[Federal Register: May 13, 2005 (Volume 70, Number 92)]
[Rules and Regulations]
[Page 25731-25752]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr13my05-13]
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Part VII
Office of Personnel Management
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5 CFR Parts 530 and 575
Recruitment, Relocation, and Retention Incentives; Final Rules
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OFFICE OF PERSONNEL MANAGEMENT
5 CFR PARTS 530 and 575
RIN 3206-AK81
Recruitment, Relocation, and Retention Incentives
AGENCY: Office of Personnel Management.
ACTION: Interim rule with request for comments.
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SUMMARY: The Office of Personnel Management is issuing interim
regulations to implement a provision of the Federal Workforce
Flexibility Act of 2004 to provide agencies with the authority to pay
recruitment, relocation, and retention incentives to employees. The new
authorities will provide agencies with additional flexibility to help
recruit and retain employees and better meet agency strategic human
capital needs. The new authorities replace the former recruitment and
relocation bonus and retention allowance authorities that applied to
General Schedule and other categories of Federal employees.
DATES: Effective Date: The interim regulations will become effective on
May 13, 2005.
Applicability Date: The interim regulations apply to recruitment
and relocation incentives authorized under 5 U.S.C. 5753 and retention
incentives authorized under 5 U.S.C. 5754 on the first day of the first
pay period beginning on or after May 13, 2005.
Comment Date: Comments must be received on or before July 12, 2005.
ADDRESSES: Send or deliver written comments to Donald J. Winstead,
Deputy Associate Director for Pay and Performance Policy, Division for
Strategic Human Resources Policy, Office of Personnel Management, Room
7H31, 1900 E Street, NW., Washington, DC 20415-8200; by fax at (202)
606-0824, or by e-mail at pay-performance-
policy@opm.gov.
FOR FURTHER INFORMATION CONTACT: Jeanne Jacobson by telephone at (202)
606-2858; by fax at (202) 606-0824; or by e-mail at pay-performance-
policy@opm.gov.
SUPPLEMENTARY INFORMATION: The Office of Personnel Management (OPM) is
issuing interim regulations to implement section 101 of the Federal
Workforce Flexibility Act of 2004 (Pub. L. 108-411, October 30, 2004).
Section 101 amends 5 U.S.C. 5753 and 5754 by providing a new authority
to make recruitment, relocation, and retention payments. The amended
law replaces the former authority provided by 5 U.S.C. 5753 and 5754.
These interim regulations replace existing regulations at 5 CFR part
575, subparts A, B, and C, to pay recruitment and relocation bonuses
and retention allowances. To differentiate these kinds of payments--
which are designed to provide a monetary incentive for an individual or
group to accept a new position or to remain employed in the current
position(s), as opposed to rewarding an individual or group for quality
of performance (the typical context in which the term ``bonus'' is
used)--these interim regulations use the term ``incentive'' in place of
``bonus.'' These interim regulations also build on the flexibilities
provided by the former authority to provide agencies with additional,
enhanced authority to pay recruitment, relocation, and retention
incentives to employees to address recruitment and retention problems
and better meet agency strategic human capital needs.
Overall Authority
These interim regulations provide agencies with the authority to
pay--
Recruitment incentives under 5 CFR part 575, subpart A, to
an employee newly appointed to a position that is likely to be
difficult to fill in the absence of an incentive;
Relocation incentives under 5 CFR part 575, subpart B, to
a current employee who must relocate to a new geographic area to accept
a position that is likely to be difficult to fill in the absence of an
incentive; and
Retention incentives under 5 CFR part 575, subpart C, to a
current employee with unusually high or unique qualifications or when
there is a special need of the agency for the employee's services that
makes it essential to retain the employee and when the agency
determines that the employee would be likely to leave the Federal
service in the absence of an incentive.
Payments to Current Employees in Interagency Movements
Section 101 of the Act amended 5 U.S.C. 5753(b) to allow OPM to
authorize the head of an agency to pay a recruitment incentive to a
current employee (of the same or a different agency) who moves to a
position in the same geographic area that is likely to be difficult to
fill in the absence of an incentive under circumstances described in
OPM's regulations. Similarly, 5 U.S.C. 5754 was amended to allow OPM to
authorize the head of an agency to pay a retention incentive to a
current employee who would be likely to leave his or her position for a
different position in the Federal service in the absence of a retention
incentive under conditions described in OPM's regulations. Congress
requested OPM to monitor the use of recruitment and retention
incentives under these circumstances to ensure that they are an
effective use of the Federal Government's funds and do not adversely
affect the ability of those Government agencies that lose employees to
other Government agencies to carry out their mission. The law provides
that agencies should notify OPM within 60 days after the date a
recruitment or retention incentive is authorized under these
circumstances.
OPM recognizes that costly and inefficient interagency competition
could occur if agencies are permitted to authorize recruitment and
retention incentives to encourage employees to move from other agencies
or to discourage employees from moving to other agencies. We have
discussed this issue with the Chief Human Capital Officers (CHCO)
Council and have agreed that, before OPM issues any rules providing
agencies with the authority to pay recruitment and retention incentives
to current employees in interagency movements, we will invite comments
from interested parties on whether an agency should be permitted to
authorize a recruitment incentive to recruit an employee from another
agency or to authorize a retention incentive to retain an employee
likely to leave for another Federal position and, if so, the specific
circumstances in which such incentives should be authorized. Therefore,
these interim regulations do not provide agencies with the authority to
pay recruitment or retention incentives to current employees in
interagency movements.
OPM invites comments on whether, in view of the potential for
costly and inefficient interagency competition, it would be appropriate
to authorize a recruitment incentive for a current employee who moves
to another Federal position in the same geographic area that is likely
to be difficult to fill. Specifically--
Would it be desirable to allow an agency to offer a
recruitment incentive to a current employee (of the same or a different
Federal agency) when the head of the agency initiating the recruitment
action determines that the unique competencies (i.e., knowledge,
skills, abilities, behaviors, and other characteristics) possessed by
the employee are critical to the successful accomplishment of an
important agency mission?
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Would it be desirable to allow an agency to offer a
recruitment incentive to a current employee (of the same or a different
Federal agency) when the offered position is under a pay system that
differs from the pay system of the employee's position before the move
and the head of that agency determines that the employee's service in
the new position is critical to the successful accomplishment of an
important agency mission?
Would it be desirable to allow the head of an agency to
offer a recruitment incentive to a current employee (of the same or a
different Federal agency) when the employee is changing career fields
by moving to a position in an occupational series that is part of an
occupational group other than the occupational group of the employee's
position immediately before the move (e.g., a program analyst (0343)
moving to an information technology specialist (security (2210)
position)?
Likewise, we invite comments on whether, in view of the potential
for costly and inefficient interagency competition, it would be
appropriate to offer a retention incentive to a current employee who
would be likely to leave his or her position for a different position
in the Federal service in the absence of such an incentive.
Specifically--
Would it be desirable to allow an agency to offer a
retention incentive to a current employee when the head of that agency
determines that the loss of the employee's unique competencies (i.e.,
knowledge, skills, abilities, behaviors, and other characteristics)
required for the position would adversely affect the successful
accomplishment of an important agency mission or the completion of a
critical project?
Would it be desirable to allow an agency to offer a
retention incentive to a current employee when the offered position is
under a pay system that differs from the pay system of the employee's
position before the move and the head of that agency determines that
the loss of the employee in the current position would adversely affect
the successful accomplishment of an important agency mission or the
completion of a critical project?
Would it be desirable to allow an agency to offer a
retention allowance when the employee's position requires him or her to
work under unusually severe or arduous working conditions (e.g., an
extreme climate; unreliable essential services, such as basic utility
or telecommunication services; or other harsh conditions) that the
agency cannot control and the head of that agency has determined that
these conditions have a significant negative effect on the agency's
ability to retain that employee at the worksite?
Would it be desirable to allow an agency to offer a
retention incentive to a current employee in order to retain an
employee who is likely to leave his or her position for another Federal
position before the closure or relocation of the employee's office or
facility and the head of that agency has determined that the employee's
services are critical to the successful closure or relocation?
OPM also invites comments on whether we should limit the payment of
a recruitment or retention incentive in any of the circumstances listed
in this section of the Supplementary Information to only those
employees whose rating of record is at the highest level under the
applicable performance appraisal or evaluation system.
Requirements Applicable to Recruitment, Relocation, and Retention
Incentives
The regulations governing each of the recruitment, relocation, and
retention incentive authorities are provided in separate subparts of 5
CFR part 575, as discussed later in this Supplementary Information. In
addition to these interim regulations, OPM will issue guidance to
implement the new recruitment, relocation, and retention incentive
authorities. The following requirements are similar for all of the new
recruitment, relocation, and retention authorities:
Covered Employees
Under 5 U.S.C. 5753(a)(1) and 5754(a)(1), the new recruitment,
relocation, and retention incentive authorities may be applied to
employees covered by the General Schedule (GS) pay system or to
employees in a category approved by OPM for coverage at the request of
the head of an Executive agency. OPM has decided to extend coverage
under the new recruitment, relocation, and retention incentive
authorities to those categories of employees that were previously
approved for coverage under the former recruitment, relocation, and
retention authorities, except when otherwise excluded. (See Employees
not covered in this Supplementary Information.) As under the former
recruitment, relocation, and retention regulations, Sec. Sec. 575.103,
575.203, and 575.303 of these interim regulations provide that
employees in the following categories of positions are eligible for
recruitment, relocation, and retention incentives:
A GS position paid under 5 U.S.C. 5332 or 5305 (or similar
special rate authority);
A senior-level (SL) or scientific or professional (ST)
position paid under 5 U.S.C. 5376;
A Senior Executive Service (SES) position paid under 5
U.S.C. 5383 or a Federal Bureau of Investigation and Drug Enforcement
Administration (FBI/DEA) SES position paid under 5 U.S.C. 3151;
A position as a law enforcement officer, as defined in 5
CFR 550.103;
A position under the Executive Schedule paid under 5
U.S.C. 5311-5317 or a position the rate of pay for which is fixed by
law at a rate equal to a rate for the Executive Schedule; and
A prevailing rate position, as defined in 5 U.S.C.
5342(a)(3).
Sections 575.103, 575.203, and 575.303 of these interim regulations
also provide the head of an Executive agency with the discretionary
authority to request that OPM approve coverage of other categories of
employees. Employees in a requested category must be in an Executive
agency (as defined in 5 U.S.C. 105) and meet the definition of employee
under 5 U.S.C. 2105 (including an employee paid from nonappropriated
funds who is covered by 5 U.S.C. 2105(c)). However, agencies do not
need to request coverage of a category of employees under the new
recruitment, relocation, and retention incentive authorities if OPM
previously approved that category for coverage under the former
authorities. Coverage of such employee categories under the new
authorities will continue unless otherwise requested by the head of an
Executive agency or excluded by the regulations. OPM will separately
notify agencies regarding the coverage of such employee categories.
Employees Not Covered
Sections 5753(a)(2) and 5754(a)(2) of title 5, United States Code,
prohibit the payment of recruitment, relocation, and retention
incentives to employees in--
A position to which an individual is appointed by the
President, by and with the advice and consent of the Senate;
A position in the SES as a noncareer appointee (as defined
in 5 U.S.C. 3132(a)(7)); or
A position excepted from the competitive service by reason
of its confidential, policy-determining, policy-making, or policy-
advocating character.
In addition, these interim regulations prohibit recruitment,
relocation, and retention incentives for employees in positions to
which an individual is
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appointed by the President without the advice and consent of the
Senate. (See Sec. Sec. 575.104, 575.204, and 575.304.) For example,
certain Executive Schedule Presidential appointees who do not otherwise
fall into the other excluded categories are prohibited from receiving
new recruitment, relocation, and retention incentives under this
additional exclusion. As with the former authorities, the interim
regulations also prohibit an employee in a position designated as the
head of an agency, including an agency headed by a collegial body
composed of two or more individual members and an employee appointed to
a position in the expectation of receiving an appointment as the head
of an agency, from receiving recruitment, relocation, and retention
incentives.
Authorization of Recruitment, Relocation, and Retention Incentives
An authorized agency official may (1) determine whether an employee
meets the statutory requirements for receiving a recruitment,
relocation, or retention incentive; (2) approve an incentive for an
employee; (3) establish the criteria for determining the amount of an
incentive payment, method of payment, and length of a required service
period; and (4) establish the criteria for terminating a service
agreement and any obligations of the agency and employee when a service
agreement is terminated. (See Sec. Sec. 575.106, 575.206, and
575.306.)
Recruitment, Relocation, and Retention Incentive Plans and Approval
Levels
Under 5 U.S.C. 5753(f) and 5754(g) and Sec. Sec. 575.107, 575.207,
and 575.307, an agency must establish a separate plan for each of the
new recruitment, relocation, and retention incentives authorities.
However, the agency may establish an overall policy for using
recruitment, relocation, and retention incentives that addresses the
criteria, options, and requirements that apply to all three incentives,
but also includes separate plans that provide detailed information on
the unique features of each of the recruitment, relocation, and
retention incentive authorities. The agency's policy must include the
designation of officials with authority to approve the incentives, the
categories of employees who are prohibited from receiving incentives,
requirements for determining the amount of an incentive and the payment
method, requirements governing service agreements, and documentation
and recordkeeping requirements. In the interest of ensuring internal
equity and consistency, the interim regulations require that such plans
apply uniformly across the agency (unless the agency head in his or her
sole and exclusive discretion determines otherwise, subject only to OPM
review and oversight).
An authorized agency official who is at least one level higher than
the employee's supervisor is authorized to approve a recruitment,
relocation, and retention incentive for eligible employees, unless
there is no official at a higher level in the agency. Sections
575.107(b), 575.207(b), and 575.307(b) provide certain additional
exceptions to the higher-level review and approval requirement.
Requirements for Approving Incentives
Each of the recruitment, relocation, and retention incentive
authorities has separate criteria for authorization of an incentive,
but shares a new criterion--namely, that eligible employees must have
or maintain a rating of record of at least ``Fully Successful'' or
equivalent to receive a recruitment, relocation, or retention
incentive, as applicable. (See Sec. Sec. 575.111(b), 575.205(c),
575.211(b), 575.305(d), and 575.311(b) and (g)(4).)
In determining whether to authorize an incentive, agencies must
consider a number of factors, as applicable to the case at hand. For
example, agencies must consider employment trends and labor-market
factors, non-Federal salaries paid for similar positions, special or
unique competencies required for the position, agency efforts to use
non-pay authorities, and the desirability of the duties, work or
organizational environment, or location of the position.
For each determination to pay a recruitment, relocation, or
retention incentive, an agency must document in writing the basis for
the approval of the incentive, the amount and timing of the incentive
payment, and the length of the required service period.
Recruitment, Relocation, and Retention Incentive Payments
The interim regulations require agencies to use an employee's
special rate or locality rate of pay, as applicable, to compute
recruitment, relocation, and retention incentive payments. (Agencies
were prohibited from using locality rates for this purpose under the
former recruitment, relocation, and retention authorities.) Sections
575.102, 575.202, and 575.302 of the regulations define rate of basic
pay to include a special rate under 5 CFR part 530, subpart C, or
similar payment under other legal authority and a locality-based
comparability payment under 5 CFR part 531, subpart F, or similar
payment under other legal authority. The definition of rate of basic
pay excludes additional pay of any other kind, including night shift
differentials under 5 U.S.C. 5343(f) or environmental differentials
under 5 U.S.C. 5343(c)(4) for Federal Wage System employees.
Under 5 U.S.C. 5753(d)(3) and 5754(e)(3) and Sec. Sec. 575.109(e),
575.209(d), and 575.309(h) of these interim regulations, recruitment,
relocation, and retention incentive payments are not considered part of
basic pay for any purpose. In addition, Sec. Sec. 575.109(f),
575.209(e), and 575.309(i) provide that payment of recruitment,
relocation, and retention incentives is subject to the aggregate
limitation on pay under 5 U.S.C. 5307 and 5 CFR part 530, subpart B.
(See also the discussion on the aggregate limitation on pay under the
``Retention Incentives'' section of this Supplementary Information.)
The law and these interim regulations prescribe the limitations on
the maximum amount of recruitment, relocation, and retention incentives
payments that may be paid to an employee. (See the maximum incentive
payments that agencies may authorize under ``Recruitment Incentives''
and ``Retention Incentives'' later in this Supplementary Information.)
Under 5 U.S.C. 5753(e) and 5754(f), and Sec. Sec. 575.109(c),
575.209(c), and 575.309(e), an authorized agency official may request
that OPM waive these limitations based on a critical agency need. In
addition to determining whether the situation meets the regular
approval criteria, the authorized agency official must determine that
the competencies required for the position are critical to the
successful accomplishment of an important agency mission, project, or
initiative (e.g., programs or projects related to a national emergency
or implementing a new law or critical management initiative). (Note:
The term competencies is defined in all three subparts of these interim
regulations as ``the knowledge, skills, abilities, behaviors, and other
characteristics an [individual or] employee needs to perform the duties
of a position.'' See Sec. Sec. 575.102, 575.202, and 575.302.)
Service Agreements
Under 5 U.S.C. 5753(c) and 5754(d) and Sec. Sec. 575.110, 575.210,
and 575.310, before paying a recruitment, relocation, or retention
incentive, an agency must require the employee to sign a written
service agreement to complete a specified period of employment with the
agency. (A service agreement is not required when an agency pays an
employee a retention incentive in biweekly installments of equal
amounts. See 5 U.S.C. 5754(d)(3)(A) and Sec. 575.310(f).)
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A service agreement for a recruitment, relocation, or retention
incentive must specify the length of the service period, the amount of
the incentive, the method and timing of incentive payments (e.g., lump-
sum payment and/or installments), the conditions under which an
agreement may be terminated by the agency, any agency or employee
obligations if a service agreement is terminated, and any other terms
and conditions for receiving and retaining incentive payments.
The required service period for a recruitment incentive may not be
less than 6 months. There is no minimum service period for a relocation
or retention incentive. The maximum service period for a recruitment or
relocation incentive may not exceed 4 years. There is no maximum
service period for a retention incentive.
The service agreement must specify the commencement date and
termination date of the required service period. The regulations
require that recruitment, relocation, and retention incentive service
agreements begin on the first day of a pay period and end on the last
day of a pay period. In addition, Sec. Sec. 575.110(b)(3) and
575.210(b)(3) provide agencies with the discretionary authority to
delay the commencement date of a recruitment or relocation incentive
service agreement until after the employee completes an initial period
of formal training or after a probationary period. (See 5 U.S.C.
5753(c)(2)(C).)
Termination of Service Agreement
An authorized agency official may unilaterally terminate a
recruitment, relocation, or retention incentive service agreement based
on the management needs of the agency. For example, an agency may
terminate a service agreement when the employee's position is affected
by a reduction in force, when there are insufficient funds to continue
the planned incentive payments, or when the agency assigns the employee
to a different position (if the different position is not within the
terms of the service agreement). An agency must terminate a service
agreement if an employee is demoted or separated for cause (i.e., for
unacceptable performance or conduct), if the employee receives a rating
of record lower than ``Fully Successful'' or equivalent during the
service period, or if the employee otherwise fails to fulfill the terms
of the service agreement.
If an authorized agency official terminates a service agreement
based on the management needs of the agency, the agency must pay any
recruitment, relocation, or retention incentive payments attributable
to completed service. If an authorized agency official terminates a
service agreement because of the employee's unacceptable performance or
conduct, the employee receives a rating of record of lower than ``Fully
Successful'' or equivalent, or the employee fails to fulfill the terms
of the service agreement, the employee will retain any recruitment,
relocation, or retention incentives that are attributable to completed
service; receive unpaid recruitment, relocation, or retention
incentives that are attributable to completed service only if approved
by the agency under the terms of the service agreement; and must
reimburse the Federal Government for any recruitment or relocation
incentive payments received that are attributable to uncompleted
service. While the head of an agency may waive any debt owed to the
Federal Government under 5 U.S.C. 5584, if warranted, waivers should be
rare because the employee agreed to the repayment conditions when he or
she signed the service agreement. See Sec. Sec. 575.111, 575.211, and
575.311 for additional information on terminating service agreements.
Recruitment Incentives
Under 5 U.S.C. 5753(b)(2)(A) and (B) and Sec. 575.105 of these
interim regulations, an agency may pay a recruitment incentive to an
individual who is newly appointed as an employee of the Federal
Government to a position the agency has determined is likely to be
difficult to fill in the absence of a recruitment incentive. This
determination must be made on an individual, case-by-case basis before
the employee enters on duty. An agency may target groups of positions
and make this determination on a group basis.
Difficult To Fill
Under Sec. 575.106, an agency may determine that a position is
likely to be difficult to fill if--
The agency is likely to have difficulty recruiting
qualified candidates with the competencies required for a position (or
group of positions) in the absence of a recruitment incentive,
considering the factors in Sec. 575.106(b); or
OPM has approved the use of a direct-hire authority under
5 CFR part 337, subpart B, for the position (or group of positions).
Newly-Appointed Employees
An agency may pay a recruitment incentive to an individual who is
newly appointed as an employee of the Federal Government. Under Sec.
575.102 of the recruitment incentive regulations, newly appointed
refers to--
The first appointment, regardless of tenure, as an
employee of the Federal Government (as that term is defined in Sec.
575.102);
An appointment as a former employee of the Federal
Government following a break in service of at least 90 days; and
An appointment as an employee of the Federal Government
when the employee's Federal service during the 90-day period
immediately preceding the appointment was limited to one or more of the
categories listed in paragraph (3) of the definition of newly
appointed. For example, if an individual was employed under a
competitive or excepted service temporary or time-limited appointment
during the 90 days immediately preceding an appointment to a GS
position, the agency may pay the employee a recruitment incentive upon
appointment to a GS position.
Payment Options and Caps
The new recruitment incentive authority provides a wide range of
options for paying a recruitment incentive and significantly raises the
limit on recruitment incentive payments. Under 5 U.S.C. 5753(d)(2) and
Sec. 575.109(a) of these interim regulations, an agency may pay a
recruitment incentive as an initial lump-sum payment at the
commencement of the service period required by the service agreement in
equal or variable installment payments throughout the service period
required by the service agreement, as a final lump-sum payment upon
completion of the full service period required by the service
agreement, or in a combination of these payment methods. For example,
an agency may decide to pay a portion of a recruitment incentive to an
employee upon appointment to the new position, another portion when the
employee completes half of the service period required by the service
agreement, and a final payment when the employee completes the full
service period required by the service agreement. Under 5 U.S.C.
5753(d)(4) and Sec. 575.109(d), agencies also may pay all or part of a
recruitment incentive to an individual who has not yet entered on duty
once he or she has signed a service agreement under Sec. 575.110.
Under 5 U.S.C. 5753(d)(1) and Sec. 575.109(b), the total amount of
recruitment incentive payments received by an employee in a service
period may not exceed 25 percent of an employee's annual rate of basic
pay in effect at the beginning of the service
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period (including any special rate or locality payment) multiplied by
the number of years (or fractions of a year) in a service period. This
will allow an agency to pay a recruitment incentive of as much as 100
percent of an employee's annual rate of basic pay in effect at the
beginning of the service period if the employee signs a 4-year service
agreement. Special rules apply for determining the annual rate of basic
pay for employees who do not have a scheduled annual rate (e.g.,
Federal Wage System employees) and for determining the number of years
in a service period. (See Sec. 575.109(b)(2) and (b)(3).)
For example, assume an agency decides to pay the maximum
recruitment incentive to an employee. The recruitment incentive service
agreement covers 39 pay periods (546 days). The employee's annual rate
of basic pay (including locality pay) at the beginning of the service
period is $74,782. To determine the maximum recruitment incentive the
agency may authorize, the following calculation must be made: $74,782
(annual rate) x .25 (25%) x 1.5 years (546 days/365 days) = $28,043.
Thus, the employee may receive recruitment incentive payments totaling
up to $28,043 for a 39 pay period service agreement. Under Sec.
575.109(a), the agency may pay the $28,043 recruitment incentive as an
initial up-front payment at the beginning of the service period, divide
the $28,043 recruitment incentive into installment payments to be paid
throughout the service period, pay the full $28,043 at the end of the
service period, or use a combination of these payment methods.
As previously discussed in this Supplementary Information, under 5
U.S.C. 5753(e) and Sec. 575.109(c), an authorized agency official may
request that OPM waive the 25 percent limitation under Sec. 575.109(b)
based on a critical agency need. Under such a waiver, the total amount
of recruitment incentive payments received by an employee in a service
period may not exceed 50 percent of the employee's annual rate of basic
pay (including any special rate or locality payment) at the beginning
of the service period multiplied by the number of years (including
fractions of a year) in the service period. In no event may a waiver
provide total recruitment incentives payments exceeding 100 percent of
the employee's annual rate of basic pay at the beginning of the service
period. Section 575.109(c)(2) provides the documentation that agencies
must include when submitting waiver requests to OPM.
Repayment Upon Termination of Service Agreement
As previously discussed in this Supplementary Information, an
agency must terminate a recruitment incentive service agreement when an
employee is demoted or separated for cause, when the employee receives
a rating of record of less then ``Fully Successful,'' or when an
employee fails to fulfill the terms of a service agreement (Sec.
575.111(b)). If an agency terminates a service agreement under these
circumstances, the employee is entitled to keep all recruitment
incentive payments that the agency paid to the employee that are
attributable to completed service. (See Example A in the next
paragraph.) If the employee received recruitment incentive payments
that are less than the amount that would be attributable to the
completed portion of the service period, the agency is not obligated to
pay the employee the amount attributable to completed service, unless
the agency agrees to such payment under the terms of the recruitment
incentive service agreement. If the employee received recruitment
incentive payments in excess of the amount that would be attributable
to the completed portion of the service period, he or she must repay
the excess amount. (See Example B in the next paragraph.)
Example A: Assume that an employee who signed a 364-day (26-pay
period) service agreement will receive a total recruitment incentive
of $28,043 in two installment payments--i.e., $14,021 at the end of
13 pay periods of completed service and $14,022 at the end of 26 pay
periods of completed service. The employee receives the first
payment of $14,021. However, after 20 pay periods (280 days), the
employee is demoted for cause and the agency terminates the service
agreement. The employee is entitled to keep the $14,021 recruitment
incentive payment already received and to receive a prorated share
of the second planned recruitment incentive payment based on the
amount of service completed. The employee would receive an
additional $7,544.07 (280 days/364 days = 76.9%; 76.9% x $28,043 =
$21,565.07; $21,565.07 - $14,021 = $7,544.07) only if authorized by
the agency under the terms of the service agreement.
Example B: Assume an employee signed a 364-day (26-pay period)
service agreement and received the full amount of a $28,043
recruitment incentive payment as an initial lump-sum payment. If the
agency separates the employee for conduct after 20 pay periods (280
days), the employee would incur an obligation equal to 23.1 percent
(84 days/364 days) of the payment, or $6,477.93. The employee may
keep 76.9 percent (280 days/364 days) of the payment, or $21,565.07.
Relocation Incentives
Under 5 U.S.C. 5753(b)(2)(B)(i) and (ii) and Sec. 575.206 of these
interim regulations, an agency may pay a relocation incentive to an
employee of the Federal Government who must relocate to a different
geographic area without a break in service to accept a position in an
agency when the position is likely to be difficult to fill or to an
employee of an agency who must relocate to a different geographic area
to accept a position when the position is likely to be difficult to
fill. The relocation may be permanent or temporary and voluntary or
involuntary. The employee must sign a service agreement to fulfill a
service period in the new geographic area in return for payment of the
relocation incentive.
The new flexibilities and authorities in the relocation incentive
regulations regarding approval criteria, documentation requirements,
payment options and caps, service agreement options and requirements,
and repayment requirements are parallel to the provisions in the
recruitment incentive regulations at 5 CFR part 575, subpart A, as
previously described in this Supplementary Information. The following
provisions are unique to the relocation incentive regulations:
Under Sec. 575.208(b), an agency may waive the case-by-
case approval requirement for relocation incentives under two specific
conditions and authorize a relocation incentive for a group or category
of employees. These conditions are identical to those found in the
former relocation bonus regulations.
Under Sec. 575.205(b), an agency may pay a relocation
incentive if the new position or assignment is in a different
geographic area. A position is considered to be in a different
geographic area if the worksite of the new position is 50 miles or more
from the worksite of the position held immediately before the move. If
the worksite of the new position is less than 50 miles from the
worksite of the position held immediately before the move, but the
employee must relocate (i.e., establish a new residence) to accept the
position, the head of the agency may waive the 50-mile requirement and
pay the employee a relocation incentive subject to the requirements in
subpart B of these interim regulations.
Under Sec. 575.205(b), an employee must establish a
residence (temporary or permanent) in the new geographic area before
the agency may pay a relocation incentive.
An agency may not pay a relocation incentive to an
employee before the employee enters on duty in the position to which
relocated.
In addition, section 101(b) of Pub. L. 108-411 repealed the $15,000
relocation
[[Page 25737]]
bonus payment limit that applied to law enforcement officers under
section 407 of the Federal Employees Pay Comparability Act of 1990
(Public Law 101-509). All employees are covered by the same relocation
incentive limit under the new authority at 5 U.S.C. 5753(d) and Sec.
575.209 of these interim regulations.
Retention Incentives
Under 5 U.S.C. 5754(b) and Sec. 575.305 of these interim
regulations, an agency may pay a retention incentive to a current
employee when the agency determines that the unusually high or unique
qualifications of the employee or a special need of the agency for the
employee's services makes it essential to retain the employee and the
employee would be likely to leave in the absence of a retention
incentive. Like the former retention allowance authority, Sec. 575.305
provides agencies with the flexibility to authorize a retention
incentive for an individual employee or for a group or category of
employees. (The group retention incentive authority may not be used for
SL/ST employees, members of the SES or FBI/DEA SES, Executive Schedule
officials, or employees in similar positions. See Sec. 575.305(c).)
Payment Options and Caps
Under 5 U.S.C. 5754(e)(1) and Sec. 575.309(a), an agency must
establish a retention incentive rate for each individual employee or
group of employees which must be expressed as a percentage of the
employee's rate of basic pay (including any special rate or locality
payment). Except as provided in Sec. 575.309(e), the retention
incentive rate may not exceed 25 percent of an employee's rate of basic
pay, if authorized for an individual employee, or 10 percent of an
employee's rate of basic pay, if authorized for a group or category of
employees.
The new retention incentive authority provides agencies with a
number of options for paying a retention incentive. Under 5 U.S.C.
5754(e)(2)(A) and Sec. 575.309(b), an agency may pay a retention
incentive in (1) installments after the completion of specified periods
of service (biweekly, monthly, quarterly, etc.), or (2) a single lump-
sum payment after the completion of the full service period required by
a service agreement. Under 5 U.S.C. 5754(e)(2), an agency may not pay a
retention incentive as an initial lump-sum payment at the start of a
service period or in advance of fulfilling the service period for which
the incentive is being paid. If an agency chooses to pay retention
incentives in installments, the agency may compute each retention
incentive installment payment using the full retention incentive
percentage rate established for the employee (or group of employees)
under Sec. 575.309(a) or a reduced percentage rate. An agency may
decide to use different payment options for different retention
incentive authorizations.
Under 5 U.S.C. 5754(e)(2)(B) and Sec. 575.309(c)(1), each
installment payment is derived by multiplying the retention incentive
percentage rate by the total rate of basic pay the employee earned
during the installment period (including any special rate or locality
payment). If an agency chooses to provide an installment payment that
reflects a reduced retention incentive percentage rate under Sec.
575.309(a), any portion of the retention incentive that is accrued by
the employee during an installment period but not paid must be paid as
part of a final installment payment to the employee after completion of
the full service period under the terms of the service agreement. A
retention incentive paid as a single lump-sum payment upon completion
of the full service period is derived by multiplying the retention
incentive percentage rate established for the employee (or group of
employees) under Sec. 575.309(a) by the total amount of basic pay
earned by the employee during the full service period. (See 5 U.S.C.
5754(e)(2)(B) and (C) and Sec. 575.309(c) and (d).)
The following chart compares how a 10 percent retention incentive
payment is calculated and paid using a sample of payment options
available under the regulations. An employee's biweekly rate (computed
under 5 U.S.C. 5504) must be used to compute an installment payment or
a lump-sum payment. The installment payment is derived by multiplying
the percentage incentive retention rate by the employee's basic pay
earned in each biweekly pay period during the installment period. In
the examples below, a biweekly rate of $3,057.60 is used to compute
retention incentive installment payments after 13 and 26 pay periods of
service and to compute a retention incentive lump-sum payment after 26
pay periods of service.
----------------------------------------------------------------------------------------------------------------
Total retention
Retention incentive payment Retention Basic pay earned Retention incentive paid
option incentive rate in installment incentive after 26 pay
period installment periods
----------------------------------------------------------------------------------------------------------------
Installment payment provided 10% (Each $39,748.80 $3,974.88 (each) $7,949.76
after 13 and 26 pay periods of installment ($3,057.60 ($39,748.80 basic ($3,974.88
service. computed at full biweekly rate pay earned times incentive times 2
percentage rate.). times 13 pay 10%). installments).
periods).
Installment payment provided 10% First $39,748.80 First: $1,987.44 $7,949.76 (Two
after 13 and 26 pay periods of installment ($3,057.60 ($39,748.80 basic installments of
service. computed at a biweekly rate pay earned times $1,987.44 and
reduced times 13 pay 5%). $5,962.32).
percentage rate periods). Second: 5,962.32
of 5%. ($39,748.80 basic
Second installment pay earned times;
computed at 10% 10%, plus
percentage rate, $1,987.44
plus remaining 5% (remaining 5%
unpaid accrued unpaid accrued
incentive from incentive from
first installment first installment
period. period)).
Final lump-sum payment provided 10%............... $79,497.60 $7,949.76 $7,949.76 (One
after 26 pay periods of service. ($3,057.60 ($79,497.60 basic lump-sum payment
biweekly rate rate earned times of $7,949.76).
times 26 pay 10%).
periods).
----------------------------------------------------------------------------------------------------------------
As previously discussed in this Supplementary Information, under 5
U.S.C. 5754(f) and Sec. 575.309(e), an authorized agency official may
request that OPM waive the 25 percent payment limitation for individual
employees or the 10 percent payment limitation for groups of employees
under Sec. 575.309(a) based on a critical agency need. Under such a
waiver, a retention incentive may not exceed 50 percent of the
employee's rate of basic pay (including any special rate or locality
payment). OPM will consider waiver requests only for those employees or
groups of employees who will be required to sign a service agreement.
Section 575.309(e)(2) establishes the documentation that must
[[Page 25738]]
be submitted to OPM for waiver requests. OPM may require that waiver
requests for groups or categories of employees be coordinated with
other agencies that have similar categories of employees.
Under 5 U.S.C. 5754(d)(4) and Sec. 575.309(g), an agency may not
begin a retention incentive service agreement or begin paying a
retention incentive during a service period covered by a service
agreement for payment of a recruitment or relocation incentive.
However, an agency may authorize a relocation incentive after a
retention incentive service agreement or retention incentive payments
have begun.
Aggregate Limitation on Pay
As previously discussed in this Supplementary Information,
retention incentives are subject to the aggregate limitation on pay
under 5 U.S.C. 5307 and 5 CFR part 530, subpart B. Unlike the former
retention allowance authority, retention incentives under the new
authority are treated like other covered payments authorized under
title 5, United States Code, when administering the aggregate
limitation rules. Excess retention incentive payments that would cause
an employee's total compensation to exceed the applicable aggregate
limitation may be deferred and paid in a lump-sum payment at the
beginning of the following calendar year. This change will simplify
payroll processing, be easier for employees to understand, and provide
a full retention incentive to key employees.
Continuation, Reduction, and Termination of Retention Incentive Service
Agreement
As previously discussed in this Supplementary Information, an
agency must terminate a retention incentive service agreement when an
employee is demoted or separated for cause, if the employee receives a
rating of record of less than ``Fully Successful'' or equivalent, or
when the employee fails to fulfill the terms of the service agreement
(Sec. 575.311(b)). If an agency terminates a retention incentive
service agreement under these circumstances, the employee is entitled
to retain any retention incentive payments received that are
attributable to completed service. If the employee received retention
incentive payments that are less than the amount that would be
attributable to the completed portion of the service period, the agency
is not obligated to pay the employee the amount attributable to
completed service, unless the agency agrees to such payment under the
terms of the service agreement. (See Example C in the next paragraph.)
Example C: Assume an employee who signed a 364-day (26-pay
period) service agreement will receive a total retention incentive
of $7,949.76 in two installment payments--i.e., $3,974.88 at the end
of 13 pay periods of completed service and $3,974.88 at the end of
26 pay periods of completed service. The employee receives the first
payment of $3,974.88. However, after 20 pay periods (280 days), the
employee is demoted for cause and the agency terminates the service
agreement. The employee is entitled to keep the $3,974.88 retention
incentive payment already received. If authorized in the service
agreement, the employee will receive a prorated share of the second
planned retention incentive payment based on the amount of service
completed or an additional $2,138.49 (280 days/364 days = 76.9%;
76.9% x $7,949.76 = $6,113.37; $6,113.37 -$3,974.88 = $2,138.49).
Termination of Retention Incentive When No Service Agreement Is
Required
Under Sec. 575.310(f) of these interim regulations, a written
service agreement is not required if the agency pays a retention
incentive in biweekly installments of equal amounts. Section 575.311(g)
requires agencies to review at least annually each determination to pay
retention incentives when no service agreement is required to determine
whether payment is still warranted and to certify this determination in
writing. An agency may continue such retention incentive payments as
long as conditions giving rise to the original determination to pay the
incentive still exist. An agency must reduce or terminate an incentive
paid without a service agreement whenever payment at the level
originally approved is no longer warranted. An agency must terminate a
retention incentive when no service agreement is required if the
employee is demoted or separated for cause or receives a rating of
record lower than ``Fully Successful'' or equivalent. If an agency
terminates a retention incentive when no service agreement is required,
the agency must provide written notice to the employee, and the
employee is entitled to receive any scheduled incentive payments
through the end of the pay period in which the written notice is
provided.
Recruitment, Relocation, and Retention Authority Monitoring
Requirements and Revocation or Suspension of Authority
The interim regulations at Sec. Sec. 575.112, 575.212, and 575.312
require agencies to monitor their use of the new recruitment,
relocation, and retention incentive authorities to ensure that their
recruitment, relocation, and retention plans and the use of the
authorities are consistent with the requirements and criteria
established under law and these interim regulations. These sections
also authorize OPM to revoke or suspend an agency's authority to make
recruitment, relocation, and retention incentive payments if OPM finds
the agency's use of the incentive authorities is not consistent with
law, regulations, and the agency's plans.
Records and Reports
These interim regulations at Sec. Sec. 575.113(a), 575.213(a), and
575.313(a) require agencies to keep a record of each determination to
pay a recruitment, relocation, or retention incentive and to make such
records available for review upon OPM's request. Section 101(c) of
Public Law 108-411 also requires OPM to submit an annual report to the
Committee on Governmental Affairs of the Senate and the Committee on
Government Reform in the House of Representatives on the operation of
the new recruitment, relocation, and retention incentive authorities
for each of the first 5 years in which the new authorities are in
effect (i.e., 2005 through 2009). Sections 575.113(b), 575.213(b), and
575.313(b) of these interim regulations require agencies to submit
specific information and data to OPM for this annual report. OPM will
issue additional guidance to agencies on these reporting requirements
by memorandum.
Recruitment, Relocation, or Retention Payments Authorized Before May 1,
2005
These interim regulations do not apply to recruitment and
relocation bonuses and retention allowances authorized under 5 U.S.C.
5753 and 5754 before May 1, 2005. Under section 101(d)(2) of Public Law
108-411 and Sec. Sec. 575.114 and 575.214 of these interim
regulations, a recruitment or relocation bonus service agreement that
was authorized under 5 U.S.C. 5753 and 5 CFR part 575, subparts A and
B, before May 1, 2005, remains in effect until its expiration, subject
to the law and regulations applicable to recruitment and relocation
bonuses before May 1, 2005. (Note: If an individual or employee
received a formal offer of a recruitment or relocation bonus before May
1, 2005, the agency may pay the bonus after that date as long as the
terms associated with the offer were consistent with the regulations in
effect when the offer was made.)
Under section 101(d)(3) of Public Law 108-411 and Sec. 575.314 of
these interim regulations, retention allowances that were authorized
under 5 U.S.C. 5754 and 5 CFR part 575, subpart C, before
[[Page 25739]]
May 1, 2005, must continue to be paid until the retention allowance is
reauthorized or terminated, but not later than April 30, 2006, and are
subject to the law and regulations applicable to retention allowances
before May 1, 2005. For example, retention allowances authorized before
May 1, 2005, must continue to be subject to the special rules regarding
the aggregate pay limitation under 5 CFR part 530, subpart B, and 5 CFR
part 575, subpart C, as in effect before May 1, 2005. (Note: If an
individual or employee received a formal offer of a retention allowance
before May 1, 2005, the agency may pay the allowance after that date as
long as the terms associated with the offer were consistent with the
regulations in effect when the offer was made.)
Other Conforming Changes
Aggregate Limitation on Pay
These interim regulations amend the definitions of aggregate
compensation and discretionary payment in 5 CFR 530.202 and 5 CFR
530.203 of the aggregate limitation on pay regulations to reflect the
new term retention incentive and the new rules regarding the
application of retention incentives toward the aggregate pay
limitation. (See discussion on the aggregate limitation on pay in the
``Retention Incentives'' section of this Supplementary Information.)
These interim regulations also make conforming changes to implement
section 301 of Public Law 108-411. The amended definitions of aggregate
compensation and basic pay in 5 CFR 530.202 delete obsolete references
and treat locality payments under 5 CFR part 531, subpart F, as basic
pay for the purpose of applying the aggregate limitation on pay.
Supervisory Differentials
These interim regulations amend the regulations regarding
supervisory differentials at 5 CFR 575.405 to reflect the new term
retention incentive and to exclude recruitment, relocation, and
retention incentives from the continuing pay of a supervisor and the
continuing pay of a subordinate for the purpose of comparing their pay
and calculating a supervisory differential.
These interim regulations also make conforming changes to implement
section 301 of Public Law 108-411 by removing obsolete references and
treating locality payments under 5 CFR part 531, subpart F, as basic
pay for the purpose of calculating supervisory differentials.
Extended Assignment Incentives
These interim regulations amend the extended assignment incentive
regulations at 5 CFR 575.506 to provide that an agency may not begin
paying an extended assignment incentive to an otherwise eligible
employee who is receiving a recruitment, relocation, or retention
incentive. These interim regulations also make conforming changes to
implement section 301 of Public Law 108-411 by removing obsolete
references and treating locality payments under 5 CFR part 531, subpart
F, as basic pay for the purpose of calculating extended assignment
incentives.
Waiver of Notice of Proposed Rulemaking and Delayed Effective Date
Pursuant to 5 U.S.C. 553(b)(3)(B), I find that good cause exists
for waiving the general notice of proposed rulemaking. Also, pursuant
to 5 U.S.C. 553(d)(3), I find that good cause exists for making this
rule effective in less than 30 days. These interim regulations
implement a provision of Public Law 108-411 that became effective on
May 1, 2005. Waiver of the requirements for proposed rulemaking and
making the effective date less than 30 days after publication are
necessary to ensure timely implementation of the law as intended by
Congress. To delay implementation of these regulations by imposing a
general notice of proposed rulemaking or an additional 30 day
implementation requirement would be contrary to the public interest in
giving Federal agencies flexibility to assist in their recruiting,
relocation, and retention efforts. The public will be benefited by the
immediate implementation of these regulations with no detriment,
financial or otherwise, in taking this action. Comments are being
solicited which will assist OPM in issuing final regulations without
negatively affecting agency flexibility.
E.O. 12866, Regulatory Review
This rule has been reviewed by the Office of Management and Budget
in accordance with E.O. 12866.
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.
List of Subjects in 5 CFR 530 and 575
Government employees, Reporting and recordkeeping requirements,
Wages.
Office of Personnel Management.
Dan G. Blair,
Acting Director.
0
Accordingly, OPM amends 5 CFR parts 530 and 575 as follows:
PART 530--PAY RATES AND SYSTEMS (GENERAL)
0
1. Revise the authority citation for part 530 to read as follows:
Authority: 5 U.S.C. 5305 and 5307; subpart C also issued under 5
U.S.C. 5338 and sec. 4, Pub. L. 103-89, 107 Stat. 981.
Subpart B--Aggregate Limitation on Pay
0
2. In Sec. 530.202--
0
a. Remove paragraph (2) in the definition of aggregate compensation;
0
b. Redesignate paragraphs (3) through (15) in the definition of
aggregate compensation as paragraphs (2) through (14), respectively,
and revise newly redesignated paragraphs (5) and (6); and
0
c. Revise the definitions of basic pay and discretionary payment.
The revisions read as follows:
Sec. 530.202 Definitions.
* * * * *
Aggregate compensation means the total of--* * *
(5) Recruitment and relocation incentives under 5 U.S.C. 5753 and
retention incentives under 5 U.S.C. 5754;
(6) Extended assignment incentives under 5 U.S.C. 5757;
* * * * *
Basic pay means the total amount of pay received at a rate fixed by
law or administrative action for the position held by an employee,
including any special rate under 5 CFR part 530, subpart B, or any
locality-based comparability payment under 5 CFR part 531, subpart F,
or other similar payment or supplement under other legal authority,
before any deductions. Basic pay includes night and environmental
differentials for prevailing rate employees under 5 U.S.C. 5343(f) and
5 CFR 532.511. Basic pay excludes additional pay of any other kind.
* * * * *
Discretionary payment means a payment an agency has discretion to
make or not to make to an employee. An extended assignment incentive
under 5 U.S.C. 5757 is a discretionary payment. However, other payments
that are preauthorized to be made to an employee at a regular fixed
rate each pay period are not discretionary payments.
* * * * *
[[Page 25740]]
0
3. In Sec. 530.203, remove paragraph (g)(3) and revise paragraph (d)
to read as follows:
Sec. 530.203 Administration of aggregate limitation on pay.
* * * * *
(d) When an agency authorizes a discretionary payment for an
employee, the agency must defer any portion of such payment that, when
added to the estimated aggregate compensation the employee is projected
to receive, would cause the employee's aggregate compensation during
the calendar year to exceed the applicable aggregate limitation. Any
portion of a discretionary payment deferred under this paragraph must
be available for payment as provided in Sec. 530.204. When a
discretionary payment is authorized but not required to be paid in the
current calendar year, an agency official's decision to set the payment
date in the next calendar year is not considered a deferral under this
paragraph.
* * * * *
0
4. In part 575, revise the title to read as follows:
PART 575--RECRUITMENT, RELOCATION, AND RETENTION INCENTIVES;
SUPERVISORY DIFFERENTIALS; AND EXTENDED ASSIGNMENT INCENTIVES
0
5. Revise the authority citation for part 575 to read as follows:
Authority: 5 U.S.C. 1104(a)(2) and 5307; subparts A, B, and C
also issued under sec. 101, Public Law 108-411, 118 Stat. 2305 (5
U.S.C. 5753 and 5754); subpart D also issued under 5 U.S.C. 5755;
subpart E also issued under sec. 207 Public Law 107-273, 116 Stat.
1779 (5 U.S.C. 5757).
0
6. Revise part 575, subpart A, to read as follows:
Subpart A--Recruitment Incentives
575.101 Purpose.
575.102 Definitions.
575.103 Eligible categories of employees.
575.104 Ineligible categories of employees.
575.105 Applicability to employees.
575.106 Authorizing a recruitment incentive.
575.107 Agency recruitment incentive plan and approval levels.
575.108 Approval criteria and written determination.
575.109 Payment of recruitment incentives.
575.110 Service agreement requirements.
575.111 Termination of a service agreement.
575.112 Internal monitoring requirements and revocation or
suspension of authority.
575.113 Records and reports.
575.114 Recruitment bonus service agreements in effect before May 1,
2005.
Subpart A--Recruitment Incentives
Sec. 575.101 Purpose.
This subpart contains regulations implementing 5 U.S.C. 5753, which
authorizes payment of recruitment incentives. An agency may pay a
recruitment incentive to a newly appointed employee under the
conditions specified in this subpart provided the agency has determined
that the employee's position is likely to be difficult to fill in the
absence of an incentive.
Sec. 575.102 Definitions.
In this subpart:
Agency means an executive agency or a legislative branch agency
included in 5 U.S.C. 5102(a)(1).
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.
Competencies means the knowledge, skills, abilities, behaviors, and
other characteristics an individual needs to perform the duties of a
position.
Employee has the meaning given that term in 5 U.S.C. 2105, except
that the term also includes an employee described in 5 U.S.C. 2105(c).
An employee also means an individual not yet employed who has received
a written offer to be newly appointed or reappointed and has signed the
written service agreement required by Sec. 575.110 before payment of
the recruitment incentive.
Employee of the Federal Government means an employee (as that term
is defined in 5 U.S.C. 2105, except that the term also includes an
employee described in 5 U.S.C. 2105(c) and (e)) of any part of the
Government of the United States (which includes the United States
Postal Service and the Postal Rate Commission).
Executive agency has the meaning given that term in 5 U.S.C. 105.
Newly appointed refers to--
(1) The first appointment, regardless of tenure, as an employee of
the Federal Government;
(2) An appointment as a former employee of the Federal Government
following a break in service of at least 90 days; or
(3) An appointment as an employee of the Federal Government when
the employee's Federal service during the 90-day period immediately
preceding the appointment was limited to one or more of the following:
(i) A time-limited or non-permanent appointment in the competitive
or excepted service;
(ii) Employment with the government of the District of Columbia
(DC) when the candidate was first appointed by the DC government on or
after October 1, 1987;
(iii) An appointment as an expert or consultant under 5 U.S.C. 3109
and 5 CFR part 304;
(iv) Service as an employee of a nonappropriated fund
instrumentality (NAFI) of the Department of Defense (when moving from a
Department of Defense NAFI position to another Department of Defense
position) or the Coast Guard (when moving from a Coast Guard NAFI
position to another Coast Guard position) if the individual has a break
in service of more than 3 days from the nonappropriated fund
instrumentality;
(v) Service as an employee of a nonappropriated fund
instrumentality of the Department of Defense when moving to a position
outside of the Department of Defense or of the Coast Guard when moving
to a position outside the Coast Guard; or
(vi) Employment under a provisional appointment designated under 5
CFR 316.403.
OPM means the Office of Personnel Management.
Rate of basic pay means the rate of pay fixed by law or
administrative action for the position to which an employee is or will
be appointed before deductions and including any special rate under 5
CFR part 530, subpart C, or similar payment under other legal
authority, and any locality-based comparability payment under 5 CFR
part 531, subpart F, or similar payment under other legal authority,
but excluding additional pay of any other kind. For example, a rate of
basic pay does not include additional pay such as night shift
differentials under 5 U.S.C. 5343(f) or environmental differentials
under 5 U.S.C. 5343(c)(4).
Service agreement means a written agreement between an agency and
an employee under which the employee agrees to a specified period of
employment of not less than 6 months or more than 4 years with the
agency in return for payment of a recruitment incentive.
Sec. 575.103 Eligible categories of employees.
Except as provided in Sec. 575.104, an agency may pay a
recruitment incentive to an employee appointed or placed in the
following categories of positions:
(a) A General Schedule position paid under 5 U.S.C. 5332 or 5305
(or similar special rate authority);
(b) A senior-level or scientific or professional position paid
under 5 U.S.C. 5376;
[[Page 25741]]
(c) A Senior Executive Service position paid under 5 U.S.C. 5383 or
a Federal Bureau of Investigation and Drug Enforcement Administration
Senior Executive Service position paid under 5 U.S.C. 3151;
(d) A position as a law enforcement officer, as defined in 5 CFR
550.103;
(e) A position under the Executive Schedule paid under 5 U.S.C.
5311-5317 or a position the rate of pay for which is fixed by law at a
rate equal to a rate for the Executive Schedule;
(f) A prevailing rate position, as defined in 5 U.S.C. 5342(a)(3);
or
(g) Any other position in a category for which payment of
recruitment incentives has been approved by OPM at the request of the
head of an executive agency.
Sec. 575.104 Ineligible categories of employees.
An agency may not pay a recruitment incentive to an employee in--
(a) A position to which an individual is appointed by the
President, by and with the advice and consent of the Senate;
(b) A position in the Senior Executive Service as a noncareer
appointee (as defined in 5 U.S.C. 3132(a)(7));
(c) A position excepted from the competitive service by reason of
its confidential, policy-determining, policy-making, or policy-
advocating character; or
(d) A position not otherwise covered by the exclusions in
paragraphs (a), (b), and (c) of this section--
(1) To which an individual is appointed by the President without
the advice and consent of the Senate;
(2) Designated as the head of an agency, including an agency headed
by a collegial body composed of two or more individual members; or
(3) In which the employee is expected to receive an appointment as
the head of an agency.
Sec. 575.105 Applicability to employees.
(a) A recruitment incentive may be paid under the conditions
prescribed in this subpart to an employee who is newly appointed to a
position listed in Sec. 575.103 that is likely to be difficult to
fill, as determined under Sec. 575.106.
(b) An agency may target groups of similar positions (excluding
positions covered by Sec. 575.103(b), (c), or (e) or those in similar
categories approved by OPM under Sec. 575.103(g)) that have been
difficult to fill in the past or that may be difficult to fill in the
future and make the required determination to offer a recruitment
incentive to newly-appointed employees on a group basis.
Sec. 575.106 Authorizing a recruitment incentive.
(a) Authority of authorized agency official. An authorized agency
official retains sole and exclusive discretion, subject only to OPM
review and oversight, to--
(1) Determine when a position is likely to be difficult to fill
under paragraph (b) of this section;
(2) Approve a recruitment incentive for an employee under Sec.
575.105;
(3) Establish the criteria for determining the amount of a
recruitment incentive and the length of a service period under
Sec. Sec. 575.109(a) and 575.110(a), respectively;
(4) Request a waiver from OPM of the limitation on the maximum
amount of a recruitment incentive under Sec. 575.109(c); and
(5) Establish the criteria for terminating a service agreement
under Sec. 575.111.
(b) Factors for determining when a position is likely to be
difficult to fill. An agency in its sole and exclusive discretion,
subject only to OPM review and oversight, may determine that a position
is likely to be difficult to fill if the agency is likely to have
difficulty recruiting candidates with the competencies required for the
position (or group of positions) in the absence of a recruitment
incentive. An agency must consider the following factors, as applicable
to the case at hand, in determining whether a position (or group of
positions) is likely to be difficult to fill in the absence of a
recruitment incentive and in documenting this determination as required
by Sec. 575.108:
(1) The availability and quality of candidates possessing the
competencies required for the position, including the success of recent
efforts to recruit candidates for similar positions using indicators
such as offer acceptance rates, the proportion of positions filled, and
the length of time required to fill similar positions;
(2) The salaries typically paid outside the Federal Government for
similar positions;
(3) Recent turnover in similar positions;
(4) Employment trends and labor-market factors that may affect the
agency's ability to recruit candidates for similar positions;
(5) Special or unique competencies required for the position;
(6) Agency efforts to use non-pay authorities, such as special
training and work scheduling flexibilities, to resolve difficulties
alone or in combination with a recruitment incentive;
(7) The desirability of the duties, work or organizational
environment, or geographic location of the position; and
(8) Other supporting factors.
(c) An agency may determine that a position (or group of positions)
is likely to be difficult to fill if OPM has approved the use of a
direct-hire authority applicable to the position (or group of
positions) under 5 CFR part 337, subpart B.
Sec. 575.107 Agency recruitment incentive plan and approval levels.
(a) Before paying recruitment incentives under this subpart, an
agency must establish a recruitment incentive plan. The plan must
include the following elements:
(1) The designation of officials with authority to review and
approve payment of recruitment incentives (subject to paragraph (b) of
this section), including the circumstances under which an official has
the authority to approve payment without higher level approval under
paragraph (b)(2) of this section;
(2) The categories of employees who are prohibited from receiving
recruitment incentives;
(3) Required documentation for determining that a position is
likely to be difficult to fill;
(4) Any requirements for determining the amount of a recruitment
incentive;
(5) The payment methods that may be authorized;
(6) Requirements governing service agreements, which, at a minimum,
must include--
(i) The criteria for determining the length of a service period;
(ii) The conditions for terminating a service agreement; and
(iii) The obligations of the agency and the employee, as
applicable, if an agency terminates a service agreement; and
(7) Documentation and recordkeeping requirements sufficient to
allow reconstruction of the action and to fulfill the requirements of
Sec. Sec. 575.112 and 575.113.
(b)(1) Except as provided in paragraph (b)(2) of this section, an
authorized agency official who is at least one level higher than the
employee's supervisor must review and approve each determination to pay
a recruitment incentive to a newly-appointed employee, unless there is
no official at a higher level in the agency.
(2) When necessary to make a timely offer of employment, an
authorized agency official may establish criteria in advance for
offering recruitment incentives to newly-appointed employees and may
authorize an official
[[Page 25742]]
who is not lower than a candidate's supervisor to use these criteria to
offer a recruitment incentive (in any amount within a pre-established
range) to a candidate without further review or approval.
(c) Unless the head of the agency determines otherwise, an agency
recruitment incentive plan must apply uniformly across the agency.
Sec. 575.108 Approval criteria and written determination.
(a) For each determination to pay a recruitment incentive under
this subpart, an agency must document in writing--
(1) The basis for determining that a position is likely to be
difficult to fill, as determined under Sec. 575.106;
(2) The basis for authorizing a recruitment incentive; and
(3) The basis for the amount and timing of the approved recruitment
incentive payment and the length of the required service period.
(b) An agency must make the determination to pay a recruitment
incentive before the prospective employee enters on duty in the
position for which recruited.
Sec. 575.109 Payment of recruitment incentives.
(a) An authorized agency official must establish the criteria for
determining the amount of a recruitment incentive. An agency may pay a
recruitment incentive-(1) As an initial lump-sum payment at the
commencement of the service period required by the service agreement or
before the start of the service period, as authorized by paragraph (d)
of this section;
(2) In installments throughout the service period required by the
service agreement;
(3) As a final lump-sum payment upon the completion of the full
service period required by the service agreement; or
(4) In a combination of these payment methods.
(b)(1) Except as provided in paragraph (c) of this section, the
total amount of recruitment incentive payments paid to an employee in a
service period may not exceed 25 percent of the annual rate of basic
pay of the employee at the beginning of the service period multiplied
by the number of years (including fractions of a year) in the service
period (not to exceed 4 years).
(2) For hourly rate employees who do not have a scheduled annual
rate of basic pay, compute the annual rate required for paragraph
(b)(1) of this section by multiplying the applicable hourly rate in
effect at the beginning of the service period by 2,087 hours.
(3) For the purpose of determining the number of years in a service
period under paragraph (b)(1) of this section, divide the total number
of calendar days in the service period by 365 and round the result to
two decimal places. For example, a service period covering 39 biweekly
pay periods equals 546 days, and 546 days divided by 365 days equals
1.50 years.
(c)(1) An authorized agency official may request that OPM waive the
limitation in paragraph (b)(1) of this section for an employee based on
a critical agency need. The authorized agency official must determine
that the competencies required for the position are critical to the
successful accomplishment of an important agency mission, project, or
initiative (e.g., programs or projects related to a national emergency
or implementing a new law or critical management initiative). Under
such a waiver, the total amount of recruitment incentive payments paid
to an employee in a service period may not exceed 50 percent of the
annual rate of basic pay of the employee at the beginning of the
service period multiplied by the number of years (including fractions
of a year) in the service period. However, in no event may a waiver
provide total recruitment incentive payments exceeding 100 percent of
the employee's annual rate of basic pay at the beginning of the service
period.
(2) Waiver requests must include--
(i) A description of the critical agency need the proposed
recruitment incentive would address;
(ii) The documentation required by Sec. 575.108;
(iii) The proposed recruitment incentive payment amount and a
justification for that amount;
(iv) The timing and method of making the recruitment incentive
payments;
(v) The service period required; and
(vi) Any other information pertinent to the case at hand.
(d) An agency may pay a recruitment incentive to an employee who
has not yet entered on duty once the employee has signed a service
agreement established under Sec. 575.110.
(e) A recruitment incentive is not part of an employee's rate of
basic pay for any purpose.
(f) Payment of a recruitment incentive is subject to the aggregate
limitation on pay under 5 CFR part 530, subpart B.
Sec. 575.110 Service agreement requirements.
(a) Before paying a recruitment incentive, an agency must require
the employee to sign a written service agreement to complete a
specified period of employment with the agency (or successor agency in
the event of a transfer of function). An authorized agency official
must establish the criteria for determining the length of a service
period. The service period may not be less than 6 months and may not
exceed 4 years.
(b)(1) The service agreement must include the commencement and
termination dates of the required service period. Except as provided in
paragraphs (b)(2) and (b)(3) of this section, the required service
period must begin upon the commencement of service with the agency. The
service period must terminate on the last day of a pay period.
(2) If service with the agency does not begin on the first day of a
pay period, the agency must delay the service period commencement date
so that a required service period begins on the first day of the first
pay period beginning on or after the commencement of service in the
agency.
(3) An agency may delay a service agreement commencement date until
after the employee completes an initial period of formal training or
required probationary period when continued employment in the position
is contingent on successful completion of the formal training or
probationary period. The agency must make the determination to pay a
recruitment incentive before the employee enters on duty in the
position. However, the service agreement must specify that if an
employee does not successfully complete the training or probationary
period before the service period commences, the agency is not obligated
to pay any portion of the recruitment incentive to the employee.
(c) The service agreement must specify the total amount of the
incentive, the method of paying the incentive, and the timing and
amounts of each incentive payment, as established under Sec. 575.109.
(d) The service agreement must include the conditions under which
the agency must terminate the service agreement (i.e., if an employee
is demoted or separated for cause, receives a rating of record of less
than ``Fully Successful'' or equivalent, or otherwise fails to fulfill
the terms of the service agreement) and the conditions under which the
employee must repay a recruitment incentive under Sec. 575.111.
(e) The service agreement must include the conditions under which
the agency may terminate the service agreement before the employee
completes the agreed-upon service period. The service agreement must
specify the effect of a termination under
[[Page 25743]]
Sec. 575.111, including the conditions under which the agency will pay
an additional recruitment incentive payment for partially completed
service under Sec. 575.111(e) and (f).
(f) The service agreement may include any other terms or conditions
that, if violated, will result in termination of the service agreement
under Sec. 575.111(b). For example, the service agreement may specify
the employee's work schedule, type of position, and the duties he or
she is expected to perform. In addition, the service agreement may
address the extent to which periods of time on detail, in a nonpay
status, or in a paid leave status are creditable towards the completion
of the service period.
Sec. 575.111 Termination of a service agreement.
(a) An authorized agency official may unilaterally terminate a
recruitment incentive service agreement based solely on the management
needs of the agency. For example, an agency may terminate a service
agreement when the employee's position is affected by a reduction in
force, when there are insufficient funds to continue the planned
incentive payments, or when the agency assigns the employee to a
different position (if the different position is not within the terms
of the service agreement).
(b) An authorized agency official must terminate a recruitment
incentive service agreement if an employee is demoted or separated for
cause (i.e., for unacceptable performance or conduct), if the employee
receives a rating of record (or an official performance appraisal or
evaluation under a system not covered by 5 U.S.C. chapter 43 or 5 CFR
part 430) of less than ``Fully Successful'' or equivalent, or if the
employee otherwise fails to fulfill the terms of the service agreement.
(c) The termination of a service agreement is not grievable or
appealable.
(d) The agency must notify an employee in writing when it
terminates a recruitment incentive service agreement.
(e) If an authorized agency official terminates a service agreement
under paragraph (a) of this section, the employee is entitled to all
recruitment incentive payments that are attributable to completed
service and to retain any portion of a recruitment incentive payment he
or she received that is attributable to uncompleted service.
(f) If an authorized agency official terminates a service agreement
under paragraph (b) of this section, the employee is entitled to retain
recruitment incentive payments previously paid by the agency that are
attributable to the completed portion of the service period. If the
employee received recruitment incentive payments that are less than the
amount that would be attributable to the completed portion of the
service period, the agency is not obligated to pay the employee the
amount attributable to completed service, unless the agency agreed to
such payment under the terms of the recruitment incentive service
agreement. If the employee received recruitment incentive payments in
excess of the amount that would be attributable to the completed
portion of the service period, he or she must repay the excess amount.
(g) If an employee fails to reimburse the paying agency for the
full amount owed under paragraph (f) of this section, the amount
outstanding must be recovered from the employee under the agency's
regulations for collection by offset from an indebted Government
employee under 5 U.S.C. 5514 and 5 CFR part 550, subpart K, or through
the appropriate provisions governing Federal debt collection if the
individual is no longer a Federal employee. However, the head of the
agency may waive the debt under 5 U.S.C. 5584.
Sec. 575.112 Internal monitoring requirements and revocation or
suspension of authority.
(a) Each agency must monitor the use of recruitment incentives to
ensure that its recruitment incentive plan and the payment of
recruitment incentives are consistent with the requirements and
criteria established under 5 U.S.C. 5753 and this subpart.
(b) When OPM finds that an agency is not paying recruitment
incentives consistent with the agency's recruitment incentive plan and
the criteria established under 5 U.S.C. 5753 and this subpart or
otherwise determines that the agency is not using this authority
selectively and judiciously, OPM may--
(1) Direct the agency to revoke or suspend the authority granted to
any organizational component in the agency and, with respect to any
category or categories of employees, require that the component obtain
approval from the agency's headquarters level before paying a
recruitment incentive to such employees; or
(2) Revoke or suspend the authority granted to the agency under
this subpart for all or any part of the agency and, with respect to any
category or categories of employees, require that the agency obtain
OPM's approval before paying a recruitment incentive to such employees.
Sec. 575.113 Records and reports.
(a) Each agency must keep a record of each determination to pay a
recruitment incentive and make such records available for review upon
OPM's request.
(b) By March 31 in each of the years 2006 through 2010, each agency
must submit a written report to OPM on the use of the recruitment
incentive authority within the agency during the previous calendar year
for use in compiling an OPM report to Congress, as required by section
101(c) of Public Law 108-411. Each agency report must include--
(1) A description of how the authority to pay recruitment
incentives was used by the agency during the previous calendar year;
(2) The number and dollar amount of recruitment incentives paid
during the previous calendar year by occupational series and grade, pay
level, or other pay classification; and
(3) Other information, records, reports, and data as OPM may
require.
Sec. 575.114 Recruitment bonus service agreements in effect before
May 1, 2005.
This subpart does not apply to a recruitment bonus service
agreement that was authorized under 5 U.S.C. 5753 and 5 CFR part 575,
subpart A, before May 1, 2005. Such service agreements remain in effect
until their expiration, subject to regulations applicable to
recruitment bonuses before May 1, 2005. (See 5 CFR part 575 and part
530, subpart B, contained in the 5 CFR, parts 1 to 699, edition revised
as of January 1, 2005.)
0
7. Revise part 575, subpart B, to read as follows:
Subpart B--Relocation Incentives
575.201 Purpose.
575.202 Definitions.
575.203 Eligible categories of employees.
575.204 Ineligible categories of employees.
575.205 Applicability to employees.
575.206 Authorizing a relocation incentive.
575.207 Agency relocation incentive plan and approval levels.
575.208 Approval criteria and written determination.
575.209 Payment of relocation incentives.
575.210 Service agreement requirements.
575.211 Termination of a service agreement.
575.212 Internal monitoring requirements and revocation or
suspension of authority.
575.213 Records and reports.
575.214 Relocation bonus service agreements in effect before May 1,
2005.
Subpart B--Relocation Incentives
Sec. 575.201 Purpose.
This subpart contains regulations implementing 5 U.S.C. 5753, which
[[Page 25744]]
authorizes payment of relocation incentives. An agency may pay a
relocation incentive to a current employee who must relocate to accept
a position in a different geographic area under the conditions
specified in this subpart provided the agency determines that the
position is likely to be difficult to fill in the absence of an
incentive.
Sec. 575.202 Definitions.
In this subpart:
Agency means an executive agency or a legislative branch agency
included in 5 U.S.C. 5102(a)(1).
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.
Competencies means the knowledge, skills, abilities, behaviors, and
other characteristics an employee needs to perform the duties of a
position.
Employee has the meaning given that term in 5 U.S.C. 2105, except
that the term also includes an employee described in 5 U.S.C. 2105(c).
Employee of the Federal Government means an employee (as that term
is defined in 5 U.S.C. 2105, except that the term also includes an
employee described 5 U.S.C. 2105(c) and (e)) of any part of the
Government of the United States (which includes the United States
Postal Service and the Postal Rate Commission).
Executive agency has the meaning given that term in 5 U.S.C. 105.
OPM means the Office of Personnel Management.
Rate of basic pay means the rate of pay fixed by law or
administrative action for the position to which the employee is
relocated before deductions and including any special rate under 5 CFR
part 530, subpart C, or similar payment under other legal authority,
and any locality-based comparability payment under 5 CFR part 531,
subpart F, or similar payment under other legal authority, but
excluding additional pay of any other kind. For example, a rate of
basic pay does not include additional pay such as night shift
differentials under 5 U.S.C. 5343(f) or environmental differentials
under 5 U.S.C. 5343(c)(4).
Service agreement means a written agreement between an agency and
an employee under which the employee agrees to a specified period of
employment of not more than 4 years with the agency at the new duty
station to which relocated in return for payment of a relocation
incentive.
Sec. 575.203 Eligible categories of employees.
Except as provided in Sec. 575.204 of this part, an agency may pay
a relocation incentive to an employee in the following categories of
positions:
(a) A General Schedule position paid under 5 U.S.C. 5332 or 5305
(or similar special rate authority);
(b) A senior-level or scientific or professional position paid
under 5 U.S.C. 5376;
(c) A Senior Executive Service position paid under 5 U.S.C. 5383 or
a Federal Bureau of Investigation and Drug Enforcement Administration
Senior Executive Service position paid under 5 U.S.C. 3151;
(d) A position as a law enforcement officer, as defined in 5 CFR
550.103;
(e) A position under the Executive Schedule paid under 5 U.S.C.
5311-5317 or a position the rate of pay for which is fixed by law at a
rate equal to a rate for the Executive Schedule;
(f) A prevailing rate position, as defined in 5 U.S.C. 5342(a)(3);
or
(g) Any other position in a category for which payment of
relocation incentives has been approved by OPM at the request of the
head of an executive agency.
Sec. 575.204 Ineligible categories of employees.
An agency may not pay a relocation incentive to an employee in--
(a) A position to which an individual is appointed by the
President, by and with the advice and consent of the Senate;
(b) A position in the Senior Executive Service as a noncareer
appointee (as defined in 5 U.S.C. 3132(a)(7));
(c) A position excepted from the competitive service by reason of
its confidential, policy-determining, policy-making, or policy-
advocating character; or
(d) A position not otherwise covered by the exclusions in
paragraphs (a), (b), and (c) of this section--
(1) To which an individual is appointed by the President without
the advice and consent of the Senate;
(2) Designated as the head of an agency, including an agency headed
by a collegial body composed of two or more individual members; or
(3) In which the employee is expected to receive an appointment as
the head of an agency.
Sec. 575.205 Applicability to employees.
(a) An agency may pay a relocation incentive under the conditions
prescribed in this subpart to--
(1) An employee of the Federal Government who must relocate to a
different geographic area without a break in service to accept a
position listed in Sec. 575.203 in an agency when the position is
likely to be difficult to fill as determined under Sec. 575.206; or
(2) An employee of an agency who must relocate to a different
geographic area (permanently or temporarily) to accept a position
listed in Sec. 575.203 when the position is likely to be difficult to
fill as determined under Sec. 575.206.
(b) An agency may pay a relocation incentive under paragraph (a) of
this section when an employee must relocate to accept a position or
assignment in a different geographic area. A position is considered to
be in a different geographic area if the worksite of the new position
is 50 or more miles from the worksite of the position held immediately
before the move. If the worksite of the new position is less than 50
miles from the worksite of the position held immediately before the
move, but the employee must relocate (i.e., establish a new residence)
to accept the position, an authorized agency official may waive the 50-
mile requirement and pay the employee a relocation incentive subject to
the requirements of this subpart. In all cases, the employee must
establish a residence in the new geographic area before the agency may
pay a relocation incentive to the employee.
(c) A relocation incentive may be paid only when the employee's
rating of record (or an official performance appraisal or evaluation
under a system not covered by 5 U.S.C. chapter 43 or 5 CFR part 430)
for the position held immediately before the move is at least ``Fully
Successful'' or equivalent.
Sec. 575.206 Authorizing a relocation incentive.
(a) Authority of authorized agency official. An authorized agency
official retains sole and exclusive discretion, subject only to OPM
review and oversight, to--
(1) Determine when a position is likely to be difficult to fill
under paragraph (b) of this section;
(2) Approve a relocation incentive for an employee under Sec.
575.205;
(3) Establish the criteria for determining the amount of a
relocation incentive and the length of a service period under
Sec. Sec. 575.209 and 575.210, respectively;
(4) Request a waiver from OPM of the limitation on the maximum
amount of a recruitment incentive under Sec. 575.209(c); and
(5) Establish the criteria for terminating a service agreement
under Sec. 575.211.
(b) Factors for determining when a position is likely to be
difficult to fill. An agency in its sole and exclusive discretion,
subject only to OPM review and oversight, may determine that a
[[Page 25745]]
position is likely to be difficult to fill if the agency is likely to
have difficulty recruiting candidates with the competencies required
for the position (or group of positions) in the absence of a relocation
incentive. An agency must consider the following factors, as applicable
to the case at hand, in determining whether a position (or group of
positions) is likely to be difficult to fill in the absence of a
relocation incentive and in documenting this determination as required
by Sec. 575.208:
(1) The availability and quality of candidates possessing the
competencies required for the position, including the success of recent
efforts to recruit candidates for similar positions using indicators
such as offer acceptance rates, the proportion of positions filled, and
the length of time required to fill similar positions;
(2) The salaries typically paid outside the Federal Government for
similar positions;
(3) Recent turnover in similar positions;
(4) Employment trends and labor-market factors that may affect the
agency's ability to recruit candidates for similar positions;
(5) Special or unique competencies required for the position;
(6) Agency efforts to use non-pay authorities, such as special
training and work scheduling flexibilities, to resolve difficulties
alone or in combination with a relocation incentive;
(7) The desirability of the duties, work or organizational
environment, or geographic location of the position; and
(8) Other supporting factors.
(c) An agency may determine that a position (or group of positions)
is likely to be difficult to fill if OPM has approved the use of a
direct-hire authority applicable to the position (or group of
positions) under 5 CFR part 337, subpart B.
Sec. 575.207 Agency relocation incentive plan and approval levels.
(a) Before paying relocation incentives under this subpart, an
agency must establish a relocation incentive plan. This plan must
include the following elements:
(1) The designation of officials with authority to review and
approve payment of relocation incentives, subject to paragraph (b) of
this section, including;
(2) The categories of employees who are prohibited from receiving
relocation incentives;
(3) Required documentation for determining that a position (or
group of positions) is likely to be difficult to fill;
(4) Any requirements for determining the amount of a relocation
incentive;
(5) The payment methods that may be authorized;
(6) Requirements governing service agreements which, at a minimum,
must include--
(i) The criteria for determining the length of a service period
under a service agreement;
(ii) The conditions for terminating a service agreement; and
(iii) The obligations of the agency and the employee, as
applicable, if an agency terminates a service agreement; and
(7) Documentation and recordkeeping requirements sufficient to
allow reconstruction of the action and fulfill the requirements of
Sec. Sec. 575.212 and 575.213.
(b)(1) Except as provided in paragraph (b)(2) of this section, an
agency official who is at least one level higher than the employee's
supervisor must review and approve each determination to pay a
relocation incentive, unless there is no official at a higher level in
the agency.
(2) The higher level approval required by paragraph (b)(1) of this
section is not needed when approving coverage of individual employees
under a previously approved relocation incentive authorization if the
case-by-case approval requirement is waived under Sec. 575.208(b).
(c) Unless the head of the agency determines otherwise, an agency
relocation incentive plan must apply uniformly across the agency.
Sec. 575.208 Approval criteria and written determination.
(a)(1) For each determination to pay a relocation incentive under
this subpart, an agency must document in writing--
(i) The basis for determining that a position is likely to be
difficult to fill as determined under Sec. 575.206;
(ii) The basis for authorizing a relocation incentive for an
employee;
(iii) The basis for the amount and timing of the approved
relocation incentive payments and the length of the required service
period; and
(iv) That the worksite of the employee's new position is not in the
same geographic area as the worksite of the position held immediately
before the move (or that a waiver was approved under Sec. 575.205(b))
and that the employee established a residence in the new geographic
area, as required by Sec. 575.205(b).
(2) Except as provided in paragraph (b) of this section, the agency
must make each determination to pay a relocation incentive on a case-
by-case basis for each employee.
(3) The agency must make the determination to pay a relocation
incentive before the employee enters on duty in the position to which
relocated.
(b)(1) An agency may waive the case-by-case approval requirement
under paragraph (a) of this section when--
(i) The employee is a member of a group of employees subject to a
mobility agreement and the agency determines that relocation incentives
are necessary to retain employees subject to such an agreement to
ensure continuation of operations; or
(ii) A major organizational unit of the agency is relocated to a
new duty station and the agency determines that relocation incentives
are necessary for a group of employees to ensure the continued
operation of that unit without undue disruption of an activity or
function that is deemed essential to the agency's mission or without
undue disruption of service to the public.
(2) The written determination under paragraph (a) of this section
must specify the group of employees covered by the case-by-case waiver,
the conditions under which the waiver is approved, and the period of
time for which the waiver may be applied.
Sec. 575.209 Payment of relocation incentives.
(a) An authorized agency official must establish the criteria for
determining the amount of a relocation incentive. An agency may pay a
relocation incentive--
(1) As an initial lump-sum payment at the commencement of the
service period required by the service agreement;
(2) In installments throughout the service period required by the
service agreement;
(3) As a final lump-sum payment upon the completion of the full
service period required by the service agreement; or
(4) In a combination of these payment methods.
(b)(1) Except as provided in paragraph (c) of this section, the
total amount of relocation incentive payments paid to an employee in a
service period may not exceed 25 percent of the annual rate of basic
pay of the employee at the beginning of the service period multiplied
by the number of years (including fractions of a year) in the service
period (not to exceed 4 years).
(2) For hourly rate employees who do not have a scheduled annual
rate of basic pay, compute the annual rate required for paragraph
(b)(1) of this section by multiplying the applicable hourly rate in
effect at the beginning of the service period by 2,087 hours.
(3) For the purpose of determining the number of years in a service
period
[[Page 25746]]
under paragraph (b)(1) of this section, divide the total number of
calendar days in the service period (as established under Sec.
575.208) by 365 and round the result to two decimal places. For
example, a service period covering 39 biweekly pay periods equals 546
days, and 546 days divided by 365 days equals 1.50 years.
(c)(1) An authorized agency official may request that OPM waive the
limitation in paragraph (b)(1) of this section for an employee based on
a critical agency need. The authorized agency official must determine
that the competencies required for the position are critical to the
successful accomplishment of an important agency mission, project, or
initiative (e.g., programs or projects related to a national emergency
or implementing a new law or critical management initiative). Under
such a waiver, the total amount of relocation incentive payments paid
to an employee in a service period may not exceed 50 percent of the
annual rate of basic pay of the employee at the beginning of the
service period multiplied by the number of years (including fractions
of a year) in the service period. However, in no event may a waiver
provide total relocation incentive payments exceeding 100 percent of
the employee's annual rate of basic pay at the beginning of the service
period.
(2) Waiver requests must include--
(i) A description of the critical agency need the proposed
relocation incentive would address;
(ii) The documentation required by Sec. 575.208;
(iii) The proposed relocation incentive payment amount and a
justification for that amount;
(iv) The timing and method for making the relocation incentive
payments;
(v) The period of service required; and
(vi) Any other information pertinent to the case at hand.
(d) A relocation incentive is not part of an employee's rate of
basic pay for any purpose.
(e) Payment of a relocation incentive is subject to the aggregate
limitation on pay under 5 CFR part 530, subpart B.
Sec. 575.210 Service agreement requirements.
(a) Before paying a relocation incentive, an agency must require
the employee to sign a written service agreement to complete a
specified period of employment with the agency (or successor agency in
the event of a transfer of function) at the new duty station. An
authorized agency official must establish the criteria for determining
the length of a service period. The service period may not exceed 4
years.
(b)(1) The service agreement must include the commencement and
termination dates of the required service period. Except as provided
under paragraphs (b)(2) and (b)(3) of this section, the required
service period must begin upon the commencement of service at the new
duty station. The service period must terminate on the last day of a
pay period.
(2) If service at the new duty station does not begin on the first
day of a pay period, the agency must delay the service period
commencement date so that a required service period begins on the first
day of the first pay period beginning on or after the commencement of
service at the new duty station.
(3) An agency may delay a service agreement commencement date until
after the employee completes an initial period of formal training when
continued employment in the position is contingent on successful
completion of the formal training. The agency must make the
determination to pay a relocation incentive before the employee enters
on duty in the position, as required by Sec. 575.208(a)(3). However,
the service agreement must specify that if an employee does not
successfully complete the training before the service period commences,
the agency is not obligated to pay any portion of the relocation
incentive to the employee.
(c) The service agreement must specify the total amount of the
incentive, the method of paying the incentive, and the timing and
amount of each incentive payment, as established under Sec. 575.209.
(d) The service agreement must include the conditions under which
the agency must terminate the service agreement (i.e., if an employee
is demoted or separated for cause, receives a rating of record of less
than ``Fully Successful'' or equivalent, or otherwise fails to fulfill
the terms of the service agreement) and the conditions under which the
employee must repay a relocation incentive under Sec. 575.211.
(e) The service agreement must include the conditions under which
the agency may terminate the service agreement before the employee
completes the agreed-upon service period. The service agreement must
specify the effect of the termination under Sec. 575.211, including
the conditions under which the agency will agree to pay an additional
relocation incentive payment for partially completed service under
Sec. 575.211(e) and (f).
(f) The service agreement may include any other terms or conditions
that, if violated, will result in termination of the service agreement.
For example, the service agreement may specify the employee's work
schedule, type of position, and the duties he or she is expected to
perform. In addition, the service agreement may address the extent to
which periods of time on detail, in a nonpay status, or in a paid leave
status are creditable towards the completion of the service period.
Sec. 575.211 Termination of a service agreement.
(a) An authorized agency official may unilaterally terminate a
relocation incentive service agreement based solely on the management
needs of the agency. For example, an agency may terminate a service
agreement when the employee's position is affected by a reduction in
force, when there are insufficient funds to continue the planned
incentive payments, or when the agency assigns the employee to a
different position (if the different position is not within the terms
of the service agreement).
(b) An authorized agency official must terminate a relocation
incentive service agreement if an employee is demoted or separated for
cause (i.e., for unacceptable performance or conduct), if the employee
receives a rating of record (or an official performance appraisal or
evaluation under a system not covered by 5 U.S.C. chapter 43 or 5 CFR
part 430) of less than ``Fully Successful'' or equivalent, or if the
employee otherwise fails to fulfill the terms of the service agreement.
(c) The termination of a service agreement is not grievable or
appealable.
(d) The agency must notify an employee in writing when it
terminates a relocation incentive service agreement.
(e) If an authorized agency official terminates a service agreement
under paragraph (a) of this section, the employee is entitled to all
relocation incentive payments attributable to completed service and to
retain any portion of a relocation incentive payment he or she received
that is attributable to uncompleted service.
(f) If an authorized agency official terminates a service agreement
under paragraph (b) of this section, the employee is entitled to retain
relocation incentive payments previously paid by the agency that are
attributable to the completed portion of the service period. If the
employee received relocation incentive payments that are less than the
amount that would be attributable to
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the completed portion of the service period, the agency is not
obligated to pay the employee the amount attributable to completed
service, unless the agency agreed to such payment under the terms of
the relocation incentive service agreement. If the employee received
relocation incentive payments in excess of the amount that would be
attributable to the completed portion of the service period, he or she
must repay the excess amount.
(g) If an employee fails to reimburse the paying agency for the
full amount owed under paragraph (f) of this section, the amount
outstanding must be recovered from the employee under the agency's
regulations for collection by offset from an indebted Government
employee under 5 U.S.C. 5514 and 5 CFR part 550, subpart K, or through
the appropriate provisions governing Federal debt collection if the
individual is no longer a Federal employee. However, the head of the
agency may waive the debt under 5 U.S.C. 5584.
Sec. 575.212 Internal monitoring requirements and revocation or
suspension of authority.
(a) Each agency must monitor the use of relocation incentives to
ensure that the agency's relocation incentive plan and the payment of
relocation incentives are consistent with the requirements and criteria
established under 5 U.S.C. 5753 and this subpart.
(b) When OPM finds that an agency is not paying relocation
incentives consistent with the agency's relocation incentive plan and
the criteria established under this subpart or otherwise determines
that the agency is not using this authority selectively and
judiciously, OPM may--
(1) Direct the agency to revoke or suspend the authority granted to
any organizational component in the agency and, with respect to any
category or categories of employees, require that the component obtain
approval from the agency's headquarters level before paying a
relocation incentive to such employees; or
(2) Revoke or suspend the authority granted to the agency under
this subpart for all or any part of the agency and, with respect to any
category or categories of employees, require that the agency obtain
OPM's approval before paying a relocation incentive to such employees.
Sec. 575.213 Records and reports.
(a) Each agency must keep a record of each determination to pay a
relocation incentive and make such records available for review upon
OPM's request.
(b) By March 31 in each of the years 2006 through 2010, each agency
must submit a written report to OPM on the use of the relocation
incentive authority within the agency during the previous calendar year
for use in compiling an OPM report to Congress, as required by section
101(c) of Pubic Law 108-411. Each agency report must include--
(1) A description of how the authority to pay relocation incentives
was used by the agency during the previous calendar year;
(2) The number and dollar amount of relocation incentives paid
during the previous calendar year to individuals by occupational series
and grade, pay level, or other pay classification; and
(3) Other information, records, reports, and data as OPM may
require.
Sec. 575.214 Relocation bonus service agreements in effect before May
1, 2005.
This subpart does not apply to a relocation bonus service agreement
that was authorized under 5 U.S.C. 5753 and 5 CFR part 575, subpart B,
before May 1, 2005. Such service agreements remain in effect until
their expiration, subject to regulations applicable to relocation
bonuses before May 1, 2005. (See 5 CFR part 575 and part 530, subpart
B, contained in the 5 CFR, parts 1 to 699, edition revised as of
January 1, 2005.)
0
8. Revise part 575, subpart C, to read as follows:
Subpart C--Retention Incentives
575.301 Purpose.
575.302 Definitions.
575.303 Eligible categories of employees.
575.304 Ineligible categories of employees.
575.305 Applicability to employees.
575.306 Authorizing a retention incentive.
575.307 Agency retention incentive plan and approval levels.
575.308 Approval criteria and written determination.
575.309 Payment of retention incentives.
575.310 Service agreement requirements.
575.311 Continuation, reduction, and termination of retention
incentives.
575.312 Internal monitoring requirements and revocation or
suspension of authority.
575.313 Records and reports.
575.314 Retention allowances in effect before May 1, 2005.
Subpart C--Retention Incentives
Sec. 575.301 Purpose.
This subpart contains regulations implementing 5 U.S.C. 5754, which
authorizes payment of retention incentives. An agency may pay a
retention incentive to a current employee under the conditions
specified in this subpart when an agency determines that the unusually
high or unique qualifications of the employee or a special need of the
agency for the employee's services makes it essential to retain the
employee and that the employee would be likely to leave the Federal
service in the absence of an incentive.
Sec. 575.302 Definitions.
In this subpart:
Agency means an executive agency or a legislative branch agency
included in 5 U.S.C. 5102(a)(1).
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.
Competencies means the knowledge, skills, abilities, behaviors, and
other characteristics an employee needs to perform the duties of a
position.
Employee has the meaning given that term in 5 U.S.C. 2105, except
that the term also includes an employee described in 5 U.S.C. 2105(c).
Executive agency has the meaning given that term in 5 U.S.C. 105.
OPM means the Office of Personnel Management.
Rate of basic pay means the rate of pay fixed by law or
administrative action for the position to which an employee is
appointed before deductions and including any special rate under 5 CFR
part 530, subpart C, or similar payment under other legal authority,
and any locality-based comparability payment under 5 CFR part 531,
subpart F, or similar payment under other legal authority, but
excluding additional pay of any other kind. For example, a rate of
basic pay does not include additional pay such as night shift
differentials under 5 U.S.C. 5343(f) or environmental differentials
under 5 U.S.C. 5343(c)(4).
Service agreement means a written agreement between an agency and
an employee under which the employee agrees to a specified period of
employment with the agency in return for payment of a retention
incentive.
Sec. 575.303 Eligible categories of employees.
Except as provided in Sec. 575.304, an agency may pay a retention
incentive to a current employee who holds--
(a) A General Schedule position paid under 5 U.S.C. 5332 or 5305
(or similar special rate authority);
(b) A senior-level or scientific or professional position paid
under 5 U.S.C. 5376;
(c) A Senior Executive Service position paid under 5 U.S.C. 5383 or
a Federal Bureau of Investigation and Drug Enforcement Administration
Senior Executive Service position paid under 5 U.S.C. 3151;
(d) A position as a law enforcement officer, as defined in 5 CFR
550.103;
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(e) A position under the Executive Schedule paid under 5 U.S.C.
5311-5317 or a position the rate of pay for which is fixed by law at a
rate equal to a rate for the Executive Schedule;
(f) A prevailing rate position, as defined in 5 U.S.C. 5342(a)(3);
or
(g) Any other position in a category for which payment of retention
incentives has been approved by OPM at the request of the head of an
executive agency.
Sec. 575.304 Ineligible categories of employees.
An agency may not pay a retention incentive to an employee in--
(a) A position to which an individual is appointed by the
President, by and with the advice and consent of the Senate;
(b) A position in the Senior Executive Service as a noncareer
appointee (as defined in 5 U.S.C. 3132(a)(7));
(c) A position excepted from the competitive service by reason of
its confidential, policy-determining, policy-making, or policy-
advocating character; or
(d) A position not otherwise covered by the exclusions in
paragraphs (a), (b), and (c) of this section--
(1) To which an individual is appointed by the President without
the advice and consent of the Senate;
(2) Designated as the head of an agency, including an agency headed
by a collegial body composed of two or more individual members; or
(3) In which the employee is expected to receive an appointment as
the head of an agency.
Sec. 575.305 Applicability to employees.
(a) An agency may pay a retention incentive to an individual
employee under the conditions prescribed in this subpart when the
agency determines that--
(1) The unusually high or unique qualifications (i.e.,
competencies) of the employee or a special need of the agency for the
employee's services makes it essential to retain the employee; and
(2) The employee would be likely to leave the Federal service in
the absence of a retention incentive.
(b) Except as provided in paragraph (c) of this section, an agency
may pay a retention incentive to a group or category of employees under
the conditions prescribed in this subpart when the agency determines
that--
(1) The unusually high or unique qualifications (i.e.,
competencies) of the group or category of employees or a special need
of the agency for the employees' services makes it essential to retain
the employees in that group or category; and
(2) There is a high risk that a significant number of the employees
in the group would be likely to leave the Federal service in the
absence of a retention incentive.
(c) An agency may not include in a group retention incentive
authorization an employee covered by Sec. 575.303(b), (c), (e) or
those in similar categories of positions approved by OPM to receive
retention incentives under Sec. 575.303(g).
(d) A retention incentive may be paid only when the employee's
rating of record (or an official performance appraisal or evaluation
under a system not covered by 5 U.S.C. chapter 43 or 5 CFR part 430) is
at least ``Fully Successful'' or equivalent.
Sec. 575.306 Authorizing a retention incentive.
(a) Authority of authorized agency official. An authorized agency
official retains sole and exclusive discretion, subject only to OPM
review and oversight, to--
(1) Determine when the unusually high or unique qualifications
(i.e., competencies) of an employee or a special need of the agency for
the employee's services makes it essential to retain the employee and
when the employee would be likely to leave the Federal service in the
absence of a retention incentive;
(2) Determine when a group or category of employees has unusually
high or unique qualifications (i.e., competencies) or when an agency
has a special need for the employees' services that makes it essential
to retain the employees in that group or category and when there is a
high risk that a significant number of employees in the group would be
likely to leave the Federal service in the absence of a retention
incentive;
(3) Approve a retention incentive for an employee (or group or
category of employees, except as prohibited by Sec. 575.305(c)) in a
position (or positions) listed in Sec. 575.303;
(4) Establish the criteria for determining the amount of a
retention incentive and the length of a service period under Sec. Sec.
575.309 and 575.310, respectively;
(5) Request a waiver from OPM of the limitation on the maximum
amount of a retention incentive for an employee (or group or category
of employees) under Sec. 575.309(e); and
(6) Establish the criteria for terminating a service agreement or
retention incentive payments under Sec. 575.311.
(b) Factors for authorizing a retention incentive for an individual
employee. An agency must consider the following factors, as applicable
to the case at hand, in determining whether the unusually high or
unique qualifications of an employee or a special need of the agency
for an employee's services makes it essential to retain the employee
and that the employee would be likely to leave the Federal service in
the absence of a retention incentive:
(1) Employment trends and labor market factors such as the
availability and quality of candidates in the labor market possessing
the competencies required for the position and who, with minimal
training, cost, or disruption of service to the public, could perform
the full range of duties and responsibilities of the employee's
position at the level performed by the employee;
(2) The success of recent efforts to recruit candidates and retain
employees with competencies similar to those possessed by the employee
for positions similar to the position held by the employee;
(3) Special or unique competencies required for the position;
(4) Agency efforts to use non-pay authorities to help retain the
employee instead of or in addition to a retention incentive, such as
special training and work scheduling flexibilities or improving working
conditions;
(5) The desirability of the duties, work or organizational
environment, or geographic location of the position;
(6) The extent to which the employee's departure would affect the
agency's ability to carry out an activity, perform a function, or
complete a project that the agency deems essential to its mission;
(7) The salaries typically paid outside the Federal Government; and
(8) Other supporting factors.
(c) Factors for authorizing a retention incentive for a group or
category of employees. (1) An agency must consider the factors in
paragraph (b) of this section as they relate to determining whether a
group or category of employees--
(i) Has unusually high or unique qualifications (i.e.,
competencies) or that the agency has a special need for the employees'
services that makes it essential to retain the employees in that
category; and
(ii) That it is reasonable to presume that there is a high risk
that a significant number of employees in the targeted category would
be likely to leave the Federal service in the absence of a retention
incentive.
(2) An agency must narrowly define a targeted category of employees
using
[[Page 25749]]
factors that relate to the conditions described in paragraph (c)(1) of
this section. Factors that may be appropriate include the following:
occupational series, grade level, distinctive job duties, unique
competencies required for the position, assignment to a special
project, minimum agency service requirements, organization or team
designation, geographic location, and required rating of record. (While
a rating of record of higher than the ``Fully Successful'' rating of
record required by Sec. 575.305(d) may be a factor used in defining
the targeted category, a rating of record by itself is not sufficient
to justify a retention incentive. A rating of record may function as a
supporting factor in authorizing an incentive or setting the incentive
rate only to the extent it directly relates to the conditions in
paragraph (d) of this section.)
(d) An agency must document the determinations required under
paragraphs (b) and (c) of this section as required by Sec. 575.308.
Sec. 575.307 Agency retention incentive plan and approval levels.
(a) Before paying retention incentives under this subpart, an
agency must establish a retention incentive plan. This plan must
include the following elements:
(1) The designation of officials with authority to review and
approve payment of retention incentives, subject to paragraph (b) of
this section;
(2) The categories of employees who are prohibited from receiving
retention incentives;
(3) Required documentation for determining that an employee would
be likely to leave the Federal service;
(4) Any requirements for determining the amount of a retention
incentive;
(5) The payment methods that may be authorized;
(6) Requirements governing service agreements which, at a minimum,
must include--
(i) The criteria for determining the length of a service period
under a service agreement;
(ii) The conditions for terminating a service agreement;
(iii) The obligations of the agency and the employee, as
applicable, if an agency terminates a service agreement; and
(iv) The conditions for terminating retention incentive payments
when no service agreement is required (see Sec. 575.310(f)); and
(7) Documentation and recordkeeping requirements sufficient to
allow reconstruction of the action and fulfill the requirements of
Sec. Sec. 575.312 and 575.313.
(b)(1) Except as provided in paragraph (b)(2) of this section, an
authorized agency official who is at least one level higher than the
employee's (or group of employees') supervisor must review and approve
each determination to pay a retention incentive to an individual or
group of employees, unless there is no official at a higher level in
the