[Code of Federal Regulations]
[Title 5, Volume 1, Parts 1 to 699]
[Revised as of January 1, 2001]
From the U.S. Government Printing Office via GPO Access
[CITE: 5CFR550.806]

[Page 529-530]
 
                    TITLE 5--ADMINISTRATIVE PERSONNEL
 
                CHAPTER I--OFFICE OF PERSONNEL MANAGEMENT
 
PART 550--PAY ADMINISTRATION (GENERAL)--Table of Contents
 
                           Subpart H--Back Pay
 
Sec. 550.806  Interest computations.

    (a)(1) Interest begins to accrue on the date or dates (usually one 
or more pay dates) on which the employee would have received the pay, 
allowances, and differentials if the unjustified or unwarranted 
personnel action had not occurred.
    (2) Interest accrual ends at a time selected by the agency that is 
no more than 30 days before the date of the back pay interest payment. 
No interest is payable if a complete back pay payment is made within 30 
days after any erroneous withdrawal, reduction, or denial of a payment, 
and the interest accrual ending date is set to coincide with the 
interest accrual starting date.
    (b) In computing the amount of interest due under section 5596 of 
title 5, United States Code, the agency shall reduce the amount of pay, 
allowances,

[[Page 530]]

and differentials due for each date described in paragraph (a) of this 
section by an amount determined as follows:
    (1) Divide the employee's earnings from other employment during the 
period covered by the corrective action, as described in 
Sec. 550.805(e)(1) of this part, by the total amount of back pay prior 
to any deductions;
    (2) Multiply the ratio obtained in paragraph (b)(1) of this section 
by the amount of pay, allowances, and differentials due for each date 
described in paragraph (a) of this section.
    (c) The agency shall compute interest on the amount of back pay 
computed under section 5596 of title 5, United States Code, and this 
subpart before making deductions for erroneous payments, as required by 
Sec. 550.805(e)(2) of this part.
    (d) The rate or rates used to compute the interest payment shall be 
the annual percentage rate or rates established by the Secretary of the 
Treasury as the overpayment rate under section 6621(a)(1) of title 26, 
United States Code (or its predecessor statute), for the period or 
periods of time for which interest is payable.
    (e) On each day for which interest accrues, the agency shall 
compound interest by dividing the applicable interest rate (expressed as 
a decimal) by 365 (366 in a leap year).
    (f) The agency shall compute the amount of interest due, and shall 
issue the interest payment within 30 days of the date on which accrual 
of interest ends.
    (g) To the extent administratively feasible, the agency shall issue 
payments of back pay and interest simultaneously. If all or part of the 
payment of back pay is issued on or before the date on which accrual of 
interest ends and the interest payment is issued after the payment of 
back pay is issued, the amount of the payment of back pay shall be 
subtracted from the accrued amount of back pay and interest, effective 
with the date the payment of back pay was issued. Interest shall 
continue to accrue on the remaining unpaid amount of back pay (if any) 
and interest until the date on which accrual of interest ends.

[53 FR 18072, May 20, 1988, and 53 FR 45886, Nov. 15, 1988; 64 FR 69179, 
Dec. 10, 1999]