U.S. Office of Personnel Management - Ensuring the Federal Government has an effective civilian workforce

Recruitment, Relocation, and Retention Incentives
Implementation and Transition Qs and As

Q. Since it will take time for agencies to establish new plans for using the new recruitment, relocation, and retention incentive authorities, may agencies use their current recruitment and relocation bonus and retention allowance plans in the meantime? When may agencies start using the new recruitment, relocation, and retention incentive authorities?

A. The Federal Workforce Flexibility Act of 2004 provides that the new recruitment, relocation, and retention incentive authorities became effective on the first day of the first pay period beginning on or after the 180th day after enactment (May 1, 2005). However, under 5 U.S.C. 5753(f) and 5754(g), OPM must require agencies to establish a plan "before paying any bonuses under this section, . . . subject to regulations prescribed by the Office." Therefore, agencies may not put into effect a new recruitment, relocation, or retention incentive plan or authorize a new recruitment, relocation, or retention incentive before the effective date of the interim regulations (May 13, 2005).

Agencies may adopt the recruitment, relocation, or retention incentive plan that was in effect under the prior law for the purpose of authorizing incentives under the new law and regulations, as long as any offers made using these plans are not inconsistent with the new law and regulations. Agencies should include a written statement in their adopted plans that recruitment, relocation, and retention incentives may be authorized and paid under new 5 U.S.C. 5753 and 5754 during the period of time between May 1, 2005, and the effective date of the agency's new plans.

We note that, under the interim regulations, recruitment, relocation, and retention incentive service agreements must begin on the first day of a pay period. Because May 13 was not the first day of a pay period, no service agreements could be made effective on that date. (See 5 CFR 575.110(b), 575.210(b), and 575.310(b).) Therefore, the earliest date a new recruitment, relocation, and retention incentive service agreement could be made effective was May 15, 2005 (assuming the agency's new or adopted plan was in place by that date).

If an individual received a formal offer of a recruitment or relocation bonus or retention allowance before May 1, 2005, the agency may pay that bonus or allowance on or after May 1, as long as the terms associated with the offer were consistent with the law and regulations in effect when the offer was made. If an individual received a formal offer of a recruitment, relocation, or retention payment after April 30, but before May 13, 2005, the agency may deem that offer to have been made on May 13, 2005 (i.e., the effective date of the new interim regulations), and may make such payments effective on May 15, 2005 (or the first day of a pay period thereafter), as long as the agency had a new or adopted recruitment, relocation, and retention incentive plan in place by that date.

Q. If an agency adopts its previous recruitment and relocation bonus and retention allowance plans as its interim recruitment, relocation, and retention incentive plans, may it use locality rates to compute newly authorized incentives, since this is a new requirement that is not reflected in the agency's previous plans?

A. Agencies may adopt the recruitment, relocation, or retention incentive plans that were in effect under the prior law for the purpose of authorizing incentives under the new law and regulations, as long as any offers made using these plans are not inconsistent with the new law and regulations. Not using locality rates to compute new recruitment, relocation, and retention incentives would be inconsistent with the new interim regulations. Therefore, agencies must include any applicable locality payment or special rate in an employee's rate of basic pay for the purpose of computing recruitment, relocation, and retention incentives. Agencies may want to clarify this (and any other changes required by the new recruitment, relocation, and retention incentive law and regulations) in a cover memo accompanying their adopted plans.

Q. Should an agency use locality rates to compute retention allowances authorized before May 1, 2005?

A. Locality rates may not be used to compute retention allowances authorized before May 1, 2005 ("grandfathered" retention allowances). Section 101(d)(3) of the Federal Workforce Flexibility Act of 2004 and 5 CFR 575.314 require such allowances to continue, subject to 5 U.S.C. 5754, as in effect on the day before the effective date of the new recruitment, relocation, and retention incentive authorities (i.e., April 30, 2005). Since the former authority prohibited the use of locality rates to compute retention allowances, a locality rate may not be used to compute grandfathered retention allowances. Agencies must use the employee's underlying basic rate to compute the retention allowance. However, an agency may terminate a "grandfathered" retention allowance and authorize a new retention incentive based on the locality rate if a new or adopted plan is in place.

Q. Since locality rates cannot be used to compute retention allowances authorized before May 1, 2005, the retention allowance for an employee whose special rate was terminated effective May 1, 2005, has been reduced. Can agencies increase the retention allowance to offset this reduction?

A. A locality rate may not be used to compute the grandfathered retention allowance for an employee whose special rate was terminated effective May 1, 2005. Because agencies must use the employee's underlying basic rate to compute the retention allowance, the employee's retention allowance payment has been reduced. Agencies may, on a one-time basis, increase the employee's retention allowance percentage (not to exceed a total of 25 percent of basic pay, not including locality pay (or 10 percent of basic pay for group retention allowances)) to offset the reduction. Such an increase in the retention allowance percentage is not a reauthorization for the purpose of applying the grandfather provisions in 5 CFR 575.314.