible for a pay increase until assigned to a
position under a certified system or until the employee's rate of basic
pay is less than the rate for EX-III.
Off-cycle Pay Increases
OPM is proposing that an agency head or the designee who performs
the functions described in 5 CFR 430.404(a)(6) may grant an off-cycle
pay increase under proposed 5 CFR 534.510, if warranted. Consistent
with the SES pay rules, these regulations would provide that in
determining whether an off-cycle pay increase is warranted, the
granting official can take into account factors such as the following:
(1) An SL or ST employee's exceptionally meritorious accomplishments;
(2) the need to offer a pay increase for the employee's assumption of a
position that has a greater impact on agency performance; or (3) the
need to retain an individual who is critical to the agency's
performance, and who otherwise would be likely to leave the agency. We
are proposing that an agency must include documentation from other
performance management system activities, as needed, and its written
procedures to show how such factors were considered in determining the
off-cycle pay increase.
Reductions in Pay
An SL or ST employee's rate of basic pay may be reduced subject to
adverse action rules in 5 CFR part 752, subpart D; however, an SL or ST
employee may be reduced in grade or removed from the Federal service
under either 5 CFR part 752, subpart D, or 5 CFR part 432. In 5 CFR
534.508, we are proposing to clarify how pay is to be adjusted when SL
or ST employees are reduced in grade under these applicable procedures
or move from a position covered by the SL/ST pay system to a lower-
level GS position for other reasons. (Pay setting upon movement to a
lower-level position in a different pay system (i.e., not under the
General Schedule) is governed by the pay-setting rules of that pay
system and is not addressed in these proposed regulations.)
SL and ST employees occupy white-collar positions established by
reference to GS classification standards (5 CFR 319.203). SL and ST
positions were formerly classified in GS-16, 17, and 18 of the GS
system. Removal of grade distinctions among SL/ST positions should not
obscure the fact that they are white-collar positions placed at a
single level above GS-15 by reference to GS classification standards
and principles. Though covered by a unique pay system, SL employees
remain members of the competitive or excepted service, and ST employees
remain members of the competitive service. Their conditions of
employment are largely determined by this membership. Removal from
coverage under the SL/ST pay system does not require removal from the
Federal service. Reduction in grade may enable an agency to retain an
accomplished employee in a position better suited to his or her
abilities. This is an alternative for the agency and not an entitlement
for an SL or ST employee.
We are also proposing in 5 CFR 534.508(d) to allow for an agency
and employee to voluntarily agree to a placement that will involve a
current or future pay reduction for the employee. We would provide that
if an SL or ST employee willingly accepts this pay consequence to
facilitate a desired assignment and the agency documents the voluntary
nature of the reduction, it will not be subject to 5 CFR part 752,
subpart D.
Regulatory Flexibility Act
I certify that these regulations will not have a significant
economic impact on a substantial number of small entities, because they
will apply only to Federal agencies and employees.
E.O. 12866, Regulatory Review
This rule has been reviewed by the Office of Management and Budget
in accordance with E.O. 12866.
List of Subjects in 5 CFR Part 534
Government employees, Hospitals, Students, and Wages.
U.S. Office of Personnel Management.
John Berry,
Director.
For the reasons stated in the preamble, the U.S. Office of
Personnel Management proposes to amend 5 CFR part 534 as follows:
PART 534--PAY UNDER OTHER SYSTEMS
1. Revise the authority citation for part 534 to read as follows:
Authority: 5 U.S.C. 1104, 3161(d), 5307, 5351, 5352, 5353,
5376, 5382, 5383, 5384, 5385, 5541, 5550a, sec. 1125 of the National
Defense Authorization Act for FY 2004, Pub. L. 108-136, 117 Stat.
1638 (5 U.S.C. 5304, 5382, 5383, 7302; 18 U.S.C. 207); and sec. 2 of
Pub. L. 110-372, 122 Stat. 4043 (5 U.S.C. 5304, 5307, 5376).
Sec. 534.404 [Amended]
2. Amend Sec. 534.404 to remove and reserve paragraphs (c)(3)(v)
and (e)(2).
3. Revise subpart E to read as follows:
Subpart E--Pay for Senior-Level and Scientific or Professional
Positions
Sec.
534.501 Purpose.
534.502 Coverage.
534.503 Definitions.
534.504 Pay range.
534.505 Written procedures.
534.506 Setting a rate of basic pay upon appointment.
534.507 Annual increases in basic pay.
534.508 Reductions in a rate of basic pay.
534.509 Preservation of an established rate of basic pay.
534.510 Off-cycle pay increases.
534.511 Exemption from performance appraisal requirements.
Subpart E--Pay for Senior-Level and Scientific or Professional
Positions
Sec. 534.501 Purpose.
This subpart provides rules for setting and adjusting rates of
basic pay for senior-level (SL) and scientific or professional (ST)
employees under 5 U.S.C. 5376. Section 5376, as amended by section 2 of
the Senior Professional Performance Act of 2008 (Pub. L. 110-372,
October 8, 2008), promotes performance-based pay by enabling an agency
that attains certification of a performance appraisal system covering
senior professionals to fix rates of basic pay for those employees up
to the rate
[[Page 80274]]
payable for level II of the Executive Schedule. Under 5 U.S.C. 5307(d)
and subpart D of part 430 of this chapter, the Office of Personnel
Management (OPM), with Office of Management and Budget (OMB)
concurrence, grants certification only to a performance appraisal
system that, in its design and application, makes meaningful
distinctions based upon relative performance. This subpart implements
the purpose of the law by providing for pay determinations for SL and
ST employees to be based on individual performance, contributions to
the agency's performance, or both, as determined through administration
of the agency's performance management system(s) for SL and ST
employees.
Sec. 534.502 Coverage.
(a) This subpart implements 5 U.S.C. 5376 and applies to--
(1) Senior-level (SL) positions classified above GS-15 pursuant to
5 U.S.C. 5108; and
(2) Scientific or professional (ST) positions established under 5
U.S.C. 3104.
(b) This subpart does not apply to--
(1) Senior Executive Service positions established under 5 U.S.C.
3132, unless the incumbent of the position declined to convert to the
SES and, under Sec. 317.303 of this chapter, remained at grade GS-16,
17, or 18 (now the SL pay system) or under the ST pay system;
(2) Positions in the Federal Bureau of Investigation and Drug
Enforcement Administration Senior Executive Service, Defense
Intelligence Executive Service, or Senior Cryptologic Executive
Service; or
(3) Positions for which pay is fixed by administrative action and
is limited to level IV of the Executive Schedule under 5 U.S.C. 5373.
Sec. 534.503 Definitions.
In this subpart--
Agency means--
(1) An Executive agency as defined in 5 U.S.C. 105;
(2) The Library of Congress; and
(3) Any other entity that is not part of an Executive agency, for
which OPM has approved establishment of one or more scientific or
professional positions under 5 U.S.C. 3104.
Authorized agency official means the head of an agency or an
official who is authorized to act for the head of the agency in the
matter concerned.
Certified means having the certification that OPM, with OMB
concurrence, grants under 5 U.S.C. 5307(d) and part 430, subpart D of
this chapter only to a performance appraisal system that makes, in its
design and application, meaningful distinctions based on relative
performance. In this subpart, the term ``certified'' refers to a
performance appraisal system that has this certification, including a
performance appraisal system for which certification has been
reinstated after suspension under Sec. 430.405(h) of this chapter.
Movement means a change of an SL or ST employee from one SL or ST
position to a different SL or ST position without a break in service
under procedures that meet applicable requirements for staffing
positions in the competitive service and excepted service. As used in
this subpart, the term ``movement'' applies only to an appointment, not
a detail, and is used without reference to the pay consequences of an
action. Unless otherwise specified, the term refers to position changes
both within and between agencies.
Not certified means lacking the certification that OPM, with OMB
concurrence, grants under 5 U.S.C. 5307(d) and part 430, subpart D of
this chapter only to a performance appraisal system that makes, in its
design and application, meaningful distinctions based on relative
performance. In this subpart, the term ``not certified'' refers to a
performance appraisal system that does not have this certification, or
for which a previously granted certification has expired or is
suspended under Sec. 430.405(h) of this chapter.
Off-cycle pay increase means any increase in a senior
professional's rate of basic pay that becomes effective on a date other
than the date specified in Sec. 534.507(a)(1).
OMB means the Office of Management and Budget.
OPM means the Office of Personnel Management.
Performance management system means the framework of policies and
practices that an agency uses to implement performance management, as
described in Sec. 430.102 of this chapter. As used in this subpart,
the term includes, but is not limited to, those disciplines and
activities by which an agency addresses the criteria identified in
Sec. 430.404(a)(1) through (9) of this chapter as necessary for
certification of an agency's performance appraisal system.
Performance rating means the written, or otherwise recorded,
appraisal of performance compared to the SL or ST employee's
performance standard(s) for each critical and non-critical element on
which there has been an opportunity to perform for a minimum of 90
days. A performance rating may include the assignment of a summary
level within a pattern as specified in Sec. 430.208(d) of this
chapter.
Rate of basic pay means the rate of pay fixed by law or
administrative action for an SL or ST employee under the provisions of
5 U.S.C. 5376 and this subpart before any deductions and exclusive of
additional pay of any other kind.
Rating of record means the performance rating prepared at the end
of an appraisal period for performance of agency-assigned duties over
the entire period and the assignment of a summary level within a
pattern as specified in Sec. 430.208(d) of this chapter that has been
reviewed and approved in accordance with Sec. 534.505(a).
Scientific or professional (ST) employee means an individual
appointed to a position described in Sec. 319.103 and authorized by
OPM under Sec. 319.202 of this chapter or otherwise established under
5 U.S.C. 3104.
Senior-level (SL) employee means an individual appointed to a
position described in Sec. 319.102 and authorized by OPM under Sec.
319.202 of this chapter.
Senior professional means an SL or ST employee.
Transfer means any movement, as defined in this section, that is a
change of a senior professional from an SL or ST position in one agency
to an SL or ST position in another agency without a break in service of
at least 1 full workday.
Sec. 534.504 Pay range.
(a) A rate of basic pay under this subpart must be--
(1) Not less than 120 percent of the minimum rate of basic pay
payable for GS-15 of the General Schedule, and
(2) Not greater than--
(i) The rate of basic pay payable for level III of the Executive
Schedule (EX-III), or
(ii) In the case of an SL or ST employee who is covered by a
certified performance appraisal system or whose established rate of
basic pay is preserved under Sec. 534.509, the rate of basic pay
payable for level II of the Executive Schedule (EX-II).
(b) An agency may not set or adjust the rate of basic pay for an SL
or ST employee higher than the maximum in--
(1) Paragraph (a)(2)(i) of this section (i.e., EX-III) when the SL
or ST employee is covered by a performance appraisal system that is not
certified or when the SL or ST employee is not subject to a performance
appraisal system, except as provided in Sec. 534.509; or
(2) Paragraph (a)(2)(ii) of this section (i.e., EX-II) when the SL
or ST employee
[[Page 80275]]
is covered by a certified performance appraisal system.
Sec. 534.505 Written procedures.
(a) Each agency with positions subject to this subpart must
establish written procedures for setting the rate of basic pay and
increasing the rate of basic pay of incumbents of the positions in
accordance with law and this subpart. Agencies must provide for
transparency in the processes for making pay decisions, while assuring
confidentiality. The agency's plan for setting and increasing rates of
basic pay must reflect meaningful distinctions among SL and ST
employees based on individual performance, contribution to agency
performance, or both, and must include--
(1) The criteria that will be used to set and increase a senior
professional's rate of basic pay to ensure that individual pay rates or
pay increases, as well as their overall distribution within the senior
professional pay range, reflect meaningful distinctions within a single
performance level (e.g., the higher the employee's relative performance
within a rating level, the higher the pay increase), between
performance rating levels (e.g., the higher the rating level, the
higher the pay increase), or both;
(2) The criteria that will be used to set and increase a senior
professional's rate of basic pay at a rate that exceeds the rate for
level III of the Executive Schedule if the applicable agency
performance appraisal system has been certified under part 430, subpart
D of this chapter;
(3) Any system, methods, or criteria the agency uses to establish
pay ranges applicable to various SL or ST positions within the pay
range that applies under Sec. 534.504(a), consistent with the
requirement that pay be determined based upon individual performance,
contributions to the agency's performance, or both;
(4) The designation of the authorized agency official(s) who will
have the authority to set and adjust rates of basic pay for SL and ST
employees, subject to the requirements of paragraph (c) of this
section; and
(5) The administrative and management controls that will be applied
to assure compliance with applicable statutes, OPM regulations, the
agency's written procedures established under this section, the
applicable maximum rate of basic pay in Sec. 534.504(a), and, where
applicable, the certification requirements set forth in part 430,
subpart D of this chapter. In an agency that employs ten or more senior
professionals, these controls must include centralized review of
ratings assigned under Sec. 430.208 of this chapter and pay actions
proposed under Sec. 534.507 by a panel of individuals designated by
the agency head to advise on whether--
(i) Ratings of record and performance ratings used to increase
basic pay are consistent with performance differentiation as described
in Sec. 430.404(a)(8) of this chapter; and
(ii) Proposed rates of basic pay are consistent with pay
differentiation as described in Sec. 430.404(a)(9) of this chapter.
(b) Each agency's written procedure must provide that effective at
the beginning of the first applicable pay period commencing on or after
the first day of the month in which an adjustment takes effect under 5
U.S.C. 5303 in the rates of basic pay under the General Schedule, the
head of an agency will adjust a senior professional's rate of basic pay
under the provisions of Sec. 534.507.
(c) The following actions must be approved by the agency head or by
the designee who performs the functions described in Sec.
430.404(a)(6) of this chapter and this approval authority may not be
further delegated:
(1) Any pay-setting action under Sec. 534.506 or any pay increase
under Sec. 534.507 that results in a rate of basic pay that is within
the highest 10 percent of the applicable rate range under Sec.
534.504. A rate of basic pay equal to or above the amount derived using
the following rules is considered to be within the highest 10 percent
of the applicable pay range (in 2010, $173,685 or above if the
applicable system is certified, or $160,725 or above if the applicable
system is not certified or performance appraisal does not apply):
(i) Subtract the minimum rate of basic pay from the maximum rate of
basic pay for the applicable rate range under Sec. 534.504 (in 2010,
$179,700-$119,554 = $60,146 if the applicable system is certified, or
$165,300-$119,554 = $45,746 if the applicable system is not certified
or performance appraisal does not apply);
(ii) Multiply the amount derived in paragraph (b)(1)(i) of this
section by .10 (in 2010, $60,146 x .10 = $6,015 if the applicable
system is certified, or $45,746 x .10 = $4,575 if the applicable system
is not certified or performance appraisal does not apply); and
(iii) Subtract the amount derived in paragraph (b)(1)(ii) of this
section from the maximum rate of basic pay applicable under Sec.
534.504 (in 2010, $179,700-$6,015 = $173,685 if the applicable system
is certified, or $165,300-$4,575 = $160,725 if the applicable system is
not certified or performance appraisal does not apply);
(2) Any pay increase under Sec. 534.507 that results in a rate of
basic pay more than 10 percent above the SL or ST employee's rate of
basic pay as in effect on the last day of the preceding fiscal year or,
if the individual was first appointed as an SL or ST employee in the
agency after the last day of the preceding fiscal year, more than 10
percent above the rate of basic pay set at the time of that
appointment. A rate of basic pay more than 10 percent above the
applicable rate of basic pay is considered to be any rate of basic pay
that exceeds the amount derived by multiplying the applicable rate of
basic pay by a factor of 1.1;
(3) Any pay-setting action under Sec. 534.506(c)(2) that results
in a higher rate of basic pay than the senior professional had upon
leaving the agency; and
(4) Any off-cycle pay increase under Sec. 534.510.
(d) An agency must keep its written procedures up to date, make
them available to OPM upon request and to affected SL and ST employees,
and periodically provide training or supplemental guidance to assist SL
and ST employees in understanding their application.
(e)(1) The head of an agency may delegate to an Inspector General
the authority to set and adjust pay for senior professionals in the
Office of the Inspector General, including authority for pay actions
described in paragraph (c) of this section.
(2) An agency head who delegates to an Inspector General the
authority to set and adjust pay for all senior professionals in the
Office of the Inspector General, including all pay actions described in
paragraph (c) of this section, may exclude those senior professionals
from the count of agency senior professionals for the purpose of
determining whether centralized review under paragraph (a)(5) of this
section is required.
(3) An Inspector General to whom an agency head delegates authority
to set and adjust pay for 10 or more senior professionals in the Office
of the Inspector General must provide the centralized review required
by paragraph (a)(5) of this section and may use Federal employees from
outside the agency for that purpose, including individuals from the
Inspector General community.
Sec. 534.506 Setting a rate of basic pay upon appointment.
(a) An authorized agency official may set the rate of basic pay of
an individual
[[Page 80276]]
who is not currently an SL or ST appointee of the agency at any rate
within the applicable rate range under Sec. 534.504(a) upon
appointment to an SL or ST position in the agency, subject to the
requirements of this section. In setting a new senior professional's
rate of basic pay, an agency must consider the nature and quality of
the individual's experience, accomplishments, and any unique skills,
qualifications, or competencies the individual possesses as they relate
to requirements of the senior professional position and its impact on
the agency's performance. Rates of basic pay above the rate for level
III of the Executive Schedule but less than or equal to the rate for
level II of the Executive Schedule generally are reserved for those
newly appointed senior professionals who possess superior leadership,
scientific, professional or other competencies necessary to address key
program and mission requirements, as determined by the agency as part
of its strategic human capital plan.
(b) Consistent with the agency's written procedures and paragraph
(a) of this section, an authorized agency official may set the rate of
basic pay for an SL or ST employee upon transfer from another agency at
any rate of basic pay within the pay range that applies to the SL or ST
position under Sec. 534.504(a), except as provided in Sec.
534.509(a).
(c)(1) Consistent with the agency's written procedures and
paragraph (a) of this section, except as provided in paragraph (c)(2)
of this section, an authorized agency official may set pay upon
reappointment of a former SL or ST employee at any rate of basic pay
within the pay range that applies to the SL or ST position under Sec.
534.504(a).
(2) If a former agency SL or ST employee is reappointed within 30
days to the same position or a successor position in the same agency,
the agency may not give the individual a higher rate of basic pay upon
reappointment unless the agency head or the designee who performs the
functions described in Sec. 430.404(a)(6) of this chapter determines
that a higher rate of basic pay is warranted.
Sec. 534.507 Annual increases in basic pay.
(a)(1) Effective at the beginning of the first applicable pay
period commencing on or after the first day of the month in which an
adjustment takes effect under 5 U.S.C. 5303 in the rates of basic pay
under the General Schedule, the head of an agency must adjust a senior
professional's rate of basic pay under paragraph (b) of this section by
an amount he or she considers appropriate, subject to the applicable
maximum rate under Sec. 534.504(a), the agency's written procedures
under Sec. 534.505, and the provisions of this section. For this
purpose, a determination by an authorized agency official to make a
zero adjustment in pay after reviewing a senior professional's current
rating of record or performance rating is considered to be a pay
adjustment.
(2) A pay adjustment under paragraph (a)(1) of this section does
not restrict the authority of an agency head to increase pay at other
times as authorized under Sec. 534.510, if warranted.
(b)(1) An agency may provide a pay increase to a senior
professional only upon a determination by the authorized agency
official that the senior professional's performance and/or
contributions to agency performance so warrant.
(2) Increases resulting in a rate of basic pay above level III of
the Executive Schedule but less than or equal to the rate for level II
of the Executive Schedule are reserved for those senior professionals
who demonstrate the highest levels of individual performance, make the
greatest contributions to the agency's performance, or both, as
determined by the agency through the administration of its performance
management system.
(3) A pay increase must reflect the agency's judgment concerning
the value of the employee's characteristic and continuing service to
the agency in the SL or ST position. A single noteworthy contribution
that is not characteristic of the employee's continuing performance
requirements, individual performance or contributions to the agency's
performance should be recognized by an appropriate award under part
451, subpart A of this chapter, or other appropriate authority, rather
than by a permanent increase in the rate of basic pay.
(c) An agency must document the basis for each pay increase granted
under paragraph (b) by means of--
(1) A current rating of record; or
(2) A performance rating that covers a period of at least 90 days
and is assigned in accordance with subpart B of part 430 of this
chapter and the centralized review required by Sec. 534.505(a)(5), but
only if a rating of record is not available or does not reflect current
performance.
(d) Any increase under this section that results in a rate of basic
pay above the rate for level III of the Executive Schedule may not be
made effective unless--
(1) The rating of record or performance rating used to justify the
increase covers a period of at least 90 days of performance during
which the applicable performance appraisal system has continuously been
certified under 5 U.S.C. 5307(d) and part 430, subpart D of this
chapter;
(2) The rating of record or performance rating used to justify the
increase becomes final while the applicable performance appraisal
system is certified;
(3) The rating and pay increase are reviewed and approved in
accordance with Sec. 534.505(a);
(4) The pay increase is approved in accordance with Sec.
534.505(c), as applicable, and the agency's written procedures; and
(5) The pay increase becomes effective while the applicable
performance appraisal system is certified.
(e) Upon the initial certification under 5 U.S.C. 5307(d) and part
430, subpart D of this chapter by OPM, with OMB concurrence, of an
agency performance appraisal system covering SL or ST employees, OPM
may waive the requirement of paragraph (d)(1) of this section. The
requirement may be waived only if OPM determines that the agency has,
for a period of no less than 90 days prior to certification,
consistently applied the same performance appraisal system to covered
SL or ST employees in a manner consistent with certification. If OPM
waives this requirement, OPM will notify the agency in writing.
(f) Except as required by paragraph (g) of this section, a pay
increase under this section may not be provided to an employee--
(1) Who has a current rating of record below Level 3 (Fully
Successful or equivalent), as described in Sec. 430.208 of this
chapter; or
(2) Who, after receiving a rating of record at Level 3 or above,
receives a more recent performance rating that rates performance in a
critical element at a level below fully successful, as described in
Sec. 430.206(b)(8)(i) of this chapter.
(g) An SL or ST employee whose rate of basic pay would otherwise
fall below the minimum rate of the SL and ST pay range under Sec.
534.504(a)(1) must be provided a pay adjustment sufficient to maintain
the minimum rate of basic pay.
(h)(1) If the rates of basic pay under the General Schedule are
increased under 5 U.S.C. 5303 on the date specified in paragraph (a)(1)
of this section and the agency head decides upon a zero adjustment for
an SL or ST employee who has a current rating of record or applicable
performance rating at level 3 or above, as described in Sec. 430.208
of this chapter, the agency
[[Page 80277]]
must communicate the reasons for that decision to the employee in
writing.
(2) Paragraph (h)(1) of this section shall not apply to a senior
professional with a rate of basic pay described in Sec. 534.505(c)(1)
unless--
(i) the rates of basic pay for the Executive Schedule are also
increased on the date specified in paragraph (a)(1) of this section,
and
(ii) the senior professional has a current rating of record or
applicable performance rating at level 4 in an appraisal program that
uses summary level pattern G, or at level 5 in an appraisal program
that uses summary level pattern H, as described in Sec. 430.208 of
this chapter.
(3) Paragraphs (h)(1) and (h)(2) of this section may not be
construed to require a pay increase for any senior professional
employee.
Sec. 534.508 Reductions in a rate of basic pay.
(a) Any reduction in a rate of basic pay for an SL or ST employee
is subject to part 752, subpart D of this chapter except as otherwise
provided in this section.
(b) If an employee is removed from an SL or ST position and placed
in a General Schedule position under procedures in part 752, subpart D
of this chapter or part 432 of this chapter providing for reduction in
grade, or otherwise moves voluntarily or involuntarily to a General
Schedule position, the employee is entitled to the minimum rate of
basic pay, as defined in Sec. 531.203 of this chapter, for the General
Schedule grade unless the agency sets the employee's pay at a higher
rate under--
(1) The maximum payable rate rule in Sec. 531.221 of this chapter,
if applicable;
(2) The superior qualifications and special needs pay-setting
authority in Sec. 531.212 of this chapter, if applicable; or
(3) The pay retention rules in part 536, subpart C of this chapter,
if applicable.
(c) An agency may reduce an SL or ST employee's rate of basic pay,
subject to part 752, subpart D of this chapter, upon movement to a
different SL or ST position within the agency. If an SL or ST employee
elects to accept a reduction in pay to facilitate a reassignment and
the agency documents the voluntary nature of the action, the resulting
pay reduction is not subject to part 752, subpart D of this chapter.
(d) If an SL or ST employee elects to accept a temporary increase
in a rate of basic pay upon movement to another SL or ST position with
the understanding that the employee will be returned to his or her
former rate of basic pay when the agency terminates the assignment and
the agency documents the voluntary nature of the action, the resulting
reduction to the former rate of basic pay (or to a higher rate of basic
pay determined under this subpart that is within the pay range
applicable to the SL or ST position under Sec. 534.504(a)) is not
subject to part 752, subpart D of this chapter.
(e) A reduction in the rate of basic pay of an SL or ST employee
under Sec. 534.506(b) upon transfer is considered voluntary upon the
employee's acceptance of the appointment and is not subject to part
752, subpart D of this chapter, except that an SL or ST employee's rate
of basic pay may not be reduced upon transfer under circumstances
described in Sec. 534.509(a). A reduction in the rate of basic pay of
an SL or ST employee upon a transfer of function under part 351,
subpart C of this chapter from another agency is subject to part 752,
subpart D of this chapter, unless otherwise provided by statute.
Sec. 534.509 Preservation of an established rate of basic pay.
(a) An SL or ST employee whose rate of basic pay is higher than the
rate for level III of the Executive Schedule may not suffer a reduction
in pay as a result of transfer to an SL or ST position in another
agency where the maximum rate of basic pay for the applicable SL or ST
rate range is equal to the rate for level III of the Executive
Schedule.
(b) An SL or ST employee whose rate of basic pay is higher than the
rate for level III of the Executive Schedule may not suffer a reduction
in pay because his or her agency's applicable performance appraisal
system certification expires or is suspended under Sec. 430.405(h) of
this chapter. See Sec. 530.203(g) and (h) of this chapter for
treatment of the aggregate pay limit when certification status changes
during the calendar year.
(c) An agency may continue an SL or ST employee's rate of basic pay
above the rate for level III of the Executive Schedule upon that
employee's movement within the agency to an SL or ST position that is
not under a certified performance appraisal system. Pay may be reduced
upon the movement only as provided in Sec. 534.508.
(d) If an agency grants a temporary pay increase under conditions
described in Sec. 534.508(d) to an SL or ST employee subject to a
certified performance appraisal system who, prior to the temporary pay
increase, has a rate of basic pay above the rate for level III of the
Executive Schedule, the agency may return the employee to an SL or ST
position that is not subject to a certified performance appraisal
system when the temporary assignment ends and set the SL or ST
employee's rate of basic pay at the rate in effect immediately before
the temporary pay increase.
(e) When a rate of basic pay that is higher than level III of the
Executive Schedule is preserved under a provision of this section, the
SL or ST employee will continue to receive his or her current rate of
basic pay and is not eligible for a pay increase until he or she is
assigned to an SL or ST position covered by a certified performance
appraisal system or his or her rate of basic pay is less than the rate
for level III of the Executive Schedule.
(f) An agency that is otherwise subject to the limitation in Sec.
534.504(a)(2)(i) with respect to an SL or ST position occupied by an SL
or ST employee whose rate of basic pay is authorized to be preserved
under paragraph (a), (b), (c), or (d) of this section may set that
employee's rate of basic pay above EX-III only at the level required to
preserve the applicable rate.
(g) Preservation of a rate of basic pay under this section does not
preclude a subsequent reduction in pay as provided in Sec. 534.508.
Sec. 534.510 Off-cycle pay increases.
(a) An authorized agency official may provide an off-cycle pay
increase to a senior professional if, and only if, the agency head or
the designee who performs the functions identified in Sec.
430.404(a)(6) of this chapter determines an off cycle pay increase is
warranted and approves the amount of the increase subject to the
requirements of this section and the agency's written procedures
established under Sec. 534.505. The authority to approve an off-cycle
pay increase under this section may not be further delegated.
(b) Except as provided in paragraph (d) of this section, an off-
cycle pay increase must be supported by factors that distinguish the
level of the senior professional's performance and/or contributions to
agency performance from that of his or her peers, as applicable, and
from that sufficiently rewarded through the annual pay adjustment. In
assessing the warrant for an off-cycle pay increase, the approving
official may consider such factors as--
(1) A senior professional's exceptionally meritorious
accomplishments that contribute significantly to the agency's
performance;
(2) The need to offer a pay increase to reassign a senior
professional to a
[[Page 80278]]
position that has a substantially greater impact on agency performance;
and
(3) The need to retain a senior professional whose contributions
are critical to the agency and who is likely to leave the agency in the
absence of a pay increase.
(c) Each off-cycle pay increase that is based upon such factors as
are described in paragraphs (b)(1) through (3) of this section must be
documented in accordance with Sec. 534.507(b) through (e), except that
the agency must also provide information to explain how each applicable
factor was considered in determining the pay increase. This information
may be derived from the agency's written pay procedures established
under Sec. 534.505, agency performance management system activities,
or other sources the agency deems useful for this purpose.
(d) If the maximum rate of basic pay applicable to an agency's
senior professionals increases during the one year period following the
annual pay adjustment under Sec. 534.507(a)(1) for reasons other than
a change in the certification status of an applicable performance
appraisal system, the agency head or the designee who performs the
functions identified in Sec. 430.404(a)(6) of this chapter may
consider whether, and to what extent, an additional pay increase may be
warranted for a senior professional based on the same criteria used in
determining his or her annual pay increase. However, if the increase in
maximum rate of basic pay is due to a change in the certification
status of an applicable performance appraisal system, the requirements
of paragraphs (a), (b), and (c) of this section apply.
(e) An off-cycle pay increase granted under this section will be
effective prospectively, not retroactively.
Sec. 534.511 Exemption from performance appraisal requirements.
(a) An agency responsible for setting and adjusting rates of basic
pay for SL or ST employees or positions excluded from performance
appraisal by or under statute is, with respect to those employees or
positions, exempt from any provision of this subpart to the extent that
it makes a pay determination contingent upon performance appraisal,
including--
(1) Section 534.505(a)(1), (2) and (3) to the extent these
paragraphs require that an agency's plan for setting and increasing
rates of basic pay reflect meaningful distinctions among SL and ST
employees based upon individual performance and include criteria that
ensure individuals with the highest levels of individual performance,
or the greatest contributions to agency performance, or both receive
the highest pay increases. The agency must still provide written
procedures for setting and adjusting rates of pay for covered SL and ST
employees that specify criteria that will be applied consistent with
applicable law. The remaining provisions of Sec. 534.505 apply, except
for references in Sec. 534.505(a)(5) to compliance with certification
requirements, centralized review of ratings and pay actions,
performance differentiation as described in Sec. 430.404(a)(8) of this
chapter, and pay differentiation as described in Sec. 430.404(a)(9) of
this chapter;
(2) Section 534.507(b), (c), (d), (e), and (f). The agency must
still document in writing the basis for each pay increase under Sec.
534.507 in accordance with criteria specified in the agency's written
procedures under Sec. 534.505(a); and
(3) Section 534.510(b) and (c). The agency must still document in
writing the basis for each off-cycle pay increase under Sec. 534.510
in accordance with criteria specified in the agency's written
procedures under Sec. 534.505(a).
(b) Except as specified in paragraph (a) of this section, an agency
responsible for setting and adjusting rates of basic pay for SL or ST
employees excluded from performance appraisal by or under statute is
subject to the requirements of this subpart with respect to those
employees.
(c) The maximum rate of basic pay for an SL or ST employee or
position not subject to performance appraisal is the maximum rate
described in Sec. 534.504(a)(2)(i). An agency head who uses the
exemption in paragraph (a) of this section to set the rate of basic pay
for SL or ST employees who are not subject to performance appraisal may
not certify that those employees are covered by a performance appraisal
system meeting the certification criteria established in part 430,
subpart D of this chapter for purposes of authorizing rates of basic
pay above the rate for level III of the Executive Schedule.
(d) Notwithstanding paragraph (c) of this section, an agency
responsible for setting and adjusting rates of basic pay for SL or ST
employees or positions excluded from performance appraisal by or under
statute is subject to Sec. 534.509(a) when setting a rate of basic pay
for an SL or ST employee upon transfer to such a position. The agency
may also apply Sec. 534.509(c) upon movement of an SL or ST employee
whose rate of basic pay was initially set under Sec. 534.509(a) or
Sec. 534.509(c) to another SL or ST position that is excluded from
performance appraisal. Pay may be reduced upon the movement only as
provided in Sec. 534.508. In either case, the employee will not be
eligible for a pay increase until he or she is appointed to an SL or ST
position that is subject to a certified performance appraisal system or
until his or her rate of basic pay is less than the rate for level III
of the Executive Schedule.
[FR Doc. 2011-32939 Filed 12-22-11; 8:45 am]
BILLING CODE 6325-39-P