[Federal Register: January 19, 2001 (Volume 66, Number 13)]
[Proposed Rules]
[Page 5491-5494]
[[Page 5491]]
OFFICE OF PERSONNEL MANAGEMENT
5 CFR Part 575
RIN 3206-AJ08
Recruitment and Relocation Bonuses and Retention Allowances
AGENCY: Office of Personnel Management.
ACTION: Proposed rule with request for comments.
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SUMMARY: The Office of Personnel Management (OPM) is issuing proposed
regulations to provide agencies with greater flexibility to use
recruitment and relocation bonuses and retention allowances. These
proposed regulations would provide agencies with the flexibility to pay
retention allowances to employees who are likely to leave their
positions for other Federal employment under certain limited
circumstances. This proposal also would allow agencies to pay
recruitment and relocation bonuses and retention allowances to
prevailing rate (wage) employees.
DATES: Comments must be received on or before March 20, 2001.
FOR FURTHER INFORMATION CONTACT: Jeanne Jacobson, (202) 606-2858; FAX:
(202) 606-0824; email: payleave@opm.gov.
ADDRESSES: Comments may be sent or delivered to Donald J. Winstead,
Assistant Director for Compensation Administration, Workforce
Compensation and Performance Service, Office of Personnel Management,
Room 7H31, 1900 E Street NW., Washington, DC 20415, FAX: (202) 606-
0824, or email: payleave@opm.gov.
SUPPLEMENTARY INFORMATION: The Office of Personnel Management (OPM) is
proposing to amend the recruitment and relocation bonus and retention
allowance regulations in 5 CFR part 575, subparts A, B, and C, to
provide agencies with additional flexibility to use these incentives.
The proposed regulations would allow agencies to grant a retention
allowance to a current employee likely to leave for other Federal
employment under certain limited circumstances. The proposed
regulations also would allow agencies to pay recruitment and relocation
bonuses and retention allowances to prevailing rate (wage) employees.
Retention Allowances for Employees Likely To Leave for Other
Federal Employment
Under current law (5 U.S.C. 5754), OPM may authorize agencies to
grant a retention allowance to an employee if the unusually high or
unique qualifications of the employee or a special need for the
employee's services makes it essential to retain the employee, and the
agency determines that the employee would be likely to leave in the
absence of an allowance. Our regulations initially authorized agencies
to grant retention allowances only if the employee was likely to leave
the Federal service for employment outside the executive, legislative,
or judicial branch of the Federal Government (60 FR 12833, March 28,
1991). Later, we broadened this authority to provide agencies with the
flexibility to grant retention allowances to employees who were likely
to leave the Federal service for any reason (60 FR 33323, June 28,
1995). We did not authorize agencies to pay retention allowances to
employees likely to leave for other Federal employment because of
concerns about potentially disruptive and costly bidding wars among
Federal agencies competing for employees with highly desired skills or
competencies.
Agencies have recently requested that OPM amend its regulations to
authorize retention allowances for employees likely to leave for other
Federal employment in certain limited circumstances. We recognize that
agencies may experience significant staffing problems that hinder their
ability to meet mission objectives when their employees leave for other
Federal jobs. In some cases, the retention allowance authority may be
the most effective way to resolve such problems. However, we must also
continue to be cognizant of the potential costs of interagency
competition.
We propose to amend the regulations at 5 CFR 575.304(b) to allow
agencies to pay a retention allowance to an employee likely to leave
for other Federal employment when (1) the other Federal position is
under a different pay system (with certain exceptions) or (2) it is
essential to retain the employee during a temporary but critical work
situation. (Agencies would continue to have authority under
Sec. 575.304(b)(1) to pay retention allowances to employees who are
likely to leave the Federal service for any reason.)
Section 575.304(b)(2) of the proposed regulations would authorize
an agency to pay a retention allowance to an employee likely to leave
for another Federal position that is under a pay system that is
different from the pay system of the employee's current position. The
proposed regulations would prohibit agencies from using this authority
to pay retention allowances to an employee likely to leave for a
General Schedule (GS), prevailing rate (wage), senior-level and
scientific or professional (SL/ST), Senior Executive Service (SES),
administrative law judge (ALJ), Executive Schedule (EX), or Board of
Contract Appeals (BCA) position when his or her current position is
also under any of these pay systems. (See proposed Sec. 575.304(d).)
For example, using this new authority an agency could pay a
retention allowance to a General Schedule employee likely to leave for
a higher-paying position under a pay system outside of title 5, United
States Code, (e.g., the Federal Aviation Administration). In this
situation, the recruiting agency may have independent statutory
authority to offer salaries or other incentives that are greater than
those available under the General Schedule, making it very difficult
for the employee's current agency to compete effectively. We believe
allowing agencies to grant retention allowances in such situations will
help level the playing field among agencies with similar staffing
needs.
Section 575.304(b)(3) of the proposed regulations would allow
Federal agencies to grant retention allowances to an employee likely to
leave for other Federal employment (under the same or different pay
system) during temporary but critical staffing situations. Private
sector organizations pay ``staying-on'' or ``retention bonuses'' to
help retain employees and keep operations running smoothly during
``crisis'' situations, such as mergers, acquisitions, and plant
closings. We believe it would be reasonable to allow Federal agencies
to use the retention allowance authority on
[[Page 5492]]
a temporary basis to help retain experienced employees who otherwise
would be likely to leave during similar critical periods.
For example, an agency may need to retain an employee until the
completion of a project critical to the mission of the agency or during
the closure of a facility or office or the relocation of an office or
facility to a different commuting area. Such employees may be likely to
leave for other Federal employment if, for example, the agency has
announced that it will eliminate or substantially change the duties of
the employee's position as a result of the critical situation or upon
completion of the important project or if the office relocation will
compel the employee to change his or her residence to continue
employment. A retention allowance may help entice an employee to stay
through the temporary but critical work period.
To help ensure that agencies use this new authority only for
temporary staffing difficulties, Sec. 575.307(b) would limit payment of
retention allowances to an employee working on a critical project to a
period of no longer than 1 year. On a case-by-case basis, the head of
an agency may ask OPM to extend this time limit. The proposed
regulations would allow an agency to pay retention allowances to an
employee likely to leave for other Federal employment prior to an
office closure or relocation as long as the agency continues to have an
essential need for the employee's services.
When authorizing a retention allowance for an employee likely to
leave for other Federal employment under Sec. 575.304(b)(2) and (3),
the proposed regulations would require agencies to follow the payment
criteria and documentation provisions currently prescribed in
Sec. 575.305(c). In addition, before approving a retention allowance
for an employee who is likely to leave during a critical work period,
Sec. 575.305(c)(2) of the proposed regulations would require the agency
to determine how the employee's departure would affect its ability to
function effectively during the critical period.
The proposed regulations at Sec. 575.305(c)(3)(iii) also would
require agencies to consider other relevant factors when authorizing a
retention allowance and determining the amount for an employee who is
likely to leave for other Federal employment. These factors may include
the likelihood of attracting candidates to fill the employee's position
if the agency has announced that it will relocate the position, the
cost and time required to hire and train a new employee to complete a
critical project, or the salaries typically paid by another Federal
agency.
To help avoid unwarranted and possibly costly interagency
competition, Sec. 575.305(c)(4) of the proposed regulations also would
require agencies to consider the use of non-pay alternatives to help
resolve staffing problems before paying a retention allowance to an
employee likely to leave for another Federal position. Such non-pay
alternatives may include alternative recruitment strategies; use of
temporary or term appointments or appointments with varying work
schedules, such as part-time, intermittent, and seasonal schedules;
employment of experts and consultants; alternative work schedules
(i.e., flexible or compressed work schedules), job sharing, and
telecommuting arrangements; paying or sharing the cost of employee
training and higher education; or redesigning jobs so that a larger
pool of candidates may qualify for a position or to make a job more
appealing to candidates by adding desirable duties or eliminating
undesirable duties.
All other conditions and requirements for paying a retention
allowance under 5 CFR part 575, subpart C, would continue to apply to
employees who receive an allowance on the basis of being likely to
leave for other Federal employment. For example, Secs. 575.306(c) and
575.307(b) would require agencies to reduce or terminate a retention
allowance paid to an employee likely to leave for other Federal
employment when the conditions giving rise to the original
determination to pay the allowance have changed. In addition, under
Sec. 575.307(d)(4), an agency could authorize a retention allowance of
up to 10 percent (or up to 25 percent with OPM approval) of an
employee's rate of basic pay for a group or category of employees
likely to leave for other Federal employment. (In response to agency
inquiries, the proposed regulations at Sec. 575.305(c)(1) clarify that,
when the group retention allowance authority is not used, agencies must
make likely-to-leave determinations (for any reason, including for
other Federal employment) only on an individual, case-by-case basis.)
Recruitment, Relocation, and Retention Payments for Prevailing Rate
(Wage) Employees
Sections 5753(e) and 5754(e) of title 5, United States Code, permit
the President to authorize the application of recruitment, relocation,
and retention payments to one or more categories of employees in an
agency who would not otherwise be covered by these provisions of law
upon the request of the head of the agency. Under section 6 of
Executive Order 12748 of February 1, 1991, the President delegated this
authority to the Director of OPM. In response to an agency request,
these proposed regulations would provide agencies with discretionary
authority to pay recruitment and relocation bonuses and retention
allowances to an employee in a prevailing rate (wage) position, as
defined in 5 U.S.C. 5342(a)(3). This would include Federal Wage System
or ``wage grade'' employees. Under the proposed regulations, the same
payment criteria, procedures, and documentation requirements that apply
to other covered groups of employees also would apply to wage
employees.
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 would not have a significant
economic impact on a substantial number of small entities because they
would apply only to Federal agencies and employees.
List of Subjects in 5 CFR Part 575
Government employees, Wages.
U.S. Office of Personnel Management.
Janice R. Lachance,
Director.
Accordingly, OPM is proposing to amend part 575 of title 5, Code of
Federal Regulations, as follows:
PART 575--RECRUITMENT AND RELOCATION BONUSES; RETENTION
ALLOWANCES;
SUPERVISORY DIFFERENTIALS
1. The authority citation for part 575 continues to read as
follows:
Authority: 5 U.S.C. 1104(a)(2), 5753, 5754, and 5755; secs. 302
and 404 of the Federal Employees Pay Comparability Act of 1990
(FEPCA) (Pub. L. 101-509), 104 Stat. 1462 and 1466, respectively;
E.O. 12748, 3 CFR, 1992 Comp., p. 316.
Subpart A--Recruitment Bonuses
2. In Sec. 575.102, paragraph (a)(5) is amended by removing ``or'';
paragraph (a)(6) is amended by removing ``.'' and inserting in its
place ``; or''; and a new paragraph (a)(7) is added to read as follows:
Sec. 575.102 Delegation of authority.
(a) * * *
[[Page 5493]]
(7) A prevailing rate position, as defined in 5 U.S.C. 5342(a)(3).
* * * * *
Subpart B--Relocation Bonuses
3. In Sec. 575.202, paragraph (a)(5) is amended by removing ``or'';
paragraph (a)(6) is amended by removing ``.'' and inserting in its
place ``; or''; and a new paragraph (a)(7) is added to read as follows:
Sec. 575.202 Delegation of authority.
(a) * * *
(7) A prevailing rate position, as defined in 5 U.S.C. 5342(a)(3).
* * * * *
Subpart C--Retention Allowances
4. In Sec. 575.302, paragraph (a)(5) is amended by removing ``or'';
paragraph (a)(6) is amended by removing ``.'' and inserting in its
place ``; or''; and paragraph (a)(7) is added to read as follows:
Sec. 575.302 Delegation of authority.
(a) * * *
(7) A prevailing rate position, as defined in 5 U.S.C. 5342(a)(3).
* * * * *
5. In Sec. 575.303, the definition of commuting area is added in
alphabetical order to read as follows:
Sec. 575.303 Definitions.
* * * * *
Commuting area has the meaning given that term in Sec. 575.203.
* * * * *
6. In Sec. 575.304, paragraph (d) is redesignated as paragraph (e),
paragraphs (b) and (c) are revised, and a new paragraph (d) is added,
to read as follows:
Sec. 575.304 Conditions for payment.
* * * * *
(b) An agency may consider an employee likely to leave if he or she
is--
(1) Likely to leave the Federal service for any reason;
(2) Likely to leave his or her position for another Federal
position under a different pay system (except as provided in paragraph
(c) of this section); or
(3) Likely to leave his or her position for a position under the
same or different Federal pay system prior to the closure of the
employee's office or facility; relocation of the employee's office or
facility to a different commuting area; or the completion of a project
critical to the mission of an agency.
(c) An agency may not pay a retention allowance under paragraph
(b)(2) of this section to an employee likely to leave for a General
Schedule, prevailing rate (wage), senior-level and scientific or
professional, Senior Executive Service, administrative law judge,
Executive Schedule, or Board of Contract Appeals position when his or
her current position is also under any of these pay systems.
(d) An agency may not pay a retention allowance to an employee who
is likely to leave his or her position for another Federal position
other than under the conditions described in paragraphs (b)(2) and (3)
of this section.
* * * * *
7. In Sec. 575.305, paragraphs (a)(2)(iii), (c), and (d)(1)(i) are
revised to read as follows:
Sec. 575.305 Agency retention allowance plans; higher level review and
approval; and criteria for payment.
(a) * * *
(2) * * *
(iii) Procedures for paying allowances; and
* * * * *
(c) Criteria for payment. (1) An agency must base each allowance
paid under this subpart on a written determination 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, in the absence of such an allowance, the employee
would be likely to leave under one of the conditions specified in
Sec. 575.304(b). Except when using the group retention allowance
authority under paragraph (d) of this section, an agency must make the
determination that an employee is likely to leave on an individual,
case-by-case basis.
(2) An agency must base the determination required by paragraph
(c)(1) of this section on a written description of the extent to which
the employee's departure would affect the agency's ability to carry out
an activity or perform a function that the agency deems essential to
its mission or to operate effectively during a critical period.
(3) An agency must consider the following factors, as applicable in
the case at hand, in determining whether to pay a retention allowance
and the amount of any such payment:
(i) The success of recent efforts to recruit candidates and retain
employees with qualifications similar to those possessed by the
employee for positions similar to the position held by the employee;
(ii) The availability in the labor market of candidates for
employment who, with minimal training or disruption of service to the
public, could perform the full range of duties and responsibilities of
the employee's position; or
(iii) Other supporting factors, such as the likelihood of
attracting candidates to fill the employee's position if the agency has
announced that it will soon relocate the position, the cost and time
required to hire and train a new employee to complete a critical, time-
sensitive project, or the salaries typically paid by another Federal
agency.
(4) For an employee likely to leave for other Federal employment
under the conditions described in Sec. 575.304(b)(2) and (3), the
agency must consider the use of non-pay solutions to help retain the
employee before authorizing a retention allowance. Such solutions may
include conducting an aggressive recruiting program, using alternative
appointing authorities, redesigning jobs, establishing training
programs, implementing alternative work schedules, or improving working
conditions.
(d) * * *
(1)(i) An agency may authorize a retention allowance of up to 10
percent of an employee's rate of basic pay for a group or category of
employees (excluding individuals covered by Sec. 575.302(a)(2), (3),
(5), or (6) or those in similar positions to which OPM has delegated
authority to approve retention allowances to agency heads under
Sec. 575.302(c)). An agency must determine in writing that the category
of employees has unusually high or unique qualifications, or that the
agency has a special need for the employees' services that makes it
essential to retain the employees in that category. The agency must
also determine in writing that it is reasonable to presume that there
is a high risk that a significant number of employees in the targeted
category are likely to leave under one of the conditions specified in
Sec. 575.304(b) in the absence of an allowance.
* * * * *
8. In Sec. 575.306, paragraph (c) is revised to read as follows:
Sec. 575.306 Payment of retention allowance.
* * * * *
(c) An agency may continue paying a retention allowance as long as
the conditions giving rise to the original determination to pay the
allowance still exist, except as provided in Sec. 575.307(a) and (b).
However, at least annually, the agency must review each determination
to pay an allowance to determine whether payment is still warranted.
The agency approving official must certify this determination in
writing.
* * * * *
9. In Sec. 575.307, paragraphs (b) and (c) are redesignated as
paragraphs (c) and
[[Page 5494]]
(d), respectively, and a new paragraph (b) is added to read as follows:
Sec. 575.307 Reduction or termination of retention allowance.
* * * * *
(b) An agency must terminate a retention allowance paid to an
employee (or group of employees) under Sec. 575.304(b)(3) (for work on
a project critical to the mission of the agency) not later than 1 year
after the initial allowance payment. On a case-by-case basis, the head
of an agency may ask OPM to extend this time limit.
* * * * *
[FR Doc. 01-1486 Filed 1-18-01; 8:45 am]
BILLING CODE 6325-01-P