[Federal Register: February 1, 2005 (Volume 70, Number 20)]
[Rules and Regulations]
[Page 5271-5347]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr01fe05-13]
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Part II
Department of Homeland Security
Office of Personnel Management
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5 CFR Chapter XCVII and Part 9701
Department of Homeland Security Human Resources Management System;
Final Rule
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DEPARTMENT OF HOMELAND SECURITY
OFFICE OF PERSONNEL MANAGEMENT
5 CFR Chapter XCVII and Part 9701
RIN 3206-AK31 and 1601-AA-19
Department of Homeland Security Human Resources Management System
AGENCY: Department of Homeland Security; Office of Personnel
Management.
ACTION: Final rule.
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SUMMARY: The Department of Homeland Security (DHS or the Department)
and the Office of Personnel Management (OPM) are issuing final
regulations to establish a new human resources management system within
DHS, as authorized by the Homeland Security Act of 2002. The affected
subsystems include those governing basic pay, classification,
performance management, labor relations, adverse actions, and employee
appeals. These changes are designed to ensure that the Department's
human resources management system aligns with its critical mission
requirements without compromising the statutorily protected civil
service rights of its employees.
DATES: Effective Date:
March 3, 2005.
FOR FURTHER INFORMATION CONTACT: At OPM: Ronald P. Sanders, 202-606-
9150; at DHS: Kay Frances Dolan, 202-357-8200.
SUPPLEMENTARY INFORMATION:
Table of Abbreviations
AFGE--American Federation of Government Employees
ALJ--Administrative Law Judge
Compensation Committee--Homeland Security Compensation Committee
DHS--Department of Homeland Security
FLRA--Federal Labor Relations Authority
FMCS--Federal Mediation and Conciliation Service
FSIP--Federal Service Impasses Panel
GAO--Government Accountability Office (former General Accounting
Office)
GS--General Schedule
HR--Human Resources
HSLRB--Homeland Security Labor Relations Board
MRO--Mandatory Removal Offense
MRP--Mandatory Removal Panel
MSPB--Merit Systems Protection Board
NAAE--National Association of Agriculture Employees
NFFE--National Federation of Federal Employees
NTEU--National Treasury Employees Union
OPM--Office of Personnel Management
SES--Senior Executive Service
SL--Senior Level
SRC--DHS Human Resource Management Senior Review Committee
ST--Scientific or Professional Positions
TSA--Transportation Security Administration
Table of Contents
This supplementary information section is organized as follows:
Introduction
The Case for Action
Pay and Classification
Performance Management
Labor-Management Relations
Adverse Actions and Appeals
Summary of the Design Process
The Meet and Confer Process
Major Issues
Specificity of the Regulations
Pay for Performance
Management Rights/Scope and Duty to Bargain
Adverse Actions and Appeals
Mandatory Removal Offenses
Response to Specific Comments and Detailed Explanation of
Regulations
Subpart A--General Provisions
Section 9701.101--Purpose
Section 9701.102--Eligibility and Coverage
Summary of Coverage Eligibility Chart
Section 9701.103--Definitions
Section 9701.105--Continuing Collaboration
Section 9701.106--Relationship to Other Provisions
Section 9701.107--Program Evaluation
Subpart B--Classification
General Comments
Section 9701.201--Purpose
Section 9701.203--Waivers
Section 9701.204--Definitions
Section 9701.211--Occupational Clusters
Section 9701.212--Bands
Section 9701.222--Reconsideration of Classification Decisions
Section 9701.232--Special Transition Rules for Federal Air
Marshal Service
Subpart C--Pay and Pay Administration
General Comments
Section 9701.301--Purpose
Section 9701.303--Waivers
Section 9701.304--Definitions
Section 9701.311--Major Features
Section 9701.312--Maximum Rates
Section 9701.314--Department of Homeland Security
Responsibilities
Section 9701.321--Structure of Bands
Section 9701.322--Setting and Adjusting Rate Ranges
Section 9701.323--Eligibility for Pay Increase Associated with a
Rate Range Adjustment
Section 9701.331--General
Section 9701.332--Locality Rate Supplements
Section 9701.333--Special Rate Supplements
Section 9701.334--Setting and Adjusting Locality and Special
Rate Supplements
Section 9701.335--Eligibility for Pay Increase Associated with a
Supplement Adjustment
Section 9701.342--Performance Pay Increases
Section 9701.343--Within Band Reductions
Section 9701.344--Special Within Band Increases for Certain
Employees
Section 9701.345--Developmental Pay Adjustments
Section 9701.346--Pay Progression for New Supervisors
Section 9701.353--Setting Pay Upon Promotion
Section 9701.356--Pay Retention
Section 9701.361--Special Skills Payment
Section 9701.362--Special Assignment Payments; and 9701.363
Special Staffing Payments
Summary of Special Rate Supplements and Special Payments
Provisions
Section 9701.373--Conversion of Employees to the DHS Pay System
Section 9701.374--Special Transition Rules for the Federal Air
Marshal Service
Subpart D--Performance Management
General Comments
Section 9701.401--Purpose
Section 9701.403--Waivers
Section 9701.404--Definitions
Section 9701.405--Performance Management Systems
Section 9701.406--Setting and Communicating Performance
Expectations
Section 9701.407--Monitoring Performance
Section 9701.408--Developing Performance
Section 9701.409--Rating Performance
Section 9701.410--Rewarding Performance
Section 9701.412--Performance Review Boards
Subpart E--Labor-Management Relations
General Comments
Section 9701.501--Purpose
Section 9701.502--Rules of Construction
Section 9701.503--Waivers
Section 9701.504--Definitions
Section 9701.505--Coverage
Section 9701.506--Impact on Existing Agreements
Section 9701.508--Homeland Security Labor Relations Board
Section 9701.509--Powers and Duties of the HSLRB and 9701.510--
Powers and Duties of the Federal Relations Authority
Section 9701.511--Management Rights
Section 9701.512--Obligation to Confer
Section 9701.513--Exclusive Recognition of Labor Organizations
Section 9701.515--Representation Rights and Duties
Section 9701.516--Allotments to Representatives
Section 9701.517--Unfair Labor Practices
Section 9701.518--Duty to Bargain, Confer, and Consult in Good
Faith
Section 9701.519--Negotiation Impasses
Section 9701.521--Grievance Procedures
Section 9701.522--Exceptions to Arbitration Awards
Section 9701.527--Savings Provision
Subpart F--Adverse Actions
General Comments
Section 9701.601--Purpose
Section 9701.602--Waivers
Section 9701.603--Definitions
Section 9701.604--Coverage
Section 9701.605--Standard for Action
Section 9701.606--Mandatory Removal Offenses
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Section 9701.608--Departmental Record
Section 9701.609--Suspension and Removal
Section 9701.614--Savings Provision
Subpart G--Appeals
Section 9701.701--Purpose
Section 9701.702--Waivers
Section 9701.704--Coverage
Section 9701.705--Alternative Dispute Resolution
Section 9701.706--MSPB Appellate Procedures
Section 9701.707--Appeals of Mandatory Removal Action
Section 9701.709--Savings Provision
Next Steps
Moving Forward
Regulatory Requirements
E.O. 12866--Regulatory Review
Regulatory Flexibility Act
E.O. 12988--Civil Justice Reform
E.O. 13132--Federalism
Introduction
The Secretary of Homeland Security, Tom Ridge, and the Director of
the Office of Personnel Management, Kay Coles James, jointly prescribe
this final regulation to establish a flexible and contemporary system
for managing the Department's human resources (HR). This system has
been developed pursuant to a process based on principles articulated by
OPM and affirmed by DHS that called for extensive and continuing
collaboration with employees and employee representatives. In addition,
DHS and OPM have engaged in unprecedented outreach to the public as
well as to the Congress and other key stakeholders. As provided by
Public Law 107-296 (the Homeland Security Act, signed into law by
President George W. Bush on November 25, 2002), the system preserves
all core civil service protections, including merit system principles,
veterans' preference, and due process. It also protects against
discrimination, retaliation against whistleblowers, and other
prohibited personnel practices, and ensures that employees may organize
and bargain collectively (when not otherwise prohibited by law,
including these regulations, applicable Executive orders, and any other
legal authority).
This Supplementary Information addresses the following areas:
The Case for Action
Summary of the Design Process
The Meet-and-Confer Process
Major Issues
Response to Specific Comments and Detailed Explanation of
Regulations
Next Steps
Moving Forward
The Case for Action
Since September 11, 2001, this Nation has come together with a
unity of purpose that has not been seen or felt since the attack at
Pearl Harbor in 1941. Out of that national tragedy emerged a consensus
for a comprehensive global war on terrorism. That consensus resulted in
the enactment of legislation creating the Department of Homeland
Security, and with it, the authority to create a system for managing
its human resources that would be flexible and mission-focused without
compromising the principles of merit and fitness. Indeed, the
Department's mission is to ``lead the unified national effort to secure
America'' (emphasis added), and its new HR system is aimed at that same
result. In order for the Department to sustain that unity of effort,
its HR system must also provide for the meaningful participation of
employees in its creation, and they must be treated with dignity and
respect in its implementation.
These final regulations represent a major step in that historic
transformation. They establish a new HR system for the Department of
Homeland Security (DHS) that assures its ability to attract, retain,
and reward a workforce that is able to meet the critical mission
entrusted to it by the American people. As provided by the regulations
published here, that system must and does provide for greater
flexibility and accountability in the way employees are paid,
developed, evaluated, afforded due process, and represented by labor
organizations. These regulations respond to comments on a notice of
proposed rulemaking published in the Federal Register of February 20,
2004 (69 FR 8030). The next step, following the publication of these
enabling regulations, is to implement this new system, in continuing
collaboration with employee representatives.
The mission of the Department demands that employees and
supervisors work together as never before. Managers, supervisors, and
employees of the Department must be unified in both purpose and effort
if they are to accomplish that mission. And perhaps the most important
way to bring about that unity is through an integrated HR system for
the Department--a system that assures maximum flexibility and
accountability. That system must value, reward, and reinforce high
performance, teamwork, commitment to learning and excellence, and
selfless service. It must also facilitate communication and
collaboration at all levels of the Department. The Secretary and the
Director are committed to ensuring that these goals are met.
The mission statement of the Department goes on to state that
``[w]e will prevent and deter terrorist attacks and protect against and
respond to threats and hazards to the nation. We will ensure safe and
secure borders, welcome lawful immigrants and visitors, and promote the
free-flow of commerce.'' No Federal agency has ever had a mission that
is so broad, complex, dynamic, and vital. That mission demands
unprecedented organizational agility to stay ahead of determined,
dangerous, and sophisticated adversaries. The importance of the
Department's HR system to achieving that goal has been underscored by
the President and the Congress. In signing the Homeland Security Act
into law, President Bush emphasized the Department's critical need to
``put the right people in the right place at the right time in the
defense of our country'' while ensuring that the rights of the
Department's employees ``[a]s federal workers * * * will be fully
protected * * *.'' Senator Susan Collins, Chairman of the Senate
Committee on Governmental Affairs, said, ``[w]e need to grant the new
Secretary appropriate but not unlimited authority to create a flexible,
unified new personnel system that meets the Department's unique
demands.''
This was the fundamental challenge faced by Secretary Ridge and
Director James in designing this new system--to strike a balance
between mission-essential flexibility and protection of core civil
service principles. Summarized here and discussed at length in the
pages that follow are the changes that we believe strike that balance.
Many of those changes are significant, and we have highlighted them in
the following pages. We believe they respond to the fundamental
concerns of the American public, as well as our employees. Where there
is a substantial departure from the status quo in this final plan, it
is in furtherance of the Department's statutory mission, with the
attendant need for a significant investment in communication and
understanding on the part of all parties in order to successfully
implement those changes.
Pay and Classification. One of the most fundamental changes in the
regulations is the creation of a pay-for-performance system for
Department employees that will replace the General Schedule. Under this
new system, pay increases will be based solely on performance--not time
in grade. It also provides for the establishment of a series of
occupational clusters and bands in place of the current General
Schedule grades and authorizes DHS to
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set and adjust the minimum and maximum rates of pay for each band
associated with a cluster. In addition, the system establishes locality
rate supplements to address local market conditions, as well as special
rate supplements to address special recruitment or retention needs.
Only those DHS employees whose performance meets or exceeds
expectations will be eligible for a performance- and/or market-based
pay increase.
Performance Management. The new performance management system for
DHS will complement and support the Department's new pay and
classification system by ensuring greater accountability for individual
performance expectations and organizational results. The regulations
simplify performance management, removing many administrative burdens
associated with the current system. For example, ``performance
expectations'' need no longer be in writing and may take the form of
individual, team, and/or work unit goals or objectives, as well as such
things as standard operating procedures or manuals, internal rules and
directives, and other generally available instructions applicable to an
employee's job. However, performance expectations, including those that
may affect the employee's retention, must still be communicated to the
employee prior to holding the employee accountable for them.
Labor-Management Relations. To ensure that the Department has the
flexibility to carry out its vital mission, the regulations, among
other things, revise management's rights and its duty to bargain to
ensure that the Department can act as and when necessary. Such critical
matters as work assignments and deployments are no longer subject to
collective bargaining. However, exclusive representatives will still be
able to negotiate over significant and substantial changes, as well as
appropriate arrangements for employees adversely affected by those
changes, under certain specified conditions. Additionally, the
regulations create the Homeland Security Labor Relations Board (HSLRB)
to address those issues that are most important to accomplishing the
DHS mission, with other matters retained by the Federal Labor Relations
Authority (FLRA). The revisions strike the right balance between the
mission needs of DHS and the meaningful involvement of employees and
their representatives.
Adverse Actions and Appeals. Consistent with the Homeland Security
Act, the regulations streamline and simplify adverse action and appeals
procedures, but without compromising due process for DHS employees.
Employees will still receive notice of a proposed adverse action, the
right to reply, and the right to appeal to the Merit Systems Protection
Board (MSPB). We have also revised the proposed regulations to raise
the burden of proof in adverse actions from ``substantial'' to
``preponderance,'' and to permit arbitration of adverse actions as an
option for bargaining unit employees. In addition, the regulations now
allow MSPB (and arbitrators) to mitigate penalties, but only under
certain specified conditions. The final regulations also retain
authority for the Secretary to establish a number of mandatory removal
offenses (MROs) that have a direct and substantial effect on homeland
security and an independent Panel (selected from a list that will
include nominees from DHS exclusive representatives and other sources)
to hear MRO appeals.
Summary of the Design Process
As the Congress made clear, ``collaborative effort will help secure
our homeland.'' DHS and OPM have been committed to a collaborative
approach from the beginning. The General Accounting (now Government
Accountability) Office (GAO) recognized this in a report last year,
stating that ``DHS's and OPM's efforts to design a new human capital
system are collaborative and facilitate participation of employees from
all levels of the department.'' In a follow-up report issued in June
2004, GAO observed that ``to date, DHS's actions in designing its human
capital management system and its stated plans for future work on the
system are positioning the department for successful implementation.''
Those actions included an extensive process of deliberation,
discussion, and collaboration with employees, representatives of labor
organizations, supervisors, managers, and other stakeholders in order
to identify ideas and concerns.
This collaborative process was rooted in conversations Director
James held with employee representatives even prior to the passage of
the Homeland Security Act to propose a fair and principled process for
the design of the HR system. The process itself actually began in April
2003, when the Secretary and the Director established a DHS/OPM Design
Team composed of Department managers and employees, HR experts from DHS
and OPM, and professional staff from the Department's three largest
labor organizations: The American Federation of Government Employees,
the National Treasury Employees Union, and the National Association of
Agriculture Employees.
The 48 members of the Design Team conducted significant research in
the areas of pay, performance, classification, labor relations, adverse
actions, and appeals reform. The team gathered data from public and
private sector organizations; examined and evaluated successful and
promising human capital practices; interviewed leading human resources
experts, DHS employees and managers; and consulted a Field Team of
employees and managers who provided a front-line perspective. Together,
as a team, DHS and OPM also held dozens of focus groups, including
visits to Norfolk, Atlanta, Detroit, New York, Miami, El Paso, Los
Angeles, Seattle, Baltimore, and Washington, DC. Thus, DHS and OPM
heard the concerns of thousands of the Department's employees.
The Design Team developed 52 options for the various elements of
the Department's HR system. These were presented to a DHS Human
Resource Management Senior Review Committee (SRC) on October 20-23,
2003. The SRC, co-chaired by senior DHS and OPM officials, included the
presidents of the Department's three largest labor organizations, as
well as the heads of some of its largest and most critical line
operations. In addition, five non-Federal experts in public
administration were designated as technical advisors to the SRC. During
the course of two public meetings, the SRC reviewed the various Design
Team options, and thereafter its members reported their views to the
Secretary and the Director for consideration. In reaching final
decisions regarding the new HR system, the Secretary and the Director
relied on the SRC's advice and counsel, as well as the public comments
received during the SRC proceedings and the wealth of material
developed through the Design Team's research.
These extensive and collaborative design efforts all preceded the
formal process for developing the new HR system, and went far beyond
that required by the Congress in the Homeland Security Act. The Act
established a formal process in this regard, officially beginning when
the Secretary and the Director published proposed regulations to
establish the new DHS HR system in the Federal Register on February 20,
2004. That first formal step provided a 30-day period for the public,
employees, and employee representatives to review and submit formal
comments on the proposed system. More than 3,800 public comments were
received and analyzed by DHS and OPM staff. At the specific
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request of the Secretary and the Director, the formal comments of labor
organizations were given particular attention and consideration.
Commenting jointly, the three largest labor organizations rejected the
proposed regulations in their entirety. Public, employee, and labor
organization comments are summarized in detail in a subsequent section
of this Supplementary Information.
The Meet-and-Confer Process
The public comment period was followed by the second step in the
formal development process--an additional 30-day period during which
representatives of the Department and its major employee organizations
were to ``meet and confer'' in order to resolve differences over the
proposed regulations wherever possible. That meet-and-confer process
began officially on June 14, 2004. On that date, the Secretary and the
Director notified Congress in writing that they had not accepted the
labor organizations' recommendation to reject the proposed regulations
in their entirety. This notification was required by the Homeland
Security Act of 2002 (5 U.S.C. 9701(e)(1)(B)(i)). Even before the meet-
and-confer process began, however--and in keeping with our
determination to work collaboratively with DHS employee
representatives--staff from DHS and OPM met informally for several days
with representatives of the three largest labor organizations
representing DHS employees to discuss the proposed regulations. Our
discussions helped us better understand each other's positions and led
to several clarifications regarding the proposed regulations.
As authorized by 5 U.S.C. 9701(e)(1)(B)(iii), and in order to
facilitate the meet-and-confer process, the Secretary and the Director
issued procedures governing the conduct of this process. The procedures
provided for five employee organizations to participate in the meet-
and-confer process, including one management association; however, the
management association declined to participate. The Secretary, in
consultation with the Director, also requested the services of the
Federal Mediation and Conciliation Service. Under those procedures,
officials of the Department and OPM met with employee representatives
from June 14 through August 6, 2004, a period well in excess of the
statutory requirement. (Including informal sessions that preceded the
meet-and-confer process, DHS, OPM, and labor organization
representatives met for a total of more than 36 days--this, of course,
is in addition to the 6 months that DHS and OPM representatives spent
with employee representatives, full-time, during the HR system design
process.) The following principals participated in the actual meet-and-
confer process:
One representative from each of the four largest DHS labor
organizations: the American Federation of Government Employees (AFGE),
the National Treasury Employees Union (NTEU), the National Association
of Agriculture Employees (NAAE), and the National Federation of Federal
Employees (NFFE);
Four representatives from DHS, including the Chief Human
Capital Officer, an executive from his staff, and two senior line
managers from DHS operational components; and
Two senior executives from the Office of Personnel
Management (OPM).
Finally, at the conclusion of the meet-and-confer process, the
Secretary and the Director met with the national presidents of the
Department's two largest labor organizations (AFGE and NTEU) on
September 10, 2004, to provide them with an opportunity to present
their issues and concerns directly to the principals. Their
presentation led to further revisions to these regulations as described
in this SUPPLEMENTARY INFORMATION.
As discussed and described in great detail in subsequent sections
of this Supplementary Information, we have made substantial revisions
to the proposed regulations in response to the many recommendations
made by employees, labor organizations, and others during the public
comment period. In addition, we listened to the concerns of the
employee representatives and adopted many of the proposals made by
labor organization representatives during the extensive meet-and-confer
process. A careful comparison of the final regulations to those
proposed several months ago will show that we have kept our commitment
to an open, inclusive, and participatory process that respected and
accommodated employee and labor organization perspectives and concerns.
These extensive revisions notwithstanding, substantial
disagreements remain over such fundamental issues as performance vs.
tenure as a basis for individual pay increases, and the scope and duty
to bargain vs. operational flexibility in the assignment and deployment
of front-line personnel. These disagreements were underscored during
the meet-and-confer process, and despite the exhaustive, good faith
efforts by labor organization and management representatives during
that process, the parties were simply not able to resolve them. In
point of fact, these issues reach to the core of a flexible,
contemporary HR system for the Department, and they represent the sort
of transformational change envisioned by the Congress and the President
when the Homeland Security Act was enacted into law. And because they
are so fundamental, no one should be alarmed by these disagreements,
take them as a sign of bad faith on the part of any party, or view them
as an indication that the meet-and-confer process failed. Reasonable
and honorable people may disagree, especially over such issues as
these, but we believe the extensive involvement of employees and
employee representatives over the course of the last 18 months added
tremendous value--and that the process worked.
While the regulatory process precluded us from agreeing on final
regulatory language during the meet-and-confer process, we believe we
did reach agreement with the participating labor organizations on
numerous substantive issues. Because we could not ``sign off'' on these
agreements, as we would in a traditional collective bargaining process,
we have tried to exercise caution in characterizing the results. We
believe this understates the extent of the conceptual agreements and
understandings reached during the process, which we have tried to
reflect in the Supplementary Information section of this notice. Thus,
where we make the statement ``we agreed'' in the text of this
Supplementary Information, we are referring to agreements reached by
OPM and DHS in the regulatory process, rather than to agreements
reached between management and labor organization representatives
during the meet-and-confer process.
Major Issues
Our analysis of the more than 3,800 comments received during the
public comment period, as well as the many issues extensively discussed
during the subsequent meet-and-confer process, revealed a set of major
issues that elicited the most (or most substantive) comments,
especially from key stakeholders. They are (1) specificity of the
regulations, (2) pay for performance, (3) management rights/scope and
duty to bargain, (4) adverse actions and appeals, and (5) mandatory
removal offenses. Because these issues are critical to understanding
the objectives of the Department's new HR system, we have given them
particular attention in the following pages.
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1. Specificity of the Regulations
One of the most significant issues raised by employees, labor
organizations, and some Members of Congress had to do with the basic
structure of the regulations. As jointly prescribed by DHS and OPM,
parts of the final regulations establish broad policy parameters for
the Department's HR system but leave many of the details of that system
to DHS implementing directives. Many of the commenters, especially
labor organizations, expressed concern about this fact, arguing that
the proposed regulations lacked sufficient detail, and they recommended
that the regulations include far greater specificity.
These comments and concerns focused almost exclusively on three of
the subparts in the proposed regulations--those dealing with
classification, pay, and performance management (subparts B, C, and D,
respectively). Those subparts were (and remain) relatively general in
nature, and they expressly provide for the Department to develop and
issue directives implementing their precepts subsequent to the
promulgation of these regulations. In contrast, the subparts dealing
with labor relations, adverse actions, and appeals (subparts E, F, and
G, respectively) are quite detailed, requiring little in the way of
implementing directives.
In response to these comments, and as a result of the meet-and-
confer process, we have added greater detail to the subparts at issue--
particularly subpart C. However, even with added detail, all three of
the subparts at issue retain their original structure in the final
regulations, establishing a general policy framework to be supplemented
by detailed Departmental implementing directives. Comments
notwithstanding, we believe that this is the appropriate approach. In
these final regulations which have the full force and effect of law, we
have intentionally adopted a structure that mirrors the very statutes
that they replace. Moreover, this structure provides the Department the
flexibility it requires in implementing an HR system of this scope and
complexity.
In this regard, the provisions of title 5, U.S. Code, governing
classification, pay, and performance management establish general
policies and authorities, with the details left to OPM to regulate. For
example, 5 U.S.C. chapter 51 establishes the General Schedule (GS)
classification system but leaves to OPM the definition of occupational
series and families and the development and promulgation of detailed
job grading standards and qualification requirements--presently
encompassing hundreds of detailed classification standards and
qualifications requirements (note that those standards and requirements
are not subject to public notice and comment under the Administrative
Procedure Act). Subpart B of these regulations, which now replaces 5
U.S.C. chapter 51, follows suit, establishing the basic
``architecture'' of the Department's job classification system--that
is, its core elements and parameters--but it leaves the specific
definition of occupational clusters and bands and the development of
job grading standards to Departmental implementing directives (all
subject to OPM review and coordination). Chapters 53 and 43 of title 5,
U.S. Code, follow the same pattern and so too do the subparts that
replace them--subparts C and D, respectively.
While commenters did not express concern about the structure of
subparts E, F, and G, dealing with labor relations, adverse actions,
and appeals, respectively, they too reflect their statutory
underpinnings. Like their ``legacy'' chapters in title 5 (chapters 71,
75, and 77, respectively), they are extremely detailed and, except for
procedures for the operation of the two adjudicating bodies that they
establish, they require little in the way of implementing directives.
While the final regulations retain their basic structure as
originally proposed, we have added detail in subparts B, C, and D as a
result of public comment and the meet-and-confer process. These
additions are documented at length in our responses to the detailed
comments that follow. However, some of them are worth highlighting. For
example, in subpart C, we have included specific policies governing pay
adjustments upon promotion from a lower pay band to a higher one; pay
progression for employees in entry/developmental pay bands; limits on
reductions in basic pay for performance or conduct reasons; pay
adjustments for employees on pay retention; and the impact of an
``unacceptable'' performance rating on an individual's pay. Similarly,
subpart D now includes additional detail regarding requirements for
setting and communicating performance expectations (especially those
that may affect an employee's retention) and policies dealing with
rating and rewarding performance.
According to labor organization feedback during the final stages of
the meet-and-confer process, these additions still fall short of the
detail they recommend. Labor organization comments in this regard focus
primarily on process, asserting that by including greater detail in the
proposed regulations, they would have been given an opportunity to
participate and provide input to the final regulations via the
statutory meet-and-confer process set forth in 5 U.S.C. 9701(e). Among
other things, that statutory process requires the Department and OPM to
provide employee organizations with an opportunity to comment on
proposed regulations and thereafter, meet with DHS and OPM officials
(under the auspices of the Federal Mediation and Conciliation Service,
if necessary) in an attempt to resolve any concerns and disagreements.
As the labor organizations and other commenters have correctly pointed
out, the proposed regulations did not provide for an analogous
opportunity with respect to the issuance of implementing directives.
This became a major topic of discussion during the meet-and-confer
process, with labor organizations insisting that DHS and OPM either
include all implementing details in these final regulations, or subject
Department implementing directives to collective bargaining.
We did not adopt either alternative. Including such detail in these
regulations would be inconsistent with the ``legacy'' statutes that
they replace and contrary to our best judgment--based on years of
experience administering those statutes. Moreover, such detail would
result in untenable rigidity in a Department whose mission requires
just the opposite. In authorizing these regulations, Congress mandated
that we develop a human resources system that is ``flexible'' (see 5
U.S.C. 9701(b)(1)); indeed, of all of the various objectives set by
Congress for this system in the Homeland Security Act, flexibility was
the very first it enumerated, and unnecessary and excessive detail in
subparts B, C, and D would undermine that objective.
Collective bargaining is also inappropriate for the development of
implementing directives. First, Congress could have provided for
collective bargaining to develop directives, but did not. Instead, it
expressly provided for a meet-and-confer process as a way of providing
for labor organization involvement, and there is no evidence whatsoever
that it intended that Departmental implementing directives be
collectively bargained; rather, Congress clearly provided for
``continuing collaboration'' (but implicitly, not collective bargaining
or ``meet and confer'') in this regard. Moreover, we note that no labor
organization enjoys exclusive
[[Page 5277]]
recognition at the Department level--indeed, labor organizations
represent fewer than 40 percent of the Department's eligible civilian
workforce; granting labor organizations the right to collectively
bargain implementing directives that cover all of the Department's
employees would be inappropriate.
However, from the beginning DHS and OPM have recognized the value
of involving employees and their representatives in the design of this
system and included this as one of our guiding principles. Moreover, as
noted previously, 5 U.S.C. 9701(e)(1)(D) requires the Department and
OPM to provide a means for ensuring ``continuing collaboration'' with
employee representatives in implementing these regulations. In keeping
with those objectives, we have included a ``continuing collaboration''
process at Sec. 9701.105. This is consistent with the statutory
provision which states that the Secretary and Director ``shall * * *
develop a method for each employee representative to participate in any
further planning or development (of the personnel system) which might
become necessary.'' The new section now assures employee representative
involvement in the development of the Department's implementing
directives. Named after the section in the law that requires it, this
section provides employee representatives with an opportunity to
discuss their views and concerns on implementation and design concepts
with DHS officials and/or to review and provide written comments on
proposed final draft implementing directives in advance.
In summary, three of the subparts in these final regulations remain
relatively general in nature, providing broad policy parameters but
leaving much of the details to implementing directives, while three
others are specific. We believe that this structure, patterned after
the chapters in title 5 that they replace, is appropriate. By providing
for detailed implementing directives, the subparts dealing with
classification, pay, and performance management provide the Department
with the flexibility mandated by Congress, and they do so without
compromising the Department's commitment to substantive employee
representative involvement in the development of those directives.
2. Pay for Performance
The pay system we described in the proposed regulations was
designed to fundamentally change the way we pay employees in the
Department of Homeland Security. Instead of a pay system based
primarily on tenure and time-in-grade, we proposed a system that bases
all individual pay increases on performance. This proposal honors major
points that were debated by the Congress and agreed upon with the
passage of the Homeland Security Act. In addition, the proposed pay
system would be far more market-sensitive than the current pay system.
The proposed changes relating to classification, pay, and performance
management were designed to achieve these two primary goals.
A number of commenters agreed with the proposal to create a more
occupation-specific and market- and performance-based classification
and pay system. However, most commenters strongly recommended that we
maintain the status quo; that is, that DHS continue to rely on the
General Schedule (GS) classification and pay system. Many commenters
thought that the proposed pay-for-performance system would lower
employee morale, increase competition among employees, and undermine
teamwork and cooperation. Some also questioned the ability of the
Department to successfully implement the proposed system, or of DHS
managers to establish and apply performance standards fairly and
consistently to pay decisions.
We have retained the system described in the proposed regulations.
We believe Congress and the American people expect their public
employees to be paid according to how well they perform, rather than
how long they have been on the job. They also expect the Department to
do everything it can to recruit and retain the most talented
individuals it can find to carry out its critical mission. These
expectations are difficult, if not impossible, to achieve under the
current system. The General Schedule does not provide the opportunity
to appropriately reward top performers or to pay them according to
their true value in the labor market. Under the General Schedule,
performance is rewarded as an exception rather than the rule, and
market is defined as ``one size fits all.''
The GS pay system is primarily a longevity-based system--that is,
pay increases are linked primarily to the passage of time. While time-
in-grade determines eligibility for a GS step increase, it is true that
a finding that the employee is performing at an acceptable level of
competence is also required. However, this minimal requirement is met
by roughly 99 percent of all GS employees. Thus, at any given grade
level, the vast majority of employees can expect to automatically
receive base pay increases of up to 30 percent over time--in addition
to the annual across-the-board pay increases--so long as their
performance is ``acceptable.'' Even employees whose performance is
unacceptable receive annual across-the-board pay increases that range
from 3 to 5 percent, and special rates that are even higher. Over time,
even minimally productive employees will progress steadily to the top
of the GS pay range, and may end up being paid significantly more than
higher performing employees with less time in grade. Such a system
cannot be fairly characterized as providing performance-based pay.
The DHS pay-for-performance system, by contrast, is designed to
recognize and reward performance in two key ways. First, it establishes
the fundamental principle that no employee may receive a base pay or
locality rate increase if his or her performance does not at least meet
expectations. Unlike the GS system, employees rated unacceptable will
not get an annual adjustment. Second, the DHS system provides for
individual base pay increases based on an employee's performance,
whether by demonstrating requisite competencies at the entry/
developmental level or by meeting or exceeding stringent performance
expectations at the full performance level. Unlike the GS system,
tenure and time-in-grade have no bearing. An employee will progress
through the pay range based solely on how well he or she performs.
This concept may be simply summarized: The higher the performance,
the higher the pay. This, too, is a fundamental principle of the new
system, and we choose the order of these words deliberately. This
system does not assume that individuals are motivated by pay, but
rather that we have an obligation as an employer to reward the highest
performers with additional compensation--however they may be motivated
to achieve excellence. The Department has a special responsibility in
this regard. Thus, the system we have designed is not a ``performance-
for-pay'' system, but a ``pay-for-performance'' system. Nevertheless,
we believe it will inspire DHS employees to perform at their best. This
is in contrast to the GS system, where it is possible for a high-
performing employee to be paid the same, or even less, than a lower
performing co-worker.
The 50-plus-year-old GS pay system also is not sufficiently market-
sensitive, potentially under-valuing the talents of the Department's
most critical employees. Under the GS pay system, all employees in a
given geographic location receive the same annual pay adjustment
without regard to their
[[Page 5278]]
occupation or the level of duties and responsibilities they are
expected to perform. This one-size-fits-all approach treats all
occupations alike, across the board as well as in particular locations,
regardless of market value and competition. Thus, we inevitably end up
underpaying employees in some occupations and overpaying others. Even
within an occupation, the rigidities of the General Schedule sometimes
force us to underpay employees at the entry/developmental grades, with
recruiting difficulties and high attrition the result.
The new DHS pay system is designed to be much more market-
sensitive. First, it allows DHS, after coordination with OPM, to define
occupational clusters and levels of work within each cluster that are
tailored to the Department's missions and components. Second, it gives
DHS considerable discretion, after coordination with OPM, to set and
adjust the minimum and maximum rates of pay for each of those
occupational clusters or bands, based on national and local labor
market factors and other conditions. Instead of ``one size fits all''
pay rates and adjustments, the system allows DHS to customize those
adjustments and optimize valuable but limited resources. This kind of
flexibility, which is lacking under the GS pay system, will enable DHS
to allocate payroll dollars to the occupations and locations where they
are most needed to carry out the Department's mission of protecting the
homeland.
Thus, the goals and principles of the new system are sound, and we
have confidence that the Department has the capability to effectively
execute them. Pay-for-performance systems like that proposed for DHS
are not new. Paybanding has been around in the Federal Government since
1980, and the Federal Government has substantial experience in
implementing performance-based pay systems (e.g., in demonstration
projects). Research shows that employees' attitudes toward such systems
change over time, as they gain experience with them. For example,
employee support for the circa 1980 ``China Lake'' broadbanding/pay-
for-performance demonstration project was only 29 percent before the
project began, reached 51 percent by 1985, and was 69 percent by 1988.
Employee support was 70 percent when Congress made the project
permanent in 1994. Today, thousands of Federal employees already are
covered by successful performance-based pay systems.
The system we have devised is also consistent with the findings and
recommendations of the National Academy of Public Administration in its
May 2004 Report, ``Recommending Performance-Based Federal Pay'': ``The
basis for managing individual salary increases should be pay-for-
performance. This recommendation has been a constant theme in
discussions for more than two decades and the principle in every
demonstration project that tested new pay policies. The evidence from
the projects confirms that pay-for-performance can be successful in
federal agencies. The switch to a pay-for-performance policy should be
managed as an organizational change because it will alter each agency's
culture and contribute to improved performance.'' Thus, this is not a
journey into uncharted waters.
We respect the concerns of employees and agree that it is essential
to communicate with employees regarding the changes that DHS is making.
Experience has shown that one of the best ways to deal with the
concerns associated with change is to involve employees and their
representatives in the process. As stated in the Preamble to the
proposed regulations, DHS is committed to a high degree of employee
involvement in developing the details of the new classification, pay,
and performance management system, and by its actions to date, it has
lived up to that commitment.
The need for employee involvement, however, will not cease with the
publication of these regulations. That is why the final regulations
provide for the continuing involvement of employee representatives in
the development of the detailed directives that will implement this
system and in the evaluation of the system. (See Sec. Sec. 9701.105
and 9701.107.) That is also why the final regulations provide for the
establishment of a new Homeland Security Compensation Committee
(Compensation Committee) that will involve representatives from the
major DHS labor organizations in addressing strategic compensation
matters, such as Departmental compensation policies and principles. The
Compensation Committee will consider factors such as turnover,
recruitment, and local labor market conditions in providing options and
recommendations for consideration by the Secretary. (See Sec.
9701.313.) This involvement will enhance the credibility and acceptance
of the system.
The new pay system will require numerous decisions to be made on an
annual basis, and the Compensation Committee will play a key role. For
example, DHS must determine how available budgetary resources should be
allocated between market-based adjustments--such as rate range
adjustments and adjustments in locality and special rate supplements--
and performance pay increases. DHS must determine the overall amount
that will be authorized for rate range adjustments in response to
changes in the national labor market for specific occupational clusters
and bands and the amounts that will be authorized for more targeted
market-based adjustments in specific locality pay areas. The
Compensation Committee will provide options and/or recommendations for
consideration by the Secretary, who will make final decisions.
The Compensation Committee will include a total of 14 members, with
4 ``seats'' reserved for DHS labor organizations granted national
consultation rights. OPM will also serve as an ex officio member. It
will be chaired by DHS's Undersecretary for Management, who will select
a facilitator from a list of nominees developed jointly by
representatives of the Department and the labor organizations. In
addition to making recommendations to the Secretary on strategic
compensation matters, the Compensation Committee also will review
summary data regarding annual performance payouts authorized under the
new system (Sec. 9701.342). The Compensation Committee is modeled
after the Federal Salary Council, which advises the President's Pay
Agent (the Secretary of Labor and the Directors of the Office of
Management and Budget and the Office of Personnel Management) on the
ongoing administration of the locality pay program for GS employees. It
is designed to give DHS employees, through the labor organizations that
represent them, a real voice in the ongoing administration of the DHS
pay-for-performance system.
In summary, we believe the Department's pay-for-performance system
is an imperative, essential to DHS's ability to attract, retain, and
reward a workforce that is able to meet the high expectations set for
it by the American people--the security of our homeland. Its successful
implementation is well within the capability of the Department's
leadership.
3. Management Rights/Scope and Duty To Bargain
The ability to act quickly is central to the Department's mission--
not just in emergency situations but, more importantly, in order to
prepare for or prevent emergencies. This principle was critical to
President Bush and the Congress throughout the formation of
[[Page 5279]]
the legislation and the congressional debate that followed its
introduction. This ability to act quickly is necessary even in meeting
day-to-day operational demands. The Department must be able to assign
and deploy employees, and to introduce the latest security technologies
without delay. Congress clearly stated that the Department's HR system
must provide the flexibility DHS needs to respond to a variety of vital
operational challenges and to carry out its wide-ranging mission.
To achieve this mandate, the proposed regulations revised the
management rights and duty to bargain provisions found in 5 U.S.C.
chapter 71. We expanded the list of management rights that are
prohibited from negotiation to include numbers, types, and grades of
employees or positions assigned to any organizational subdivision, work
project, or tour of duty; and the technology, methods, and means of
performing work--those rights that deal directly with the Department's
homeland security operations. We also excluded from mandatory
negotiations the procedures that the Department would follow in
exercising these expanded management rights. And we proposed changes to
allow the Department to take action in any of these areas without
advance notice to labor organizations and without pre-implementation
bargaining.
Without exception, comments received from labor organizations
objected to the proposed regulations, arguing that altering the scope
of bargaining in any way was contrary to the Homeland Security Act.
Further, labor organizations asserted that these changes were not
necessary, and that current law already provided the Department with
sufficient flexibility to deal with emergencies. Labor organizations
did acknowledge the Department's need to take certain actions without
pre-implementation bargaining, and during the meet-and-confer process,
they proposed a process for accelerated post-implementation bargaining
and third-party impasse resolution. Additionally, their proposal would
have allowed the Department to temporarily suspend procedural
provisions of collective bargaining agreements in situations where
there is a direct or substantive connection to protecting homeland
security. However, even under those stringent conditions, they insisted
that employees automatically be ``made whole'' for any adverse
consequences stemming from the suspension, as if management had
violated the agreement.
We recognize the good faith effort made by these labor
organizations to meet the Department's operational needs. However,
their proposals were fundamentally flawed in several respects. We have,
therefore, retained the management rights/scope of bargaining
provisions in the proposed regulations with some modifications.
With respect to procedures, the proposals offered by the labor
organizations do not go far enough. They would still require the
Department to bargain, as a mandatory matter, over the procedures it
would be required to follow in exercising management rights, especially
those that deal directly with its operations. Those procedures can and
do constrain such critical actions as the assignment of work, the
deployment of personnel, and the staffing of tours of duty. These
procedures are negotiable under 5 U.S.C. chapter 71. Labor
organizations would have the Department continue that obligation, but
with an ``escape clause'' that would allow the Department to suspend
those procedures and act under exceptional circumstances.
This is too high a bar. In today's operational environment, the
exceptional has become the rule. During the meet-and-confer process, we
provided numerous and frequently alarming examples where such
negotiated procedures have hindered day-to-day operations--for example,
in redeploying personnel from a seaport to an airport to meet an
unexpected operational need, port directors today must draw from a pre-
established pool of volunteers even if in so doing they would under-
staff other critical line functions. Department managers, supervisors,
and employees are on the frontlines of the war on terrorism and the
efforts to preserve homeland security. The Department must be able to
rely on the judgment and ability of these managers and supervisors to
make day-to-day decisions--even if this means deviating from
established or negotiated procedures. The reality in the Department
today is that such deviations would be constant, thereby rendering any
negotiated procedures meaningless. Moreover, the Department's managers
and supervisors must be able to make split-second decisions to deal
with operational realities free of arbitrarily imposed standards.
With respect to post-implementation bargaining, the proposals
offered by labor organizations are similarly flawed. While they would
allow for management to implement without bargaining in advance over
impact and appropriate arrangements for employees adversely affected by
the exercise of a management right, they would still require immediate
post-implementation negotiations and third-party impasse resolution
over such matters. However, the reality of DHS's operational
environment today is that change is constant, and as a consequence, so
too would be post-implementation negotiations, with the prospect of
continuous third-party involvement. These negotiations would be
required even in cases where the change has come and gone and/or where
its impact was insignificant or insubstantial. The demand on DHS's
frontline managers and supervisors to engage in constant post-
implementation negotiations would divert them, and other critical
resources, from accomplishing the mission. This is unacceptable and
inconsistent with the vision for the Department.
Further, under 5 U.S.C. chapter 71, negotiated agreements over
appropriate arrangements are binding, under the assumption that those
agreements have anticipated future changes. Once again, today's
operational environment belies that assumption. Not only are changes
necessitated by operational demands constant, but they are also of
almost infinite variety. Our frontline managers and supervisors must
not be bound by past agreements when they must face current and future
exigencies.
Nevertheless, in recognition of the concerns articulated by the
participating labor organizations and other commenters, and as a result
of the September 10 meeting with the national presidents of AFGE and
NTEU, the Secretary and the Director directed that the proposed
regulations be revised to ensure the involvement of labor organizations
in such matters. First, the regulations provide for management, at the
level of recognition, (1) to confer with an appropriate exclusive
representative to consider its views and recommendations with regard to
procedures that managers and supervisors will follow in the exercise of
those management rights that deal directly with operational matters;
(2) to meet for up to 30 days in an attempt to reach agreement on such
procedures, with the possibility of extensions and third-party
assistance; and (3) to deviate from those procedures as necessary. We
believe this strikes the right balance between the Department's need
for maximum flexibility and speed and the value of labor organization
involvement.
Second, as a result of the September 10 meeting with the national
presidents of AFGE and NTEU, the Secretary and the Director also
directed that the proposed regulations be revised to require post-
implementation negotiations over impact and
[[Page 5280]]
appropriate arrangements for employees adversely affected by the
exercise of a management right. They have also been revised to allow
for pre-implementation notice and bargaining on arrangements when
operational circumstances permit.
However, to ensure that those negotiations do not distract or
divert managers and supervisors from their operational mission, those
negotiations are required only when the action or event has a
``significant and substantial'' impact on the bargaining unit as a
whole, or on those employees in that part of the bargaining unit
affected by the management action. For example, a management action
that impacted employees from various locations could trigger
negotiations at the level of recognition under this provision, as would
a management action that impacted employees in a single district or
port covered by a nationwide bargaining unit. Those negotiations must
be consistent with the Department's general duty to bargain over
conditions of employment, as established by these final regulations. In
such instances, bargaining is not required unless the act or event is
expected to exceed or has exceeded 60 days, in order to ensure that
managers are not bargaining over short-term changes that may become
moot before negotiations can even begin. While management is not
required to negotiate when the impact is on a single employee,
Department managers will be encouraged to address individual employee
hardships that result from a management action, whether or not that
management action triggers an obligation to bargain. In addition, the
revised regulations provide for reimbursement for reasonable, actual,
and non-routine expenses incurred as a result of such actions or
events.
We have also revised the proposed regulations to require mid-term
bargaining over personnel policies, practices, and matters affecting
working conditions only insofar that they are ``foreseeable,
substantial, and significant in terms of impact and duration on the
bargaining unit, or on those employees in that part of the bargaining
unit affected by the change.'' For example, in addition to requiring
negotiations over bargaining unit-wide changes in working conditions
that are ``foreseeable, substantial, and significant,'' this provision
would also require bargaining if the change in working conditions was
limited to a location(s) or organizational unit(s) below the level of
recognition (such as a port or district), insofar as the impact of such
a change was otherwise ``foreseeable, substantial, and significant.''
In so doing, we note that this ``substantial and significant'' test is
consistent with current FLRA and private sector case law.
In addition, we have limited mid-term bargaining to 30 days.
However, in response to the comments of labor organizations, the
Secretary and the Director directed that the proposed regulations be
amended to allow for binding resolution of mid-term impasses by the
HSLRB. We have also reinstated an exclusive representative's right to
be present at formal discussions between Department representatives and
employees, except when the purpose is to discuss operational matters.
These changes are also in keeping with our attempt to strike the right
balance between operational demands and the rights of an exclusive
representative.
Taken together, the Secretary and the Director believe these
revisions meet the Department's mission needs and are consistent with
the Homeland Security Act's promise to preserve collective bargaining
rights. While labor organizations have argued that any alteration of
the scope of bargaining violates the Act, such an interpretation of the
law would have the effect of nullifying the Act itself. The Act
authorizes the Secretary and the Director to waive and/or modify 5
U.S.C. chapter 71. Clearly, case law interpreting that chapter may be
modified, as well, to carry out the language, intent, and purpose of
these regulations. The Act also requires that the Department's HR
system be flexible, and these regulations fulfill that statutory
requirement.
4. Adverse Actions and Appeals
In authorizing the creation of a new human resources system for the
Department, Congress specifically required that employees continue to
be afforded the protections of due process. It also prohibited any
change in the application of existing statutory provisions involving
merit principles, prohibited personnel practices, or protection against
whistleblower reprisal or discrimination. Recognizing the critical
nature of the Department's mission, Congress also stated in 5 U.S.C.
9701(f)(2) that the new system should provide, ``to the maximum extent
practicable, for the expeditious handling'' of appeals of disciplinary
and performance-based actions.
The proposed regulations included a number of changes to adverse
actions and appeals procedures. Consistent with the Homeland Security
Act, these changes were intended to simplify and streamline those
procedures and provide for greater individual accountability, all
without compromising guaranteed due process protections. Greater
accountability is particularly critical to the Department. By its very
nature, the Department's mission requires an exceptionally high level
of workplace order and discipline. For example, the fact that many DHS
employees have arrest authority and other enforcement powers means that
they, and the Department, have a special responsibility to the public.
With that in mind, the proposed regulations provided for shorter
notice for adverse actions, an accelerated MSPB adjudication process, a
lower burden of proof to sustain the Department's action, and a bar on
any mitigation of penalty by MSPB (except in the case of a prohibited
personnel practice), as well as a bar on the arbitration of adverse
actions. The proposed regulations also gave the Secretary authority to
establish a number of mandatory removal offenses (MRO)--that is,
offenses that have such a direct and substantial impact on homeland
security that they must carry a mandatory removal penalty. The proposed
regulations also created a special, independent panel appointed by the
Secretary to adjudicate MROs; if that panel found that an MRO had been
committed, the proposed regulations provided that only the Secretary
could mitigate the removal of an employee. While Congress gave DHS and
OPM the authority to establish an adjudicatory body other than MSPB,
the Secretary and the Director decided that with the changes outlined
above, DHS could achieve the objectives of the legislation while
retaining MSPB for employee adverse action appeals, except for MROs.
Commenters, including the labor organizations participating in the
meet-and-confer process, generally expressed concern that these
changes, separately and together, would vitiate the due process rights
of DHS employees. They argued that the changes would substantially
diminish (or in the case of arbitrators eliminate) the authority of
third parties such as MSPB to fully and fairly review and adjudicate
adverse actions. Commenters, as well as some Members of Congress,
expressed particular concern over the proposal to adopt a lower
``substantial evidence'' standard of proof for adverse actions, as well
as the proposal to bar MSPB from mitigating the Department's penalty
determination in an adverse action, except in the case of a prohibited
personnel practice. Labor organizations argued that the right to
arbitrate an adverse action was fundamental to collective bargaining,
and that by
[[Page 5281]]
removing adverse actions from arbitral review, the proposed regulations
were inconsistent with statutory guarantees in this regard.
OPM and DHS have carefully considered these comments, including
those received from participating labor organizations during the meet-
and-confer process. Accordingly, major revisions have been made to the
proposed regulations in four areas.
First, while DHS and OPM continue to provide for a shorter, 15-day
minimum notice to an employee of a proposed adverse action (compared to
a 30-day notice under current law), we have given employees a minimum
of 10 days to respond to the charges specified in the notice of
proposed adverse action. This reply period runs concurrently with the
notice period; it represents an increase over the 5-day reply period
initially proposed, as well as the 7-day reply period provided in
current law. Employees have a right to be heard before a proposed
adverse action is taken against them. This is a fundamental element of
due process in adverse actions. This change protects that right while
still providing for a more streamlined process. Similarly, in the
performance management section of the regulations, we have also ensured
that employees are apprised in advance of performance expectations that
may affect their retention.
Second, we re-examined the issue of burden of proof and decided to
adopt the ``preponderance of the evidence'' standard for all adverse
actions, whether conduct-or performance-based, instead of the
``substantial evidence'' standard set forth in the proposed
regulations. ``Preponderance of the evidence'' is that degree of
relevant evidence that a reasonable person, considering the record as a
whole, would accept as sufficient to find that a contested fact is more
likely to be true than untrue. This is the standard that currently
applies to conduct actions taken under chapter 75 of title 5. This is a
higher standard of proof than ``substantial evidence,'' which currently
applies to performance actions taken under chapter 43.
Third, in response to comments from labor organizations and others,
the Secretary and the Director decided to provide bargaining unit
employees the option of grieving and, subject to the approval of their
exclusive representative, arbitrating adverse actions. Thus, consistent
with current law, bargaining unit employees may contest an adverse
action either by filing an appeal with MSPB or by grieving and
arbitrating the matter through any applicable negotiated grievance
procedure. However, when adjudicating such adverse actions, arbitrators
will be bound by the same rules and standards governing such things as
burden of proof and mitigation that these regulations require of MSPB;
this has been a matter of law, and the regulations reiterate this
requirement to ensure consistent adjudication, regardless of forum. In
order to ensure that consistency, the Department's two largest labor
organizations at the September 10 meeting recommended the establishment
of a mutually acceptable panel of arbitrators who have been trained and
qualified to hear adverse action grievances. The Secretary and the
Director concurred with this recommendation, and the regulations have
been revised accordingly.
Finally, the Secretary and the Director have authorized MSPB (as
well as arbitrators) to mitigate penalties in adverse action cases, but
only under very limited circumstances. We continue to believe that,
because the Department bears full accountability for homeland security,
it is in the best position to determine the most appropriate adverse
action for poor performance or misconduct. Thus, its judgment in regard
to penalty should be given deference.
We are persuaded by the concern expressed by commenters, as well as
the national presidents of AFGE and NTEU at the September 10 meeting,
that the Department's authority over penalties should not be unlimited.
Although there is a presumption that DHS officials will exercise that
authority in good faith, the Secretary and the Director concluded that
it is appropriate to provide an employee affected by an adverse action
with an opportunity to rebut that presumption. In this regard, we are
persuaded that providing MSPB (and arbitrators) limited authority to
mitigate is an appropriate check regarding the exercise of the
Department's imposition of penalties. Accordingly, the final
regulations preclude mitigation of the penalty selected by DHS except
where, after granting deference to the Department, a determination is
made that the penalty is so disproportionate to the basis for the
action as to be wholly without justification.
This authority is significantly more limited than MSPB's current
mitigation authority under the standard first enunciated in Douglas v.
Veterans Administration (5 M.S.P.R. 280 (1981)). Under that 1981
decision, MSPB stated that it would evaluate agency penalties to
determine not only whether they were too harsh or otherwise arbitrary
but also whether they were unreasonable under all the circumstances. In
practice, this has meant that MSPB has exercised considerable latitude
in modifying agency penalties. With this new, substantially more
limited standard for MSPB mitigation of penalties selected by DHS, our
intent is to explicitly restrict the authority of MSPB to modify those
penalties to situations where there is simply no justification for the
penalty. MSPB may not modify the penalty imposed by the Department
unless such penalty is so disproportionate to the basis for the action
as to be wholly without justification. In cases of multiple charges,
MSPB or an arbitrator may mitigate a penalty where not all of the
charges are sustained. The third party's judgment is based on the
justification for the penalty as it relates to the sustained charge(s).
The regulations are intended to ensure that when a penalty is
mitigated, the maximum justifiable penalty must be applied.
With the changes outlined above, we believe we have addressed and
resolved the concerns raised by commenters regarding the preservation
of due process for DHS employees. Due process is protected under the
final regulations. Thus, the adverse actions and appeals procedures set
forth in these regulations are ``fair, efficient, and expeditious,''
consistent with congressional direction.
5. Mandatory Removal Offenses
The proposed regulations authorized the Secretary to identify
offenses that, because they have a direct and substantial impact on the
ability of the Department to protect homeland security, warrant a
mandatory penalty of removal from the Federal service. Only the
Secretary could mitigate the removal of an employee determined to have
committed such a mandatory removal offense (MRO). Employees alleged to
have committed these offenses would have the right to advance notice,
an opportunity to respond, and a written decision. They would also be
entitled to appeal that decision to an independent DHS panel, which
could reverse the action but could not mitigate the removal penalty.
This panel would be composed of three members, who would be appointed
by the Secretary. Two examples of possible mandatory removal offenses
were provided and comments were solicited on the best and most
effective way to provide notice to all employees well in advance of
their application.
Commenters expressed a number of objections to the concept of MROs.
Since only two examples of potential MROs were provided in the proposed
regulations, they feared that removal could be too harsh a penalty for
as-yet-
[[Page 5282]]
unspecified offenses and that local management might misuse MROs to
target individual employees. They also were concerned that employees
would not be given full and complete notice of such offenses prior to
their application. Finally, they expressed an overriding concern about
the independence and objectivity of the proposed internal DHS panel.
As proposed, an MRO should have a direct and substantial impact on
homeland security such that there is ``zero tolerance'' for the
offense. Accordingly, we have decided to retain MROs and the Mandatory
Removal Panel (MRP). However, in response to comments, the Secretary
and the Director directed several modifications to the proposed
regulations. First, we understand the concern over the lack of
specificity with regard to MROs. During the meet-and-confer process,
participating labor organizations expressed a similar concern, but we
believe we were able to satisfactorily address most of their objections
by providing them a preliminary list of potential mandatory removal
offenses, as follows:
Intentionally or willfully aiding or abetting an act, or
potential act, of terrorism.
Intentionally or willfully purchasing, using, selling,
and/or transporting weapons of mass destruction or materials related
thereto for the purpose of committing or contributing to a terrorist
act.
Intentionally or willfully allowing the improper
transportation or importation of illegal weapons (including but not
limited to weapons of mass destruction) or materials to be used for the
purpose of committing or contributing to a terrorist act.
Intentionally or willfully allowing the improper entry of
an individual to the U.S. who could compromise, or potentially
compromise, homeland security.
Soliciting or intentionally accepting a bribe or other
personal benefit that compromises, or could compromise, homeland
security, when the employee knew or reasonably should have known of the
compromise or potential compromise.
Intentionally or willfully misusing and/or divulging law
enforcement sensitive or confidential information (including, but not
limited to, classified material) to unauthorized recipients that
compromises, or could compromise, homeland security, when the employee
knew or reasonably should have known of the compromise or potential
compromise, subject to applicable whistleblower and free speech
protections.
Intentionally or willfully engaging in activities that
compromise, or could compromise, the information, economic, or
financial infrastructure of the Federal Government, when the employee
knew or reasonably should have known of the compromise or potential
compromise.
There is no question that employees must be made aware of the final
list of MROs when approved by the Secretary. Both the Secretary and the
Director believe that this is a basic issue of fairness and a tenet of
an organizational culture that establishes clear accountability. The
labor organizations participating in the meet-and-confer process were
especially concerned about this issue. Accordingly, we agreed to revise
the proposed regulations to provide, at a minimum, that MROs will be
(1) identified in advance as part of the Department's implementing
directives, (2) publicized via notice in the Federal Register, and (3)
made known to all employees on an annual basis. These offenses should
not be a surprise to anyone. The Secretary also intends to consult with
the Department of Justice in preparing the list of offenses for
publication.
Labor organizations participating in the meet-and-confer process
were also apprehensive that managers could misuse MROs. At their
specific suggestion, we agreed to add a requirement that every proposed
notice of mandatory removal be approved by a Departmental level
official before being issued to the employee. This requirement,
combined with the Secretary's authority to mitigate the removal
penalty, guards against the potential for such abuse and assures
consistency of application.
Finally, labor organizations participating in the meet-and-confer
process indicated that assurance regarding the independence of the
Panel would improve credibility and acceptance, and help resolve any
concerns about due process protections. The Secretary and the Director
agreed and directed that the proposed regulations be revised to provide
that (1) members will be ``independent, distinguished citizens * * *
who are well known for their integrity, impartiality, and expertise in
labor or employee relations and law enforcement/homeland security'';
(2) the Secretary will select members from a list that will include
nominees submitted by labor organizations and other sources; and (3)
decisions of the Panel will be subject to MSPB record review and
appropriate judicial review under the same criteria applicable to other
MSPB decisions. We believe these changes effectively resolve the major
concerns regarding MROs and the Panel.
With these changes, the final regulations provide for the
independence demanded by commenters while assuring DHS's ability to
remove employees who engage in conduct or performance that has a direct
and substantial impact on homeland security. The Secretary is
accountable to the President and the American people for safeguarding
homeland security. No other agency or department bears this burden.
These regulations ensure that the Secretary's authority aligns with
that responsibility.
Response to Specific Comments and Detailed Explanation of Regulations
Subpart A--General Provisions
Section 9701.101--Purpose
Section 9701.101 explains the overall purpose of the regulations in
5 CFR part 9701 to implement the DHS human resources (HR) management
system authorized by 5 U.S.C. 9701. In the proposed regulations, this
section provided the design goals of the DHS HR system.
During the meet-and-confer process, participating labor
organizations recommended that the regulations be revised to clarify
the DHS HR system design goals. We have amended Sec. 9701.101 by
moving the system goals to a new paragraph (b) and by revising the
goals to be consistent with the ``Guiding Principles'' adopted by the
Senior Review Committee in 2003 when reviewing options for the DHS HR
system.
Section 9701.102--Eligibility and Coverage
Section 9701.102 of the proposed regulations provided the Secretary
with the authority to approve the coverage of specific employee
categories under one or more provisions in 5 CFR part 9701. During the
meet-and-confer process, the participating labor organizations
recommended that the regulations clarify the Secretary's authority to
cover (and rescind the coverage of) various employee categories under
part 9701 and the coverage eligibility of employee categories. Other
commenters requested clarification regarding how employees who are not
immediately covered by the new HR system (i.e., as the system is phased
in) will be treated. In response to these comments, we have revised and
reordered Sec. 9701.102 (and made conforming changes elsewhere in the
final regulations) to clarify which categories of employees are
eligible for coverage under these regulations, and
[[Page 5283]]
we have also clarified the Secretary's authority to make coverage
determinations and the timing of such determinations, as follows:
New Sec. 9701.102(a) (formerly Sec. 9701.102(d))
clarifies that all civilian DHS employees are eligible for coverage
under one or more subparts of these regulations, except those covered
by a provision of law outside the chapters of title 5, United States
Code, that DHS may waive under 5 U.S.C. 9701.
New Sec. 9701.102(b) replaces the proposed Sec.
9701.102(a).
New Sec. 9701.102(b)(1) provides that subpart A becomes
applicable to all eligible employees when the regulations take effect--
i.e., 30 days after the date of publication of the final regulations in
the Federal Register.
New Sec. 9701.102(b)(2) provides that subparts E, F, and
G are applicable to all eligible employees on the effective date
established by the Secretary or designee, at his or her sole and
exclusive discretion and after coordination with OPM; however, the
effective date may not be later than 180 days after the date of
publication of the final regulations in the Federal Register unless
otherwise determined by the Secretary and the Director.
New Sec. 9701.102(b)(3) provides that, with respect to
subparts B, C, and D, the Secretary of DHS (or designee), at his or her
sole and exclusive discretion and after coordination with OPM, may
apply one or more of these subparts to a specific category or
categories of eligible employees at any time. The regulations provide
that the Secretary may apply some subparts, but not others, to a
specific category or categories of eligible employees and that such
coverage determinations may be made effective on different dates.
New Sec. 9701.102(b)(4) contains the requirement (also
included in the proposed regulations) that DHS will notify affected
employees and labor organizations of all coverage determinations.
New Sec. 9701.102(c) provides that until the Secretary
makes a coverage determination, DHS employees will continue to be
covered by the Federal laws and regulations that would apply to them in
the absence of the authorities provided by these regulations. For
example, GS employees in DHS will continue to be covered by the laws
and regulations governing General Schedule classification and pay
(i.e., 5 U.S.C. chapter 51 and 5 U.S.C. chapter 53, subchapter III)
until the effective date of the Secretary's decision to cover such
employees under the classification and pay provisions authorized by 5
CFR part 9701, subparts B and C.
New Sec. 9701.102(e) (formerly Sec. 9701.102(c))
clarifies that the Secretary or designee may prescribe implementing
directives for converting employees to coverage under title 5 if, at
his or her sole and exclusive discretion and after coordination with
OPM, coverage under one or more subparts of these regulations is
rescinded. (See Section 9701.103--Definitions and Section 9701.105--
Continuing collaboration for additional information on the process for
developing implementing directives.) We have also clarified that DHS
will notify affected employees and labor organizations in advance of a
decision to rescind coverage under these regulations.
In addition, a number of commenters requested clarification
regarding the specific categories of employees that are eligible and
ineligible for coverage under various subparts of these regulations.
The following chart provides additional information on the categories
of employees that are eligible (annotated with ``Yes'') and ineligible
(annotated with ``No'') for coverage under each subpart of these
regulations. The chart and its footnotes must be read together for full
coverage information. Employee categories that are eligible for
coverage under one or more subparts of these regulations will actually
be covered by such subparts only upon approval of the Secretary or
designee under Sec. 9701.102(b). DHS will provide advance notice to
affected employees and labor organizations regarding coverage
decisions.
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Section 9701.102(e) of the proposed regulations provided that
nothing in 5 CFR part 9701 prevents DHS from using an independent
discretionary authority to establish a parallel system that follows
some or all of the requirements in these regulations for a category of
employees ineligible for coverage under 5 U.S.C. 9701, as described in
this chart. Commenters recommended that DHS cover all employees by the
same HR system provisions. For example, commenters urged DHS to treat
employees appointed under the Robert T. Stafford Disaster Relief and
Emergency Assistance Act consistently with other employees who are
eligible for coverage under these regulations and to recognize the
value of the contributions of intermittent employees in emergency
disaster assignments by creating an equivalent parallel system for them
and closing the gap in compensation between this cadre and regular DHS
employees. Conversely, another commenter recommended that such
employees not be subject to the new DHS HR system. Other commenters
recommended that DHS cover U.S. Coast Guard academy faculty in a
parallel system, while keeping its existing HR system intact. Finally,
a commenter felt that the Secretary should not be allowed to use
independent discretionary authority to establish a parallel system for
categories of employees who are ineligible for coverage and that such
authority should be subject to congressional approval.
We have redesignated Sec. 9701.102(e) as Sec. 9701.102(f) and
revised it to clarify that the Secretary or other authorized DHS
official may exercise an independent legal authority to establish a
parallel system that follows some or all of the requirements in these
regulations for a category of employees who are not eligible for
coverage. DHS may decide to treat each employee category that is
ineligible for coverage differently. In all cases, DHS may invoke its
independent authority to establish a new or parallel pay system for
categories of employees ineligible for coverage under these regulations
only to the extent provided under such independent legislation and
subject to any procedural protections that such legislation provides.
For example, DHS may establish a parallel classification and pay system
for Stafford Act employees.
Other commenters requested clarification regarding the coverage of
members of the Senior Executive Service (SES) and employees in senior-
level (SL) and scientific or professional (ST) positions under the
classification, pay, and performance management system in subparts B,
C, and D of these regulations in light of the new performance
management certification requirements under 5 U.S.C. 5307 and the new
pay-for-performance system for SES members under 5 U.S.C. 5383.
Section 1322 of the Homeland Security Act of 2002 amended 5 U.S.C.
5307 to provide a higher limit on the aggregate compensation that SES
members and employees in SL/ST positions may receive in a calendar
year. In addition, section 1125 of the National Defense Authorization
Act of 2003 amended 5 U.S.C. chapter 53, subchapter VIII, to establish
a performance-based pay system for SES members.
These final regulations provide DHS with discretionary authority to
cover SES members and SL/ST employees under the classification, pay,
and performance management provisions of 5 U.S.C. part 9701, subparts
B, C, and D. (See Sec. Sec. 9701.202(b)(3) and (4), 9701.302(b)(3) and
(4), and 9701.402(a).) The aggregate pay limitation law and regulations
under 5 U.S.C. 5307 and 5 CFR part 530, subpart B, cannot be waived and
must continue to apply to SES members and SL/ST employees covered by
the DHS pay system under 5 CFR part 9701, subpart C. DHS must obtain
certification of its performance appraisal system, as required by 5 CFR
part 430, subpart D, in order to apply the higher aggregate cap. (See
Sec. 9701.303(f).)
In addition, Sec. 9701.102(d) of these final regulations (Sec.
9701.102(b) in the proposed regulations) allows DHS to cover its SES
members under a classification, pay, and performance management system
under these regulations. However, the provisions of such a system must
be consistent with the performance-based features and pay caps that
apply to employees covered by the new Governmentwide SES pay-for-
performance system under 5 U.S.C. chapter 53, subchapter VIII, and OPM
implementing regulations. If DHS wishes to establish a system for SES
members that differs from the Governmentwide SES pay-for-performance
system, DHS and OPM must issue joint regulations consistent with the
requirements of 5 U.S.C. 9701. DHS and OPM will involve SES members and
other interested parties in the design and implementation of any new
pay system for SES members.
Other commenters requested clarification regarding why
Transportation Security Administration (TSA) screeners are not covered
by the new system. Commenters stated that the applicability of the
regulations to TSA is addressed ambiguously and the regulations do not
appear to recognize certain statutory impediments to coverage (whether
implemented administratively as a ``parallel system'' or under the
coverage of regulation) that differ with respect to screeners and
nonscreeners.
Under section 111(d) of the Aviation and Transportation Security
Act, TSA screeners are employed outside the provisions of title 5,
United States Code. Thus, they cannot be covered by the DHS HR system
established under 5 U.S.C. 9701. Similarly, other TSA employees
(nonscreeners) are covered by an independent personnel management
system established under the authority of 49 U.S.C. 114(n). Under that
authority, TSA nonscreeners are covered by the personnel management
system established by the Federal Aviation Administration under 49
U.S.C. 40122, subject to any modifications TSA may make. Under 49
U.S.C. 40122(g), TSA employees are not covered by most provisions in
title 5, U.S. Code, including the DHS HR system authority in 5 U.S.C.
9701. While TSA employees are excluded from coverage under the HR
system established by these regulations, DHS can direct that the TSA
personnel systems align administratively with the new DHS HR system
except to the extent that aspects of those systems conflict with the
statutory authorities applicable to TSA employees.
Commenters also recommended that the regulations be modified to
allow DHS to cover administrative law judges (ALJs) and to develop a
parallel job evaluation, pay, and performance management system
tailored to ALJs consistent with the treatment of DHS SES members and
employees in SL/ST positions, including the higher basic pay cap that
applies to SES members under Sec. 9701.312(b). The commenters
recommended that DHS develop a performance management system that is
consistent with the requirements of the Administrative Procedure Act
and in line with the guiding principles of the proposed regulations.
DHS believes it is desirable to cover its ALJs under the system that
applies to other ALJs throughout the Government.
Section 9701.103--Definitions
During the meet-and-confer process, the participating labor
organizations requested clarification regarding the exception to the
definition of ``employee'' under Sec. 9701.103 of the proposed
regulations. We agree that this exception is confusing and have revised
5 CFR part 9701, subpart E, to eliminate the need for the exception
language in
[[Page 5288]]
Sec. 9701.103. (See Section 9701.505--Coverage.)
During the meet-and-confer process, the participating labor
organizations requested that the definition of ``coordination'' be
revised so that the OPM coordination process involve employees and
employee representatives. Alternatively, the labor organizations
recommended that the definition of ``coordination'' be deleted and that
all requirements for DHS to coordinate with OPM be replaced with more
detailed regulations.
While we understand the desire for the regulations to provide more
specificity and assurances on how the HR system will operate, we have
not removed the definition of ``coordination'' from these regulations.
The regulations must provide DHS with sufficient flexibility to design
a classification, pay, and performance management system that can be
tailored to DHS's varied mission requirements, performance priorities,
and strategic human capital needs.
However, we agree that the DHS HR system must be designed in a
transparent and credible manner that involves employees and employee
representatives. For this reason, we have added a definition of
``implementing directives'' to Sec. 9701.103. The term ``implementing
directives'' is defined as the directives issued by the Secretary or
designee at the Department level to carry out any system established
under 5 CFR part 9701. Such implementing directives will be developed
with the involvement of employee representatives using the continuing
collaboration provisions in revised Sec. 9701.105. (See Section
9701.105--Continuing collaboration.) In addition, we have made a number
of revisions in other sections of these regulations to require DHS to
establish implementing directives to carry out the HR authority
provided by these regulations.
Section 9701.105--Continuing Collaboration
Section 9701.105 of the proposed regulations provided DHS with the
authority to establish internal Departmental directives to further
define the design characteristics of any system established under these
regulations. During the meet-and-confer process, the participating
labor organizations expressed concerns that such directives would be
developed without the involvement of employees and employee
representatives. The labor organizations recommended that DHS consult
with employees and employee representatives before issuing any internal
directives.
We agree that the DHS HR system must be designed in a transparent
and credible manner and that the development of any internal directives
implementing the HR system authorities provided by these regulations
involve employees and employee representatives. Although not expressly
stated in the proposed regulations, DHS, in the spirit of collaboration
used throughout the design process, intends to involve employees and
their representatives in the development of the implementing
directives. In addition, we have revised and retitled Sec. 9701.105 as
``Continuing collaboration.'' This section requires DHS to issue
implementing directives, as newly defined in Sec. 9701.103, to
implement these regulations. As required by 5 U.S.C. 9701, employee
representatives will be provided with an opportunity to collaborate in
developing and issuing these implementing directives. DHS will
determine the number of employee representatives that may engage in
continuing collaboration and will establish timeframes to provide
information and comments. National labor organizations with multiple
local labor organizations accorded exclusive recognition will determine
how their units will be represented within this framework.
As the Department determines necessary, employee representatives
will be provided with an opportunity to discuss their views with DHS
officials and/or to submit written comments at initial identification
of implementation issues and conceptual design and/or at review of
draft recommendations or alternatives. Employee representatives also
will be given a copy of the proposed final draft and will be provided
with an opportunity for written and/or oral comment. These comments
will become part of the record and will be forwarded with the final
directive to the Secretary or designee for a final decision. However,
nothing in the continuing collaboration process affects the right of
the Secretary to determine the content of implementing directives and
to make them effective at any time.
As required by the Homeland Security Act, Sec. 9701.105(f)
provides that the Secretary and the Director will jointly establish any
procedures necessary to carry out the continuing collaboration process
as internal rules of Departmental procedure which are not subject to
review.
Section 9701.106--Relationship to Other Provisions
Section 9701.106 describes the relationship of the authority
provided DHS under 5 U.S.C. 9701 and these regulations to the
authorities in other sections of law and regulations. During the meet-
and-confer process, the participating labor organizations requested
clarification regarding when waived laws and regulations will and will
not apply to categories of employees approved for coverage under one or
more subparts of these regulations.
We agree and have revised Sec. 9701.106 to clarify that, for the
purpose of applying other provisions of law or Governmentwide
regulations that reference provisions under the waivable chapters
(i.e., chapters 43, 51, 53, 71, 75, and 77 of title 5, U.S. Code), the
referenced provisions are not waived but are modified consistent with
the corresponding regulations in part 9701, except as otherwise
provided in that part or in DHS implementing directives. For example,
hazardous duty differentials under 5 U.S.C. 5545(d) are payable only to
General Schedule employees covered by 5 U.S.C. chapter 51 and
subchapter III of chapter 53. To ensure that DHS employees continue to
be eligible for hazardous duty differentials when they convert from the
General Schedule to the DHS pay system, they will be deemed to be
covered by the referenced General Schedule provisions of law for the
purpose of applying section 5545(d). In addition, in applying the back
pay law in 5 U.S.C. 5596 to DHS employees covered by subpart G of these
proposed regulations (dealing with appeals), the reference in section
5596(b)(1)(A)(ii) to 5 U.S.C. 7701(g) (dealing with attorney fees) is
considered to be a reference to a modified section 7701(g) that is
consistent with Sec. 9701.706(h).
We also revised paragraph (c) to clarify that the listed provisions
in paragraph (c) do not apply to categories of employees upon
conversion to a new classification and pay system established under 5
CFR part 9701, subparts B and C.
We also added a new paragraph (a) to clarify that provisions of
title 5 are waived or modified to the extent authorized by 5 U.S.C.
9701 to conform with these regulations--i.e., these regulations
supersede the corresponding laws they replace. In addition, for
clarification purposes, we have restated the rule of construction,
which was located in Sec. 9701.502 of subpart E of the proposed
regulations, as a general rule of construction applicable to the entire
part. However, in so doing, we do not intend to imply that the rule of
construction is limited only to that subpart; rather, the express
language of
[[Page 5289]]
Sec. 9701.106(a) extends that rule of construction to the entire part.
Section 9701.107--Program Evaluation
During the meet-and-confer process, the labor organizations
recommended that the regulations require DHS to conduct ongoing
evaluations of these regulations and that employees and employee
representatives be involved in such evaluations. Other commenters also
recommended that regulations include a formal evaluation of the HR
system with implementation goals, including predetermined benchmarks
for success.
Consistent with the commitment made in the Preamble to the proposed
regulations, DHS intends to conduct evaluations of its HR system. We
added a new Sec. 9701.107 to carry out this intent by requiring DHS to
establish procedures for evaluating the regulations and their
implementation. DHS will provide employee representatives with an
opportunity to be briefed and comment on the design and results of the
program evaluation. This opportunity includes participation in
identifying the scope, objectives, and methodology to be used in the
program evaluation and reviewing draft findings and recommendations,
subject to any time limits prescribed in DHS's procedures. Involvement
in this process does not waive the rights of DHS or the employee
representatives under the applicable laws and these regulations.
Subpart B--Classification
General Comments
As a result of concerns expressed during the meet-and-confer
process, we have replaced the term ``job evaluation'' with the term
``classification'' throughout these regulations.
Commenters were concerned about the lack of specificity in subpart
B of the proposed regulations regarding the structure and rules for the
DHS classification system. Commenters found it difficult to ascertain
where their positions would fit within the classification framework of
occupational clusters and bands. Although some found the classification
concepts simple and clear, most commenters felt the proposed
regulations were too vague and difficult to understand because of the
lack of detailed information on such features as how occupational
clusters and bands will be established, which occupations will be
assigned to each cluster, how GS grades will ``cross-walk'' to bands,
and which positions will be assigned to each band. Because of the lack
of details in the proposed regulations, commenters questioned whether
the proposed classification system would be fair and credible.
Commenters expressed a strong desire that the regulations be more
transparent and that DHS closely involve employees and employee
representatives in the design of the DHS classification system.
Because of the lack of specificity, commenters recommended a number
of amendments to subpart B of the regulations to provide more detailed
criteria and conditions for the DHS classification system or to clarify
how positions will be converted into the system. The comments included
recommendations on and clarifications regarding the criteria for
grouping occupations into clusters and the specific occupational
clusters DHS will create, how competencies will be identified and used
in the system, the definitions of the bands and the criteria DHS will
use to assign positions to bands, the purpose of the Senior Expert band
and the criteria that DHS will use to promote employees to that band,
how manager and team leader positions will be assigned to clusters and
bands, how law enforcement officer positions will be treated, the
standards DHS will use to qualify and promote employees to higher bands
(e.g., time-in-service, formal education requirements), and the process
for converting positions to the DHS classification system. In reaction
to the lack of detail in the regulations, the labor organizations
recommended that the bar on collective bargaining of the DHS
classification system under Sec. 9701.205(b) of the proposed
regulations be removed.
We understand the desire for the regulations to provide more
specificity and assurances regarding how the DHS classification system
will operate. However, the regulations must provide DHS with sufficient
flexibility to design a classification system with occupational
clusters and bands that support the market-based features of the DHS
pay system and that can be tailored to DHS's mission requirements and
strategic human capital needs. Except as otherwise explained in this
section of the SUPPLEMENTARY INFORMATION, we have not modified subpart
B of the regulations in response to these comments. DHS will consider
the suggestions and recommendations made by commenters as it develops
implementing directives for the DHS classification system.
We agree that the DHS classification system must be designed in a
transparent and credible manner that involves employees and employee
representatives. While we have not removed the bar on collective
bargaining in Sec. 9701.205, we have made a number of revisions
throughout subpart B that require DHS to carry out the new
classification system through detailed implementing directives, as
defined in Sec. 9701.103. As previously discussed, these implementing
directives will be established using the ``continuing collaboration''
provisions in revised Sec. 9701.105. (See Section 9701.103--
Definitions and Section 9701.105--Continuing collaboration.)
Other Comments on Specific Sections of Subpart B
Section 9701.201--Purpose
Section 9701.201 explains the purpose of subpart B, which contains
regulations establishing a classification structure and rules for
covered DHS employees and positions. During the meet-and-confer
process, the participating labor organizations recommended that the
definition of ``classification'' under Sec. 9701.204 include a
reference to the principle of equal pay for equal work. We agree, but
rather than revising this definition, we have added the merit principle
of ``equal pay for work of equal value'' to the end of the purpose
description in new Sec. 9701.201(a).
For clarification purposes, we also moved Sec. 9701.205(a) in the
proposed regulations to a new Sec. 9701.201(b) in the final
regulations. We have retitled Sec. 9701.205 as Bar on collective
bargaining, consistent with the title of Sec. 9701.305.
Section 9701.203--Waivers
Section 9701.203 of the regulations specifies the provisions of
title 5, United States Code, that are waived for employees covered by
the DHS classification system established under subpart B. During the
meet-and-confer process, the participating labor organizations
requested that the regulations clarify when such waivers will be
applied. We have amended Sec. 9701.203(a) to clarify that the waivers
apply when a category of DHS employees is covered by a classification
system established under subpart B.
We also have amended Sec. 9701.203(a) by adding Sec. 9701.222(d)
to the list of exceptions to the waiver of 5 U.S.C. chapter 51. See
Section 9701.222--Reconsideration of classification decisions for
additional information on this exception.
Section 9701.204--Definitions
A commenter suggested adding a definition of ``competency'' to
Sec. 9701.204 to clarify its meaning in the definition of ``position''
or ``job.'' We agree and have added a definition of ``competencies''
that is identical to the
[[Page 5290]]
definition of that term in Sec. 9701.404 concerning the DHS
performance management system.
To help respond to commenters' general confusion with the
classification provisions, we also have--
Added a definition of ``basic pay'' that is identical to
the definition of that term in Sec. 9701.304 to clarify its use under
Sec. 9701.231, regarding conversion into the DHS classification
system.
Revised the definition of ``classification'' to clarify
that this term, also referred to as job evaluation, means the process
of analyzing and assigning a job or position to an occupational series,
cluster, and band for pay and other related purposes.
Amended the definition of ``occupational cluster'' to
clarify that an occupational cluster may include one or more
occupational series.
Section 9701.211--Occupational Clusters
Section 9701.211 provides DHS with the authority to establish
occupational clusters after coordination with OPM. In response to
commenters' concerns about the lack of specificity in the regulations
regarding how DHS will define occupational clusters, we have revised
Sec. 9701.211 to clarify that DHS must document in writing the
rationale, as well as the criteria, for grouping occupations or
positions into occupational clusters.
Section 9701.212--Bands
Section 9701.212 provides DHS with the authority to establish one
or more bands within each occupational cluster after coordination with
OPM. Section 9701.212(a)(1)(iv) of the proposed regulations provided
that each occupational cluster may include a Supervisory band reserved
primarily for first-level supervisors. Commenters observed that
limiting Supervisory bands to first-level supervisors does not
adequately accommodate the range of supervisory and managerial
positions at DHS that are below the executive level. Some commenters
questioned whether the Senior Expert band should be used for other
supervisory/managerial levels or team leader positions. Others
questioned whether the number of Supervisory bands should be limited
above the first-level in an effort to ``flatten-out'' organizational
structures. We agree that the description of Supervisory band in the
proposed regulations was too narrow. To clarify, we have reordered
Sec. 9701.212 and revised Sec. 9701.212(b)(4) (formerly Sec.
9701.212(a)(1)(iv)) to provide that a Supervisory band includes work
that may involve hiring or selecting employees, assigning work,
managing performance, recognizing and rewarding employees, and other
associated duties. DHS will address the number and use of Supervisory
bands and the assignment of team leaders to bands in its implementing
directives.
Section 9701.212(b) of the proposed regulations provided DHS with
the discretionary authority to establish qualification standards and
requirements for occupational series, occupational clusters, and/or
bands after coordination with OPM. During the meet-and-confer process,
the participating labor organizations were concerned that DHS may
choose not to establish qualifications standards. To clarify our
intent, we have redesignated Sec. 9701.212(b) as Sec. 9701.212(d) and
revised this paragraph to require DHS to establish qualifications
standards and requirements. Under this provision, DHS has the
flexibility to (1) adopt the qualifications standards and requirements
issued by OPM and/or (2) establish different qualifications standards
and requirements after coordination with OPM. In addition, we have
clarified this section to reflect the fact that DHS retains its
authority to establish qualification standards under 5 U.S.C. chapters
31 and 33 and implementing regulations.
Section 9701.222--Reconsideration of Classification Decisions
Section 9701.222 of the proposed regulations required DHS to
establish policies and procedures for handling an employee's request
for reconsideration of classification decisions. The proposed
regulations limited reconsideration requests to occupational series or
pay system assignment and provided employees no right to appeal
classification decisions outside DHS.
Because the proposed regulations provided no authority for
independent review of DHS classification decisions, the labor
organizations recommended that the regulations be revised to provide
bargaining unit employees with the authority to challenge
classification determinations through negotiated grievance procedures.
They also recommended that employees be provided the right to challenge
classification decisions beyond occupational series and pay system
assignment. Other commenters advised that DHS's authority to reconsider
classification decisions should be appealable to an independent
arbitrator.
We agree that the DHS classification system should provide covered
employees with the right to a broader scope of review of the
classification of their position by an independent third party. We have
therefore revised Sec. 9701.222 to provide employees with the right to
request that DHS or OPM reconsider the occupational cluster and band
assignment as well as the pay system and occupational series of their
official position of record at any time. This right is parallel to the
classification appeal right of current General Schedule employees under
5 U.S.C. 5112(b). In addition, the regulations require both DHS and OPM
to establish implementing directives for reviewing these requests,
including, but not limited to, policies on nonreviewable issues, rights
of representation, and effective dates of any corrective actions.
Section 9701.222(c) of the regulations allows an employee to
request that OPM reconsider a DHS classification reconsideration
decision. However, an employee may not request that DHS review an OPM
reconsideration decision. If an employee does not request an OPM
reconsideration decision, Sec. 9701.222(c) provides that a DHS
classification determination is final and not subject to further review
or appeal. Section 9701.222(d) provides that OPM's final determination
on an employee's request is not subject to further review or appeal.
This provision, in conjunction with the waiver exception in Sec.
9701.203(a), is intended to preserve OPM's authority under 5 U.S.C.
5112(b) and 5 U.S.C. 5346(c) to review and issue final classification
decisions without judicial review.
During the meet-and-confer process, the participating labor
organizations suggested that the regulations authorize retroactive
effective dates for promotions if an employee's position is found by
OPM to be misclassified. Under the current classification law and
regulations (5 U.S.C. chapter 51 and 5 CFR part 511) classification
decisions generally may not be made effective retroactively. (See 5 CFR
511.701(a)(4).) In addition, the Supreme Court has held that neither
the Classification Act under 5 U.S.C. chapter 51 nor the Back Pay Act
under 5 U.S.C. 5596 creates a substantive right to back pay for periods
of wrongful classifications. (See United States v. Testan, 424 U.S. 372
(1976).)
OPM regulations at 5 CFR 511.703 provide an exception to this
general rule and allow a retroactive effective date if upon
classification appeal an employee is found to be wrongfully demoted.
Any similar retroactive effective date provisions regarding
classification reconsideration decisions will be addressed in DHS's and
OPM's policies and procedures for reviewing these requests.
[[Page 5291]]
Section 9701.232--Special Transition Rules for Federal Air Marshal
Service
Section 9701.232 provides that if DHS transfers Federal Air Marshal
Service positions from the Transportation Security Administration (TSA)
to another organization within DHS, DHS may cover such positions under
a classification system that is parallel to the classification system
that was applicable to the Federal Air Marshal Service within TSA.
These revised regulations provide that DHS will issue implementing
directives on converting Federal Air Marshal Service employees to any
new classification system under subpart B, consistent with the
conversion rules in Sec. 9701.231.
Labor organization commenters recommended that the regulations
provide DHS with the authority to transfer Federal Air Marshal Service
positions only if Federal Air Marshals are granted full collective
bargaining rights and the ability to join a labor organization of their
choice. We disagree. Federal Air Marshals are excluded from collective
bargaining by section 1-123 of E.O. 12666, January 12, 1989.
Subpart C--Pay and Pay Administration
General Comments
Commenters expressed concerns about the lack of specificity in
subpart C of the proposed regulations on the pay structure and the pay
administration rules governing the proposed DHS pay system. Commenters
felt the proposed regulations were too vague and difficult to
understand because of the lack of detailed information on such issues
as how band rate ranges will be established and adjusted, how locality
and special pay supplements (hereafter called locality and special rate
supplements) will be established and adjusted, and how performance pay
pools will be funded and operated. Commenters had difficulty
ascertaining how their pay and pay adjustments would be determined
under the new system and how individual and team performance would
affect pay. They also were concerned that their pay would not keep up
with their counterparts in other Federal agencies. Commenters expressed
a strong desire that the regulations be more transparent and that DHS
closely involve employees and employee representatives in the design of
the pay system. Because of the lack of details in the proposed
regulations, commenters questioned whether the proposed pay system
would be fair and equitable.
Because of the lack of specificity, commenters recommended a number
of different amendments to subpart C of the regulations to provide
detailed criteria and conditions for setting and adjusting basic rate
ranges and granting rate range increases to employees; setting and
adjusting locality and special rate supplements and providing for
increases in those supplements; addressing staffing issues that may
result from geographic pay differences; funding pay pools; determining
and granting performance pay increases; setting pay upon promotion,
demotion, initial appointment, and other actions; granting within-band
pay increases; granting special skills, assignment, and staffing
payments; and transitioning and converting employees into the new pay
system. In reaction to the lack of specificity, the labor organizations
recommended that the regulations be revised to remove the bar on
collective bargaining of the DHS pay structure and system in Sec.
9701.305; require the new pay system to be faithful to merit system
principles and protect against prohibited personnel practices; require
DHS to assess the impact of the system on employees prior to
implementation to maximize fairness, uniformity, and objectivity;
implement the current locality pay program, modified to be occupation
specific; and establish a Department-level compensation board to
address and make recommendations on continuing issues regarding the
administration of the new pay system. Labor organization commenters
felt that such a compensation board would make pay decisions more
credible and transparent. Other commenters felt that employees should
receive pay increases equivalent to the increases they would have
received under the General Schedule.
We understand the desire for the regulations to provide more
specificity and assurances regarding how the pay system will operate.
However, the regulations also must provide DHS with sufficient
flexibility to design a nimble pay system that is performance-
sensitive, market-based, and tailored to DHS's performance goals,
mission requirements, and strategic human capital needs. Except as
otherwise explained in this section of the Supplementary Information,
we have not modified subpart C of the regulations in response to these
comments.
However, we agree that the DHS pay system must be designed in a
transparent and credible manner that involves employees and employee
representatives. While we have not removed the bar on collective
bargaining in Sec. 9701.305, we made a number of revisions throughout
subpart C that require DHS to establish more detailed policies to carry
out the new pay system through implementing directives, as defined in
Sec. 9701.103. As previously discussed, these implementing directives
will be developed using the ``continuing collaboration'' provisions in
revised Sec. 9701.105. (See Section 9701.103--Definitions and Section
9701.105--Continuing collaboration.) DHS will consider the suggestions
and recommendations made by commenters as it develops implementing
directives for the DHS pay system.
In addition, we agree that labor organization involvement in both
the design and administration of the pay system can contribute to its
credibility and acceptance with bargaining unit employees. Therefore,
we have provided for such involvement by giving the Department's
national labor organizations four seats on the newly established
Homeland Security Compensation Committee (Compensation Committee). As
part of the Compensation Committee, the labor organization
representatives and some of the Department's most senior leaders will
be able to participate in the development of recommendations and
options for the Secretary's consideration on strategic compensation
matters such as Departmental compensation policies and principles, the
annual allocation of funds between market and performance pay
adjustments, and the annual adjustment of rate ranges and locality and
special rate supplements. While the Secretary retains the final
decisionmaking authority in all of these matters, we believe this
degree of labor organization involvement is consistent with our guiding
principles. The Department will prescribe procedures governing the
membership and operation of the Compensation Committee, including
setting schedules for discussions and submission of recommendations. In
addition, the establishment of the Compensation Committee will not
affect the right of the Secretary to make determinations regarding the
annual allocation of funds between market and performance pay
adjustments and the annual adjustment of rate ranges and locality and
special rate supplements, and to make such determinations effective at
any time. See new Sec. 9701.313 of these regulations for additional
information.
Finally, as previously discussed, we have added a new paragraph (b)
to Sec. 9701.101, which provides the overall criteria for the design
of the DHS human resources system, to include a requirement that the
system be designed to generate respect and trust and be
[[Page 5292]]
based on the principles of merit and fairness embodied in the merit
system principles contained in 5 U.S.C. 2301. We also have added a new
paragraph (c) to Sec. 9701.301 to require that the DHS pay system,
working in conjunction with the performance management system
established under subpart D, be designed to incorporate a number of
elements, including adherence to the merit system principles, and that
it must be implemented and managed in a fair, transparent, and
inclusive manner. These criteria are based on similar criteria that
Congress recently enacted with respect to chapters 47, 54, and 99 of
title 5, United States Code.
Other Comments on Specific Sections of Subpart C
Section 9701.301--Purpose
In addition to the new Sec. 9701.301(c) discussed in the General
Comments section, we also have added a new paragraph (b) to Sec.
9701.301 to clarify that any pay system under subpart C must be
established in conjunction with the classification system described in
subpart B. This addition is consistent with a similar provision in
Sec. 9701.201(b).
Section 9701.303--Waivers
Section 9701.303(a) specifies the provisions of title 5, United
States Code, that are waived for employees covered by the DHS pay
system established under subpart C. During the meet-and-confer process,
the participating labor organizations requested that the regulations
clarify when such waivers will be applied. We have amended Sec.
9701.303(a) to clarify that the waivers apply when a category of DHS
employees is covered by a pay system established under subpart C. We
have also reordered some of the paragraphs in this section for
clarification.
Section 9701.303(c)(2) of the proposed regulations raised the
limitation on rates of basic pay payable under 5 U.S.C. 5373--for
categories of DHS employees whose pay is fixed by administrative
action--to the rate for level III of the Executive Schedule, consistent
with the level III basic pay cap that applies to employees paid under
the DHS pay system established under subpart C of these regulations.
(See Sec. 9701.312 of these regulations.) Currently, 5 U.S.C. 5373
provides a basic pay limitation equal to the rate for Executive Level
IV. During the meet-and-confer process, the participating labor
organizations requested clarification regarding which categories of
employees were covered by the pay limitation under 5 U.S.C. 5373. In
reordering this section, we have redesignated paragraph (c)(2) as
paragraph (c) and revised it to clarify that the pay limitation under 5
U.S.C. 5373 applies to DHS employees whose pay is set by administrative
action, such as Coast Guard Academy faculty. We note that 5 U.S.C. 5373
does not apply to employees covered by a pay system established under
subpart C. The basic pay limitation for employees covered by subpart C
is provided in Sec. 9701.312.
Section 9701.303(c)(3) of the proposed regulations revised 5 U.S.C.
5379 to provide DHS with the authority to establish a student loan
repayment program for DHS employees. During the meet-and-confer
process, the participating labor organizations requested clarification
regarding the process for establishing a new student loan repayment
authority. In reordering this section, we have redesignated paragraph
(c)(3) as paragraph (d) and revised it to provide that a DHS student
loan repayment program under this authority will be established by
implementing directives (as defined in Sec. 9701.103). In addition, we
have revised Sec. 9701.303(d) to clarify that DHS will coordinate
those implementing directives with OPM.
Section 9701.304--Definitions
The definition of ``control point'' has been removed consistent
with the removal of the control point provisions in Sec. 9701.321 and
other sections of the regulations. (See Section 9701.321--Structure of
bands.) We have added a definition of ``competencies'' that is
identical to the definition of that term in Sec. 9701.404 concerning
the DHS performance management system. This is consistent with the
addition of that term to the definitions section in subpart B. (See
Section 9701.204--Definitions.) We have added a reference to the
description of ``performance expectations'' in Sec. 9701.406(c) to
clarify the use of that term in the definitions of ``rating of record''
and ``unacceptable performance'' in Sec. 9701.304. As a result of
comments made during the meet-and-confer process, we have added a
definition of ``modal rating'' to explain the use of this term in
revised Sec. 9701.342(a)(2). Finally, we have deleted the definition
of ``unacceptable rating of record'' as unnecessary.
Section 9701.311--Major Features
Section 9701.311 requires that a DHS pay system established under
subpart C include a number of specific features. Commenters noted that
the term ``rate'' appeared to be missing after ``basic pay'' in
paragraph (b). We agree and have inserted the term in Sec.
9701.311(b).
Section 9701.312--Maximum Rates
Section 9701.312 provides that DHS may not pay an employee covered
by a pay system established under subpart C a rate of basic pay in
excess of the rate for level III of the Executive Schedule. This
section further provides that DHS may establish the maximum annual rate
of basic pay at the rate for level II of the Executive Schedule for
members of the SES if DHS obtains the certification required under 5
U.S.C. 5307(d). Commenters observed that this proposed basic pay
limitation and other features of the pay system proposal will not
resolve the pay compression and limitation issues for senior law
enforcement officers.
The rate of pay received by senior law enforcement officers and
other employees who earn premium pay under 5 U.S.C. chapter 55 is
subject to a special limitation in 5 U.S.C. 5547. This limitation is
not affected by these regulations. Under 5 U.S.C. 9701(c)(2), DHS is
prohibited from waiving the premium pay limitation or any other premium
pay provision authorized under 5 U.S.C. chapter 55. See also the
discussion of changes made in Sec. 9701.332(c) to clarify that
locality and special rate supplements are considered basic pay for the
purpose of applying the limitation in Sec. 9701.312 in Section
9701.332--Locality rate supplements.
Section 9701.314--DHS Responsibilities
Section 9701.313 of the proposed regulations provided a list of
DHS's overall responsibilities in implementing the pay system
established under subpart C. This section has been redesignated as
Sec. 9701.314 due to the insertion of a new Sec. 9701.313, Homeland
Security Compensation Committee. (See the discussion of new Sec.
9701.313 under General Comments.)
Section 9701.321--Structure of Bands
Section 9701.321 provides DHS with the authority to establish basic
pay rate ranges for bands after coordination with OPM. In the proposed
regulations, this section also provided DHS with the authority to
establish control points within bands to limit the initial pay-setting
or pay progression of employees. The labor organizations expressed
concerns about the control point provisions. They felt that control
points could prevent employees who are meeting or exceeding performance
expectations from achieving the same level of pay they could receive
under the current system. They recommended that the regulations be
modified to require that control point policies be collectively
bargained.
[[Page 5293]]
We have removed the provisions concerning control points in
Sec. Sec. 9701.321(a) and (d) and 9701.342(d)(3), as well as the
definition of ``control point'' in Sec. 9701.304 of the proposed
regulations, as it is not our intention to unduly limit pay
progression.
Section 9701.321(c) of the proposed regulations provided DHS with
the authority to establish different basic pay rate ranges for
employees in a band who are stationed in locations outside the 48
contiguous States. Commenters requested clarification regarding how
basic pay rate ranges for employees stationed outside the 48 contiguous
States will be determined. Other commenters were concerned that
employees working in Hawaii, Puerto Rico, Alaska, and other nonforeign
areas and foreign areas would never see another annual pay increase
because funding will be used for performance pay increases and that
employees in such areas will not receive any locality rate supplement.
During the meet-and-confer process, the participating labor
organizations asked whether locality rate supplements under Sec.
9701.332 would apply to employees stationed outside the 48 contiguous
States and what protections would be offered to replicate the current
pay-setting criteria for employees in these locations.
We have removed paragraph (c) from Sec. 9701.321. We have also
removed paragraph (d) from Sec. 9701.322, which provided DHS with the
authority to provide basic pay rate range adjustments in locations
outside the 48 contiguous States that differ from the adjustments
within the 48 States. Under the revised regulations, employees in a
band who are stationed in locations outside the 48 contiguous States
will be covered by the same basic pay ranges as other employees in that
band who are stationed within the 48 States. In addition, under
Sec. Sec. 9701.332 and 9701.333, and after coordination with OPM, DHS
may establish locality or special rate supplements for employees
stationed outside the 48 contiguous States. Employees stationed in
locations outside the 48 contiguous States also will continue to be
entitled to foreign and nonforeign area cost-of-living allowances and
other differentials and allowances under 5 U.S.C. chapter 59, as
applicable.
Section 9701.322--Setting and Adjusting Rate Ranges
Section 9701.322 provides DHS with the authority to set and adjust
the basic pay rate ranges of bands after coordination with OPM. Section
9701.322(b) of the proposed regulations provided DHS with the
authority, after coordination with OPM, to determine the effective date
of newly set or adjusted band rate ranges and stated that, generally,
ranges will be adjusted annually. The labor organizations recommended
that the regulations be amended to guarantee that basic rate ranges
will be adjusted annually and normally become effective in January.
We have revised Sec. 9701.322(a) to clarify that DHS may set and
adjust rate ranges on an annual basis. In addition, we have revised
Sec. 9701.322(b) to provide that, unless DHS determines that a
different date is needed for operational reasons, annual adjustments to
basic rate ranges will become effective on or about the same date as
the annual General Schedule pay adjustment authorized by 5 U.S.C. 5303.
Section 9701.322(c) provides that DHS may provide different rate
range adjustments for different occupational clusters. A commenter
requested clarification regarding whether the pay ranges will vary
between occupational clusters. We have clarified paragraph (c) to
provide that DHS may establish different rate ranges and rate range
adjustments for different bands.
As previously discussed, we also have removed paragraph (d) from
Sec. 9701.322, which provided DHS with the authority to provide basic
pay rate range adjustments in locations outside the 48 contiguous
States that differ from the adjustments within the 48 States. (See
Section 9701.321--Structure of bands.) Paragraph (e) in the proposed
regulations has been redesignated paragraph (d) in these final
regulations.
Section 9701.323--Eligibility for Pay Increase Associated With a Rate
Range Adjustment
Section 9701.323(a) of the proposed regulations provided that an
employee who meets or exceeds performance expectations must receive an
increase in basic pay equal to the percentage value of any increase in
the minimum rate of the employee's band resulting from a basic rate
range adjustment under Sec. 9701.322. Section 9701.323(b) provides
that an employee who has an unacceptable rating of record may not
receive a pay increase as a result of a rate range adjustment. During
the meet-and-confer process, the participating labor organizations
requested that the regulations clarify which type of pay increase
paragraph (a) covers and when eligible employees would be entitled to
such a pay increase.
We agree and have revised Sec. 9701.323(a) to clarify that when a
band rate range is adjusted under Sec. 9701.322, employees covered by
that band are eligible for an individual pay increase if they meet or
exceed performance expectations. We also clarified that for an employee
receiving a retained rate, the amount of the pay increase is determined
under Sec. 9701.356. (See Section 9701.356--Pay retention.) We have
also redesignated paragraph (b) as paragraph (c) for clarification
purposes.
The labor organizations also recommended that Sec. 9701.323(a) be
revised to provide that an employee who meets or exceeds expectations
must receive an increase in pay equal to either (1) the percentage
value of any increase in the minimum rate of the employee's band
resulting from a rate range adjustment (as stated in the proposed
regulations) or (2) the percentage value equal to the average of the
increase in the minimum rate and the increase in the maximum rate of
the employee's band, whichever is greater.
We have not revised Sec. 9701.323(a) in response to this
recommendation. Under Sec. 9701.322(d), DHS has the authority to
adjust the minimum and maximum rates of band ranges by different
percentages. This will allow DHS, for example, to increase the maximum
rate by a greater percentage than the minimum rate in response to labor
market factors that warrant a broader rate range for a particular
occupational category. However, Sec. 9701.323 requires DHS to increase
the pay of eligible employees by only the percentage value of any
increase in the minimum rate of the band. As a result, DHS has greater
opportunities to enhance employee pay through the use of performance
pay increases under Sec. 9701.342. Providing greater opportunities for
high performers to earn pay increases will help DHS be more competitive
in the labor market, since in the private sector high performers are
generally provided with larger pay increases.
We also note that increases in the maximum rate may be unrelated to
changes in the labor market and, thus, should not be used to determine
the general increase for DHS employees. For example, DHS may decide
that a rate range is too narrow to appropriately recognize high
performers and extend the range by 10 percent. That does not mean that
all eligible employees in the band should receive a 10 percent
increase.
Commenters also requested that Sec. 9701.323(a) be revised to make
the payment of the annual adjustment nondiscretionary. We have not
adopted this recommendation. These regulations authorize DHS to
establish a contemporary pay system that is more performance-sensitive
to help achieve
[[Page 5294]]
and sustain a high performance culture. Providing annual basic pay
increases only to employees whose performance meets or exceeds
expectations will help support this goal. This policy is consistent
with the findings of the National Academy of Public Administration
(NAPA) in its May 2004 report, ``Recommending Performance-Based Federal
Pay.'' The NAPA report states that most private sector companies base
all pay adjustments on performance.
Section 9701.323(b) of the proposed regulations provided that the
``denial'' of a pay increase associated with a rate range adjustment is
not considered an adverse action under subpart F. To clarify our
intent, we have revised this paragraph (now redesignated as paragraph
(c)) to state that if an employee's pay remains unchanged because he or
she has received an unacceptable rating of record, the ``failure to
receive a pay increase'' is not an adverse action.
Section 9701.323(c) of the proposed regulations provided that if an
employee does not have a rating of record for the purpose of granting a
pay increase under Sec. 9701.323(a), the employee is deemed to meet or
exceed performance expectations. During the meet-and-confer process,
the participating labor organizations asked that the regulations be
revised to provide that such determinations be based on the employee's
most recent rating of record.
We agree that this provision must be clarified. Therefore, we have
redesignated paragraph (c) as paragraph (b) and revised it to provide
that an employee without a rating of record for the most recently
completed appraisal period must be treated in the same manner as an
employee who meets or exceeds performance expectations and is entitled
to receive an increase based on the rate range adjustment under Sec.
9701.323(a).
Section 9701.323(d) of the proposed regulations provided DHS with
the authority to adopt policies under which an employee who is
initially denied a pay increase under this section based on an
unacceptable rating of record may receive a delayed increase after
demonstrating improved performance. The regulations provided that any
such delayed increase would be made effective prospectively.
During the meet-and-confer process, the participating labor
organizations expressed a concern that certain employees would fall
below the minimum pay rate for their bands if they were at or near the
low end of the band and were denied a rate range increase as a result
of an unacceptable rating of record. They also expressed a concern that
the proposed regulations allow managers to continuously rate employees
unacceptable and indefinitely deny them pay increases. The labor
organizations believe that DHS, and not its employees, should bear the
burden of proof in any action that denies employees a rate range
increase. The labor organizations also argued that any pay system that
allows certain employees to be paid below the minimum rate set for a
band is not truly a market-based system.
Other commenters suggested that if an employee loses a pay increase
due to poor performance, the increase should be restored automatically
when performance becomes satisfactory as an incentive to become
successful. Commenters expressed a need for less manager discretion and
more policy governing the granting of previously denied pay increases
based on performance improvement. The commenters were concerned that
the lack of clear policy may result in disparate use of this authority
and increased grievances and equal employment opportunity (EEO)
complaints.
We agree with some of these concerns and have revised the
regulations as follows:
We have added a new Sec. 9701.324, Treatment of employees
whose rate of basic pay does not fall below the minimum rate of their
band. This section provides that an employee who initially does not
receive a pay increase under Sec. 9701.323 based on an unacceptable
rating of record, and whose rate does not fall below the minimum rate
of the band, must receive a delayed increase after demonstrating
performance that meets or exceeds performance expectations, as
reflected in a new rating of record. Any such delayed increase will be
made effective on the first day of the first pay period beginning on or
after the date the new rating of record is issued.
We have added new Sec. 9701.325, Treatment of employees
whose rate of basic pay falls below the minimum rate of their band.
Paragraph (a) of this section requires that in the case of an employee
who does not receive a pay increase under Sec. 9701.323 DHS must (1)
initiate action within 90 days after the date of the rate range
adjustment to demote or remove the employee in accordance with the
adverse action procedures under subpart F, or (2) if the employee
demonstrates performance that meets or exceeds performance expectations
within 90 days after the date of the rate range adjustment, issue a new
rating of record and adjust the employee's pay prospectively.
Paragraph (b) of new Sec. 9701.325 provides that if DHS
fails to initiate a removal or demotion action under paragraph (a)
within 90 calendar days after the date of a rate range adjustment, the
employee becomes entitled to the minimum rate of his or her band rate
range on the first day of the first pay period beginning on or after
the 90th day following the date of the rate range adjustment.
We do not agree that managers should be required to initiate an
adverse action whenever employees are rated unacceptable. Unless such a
rating results in an employee being paid below the minimum band rate,
an employee's ability to grieve his or her performance rating is
sufficient protection against unfair or inaccurate ratings.
The labor organizations also recommended that Sec. 9701.323(d) be
revised to require that delayed increases must be retroactively
effective if there is a management error in assessing an unacceptable
rating or when a rating is overturned on appeal. We did not make a
change in the regulations in response to this comment. If an employee
does not receive a pay adjustment because of an error in assessing an
unacceptable rating, when the rating error is corrected, the employee
is entitled to receive any pay increase associated with the correct
rating. This pay increase must be made effective retroactive to the
effective date of the incorrectly denied increase and is subject to
back pay under 5 U.S.C. 5596.
Section 9701.331--General
Section 9701.331 of the proposed regulations provided that basic
pay ranges under the new DHS pay system may be supplemented by locality
or special rate supplements. During the meet-and-confer process, the
participating labor organizations asked that the regulations provide
that payment of such supplements to employees be mandatory.
We agree that locality and special rate supplements should be paid
in appropriate circumstances and have revised Sec. 9701.331 to clarify
this point. We do not agree that such payments should be mandatory, but
have revised Sec. 9701.331 to clarify that DHS may pay locality or
special rate supplements in appropriate circumstances. For example, DHS
may decide that a locality rate supplement is unnecessary for
nonforeign or foreign areas or that a different pay flexibility (e.g.,
recruitment bonuses, retention allowances, or special staffing payments
under Sec. 9701.363) will better address a
[[Page 5295]]
particular staffing problem instead of establishing a special rate
supplement. DHS must retain the flexibility under Sec. Sec. 9701.332
and 9701.333 to establish locality rate supplements for geographic
areas and occupational clusters when warranted by mission requirements,
labor market conditions, and other factors and special rate supplements
when warranted by current or anticipated recruitment and/or retention
needs.
Section 9701.332--Locality Rate Supplements
Section 9701.332(a) and (b) provides DHS with the authority to
establish locality rate supplements and set the boundaries of locality
pay areas after coordination with OPM. The regulations provide DHS with
the authority to establish different locality rate supplements for
different occupational clusters or for different bands within an
occupational cluster.
Commenters recommended that Sec. 9701.332 be revised so that
locality rate supplements are based on cost-of-living factors instead
of the cost of labor, such as through the use of Chamber of Commerce
analyses and data on median housing costs in each geographic area. We
do not agree. Generally, employers set pay based on the labor market to
be sufficiently competitive to avoid staffing problems. Paying above
what is necessary to be competitive in the labor market does not make
economic sense. If you have a market-based pay system, but grant
additional pay for high living costs, you no longer have market-based
rates. Also, living costs are very difficult to measure.
If DHS experiences recruitment or retention problems due to living
costs in a particular geographic area, other pay flexibilities are
available to address such problems. For example, DHS could establish a
special rate supplement under Sec. 9701.333 of these regulations or a
special staffing payment under Sec. 9701.363 to address staffing
problems for a particular category of employees in a given geographic
area. DHS also may use recruitment and relocation bonuses under 5
U.S.C. 5753, retention allowances under 5 U.S.C. 5754, and other
flexibilities to address staffing problems that may be caused by cost-
of-living factors.
Section 9701.332(b) of the proposed regulations provided that if
DHS does not use the locality pay areas established by the President's
Pay Agent under 5 U.S.C. 5304, it may make boundary changes by
regulation or other means. We have revised this paragraph to clarify
that DHS may, after coordination with OPM, establish and adjust
different locality pay areas within the 48 contiguous States or new
locality pay areas outside the 48 contiguous States by regulation. We
note that while the final regulations provide DHS with the discretion
to establish new or different locality pay areas within and outside the
48 States, DHS will likely adopt the locality pay areas established
under 5 U.S.C. 5304 for the purpose of establishing locality rate
supplements under Sec. 9701.332.
Section 9701.332(c) lists the purposes for which locality rate
supplements are considered basic pay. During the meet-and-confer
process, the participating labor organizations requested clarification
regarding whether the purposes for which locality rate supplements are
treated as basic pay will be different from the purposes for which
locality payments under 5 U.S.C. 5304 are treated as basic pay. Another
commenter encouraged the consistent treatment of locality supplements
as basic pay across the Department.
Under Sec. 9701.332(c), the purposes for which locality rate
supplements are considered basic pay include all of the purposes that
apply to locality payments under 5 U.S.C. 5304 and 5 CFR part 531,
subpart F. We agree that the treatment of locality rate supplements as
basic pay should be consistent throughout the Department and only as
provided in these regulations, DHS implementing directives, or other
laws or regulations, consistent with the requirements in Sec.
9701.332(c). We have revised Sec. 9701.332(c)(6) (as redesignated from
Sec. 9701.332(c)(5) in the proposed regulations) to clarify that
locality rate supplements may be considered basic pay for the purpose
of other payments and adjustments under subpart C only if specified by
DHS in implementing directives, consistent with the new definition of
``implementing directives'' in Sec. 9701.103 and the requirement for
continuing collaboration with employee representatives in developing
implementing directives under Sec. 9701.105. (See Section 9701.103--
Definitions and Section 9701.105--Continuing collaboration.)
In addition, we inserted a new Sec. 9701.332(c)(5) to clarify that
locality rate supplements (and special rate supplements, by reference
under Sec. 9701.333) are considered basic pay for the purpose of
applying the maximum rate limitation under Sec. 9701.312. The
remaining paragraphs (c)(5) through (c)(7) of the proposed regulations
are redesignated as paragraphs (c)(6) through (c)(8).
Section 9701.333--Special Rate Supplements
Section 9701.333 provides DHS with the authority to establish
special rate supplements after coordination with OPM that provide
higher levels of pay for subcategories of employees in an occupational
cluster if warranted by current or anticipated recruitment or retention
needs. The proposed regulations provided DHS with the authority to
establish rules for implementing such supplements. This section also
provides that special rate supplements are considered basic pay for the
same purposes as locality rate supplements under Sec. 9701.332(c) and
for the purpose of computing cost-of-living allowances and post
differentials in nonforeign areas under 5 U.S.C. 5941.
A commenter encouraged consistent treatment of special rate
supplements as basic pay across the Department. We agree that the
treatment of special rate supplements as basic pay should be consistent
throughout the Department and only as provided in these regulations,
DHS implementing directives, or other laws or regulations, consistent
with the requirements for locality rate supplements under Sec.
9701.332(c), as revised in these regulations.
Section 9701.334--Setting and Adjusting Locality and Special Rate
Supplements
Section 9701.334 of the proposed regulations provided that locality
and special rate supplements would ``generally'' be reviewed on an
annual basis in conjunction with a rate range adjustment under Sec.
9701.322. Consistent with the changes in revised Sec. 9701.322(a), we
have revised Sec. 9701.334(b) to require DHS to review established
supplements for possible adjustment on an annual basis in conjunction
with a rate range adjustment.
Section 9701.335--Eligibility for Pay Increase Associated With a
Supplement Adjustment
We have revised Sec. 9701.335(a) to clarify that when a locality
or special rate supplement is adjusted under Sec. 9701.334, an
employee is entitled to the pay increase resulting from that adjustment
if the employee meets or exceeds performance expectations. This is
consistent with part of the revision of Sec. 9701.323(a), which
clarifies when an employee is entitled to receive a basic rate range
adjustment. (See Section 9701.323--Eligibility for pay increase
associated with a rate range adjustment.)
[[Page 5296]]
Commenters felt that the payment of locality rate supplements
should not be discretionary. They argued that locality pay was not
designed to reward performance, but to close a salary gap between
Federal and non-Federal employees.
The locality rate supplement authority in the DHS regulations is
specifically designed to respond to occupation-specific labor market
conditions among geographic areas and to support DHS's and OPM's desire
to establish a contemporary pay system that is more performance-
sensitive to help achieve a high performance culture. Providing
locality rate supplement increases only to employees whose performance
meets or exceeds expectations will help support this goal and will help
DHS become more competitive in recruiting and retaining high performing
employees.
Section 9701.335(b) of the proposed regulations provided that an
employee who has an unacceptable rating of record may not receive a pay
increase as a result of an increase in a locality or special rate
supplement. Paragraph (b) of the proposed regulations also provided DHS
with the authority to determine the method of preventing a pay increase
in this circumstance, including by reducing the employee's rate of
basic pay by the amount necessary to prevent an increase.
During the meet-and-confer process, the participating labor
organizations expressed concerns about the regulations providing DHS
with the authority to reduce the rate of basic pay for an employee with
an unacceptable rating of record without adverse action protections in
order to offset an increase in a locality or special rate supplement.
They expressed the belief that reducing basic pay for unacceptable
performance should be considered an adverse action under subpart F even
if the employee's total locality or special rate supplement-adjusted
pay rate does not change as a result of the basic pay reduction.
We redesignated paragraph (b) as paragraph (c). We revised the
language to provide that if an employee has an unacceptable rating of
record at the time of an increase in a locality or special rate
supplement, the employee will not receive an increase in the applicable
supplement. Basic pay will not be reduced under this authority. We have
also revised this paragraph to clarify our intent that if an employee's
pay remains unchanged because he or she has received an unacceptable
rating of record, the failure to receive a pay increase associated with
a supplement adjustment is not an adverse action.
Section 9701.335(c) of the proposed regulations provided that if an
employee does not have a rating of record for the purpose of granting a
pay increase associated with a supplement adjustment, the employee is
deemed to meet or exceed performance expectations. We have redesignated
paragraph (c) as paragraph (b). We revised this paragraph, consistent
with the revision of Sec. 9701.323(b), to provide that an employee
without a rating of record must be treated in the same manner as an
employee who meets or exceeds performance expectations. (See Section
9701.323--Eligibility for pay increase associated with a rate range
adjustment.)
Section 9701.335(d) of the proposed regulations provided DHS with
the authority to adopt policies under which an employee who is
initially denied a pay increase under this section based on an
unacceptable rating of record may receive a delayed increase after
demonstrating improved performance. During the meet-and-confer process,
the participating labor organizations questioned whether a denial of a
pay increase as a result of an increase in a locality or special rate
supplement could cause an employee's pay to fall below the minimum rate
of the band. The labor organizations questioned how long an employee's
pay rate could be below the minimum band rate without requiring
management to take some action (e.g., demotion or removal).
It is possible for an employee's locality or special rate
supplement-adjusted pay rate to fall below the locality or special rate
supplement-adjusted minimum band rate as a result of a denial of a
supplement increase under Sec. 9701.335(c). We agree with the labor
organizations' concern about requiring DHS to take action in this
situation. Therefore, we revised and moved paragraph (d) to a new Sec.
9701.336, Treatment of employees whose pay does not fall below the
minimum adjusted rate of their band. This new section provides the
requirements for paying a delayed supplement increase after the
employee demonstrates performance that meets or exceeds performance
expectations, consistent with the changes made in new Sec. 9701.324.
We also have added a new Sec. 9701.337, Treatment of employees whose
rate of pay falls below the minimum adjusted rate of their band.
Paragraph (a) of this new section requires DHS to take specific actions
within 90 days after the employee's pay rate falls below the adjusted
band minimum rate. Paragraph (b) provides that if DHS does not take
action within 90 days, the employee's pay rate must be set at the
adjusted band minimum rate. This new section is consistent with new
Sec. 9701.325 on pay increases associated with rate range adjustments.
(See Section 9701.323--Eligibility for pay increase associated with a
rate range adjustment.)
Section 9701.342--Performance Pay Increases
Section 9701.342(a) provides an overview of the DHS performance-
based pay system for employees in a Full Performance or higher band
based on ratings of record assigned under a performance management
system established under subpart D. We have moved the sentence
concerning the rating of record used as a basis for a performance pay
increase to a separate paragraph (a)(2). In reaction to concerns about
DHS's authority to issue a new rating of record for an employee if the
employee's current performance is not consistent with his or her most
recent rating of record, we have revised new paragraph (a)(2) to
clarify that the employee's supervisor (or other rating official) may
make such determinations and prepare any new rating of record. This new
language is consistent with the language used in Sec. 9701.409(b)
regarding rating employee performance. We note that the definition of
``rating of record'' in Sec. Sec. 9701.304 and 9701.404 states that a
rating of record is prepared at the end of an appraisal period or to
support a pay determination under subpart C of these regulations (or
other rules). Because DHS plans to make pay determinations shortly
after issuing ratings of record at the end of the appraisal period, we
anticipate that DHS will rarely need to issue supplemental ratings of
record to support pay decisions.
New paragraph (a)(2) also clarifies that if an employee does not
have a rating of record, DHS will use the modal rating received by
other employees covered by the same pay pool during the most recent
rating cycle to determine the employee's performance pay increase. This
change is consistent with other revisions of the regulations on
determining the pay increases and adjustments for employees without a
rating of record. (See Sec. 9701.342(f) and (g).)
Section 9701.342(c) provides DHS with the authority to establish
point values that correspond to the performance rating levels
established by the performance management system under subpart D. These
point values will be used to determine performance pay increases. This
section also provides DHS with authority to establish a point value
pattern for each
[[Page 5297]]
pay pool and requires DHS to assign zero points to any employee with an
unacceptable rating of record.
One commenter recommended that DHS not limit its pay-for-
performance options to only the point value system defined in the
proposed regulations. The commenter was concerned about unintended
consequences of the proposed system that would require regulatory
changes to address those consequences. The commenter recommended that
the regulations allow alternative pay-for-performance systems to be
adopted within major components, subject to DHS objectives, criteria,
and approval.
We understand the commenter's desire that the regulations provide
DHS with the flexibility to develop different types of pay-for-
performance systems tailored to the performance and mission
requirements of individual DHS components and not be limited to the
proposed point value system. However, in developing the regulations for
the DHS pay system, we balanced the need for flexibility with the need
for a system that generates respect and trust and is credible and
transparent. Subpart C of the regulations provides the parameters and
criteria for the point value system in sufficient specificity so that
managers, employees, and employee representatives can better understand
how performance pay increases will be determined and paid. At the same
time, the regulations allow DHS to tailor the point value system to the
mission and performance needs of individual components and the specific
performance requirements and priorities of individual positions and
occupations.
Another commenter requested clarification regarding the logic of
establishing different point value patterns by pay pool, as provided in
Sec. 9701.342(c)(2). The regulations provide DHS with the flexibility
to establish different point value patterns for each pay pool so that
each pay pool can better reflect the performance goals, objectives, and
priorities of the employees and organizations covered. This matter will
be further clarified in implementing directives.
Section 9701.342(d) provides DHS with the authority to determine
the value of performance points (as a percentage of basic pay or as a
fixed dollar amount), the amount of an employee's performance payout,
and the effective dates of performance pay adjustments. This paragraph
also specifies that a performance payout may not cause an employee's
rate of basic pay to exceed the maximum basic rate of the band and
provides DHS with the authority to pay excess amounts as lump-sum
payments.
Commenters were concerned that if more employees receive higher
ratings, the value of the payout for each employee lessens. We
acknowledge that this is a consequence of this type of pay-for-
performance system. A point value system requires managers to make
distinctions in ratings if they want to grant the highest performers
the greatest pay increases. In keeping with our guiding principles,
this type of system is designed to place greater emphasis on making
distinctions among employees' performance.
Commenters also were concerned that lump-sum payments are taxed at
a greater percentage than a basic pay increase and will not have the
same lasting effect over time as a basic pay increase. We have removed
the language from Sec. 9701.342(d)(3) that stated that the payment of
performance payouts as basic pay increases is subject to any applicable
control point within a band, consistent with the removal of control
point provisions elsewhere in the regulations. (See Section 9701.321--
Structure of bands.) Lump-sum performance payouts may be paid in lieu
of basic pay increases only when an employee's rate of basic pay would
otherwise exceed the band maximum rate. While tax withholdings may be
greater in the short term, lump-sum payments are not taxed at a higher
rate than any other form of income. Also, consistent with other changes
in the regulations that clarify how DHS will grant pay increases to
retained rate employees, we have added a new paragraph (d)(5) to Sec.
9701.342 to clarify that for an employee receiving a retained rate
under Sec. 9701.356, DHS will issue implementing directives (as
defined under Sec. 9701.103) to provide that a lump-sum performance
payout may not exceed the amount that may be received by an employee in
the same pay pool with the same rating of record who is at the maximum
rate of the band.
Another commenter suggested that the regulations allow all
employees on certain ``teams'' (or offices) to receive a bonus based on
a percentage of their pay when the team achieved its goals. Team
awards, such as goalsharing awards, are generally paid under 5 U.S.C.
chapter 45, which is not waived by these regulations. DHS continues to
have the flexibility to grant group or team-based awards and bonuses
under this authority.
Section 9701.342(e) specifies the circumstances under which
performance payouts may be prorated. Section 9701.342(f) of the
proposed regulations provided for the payment of performance pay
increases for employees upon reemployment after performing honorable
service in the uniformed services.
During the meet-and-confer process, the participating labor
organizations requested that Sec. 9701.342(e)(2) clarify, as
necessary, the circumstances in which it would be illegal to prorate
performance payouts for employees in a leave-without-pay status. We
have revised Sec. 9701.342(e)(2) to clarify that DHS may not prorate
performance payouts for employees in a leave-without-pay status while
performing honorable service in the uniformed services or while in a
workers' compensation status, as provided in paragraphs (f) and (g) of
this section. In addition, DHS may issue implementing directives
regarding the proration of performance payouts for employees in other
circumstances.
During the meet-and-confer process, the participating labor
organizations recommended that Sec. 9701.342(f) be revised to clarify
how DHS will set the rate of basic pay for employees upon reemployment
after performing honorable service in the uniformed services and how
intervening performance pay adjustments for such employees would be
determined upon reemployment. We have revised Sec. 9701.342(f) of the
proposed regulations to require DHS to issue implementing directives
(as defined in Sec. 9701.103) governing how it will set the rate of
basic pay for employees upon reemployment and that DHS will credit the
employee with intervening rate range adjustments under Sec.
9701.323(a), developmental pay adjustments under Sec. 9701.345, and
performance pay adjustments under Sec. 9701.342 based on the
employee's last rating of record. The regulations clarify that, for an
employee without a rating of record, DHS will use the modal rating
received by other employees in the same pay pool. Paragraph (f) also
clarifies that employees returning from qualifying service in the
uniformed services and returning to duty after receiving injury
compensation will receive the full value of their next performance pay
increase associated with their rating of record.
As a result of the labor organization's comments, we also have
added a new paragraph (g) to Sec. 9701.342 to address pay setting and
determining intervening performance pay adjustments for employees upon
reemployment after being in a workers' compensation status. The
provisions in new paragraph (g) are identical to the provisions in
revised Sec. 9701.342(f) regarding setting pay for employees upon
reemployment after
[[Page 5298]]
performing honorable service in the uniformed services.
Section 9701.343--Within Band Reductions
Section 9701.343 provides DHS with the authority to reduce an
employee's rate of basic pay within a band for unacceptable performance
or conduct under the adverse action procedures in subpart F of these
regulations. During the meet-and-confer process, the participating
labor organizations were very concerned that the proposed regulations
provided DHS with the authority to reduce an employee's pay within a
band without limit. We have revised Sec. 9701.343 to provide that a
within-band reduction in basic pay may not be greater than 10 percent,
as discussed during the meet-and-confer process. The regulations
continue to provide that a within-band reduction may not cause an
employee's rate of basic pay to fall below the minimum rate of the
employee's band. (See related discussion at Section 9701.354--Setting
pay upon demotion.)
Commenters observed that Sec. Sec. 9701.343 and 9701.357(a)
appeared to be inconsistent regarding the ability of an employee with
an unacceptable rating of record to be paid less than the minimum rate
of his or her band. We have revised the regulations to clarify that
Sec. 9701.357(a) does not apply in the case of an employee who does
not receive a pay increase based on an unacceptable rating of record
under Sec. 9701.343.
Other commenters felt that pay reductions should not be permitted
for any reason and that pay reductions do not improve performance and
have greater impact on an employee's family than on the employee. We do
not agree. We understand that pay reductions can adversely affect an
employee's family. However, DHS feels it is necessary to retain
flexibility to reduce the pay of an unacceptable performer in order to
achieve and retain a high performing workforce.
Section 9701.344--Special Within-Band Increases for Certain Employees
Section 9701.344 of the proposed regulations provided DHS with the
authority to approve special basic pay increases for employees in a
Senior Expert band who possess exceptional skills in critical areas or
who make exceptional contributions to mission accomplishment. A
commenter recommended that the within-band increase provision be
available in all bands. The commenter felt that this would be a useful
management tool in all pay bands, particularly with reference to
recognizing and retaining top performers. We have revised this section
to allow DHS to issue implementing directives (as defined in Sec.
9701.103) to provide special within-band basic pay increases for
employees in a Full Performance or higher band. We also have revised
this section to clarify that such increases may not be based on length
of service.
The labor organizations asked that the regulations clarify what
constitutes ``exceptional skills'' or ``exceptional contributions'' for
any particular occupation, with labor organization involvement. We did
not revise the regulations to define or clarify these terms. This
specificity is better suited for DHS implementing directives regarding
the use of special within-band pay increases. DHS implementing
directives may provide that such increases may be used to help recruit
or retain employees demonstrating extraordinary performance or as an
incentive for employees with exceptional skills to accept increased
responsibility.
During the meet-and-confer process, the participating labor
organizations requested clarification regarding the differences between
special within-band increases for employees in a Senior Expert band,
special rate supplements under Sec. 9701.333, special skills payments
under Sec. 9701.361, special assignment payments under Sec. 9701.362,
and special staffing payments under Sec. 9701.363. See the comparison
chart under the section entitled Section 9701.361--Special skills
payment; Section 9701.362--Special assignment payments; and Section
9701.363--Special staffing payments for information on each of these
special pay flexibilities.
Section 9701.345--Developmental Pay Adjustments
Section 9701.345 of the proposed regulations provided DHS with the
authority to establish policies and procedures for adjusting the pay of
employees in an Entry/Developmental band. During the meet-and-confer
process, the participating labor organizations requested that the
regulations clarify how employees will progress through an Entry/
Developmental pay band. The labor organizations also recommended that
the regulations require that increments of pay progression link to
identified levels of knowledge, competencies, and skills. Another
commenter noted that DHS must provide the necessary means to attain the
requisite skills and competencies to advance within the Entry/
Developmental band, either through on-the-job opportunities or formal
training. The same commenter expressed the view that without clearly
defined and funded means to do this (i.e., career development and
employee training and education), employees may not be able to gain
skills and grow as necessary to move up within the band and be promoted
out of the band. The commenter suggested that the regulations mandate
the establishment of a policy for adjusting pay within the Entry/
Developmental pay band and that employees who more quickly attain
requisite skills and competencies be accelerated in their advancement.
We have revised Sec. 9701.345 to clarify that DHS will issue
implementing directives (as defined in Sec. 9701.103) regarding pay
adjustments for employees in the Entry/Developmental band. The
regulations provide that such directives may require employees to meet
certain standardized assessment points as part of a formal training/
developmental program. The regulations also clarify that in
administering pay progression plans, DHS may use measures that link pay
progression to the demonstration of knowledge, skills, and abilities
(KSAs)/competencies.
In addition, we have revised Sec. 9701.373 to provide DHS with the
authority to issue implementing directives governing the conversion of
employees currently in career ladder positions into Entry/Developmental
bands. (See Section 9701.373--Conversion of employees to the DHS pay
system.)
Section 9701.346--Pay Progression for New Supervisors
A number of commenters were concerned about the ability of
supervisors to apply the new DHS pay system provisions. Commenters felt
that training for supervisors and employees will be critical to the
equitable application of the new pay-for-performance system and in
conducting performance reviews.
We have added a new Sec. 9701.346 regarding pay progression for
new supervisors that requires DHS to issue implementing directives
requiring an employee newly appointed to or selected for a supervisory
position to meet certain assessment or certification points as part of
a formal training/developmental program. In administering performance
pay increases under Sec. 9701.342 for new supervisors, the regulations
provide DHS with the authority to take into account the employee's
success in completing a formal training/developmental program in
addition to his or her performance.
[[Page 5299]]
Section 9701.353--Setting Pay Upon Promotion
Section 9701.353 of the proposed regulations provided that upon
promotion DHS must provide an increase in an employee's rate of basic
pay equal to the greater of (1) 8 percent, or (2) the amount necessary
to reach the minimum rate of the higher band. During the meet-and-
confer process, the participating labor organizations were concerned
that this section of the regulations provided a promotion pay increase
that is less than the normal increase for a GS two-grade interval
promotion. Other commenters also expressed this concern. The labor
organizations also requested that the regulations clarify the policies
DHS will issue regarding pay-setting upon promotion and how pay will be
set upon promotion for an employee receiving a retained rate.
We have revised this section of the regulations as follows:
Under Sec. 9701.353(a), DHS must increase an employee's
rate of basic pay upon promotion to a higher band by at least 8
percent, but pay may not be set less than the minimum rate of the
higher band.
Under Sec. 9701.353(b), DHS will issue implementing
directives providing for an increase other than that specified in
paragraph (a) in certain situations. We also removed the pay-setting
criteria under Sec. 9701.353(b)(3) for an employee who was demoted and
is then repromoted back to the higher band because these kinds of rules
are better suited for DHS implementing directives.
Under Sec. 9701.353(c), we revised the promotion pay-
setting rule for retained rate employees, consistent with the change in
Sec. 9701.353(a).
Section 9701.354--Setting Pay Upon Demotion
Section 9701.354 of the proposed regulations provided DHS with the
authority to prescribe rules governing how to set an employee's pay
upon demotion. During the meet-and-confer process, the participating
labor organizations were very concerned that the proposed regulations
provided DHS with the authority to reduce an employee's pay upon
demotion without limit. We have revised Sec. 9701.354 to provide that
a reduction in basic pay upon demotion under adverse action procedures
may not exceed 10 percent unless a larger reduction is needed to place
the employee at the maximum rate of the lower band.
Section 9701.356--Pay Retention
Section 9701.356(a) of the proposed regulations provided DHS with
the authority to prescribe policies governing the application of pay
retention. Section 9701.356(c) provided that a retained rate is a
frozen rate that is not adjusted in conjunction with rate range
adjustments. During the meet-and-confer process, the participating
labor organizations recommended that the rules for providing a rate
range adjustment for employees receiving a retained rate be consistent
with the rules for GS retained rate employees. We have revised Sec.
9701.356 to provide that in applying the basic rate range adjustment
provisions under Sec. 9701.322, any increase in the rate of basic pay
for an employee receiving a retained rate is equal to one-half of the
percentage value of any increase in the minimum rate of the employee's
band.
Section 9701.361--Special Skills Payments; Section 9701.362--Special
Assignment Payments; and Section 9701.363--Special Staffing Payments
Sections 9701.361, 9701.362, and 9701.363 provide DHS with the
flexibility to authorize three different types of special payments to
employees possessing certain skills (special skills payments) or
serving on certain special assignments (special assignment payments) or
to address significant recruitment or retention problems (special
staffing payments). Such payments may be paid at the same time as basic
pay or in periodic lump-sum payments, are not considered basic pay for
any purpose, and may be terminated or reduced at any time.
During the meet-and-confer process, the participating labor
organizations requested clarification regarding the differences among
these special payments and how these payments differ from special rate
supplements under Sec. 9701.333 and special within-band increases
under Sec. 9701.344. Other commenters also requested that the
regulations clarify the purposes of these payments and how they will be
used by DHS. The following chart provides additional information on the
purpose and criteria for granting special rate supplements and special
within-band increases. Other features of these special payments are
also highlighted. In addition, the chart provides illustrative examples
of these special payments. Nothing in this chart obligates DHS to
authorize these payments for any particular category of employees.
BILLING CODE 6325-39-P; 4410-10-P
[[Page 5300]]
[GRAPHIC] [TIFF OMITTED] TR01FE05.003
[[Page 5301]]
[GRAPHIC] [TIFF OMITTED] TR01FE05.004
BILLING CODE 6325-39-C; 4410-10-C
Commenters also requested that the regulations be revised to make
special skills payments under Sec. 9701.361 and special assignment
payments under
[[Page 5302]]
Sec. 9701.362 nondiscretionary. We do not agree. The special skills
and special assignment payment authorities are designed to provide DHS
with additional pay flexibility to address specific human capital
needs. For example, DHS may wish to establish a special assignment
payment for employees performing temporary emergency or mission
critical duties in an identified geographic location or component where
employees do not normally perform such duties. However, DHS may choose
not to pay this special assignment payment to employees working in a
different geographic location or organization who regularly perform
these same duties. Requiring the nondiscretionary use of special skills
or special assignment payments would reduce DHS's ability to use these
pay flexibilities in strategic ways.
Section 9701.373--Conversion of Employees to the DHS Pay System
Section 9701.373(e) of the proposed regulations provided the
Secretary with the discretionary authority to make one-time pay
adjustments for GS and prevailing rate employees when they are
converted to the DHS pay system. The labor organizations recommended
that the regulations be amended to require (1) within-grade increase
buy-ins as basic pay adjustments and (2) career-ladder increase buy-ins
as a basic pay adjustment upon conversion of employees into the new pay
system. Other commenters were concerned that employees currently in GS
career-ladder positions who are converted into the new pay system have
no guarantee of receiving increases comparable to what they would have
received under the GS system. We have not revised the regulations to
require DHS to pay a within-grade increase or career-ladder increase
buy-in payment to employees converted into the new DHS pay system. As
we stated in the Preamble to the proposed regulations, DHS employees
will be converted at their current rate, adjusted on a one-time, pro
rata basis for the time spent toward their next within-grade increase.
As provided in revised Sec. 9701.373(e), DHS will issue implementing
directives for such pay adjustments, including the rules governing
eligibility, pay computations, and timing of payments.
We also agree that DHS employees in career-ladder positions prior
to conversion into an Entry/Developmental band under the new pay system
(1) will be converted at their current rate, adjusted on a one-time,
pro rata basis for the time spent toward their next within-grade
increase, and (2) will also receive pay increases equivalent to the
promotion pay increases they would have received under their previous
pay system when they otherwise would have been eligible. These
increases will continue until DHS establishes a formal pay progression
plan for such employees. As provided in revised Sec. 9701.373(f), DHS
will issue implementing directives governing the conversion of
employees into the Entry/Developmental band, including rules regarding
employee eligibility, pay computations, and the timing of such
payments.
Section 9701.374--Special Transition Rules for Federal Air Marshal
Service
Section 9701.374 of the proposed regulations provided DHS with the
authority to cover Federal Air Marshal Service positions under a system
that is parallel to the pay system that was applicable to the Federal
Air Marshal Service within the TSA if DHS transfers such positions from
TSA to another organization within DHS. DHS may modify that system
after coordination with OPM. This section also provides DHS with the
authority to establish rules for converting Federal Air Marshal Service
positions to any new pay system consistent with the conversion rules
under Sec. 9701.373.
The labor organizations recommended that this section be deleted.
They felt that Federal Air Marshal Service transition rules must be
promulgated in regulations. We do not agree. However, we have revised
Sec. 9701.374 to clarify that DHS will issue implementing directives
on converting Federal Air Marshal Service employees to any new pay
system, consistent with the new definition of ``implementing
directive'' under Sec. 9701.103 and the requirement for ``continuing
collaboration'' before issuing implementing directives under Sec.
9701.105. (See Section 9701.103--Definitions and Section 9701.105--
Continuing collaboration.)
Subpart D--Performance Management
General Comments
In response to commenters' general concerns regarding the clarity
of the regulations, we have reorganized subpart D, Performance
Management. We have also removed redundancies from and clarified the
regulatory text.
By far the greatest concern regarding the proposed performance
management regulations expressed by commenters related to fairness.
This concern was expressed in a variety of ways, including the
following:
Subjectivity of the rater, consistency of rater, rater
favoritism, rater bias, and potential for cronyism;
Managers will be buried in paperwork in evaluating
employees;
The fact that managers are no longer required to use
written performance plans, performance elements, and standards is
potentially problematic;
This system does nothing to hold supervisors accountable;
There needs to be monitoring of performance by leaders
through all levels of the organization to ensure that decisions are
made based on principle, equality and fair-mindedness; and
To the greatest extent possible and in the quickest time
practical, align the DHS HR governance structure so that all employees
are covered by the same performance management and pay systems.
The regulations make every attempt to ensure that the performance
management system(s) will be fair. First, the regulations adopt guiding
principles based on the performance management system criteria that
Congress has recently enacted with respect to chapters 47, 54, and 99
of title 5, United States Code. These principles require any
performance management system(s) established by DHS to be fair,
credible, and transparent, and to adhere to the merit system principles
found in 5 U.S.C. 2301. Furthermore, DHS has always been committed to
extensive training for managers, supervisors, and employees so that
they understand the requirements of the performance management system.
The training of managers and supervisors is of particular concern and
will focus on how to establish and communicate performance expectations
and how to assess employee performance. Finally, the Department is
committed to creating a performance culture in DHS that creates and
sustains a high performance organization.
Another concern that is related to fairness deals with the ability
to accurately measure employee performance. Commenters believe it will
be difficult to evaluate employees whose performance is not measurable.
Many commenters feel this will be particularly difficult when dealing
with law enforcement employees. They expressed the following concerns:
The proposed rule does not take into consideration the
unique and distinctive work performed by the Department's law
enforcement employees;
Law enforcement jobs are not measurable or are difficult
to measure by tangible means; and
Focusing on measurable performance creates an incentive
for law enforcement officers to focus on quantity rather than quality.
[[Page 5303]]
The regulations specifically allow for a wide variety of ways to
capture performance expectations. (See Sec. 9701.406(c) of the final
regulations.) DHS, using the continuing collaboration process, will
identify the most appropriate approach, or establish separate
performance management systems, if needed, for different groups of
employees.
Commenters recommended that DHS include proper training programs
for managers regarding performance reviews and funding for training
programs. Some suggested that military supervisors will need to be
trained on performance appraisal. Other commenters believe training
managers to do performance management will not improve managers'
ability to rate employees. Several changes have been made in the
regulations to address these issues. As stated previously, DHS is
committed to training managers, supervisors, and employees in the new
performance management system(s).
Commenters also suggested that there should be a formal evaluation
of any performance management system. Both the proposed and final
regulations include a requirement for the evaluation of any performance
management system established by DHS. (See Sec. 9701.410(b) of the
final regulations.) This evaluation requirement addresses the system's
compliance with these regulations and DHS implementing directives and
policies, as well as the system's effectiveness.
Another commenter made several suggestions that deal with the
broader aspects of performance management, as compared to the narrower
aspects of performance appraisal/evaluation. Most of these suggestions,
by their nature, relate to the operation of the performance management
system that DHS will establish through implementing directives. As
such, they are not specifically addressed by these enabling
regulations. These comments will be taken into account by DHS as it
develops its implementing directives.
Other Comments on Specific Sections of Subpart D
Section 9701.401--Purpose
Section 9701.401 provides for the establishment of at least one DHS
performance management system and sets out the guiding principles that
govern it. These guiding principles are based on the criteria that
Congress recently enacted with respect to chapters 47, 54, and 99 of
title 5, U.S. Code.
Section 9701.403--Waivers
Section 9701.403 specifies the provisions of title 5, U.S. Code,
and title 5, Code of Federal Regulations, that are waived for employees
covered by the DHS performance management system(s) established under
subpart D. We have amended Sec. 9701.403 to clarify that these waivers
become effective only after a decision is made to convert specific
categories of DHS employees to a new performance management system(s)
established under this subpart.
Section 9701.404--Definitions
One commenter suggested that we define ``supervisor'' as a
management official who oversees the daily work assignments of an
employee within a well-defined management structure. We believe the
term ``supervisor'' is well understood and does not require a specific
definition for the purpose of this subpart of the regulations.
During the meet-and-confer process, the participating labor
organizations suggested that the definition of ``performance measures''
in the proposed regulations be deleted and replaced by a definition of
``performance standards'' based on current law and regulations. In
response, we have added a definition of ``performance expectations''
that encompasses the concept of performance standards. Also in response
to discussions during the meet-and-confer process, we have revised the
definition of ``competencies'' to substitute ``other characteristics''
for ``attributes'' required by a position.
Section 9701.405--Performance Management Systems
Section 9701.405 has been renamed to clarify that it provides the
requirements for performance management systems within the Department
of Homeland Security. Several commenters had specific ideas and
recommendations for the design and operation of performance management
systems, including employee involvement, linkage to the Department's
strategic plan, meaningful distinctions in performance, reasonable
transparency, and appropriate accountability. Many of the requirements
previously addressed in this section of the proposed regulations are
now covered by the guiding principles found in the purpose section,
Sec. 9701.401. The guiding principles address the concerns raised by
the commenters. We have revised the regulations to remove redundancies
and reorganized the remaining requirements for clarity.
Other commenters made suggestions regarding specifying the length
of time for appraisal periods and the minimum period before a rating
can be given. The proposed regulations were silent on any specified
time periods. No change has been made, and the regulations continue to
provide DHS with the flexibility to determine whether its needs are
best met by specifying the time periods in its implementing directives
or by delegating that system feature to DHS components.
Section 9701.406--Setting and Communicating Performance Expectations
Section 9701.406 provides the requirements and guidelines for
communicating with employees regarding their performance. The proposed
regulations addressed the form performance expectations could take.
Commenters made very specific suggestions regarding how to amend
various provisions regarding the nature and form of the performance
expectations. Some of these are included in the performance management
system requirements in Sec. 9701.405, and the rest are addressed in
the following paragraphs. We have reorganized Sec. 9701.406 for
clarity. To underscore one of the guiding principles of these
regulations, we have given primacy to aligning performance expectations
with DHS's operating mission and organizational goals and measures.
During the meet-and-confer process, the participating labor
organizations agreed that performance expectations need not be in
writing. We have revised the regulations to clarify our intent that
performance expectations must be communicated to the employee prior to
holding the employee accountable for them. The regulations also have
been revised to state that, notwithstanding this requirement, employees
are always expected to demonstrate appropriate standards of conduct,
behavior, and professionalism, such as civility and respect for others.
Other commenters made suggestions regarding the purpose and content
of performance expectations. These comments reflect concerns about
management's ability to change work assignments swiftly and a concern
that DHS's mission will make it difficult to set goals at the
individual level. We believe the proposed regulations provided
sufficient detail in this regard, and the final regulations preserve
that detail. The remainder of the comments relate to the operation of
the
[[Page 5304]]
performance management system and will best be addressed in DHS
implementing directives or operating procedures.
Section 9701.407--Monitoring Performance
Section 9701.407 establishes the basic responsibility for
supervisors to monitor employee and organizational performance and
inform employees of their progress in meeting their performance
expectations. We have renamed the section to clarify that it includes
providing feedback to employees. Commenters had concerns about the
frequency and timeliness of the feedback provided to employees and the
form it might take. During the meet-and-confer process the
participating labor organizations made a number of proposals in this
regard. We have revised the section to include the requirement that
feedback must be timely and to provide for one or more interim reviews.
Section 9701.408--Developing Performance
Section 9701.408 addresses two aspects of developing or improving
performance; the first addresses the continual improvement that is part
of a high performance culture, and the second addresses remedial
improvement and dealing with poor performance. The section has been
retitled, Developing performance and addressing poor performance.
For Sec. 9701.408(a), commenters had suggestions for specific
language changes and also suggested the inclusion of a requirement for
an individual development plan. We decided to leave individual
development plans optional. DHS is committed to designing specific
development programs for Entry/Developmental band employees (see Sec.
9701.345) and could address individual development plans for other
employees in its implementing directives or operating procedures.
Regarding Sec. 9701.408(b), some commenters suggested requiring an
improvement period before an adverse action based on unacceptable
performance can be taken. The proposed regulations provided for an
improvement period as one of several options available to address or
correct unacceptable performance prior to taking an adverse action. We
continue to believe that an improvement period should be an option, but
not a requirement, of the new system.
Section 9701.409--Rating Performance
Section 9701.409 establishes the requirements regarding rating and
rewarding employee performance, including the rating levels that may be
used by DHS performance management systems, the purposes for which
ratings may be issued, and a prohibition of any forced distribution of
ratings. Therefore, the section has been retitled, Rating and rewarding
performance.
A commenter suggested that the removal of a pass/fail performance
rating system is a step in the right direction. However, during the
meet-and-confer process, participating labor organizations supported
the continued use of pass/fail ratings for employees in the Entry/
Developmental band and proposed that the final regulations provide for
pass/fail ratings in other situations. While we continue to believe
that, as a general matter, pass/fail ratings are incompatible with a
pay-for-performance system, we have adopted that suggestion. The
regulations now require the use of at least three summary rating levels
for most employees, but permit DHS to use pass/fail appraisal systems
for employees in the Entry/Developmental band or in other bands under
extraordinary circumstances as determined by the Secretary or designee.
Commenters expressed concerns and made suggestions regarding the
rating process. These comments included proposals to use multi-rater
approaches such as 360-degree appraisals, require higher-level review
of ratings, establish documentation requirements, and tie supervisory
ratings to their timely completion of appraisals. Commenters also
expressed concerns about supervisors' ability to understand and
interpret the regulations. These issues involve the actual operation of
the performance management system and will be addressed in DHS
implementing directives or operating procedures.
Another commenter suggested that we require a detailed explanation
of all formulas used to derive an overall summary rating. This, too,
can best be handled by DHS in its implementing directives or operating
procedures. We have not changed the regulations in response to this
comment.
Commenters expressed concern that ratings of record could be
lowered without sufficient justification. During the meet-and-confer
process, participating labor organizations requested that we provide
additional detail regarding the circumstances in which a new rating of
record may be issued. We have complied with their request and have
clarified Sec. 9701.409(b) to provide that new ratings of record may
be prepared only when there has been a substantial change in an
employee's performance since the last rating of record was assigned. We
also have revised Sec. 9701.409(f) to prohibit lowering an employee's
rating for any approved absence.
Other commenters raised concerns that allowing the grievance of
ratings of record would allow arbitrators to change those ratings and/
or superimpose their judgment of the employee's performance. We have
revised Sec. 9701.409(g) to specify that arbitrators are subject to
the standards of review in Sec. 9701.521(g)(2).
Section 9701.410--Rewarding Performance
Section 9701.410 of the proposed regulations has been incorporated
into the revised Sec. 9701.409 for clarity and to remove redundancies.
In addition, the revised section has been retitled, Rating and
rewarding performance.
Commenters questioned why the proposed regulations included
references to within-grade and quality step increases under title 5,
Code of Federal Regulations. This specific reference was included in
the event a group of employees is covered by the provisions of the
performance management system under subpart D of these regulations
while they continue to be covered by the within-grade and quality step
increase provisions of 5 CFR part 531. We have revised the regulation
to clarify that references to provisions in 5 CFR part 531 are
applicable only until an employee is covered by the pay system
established under subpart C of these regulations.
Section 9701.411--Performance Review Boards
Section 9701.411 of the proposed regulations authorized the
establishment of Performance Review Boards (PRBs) and described their
duties and composition. During the meet-and-confer process, the
participating labor organizations expressed concern about the operation
of PRBs; they felt that PRBs could delay pay decisions based on
performance appraisals and give the appearance of unwarranted
interference in the performance rating process. We continue to believe
that an oversight mechanism is important to the credibility of the
Department's pay-for-performance system. To that end, the Homeland
Security Compensation Committee established under Sec. 9701.313 will
conduct an annual review of performance payout summary data. Therefore,
we have removed the
[[Page 5305]]
separate section in subpart D dealing with PRBs.
Section 9701.412--DHS Responsibilities
Section 9701.412 of the proposed regulations specified the
responsibilities DHS must carry out in order to ensure a fair,
credible, and transparent performance management system. This section
has been redesignated as Sec. 9701.410. Commenters expressed concern
that only startup training would be funded. The purpose section of the
regulations (Sec. 9701.401) has been revised to provide guiding
principles for DHS performance management systems based on similar
criteria that Congress recently enacted with respect to chapters 47,
54, and 99 of title 5, U.S. Code. These principles require initial and
ongoing training for managers, supervisors, and others involved in the
performance management process. Finally, to comply with 29 CFR
1614.102(a)(5), we have added a new requirement in Sec. 9701.410 to
ensure that managers and supervisors fulfill their equal employment
responsibilities.
Subpart E--Labor-Management Relations
General Comments
Commenters expressed concern that the proposed regulations
curtailed employees' rights to collectively bargain, with a number
suggesting that the limits on collective bargaining are contrary to the
provisions of the Homeland Security Act. Commenters also recommended
that the design and implementation of every aspect of the proposed DHS
human resource system, including the pay, performance, classification
and appeals systems, be subject to collective bargaining. As discussed
in the Major Issues section, we do not believe that collective
bargaining over these matters is appropriate, nor intended by Congress.
However, we have provided a number of mechanisms to ensure the
substantive involvement of labor organizations in such things as the
development of implementing directives, the administration of the
Department's new pay system, and the nomination of members to the
Homeland Security Labor Relations Board (HSLRB) and the Mandatory
Removal Panel (MRP). Other concerns related to the scope of bargaining
are addressed in the discussion of the specific related sections of
subpart E that follow.
Other Comments on Specific Sections of Subpart E
Section 9701.501--Purpose
The proposed regulation restates the statute's purpose to provide
DHS and OPM with flexibility to establish a modern DHS personnel
system, permitting waiver of certain statutory provisions while
retaining core civil service protections, including the merit system
principles. In their comments and during the meet-and-confer process,
participating labor organizations recommended that we include in this
section a statement that labor organizations and collective bargaining
are in the public interest, consistent with the Homeland Security Act's
preservation of collective bargaining rights.
We have decided to retain the originally proposed language with
minor clarifications. This section of the regulations recognizes and
stresses the fundamental purpose underlying the Homeland Security Act
and the statutory mandate to build a flexible personnel system that
supports the unique mission of DHS. Consistent with the Homeland
Security Act, the regulations specifically recognize the right of
employees to organize and bargain collectively subject to limitations
established by law, including these regulations, applicable Executive
orders, and any other legal authority.
Section 9701.502--Rule of Construction
In accordance with the Homeland Security Act's core purpose, these
regulations provide the Department with the flexibility necessary to
accomplish its vital mission. In so doing, they also provide that
interpretations of these regulations by the Secretary and the Director
be accorded great deference.
In their comments and during the meet-and-confer process,
participating labor organizations suggested that we delete ``great''
and describe the particular circumstances in which DHS and OPM's
interpretation of the regulations would not be given deference.
We decided to retain this section as originally proposed. However,
in so doing, we do not intend to imply that the rule of construction is
limited only to this subpart. In this regard, we have added a new Sec.
9701.106(a), as previously noted, and its express language extends the
application of that rule of construction to the entire part. We believe
Sec. 9701.106(a), as referenced in this subpart, accurately reflects
the Supreme Court's rulings on deference. In this regard, the Court has
held that courts and administrative bodies must defer to an agency
head's interpretation of a regulation unless an ``alternate reading is
compelled by the regulation's plain language or by other indications of
[her] intent at the time of the regulation's promulgation.'' Thomas
Jefferson University v. Shalala, 512 U.S. 504, 512 (1994). An agency's
interpretation must be given ``controlling weight unless plainly
erroneous or inconsistent with the regulation.'' Id. The regulation is
entirely consistent with Supreme Court decisions. Moreover, the
regulation reflects the exceptionally broad grant of regulatory
authority that Congress conferred on DHS and OPM to establish and
implement a human resources system for the Department.
Section 9701.503--Waivers
The proposed regulations waived sections 7101 through 7135 of title
5 except as otherwise specified in the regulations. During the meet-
and-confer process, participating labor organizations requested that
the regulations clarify when such waivers will be applied. We have
amended Sec. 9701.503 to clarify that the waivers apply to DHS
employees when they are covered by the labor-management relations
system established under subpart E.
Section 9701.504--Definitions
In their comments and during the meet-and-confer process,
participating labor organizations recommended that the current
definition of ``conditions of employment'' be expanded to include the
classification of any position. In addition, they and other commenters
recommended that we include Department-wide regulations as ``conditions
of employment.'' We have adopted the second recommendation, and we have
adopted the recommendation of participating labor organizations to
revert to the definition of ``confidential employee'' contained in 5
U.S.C. 7103. To avoid confusion, we also deleted the definition of
``employee'' and instead, revised Sec. 9701.505 to ensure appropriate
coverage. We have also modified the definition of ``exclusive
representative'' contained in the proposed regulations by deleting the
second paragraph, which dealt with the requirement of the Homeland
Security Act that recognition of exclusive representatives would
continue as organizations transferred into the Department, because such
transfers have already taken place and thus the language was
unnecessary and confusing. Further, the provision
[[Page 5306]]
remains in force through the Homeland Security Act. In response to
labor organization comments, we have revised the definition of
``grievance'' to more closely align with the definition in 5 U.S.C.
7103; however, the revised definition clarifies that grievances must
relate to conditions of employment. Finally, we have added a definition
of ``professional employee'' by referencing 5 U.S.C. 7103(a)(5) to
reflect changes discussed in Sec. 9701.514.
Section 9701.505--Coverage
As noted, we have clarified which employees are covered by this
subpart by moving language from the definitions section in the proposed
regulations to the coverage section; this parallels the structure of
subpart F, Adverse Actions. Labor organizations commented that TSA
screeners should be covered by this subpart. We did not accept that
recommendation, given that the TSA administrator, exercising his
statutory authority, specifically determined that screeners would not
be subject to coverage under 5 U.S.C. chapter 71. Similarly, we did not
accept the recommendation from other commenters that Customs and Border
Patrol officers be excluded from coverage, given that their predecessor
occupations have been covered by 5 U.S.C. chapter 71 for some time. We
have also clarified two of the exclusions in paragraph (b) by adding a
reference to 5 U.S.C. 2101(3) to better define what is meant by the
term ``a member of the uniformed services'' and clarified the exclusion
for the ``United States Secret Service'' by adding the ``United States
Secret Service Uniformed Division,'' as these two exclusions are
provided by separate statutory provisions.
Section 9701.506--Impact on Existing Agreements
In their comments and during the meet-and-confer process,
participating labor organizations stated that it was unreasonable to
void any contract provisions that conflict with the regulations because
continuing them would not adversely affect the Department's mission.
Instead, they recommended that conflicting contract provisions remain
in full force and effect until they expire unless the Department shows
that they adversely affect homeland security. In those latter instances
only, the parties would be required to engage in bargaining over
modifications to existing agreements. There was significant discussion
with the participating labor organizations regarding what level of
detail would be provided in these regulations and what would be
provided in the implementing directives, what the effect of each would
be on existing agreements, and what involvement the union would have in
the development of the implementing directives. The participating labor
organizations recommended that the implementing directives should be
subject to the full scope of collective bargaining provided in 5 U.S.C.
chapter 71 or, if that were not possible, that they should be afforded
the opportunity to participate in the development of the implementing
directives.
As a general matter, we have retained this section as originally
proposed. We believe that the effect of the alternative posed by
participating labor organizations would be to delay implementation of
these regulations for years, a result Congress never intended. It would
severely hamper the Department's mission by permitting piecemeal,
haphazard implementation of these regulations, dictated solely by the
happenstance of a local contract's expiration date. This would create a
confusing, difficult-to-administer, and Balkanized personnel system. A
primary purpose of the Homeland Security Act was to create one
Department out of a patchwork quilt of agencies performing similar
functions. Accepting the recommendation would impair accomplishment of
that goal.
We believe Congress intended the opposite result. Given that these
regulations have the full force and effect of law, they have the same
effect on collective bargaining agreements as any statutory change.
However, in response to the concerns expressed by participating labor
organizations, we have modified the regulation to provide for a 60-day
period during which the parties to a collective bargaining agreement
would bring conflicting and other impacted provisions into conformance.
We have also provided that the Secretary may exercise his or her
discretion to continue certain contract provisions as appropriate and
to cancel such provisions at any time. Note that this process would not
delay the effective date of these regulations or their implementing
directives. However, in response to discussions with the participating
labor organizations, we have adopted a provision for continuing
collaboration in Sec. 9701.105 on the development of implementing
directives and clarified that all contract provisions must be
consistent with implementing directives which, by their very nature,
flow directly from the regulations.
Section 9701.508--Homeland Security Labor Relations Board
Commenters, including the labor organizations participating in the
meet-and-confer process, objected to the creation of the HSLRB, and
recommended that the regulations preserve the authority of FLRA, FMCS,
and FSIP. They remarked that these agencies, which are independent and
impartial, currently decide many of those matters for which the
proposed regulations confer jurisdiction on the HSLRB to adjudicate. In
this regard, they challenged the independence and impartiality of any
HSLRB member appointed exclusively by the Secretary. Therefore, they
objected to any change to the status quo. Other commenters approved of
the proposal, indicating that the HSLRB would afford the Department
greater regularity and consistency in the processing of cases than that
currently provided by FLRA. A commenter noted that the ``one-stop
shop'' concept of the HSLRB was preferable to the division of
prosecutorial, adjudicatory, and mediation responsibilities provided
for in the current system.
We have decided to retain the HSLRB. As we indicated in the
Preamble accompanying the proposed regulations, it ensures that those
who adjudicate the most critical labor disputes in the Department do so
quickly and with an understanding and appreciation of the unique
challenges that the Department faces in carrying out its mission.
During the meet-and-confer process, participating labor organizations
proposed that the HSLRB be required to develop a single, integrated
dispute resolution process for matters concerning the scope and duty to
bargain. Second, they proposed a new process for nominating HSLRB
members. Other commenters made similar recommendations. We have revised
the proposed regulations to include a formal opportunity for labor
organization participation in the nomination process.
In this regard, the final regulations establish criteria for HSLRB
members, requiring that they be known for their integrity and
impartiality as well as their expertise in labor relations, law
enforcement, or national/homeland or other related security issues (for
example, former members of the judiciary). The regulations preserve the
Secretary's sole and exclusive discretion to appoint one member who
serves as the HSLRB's Chair, with powers and duties enumerated in Sec.
9701.508. However, the regulations provide the Department's labor
organizations with an opportunity to participate in the process of
nominating the remaining two members of the HSLRB. While the Secretary,
like other heads of departments and agencies, retains the
[[Page 5307]]
ability to make these senior appointments from any appropriate source
(and to remove those appointees), the Secretary and the Director have
determined that it is in the Department's interest to include a formal
process through which labor organizations can recommend individuals for
these positions.
We also received several comments regarding the terms of the HSLRB
members. One commenter suggested that the terms of the HSLRB members
should be staggered to ensure continuity. We have adopted this
suggestion. Another commenter suggested that an HSLRB member should be
permitted to serve an additional term beyond his or her initial term
because that HSLRB member might have gained valuable experience or
expertise that could be of value to the HSLRB. We agree, and have
adopted this suggestion as well.
A review of the comments made us realize that estimating the number
of cases that the HSLRB might be called upon to handle at any
particular time is a difficult, if not impossible, task. To ensure the
HSLRB has the resources to process all cases expeditiously, we have
given the Secretary the sole and exclusive discretion to appoint
additional HSLRB members, subject to the criteria and nomination
procedures specified in the regulations. In addition, we have permitted
individual HSLRB members to adjudicate disputes. Such changes will
provide the HSLRB with more flexibility to manage its workload, but
will not significantly prejudice the interests of either the Department
or its employees.
The proposed regulations also discussed judicial review of HSLRB
decisions and posed two options for consideration by commenters. One
option would have the regulations remain silent with regard to judicial
review, thus allowing existing governing legal principles to determine
the circumstances under which there would be judicial review. The
second option would have required FLRA review, under the same
procedures and standards for judicial review of FLRA decisions as a
condition precedent to appellate court jurisdiction. The labor
organizations made no recommendations with regard to the two options.
We received other comments that specifically supported allowing
judicial review following FLRA review of HSLRB decisions. On the other
hand, a commenter argued that the Homeland Security Act gave neither
DHS nor OPM the power to confer jurisdiction on FLRA to hear appeals
from HSLRB decisions involving the duty to bargain or appropriate unit
issues involving DHS employees. We disagree. The Homeland Security Act,
within defined parameters, gave DHS and OPM sufficiently wide latitude
for designing the Department's labor-management relations program.
Accordingly, after further consultation with FLRA (as well as MSPB
with regard to subpart G), we have adopted the second option in Sec.
9701.508(g), which provides that either party may request review of the
record of an HSLRB decision by FLRA. In conducting its review, FLRA
will defer to findings of fact and interpretations of these regulations
made by the HSLRB. The provision also establishes a 30-day time limit
for FLRA to render its decision. This 30-day time limit is mandatory,
except that FLRA may extend its time for review by a maximum of 15
additional days if it determines that a case is unusually complex, or
that an extension is necessary to prevent any prejudice to the parties;
however, the regulations do not permit any further extension. In
addition, Sec. 9701.508(g) was revised to provide for judicial review
under 5 U.S.C. 7123 of any final FLRA order.
Section 9701.509--Powers and Duties of the HSLRB and Section 9701.510--
Powers and Duties of the Federal Labor Relations Authority
Commenters, including the labor organizations participating in the
meet-and-confer process, recommended that FLRA retain jurisdiction over
all labor disputes in DHS. Specifically, they suggested that not all
labor relations issues that arise in the Department will have a
significant enough impact on homeland security to warrant removing them
from the jurisdiction of FLRA. The labor organizations also expressed
concern at the HSLRB's authority to assert jurisdiction over any matter
submitted to FLRA if the HSLRB determined that homeland security was
affected. Following discussion during the meet-and-confer process, we
agreed to amend the proposed regulation. In addition to retaining the
powers and duties of FLRA that we outlined in our proposed regulations,
we also agreed to retain FLRA's current authority to determine the
appropriateness of units pursuant to Sec. 9701.514, and to resolve
exceptions to arbitration awards which do not involve the exercise of
management rights and/or the duty to bargain.
It is imperative that the HSLRB retain jurisdiction over each
matter for which an understanding and appreciation of the Department's
mission is necessary. As a result, the final regulations give the HSLRB
jurisdiction over disputes concerning the duty to bargain, the scope of
bargaining, negotiation impasses, and certain exceptions to arbitration
awards involving these issues because these disputes typically involve
the exercise of management rights under Sec. 9701.511. Similarly, the
final regulations continue to give the HSLRB authority to assert
jurisdiction over any dispute submitted to FLRA that affects homeland
security. Finally, labor organizations suggested that, because the
regulations accorded the HSLRB the authority to issue opinions, those
opinions should have the force and effect of law and be subject to
judicial review. We agree, and have amended the regulations
accordingly. Finally, in response to comments from participating labor
organizations, we have included procedures for resolving jurisdictional
disputes between the HSLRB and the FLRA in Sec. 9701.509(d).
Section 9701.511--Management Rights
In their comments and during the meet-and-confer process,
participating labor organizations recommended that we retain the
current language in 5 U.S.C. chapter 71 with regard to management
rights, arguing that the proposed regulations unduly limited the scope
of bargaining. However, they did propose modifications that would allow
the Department to take immediate action without bargaining in advance,
or without regard to existing collective bargaining agreements, in
exceptional circumstances. This issue was discussed extensively during
the meet-and-confer process, but no agreement was reached. Even with
the modifications recommended by the labor organizations, the current
statute does not give the Department the flexibility necessary to carry
out its vital mission of protecting homeland security. Title 5, chapter
71, requires bargaining over procedures that govern how employees are
assigned or deployed to particular locations, often within the same
facility. The resulting procedures often prevent management from
quickly assigning the right employee to the right task at the right
time. Similarly, the requirement to bargain in advance of the exercise
of a management right, over its implementation and impact, also has the
potential for impeding or delaying the execution of the Department's
mission.
The Department needs greater flexibility to act--for example, in
the assignment or deployment of personnel or the introduction of new
technology--not just in emergency or exceptional situations, but also
on a day-to-day basis to meet operational demands.
[[Page 5308]]
Accordingly, we have retained the management right provisions in the
proposed regulations. However, this section has been clarified to
prohibit bargaining over the exercise of the management rights
enumerated in paragraph (a), as well as the procedures associated with
the exercise of the management rights enumerated in paragraphs (a)(1)
and (2). As noted previously, the Department has found that procedures
negotiated under current law have impeded its ability to accomplish its
mission, and as a consequence, we have removed these procedures from
the scope of bargaining. We have also eliminated the requirement to
bargain in advance over implementation and impact of a management
action as well as appropriate arrangements when employees are adversely
affected by that action.
However, as a result of concerns expressed by participating labor
organizations in the meet-and-confer process, we have added a new
paragraph (c) establishing a requirement that management ``confer''
with an exclusive representative over operational procedures such as
for work assignments and deployments, which are no longer negotiable
under Sec. 9701.511(a)(1) and (2) (see Sec. 9701.512). We have also
substantially revised the proposed regulations to require that when
management exercises a management right and the effect on conditions of
employment is foreseeable, substantial, and significant in terms of
both duration and impact on the bargaining unit as a whole, or on those
employees in that part of the bargaining unit affected by the
management action, notice will be provided to the exclusive
representative at the time management exercises that right if an
obligation to bargain, confer, or consult exists. Such notice also may
be provided any time in advance at the discretion of management.
Additionally, under certain circumstances and upon request of the
exclusive representative, management is obligated to negotiate over
impact and appropriate arrangements for employees adversely affected by
the action. Each party may exercise sole and exclusive discretion to
delegate authority to bargain such matter below the level of
recognition. This provision allows either party to exercise
unreviewable discretion to decline to bargain below the level of
recognition. The regulations continue to provide that such bargaining
may occur on a pre-implementation basis at management's discretion.
However, as a result of the September 10 meeting, the regulations
have been revised to require bargaining over impact and appropriate
arrangements after implementation under certain circumstances specified
in Sec. 9701.511 (see the discussion on Management Rights/Scope and
Duty to Bargain in the Major Issues section of this Supplementary
Information). The regulations continue to require bargaining over
implementation, impact, procedures, and appropriate arrangements
regarding the exercise of nonoperational management rights enumerated
in Sec. 9701.511(a)(3), as provided under current law. The proposed
regulations have also been modified to provide the exclusive
representative with the opportunity to present its views and
recommendations regarding the exercise of management rights. We added
paragraph (f) to clarify that nothing prevents management from taking
action, and that any agreements over impact or appropriate arrangements
are neither retroactive nor precedential.
In their comments and during the meet-and-confer process,
participating labor organizations raised concerns about out-of-pocket
expenses incurred by employees as a result of the exercise of a
management right. They argued that employees should not be expected to
shoulder unusual or unanticipated expenses incurred as a result of
management action. Based on those comments, we have revised the
proposed regulation to provide reimbursement of appropriate out-of-
pocket expenses incurred by an employee as a direct result of a
management action, under certain conditions.
Section 9701.512--Obligation To Confer
In their comments and during the meet-and-confer process,
participating labor organizations strongly objected to Sec.
9701.511(b) of the proposed regulations that eliminated mandatory
bargaining over the procedures management will follow in the exercise
of its rights. As previously discussed, we have clarified that section
to prohibit negotiations over these procedures. However, in response to
the concerns expressed by participating labor organizations, we have
added a new section that requires management to confer with an
appropriate exclusive representative to consider its views and
recommendations with regard to such procedures. The process established
by this section requires that the parties meet for no longer than 30
calendar days to confer over operational procedures governing such
matters as work assignments and deployments, unless the parties
mutually agree to an extension. Upon mutual agreement, the parties may
ask the HSLRB, FMCS, or any other third-party to assist them in
reaching resolution. Because these procedures are so critical to
accomplishing the Department's mission, the process established under
this section is beyond the scope of the unfair labor practice
provisions of these regulations, and the Department retains final
authority to determine the content of these operational procedures as
well as the authority to deviate from them.
Section 9701.513--Exclusive Recognition of Labor Organizations
In their comments and during the meet-and-confer process, the
participating labor organizations recommended that the regulations
authorize the Secretary to voluntarily recognize a labor organization
or two or more labor organizations jointly upon a demonstration that
they represent a majority of employees in the unit. However, we believe
it is essential that employees have the utmost confidence in the
process by which their exclusive representatives are selected and that
employees should continue to be afforded the opportunity to vote in
representational elections. Therefore, we have not adopted the
recommendation and have retained the language of the proposed
regulations regarding elections.
Section 9701.514--Determination of Appropriate Units for Labor
Organization Representation
We have adopted the recommendation of commenters to retain the
current statutory distinction between professional and non-professional
bargaining units by incorporating the provision from 5 U.S.C.
7112(b)(5) in Sec. 9701.513(b)(5).
Section 9701.515--Representation Rights and Duties
In connection with this section of the proposed regulations, we
received comments pertaining to (1) an employee's right to
representation during an investigatory interview; (2) the right of an
exclusive representative to attend formal discussions; (3) the standard
of conduct applicable to employee representatives; and (4) the scope of
the Department's obligation to disclose information to the exclusive
representative(s) of its employees.
Commenters strongly objected to the elimination of the right of an
employee to request representation when examined by representatives of
the Office of the Inspector General, Office of Security, and Office of
Internal Affairs, arguing that such representation
[[Page 5309]]
protects employees against abusive or illegal interview techniques and
provides reassurance and guidance to employees. Accordingly, we
modified the regulation to restore the full scope of the ``Weingarten''
right as it currently exists.
In their comments, labor organizations objected to the elimination
of formal discussions in the proposed regulations, viewing it as
undermining the ability of labor organizations to effectively represent
bargaining unit employees. In response to these comments, we revised
the proposed regulations to provide the exclusive representative with
an opportunity to be present at meetings between Department
representatives and bargaining unit employees when the purpose of the
meeting is to discuss and/or announce new or substantially changed
personnel policies, practices, or working conditions. However, this
right was not extended to meetings between Department representatives
and bargaining unit employees that involve operational matters when the
discussion of working conditions is incidental or peripheral to the
announced purpose of the meeting. Additionally, this right does not
apply to discussions that merely reiterate or apply existing personnel
policies, practices, or working conditions.
We believe this modification provides clearer guidance to a
Department representative as to when he or she is required to notify
the exclusive representative of a meeting with bargaining unit
employees. Moreover, this provision facilitates the Department's
accomplishment of its critical mission by enabling managers and
supervisors to have meetings with their employees regarding operational
matters without any confusion regarding whether the exclusive
representative must receive prior notice.
In their comments and during the meet-and-confer process,
participating labor organizations objected to precluding their right to
be present during the discussion of an EEO complaint. The parties noted
that an exclusive representative's presence during a discussion
concerning an EEO complaint has been intensely litigated. Given this
ongoing debate, we have modified the language in the proposed
regulations to provide that an official of a labor organization may
attend formal EEO complaint meetings as an employee's personal
representative and only at the request of the bargaining unit employee
who filed the complaint. The final regulation provides that if the
United States Supreme Court determines whether an exclusive
representative has a right to be present at such a meeting under 5
U.S.C. 7114, the Department will interpret and apply that decision to
this section. We have also clarified Sec. 9701.515(a)(5) regarding an
employee's right to a personal representative in grievance or appeal
procedures other than those negotiated grievance procedures established
under subpart E.
In their comments and during the meet-and-confer process,
participating labor organizations objected to the requirement in the
proposed regulations that employee representatives be subject to the
same standards of conduct as any other employee, stating that this
provision would ``chill'' the employee representatives' ability to
exercise their protected rights. The participating labor organizations
recommended retaining current case law standards that allow discipline
of employee representatives only if they engage in ``outrageous
conduct.'' We have deleted this provision but have left the development
of any standards in this regard to the discretion of the HSLRB.
In their comments and during the meet-and-confer process,
participating labor organizations suggested that we maintain the duty
to disclose information as it currently exists under 5 U.S.C. 7114(b).
They particularly objected to the proposed exemption for disclosure of
information if ``adequate alternative means exist'' for obtaining it.
Another commenter stated that it was unclear whether the proposed
regulation will utilize the existing ``particularized need'' standard,
which requires a labor organization to specifically state why it needs
the requested information.
We do not believe the current standards for information disclosure
in 5 U.S.C. chapter 71 adequately address the Department's need to
withhold information that it determines would compromise its mission,
security, or employee safety/privacy. Further, those standards have led
to considerable confusion and much unnecessary litigation. Accordingly,
we have added language to clarify the conditions for disclosure of
information, including the requirement that the exclusive
representative must demonstrate a particularized need. We expect the
HSLRB to interpret and apply this language in a manner that is
consistent with the Department's mission and the established
particularized need of exclusive representatives in accordance with
law.
Finally, we have revised the language in the proposed regulations
to make clear that Sec. 9701.515(b)(5)(ii) applies only to information
requested in connection with matters covered by subpart E. However, if
a labor organization serves as the personal representative of a
bargaining unit employee in connection with the appeal of an adverse
action to MSPB, the appeal of a mandatory removal offense to the
Mandatory Removal Panel, or the pursuit of a complaint of
discrimination before the Equal Employment Opportunity Commission, the
applicable discovery rules and procedures of those respective bodies
apply.
Section 9701.516--Allotments to Representatives
Commenters suggested that the regulations should allow employees to
discontinue their allotments at any time, rather than on an annual
basis. In their comments, the labor organizations recommended that we
revise the proposed regulation to allow the assignment and allotment of
other financial assessments of the exclusive representative, and that
we adopt language which provides that after one year has passed, an
employee may revoke his or her dues allotment assignment on the
anniversary date of his or her enrollment or on a date specified in a
collective bargaining agreement. We believe the regulations, which
track chapter 71, provide the appropriate mechanism for processing dues
allotments and have not adopted these suggestions.
Section 9701.517--Unfair Labor Practices
In the proposed regulations, the Department and OPM identified
those actions that would constitute unfair labor practices in the
Department's labor-management relations system. This list of unfair
labor practices is almost identical to that set forth in 5 U.S.C. 7116.
The proposal made only slight modifications to this list. Specifically,
we clarified that the HSLRB, not FLRA, would be the arbiter of whether
a party refused to consult or negotiate in good faith, or failed or
refused to cooperate in impasse procedures and impasse decisions
required by the Department's regulations. In addition, because these
regulations provide that any provision of a collective bargaining
agreement that is inconsistent with these regulations or the
implementing directives is unenforceable on the effective date of
coverage, we did not identify the action set forth in 5 U.S.C.
7116(a)(7) as an unfair labor practice.
The labor organizations suggested that references to the HSLRB be
removed from the regulation because of their
[[Page 5310]]
objection to the creation of the HSLRB. In addition, they urged that we
retain 5 U.S.C. 7116(a)(7) because an agency should not be permitted to
enforce a rule or regulation that is in conflict with a collective
bargaining agreement if the agreement was in effect prior to the
issuance of the rule or regulation.
We decline to adopt the first recommendation in light of the fact
that we have retained the HSLRB in the final regulations. In addition,
for reasons of homeland security, it is imperative that these
regulations and any implementing directives trump provisions of
existing collective bargaining agreements if these provisions are
inconsistent with the regulations or directives. Therefore, we decline
to adopt this second recommendation.
We have made technical corrections in the second sentence of
paragraph (e) to reflect the intent of the proposed regulations to
mirror the language in 5 U.S.C. 7116(d).
Section 9701.518--Duty To Bargain, Confer, and Consult in Good Faith
Commenters, including those labor organizations participating in
the meet-and-confer process, objected to (1) the removal of
Departmental implementing directives and other regulations from the
scope and duty to bargain; (2) the modification to the de minimis
standard, which limits the duty to bargain to those matters that
``significantly affect a substantial portion of the bargaining unit'';
(3) the establishment of a 60-day time limit for term bargaining; and
(4) the absence of a mechanism for resolving mid-term bargaining
impasses.
We retained the bar on negotiations over Departmental implementing
directives and other regulations. Under current law, Departmental
implementing directives and other regulations would be subject to
collective bargaining at a subordinate level of recognition, unless the
Department could demonstrate a ``compelling need'' for uniformity. We
believe that this is inconsistent with the basic purposes of the
Homeland Security Act. The Department was created, in part, to bring
about greater cohesion and coordination among its formerly separate
components, and by definition, we believe there is a compelling need
for uniformity among those components. Therefore, we have excepted
Departmental implementing directives and other regulations from
bargaining. The prospect of subjecting critical Department-wide human
resources policies to modification through bargaining in over 70
separate bargaining units is untenable, and the resulting patchwork of
human resources policies could have an adverse effect on the
Department's mission.
However, we have revised the regulation to provide for labor
organization involvement in three ways: (1) With respect to
Departmental implementing directives, the Department will provide
appropriate labor organizations with an opportunity to participate in
the ``continuing collaboration'' process under Sec. 9701.105; (2) with
respect to other Departmental regulations dealing with conditions of
employment, the Department will confer with labor organizations granted
national consultation rights under Sec. 9701.518(d)(2), in accordance
with the procedures set forth in Sec. 9701.512; and (3) with respect
to all other Department-wide matters that impact bargaining unit
members, the Department will consult with national labor organizations.
During the meet-and-confer process, we agreed to revise the
proposed de minimis standard. Participating labor organizations
expressed concern that the proposed standard relieved management from
the duty to bargain unless the change impacted a majority of bargaining
unit employees. In response to those concerns, we further clarified the
standard to reflect current Federal and private sector case law, which
requires management to afford an exclusive representative an
opportunity to bargain over changes that are ``foreseeable,
substantial, and significant in terms of both impact and duration on
the bargaining unit, or on those employees in that part of the
bargaining unit affected by the change.'' Under this standard,
management is not required to negotiate when the impact is on a single
employee. We also agreed to extend the time limit for term bargaining
from 60 days to 90 days. In addition, we provide that the parties may
refer a mid-term bargaining impasse to an independent mediator/
arbitrator (by mutual agreement), FMCS, and/or HSLRB for assistance or
resolution.
Section 9701.519--Negotiation Impasses
The proposed regulation provided the Homeland Security Labor
Relations Board with the authority to resolve negotiation impasses. We
have retained this authority, but deleted Sec. 9701.519(b) involving
the HSLRB's regulations and reincorporated the concepts into Sec.
9701.508, Homeland Security Labor Relations Board, where it more
appropriately flows with the HSLRB's authority to issue regulations
concerning its impasse resolution procedures. Commenters recommended
that negotiation impasses should be referred through the Federal
Mediation and Conciliation Service (FMCS) and then to the Federal
Service Impasses Panel (FSIP) for resolution. We have incorporated
provisions for parties to use the services of FMCS in Sec. 9701.508,
Homeland Security Labor Relations Board. However, we continue to
believe that FSIP is not positioned to adequately respond to the unique
and critical mission of the Department, and the labor organizations
during the meet-and-confer process were not opposed to the creation of
a streamlined impasse resolution process.
Section 9701.521--Grievance Procedures
In their comments, labor organizations recommended that we modify
paragraph (b)(2) of the proposed regulations to retain an arbitrator's
current authority to stay a personnel action in the same manner as MSPB
if a prohibited personnel action is involved. We agree and have so
modified the regulation.
Paragraph (f) of the proposed regulations provided that employees
may no longer challenge adverse actions through the negotiated
grievance procedure. Several labor organizations commented that access
to the grievance/arbitration process is a fundamental element of the
statutory right to organize and bargain collectively. Other commenters
also opposed this change. We agree and have modified the regulations to
permit employees who are subjected to certain adverse actions to seek
redress either through the appeals process or grievance procedure, but
not both. We have revised the regulations to provide that 5 U.S.C.
7121(f) is modified so that matters covered by subpart G are deemed to
be matters covered by 5 U.S.C. 4303 and 7512 for the purpose of
obtaining judicial review. Section 7121(f) also is modified to provide
that judicial review under 5 U.S.C. 7703 will apply to an arbitration
award under the same manner and under the same conditions as if the
matter had been decided by MSPB under Sec. 9701.706, including the
requirement that the preponderance of the evidence standard applies to
arbitrators as well as to MSPB. The new Sec. 9701.521(f) is consistent
with 5 U.S.C. chapter 71 and requires arbitrators hearing adverse
action grievances to be bound by these regulations and MSPB case law as
it applies to DHS.
For example, section 9701.706(k)(6) clarifies that MSPB may
mitigate a penalty only if the penalty is so disproportionate to the
offense as to be wholly without justification. Under the
[[Page 5311]]
final regulations, this standard applies with equal force to
arbitrators who adjudicate adverse actions under the negotiated
grievance procedure. Adverse action penalties which do not meet this
standard may not be modified by either MSPB or an arbitrator; in other
words, they are barred from substituting their judgment as to the
penalty for that of the Department. In cases of multiple charges, MSPB
or an arbitrator may still mitigate a penalty where not all of the
charges are sustained. The third party's judgment is based on the
justification for the penalty as it relates to the sustained charge(s).
The regulations are intended to ensure that when a penalty is
mitigated, the maximum justifiable penalty will be applied.
In order to ensure consistency in the adjudication of adverse
actions, the Department's two largest labor organizations recommended
the establishment of a mutually acceptable panel of arbitrators who
have been trained and qualified to hear adverse action grievances. The
Secretary and the Director concurred with this recommendation, and
Sec. 9701.521(f) has been revised accordingly.
Consistent with the change to allow grievances regarding certain
adverse actions, we have revised Sec. 9701.521 to provide that adverse
actions under subpart F are grievable, except for mandatory removal
offenses and adverse actions taken in the interest of national security
under Sec. 9701.613. This revision also eliminates confusion caused by
the language in 5 U.S.C. 7121(c)(5) and accurately reflects the current
situation that, although adverse actions are grievable, the exclusive
recourse with regard to classification disputes is the OPM
classification appeals procedure (5 CFR 511.603). The revision also is
consistent with the statutory exclusion of classification matters from
the definition of ``conditions of employment'' in 5 U.S.C.
7103(a)(14)(B). (See related clarifications in Sec. Sec. 9701.222 and
9701.604(b)(15).)
In their comments, labor organizations recommended that we delete
paragraph (g), which provided that an employee may grieve a performance
rating only if it was not raised in connection with an adverse action
appeal. However, during the meet-and-confer process, they withdrew
their objections.
Labor organizations also objected to that part of paragraph (g)
requiring that an arbitrator must sustain a grieved rating of record
unless the grievant proves that it was arbitrary or capricious. The
labor organizations argued that a rating should be cancelled upon a
showing of a prejudicial violation of applicable law or the provisions
of a labor agreement. During the meet-and-confer process, we agreed to
revise paragraph (g) to address the authority of an arbitrator to
cancel a performance rating. Paragraph (g) now provides that an
arbitrator may cancel such a rating upon a finding that management
applied the employee's established performance expectations in
violation of law, regulation, or collective bargaining agreement if the
violation prejudices the grievant. Further, the revision precludes an
arbitrator from ordering a change to a rating, except when he or she is
able to determine the rating that the manager would have given but for
the violation; if the arbitrator cannot do so, the case must be
remanded for re-evaluation. Finally, paragraph (g) states that an
arbitrator does not have authority to conduct an independent evaluation
of an employee's performance or otherwise substitute his or her
judgment for that of the manager, unless otherwise provided by law.
Section 9701.522--Exceptions to Arbitration Awards
Commenters, including labor organizations, objected to giving the
HSLRB jurisdiction over exceptions to arbitration awards and requested
that FLRA retain such jurisdiction. We adopted this suggestion in part,
revising the regulations to give FLRA jurisdiction over exceptions that
do not involve the exercise of management rights and/or the scope and
duty to bargain. Because those matters involving the exercise of
management rights and/or the scope and duty to bargain potentially
impact Department operations, we believe that they should remain within
the purview of the HSLRB. This will also facilitate the HSLRB's
development of a single, integrated dispute resolution process for such
matters. During the meet-and-confer process, participating labor
organizations also suggested that we develop procedures to resolve
disputes over whether exceptions to a particular arbitration award
involve the exercise of a management right or the duty to bargain. The
final regulations include such procedures at Sec. 9701.522(b). (See
Section 9701.509--Powers and Duties of the HSLRB and Section 9701.510--
Powers and Duties of the Federal Labor Relations Authority.)
Section 9701.527--Savings Provision
We have revised this section to clarify our intent that any remedy
that applies after the date of coverage under any provision of subpart
E and that is in conflict with applicable provisions of this part is
not enforceable.
Subpart F--Adverse Actions
General Comments
Some commenters felt that the proposed regulations would adversely
impact due process rights, equal employment opportunity claims,
whistleblowing claims, and recruiting and retention efforts. We
disagree. Under the Homeland Security Act of 2002, DHS is prohibited
from waiving or modifying any provision relating to prohibited
personnel practices or merit system principles, including reprisal
against whistleblowing or discrimination. We retained these protections
intact. The Homeland Security Act also requires DHS to ensure that
employees are afforded the protections of due process, and we have done
so, not only for actions that trigger due process protections, but for
all covered adverse actions. We have retained these protections as
well, assuring an employee a right to notice of a proposed adverse
action, a right to reply, a right to a final written decision, and a
right to appeal the action. Although we have made changes to the
proposed regulations, those changes preserve due process and guarantee
other legal protections, and as a result, we do not believe they will
have any effect on recruiting and retention efforts.
One commenter expressed concern that the new time limits could lead
to longer processing times and more burdensome delays for other Federal
agencies attempting to defend their adverse actions before MSPB. We
intend to conduct an evaluation of the appellate procedures after they
have been in effect for 2 years in order to determine, among other
things, whether additional modifications to 5 U.S.C. chapter 77 and/or
these regulations should be considered.
Other Comments on Specific Sections of Subpart F
Section 9701.601--Purpose
Section 9701.601 of the proposed regulations revised the number of
days for a furlough from 30 days or less to 90 days or less. Commenters
noted that this revision conflicts with current Governmentwide rules
where a furlough of more than 30 days requires the use of reduction in
force procedures. This conflict was not intended. We have revised the
final regulations to retain the current number of days for a furlough
action as 30 days or less. We have also clarified this section by
including a statement that DHS may issue
[[Page 5312]]
implementing directives to carry out the provisions of this subpart.
Section 9701.602--Waivers
Section 9701.602 of the proposed regulations specified the
provisions of title 5, U.S. Code, that are waived for employees covered
by the DHS adverse action system established under subpart F. We have
revised this section to be consistent with language used in other
waivers sections of the regulations.
Section 9701.603--Definitions
Section 9701.603 of the proposed regulations defined an ``initial
service period'' as the 1 to 2 years employees must serve upon
appointment to DHS before being covered by subpart F, and counts prior
Federal service toward this requirement. We have clarified the initial
service period in a new separate section in the final regulations,
numbered as Sec. 9701.605.
Labor organizations requested that we retain the current
probationary period of one year as sufficient time to evaluate
employees. However, we note that the initial service period is not a
probationary period. A probationary period is an extension of the
examination process. An initial service period focuses on an employee's
developmental progress. Accordingly, we have retained the initial
service period for those jobs that have an extended (12- to 24-month)
developmental cycle, in order to allow the Department sufficient time
to determine whether a trainee has the potential to acquire the
competencies required at the full performance level of the employee's
occupation and should be retained. However, in response to the concerns
of labor organizations, we have specified that initial service periods
will be standardized for particular occupations via DHS implementing
directives, rather than left to individual supervisory discretion. We
have also revised the definition to specify that the 1- to 2-year
initial service period (ISP) applies only to employees selected for a
designated DHS position in the competitive service, and to credit
relevant prior Federal service towards satisfactory completion of the
ISP.
We use the term ``competencies'' in this subpart, and have added
this term to the definitions. It is identical to the definition of that
term in Sec. 9701.404 concerning the DHS performance management
system. Additionally, we use the identical definition of ``band'' found
at Sec. 9701.204, rather than referring the reader to that section for
the definition. We have also included the current title 5 definitions
for ``probationary period,'' ``current continuous service,'' ``similar
positions,'' and ``trial period'' to coincide with the use of these
terms in subpart F of the final regulations.
Finally, we have added definitions of adverse action, mandatory
removal offense (MRO), and Mandatory Removal Panel (MRP).
Section 9701.604--Coverage
Section 9701.604(b)(1) of the proposed regulations indicated that
employees in the competitive service who are removed during an initial
service period are subject to the limited appeal rights under 5 CFR
part 315. Labor organizations observed an inconsistency with this
section and Sec. 9701.704(c) which indicates that employees in the
competitive service who are removed during the first year of an initial
service period are covered by 5 CFR part 315, while employees removed
during the second year of an initial service period are not covered by
either part 315 or subpart G of these regulations. As a result, the
labor organizations noted, those employees could conceivably have fewer
rights in their second year of service than their first year of
service. We have clarified this drafting error in Sec. 9701.704(c) of
the final regulations to reflect that the applicable appeal procedures
of 5 CFR part 315 apply during the entire initial service period. We
have also moved the reference to 5 CFR part 315 coverage in Sec.
9701.604(b)(1) of the proposed regulations to Sec. 9701.605(c) in the
final regulations.
We have added a new paragraph (b)(15) to clarify that
classification determinations, including classification determinations
under subpart B, are not subject to adverse action procedures under
subpart F. Under Sec. 9701.222, classification determinations under
subpart B are subject to DHS and/or OPM review and are not subject to
further review or appeal.
We revised Sec. 9701.604(d) to add employees appointed and serving
under Executive Order 11203, members of the Homeland Security Labor
Relations Board, and members of the Mandatory Removal Panel to the list
of exclusions. The members of the HSLRB and the Panel may be removed
only under the same conditions and according to the same procedures
applicable to members of the Federal Labor Relations Authority and the
Merit Systems Protection Board, respectively, as specified in the
relevant sections of the two subparts.
Section 9701.604(d)(1) of the proposed regulations excluded
employees serving a term, temporary, or otherwise time-limited
appointment. During the meet-and-confer process, participating labor
organizations requested that the regulation exclude employees serving a
time-limited appointment, except those employees who have completed a
trial period. We have partially adopted this suggestion. Preference
eligible employees who are serving a time-limited appointment of any
length (including a term appointment) and who have completed a
probationary or trial period are covered by subpart F. Non-preference
eligible employees who are on a time-limited appointment of longer than
2 years and who have completed a trial period are also covered by
subpart F except as otherwise provided by Sec. Sec. 9701.604 and
9701.605. We have revised this paragraph accordingly and have also
redesignated this paragraph as Sec. 9701.604(d)(4).
Section 9701.604(d)(2) of the proposed regulation provided that
preference eligible employees would be covered by subpart F adverse
action procedures, as well as subpart G appeal procedures, after their
first year of an initial service period, regardless of the length of
the initial service period. During the meet-and-confer process and in
their comments, participating labor organizations suggested that the
protections for preference eligible employees apply to all DHS
employees. We have not adopted this suggestion. Placing non-preference
eligible employees on equal footing with preference eligible employees
in this instance would diminish preference status. We have redesignated
this paragraph as Sec. 9701.604(d)(1) in the final regulations, and
revised it to exclude employees in the competitive service who are
serving a probationary, trial, or initial service period. We have also
moved the reference to 5 CFR part 315 coverage in Sec. 9701.604(d)(2)
of the proposed regulations to Sec. 9701.605(c) in the final
regulations.
To further clarify coverage of subpart F, we created parallel
provisions to 5 U.S.C. 7511 that retain the adverse action procedures
for employees in the excepted service. These provisions are included at
Sec. 9701.604(d)(2) and (d)(3) of the final regulations.
Section 9701.605--Standard for Action
We redesignated this section as Sec. 9701.606 due to insertion of
the new section on ``Initial service period'' at Sec. 9701.605. (See
discussion of ISP in Section 9701.603--Definitions.)
Section 9701.605 of the proposed regulations provided that DHS may
take an adverse action only when it establishes a factual basis for the
action and a connection between the action and a legitimate
Departmental interest.
[[Page 5313]]
During the meet-and-confer process, the participating labor
organizations requested that the long-standing ``efficiency of the
service standard'' be retained. We agree. We originally deleted the
efficiency of the service standard in the proposed regulations to allay
any confusion that might arise from case law linking this standard with
the authority to review and mitigate penalties, an authority we did not
provide in the proposed regulations. However, because we have revised
the proposed regulations to provide for a limited authority to mitigate
in other than mandatory removal offenses, we have also revised the
proposed regulations to retain the current efficiency of the service
standard. See the discussion on mitigation in the Major Issues section
of the Supplementary Information.
Section 9701.606--Mandatory Removal Offenses
This section has been redesignated as Sec. 9701.607. Section
9701.606 of the proposed regulations provided that the Secretary in his
or her sole, exclusive, and unreviewable discretion will identify
offenses that have a direct and substantial impact on the ability of
the Department to protect homeland security. The Secretary intends to
consult with the Department of Justice in preparing the list of
offenses. An employee who commits such an offense must be removed from
Federal service, and must be provided due process including third-party
review by an independent DHS Panel. Commenters suggested that the
Secretary would have too much discretion in such cases, that removal
may be too harsh, and that due process would be diminished. We disagree
and have retained this provision, including the Secretary's sole,
exclusive, and unreviewable discretion to mitigate.
During the meet-and-confer process, participating labor
organizations initially opposed this provision. However, upon their
review of a tentative list of MROs, they agreed in concept. They also
agreed that the proposed regulations met due process requirements. In
that regard, the participating labor organizations recommended that the
final list of MROs be publicized and communicated annually to
employees. We agree. We will publish the final list of MROs in the
Federal Register and will include it in DHS implementing directives; we
have also revised Sec. 9701.607(a) to provide for making them known to
employees annually. See the discussion on ``Mandatory Removal
Offenses'' in the Major Issues section of the Supplementary
Information.
Also in response to proposals made by labor organizations during
the meet-and-confer process, we added a requirement in Sec.
9701.607(c) that a proposed notice of a MRO be reviewed and approved by
the Secretary or designee prior to issuance of the notice to the
employee. In addition, we moved the reference to the Secretary's
mitigation authority from paragraph (b) to a new paragraph (d).
Finally, we have added a new paragraph (f) to clarify that the current
authority to remove an employee based on the revocation of a security
clearance is not limited by the establishment of MROs.
Section 9701.607--Procedures
We redesignated this section as Sec. 9701.608. Section 9701.607 of
the proposed regulations provided shorter advance notice and reply
periods. Labor organizations and other commenters requested that we
retain the current notice and reply periods (currently 30 and 7 days,
respectively) because they believed proposed shorter periods deprive
employees of a full and fair defense or would make it extremely
difficult for employees to enforce their rights. However, we believe
that one of the fundamental objectives of the Homeland Security Act was
to streamline the process for taking an adverse action, and as a
result, we have retained a minimum notice period of 15 days as
originally proposed. However, based on the comments of participating
labor organizations, we have extended the reply period from a minimum
of 5 days to a minimum of 10 days. Moreover, employees may always
request an extension of their reply period.
We have revised the notice period in paragraph (a) for mandatory
removal offenses from ``at least 5 days'' to ``at least 15 days'' to be
consistent with the notice period for other adverse actions. Should DHS
need longer notice periods when taking an adverse action, the
regulations provide that flexibility as well in that the notice periods
are only minimum required timeframes. Similarly, we have revised the
reply periods in paragraph (b) for both mandatory removal offenses and
other adverse actions from ``at least 5 days'' to ``at least 10 days''.
The net result is a shorter notice period coupled with a longer, but
concurrent, reply period than currently provided under 5 U.S.C. 7513.
The only situation where a shorter 5-day notice and reply period is
permitted is where there is reasonable cause to believe the employee
has committed a crime for which a sentence of imprisonment may be
imposed. This ``crime provision'' is patterned after that provided for
in the current law at 5 U.S.C. 7513.
Section 9701.607 of the proposed regulations established a single,
integrated process for taking adverse action based on unacceptable
performance and for disciplinary reasons, and eliminated the
requirement for a formal, set period for an employee to improve
performance before management can take an adverse action. Some
commenters indicated that the requirement for an opportunity to improve
should be retained, while another commenter agreed with having the
single process. We have not revised the proposed regulations in this
regard. However, the final regulations continue to provide for the
optional use of performance improvement periods.
Section 9701.607(b)(4) of the proposed regulation provided that the
Department may disallow an employee's choice of representative when
that choice could compromise security. One commenter expressed concern
that employees would not be able to be represented by attorneys who did
not have security clearances. Labor organizations participating in the
meet-and-confer process raised similar concerns. Generally, we agree
and have revised the regulation to reflect 5 CFR 752.404(e). However,
we have limited the applicability of this section to mandatory removal
offenses because of their very nature. We have also clarified that an
employee must designate his or her representative in writing.
Section 9701.607(b)(5) of the proposed regulations provided that
the Department must comply with 5 CFR part 339 when addressing an
employee's medical condition relevant to a proposed adverse action. A
commenter suggested that we include language to clarify the
Department's compliance requirement with the Rehabilitation Act found
at 29 CFR 1614.203. During the meet-and-confer process, participating
labor organizations suggested that we edit Sec. 9701.607(b)(5) and (c)
so that it reads as it currently does in 5 CFR part 752. We agree and
have revised this section in the final regulations to better clarify
the Department's required compliance with the Rehabilitation Act, 29
CFR 1614.203. We have also revised Sec. 9701.607(b)(5)(i) and (c) of
the proposed regulations so that they read as they currently do in 5
CFR part 752.
Finally, to aid the reader, we have split the material in this
section of the regulations into a total of four sections (Sec.
9701.608--Procedures, Sec. 9701.609--Proposal notice, Sec. 9701.610--
Opportunity to reply, and Sec. 9701.611--
[[Page 5314]]
Decision notice), and we have redesignated the subsequent sections
accordingly.
Section 9701.608--Departmental Record
We redesignated this section as Sec. 9701.612. Section 9701.608(a)
of the proposed regulations provided that the Department must retain a
record of the adverse action pursuant to the General Records Schedule
and the Guide to Processing Personnel Actions. One commenter asked that
we clarify whether an employee's SF-50 and Official Personnel Folder
(OPF) will be documented. We have revised this section in the final
regulations to correct the citation from the Guide to Processing
Personnel Actions to the Guide to Personnel Recordkeeping. The
Department will comply with the requirements for documenting an
employee's SF-50 and OPF as provided by the General Records Schedule
and the Guide to Personnel Recordkeeping.
Section 9701.609--Suspension and Removal
We redesignated this section as Sec. 9701.613. Section 9701.609 of
the proposed regulations provided procedures for taking an adverse
action based on national security reasons, as provided by 5 U.S.C.
7532. Labor organizations suggested that we delete this section because
they believe Congress needs to designate DHS as one of the agencies
with the authority to use these special procedures. We have not revised
this section in the final regulations. Such a designation is not
necessary because Congress already gave the Department the authority to
waive and/or modify 5 U.S.C. chapter 75 through the Homeland Security
Act.
We revised paragraph (c) to clarify that employees who have
completed their initial service period, probationary period, or trial
period are covered by this section.
Section 9701.614--Savings Provision
We have added this new section in the final regulations to clarify
that this subpart does not apply to adverse actions proposed prior to
the date of an affected employee's coverage under this subpart.
Subpart G--Appeals
Section 9701.701--Purpose
Section 9701.701 of the proposed regulations specified that the
purpose of subpart G is to provide regulations implementing the
provisions of 5 U.S.C. 9701(a) through (c) and (f) concerning the
Department's appeals system for certain adverse actions covered under
subpart F. During the meet-and-confer process, the participating labor
organizations recommended that we either delete this section or revise
it to accurately reflect the text from the Homeland Security Act of
2002. We agree and have deleted it as unnecessary, given that it is a
legal requirement.
Section 9701.702--Waivers
Section 9701.702 specifies the provisions of title 5, U.S. Code,
that are waived for employees covered by the DHS appeals system
established under subpart G. We have revised this section to be
consistent with language used in other waivers sections of the
regulations.
This section also specifies that the appellate procedures in
subpart G replace those of the Merit Systems Protection Board (MSPB) to
the extent MSPB's procedures are inconsistent with these regulations,
and that MSPB must follow these regulations until it issues conforming
regulations. In this regard, commenters questioned how the deadlines
for handling DHS cases would impact MSPB's handling of non-DHS cases
and suggested that rather than include the streamlined procedures in
the final regulation, DHS and MSPB should instead enter into a
voluntary memorandum of understanding streamlining the MSPB's
procedures. In addition, during the meet-and-confer process, the
participating labor organizations questioned the authority of DHS and
OPM to waive, modify, or supersede MSPB's appellate procedures or
otherwise diminish its authority to take final action on any matter
within its jurisdiction. However, they concurred with the substance of
the streamlined procedures contained in the regulations. We believe
that sufficient legal authority exists to modify MSPB procedures.
Moreover, as required by the Homeland Security Act, we have consulted
extensively with MSPB on these matters, and MSPB has indicated an
intention to issue its own conforming regulations pursuant to this
section.
The participating labor organizations also suggested that this
section be amended to clarify that appeals of actions not covered by
subpart F continue to be covered by 5 U.S.C. 7701. We have not revised
this section. We believe that the proposed regulation is clear with
respect to the continued applicability of 5 U.S.C. 7701 to actions not
covered by subpart F.
We also received numerous comments expressing concern that limiting
the discretion of MSPB to mitigate penalties would make MSPB review
``practically meaningless,'' and would decrease the credibility of
MSPB. The labor organizations participating in the meet-and-confer
process also argued strongly for retaining MSPB authority to mitigate,
identifying this as one of their most important priorities. Based on
these comments and concerns, we have reconsidered this provision and
have attempted to balance the equity issues raised by commenters and
participating labor organizations with the Department's critical
homeland security mission. In this regard, we have decided to authorize
MSPB to mitigate penalties, but only under certain limited
circumstances, and have thus included a standard for mitigation that is
more stringent than current case law. See the discussion on mitigation
in the Major Issues section of the Supplementary Information.
Commenters and participating labor organizations also recommended
that we return to the status quo with respect to the criteria for the
award of attorney fees. We agree that awards of attorney fees should be
based on current requirements and have revised the final regulations
accordingly. See Sec. Sec. 9701.706 and 9701.707.
Section 9701.704--Coverage
Section 9701.704(c) of the proposed regulation provided that the
removal of an employee in the competitive service during an initial
service period is subject to the provisions of 5 CFR 315.806. During
the meet-and-confer process, participating labor organizations
requested that we delete the initial service period and replace it with
the existing probationary or trial period. As previously discussed with
regard to Sec. 9701.604, we have retained the initial service period
in the final regulations.
Section 9701.705--Alternative Dispute Resolution
Section 9701.705 of the proposed regulations provided for the
development of alternative dispute resolution (ADR) methods to address
employee-employer disputes arising in the workplace, including those
which may involve disciplinary actions. Commenters endorsed the concept
of ADR and we continue to provide for these techniques in the final
regulations, as appropriate. Participating labor organizations during
the meet-and-confer process requested that the Department negotiate
with the labor organization(s) before implementing a new ADR process or
making changes to an existing ADR process. We have revised this section
to add that ADR will be subject to collective bargaining to the extent
permitted by subpart E.
[[Page 5315]]
Section 9701.706--MSPB Appellate Procedures
This section established streamlined MSPB appellate procedures and
provided for such things as limited discovery, summary judgment, and
expedited timeframes. The process for computing number of days allowed
for filing under the expedited timeframes, however, will be consistent
with current MSPB procedures. For example, if a filing deadline falls
on a weekend or Federal holiday, the filing period will include the
first workday after that date.
During the meet-and-confer process, participating labor
organizations questioned our authority to establish streamlined
procedures to replace current MSPB regulations. However, those labor
organizations ultimately agreed that these streamlined procedures would
serve appellants without compromising fundamental fairness.
Accordingly, we have retained all of these provisions, with specific
revisions as follows.
Section 9701.706(d)(1) of the proposed regulations provided that
the Department's adverse action decision must be sustained if it is
supported by substantial evidence. Several commenters, including labor
organizations, commented that the reduction in the standard of proof
from a preponderance of the evidence to substantial evidence violated
the fundamental notions of fairness and due process. During the meet-
and-confer process, participating labor organizations also identified
this issue as one of major import and proposed that we revert to the
current ``preponderance'' standard. Based on those discussions, we have
revised this paragraph to retain the current preponderance of the
evidence standard. See discussion on burden of proof in the Major
Issues section of the SUPPLEMENTARY INFORMATION.
Section 9701.706(d)(2) of the proposed regulations also provided
that the MSPB may not reverse a Department action based on the way the
charge is labeled or the conduct characterized, provided the employee
is on notice of the facts sufficient to respond to the factual
allegations of the charge. During the meet-and-confer process,
participating labor organizations expressed concern that this proposal
would violate the right of employees to due process in that the
Department would not be required to prove all the specific elements of
a charge. Although we do not agree, we have revised this section to
delete the provision regarding the framing of charges or charge-
labeling.
Section 9701.706(h) of the proposed regulations established a new
standard for recovering attorney fees which was intended to simplify
the process. Comments received on the proposed regulations and during
the meet-and-confer process argued that the new standard was
unreasonable, beyond the authority provided under the Homeland Security
Act, and would discourage employees from challenging wrongful
terminations. As noted previously, we have revised this paragraph to
retain the current statutory standard under which such fees may be
awarded.
Section 9701.706(i)(1) of the proposed regulations provided that
the MSPB may not require settlement discussions in connection with any
appealed action. A commenter remarked that settlement can contribute to
fast and simple case resolution. We agree that settlement can aid in
timely case resolution. However, we have not revised this section
because we believe strongly that settlement should be a completely
voluntary decision made by the parties on their own, based on their
individual interests.
Section 9701.706(k)(3) of the proposed regulations provided for
limited discovery. A commenter suggested that the proposed discovery
changes were ``one-sided,'' and should be reconsidered. Another
commenter thought the proposed changes failed to address the
disproportionate impact of current discovery procedures on Federal
agencies. The commenter suggested that the regulations provide for
motions by DHS to preclude factual assertions or legal arguments made
by appellants in their prehearing submissions, or at the hearing, where
they have failed to respond to DHS discovery requests seeking complete
information on their defenses to the charges against them and their
affirmative defenses. We believe we have this authority now and have
decided not to revise this section. These rules of discovery are
derived from the Federal Rules of Civil Procedure and apply equally to
all parties.
Section 9701.706(k)(5) of the proposed regulations provided that
the MSPB must render summary judgment on the law without a hearing when
there is no dispute of material fact. We received comments from labor
organizations and others expressing concern that this change would
violate or ``scrap'' employee due process rights. We have not revised
this section. Summary judgment will help to significantly expedite and
streamline the appeals process. When material facts are in dispute, a
hearing will be held and a transcript will be kept (as is the case
today, a tape recording is sufficient for this purpose). Thus, the
regulations retain due process protections.
Section 9701.706(k)(6) of the proposed regulations also established
procedures for appeals in which the MSPB sustains fewer than all of the
Department's charges. A commenter observed that the proposal would
effectively eliminate MSPB review of the charges. We have revised this
section to provide for limited mitigation, and eliminated the special
procedures for processing of MSPB decisions that sustain fewer than all
of the charges. See discussion on mitigation in the Major Issues
section of the Supplementary Information.
We moved the reference to judicial review to a new paragraph on
judicial review at Sec. 9701.706(m).
We also received suggestions from commenters to clarify that
whistleblower and prohibited personnel practice protections are
unchanged. We have not revised the proposed regulations in response to
these suggestions because we believe that the waiver sections of this
subpart clearly identify the provisions of law that we have waived.
Whistleblower and prohibited personnel practice protections are
unchanged.
Section 9701.707--Appeals of Mandatory Removal Actions
Section 9701.707 of the proposed regulations established the
appellate procedures for a mandatory removal action (MRO), including
creation of the DHS independent panel to decide MRO appeals. Commenters
and participating labor organizations stated that the MRO panel would
not be transparent, accountable, or objective, nor would it protect
employee due process rights. A commenter suggested that the judicial
review issue could be resolved by providing for MSPB review of
mandatory removal offenses. Another commenter suggested that the
Department consider having members of the panel removed only by a
majority decision of the panel, and that we stagger the terms of the
members to ensure a degree of continuity.
During extensive discussions in the meet-and-confer process,
participating labor organizations emphasized that the nomination
process for that panel should be credible, transparent, and not subject
to politicization. We agree and have established a process for
appointing Panel members by the Secretary that includes labor
organization involvement in the nomination of candidates. (See Sec.
9701.708.) The process for appointing members of the Mandatory Removal
Panel (MRP) mirrors those for
[[Page 5316]]
appointing members of the Homeland Security Labor Relations Board, as
described in Sec. 9701.508 of the final regulations. Specific
revisions include--
Sec. 9701.708(a), which provides that the MRP is a
standing panel composed of three members who are appointed by the
Secretary for fixed terms. The members must be independent,
distinguished citizens of the U.S. who are well known for their
integrity, impartiality, and expertise in labor or employee relations
and law enforcement/homeland security. Also, members serve for 3-year
staggered terms.
Sec. 9701.708(b), which provides that the Secretary
appoints the Chair of the MRP.
Sec. 9701.708(c), which authorizes labor organizations to
submit lists of proposed nominees to serve as non-Chair MRP members.
In addition, Sec. 9701.707(b) provides that all members of the MRP
will hear a particular appeal and will decide the appeal based on a
majority vote of the members. The MRP must provide a hearing, and may
not mitigate the Department's penalty. An employee may petition the
Equal Employment Opportunity Commission to review the MRP decision as a
``mixed case'' under procedures established in 5 U.S.C. 7702, except
that a Special Panel convened under those procedures will include a
member of the MRP and not MSPB.
The proposed regulations also discussed judicial review of MRO
Panel decisions and posed two options for consideration by commenters.
One option would have the regulations remain silent with regard to
judicial review, thus allowing existing governing legal principles to
determine the circumstances under which there would be judicial review.
The second option would have required MSPB review, under the same
procedures and standards for judicial review of MSPB decisions as a
condition precedent to Federal Circuit jurisdiction.
One commenter noted that under the first option, judicial review
would most likely be available under 5 U.S.C. 704. However, another
commenter recommended the second option because, according to the
commenter, the first option could permit review in a broad array of
Federal courts of competent jurisdiction, resulting in greater second-
guessing of DHS management decisions, as well as the creation of
fragmented and inconsistent case law in this area. This commenter
favored the second option because it has the advantage of keeping
interpretation and enforcement of the DHS regulations within the
existing MSPB/Federal Circuit review structure and therefore promises
much greater uniformity and consistency than the first option. The
commenter cautioned, however, that based on its experience with the
Federal Circuit, that court would likely subject to very searching and
critical scrutiny any Panel claims to special deference under the U.S.
Supreme Court's decision in Chevron U.S.A., Inc. v. Natural Resources
Defense Council, Inc., 467 U.S. 837 (1984)). Therefore, this commenter
believes the likelihood of the court respecting those claims is
somewhat debatable. The labor organizations did not have any
recommendations in this regard during the meet-and-confer process.
Accordingly, after further consultation with MSPB (as well as FLRA with
regard to subpart E), we have adopted the second option in revising
Sec. 9701.707(d), which now provides that either party may request
review of the record of an MRP decision by MSPB. In conducting its
review, MSPB will accept the findings of fact and interpretations of
these regulations made by the MRP. The provision also establishes a 30-
day time limit for MSPB to render its decision. This 30-day time limit
is mandatory, except that MSPB may extend its time for review by a
maximum of 15 additional days if it determines that a case is unusually
complex, or that an extension is necessary to prevent any prejudice to
the parties; however, the regulations do not permit any further
extension. In addition, Sec. 9701.707(f) was revised to provide for
judicial review under 5 U.S.C. 7703 of any final MSPB order or decision
on an MRO. See the discussion on mandatory removal offenses and
mandatory removal panel in the Major Issues section of the
Supplementary Information.
Section 9701.709--Savings Provision
We have added this new section in the final regulations to clarify
that this subpart does not apply to adverse actions proposed prior to
the date of an affected employee's coverage under this subpart.
Next Steps
The mission of homeland security has never been more important.
Whether it be the ability to appropriately compensate and reward our
top performers, the ability to attract top talent from industry to our
key mission areas, the ability to more rapidly respond to workforce and
organizational requirements, or the ability to identify and establish
career progression opportunities for all of the workforce, the
flexibilities contained in the new DHS regulations are a top priority.
These regulations affect people, processes, and technology across
the Department and represent a significant change management
undertaking. The communications and training requirements to ensure
success are enormous. DHS will apply the new labor relations, adverse
actions, and appeals provisions no sooner than 30 days, but no later
than 180 days, after the publication of these final regulations (unless
the Secretary and the Director jointly approve a later date). The
Preamble to the proposed regulations also outlined a tentative schedule
for implementing classification, pay and performance management system
changes, starting with employees of DHS Headquarters, Science and
Technology and Intelligence Analysis and Infrastructure Protection, as
well as GS employees of the Coast Guard (Phase 1).
The proposed regulations contemplated conversion of these groups of
employees to a new performance management system in the fall of 2004,
with a subsequent conversion to the new classification and pay system
in early 2005. At that time, affected employees would have been
converted to the new system with a one-time within-grade increase buy-
out and would have received their first performance-based pay increase
in the summer/fall of 2005, to coincide with the completion of their FY
2005 performance management cycle. The first annual rate range
adjustment for these employees was contemplated for early 2006.
A second phase would convert all remaining GS employees to new
performance management provisions in fall 2005, with conversion to new
job evaluation and pay systems in early 2006. The first annual rate
range adjustment for Phase 2 employees was contemplated for early 2007.
However, many commenters voiced concern over the proposed schedule
for conversion to the new pay and performance systems. Specific
concerns were noted regarding the ability of the Department to
adequately provide DHS leaders with the requisite training and skills
that would be required to manage a pay-for-performance system during
the Phase 1 proposed schedule. Other concerns included the need for
additional time to plan for and conduct a thorough evaluation of Phase
1, making necessary course corrections prior to expanding the scope of
the deployment effort to all remaining GS employees. Additionally,
during the meet-and-confer process, participating
[[Page 5317]]
labor organizations repeatedly stated their case for conducting a pilot
test of the systems prior to converting bargaining unit employees.
DHS is committed to the successful implementation of these
regulations and to addressing employee concerns. Accordingly, we have
revised our implementation schedule with respect to pay,
classification, and performance management. The revised implementation
plan has been adjusted to provide the majority of employees with at
least 2 full years under the new performance management system before
the results of performance ratings are used for pay purposes.
The performance management cycle for all employees (except civilian
employees of the U.S. Coast Guard) will run concurrently with the
fiscal year (October through September). Under the revised schedule,
the new DHS performance management system will be applied to as many
DHS employees as feasible during calendar year 2005. No later than
October 2006, the new DHS performance management system will be applied
to all covered employees.
We have also redefined the phases for implementation of the pay-
for-performance system. The first phase will include covered employees
at DHS Headquarters, Information Analysis and Infrastructure
Protection, Science and Technology, Emergency Preparedness and
Response, and the Federal Law Enforcement Training Center. The second
phase will include covered employees at the U.S. Secret Service and the
U.S. Coast Guard. The third will include covered employees at Customs
and Border Patrol, Immigration and Customs Enforcement, and Citizenship
and Immigration Services. Conversion to the new pay system will occur
for employees in the first phase in early calendar year 2006. The first
performance-based pay adjustments under the new DHS pay system will
occur at the beginning of calendar year 2007. Employees in the second
phase will be converted to the new pay system in early calendar year
2007; performance-based pay adjustments for these employees will occur
at the beginning of calendar 2008. Employees in the third phase will be
converted to the new pay system in early calendar year 2008;
performance-based pay adjustments for these employees will occur at the
beginning of calendar 2009.
This revised schedule will provide (1) additional time for
implementation and evaluation of the pay-for-performance system and (2)
adequate lead time to train DHS managers and employees on their pay-
for-performance responsibilities under the new system.
Moving Forward
Every day the men and women of DHS work tirelessly to maintain the
safety and security of the Nation. They patrol 195,000 miles of
coastline and navigable waters and 7,500 miles of borderline with
Canada and Mexico. They inspect tons of imported food products and
review thousands of visa and green card applications. They work with
States, cities, and citizens to help them prepare for and recover from
emergencies such as tornados and hurricanes. They review dozens of
technology proposals, some 500 cyber security reports, and more than
1,000 pieces of intelligence, maintaining constant daily communication
with authorities throughout the country to safeguard our Nation's most
critical infrastructure and assets.
With the enactment of the Homeland Security Act of 2002, DHS
Secretary Tom Ridge and OPM Director Kay Coles James made a commitment
that the Department's new HR system would be the result of a
collaborative and inclusive process involving managers, employees, the
Department's largest labor organizations, and a broad array of
stakeholders and experts from the Federal sector and private industry
in order to provide the best system possible for the men and women of
Homeland Security. The final regulations governing the new human
resources system for DHS are a testament to that commitment to
carefully weigh, and include as appropriate, the constructive
recommendations of the labor organizations with which DHS and OPM
collaborated throughout the entire design and development process, as
well as others who provided comments. The Secretary and the Director
are confident that these regulations will enable DHS to--
Act swiftly and decisively in response to mission needs,
Recognize and reward high performance,
Adapt readily and rapidly to the changing nature of the
Department's work,
Attract and maintain a highly skilled and motivated
workforce, and
Protect the rights guaranteed by the Homeland Security
Act.
Regulatory Requirements
E.O. 12866, Regulatory Review
DHS and OPM have determined that this action is a significant
regulatory action within the meaning of Executive Order 12866 because
there is a significant public interest in revisions of the Federal
employment system. DHS and OPM have analyzed the expected costs and
benefits of the HR system to be adopted for DHS, and that analysis is
presented here.
Integral to the administration of the new DHS pay system is a
commitment to ``manage to budget.'' Accordingly, the new pay system
carries with it potential implications relative to the base pay of
individual employees, depending upon local labor market conditions and
individual, team, and organizational performance. However, actual
payroll costs under this system will be constrained by the amount
budgeted for overall DHS payroll expenditures, as is the case with the
present GS pay system. Moreover, assuming that a normal, static
population will exist over time, DHS anticipates that accessions,
separations, and promotions will net out and, as with the present
system, not add to the overall cost of administering the system.
The creation of a new DHS pay and performance management system
will, however, result in some initial implementation costs, including
some payroll related conversion costs (e.g., the ``buyout'' of within-
grade increases). In addition, DHS will incur costs relating to such
matters as training (including the cost of overtime pay required to
backfill for front-line DHS employees during periods of training),
reprogramming automated payroll and HR information systems, developing
and conducting pay surveys to determine future pay adjustments in
relation to the labor market, and conducting employee education and
communication activities. The extent of these costs will be directly
related to the level of comprehensiveness desired by DHS, especially in
relation to training in the new system and developing and conducting
labor market pay surveys for the wide variety of jobs in DHS.
Programming costs relating to automating the payroll, HR
information, and performance management systems and for administering
pay in a performance-focused pay system should not be extensive, since
such systems already are in use elsewhere in the Federal Government and
could be adapted for use by DHS. In some cases, however, DHS could
benefit from contracting with outside providers for the development and
maintenance of such systems.
DHS estimates the overall costs associated with implementing the
new DHS HR system--including the development and implementation of a
new pay and performance system, the
[[Page 5318]]
conversion of current employees to that system, and the creation of the
new Homeland Security Labor Relations Board--will be approximately $130
million through FY 2007 (i.e., over a 4-year period); less than $100
million will be spent in any 12-month period.
The primary benefit to the public of this new system resides in the
HR flexibilities that will enable DHS to build a high-performance
organization focused on mission accomplishment. The new job evaluation,
pay, and performance management system provides DHS with an increased
ability to attract and retain a more qualified and proficient
workforce. The new labor relations, adverse actions, and appeals system
affords DHS greater flexibility to manage its workforce in the face of
constantly changing threats to the security of our homeland. Taken as a
whole, the changes included in these final regulations will result in a
contemporary, merit-based HR system that focuses on performance,
generates respect and trust, and above all, supports the primary
mission of DHS--protecting our homeland.
Regulatory Flexibility Act
DHS and OPM have determined that these regulations will not have a
significant economic impact on a substantial number of small entities
because they will apply only to Federal agencies and employees.
E.O. 12988, Civil Justice Reform
This regulation is consistent with the requirements of E.O. 12988.
The regulation clearly specifies the effects on existing Federal law or
regulation; provides clear legal standards; has no retroactive effects;
specifies procedures for administrative and court actions; defines key
terms; and is drafted clearly.
E.O. 13132, Federalism
DHS and OPM have determined that these regulations will not have
Federalism implications because they will apply only to Federal
agencies and employees. The regulations will not have financial or
other effects on States, the relationship between the Federal
Government and the States, or the distribution of power and
responsibilities among the various levels of government.
Unfunded Mandates
These regulations will not result in the expenditure by State,
local, or tribal governments of more than $100 million annually. Thus,
no written assessment of unfunded mandates is required.
List of Subjects in 5 CFR Part 9701
Administrative practice and procedure, Government employees, Labor
management relations, Labor unions, Reporting and recordkeeping
requirements, Wages.
Department of Homeland Security.
Tom Ridge,
Secretary.
Office of Personnel Management.
Kay Coles James,
Director.
0
Accordingly, under the authority of section 9701 of title 5, United
States Code, the Department of Homeland Security and the Office of
Personnel Management amend title 5, Code of Federal Regulations, by
establishing chapter XCVII consisting of part 9701 as follows:
CHAPTER XCVII--DEPARTMENT OF HOMELAND SECURITY HUMAN RESOURCES
MANAGEMENT SYSTEM (DEPARTMENT OF HOMELAND SECURITY--OFFICE OF PERSONNEL
MANAGEMENT)
PART 9701--DEPARTMENT OF HOMELAND SECURITY HUMAN RESOURCES
MANAGEMENT SYSTEM
Subpart A--General Provisions
Sec.
9701.101 Purpose.
9701.102 Eligibility and coverage.
9701.103 Definitions.
9701.104 Scope of authority.
9701.105 Continuing collaboration.
9701.106 Relationship to other provisions.
9701.107 Program evaluation.
Subpart B--Classification
General
9701.201 Purpose.
9701.202 Coverage.
9701.203 Waivers.
9701.204 Definitions.
9701.205 Bar on collective bargaining.
Classification Structure
9701.211 Occupational clusters.
9701.212 Bands.
Classification Process
9701.221 Classification requirements.
9701.222 Reconsideration of classification decisions.
Transitional Provisions
9701.231 Conversion of positions and employees to the DHS
classification system.
9701.232 Special transition rules for Federal Air Marshal Service.
Subpart C--Pay and Pay Administration
General
9701.301 Purpose.
9701.302 Coverage.
9701.303 Waivers.
9701.304 Definitions.
9701.305 Bar on collective bargaining.
Overview of Pay System
9701.311 Major features.
9701.312 Maximum rates.
9701.313 Homeland Security Compensation Committee.
9701.314 DHS responsibilities.
Setting and Adjusting Rate Ranges
9701.321 Structure of bands.
9701.322 Setting and adjusting rate ranges.
9701.323 Eligibility for pay increase associated with a rate range
adjustment.
9701.324 Treatment of employees whose rate of basic pay does not
fall below the minimum rate of their band.
9701.325 Treatment of employees whose rate of basic pay falls below
the minimum rate of their band.
Locality and Special Rate Supplements
9701.331 General.
9701.332 Locality rate supplements.
9701.333 Special rate supplements.
9701.334 Setting and adjusting locality and special rate
supplements.
9701.335 Eligibility for pay increase associated with a supplement
adjustment.
9701.336 Treatment of employees whose pay does not fall below the
minimum adjusted rate of their band.
9701.337 Treatment of employees whose pay falls below the minimum
adjusted rate of their band.
Performance-Based Pay
9701.341 General.
9701.342 Performance pay increases.
9701.343 Within-band reductions.
9701.344 Special within-band increases.
9701.345 Developmental pay adjustments.
9701.346 Pay progression for new supervisors.
Pay Administration
9701.351 Setting an employee's starting pay.
9701.352 Use of highest previous rate.
9701.353 Setting pay upon promotion.
9701.354 Setting pay upon demotion.
9701.355 Setting pay upon movement to a different occupational
cluster.
9701.356 Pay retention.
9701.357 Miscellaneous.
Special Payments
9701.361 Special skills payments.
9701.362 Special assignment payments.
9701.363 Special staffing payments.
Transitional Provisions
9701.371 General.
9701.372 Creating initial pay ranges.
9701.373 Conversion of employees to the DHS pay system.
9701.374 Special transition rules for Federal Air Marshal Service.
Subpart D--Performance Management
9701.401 Purpose.
9701.402 Coverage.
9701.403 Waivers.
9701.404 Definitions.
9701.405 Performance management system requirements.
[[Page 5319]]
9701.406 Setting and communicating performance expectations.
9701.407 Monitoring performance and providing feedback.
9701.408 Developing performance and addressing poor performance.
9701.409 Rating and rewarding performance.
9701.410 DHS responsibilities.
Subpart E--Labor-Management Relations
9701.501 Purpose.
9701.502 Rule of construction.
9701.503 Waivers.
9701.504 Definitions.
9701.505 Coverage.
9701.506 Impact on existing agreements.
9701.507 Employee rights.
9701.508 Homeland Security Labor Relations Board.
9701.509 Powers and duties of the HSLRB.
9701.510 Powers and duties of the Federal Labor Relations Authority.
9701.511 Management rights.
9701.512 Conferring on procedures for the exercise of management
rights.
9701.513 Exclusive recognition of labor organizations.
9701.514 Determination of appropriate units for labor organization
representation.
9701.515 Representation rights and duties.
9701.516 Allotments to representatives.
9701.517 Unfair labor practices.
9701.518 Duty to bargain, confer, and consult.
9701.519 Negotiation impasses.
9701.520 Standards of conduct for labor organizations.
9701.521 Grievance procedures.
9701.522 Exceptions to arbitration awards.
9701.523 Official time.
9701.524 Compilation and publication of data.
9701.525 Regulations of the HSLRB.
9701.526 Continuation of existing laws, recognitions, agreements,
and procedures.
9701.527 Savings provision.
Subpart F--Adverse Actions
General
9701.601 Purpose.
9701.602 Waivers.
9701.603 Definitions.
9701.604 Coverage.
9701.605 Initial service period.
Requirements for Furlough of 30 Days or Less, Suspension, Demotion,
Reduction in Pay, or Removal
9701.606 Standard for action.
9701.607 Mandatory removal offenses.
9701.608 Procedures.
9701.609 Proposal notice.
9701.610 Opportunity to reply.
9701.611 Decision notice.
9701.612 Departmental record.
National Security
9701.613 Suspension and removal.
Savings Provision
9701.614 Savings provision.
Subpart G--Appeals
9701.701 Purpose.
9701.702 Waivers.
9701.703 Definitions.
9701.704 Coverage.
9701.705 Alternative dispute resolution.
9701.706 MSPB appellate procedures.
9701.707 Appeals of mandatory removal actions.
9701.708 Mandatory Removal Panel.
9701.709 Actions involving discrimination.
9701.710 Savings provision.
Authority: 5 U.S.C. 9701.
Subpart A--General Provisions
Sec. 9701.101 Purpose.
(a) This part contains regulations governing the establishment of a
new human resources management system within the Department of Homeland
Security (DHS), as authorized by 5 U.S.C. 9701. As permitted by section
9701, these regulations waive and replace various statutory provisions
that would otherwise be applicable to affected DHS employees. These
regulations are issued jointly by the Secretary of Homeland Security
and the Director of the Office of Personnel Management (OPM).
(b) The system established under this part is designed to be
mission-centered, performance-focused, flexible, contemporary, and
excellent; to generate respect and trust through employee involvement;
to be based on the principles of merit and fairness embodied in the
statutory merit system principles; and to comply with all other
applicable provisions of law.
Sec. 9701.102 Eligibility and coverage.
(a) All civilian employees of the Department are eligible for
coverage under one or more subparts of this part except those covered
by a provision of law outside the waivable chapters of title 5, U.S.
Code, identified in Sec. 9701.104. For example, Transportation
Security Administration employees, employees appointed under the Robert
T. Stafford Disaster Relief and Emergency Assistance Act, Secret
Service Uniformed Division members, Coast Guard Academy faculty
members, and Coast Guard military members are not eligible for coverage
under any classification or pay system established under subpart B or C
of this part. Refer to subparts B through G of this part for specific
information regarding the coverage of each subpart.
(b)(1) Subpart A of this part becomes applicable to all eligible
employees on March 3, 2005.
(2) The Secretary or designee may, at his or her sole and exclusive
discretion and after coordination with OPM, establish the effective
date for applying subparts E, F, and G of this part to all eligible
employees. Unless otherwise determined by the Secretary and the
Director, subparts E, F, and G of this part will become applicable to
all eligible employees no later than August 1, 2005.
(3) With respect to subparts B, C, and D of this part, the
Secretary or designee may, at his or her sole and exclusive discretion
and after coordination with OPM, apply one or more of these subparts to
a specific category or categories of eligible civilian employees at any
time. With respect to any given category of civilian employees, the
Secretary or designee may apply some of these subparts, but not others,
and such coverage determinations may be made effective on different
dates (e.g., in order to phase in coverage under a new classification,
pay, and performance management system).
(4) DHS will notify affected employees and labor organizations in
advance of the application of one or more subparts of this part to
them.
(c) Until the Secretary or designee makes a determination under
paragraph (b) of this section to apply the provisions of one or more
subparts of this part to a particular category or categories of
eligible DHS employees, those DHS employees will continue to be covered
by the applicable Federal laws and regulations that would apply to them
in the absence of this part. All personnel actions affecting DHS
employees must be based on the Federal laws and regulations applicable
to them on the effective date of the action.
(d) Any new DHS classification, pay, or performance management
system covering Senior Executive Service (SES) members must be
consistent with the policies and procedures established by the
Governmentwide SES pay-for-performance system authorized by 5 U.S.C.
chapter 53, subchapter VIII, and applicable implementing regulations
issued by OPM. If the Secretary determines that SES members employed by
DHS should be covered by classification, pay, or performance management
provisions that differ substantially from the Governmentwide SES pay-
for-performance system, the Secretary and the Director must issue joint
regulations consistent with all of the requirements of 5 U.S.C. 9701.
(e) At his or her sole and exclusive discretion, the Secretary or
designee may, after coordination with OPM, rescind the application
under paragraph (b) of this section of one or more subparts of this
part to a particular category of employees and prescribe implementing
directives for converting that category of employees to coverage under
applicable title 5 provisions. DHS will notify affected employees and
labor
[[Page 5320]]
organizations in advance of a decision to rescind the application of
one or more subparts of this part to them.
(f) The Secretary or other authorized DHS official may exercise an
independent legal authority to establish a parallel system that follows
some or all of the requirements in this part for a category of
employees who are not eligible for coverage under this part.
Sec. 9701.103 Definitions.
In this part:
Authorized agency official means the Secretary or an official who
is authorized to act for the Secretary in the matter concerned.
Coordination means the process by which DHS, after appropriate
staff-level consultation, officially provides OPM with notice of a
proposed action and intended effective date. If OPM concurs, or does
not respond to that notice within 30 calendar days, DHS may proceed
with the proposed action. However, if OPM indicates the matter has
Governmentwide implications or consequences, DHS will not proceed until
the matter is resolved. The coordination process is intended to give
due deference to the flexibilities afforded DHS by the Homeland
Security Act and the regulations in this part, without compromising
OPM's institutional responsibility, as codified in 5 U.S.C. chapter 11
and Executive Order 13197 of January 18, 2001, to provide
Governmentwide oversight in human resources management programs and
practices.
Department or DHS means the Department of Homeland Security.
Director means the Director of the Office of Personnel Management.
Employee means an employee within the meaning of that term in 5
U.S.C. 2105.
General Schedule or GS means the General Schedule classification
and pay system established under chapter 51 and subchapter III of
chapter 53 of title 5, U.S. Code.
Implementing directives means directives issued at the Departmental
level by the Secretary or designee to carry out any policy or procedure
established in accordance with this part. These directives may apply
Departmentwide or to any part of the Department as determined by the
Secretary at his or her sole and exclusive discretion.
OPM means the Office of Personnel Management.
Secretary means the Secretary of Homeland Security or, as
authorized, the Deputy Secretary of Homeland Security.
Secretary or designee means the Secretary or a DHS official
authorized to act for the Secretary in the matter concerned who serves
as--
(1) The Undersecretary for Management; or
(2) The Chief Human Capital Officer for DHS.
Sec. 9701.104 Scope of authority.
Subject to the requirements and limitations in 5 U.S.C. 9701, the
provisions in the following chapters of title 5, U.S. Code, and any
related regulations, may be waived or modified in exercising the
authority in 5 U.S.C. 9701:
(a) Chapter 43, dealing with performance appraisal systems;
(b) Chapter 51, dealing with General Schedule job classification;
(c) Chapter 53, dealing with pay for General Schedule employees,
pay and job grading for Federal Wage System employees, and pay for
certain other employees;
(d) Chapter 71, dealing with labor relations;
(e) Chapter 75, dealing with adverse actions and certain other
actions; and
(f) Chapter 77, dealing with the appeal of adverse actions and
certain other actions.
Sec. 9701.105 Continuing collaboration.
(a) In accordance with 5 U.S.C. 9701(e)(1)(D), this section
provides employee representatives with an opportunity to participate in
the development of implementing directives. This process is not subject
to the requirements established by subpart E of this part, including
but not limited to Sec. Sec. 9701.512 (regarding conferring on
procedures for the exercise of management rights), 9701.517(a)(5)
(regarding enforcement of the duty to consult or negotiate), 9701.518
(regarding the duty to bargain, confer, and consult), or 9701.519
(regarding impasse procedures).
(b)(1) For the purpose of this section, the term ``employee
representatives'' includes representatives of labor organizations with
exclusive recognition rights for units of DHS employees, as well as
representatives of employees who are not within a unit for which a
labor organization has exclusive recognition.
(2) Consistent with 5 U.S.C. 9701(e)(2)(A), (B), and (D), DHS will
determine the number of employee representatives to be engaged in the
continuing collaboration process.
(3) Each national labor organization with multiple collective
bargaining units accorded exclusive recognition will determine how its
units will be represented within the limitations imposed by DHS.
(c)(1) Within timeframes specified by DHS, employee representatives
will be provided with an opportunity to submit written comments and/or
to discuss their views with DHS officials on proposed final draft
implementing directives.
(2) As the Department determines necessary, employee
representatives will be provided with an opportunity to discuss their
views with DHS officials and/or to submit written comments at initial
identification of implementation issues and conceptual design and/or at
review of draft recommendations or alternatives.
(d) Employee representatives will be provided with access to
information, including research, to make their participation in the
continuing collaboration process productive.
(e) Any written comments submitted by employee representatives
regarding proposed final draft implementing directives will become part
of the record and will be forwarded to the Secretary or designee for
consideration in making a final decision.
(f) Nothing in the continuing collaboration process affects the
right of the Secretary to determine the content of implementing
directives and to make them effective at any time.
(g) In accordance with 5 U.S.C. 9701(e)(2), any procedures
necessary to carry out this section will be established by the
Secretary and the Director jointly as internal rules of Departmental
procedure which will not be subject to review.
Sec. 9701.106 Relationship to other provisions.
(a)(1) The provisions of title 5, U.S. Code, are waived or modified
to the extent authorized by 5 U.S.C. 9701 to conform to the provisions
of this part.
(2) This part must be interpreted in a way that recognizes the
critical mission of the Department. Each provision of this part must be
construed to promote the swift, flexible, effective day-to-day
accomplishment of this mission, as defined by the Secretary or
designee. The interpretation of the regulations in this part by DHS and
OPM must be accorded great deference.
(b) For the purpose of applying other provisions of law or
Governmentwide regulations that reference provisions under chapters 43,
51, 53, 71, 75, and 77 of title 5, U.S. Code, the referenced provisions
are not waived but are modified consistent with the corresponding
regulations in this part, except as otherwise provided in this part
(including paragraph (c) of this
[[Page 5321]]
section) or in DHS implementing directives. Applications of this rule
include, but are not limited to, the following:
(1) If another provision of law or Governmentwide regulations
requires coverage under one of the chapters modified or waived under
this part (i.e., chapters 43, 51, 53, 71, 75, and 77 of title 5, U.S.
Code), DHS employees are deemed to be covered by the applicable chapter
notwithstanding coverage under a system established under this part.
Selected examples of provisions that continue to apply to any DHS
employees (notwithstanding coverage under subparts B through G of this
part) include, but are not limited to, the following:
(i) Foreign language awards for law enforcement officers under 5
U.S.C. 4521-4523;
(ii) Pay for firefighters under 5 U.S.C. 5545b;
(iii) Differentials for duty involving physical hardship or hazard
under 5 U.S.C. 5545(d);
(iv) Recruitment, relocation, and retention payments under 5 U.S.C.
5753-5754;
(v) Physicians' comparability allowances under 5 U.S.C. 5948; and
(vi) The higher cap on relocation bonuses for law enforcement
officers established by section 407 of the Federal Employees Pay
Comparability Act of 1990 (section 529 of Pub. L. 101-509).
(2) In applying the back pay law in 5 U.S.C. 5596 to DHS employees
covered by subpart G of this part (dealing with appeals), the reference
in section 5596(b)(1)(A)(ii) to 5 U.S.C. 7701(g) (dealing with attorney
fees) is considered to be a reference to a modified section 7701(g)
that is consistent with Sec. 9701.706(h).
(3) In applying the back pay law in 5 U.S.C. 5596 to DHS employees
covered by subpart E of this part (dealing with labor relations), the
reference in section 5596(b)(5) to section 7116 (dealing with unfair
labor practices) is considered to be a reference to a modified section
7116 that is consistent with Sec. 9701.517.
(c) When a specified category of employees is covered by a
classification and pay system established under subparts B and C of
this part, the following provisions do not apply:
(1) Time-in-grade restrictions that apply to competitive service GS
positions under 5 CFR part 300, subpart F;
(2) Supervisory differentials under 5 U.S.C. 5755; and
(3) Law enforcement officer special rates and geographic
adjustments under sections 403 and 404 of the Federal Employees Pay
Comparability Act of 1990 (section 529 of Pub. L. 101-509).
(d) Nothing in this part waives, modifies or otherwise affects the
employment discrimination laws that the Equal Employment Opportunity
Commission (EEOC) enforces under 42 U.S.C. 2000e et seq., 29 U.S.C. 621
et seq., 29 U.S.C. 791 et seq., and 29 U.S.C. 206(d). Employees and
applicants for employment in DHS will continue to be covered by EEOC's
Federal sector regulations found at 29 CFR part 1614.
Sec. 9701.107 Program evaluation.
(a) DHS will establish procedures for evaluating the regulations in
this part and their implementation. DHS will provide designated
employee representatives with an opportunity to be briefed and a
specified timeframe to provide comments on the design and results of
program evaluations.
(b) Involvement of employee representatives under this section will
occur at the following stages:
(1) Identification of the scope, objectives, and methodology to be
used in program evaluation; and
(2) Review of draft findings and recommendations.
(c) Involvement in the evaluation process does not waive the rights
of any party under applicable law or regulations.
Subpart B--Classification
General
Sec. 9701.201 Purpose.
(a) This subpart contains regulations establishing a classification
structure and rules for covered DHS employees and positions to replace
the classification structure and rules in 5 U.S.C. chapter 51 and the
job grading system in 5 U.S.C. chapter 53, subchapter IV, in accordance
with the merit principle of equal pay for work of equal value.
(b) Any classification system prescribed under this subpart must be
established in conjunction with the pay system described in subpart C
of this part.
Sec. 9701.202 Coverage.
(a) This subpart applies to eligible DHS employees and positions
listed in paragraph (b) of this section, subject to a determination by
the Secretary or designee under Sec. 9701.102(b).
(b) The following employees and positions are eligible for coverage
under this subpart:
(1) Employees and positions that would otherwise be covered by the
General Schedule classification system established under 5 U.S.C.
chapter 51;
(2) Employees and positions that would otherwise be covered by a
prevailing rate system established under 5 U.S.C. chapter 53,
subchapter IV;
(3) Employees in senior-level (SL) and scientific or professional
(ST) positions who would otherwise be covered by 5 U.S.C. 5376; and
(4) Members of the Senior Executive Service (SES) who would
otherwise be covered by 5 U.S.C. chapter 53, subchapter VIII, subject
to Sec. 9701.102(d).
Sec. 9701.203 Waivers.
(a) When a specified category of employees is covered by a
classification system established under this subpart, the provisions of
5 U.S.C. chapter 51 and 5 U.S.C. 5346, and related regulations, are
waived with respect to that category of employees, except as provided
in paragraph (b) of this section, Sec. 9701.106, and Sec. 9701.222(d)
(with respect to OPM's authority under 5 U.S.C. 5112(b) and 5346(c) to
act on requests for review of classification decisions).
(b) Section 5108 of title 5, U.S. Code, dealing with the
classification of positions above GS-15, is not waived.
Sec. 9701.204 Definitions.
In this subpart:
Band means a work level or pay range within an occupational
cluster.
Basic pay means an employee's rate of pay before any deductions and
exclusive of additional pay of any kind, except as expressly provided
by law or regulation. For the specific purposes prescribed in
Sec. Sec. 9701.332(c) and 9701.333, respectively, basic pay includes
locality and special rate supplements.
Classification, also referred to as job evaluation, means the
process of analyzing and assigning a job or position to an occupational
series, cluster, and band for pay and other related purposes.
Competencies means the measurable or observable knowledge, skills,
abilities, behaviors, and other characteristics required by a position.
Occupational cluster means a grouping of one or more associated or
related occupations or positions. An occupational cluster may include
one or more occupational series.
Occupational series means the number OPM or DHS assigns to a group
or family of similar positions for identification purposes (for
example: 0110, Economist Series; 1410, Librarian Series).
Position or Job means the duties, responsibilities, and related
competency requirements that are assigned to an
[[Page 5322]]
employee whom the Secretary or designee approves for coverage under
Sec. 9701.202(a).
Sec. 9701.205 Bar on collective bargaining.
As provided in the definition of conditions of employment in Sec.
9701.504, any classification system established under this subpart is
not subject to collective bargaining. This bar on collective bargaining
applies to all aspects of the classification system, including but not
limited to coverage determinations, the design of the classification
structure, and classification methods, criteria, and administrative
procedures and arrangements.
Classification Structure
Sec. 9701.211 Occupational clusters.
For the purpose of classifying positions, DHS may, after
coordination with OPM, establish occupational clusters based on factors
such as mission or function; nature of work; qualifications or
competencies; career or pay progression patterns; relevant labor-market
features; and other characteristics of those occupations or positions.
DHS must document in implementing directives the criteria and rationale
for grouping occupations or positions into occupational clusters.
Sec. 9701.212 Bands.
(a) For purposes of identifying relative levels of work and
corresponding pay ranges, DHS may, after coordination with OPM,
establish one or more bands within each occupational cluster.
(b) Each occupational cluster may include, but is not limited to,
the following bands:
(1) Entry/Developmental--work that involves gaining the
competencies needed to perform successfully in a Full Performance band
through appropriate formal training and/or on-the-job experience.
(2) Full Performance--work that involves the successful completion
of any required entry-level training and/or developmental activities
necessary to independently perform the full range of non-supervisory
duties of a position in an occupational cluster.
(3) Senior Expert--work that involves an extraordinary level of
specialized knowledge or expertise upon which DHS relies for the
accomplishment of critical mission goals and objectives; reserved for a
limited number of non-supervisory employees.
(4) Supervisory--work that may involve hiring or selecting
employees, assigning work, managing performance, recognizing and
rewarding employees, and other associated duties.
(c) DHS must document in implementing directives the definitions
for each band which specify the type and range of difficulty and
responsibility, qualifications, competencies, or other characteristics
of the work encompassed by the band.
(d) DHS must, after coordination with OPM, establish qualification
standards and requirements for each occupational cluster, occupational
series, and/or band. DHS may use the qualification standards
established by OPM or, after coordination with OPM, may establish
different qualification standards. This paragraph does not waive or
modify any DHS authority to establish qualification standards or
requirements under 5 U.S.C. chapters 31 and 33 and OPM implementing
regulations.
Classification Process
Sec. 9701.221 Classification requirements.
(a) DHS must develop a methodology for describing and documenting
the duties, qualifications, and other requirements of categories of
jobs, and DHS must make such descriptions and documentation available
to affected employees.
(b) An authorized agency official must--
(1) Assign occupational series to jobs consistent with occupational
series definitions established by OPM under 5 U.S.C. 5105 and 5346 or
by DHS, after coordination with OPM; and
(2) Apply the criteria and definitions required by Sec. 9701.211
and Sec. 9701.212 to assign jobs to an appropriate occupational
cluster and band.
(c) DHS must establish procedures for classifying jobs and may make
such inquiries or investigations of the duties, responsibilities, and
qualification requirements of jobs as it considers necessary for the
purpose of this section.
(d) Classification decisions become effective on the date
designated by the authorized agency official who makes the decision.
(e) DHS must establish a plan to periodically review the accuracy
of classification decisions.
Sec. 9701.222 Reconsideration of classification decisions.
(a) An individual employee may request that DHS or OPM reconsider
the pay system, occupational cluster, occupational series, or band
assigned to his or her current official position of record at any time.
(b) DHS will, after coordination with OPM, establish implementing
directives for reviewing requests for reconsideration, including
nonreviewable issues, rights of representation, and the effective date
of any corrective actions. OPM will, after consulting with DHS,
establish separate policies and procedures for reviewing
reconsideration requests.
(c) An employee may request OPM to review a DHS determination made
under paragraph (a) of this section. If an employee does not request an
OPM reconsideration decision, DHS's classification determination is
final and not subject to further review or appeal.
(d) OPM's final determination on a request made under this section
is not subject to further review or appeal.
Transitional Provisions
Sec. 9701.231 Conversion of positions and employees to the DHS
classification system.
(a) This section describes the transitional provisions that apply
when DHS positions and employees are converted to a classification
system established under this subpart. Affected positions and employees
may convert from the GS system, a prevailing rate system, the SL/ST
system, or the SES system, as provided in Sec. 9701.202. For the
purpose of this section, the terms ``convert,'' ``converted,''
``converting,'' and ``conversion'' refer to positions and employees
that become covered by the classification system as a result of a
coverage determination made under Sec. 9701.102(b) and exclude
employees who are reassigned or transferred from a noncovered position
to a position already covered by the DHS system.
(b) DHS will issue implementing directives prescribing policies and
procedures for converting the GS or prevailing rate grade of a position
to a band and for converting SL/ST and SES positions to a band upon
initial implementation of the DHS classification system. Such
procedures must include provisions for converting an employee who is
retaining a grade under 5 U.S.C. chapter 53, subchapter VI, immediately
prior to conversion. As provided in Sec. 9701.373, DHS must convert
employees to the system without a reduction in their rate of pay
(including basic pay and any applicable locality payment under 5 U.S.C.
5304, special rate under 5 U.S.C. 5305, locality rate supplement under
Sec. 9701.332, or special rate supplement under Sec. 9701.333).
Sec. 9701.232 Special transition rules for Federal Air Marshal
Service.
Notwithstanding any other provision in this subpart, if DHS
transfers Federal Air Marshal Service positions from the Transportation
Security Administration (TSA) to another organization within DHS, DHS
may cover those positions
[[Page 5323]]
under a classification system that is parallel to the classification
system that was applicable to the Federal Air Marshal Service within
TSA. DHS may, after coordination with OPM, modify that system. DHS will
issue implementing directives on converting Federal Air Marshal Service
employees to any new classification system that may subsequently be
established under this subpart, consistent with the conversion rules in
Sec. 9701.231.
Subpart C--Pay and Pay Administration
General
Sec. 9701.301 Purpose.
(a) This subpart contains regulations establishing pay structures
and pay administration rules for covered DHS employees to replace the
pay structures and pay administration rules established under 5 U.S.C.
chapter 53, as authorized by 5 U.S.C. 9701. These regulations are
designed to provide DHS with the flexibility to allocate available
funds strategically in support of DHS mission priorities and
objectives. Various features that link pay to employees' performance
ratings are designed to promote a high-performance culture within DHS.
(b) Any pay system prescribed under this subpart must be
established in conjunction with the classification system described in
subpart B of this part.
(c) The pay system established under this subpart, working in
conjunction with the performance management system established under
subpart D of this part, is designed to incorporate the following
features:
(1) Adherence to merit principles set forth in 5 U.S.C. 2301;
(2) A fair, credible, and transparent employee performance
appraisal system;
(3) A link between elements of the pay system established in this
subpart, the employee performance appraisal system, and the
Department's strategic plan;
(4) Employee involvement in the design and implementation of the
system (as specified in Sec. 9701.105);
(5) Adequate training and retraining for supervisors, managers, and
employees in the implementation and operation of the pay system
established in this subpart;
(6) Periodic performance feedback and dialogue among supervisors,
managers, and employees throughout the appraisal period, and setting
timetables for review;
(7) Effective safeguards so that the management of the system is
fair and equitable and based on employee performance; and
(8) A means for ensuring that adequate resources are allocated for
the design, implementation, and administration of the performance
management system that supports the pay system established under this
subpart.
Sec. 9701.302 Coverage.
(a) This subpart applies to eligible DHS employees in the
categories listed in paragraph (b) of this section, subject to a
determination by the Secretary or designee under Sec. 9701.102(b).
(b) The following employees are eligible for coverage under this
subpart:
(1) Employees who would otherwise be covered by the General
Schedule pay system established under 5 U.S.C. chapter 53, subchapter
III;
(2) Employees who would otherwise be covered by a prevailing rate
system established under 5 U.S.C. chapter 53, subchapter IV;
(3) Employees in senior-level (SL) and scientific or professional
(ST) positions who would otherwise be covered by 5 U.S.C. 5376; and
(4) Members of the Senior Executive Service (SES) who would
otherwise be covered by 5 U.S.C. chapter 53, subchapter VIII, subject
to Sec. 9701.102(d).
Sec. 9701.303 Waivers.
(a) When a specified category of employees is covered by the pay
system established under this subpart, the provisions of 5 U.S.C.
chapter 53, and related regulations, are waived with respect to that
category of employees, except as provided in Sec. 9701.106 and
paragraphs (b) through (f) of this section.
(b) The following provisions of 5 U.S.C. chapter 53 are not waived:
(1) Section 5307, dealing with the aggregate limitation on pay;
(2) Sections 5311 through 5318, dealing with Executive Schedule
positions;
(3) Section 5371, insofar as it authorizes OPM to apply the
provisions of 38 U.S.C. chapter 74 to DHS employees in health care
positions covered by section 5371 in lieu of any DHS pay system
established under this subpart or the following provisions of title 5,
U.S. Code: Chapters 51, 53, and 61, and subchapter V of chapter 55. The
reference to ``chapter 51'' in section 5371 is deemed to include a
classification system established under subpart B of this part; and
(4) Section 5377, dealing with the critical pay authority.
(c) Section 5373 is modified. The limit on rates of basic pay,
including any applicable locality payment or supplement, for DHS
employees who are not covered by this subpart and whose pay is set by
administrative action (e.g., Coast Guard Academy faculty) is increased
to the rate for level III of the Executive Schedule.
(d) Section 5379 is modified. DHS may, after coordination with OPM,
establish and administer a student loan repayment program for DHS
employees, except that DHS may not make loan payments for any noncareer
appointees to the SES (as defined in 5 U.S.C. 3132(a)(7)) or for any
employee occupying a position that is excepted from the competitive
service because of its confidential, policy-determining, policy-making,
or policy-advocating character. Notwithstanding Sec. 9701.302(a), any
DHS employee otherwise covered by section 5379 is eligible for coverage
under the provisions established under this paragraph, subject to a
determination by the Secretary or designee under Sec. 9701.102(b).
(e) In approving the coverage of employees who would otherwise be
covered by a prevailing rate system established under 5 U.S.C. chapter
53, subchapter IV, DHS may limit the waiver so that affected employees
remain entitled to environmental or other differentials established
under 5 U.S.C. 5343(c)(4) and night shift differentials established
under 5 U.S.C. 5343(f) if such employees are grouped in separate
occupational clusters (established under subpart B of this part) that
are limited to employees who would otherwise be covered by a prevailing
rate system.
(f) Employees in SL/ST positions and SES members who are covered by
a basic pay system established under this subpart are considered to be
paid under 5 U.S.C. 5376 and 5382, respectively, for the purpose of
applying 5 U.S.C. 5307(d).
Sec. 9701.304 Definitions.
In this part:
48 contiguous States means the States of the United States,
excluding Alaska and Hawaii, but including the District of Columbia.
Band means a work level or pay range within an occupational
cluster.
Band rate range means the range of rates of basic pay (excluding
any locality or special rate supplements) applicable to employees in a
particular band, as described in Sec. 9701.321. Each band rate range
is defined by a minimum and maximum rate.
Basic pay means an employee's rate of pay before any deductions and
exclusive of additional pay of any kind,
[[Page 5324]]
except as expressly provided by law or regulation. For the specific
purposes prescribed in Sec. Sec. 9701.332(c) and 9701.333,
respectively, basic pay includes locality and special rate supplements.
Competencies means the measurable or observable knowledge, skills,
abilities, behaviors, and other characteristics required by a position.
Day means a calendar day.
Demotion means a reduction to a lower band within the same
occupational cluster or a reduction to a lower band in a different
occupational cluster under implementing directives issued by DHS
pursuant to Sec. 9701.355.
Locality rate supplement means a geographic-based addition to basic
pay, as described in Sec. 9701.332.
Modal rating means the rating of record that occurs most frequently
in a particular pay pool.
Occupational cluster means a grouping of one or more associated or
related occupations or positions. An occupational cluster may include
one or more occupational series.
Promotion means an increase to a higher band within the same
occupational cluster or an increase to a higher band in a different
occupational cluster under implementing directives issued by DHS
pursuant to Sec. 9701.355.
Rating of record means a performance appraisal prepared--
(1) At the end of an appraisal period covering an employee's
performance of assigned duties against performance expectations (as
defined in Sec. 9701.404) over the applicable period; or
(2) To support a pay determination, including one granted in
accordance with subpart C of this part, a within-grade increase granted
under 5 CFR 531.404, or a pay determination granted under other
applicable rules.
SES means the Senior Executive Service established under 5 U.S.C.
chapter 31, subchapter II.
SL/ST refers to an employee serving in a senior-level position paid
under 5 U.S.C. 5376. The term ``SL'' identifies a senior-level employee
covered by 5 U.S.C. 3324 and 5108. The term ``ST'' identifies an
employee who is appointed under the special authority in 5 U.S.C. 3325
to a scientific or professional position established under 5 U.S.C.
3104.
Special rate supplement means an addition to basic pay for a
particular category of employees to address staffing problems, as
described in Sec. 9701.333. A special rate supplement is paid in place
of any lesser locality rate supplement that would otherwise apply.
Unacceptable performance means the failure to meet one or more
performance expectations, as described in Sec. 9701.406.
Sec. 9701.305 Bar on collective bargaining.
As provided in the definition of conditions of employment in Sec.
9701.504, any pay program established under authority of this subpart
is not subject to collective bargaining. This bar on collective
bargaining applies to all aspects of the pay program, including but not
limited to coverage decisions, the design of pay structures, the
setting and adjustment of pay levels, pay administration rules and
policies, and administrative procedures and arrangements.
Overview of Pay System
Sec. 9701.311 Major features.
Through the issuance of implementing directives, DHS will establish
a pay system that governs the setting and adjusting of covered
employees' rates of pay. The DHS pay system will include the following
features:
(a) A structure of rate ranges linked to various bands for each
occupational cluster, in alignment with the classification structure
described in subpart B of this part;
(b) Policies regarding the setting and adjusting of basic pay rate
ranges based on mission requirements, labor market conditions, and
other factors, as described in Sec. Sec. 9701.321 and 9701.322;
(c) Policies regarding the setting and adjusting of supplements to
basic pay based on local labor market conditions and other factors, as
described in Sec. Sec. 9701.331 through 9701.334;
(d) Policies regarding employees' eligibility for pay increases
based on adjustments in rate ranges and supplements, as described in
Sec. Sec. 9701.323 through 9701.325 and 9701.335 through 9701.337;
(e) Policies regarding performance-based pay adjustments, as
described in Sec. Sec. 9701.341 through 9701.346;
(f) Policies on basic pay administration, including movement
between occupational clusters, as described in Sec. Sec. 9701.351
through 9701.356;
(g) Policies regarding special payments that are not basic pay, as
described in Sec. Sec. 9701.361 through 9701.363; and
(h) Linkages to employees' performance ratings of records, as
described in subpart D of this part.
Sec. 9701.312 Maximum rates.
(a) DHS may not pay any employee an annual rate of basic pay in
excess of the rate for level III of the Executive Schedule, except as
provided in paragraph (b) of this section.
(b) DHS may establish the maximum annual rate of basic pay for
members of the SES at the rate for level II of the Executive Schedule
if DHS obtains the certification specified in 5 U.S.C. 5307(d).
Sec. 9701.313 Homeland Security Compensation Committee.
(a) DHS will establish a Homeland Security Compensation Committee
to provide options and/or recommendations for consideration by the
Secretary or designee on strategic compensation matters such as
Departmental compensation policies and principles, the annual
allocation of funds between market and performance pay adjustments, and
the annual adjustment of rate ranges and locality and special rate
supplements. The Compensation Committee will consider factors such as
turnover, recruitment, and local labor market conditions in providing
options and recommendations for consideration by the Secretary. The
Secretary's or designee's determination with regard to those options
and/or recommendations is final and not subject to further review.
(b) The Compensation Committee will be chaired by the DHS
Undersecretary for Management. The Compensation Committee has 14
members, including 4 officials of labor organizations granted national
consultation rights (NCR) in accordance with Sec. 9701.518(d)(2). An
OPM official will serve as an ex officio member of the Compensation
Committee. DHS will provide technical staff to support the Compensation
Committee.
(c) DHS will establish procedures governing the membership and
operation of the Compensation Committee.
(d) An individual will be selected by the Chair to facilitate
Compensation Committee meetings. The facilitator will be selected from
a list of nominees developed jointly by representatives of the
Department and NCR labor organizations, the latter acting as a single
party, according to procedures and time limits established by
implementing directives. Nominees must be known for their integrity,
impartiality, and expertise in facilitation and compensation. If the
Department and the labor organizations are unable to reach agreement on
a joint list of nominees, they will enlist the services of the Federal
Mediation and Conciliation Service (FMCS) to assist them. If the
parties are unable to reach agreement with FMCS assistance, each
[[Page 5325]]
party will prepare a list of up to three nominees and provide those
separate lists to FMCS; FMCS may add up to three additional nominees.
From that combined list of nominees, the Department and the labor
organizations, the latter acting as a single party, will alternately
strike names from the list until five names remain; those five nominees
will be submitted to the Chair for consideration. The Chair may request
that the parties develop an additional list of nominees. If the
representatives of the Department's NCR labor organizations, acting as
a single party, do not participate in developing the list of nominees
in accordance with this section, the Chair will select the facilitator.
(e) After considering the views of all Compensation Committee
members, the Chair prepares and provides options and/or recommendations
to the Secretary or designee. Members may present their views on the
final recommendations in writing as part of the final recommendation
package. The Secretary or designee will make the final decision and
notify the Compensation Committee. This process is not subject to the
requirements established by Sec. Sec. 9701.512 (regarding conferring
on procedures for the exercise of management rights), 9701.517(a)(5)
(regarding enforcement of the duty to consult or negotiate), 9701.518
(regarding the duty to bargain, confer, and consult), or 9701.519
(regarding impasse procedures).
(f) The Secretary retains the right to make determinations
regarding the annual allocation of funds between market and performance
pay adjustments, the annual adjustment of rate ranges and locality and
special rate supplements, or any other matter recommended by the
Compensation Committee, and to make such determinations effective at
any time.
Sec. 9701.314 DHS responsibilities.
DHS responsibilities in implementing this subpart include the
following:
(a) Providing OPM with information regarding the implementation of
the programs authorized under this subpart at OPM's request;
(b) Participating in any interagency pay coordination council or
group established by OPM to ensure that DHS pay policies and plans are
coordinated with other agencies; and
(c) Fulfilling all other responsibilities prescribed in this
subpart.
Setting and Adjusting Rate Ranges
Sec. 9701.321 Structure of bands.
(a) DHS may, after coordination with OPM, establish ranges of basic
pay for bands, with minimum and maximum rates set and adjusted as
provided in Sec. 9701.322. Rates must be expressed as annual rates.
(b) For each band within an occupational cluster, DHS will
establish a common rate range that applies in all locations.
Sec. 9701.322 Setting and adjusting rate ranges.
(a) Within its sole and exclusive discretion, DHS may, after
coordination with OPM, set and adjust the rate ranges established under
Sec. 9701.321 on an annual basis. In determining the rate ranges, DHS
and OPM may consider mission requirements, labor market conditions,
availability of funds, pay adjustments received by employees of other
Federal agencies, and any other relevant factors.
(b) DHS may, after coordination with OPM, determine the effective
date of newly set or adjusted band rate ranges. Unless DHS determines
that a different effective date is needed for operational reasons,
these adjustments will become effective on or about the date of the
annual General Schedule pay adjustment authorized by 5 U.S.C. 5303.
(c) DHS may establish different rate ranges and provide different
rate range adjustments for different bands.
(d) DHS may adjust the minimum and maximum rates of a band by
different percentages.
Sec. 9701.323 Eligibility for pay increase associated with a rate
range adjustment.
(a) When a band rate range is adjusted under Sec. 9701.322,
employees covered by that band are eligible for an individual pay
increase. An employee who meets or exceeds performance expectations
(i.e., has a rating of record above the unacceptable performance level
for the most recently completed appraisal period) must receive an
increase in basic pay equal to the percentage value of any increase in
the minimum rate of the employee's band resulting from a rate range
adjustment under Sec. 9701.322. The pay increase takes effect at the
same time as the corresponding rate range adjustment, except as
provided in Sec. Sec. 9701.324 and 9701.325. For an employee receiving
a retained rate, the amount of the increase under this paragraph is
determined under Sec. 9701.356.
(b) If an employee does not have a rating of record for the most
recently completed appraisal period, he or she must be treated in the
same manner as an employee who meets or exceeds performance
expectations and is entitled to receive an increase based on the rate
range adjustment, as provided in paragraph (a) of this section.
(c) An employee whose rating of record is unacceptable is
prohibited from receiving a pay increase as a result of a rate range
adjustment, except as provided by Sec. Sec. 9701.324 and 9701.325.
Because the employee's pay remains unchanged, failure to receive a pay
increase is not considered an adverse action under subpart F of this
part.
Sec. 9701.324 Treatment of employees whose rate of basic pay does not
fall below the minimum rate of their band.
An employee who does not receive a pay increase under Sec.
9701.323 because of an unacceptable rating of record and whose rate of
basic pay does not fall below the minimum rate of his or her band as a
result of that rating will receive such an increase if he or she
demonstrates performance that meets or exceeds performance
expectations, as reflected by a new rating of record issued under Sec.
9701.409(b). Such an increase will be made effective on the first day
of the first pay period beginning on or after the date the new rating
of record is issued.
Sec. 9701.325 Treatment of employees whose rate of basic pay falls
below the minimum rate of their band.
(a) In the case of an employee who does not receive a pay increase
under Sec. 9701.323 because of an unacceptable rating of record and
whose rate of basic pay falls below the minimum rate of his or her band
as a result of that rating, DHS must--
(1) If the employee demonstrates performance that meets or exceeds
performance expectations within 90 days after the date of the rate
range adjustment, issue a new rating of record under Sec. 9701.409(b)
and adjust the employee's pay prospectively by making the increase
effective on the first day of the first pay period beginning on or
after the date the new rating of record is issued; or
(2) Initiate action within 90 days after the date of the rate range
adjustment to demote or remove the employee in accordance with the
adverse action procedures established in subpart F of this part.
(b) If DHS fails to initiate a removal or demotion action under
paragraph (a)(2) of this section within 90 days after the date of a
rate range adjustment, the employee becomes entitled to the minimum
rate of his or her band rate range on the first day of the first pay
period beginning on or after the 90th day following the date of the
rate range adjustment.
[[Page 5326]]
Locality and Special Rate Supplements
Sec. 9701.331 General.
The basic pay ranges established under Sec. Sec. 9701.321 through
9701.323 may be supplemented in appropriate circumstances by locality
or special rate supplements, as described in Sec. Sec. 9701.332
through 9701.335. These supplements are expressed as a percentage of
basic pay and are set and adjusted as described in Sec. 9701.334. As
authorized by Sec. 9701.356, DHS implementing directives will
determine the extent to which Sec. Sec. 9701.331 through 9701.337
apply to employees receiving a retained rate.
Sec. 9701.332 Locality rate supplements.
(a) For each band rate range, DHS may, after coordination with OPM,
establish locality rate supplements that apply in specified locality
pay areas. Locality rate supplements apply to employees whose official
duty station is located in the given area. DHS may provide different
locality rate supplements for different occupational clusters or for
different bands within the same occupational cluster in the same
locality pay area.
(b) For the purpose of establishing and modifying locality pay
areas, 5 U.S.C. 5304 is not waived. A DHS decision to use the locality
pay area boundaries established under 5 U.S.C. 5304 does not require
separate DHS regulations. DHS may, after coordination with OPM and in
accordance with the public notice and comment provisions of 5 U.S.C.
553, publish Departmental regulations (6 CFR Chapter I) in the Federal
Register that establish and adjust different locality pay areas within
the 48 contiguous States or establish and adjust new locality pay areas
outside the 48 contiguous States. These regulations are subject to the
continuing collaboration process described in Sec. 9701.105. As
provided by 5 U.S.C. 5304(f)(2)(B), judicial review of any DHS
regulation regarding the establishment or adjustment of locality pay
areas is limited to whether or not the regulation was promulgated in
accordance with 5 U.S.C. 553.
(c) Locality rate supplements are considered basic pay for only the
following purposes:
(1) Retirement under 5 U.S.C. chapter 83 or 84;
(2) Life insurance under 5 U.S.C. chapter 87;
(3) Premium pay under 5 U.S.C. chapter 55, subchapter V, or similar
payments under other legal authority;
(4) Severance pay under 5 U.S.C. 5595;
(5) Application of the maximum rate limitation set forth in Sec.
9701.312;
(6) Determining the rate of basic pay upon conversion to the DHS
pay system established under this subpart, consistent with Sec.
9701.373(b);
(7) Other payments and adjustments authorized under this subpart as
specified by DHS implementing directives;
(8) Other payments and adjustments under other statutory or
regulatory authority that are basic pay for the purpose of locality-
based comparability payments under 5 U.S.C. 5304; and
(9) Any provisions for which DHS locality rate supplements must be
treated as basic pay by law.
Sec. 9701.333 Special rate supplements.
DHS will, after coordination with OPM, establish special rate
supplements that provide higher pay levels for subcategories of
employees within an occupational cluster if DHS determines that such
supplements are warranted by current or anticipated recruitment and/or
retention needs. In exercising this authority, DHS will issue necessary
implementing directives. Any special rate supplement must be treated as
basic pay for the same purposes as locality rate supplements, as
described in Sec. 9701.332(c), and for the purpose of computing cost-
of-living allowances and post differentials in nonforeign areas under 5
U.S.C. 5941.
Sec. 9701.334 Setting and adjusting locality and special rate
supplements.
(a) Within its sole and exclusive discretion, DHS may, after
coordination with OPM, set and adjust locality and special rate
supplements. In determining the amounts of the supplements, DHS and OPM
may consider mission requirements, labor market conditions,
availability of funds, pay adjustments received by employees of other
Federal agencies, and any other relevant factors.
(b) DHS may, after coordination with OPM, determine the effective
date of newly set or adjusted locality and special rate supplements.
Established supplements will be reviewed for possible adjustment on an
annual basis in conjunction with rate range adjustments under Sec.
9701.322.
Sec. 9701.335 Eligibility for pay increase associated with a
supplement adjustment.
(a) When a locality or special rate supplement is adjusted under
Sec. 9701.334, an employee to whom the supplement applies is entitled
to the pay increase resulting from that adjustment if the employee
meets or exceeds performance expectations (i.e., has a rating of record
above the unacceptable performance level for the most recently
completed appraisal period). This includes an increase resulting from
the initial establishment and setting of a special rate supplement. The
pay increase takes effect at the same time as the applicable supplement
is set or adjusted, except as provided in Sec. Sec. 9701.336 and
9701.337.
(b) If an employee does not have a rating of record for the most
recently completed appraisal period, he or she must be treated in the
same manner as an employee who meets or exceeds performance
expectations and is entitled to any pay increase associated with a
supplement adjustment, as provided in paragraph (a) of this section.
(c) An employee who has an unacceptable rating of record is
prohibited from receiving a pay increase as a result of an increase in
an applicable locality or special rate supplement, except as provided
by Sec. Sec. 9701.336 and 9701.337. Because the employee's pay remains
unchanged, failure to receive a pay increase is not considered an
adverse action under subpart F of this part.
Sec. 9701.336 Treatment of employees whose pay does not fall below
the minimum adjusted rate of their band.
An employee who does not receive a pay increase under Sec.
9701.335 because of an unacceptable rating of record and whose rate of
basic pay (including a locality or special rate supplement) does not
fall below the minimum adjusted rate of his or her band as a result of
that rating will receive such an increase if he or she demonstrates
performance that meets or exceeds performance expectations, as
reflected by a new rating of record issued under Sec. 9701.409(b).
Such an increase will be made effective on the first day of the first
pay period beginning on or after the date the new rating of record is
issued.
Sec. 9701.337 Treatment of employees whose rate of pay falls below
the minimum adjusted rate of their band.
(a) In the case of an employee who does not receive a pay increase
under Sec. 9701.335 because of an unacceptable rating of record and
whose rate of basic pay (including a locality or special rate
supplement) falls below the minimum adjusted rate of his or her band as
a result of that rating, DHS must--
(1) If the employee demonstrates performance that meets or exceeds
performance expectations within 90 days after the date of the locality
or special rate supplement adjustment, issue a new rating of record
under
[[Page 5327]]
Sec. 9701.409(b) and adjust the employee's pay prospectively by making
the increase effective on the first day of the first pay period
beginning on or after the date the new rating of record is issued; or
(2) Initiate action within 90 days after the date of the locality
or special rate supplement adjustment to demote or remove the employee
in accordance with the adverse action procedures established in subpart
F of this part.
(b) If DHS fails to initiate a removal or demotion action under
paragraph (a)(2) of this section within 90 days after the date of a
locality or special rate supplement adjustment, the employee becomes
entitled to the minimum adjusted rate of his or her band rate range on
the first day of the first pay period beginning on or after the 90th
day following the date of the locality or special rate supplement
adjustment.
Performance-Based Pay
Sec. 9701.341 General.
Sections 9701.342 through 9701.346 describe various types of
performance-based pay adjustments that are part of the pay system
established under this subpart. Generally, these within-band pay
increases are directly linked to an employee's rating of record (as
assigned under the performance management system described in subpart D
of this part). These provisions are designed to provide DHS with the
flexibility to allocate available funds based on performance as a means
of fostering a high-performance culture that supports mission
accomplishment. While performance measures primarily focus on an
employee's contributions (as an individual or as part of a team) in
accomplishing work assignments and achieving mission results,
performance also may be reflected in the acquisition and demonstration
of required competencies.
Sec. 9701.342 Performance pay increases.
(a) Overview. (1) The DHS pay system provides employees in a Full
Performance or higher band with increases in basic pay based on
individual performance ratings of record as assigned under a
performance management system established under subpart D of this part.
The DHS pay system uses pay pool controls to allocate pay increases
based on performance points that are directly linked to the employee's
rating of record, as described in this section. Performance pay
increases are a function of the amount of money in the performance pay
pool, the relative point value placed on ratings, and the distribution
of ratings within that performance pay pool.
(2) The rating of record used as the basis for a performance pay
increase is the one assigned for the most recently completed appraisal
period (subject to the requirements of subpart D of this part), except
that if the supervisor or other rating official determines that an
employee's current performance is inconsistent with that rating, the
supervisor or other rating official may prepare a more current rating
of record, consistent with Sec. 9701.409(b). If an employee does not
have a rating of record, DHS will use the modal rating received by
other employees covered by the same pay pool during the most recent
rating cycle for the purpose of determining the employee's performance
pay increase.
(b) Performance pay pools. (1) DHS will establish pay pools for
performance pay increases.
(2) Each pay pool covers a defined group of DHS employees, as
determined by DHS.
(3) An authorized agency official(s) may determine the distribution
of funds among pay pools and may adjust those amounts based on overall
levels of organizational performance or contribution to the
Department's mission.
(4) In allocating the monies to be budgeted for performance pay
increases, the Secretary or designee must take into account the average
value of within-grade and quality step increases under the General
Schedule, as well as amounts that otherwise would have been spent on
promotions among positions placed in the same band.
(c) Performance point values. (1) DHS will establish point values
that correspond to the performance rating levels established under
subpart D of this part, so that a point value is attached to each
rating level. For example, in a four-level rating program, the point
value pattern could be 4-2-1-0, where 4 points are assigned to the
highest (outstanding) rating and 0 points to an unacceptable rating.
Performance point values will determine performance pay increases.
(2) DHS will establish a point value pattern for each pay pool.
Different pay pools may have different point value patterns.
(3) DHS must assign zero performance points to an unacceptable
rating of record.
(d) Performance payout. (1) DHS will determine the value of a
performance point, expressed as a percentage of an employee's rate of
basic pay (exclusive of locality or special rate supplements under
Sec. Sec. 9701.332 and 9701.333) or as a fixed dollar amount.
(2) To determine an individual employee's performance payout, DHS
will multiply the point value determined under paragraph (d)(1) of this
section by the number of performance points assigned to the rating.
(3) To the extent that the adjustment does not cause the employee's
rate of basic pay to exceed the maximum rate of the employee's band
rate range, DHS will pay the performance payout as an adjustment in the
employee's annual rate of basic pay. Any excess amount may be granted
as a lump-sum payment, which may not be considered basic pay for any
purpose.
(4) DHS may, after coordination with OPM, determine the effective
date of adjustments in basic pay made under paragraph (d)(3) of this
section.
(5) For an employee receiving a retained rate under Sec. 9701.356,
DHS will issue implementing directives to provide for granting a lump-
sum performance payout that may not exceed the amount that may be
received by an employee in the same pay pool with the same rating of
record whose rate of pay is at the maximum rate of the same band.
(e) Proration of performance payouts. DHS will issue implementing
directives regarding the proration of performance payouts for employees
who, during the period between performance pay adjustments, are--
(1) Hired or promoted;
(2) In a leave-without-pay status (except as provided in paragraphs
(f) and (g) of this section); or
(3) In other circumstances where proration is considered
appropriate.
(f) Adjustments for employees returning after performing honorable
service in the uniformed services. DHS will issue implementing
directives regarding how it sets the rate of basic pay prospectively
for an employee who leaves a DHS position to perform service in the
uniformed services (as defined in 38 U.S.C. 4303 and 5 CFR 353.102) and
returns through the exercise of a reemployment right provided by law,
Executive order, or regulation under which accrual of service for
seniority-related benefits is protected (e.g., 38 U.S.C. 4316). DHS
will credit the employee with intervening rate range adjustments under
Sec. 9701.323(a), as well as developmental pay adjustments under Sec.
9701.345 (as determined by DHS in accordance with its implementing
directives), and performance pay adjustments under this section based
on the employee's last DHS rating of record. For employees
[[Page 5328]]
who have no such rating of record, DHS will use the modal rating
received by other employees covered by the same pay pool during the
most recent rating cycle. An employee returning from qualifying service
in the uniformed services will receive the full amount of the
performance pay increase associated with his or her rating of record.
(g) Adjustments for employees returning to duty after being in
workers' compensation status. DHS will issue implementing directives
regarding how it sets the rate of basic pay prospectively for an
employee who returns to duty after a period of receiving injury
compensation under 5 U.S.C. chapter 81, subchapter I (in a leave-
without-pay status or as a separated employee). DHS will credit the
employee with intervening rate range adjustments under Sec.
9701.323(a), as well as developmental pay adjustments under Sec.
9701.345 (as determined by DHS in accordance with its implementing
directives), and performance pay adjustments under this section based
on the employee's last DHS rating of record. For employees who have no
such rating of record, DHS will use the modal rating received by other
employees covered by the same pay pool during the most recent rating
cycle. An employee returning to duty after receiving injury
compensation will receive the full amount of the performance pay
increase associated with his or her rating of record.
Sec. 9701.343 Within-band reductions.
Subject to the adverse action procedures set forth in subpart F of
this part, DHS may reduce an employee's rate of basic pay within a band
for unacceptable performance or conduct. A reduction under this section
may not be more than 10 percent or cause an employee's rate of basic
pay to fall below the minimum rate of the employee's band rate range.
Such a reduction may be made effective at any time.
Sec. 9701.344 Special within-band increases.
DHS may issue implementing directives regarding special within-band
basic pay increases for employees within a Full Performance or higher
band established under Sec. 9701.212 who possess exceptional skills in
critical areas or who make exceptional contributions to mission
accomplishment or in other circumstances determined by DHS. Increases
under this section are in addition to any performance pay increases
made under Sec. 9701.342 and may be made effective at any time.
Special within-band increases may not be based on length of service.
Sec. 9701.345 Developmental pay adjustments.
DHS will issue implementing directives regarding pay adjustments
within the Entry/Developmental band. These directives may require
employees to meet certain standardized assessment or certification
points as part of a formal training/developmental program. In
administering Entry/Developmental band pay progression plans, DHS may
link pay progression to the demonstration of required knowledge,
skills, and abilities (KSAs)/competencies. DHS may set standard
timeframes for progression through an Entry/Developmental band while
allowing an employee to progress at a slower or faster rate based on
his or her performance, demonstration of required competencies, and/or
other factors.
Sec. 9701.346 Pay progression for new supervisors.
DHS will issue implementing directives requiring an employee newly
appointed to or selected for a supervisory position to meet certain
assessment or certification points as part of a formal training/
developmental program. In administering performance pay increases for
these employees under Sec. 9701.342, DHS may take into account the
employee's success in completing a formal training/developmental
program, as well as his or her performance.
Pay Administration
Sec. 9701.351 Setting an employee's starting pay.
DHS will, after coordination with OPM, issue implementing
directives regarding the starting rate of pay for an employee,
including--
(a) An individual who is newly appointed or reappointed to the
Federal service;
(b) An employee transferring to DHS from another Federal agency;
and
(c) A DHS employee who moves from a noncovered position to a
position already covered by this subpart.
Sec. 9701.352 Use of highest previous rate.
DHS will issue implementing directives regarding the discretionary
use of an individual's highest previous rate of basic pay received as a
Federal employee or as an employee of a Coast Guard nonappropriated
fund instrumentality (NAFI) in setting pay upon reemployment, transfer,
reassignment, promotion, demotion, placement in a different
occupational cluster, or change in type of appointment. For this
purpose, basic pay may include a locality-based payment or supplement
under circumstances approved by DHS. If an employee in a Coast Guard
NAFI position is converted to an appropriated fund position under the
pay system established under this subpart, DHS must use the existing
NAFI rate to set pay upon conversion.
Sec. 9701.353 Setting pay upon promotion.
(a) Except as otherwise provided in this section, upon an
employee's promotion, DHS must provide an increase in the employee's
rate of basic pay equal to at least 8 percent. The rate of basic pay
after promotion may not be less than the minimum rate of the higher
band.
(b) DHS will issue implementing directives providing for an
increase other than the amount specified in paragraph (a) of this
section in the case of--
(1) An employee promoted from an Entry/Developmental band to a Full
Performance band (consistent with the pay progression plan established
for the Entry/Developmental band);
(2) An employee who was demoted and is then repromoted back to the
higher band; or
(3) Employees in other circumstances specified by DHS implementing
directives.
(c) An employee receiving a retained rate (i.e., a rate above the
maximum of the band) before promotion is entitled to a rate of basic
pay after promotion that is at least 8 percent higher than the maximum
rate of the employee's current band (except in circumstances specified
by DHS implementing directives). The rate of basic pay after promotion
may not be less than the minimum rate of the employee's new band rate
range or the employee's existing retained rate of basic pay. If the
maximum rate of the employee's new band rate range is less than the
employee's existing rate of basic pay, the employee will continue to be
entitled to the existing rate as a retained rate.
(d) DHS may determine the circumstances under which and the extent
to which any locality or special rate supplements are treated as basic
pay in applying the promotion increase rules in this section.
Sec. 9701.354 Setting pay upon demotion.
DHS will issue implementing directives regarding how to set an
employee's pay when he or she is demoted. The directives must
distinguish between demotions under adverse action procedures (as
defined in subpart F of this part) and other demotions (e.g., due to
expiration of a
[[Page 5329]]
temporary promotion or canceling of a promotion during a new
supervisor's probationary period). A reduction in basic pay upon
demotion under adverse action procedures may not exceed 10 percent
unless a larger reduction is needed to place the employee at the
maximum rate of the lower band.
Sec. 9701.355 Setting pay upon movement to a different occupational
cluster.
DHS will issue implementing directives regarding how to set an
employee's pay when he or she moves voluntarily or involuntarily to a
position in a different occupational cluster, including rules for
determining whether such a movement is to a higher or lower band for
the purpose of setting pay upon promotion or demotion under Sec. Sec.
9701.353 and 9701.354, respectively.
Sec. 9701.356 Pay retention.
(a) Subject to the requirements of this section, DHS will, after
coordination with OPM, issue implementing directives regarding the
application of pay retention. Pay retention prevents a reduction in
basic pay that would otherwise occur by preserving the former rate of
basic pay within the employee's new band or by establishing a retained
rate that exceeds the maximum rate of the new band.
(b) Pay retention must be based on the employee's rate of basic pay
in effect immediately before the action that would otherwise reduce the
employee's rate. A retained rate must be compared to the range of rates
of basic pay applicable to the employee's position.
(c) In applying Sec. 9701.323 (regarding pay increases provided at
the time of a rate range adjustment under Sec. 9701.322), any increase
in the rate of basic pay for an employee receiving a retained rate is
equal to one-half of the percentage value of any increase in the
minimum rate of the employee's band.
Sec. 9701.357 Miscellaneous.
(a) Except in the case of an employee who does not receive a pay
increase under Sec. Sec. 9701.323 or 9701.335 because of an
unacceptable rating of record, an employee's rate of basic pay may not
be less than the minimum rate of the employee's band (or the adjusted
minimum rate of that band).
(b) Except as provided in Sec. 9701.356, an employee's rate of
basic pay may not exceed the maximum rate of the employee's band rate
range.
(c) DHS must follow the rules for establishing pay periods and
computing rates of pay in 5 U.S.C. 5504 and 5505, as applicable. For
employees covered by 5 U.S.C. 5504, annual rates of pay must be
converted to hourly rates of pay in computing payments received by
covered employees.
(d) DHS will issue implementing directives regarding the movement
of employees to or from a band with a rate range that is increased by a
special rate supplement.
(e) For the purpose of applying the reduction-in-force provisions
of 5 CFR part 351, DHS must establish representative rates for all band
rate ranges.
(f) If a DHS employee moves from the pay system established under
this subpart to a GS position within DHS having a higher level of
duties and responsibilities, DHS may issue implementing directives that
provide for a special increase prior to the employee's movement in
recognition of the fact that the employee will not be eligible for a
promotion increase under the GS system.
Special Payments
Sec. 9701.361 Special skills payments.
DHS will issue implementing directives regarding additional
payments for specializations for which the incumbent is trained and
ready to perform at all times. DHS may determine the amount of the
payments and the conditions for eligibility, including any performance
or service agreement requirements. Payments may be made at the same
time as basic pay or in periodic lump-sum payments. Special skills
payments are not basic pay for any purpose and may be terminated or
reduced at any time without triggering pay retention or adverse action
procedures.
Sec. 9701.362 Special assignment payments.
DHS will issue implementing directives regarding additional
payments for employees serving on special assignments in positions
placing significantly greater demands on the employee than other
assignments within the employee's band. DHS may determine the amount of
the payments and the conditions for eligibility, including any
performance or service agreement requirements. Payments may be made at
the same time as basic pay or in periodic lump-sum payments. Special
assignment payments are not basic pay for any purpose and may be
terminated or reduced at any time without triggering pay retention
provisions or adverse action procedures.
Sec. 9701.363 Special staffing payments.
DHS will issue implementing directives regarding additional
payments for employees serving in positions for which DHS is
experiencing or anticipates significant recruitment and/or retention
problems. DHS may determine the amount of the payments and the
conditions for eligibility, including any performance or service
agreement requirements. Payments may be made at the same time as basic
pay or in periodic lump-sum payments. Special staffing payments are not
basic pay for any purpose and may be terminated or reduced at any time
without triggering pay retention or adverse action procedures.
Transitional Provisions
Sec. 9701.371 General.
(a) Sections 9701.371 through 9701.374 describe the transitional
provisions that apply when DHS employees are converted to a pay system
established under this subpart. An affected employee may convert from
the GS system, a prevailing rate system, the SL/ST system, or the SES
system, as provided in Sec. 9701.302. For the purpose of this section
and Sec. Sec. 9701.372 through 9701.374, the terms ``convert,''
``converted,'' ``converting,'' and ``conversion'' refer to employees
who become covered by the pay system without a change in position (as a
result of a coverage determination made under Sec. 9701.102(b)) and
exclude employees who are reassigned or transferred from a noncovered
position to a position already covered by the DHS system.
(b) DHS will issue implementing directives prescribing the policies
and procedures necessary to implement these transitional provisions.
Sec. 9701.372 Creating initial pay ranges.
(a) DHS must, after coordination with OPM, set the initial band
rate ranges for the DHS pay system established under this subpart. The
initial ranges will link to the ranges that apply to converted
employees in their previously applicable pay system (taking into
account any applicable special rates and locality payments or
supplements).
(b) For employees who are law enforcement officers as defined in 5
U.S.C. 5541(3) and who were covered by the GS system immediately before
conversion, the initial ranges must provide rates of basic pay that
equal or exceed the rates of basic pay these officers received under
the GS system (taking into account any applicable special rates and
locality payments or supplements).
Sec. 9701.373 Conversion of employees to the DHS pay system.
(a) When a pay system is established under this subpart and applied
to a category of employees, DHS must convert employees to the system
without a reduction in their rate of pay
[[Page 5330]]
(including basic pay and any applicable locality payment under 5 U.S.C.
5304, special rate under 5 U.S.C. 5305, locality rate supplement under
Sec. 9701.332, or special rate supplement under Sec. 9701.333).
(b) When an employee receiving a special rate under 5 U.S.C. 5305
before conversion is converted to an equal rate of pay under the DHS
pay system that consists of a basic rate and a locality or special rate
supplement, the conversion will not be considered as resulting in a
reduction in basic pay for the purpose of applying subpart F of this
part.
(c) If another personnel action (e.g., promotion, geographic
movement) takes effect on the same day as the effective date of an
employee's conversion to the new pay system, DHS must process the other
action under the rules pertaining to the employee's former system
before processing the conversion action.
(d) An employee on a temporary promotion at the time of conversion
must be returned to his or her official position of record prior to
processing the conversion. If the employee is temporarily promoted
immediately after the conversion, pay must be set under the rules for
promotion increases under the DHS system.
(e) The Secretary has discretion to make one-time pay adjustments
for GS and prevailing rate employees when they are converted to the DHS
pay system. DHS will issue implementing directives governing any such
pay adjustment, including rules governing employee eligibility, pay
computations, and the timing of any such pay adjustment.
(f) The Secretary has discretion to convert entry/developmental
employees in noncompetitive career ladder paths to the pay progression
plan established for the Entry/Developmental band to which the employee
is assigned under the DHS pay system. DHS will issue implementing
directives governing any such conversion, including rules governing
employee eligibility, pay computations, and the timing of any such
conversion. As provided in paragraph (a) of this section, DHS must
convert employees without a reduction in their rate of pay.
Sec. 9701.374 Special transition rules for Federal Air Marshal
Service.
Notwithstanding any other provision in this subpart, if DHS
transfers Federal Air Marshal Service positions from the Transportation
Security Administration (TSA) to another organization within DHS, DHS
may cover those positions under a pay system that is parallel to the
pay system that was applicable to the Federal Air Marshal Service
within TSA. DHS may, after coordination with OPM, modify that system.
DHS will issue implementing directives on converting Federal Air
Marshal Service employees to any new pay system that may subsequently
be established under this subpart, consistent with the conversion rules
in Sec. 9701.373.
Subpart D--Performance Management
Sec. 9701.401 Purpose.
(a) This subpart provides for the establishment in the Department
of Homeland Security of at least one performance management system as
authorized by 5 U.S.C. chapter 97.
(b) The performance management system established under this
subpart, working in conjunction with the pay system established under
subpart C of this part, is designed to promote and sustain a high-
performance culture by incorporating the following features:
(1) Adherence to merit principles set forth in 5 U.S.C. 2301;
(2) A fair, credible, and transparent employee performance
appraisal system;
(3) A link between elements of the pay system established in
subpart C of this part, the employee performance appraisal system, and
the Department's strategic plan;
(4) Employee involvement in the design and implementation of the
system (as provided in Sec. 9701.105);
(5) Adequate training and retraining for supervisors, managers, and
employees in the implementation and operation of the performance
management system;
(6) Periodic performance feedback and dialogue among supervisors,
managers, and employees throughout the appraisal period, with specific
timetables for review;
(7) Effective safeguards so that the management of the system is
fair and equitable and based on employee performance; and
(8) A means for ensuring that adequate resources are allocated for
the design, implementation, and administration of the performance
management system that supports the pay system established under
subpart C of this part.
Sec. 9701.402 Coverage.
(a) This subpart applies to eligible DHS employees in the
categories listed in paragraph (b) of this section, subject to a
determination by the Secretary or designee under Sec. 9701.102(b),
except as provided in paragraph (c) of this section.
(b) The following employees are eligible for coverage under this
subpart:
(1) Employees who would otherwise be covered by 5 U.S.C. chapter
43; and
(2) Employees who were excluded from chapter 43 by OPM under 5 CFR
430.202(d) prior to the date of coverage of this subpart, as determined
under Sec. 9701.102(b).
(c) This subpart does not apply to employees who are not expected
to be employed longer than a minimum period (as defined in Sec.
9701.404) during a single 12-month period.
Sec. 9701.403 Waivers.
When a specified category of employees is covered by the
performance management system(s) established under this subpart, 5
U.S.C. chapter 43 is waived with respect to that category of employees.
Sec. 9701.404 Definitions.
In this subpart--
Appraisal means the review and evaluation of an employee's
performance.
Appraisal period means the period of time established under a
performance management system for reviewing employee performance.
Competencies means the measurable or observable knowledge, skills,
abilities, behaviors, and other characteristics required by a position.
Contribution means a work product, service, output, or result
provided or produced by an employee that supports the Departmental or
organizational mission, goals, or objectives.
Minimum period means the period of time established by DHS during
which an employee must perform before receiving a rating of record.
Performance means accomplishment of work assignments or
responsibilities.
Performance expectations means that which an employee is required
to do, as described in Sec. 9701.406, and may include observable or
verifiable descriptions of quality, quantity, timeliness, and cost
effectiveness.
Performance management means applying the integrated processes of
setting and communicating performance expectations, monitoring
performance and providing feedback, developing performance and
addressing poor performance, and rating and rewarding performance in
support of the organization's goals and objectives.
Performance management system means the policies and requirements
established under this subpart, as supplemented by DHS implementing
directives, for setting and communicating employee performance
expectations, monitoring performance and providing feedback, developing
performance and addressing poor
[[Page 5331]]
performance, and rating and rewarding performance.
Rating of record means a performance appraisal prepared--
(1) At the end of an appraisal period covering an employee's
performance of assigned duties against performance expectations over
the applicable period; or
(2) To support a pay determination, including one granted in
accordance with subpart C of this part, a within-grade increase granted
under 5 CFR 531.404, or a pay determination granted under other
applicable rules.
Unacceptable performance means the failure to meet one or more
performance expectations.
Sec. 9701.405 Performance management system requirements.
(a) DHS will issue implementing directives that establish one or
more performance management systems for DHS employees, subject to the
requirements set forth in this subpart.
(b) Each DHS performance management system must--
(1) Specify the employees covered by the system(s);
(2) Provide for the periodic appraisal of the performance of each
employee, generally once a year, based on performance expectations.
(3) Specify the minimum period during which an employee must
perform before receiving a rating of record;
(4) Hold supervisors and managers accountable for effectively
managing the performance of employees under their supervision as set
forth in paragraph (c) of this section;
(5) Include procedures for setting and communicating performance
expectations, monitoring performance and providing feedback, and
developing, rating, and rewarding performance; and
(6) Specify the criteria and procedures to address the performance
of employees who are detailed or transferred and for employees in other
special circumstances.
(c) In fulfilling the requirements of paragraph (b) of this
section, supervisors and managers are responsible for--
(1) Clearly communicating performance expectations and holding
employees responsible for accomplishing them;
(2) Making meaningful distinctions among employees based on
performance;
(3) Fostering and rewarding excellent performance; and
(4) Addressing poor performance.
Sec. 9701.406 Setting and communicating performance expectations.
(a) Performance expectations must align with and support the DHS
mission and its strategic goals, organizational program and policy
objectives, annual performance plans, and other measures of
performance. Such expectations include those general performance
expectations that apply to all employees, such as standard operating
procedures, handbooks, or other operating instructions and requirements
associated with the employee's job, unit, or function.
(b) Supervisors and managers must communicate performance
expectations, including those that may affect an employee's retention
in the job. Performance expectations need not be in writing, but must
be communicated to the employee prior to holding the employee
accountable for them. However, notwithstanding this requirement,
employees are always accountable for demonstrating appropriate
standards of conduct, behavior, and professionalism, such as civility
and respect for others.
(c) Performance expectations may take the form of--
(1) Goals or objectives that set general or specific performance
targets at the individual, team, and/or organizational level;
(2) Organizational, occupational, or other work requirements, such
as standard operating procedures, operating instructions,
administrative manuals, internal rules and directives, and/or other
instructions that are generally applicable and available to the
employee;
(3) A particular work assignment, including expectations regarding
the quality, quantity, accuracy, timeliness, and/or other expected
characteristics of the completed assignment;
(4) Competencies an employee is expected to demonstrate on the job,
and/or the contributions an employee is expected to make; or
(5) Any other means, as long as it is reasonable to assume that the
employee will understand the performance that is expected.
(d) Supervisors must involve employees, insofar as practicable, in
the development of their performance expectations. However, final
decisions regarding performance expectations are within the sole and
exclusive discretion of management.
Sec. 9701.407 Monitoring performance and providing feedback.
In applying the requirements of the performance management system
and its implementing directives and policies, supervisors must--
(a) Monitor the performance of their employees and the
organization; and
(b) Provide timely periodic feedback to employees on their actual
performance with respect to their performance expectations, including
one or more interim performance reviews during each appraisal period.
Sec. 9701.408 Developing performance and addressing poor performance.
(a) Subject to budgetary and other organizational constraints, a
supervisor must--
(1) Provide employees with the proper tools and technology to do
the job; and
(2) Develop employees to enhance their ability to perform.
(b) If during the appraisal period a supervisor determines that an
employee's performance is unacceptable, the supervisor must--
(1) Consider the range of options available to address the
performance deficiency, which include but are not limited to remedial
training, an improvement period, a reassignment, an oral warning, a
letter of counseling, a written reprimand, and/or an adverse action (as
defined in subpart F of this part); and
(2) Take appropriate action to address the deficiency, taking into
account the circumstances, including the nature and gravity of the
unacceptable performance and its consequences.
(c) As specified in subpart G of this part, employees may appeal
adverse actions based on unacceptable performance.
Sec. 9701.409 Rating and rewarding performance.
(a)(1) Except as provided in paragraphs (a)(2) and (3) of this
section, each DHS performance management system must establish a single
summary rating level of unacceptable performance, a summary rating
level of fully successful performance (or equivalent), and at least one
summary rating level above fully successful performance.
(2) For employees in an Entry/Developmental band, the DHS
performance management system(s) may establish two summary rating
levels, i.e., an unacceptable rating level and a rating level of fully
successful (or equivalent).
(3) At his or her sole and exclusive discretion, the Secretary or
designee may under extraordinary circumstances establish a performance
management system with two summary rating levels, i.e., an unacceptable
level and a higher rating level, for employees not in an Entry/
Developmental band.
[[Page 5332]]
(b) A supervisor or other rating official must prepare and issue a
rating of record after the completion of the appraisal period. An
additional rating of record may be issued to reflect a substantial
change in the employee's performance when appropriate. A rating of
record will be used as a basis for determining--
(1) An increase in basic pay under Sec. 9701.324;
(2) A locality or special rate supplement increase under Sec.
9701.336;
(3) A performance pay increase determination under Sec.
9701.342(a);
(4) A within-grade increase determination under 5 CFR 531.404,
prior to conversion to the pay system established under subpart C of
this part;
(5) A pay determination under any other applicable pay rules;
(6) Awards under any legal authority, including 5 U.S.C. chapter
45, 5 CFR part 451, and a Departmental or organizational awards
program;
(7) Eligibility for promotion; or
(8) Such other action that DHS considers appropriate, as specified
in the implementing directives.
(c) A rating of record must assess an employee's performance with
respect to his or her performance expectations and/or relative
contributions and is considered final when issued to the employee with
all appropriate reviews and signatures.
(d) DHS may not impose a forced distribution or quota on any rating
level or levels.
(e) A rating of record issued under this subpart is an official
rating of record for the purpose of any provision of title 5, Code of
Federal Regulations, for which an official rating of record is
required.
(f) DHS may not lower the rating of record of an employee on an
approved absence from work, including the absence of a disabled veteran
to seek medical treatment, as provided in Executive Order 5396.
(g) A rating of record may be grieved by a non-bargaining unit
employee (or a bargaining unit employee when no negotiated procedure
exists) through an administrative grievance procedure established by
DHS. A bargaining unit employee may grieve a rating of record through a
negotiated grievance procedure, as provided in subpart E of this part.
An arbitrator hearing a grievance is subject to the standards of review
set forth in Sec. 9701.521(g)(2). Except as otherwise provided by law,
an arbitrator may not conduct an independent evaluation of the
employee's performance or otherwise substitute his or her judgment for
that of the supervisor.
(h) A supervisor or other rating official may prepare an additional
performance appraisal for the purposes specified in the applicable
performance management system (e.g., transfers and details) at any time
after the completion of the minimum period. Such an appraisal is not a
rating of record.
(i) DHS implementing directives will establish policies and
procedures for crediting performance in a reduction in force, including
policies for assigning additional retention credit based on
performance. Such policies must comply with 5 U.S.C. chapter 35 and 5
CFR 351.504.
Sec. 9701.410 DHS responsibilities.
In carrying out its performance management system(s), DHS must--
(a) Transfer ratings between subordinate organizations and to other
Federal departments or agencies;
(b) Evaluate its performance management system(s) for effectiveness
and compliance with this subpart, DHS implementing directives and
policies, and the provisions of 5 U.S.C. chapter 23 that set forth the
merit system principles and prohibited personnel practices;
(c) Provide OPM with a copy of the implementing directives,
policies, and procedures that implement this subpart; and
(d) Comply with 29 CFR 1614.102(a)(5), which requires agencies to
review, evaluate, and control managerial and supervisory performance to
ensure enforcement of the policy of equal opportunity.
Subpart E--Labor-Management Relations
Sec. 9701.501 Purpose.
This subpart contains the regulations implementing the provisions
of 5 U.S.C. 9701(b) relating to the Department's labor-management
relations system. The Department was created in recognition of the
paramount interest in safeguarding the American people, without
compromising statutorily protected employee rights. For this reason
Congress stressed that personnel systems established by the Department
and OPM must be flexible and contemporary, enabling the Department to
rapidly respond to threats to our Nation. The labor-management
relations regulations in this subpart are designed to meet these
compelling concerns and must be interpreted with the Department's
mission foremost in mind. The regulations also recognize the rights of
DHS employees to organize and bargain collectively, subject to any
exclusion from coverage or limitation on negotiability established by
law, including these regulations, applicable Executive orders, and any
other legal authority.
Sec. 9701.502 Rule of construction.
In interpreting this subpart, the rule of construction in Sec.
9701.106(a)(2) must be applied.
Sec. 9701.503 Waivers.
When a specified category of employees is covered by the labor-
management relations system established under this subpart, the
provisions of 5 U.S.C. 7101 through 7135 are waived with respect to
that category of employees, except as otherwise specified in this part
(including Sec. 9701.106).
Sec. 9701.504 Definitions.
In this subpart:
Authority means the Federal Labor Relations Authority described in
5 U.S.C. 7104(a).
Collective bargaining means the performance of the mutual
obligation of a management representative of the Department and an
exclusive representative of employees in an appropriate unit in the
Department to meet at reasonable times and to consult and bargain in a
good faith effort to reach agreement with respect to the conditions of
employment affecting such employees and to execute, if requested by
either party, a written document incorporating any collective
bargaining agreement reached, but the obligation referred to in this
paragraph does not compel either party to agree to a proposal or to
make a concession.
Collective bargaining agreement means an agreement entered into as
a result of collective bargaining pursuant to the provisions of this
subpart.
Component means any organizational subdivision of the Department.
Conditions of employment means personnel policies, practices, and
matters affecting working conditions-whether established by rule,
regulation, or otherwise--except that such term does not include
policies, practices, and matters relating to--
(1) Political activities prohibited under 5 U.S.C. chapter 73,
subchapter III;
(2) The classification of any position, including any
classification determinations under subpart B of this part;
(3) The pay of any position, including any determinations regarding
pay or adjustments thereto under subpart C of this part; or
(4) Any matters specifically provided for by Federal statute.
[[Page 5333]]
Confidential employee means an employee who acts in a confidential
capacity with respect to an individual who formulates or effectuates
management policies in the field of labor-management relations.
Day means a calendar day.
Dues means dues, fees, and assessments.
Exclusive representative means any labor organization which is
recognized as the exclusive representative of employees in an
appropriate unit consistent with the Department's organizational
structure, pursuant to 5 U.S.C. 7111 or as otherwise provided by Sec.
9701.514.
Grievance means any complaint--
(1) By any employee concerning any matter relating to the
conditions of employment of the employee;
(2) By any labor organization concerning any matter relating to the
conditions of employment of any employee; or
(3) By any employee, labor organization, or the Department
concerning--
(i) The effect or interpretation, or a claim of breach, of a
collective bargaining agreement; or
(ii) Any claimed violation, misinterpretation, or misapplication of
any law, rule, or regulation issued for the purpose of affecting
conditions of employment.
HSLRB means the Homeland Security Labor Relations Board.
Labor organization means an organization composed in whole or in
part of Federal employees, in which employees participate and pay dues,
and which has as a purpose the dealing with the Department concerning
grievances and conditions of employment, but does not include--
(1) An organization which, by its constitution, bylaws, tacit
agreement among its members, or otherwise, denies membership because of
race, color, creed, national origin, sex, age, preferential or
nonpreferential civil service status, political affiliation, marital
status, or handicapping condition;
(2) An organization which advocates the overthrow of the
constitutional form of government of the United States;
(3) An organization sponsored by the Department; or
(4) An organization which participates in the conduct of a strike
against the Government or any agency thereof or imposes a duty or
obligation to conduct, assist, or participate in such a strike.
Management official means an individual employed by the Department
in a position the duties and responsibilities of which require or
authorize the individual to formulate, determine, or influence the
policies of the Department or who has the authority to recommend such
action, if the exercise of the authority is not merely routine or
clerical in nature, but requires the consistent exercise of independent
judgment.
Professional employee has the meaning given that term in 5 U.S.C.
7103(a)(15).
Supervisor means an individual employed by the Department having
authority in the interest of the Department to hire, direct, assign,
promote, reward, transfer, furlough, layoff, recall, suspend,
discipline, or remove employees, to adjust their grievances, or to
effectively recommend such action, if the exercise of the authority is
not merely routine or clerical in nature but requires the consistent
exercise of independent judgment.
Sec. 9701.505 Coverage.
(a) Employees covered. This subpart applies to eligible DHS
employees, subject to a determination by the Secretary or designee
under Sec. 9701.102(b), except as provided in paragraph (b) of this
section. DHS employees who would otherwise be covered by 5 U.S.C.
chapter 71 are eligible for coverage under this subpart. In addition,
this subpart applies to an employee whose employment has ceased because
of an unfair labor practice under Sec. 9701.517 of this subpart and
who has not obtained any other regular and substantially equivalent
employment.
(b) Employees excluded. This subpart does not apply to--
(1) An alien or noncitizen of the United States who occupies a
position outside the United States;
(2) A member of the uniformed services as defined in 5 U.S.C.
2101(3);
(3) A supervisor or a management official;
(4) Any person who participates in a strike in violation of 5
U.S.C. 7311;
(5) Employees of the United States Secret Service, including the
United States Secret Service Uniformed Division;
(6) Employees of the Transportation Security Administration; or
(7) Any employee excluded pursuant to Sec. 9701.514 or any other
legal authority.
Sec. 9701.506 Impact on existing agreements.
(a) Any provision of a collective bargaining agreement that is
inconsistent with this part and/or its implementing directives is
unenforceable on the effective date of coverage under the applicable
subpart or directive. In accordance with procedures and time limits
established by the HSLRB under Sec. 9701.509, an exclusive
representative may appeal to the HSLRB the Department's determination
that a provision is unenforceable. Provisions that are identified by
the Department as unenforceable remain unenforceable unless held
otherwise by the HSLRB on appeal. The Secretary or designee, in his or
her sole and exclusive discretion, may continue all or part of a
particular provision(s) with respect to a specific category or
categories of employees and may cancel such continued provisions at any
time; such determinations are not precedential.
(b) Upon request by an exclusive representative, the parties will
have 60 days after the effective date of coverage under the applicable
subpart and/or implementing directive to bring into conformance those
remaining negotiable terms directly affected by the terms rendered
unenforceable by the applicable subpart and/or implementing directive.
If the parties fail to reach agreement by that date, they may utilize
the negotiation impasse provisions of Sec. 9701.519 to resolve the
matter. Agreements reached under this section are subject to approval
under Sec. 9701.515(d). Nothing in this paragraph will delay the
effective date of an implementing directive.
Sec. 9701.507 Employee rights.
Each employee has the right to form, join, or assist any labor
organization, or to refrain from any such activity, freely and without
fear of penalty or reprisal, and each employee must be protected in the
exercise of such right. Except as otherwise provided under this
subpart, such right includes the right--
(a) To act for a labor organization in the capacity of a
representative and the right, in that capacity, to present the views of
the labor organization to heads of agencies and other officials of the
executive branch of the Government, the Congress, or other appropriate
authorities; and
(b) To engage in collective bargaining with respect to conditions
of employment through representatives chosen by employees under this
subpart.
Sec. 9701.508 Homeland Security Labor Relations Board.
(a) Composition. (1) The Homeland Security Labor Relations Board is
composed of at least three members who will be appointed by the
Secretary for terms of 3 years, except that the
[[Page 5334]]
appointments of the initial HSLRB members will be for terms of 2, 3,
and 4 years, respectively. The Secretary may extend the term of any
member beyond 3 years when necessary to provide for an orderly
transition and/or appoint the member for an additional term. The
Secretary, in his or her sole and exclusive discretion, may appoint
additional members to the HSLRB; in so doing, he or she will make such
appointments to ensure that the HSLRB consists of an odd number of
members.
(2) Members of the HSLRB must be independent, distinguished
citizens of the United States who are well known for their integrity
and impartiality. Members must have expertise in labor relations, law
enforcement, or national/homeland or other related security matters. At
least one member of the Board must have experience in labor relations.
Members must be able to acquire and maintain an appropriate security
clearance. Members may be removed by the Secretary on the same grounds
as an FLRA member.
(3) An individual chosen to fill a vacancy on the HSLRB will be
appointed for the unexpired term of the member who is replaced.
(b) Appointment of the Chair. The Secretary, at his or her sole and
exclusive discretion, will appoint one member to serve as Chair of the
HSLRB.
(c) Appointment procedures for non-Chair HSLRB members. (1) The
appointments of the two non-Chair HSLRB members will be made by the
Secretary after he or she considers any lists of nominees submitted by
labor organizations that represent employees in the Department of
Homeland Security.
(2) The submission of lists of recommended nominees by labor
organizations must be in accordance with timelines and requirements set
forth by the Secretary, who may provide for additional consultation in
order to obtain further information about a recommended nominee. The
ability of the Secretary to appoint HSLRB members may not be delayed or
otherwise affected by the failure of any labor organization to provide
a list of nominees that meets the timeframe and requirements
established by the Secretary.
(d) Appointment of additional non-Chair HSLRB members. If the
Secretary determines that additional members are needed, he or she may,
subject to the criteria set forth in paragraph (a)(2) of this section,
appoint the additional members according to the procedures established
by paragraph (c) of this section.
(e) Filling a HSLRB vacancy. A HSLRB vacancy will be filled
according to the procedure in effect at the time of the appointment.
(f) Procedures of the HSLRB. (1) The HSLRB will establish
procedures for the fair, impartial, and expeditious assignment and
disposition of cases. To the extent practicable, the HSLRB will use a
single, integrated process to address all matters associated with a
negotiations dispute, including unfair labor practices, negotiability
disputes, and bargaining impasses. The HSLRB may, pursuant to its
regulations, use a combination of mediation, factfinding, and any other
appropriate dispute resolution method to resolve all such disputes at
the earliest practicable time and with a minimum of process. Such
proceedings will be conducted by the HSLRB, a HSLRB member, or employee
of the HSLRB. Individual HSLRB members may decide a particular dispute.
However, at the motion of a party upon its initial request for HSLRB
assistance or upon the HSLRB's own motion at any time, the full HSLRB
(or, where the Secretary appoints more than three members, a three-
person panel of the HSLRB) may decide a particular dispute involving a
matter of first impression or a major policy.
(2) In cases where the full HSLRB acts, a vote of the majority of
the HSLRB (or a three-person panel of the HSLRB) will be dispositive. A
vacancy on the HSLRB does not impair the right of the remaining members
to exercise all of the powers of the HSLRB. The vote of the Chair will
be dispositive in the event of a tie.
(g) Finality of HSLRB decisions. Decisions of the HSLRB are final
and binding. However, in cases involving unfair labor practices and/or
negotiability disputes decided by a single member, a party may seek
review of that decision with the full HSLRB, according to rules
prescribed by the HSLRB. In such cases the initial decision is stayed
pending the final decision by the full HSLRB.
(h) Review of a HSLRB decision. (1) In order to obtain judicial
review of a HSLRB decision, a party must request a review of the record
of a HSLRB decision by the Authority by filing such a request in
writing within 15 days after the issuance of the decision. Within 15
days after the Authority's receipt of the request for a review of the
record, any response must be filed. A party may each submit, and the
Authority may grant for good cause shown, a request for a single
extension of time not to exceed a maximum of 15 additional days. The
Authority will establish, in conjunction with the HSLRB, standards for
the sufficiency of the record and other procedures, including notice to
the parties. The Authority must defer to findings of fact and
interpretations of this part made by the HSLRB and sustain the HSLRB's
decision unless the requesting party shows that the HSLRB's decision
was--
(i) Arbitrary, capricious, an abuse of discretion, or otherwise not
in accordance with law;
(ii) Based on error in applying the HSLRB's procedures that
resulted in substantial prejudice to a party affecting the outcome; or
(iii) Unsupported by substantial evidence.
(2) The Authority must complete its review of the record and issue
a final decision within 30 days after receiving the party's timely
response to such request for review. This 30-day time limit is
mandatory, except that the Authority may extend its time for review by
a maximum of 15 additional days if it determines that--
(i) The case is unusually complex; or
(ii) An extension is necessary to prevent any prejudice to the
parties that would otherwise result.
(3) No extension beyond that provided by paragraph (h)(2) of this
section is permitted.
(4) If the Authority does not issue a final decision within the
mandatory time limit established by paragraph (h) of this section, the
Authority will be considered to have denied the request for review of
the HSLRB's decision, which will constitute a final decision of the
Authority and is subject to judicial review in accordance with 5 U.S.C.
7123.
Sec. 9701.509 Powers and duties of the HSLRB.
(a) The HSLRB may, to the extent provided in this subpart and in
accordance with regulations prescribed by the HSLRB--
(1) Resolve issues relating to the scope of bargaining and the duty
to bargain in good faith under Sec. 9701.518 and conduct hearings and
resolve complaints of unfair labor practices concerning--
(i) The duty to bargain in good faith; and
(ii) Strikes, work stoppages, slowdowns, and picketing, or
condoning such activity by failing to take action to prevent or stop
such activity;
(2) Resolve disputes concerning requests for information under
Sec. 9701.515(b)(5) and (c);
(3) Resolve exceptions to arbitration awards involving the exercise
of management rights, as defined in
[[Page 5335]]
Sec. 9701.511, and the duty to bargain, as defined in Sec. 9701.518.
The HSLRB must conduct any review of an arbitral award in accordance
with the same standards set forth in 5 U.S.C. 7122(a), which is not
waived for the purpose of this subpart but which is modified to apply
to this section and to read ``HSLRB'' wherever the term ``Authority''
appears;
(4) Resolve negotiation impasses in accordance with Sec. 9701.519;
(5) Conduct de novo review of legal conclusions involving all
matters within the HSLRB's jurisdiction;
(6) Have discretion to evaluate the evidence presented in the
record and reach its own independent conclusions with respect to the
matters at issue; and
(7) Assume jurisdiction over any matter concerning Department
employees that has been submitted to FLRA pursuant to Sec. 9701.510,
if the HSLRB determines that the matter affects homeland security.
(b) The HSLRB may issue binding Department-wide opinions, which may
be appealed as if they were decisions of the HSLRB in accordance with
Sec. 9701.508(h).
(c) In issuing opinions under paragraph (b) of this section, the
HSLRB may elect to consult with the Authority.
(d)(1) In any matter filed with the HSLRB, if the responding party
believes that the HSLRB lacks jurisdiction, that party must timely
raise the issue with the HSLRB and simultaneously file a copy of its
response with the Authority in accordance with regulations established
by the HSLRB. The HSLRB's determination with regard to its jurisdiction
in a particular matter is final and not subject to review by the
Authority.
(2) If a matter involves one or more issues that are appropriately
before the HSLRB and one or more issues that are appropriately before
the Authority, the matter must be filed with the HSLRB in accordance
with its procedures. The HSLRB will have primary jurisdiction over the
matter. The HSLRB will decide those issues within its jurisdiction and
will promptly transfer the matter to the Authority for resolution of
any remaining issues.
Sec. 9701.510 Powers and duties of the Federal Labor Relations
Authority.
(a) The Federal Labor Relations Authority may, to the extent
provided in this subpart and in accordance with regulations prescribed
by the Authority, make the following determinations with respect to the
Department:
(1) Determine the appropriateness of units pursuant to the
provisions of Sec. 9701.514;
(2) Supervise or conduct elections to determine whether a labor
organization has been selected as an exclusive representative by a
majority of the employees in an appropriate unit and otherwise
administer the provisions of 5 U.S.C. 7111 relating to the according of
exclusive recognition to labor organizations, which are not waived for
the purpose of this subpart but which are modified to apply to this
section;
(3) Conduct hearings and resolve complaints of unfair labor
practices under Sec. 9701.517(a)(1) through (4) and (b)(1) through
(4), and in accordance with the provisions of 5 U.S.C. 7118, which is
not waived for this purpose but which is modified to apply to this
section;
(4) Resolve exceptions to arbitrators' awards otherwise in its
jurisdiction and not involving the exercise of management rights under
Sec. 9701.511, the duty to bargain, as defined in Sec. 9701.518, and
matters under Sec. 9701.521(f); and
(5) Review HSLRB decisions and issue final decisions pursuant to
Sec. 9701.508(h).
(b) In any matter filed with the Authority, if the responding party
believes that the Authority lacks jurisdiction, that party must timely
raise the issue with the Authority and simultaneously file a copy of
its response with the HSLRB in accordance with regulations established
by the Authority. The Authority must promptly transfer the case to the
HSLRB, which will determine whether the matter is within the HSLRB's
jurisdiction. If the HSLRB determines that the matter is not within its
jurisdiction, the HSLRB will return the matter to the Authority for
appropriate action. The HSLRB's determination with regard to its
jurisdiction in a particular matter is final and not subject to review
by the Authority.
(c) Judicial review of any Authority decision is as prescribed in 5
U.S.C. 7123, which is not waived.
Sec. 9701.511 Management rights.
(a) Subject to paragraphs (b), (c), and (d) of this section,
nothing in this subpart may affect the authority of any management
official or supervisor of the Department--
(1) To determine the mission, budget, organization, number of
employees, and internal security practices of the Department;
(2) To hire, assign, and direct employees in the Department; to
assign work, make determinations with respect to contracting out, and
to determine the personnel by which Departmental operations may be
conducted; to determine the numbers, types, grades, or occupational
clusters and bands of employees or positions assigned to any
organizational subdivision, work project or tour of duty, and the
technology, methods, and means of performing work; to assign and deploy
employees to meet any operational demand; and to take whatever other
actions may be necessary to carry out the Department's mission; and
(3) To lay off and retain employees, or to suspend, remove, reduce
in grade, band, or pay, or take other disciplinary action against such
employees or, with respect to filling positions, to make selections for
appointments from properly ranked and certified candidates for
promotion or from any other appropriate source.
(b) Management is prohibited from bargaining over the exercise of
any authority under paragraph (a) of this section or the procedures
that it will observe in exercising the authorities set forth in
paragraphs (a)(1) and (2) of this section.
(c) Notwithstanding paragraph (b) of this section, management will
confer with an exclusive representative over the procedures it will
observe in exercising the authorities set forth in paragraphs (a)(1)
and (2) of this section, in accordance with the process set forth in
Sec. 9701.512.
(d) If an obligation exists under Sec. 9701.518 to bargain,
confer, or consult regarding the exercise of any authority under
paragraph (a) of this section, management must provide notice to the
exclusive representative concurrently with the exercise of that
authority and an opportunity to present its views and recommendations
regarding the exercise of such authority under paragraph (a) of this
section. However, nothing in this section prevents management from
exercising its discretion to provide notice as far in advance of the
exercise of that authority as appropriate. Further, nothing in
paragraph (d) of this section establishes an independent right to
bargain, confer, or consult.
(e) To the extent otherwise required by Sec. 9701.518 and at the
request of an exclusive representative, the parties will bargain at the
level of recognition (unless otherwise delegated below that level, at
their sole and exclusive discretion) over--
(1) Appropriate arrangements for employees adversely affected by
the exercise of any authority under paragraph (a)(3) of this section
and procedures which management officials and supervisors will observe
in exercising any authority under paragraph (a)(3) of this section; and
[[Page 5336]]
(2)(i) Appropriate arrangements for employees adversely affected by
the exercise of any authority under paragraph (a)(1) or (2) of this
section, provided that the effects of such exercise have a significant
and substantial impact on the bargaining unit, or on those employees in
that part of the bargaining unit affected by the action or event, and
are expected to exceed or have exceeded 60 days. Appropriate
arrangements within the duty to bargain include proposals on matters
such as--
(A) Personal hardships and safety measures; and
(B) Reimbursement of out-of-pocket expenses incurred by employees
as the direct result of the exercise of authorities under this section,
to the extent such reimbursement is in accordance with applicable law
and governing regulations.
(ii) Appropriate arrangements within the duty to bargain do not
include proposals on matters such as--
(A) The routine assignment to specific duties, shifts, or work on a
regular or overtime basis; and
(B) Compensation for expenses not actually incurred, or pay or
credit for work not actually performed.
(f) Nothing in this section will delay or prevent the Department
from exercising its authority. Any agreements reached with respect to
paragraph (e)(2) of this section will not be precedential or binding on
subsequent acts, or retroactively applied, except at the Department's
sole, exclusive, and unreviewable discretion.
Sec. 9701.512 Conferring on procedures for the exercise of management
rights.
(a) As provided by Sec. 9701.511(c), management, at the level of
recognition, will confer with an appropriate exclusive representative
to consider its views and recommendations with regard to procedures
that management will observe in exercising its rights under Sec.
9701.511(a)(1) and (2). This process is not subject to the requirements
established by Sec. Sec. 9701.517(a)(5) (regarding enforcement of the
duty to consult or negotiate), 9701.518 (regarding the duty to bargain
and consult), and 9701.519 (regarding impasse procedures). Nothing in
this section requires that the parties reach agreement on any covered
matter. The parties may, upon mutual agreement, provide for the Federal
Mediation and Conciliation Service or another third party to assist in
this process. Neither the HSLRB nor the Authority may intervene in this
process.
(b) The parties will meet at reasonable times and places but for no
longer than 30 days, including any voluntary third party assistance,
unless the parties mutually agree to extend this period.
(c) Nothing in the process established under this section will
delay the exercise of a management right under Sec. 9701.511(a)(1) and
(2).
(d) Management retains the sole, exclusive, and unreviewable
discretion to determine the procedures that it will observe in
exercising the authorities set forth in Sec. 9701.511(a)(1) and (2)
and to deviate from such procedures, as necessary.
Sec. 9701.513 Exclusive recognition of labor organizations.
The Department must accord exclusive recognition to a labor
organization if the organization has been selected as the
representative, in a secret ballot election, by a majority of the
employees in an appropriate unit as determined by the Authority, who
cast valid ballots in the election.
Sec. 9701.514 Determination of appropriate units for labor
organization representation.
(a) The Authority will determine the appropriateness of any unit.
The Authority must determine in each case whether, in order to ensure
employees the fullest freedom in exercising the rights guaranteed under
this subpart, the appropriate unit should be established on a
Department, plant, installation, functional, or other basis and will
determine any unit to be an appropriate unit only if the determination
will ensure a clear and identifiable community of interest among the
employees in the unit and will promote effective dealings with, and
efficiency of the operations of the Department, consistent with the
Department's mission and organizational structure.
(b) A unit may not be determined to be appropriate under this
section solely on the basis of the extent to which employees in the
proposed unit have organized, nor may a unit be determined to be
appropriate if it includes--
(1) Except as provided under 5 U.S.C. 7135(a)(2), which is not
waived for the purpose of this subpart, any management official or
supervisor;
(2) A confidential employee;
(3) An employee engaged in personnel work in other than a purely
clerical capacity;
(4) An employee engaged in administering the provisions of this
subpart;
(5) Both professional employees and other employees, unless a
majority of the professional employees vote for inclusion in the unit;
(6) Any employee engaged in intelligence, counterintelligence,
investigative, or security work which directly affects national
security; or
(7) Any employee primarily engaged in investigation or audit
functions relating to the work of individuals employed by the
Department whose duties directly affect the internal security of the
Department, but only if the functions are undertaken to ensure that the
duties are discharged honestly and with integrity.
(c) Pursuant to 6 U.S.C. 412(b)(2), a unit to which continued
recognition was provided upon transfer to DHS may not include an
employee whose primary duty has materially changed to consist of
intelligence, counterintelligence, or investigative work directly
related to terrorism investigation.
(d) Any employee who is engaged in administering any provision of
law or this subpart relating to labor-management relations may not be
represented by a labor organization--
(1) Which represents other individuals to whom such provision
applies; or
(2) Which is affiliated directly or indirectly with an organization
which represents other individuals to whom such provision applies.
(e) Two or more units in the Department for which a labor
organization is the exclusive representative may, upon petition by the
Department or labor organization, be consolidated with or without an
election into a single larger unit if the Authority considers the
larger unit to be appropriate. The Authority will certify the labor
organization as the exclusive representative of the new larger unit.
Sec. 9701.515 Representation rights and duties.
(a)(1) A labor organization which has been accorded exclusive
recognition is the exclusive representative of the employees in the
unit it represents and is entitled to act for, and negotiate collective
bargaining agreements covering, all employees in the unit. An exclusive
representative is responsible for representing the interests of all
employees in the unit it represents without discrimination and without
regard to labor organization membership.
(2) An exclusive representative of an appropriate unit must be
given the opportunity to be represented at--
(i) Any formal discussion between Department representative(s) and
bargaining unit employees, the purpose of which is to discuss and/or
announce new or substantially changed personnel policies, practices, or
working conditions. This right does not apply to meetings between
Department
[[Page 5337]]
representative(s) and bargaining unit employees for the purpose of
discussing operational matters where any discussion of personnel
policies, practices or working conditions--
(A) Constitutes a reiteration or application of existing personnel
policies, practices, or working conditions;
(B) Is incidental or otherwise peripheral to the announced purpose
of the meeting; or
(C) Does not result in an announcement of a change to, or a promise
to change, an existing personnel policy(s), practice(s), or working
condition(s);
(ii) Any discussion between one or more Department representatives
and one or more bargaining unit employees concerning any grievance;
(iii) Any examination of a bargaining unit employee by a
representative of the Department in connection with an investigation if
the employee reasonably believes that the examination may result in
disciplinary action against the employee and the employee requests such
representation; or
(iv) Any discussion between a representative of the Department and
a bargaining unit employee in connection with a formal complaint of
discrimination only if the employee, at his or her sole discretion,
requests such representation.
(3) Notwithstanding any other provision of this paragraph, if the
Supreme Court determines that the definition of ``grievance'' in 5
U.S.C. 7103(a)(9) includes a formal complaint of discrimination filed
by a bargaining unit employee, the definition of grievance in Sec.
9701.504, and its application to this section, will be interpreted and
applied consistent with that decision.
(4) The Department must annually inform its employees of their
rights under paragraph (a)(2)(iii) of this section.
(5) Except in the case of grievance procedures negotiated under
this subpart, the rights of an exclusive representative under this
section may not be construed to preclude an employee from--
(i) Being represented by an attorney or other representative of the
employee's own choosing, other than the exclusive representative, in
any other grievance or appeal action; or
(ii) Exercising other grievance or appellate rights established by
law, rule, or regulation.
(b) The duty of the Department or appropriate component(s) of the
Department and an exclusive representative to negotiate in good faith
under paragraph (a) of this section includes the obligation--
(1) To approach the negotiations with a sincere resolve to reach a
collective bargaining agreement;
(2) To be represented at the negotiations by duly authorized
representatives prepared to discuss and negotiate on conditions of
employment;
(3) To meet at reasonable times and convenient places as frequently
as may be necessary, and to avoid unnecessary delays;
(4) If agreement is reached, to execute on the request of any party
to the negotiation, a written document embodying the agreed terms, and
to take such steps as are necessary to implement such agreement; and
(5) In the case of the Department or appropriate component(s) of
the Department, to furnish information to an exclusive representative,
or its authorized representative, when--
(i) Such information exists, is normally maintained, and is
reasonably available;
(ii) The exclusive representative has requested such information
and demonstrated a particularized need for the information in order to
perform its representational functions in grievance proceedings or in
negotiations; and
(iii) Disclosure is not prohibited by law.
(c) Disclosure of information in paragraph (b)(5) of this section
does not include the following:
(1) Disclosure prohibited by law or regulations, including, but not
limited to, the regulations in this part, Governmentwide rules and
regulations, Departmental implementing directives and other policies
and regulations, and Executive orders;
(2) Disclosure of information if adequate alternative means exist
for obtaining the requested information, or if proper discussion,
understanding, or negotiation of a particular subject within the scope
of collective bargaining is possible without recourse to the
information;
(3) Internal Departmental guidance, counsel, advice, or training
for managers and supervisors relating to collective bargaining;
(4) Any disclosure that would compromise the Department's mission,
security, or employee safety; and
(5) Home addresses, telephone numbers, email addresses, or any
other information not related to an employee's work.
(d)(1) An agreement between the Department or appropriate
component(s) of the Department and the exclusive representative is
subject to approval by the Secretary or designee.
(2) The Secretary or designee must approve the agreement within 30
days after the date the agreement is executed if the agreement is in
accordance with the provisions of these regulations and any other
applicable law, rule, or regulation.
(3) If the Secretary or designee does not approve or disapprove the
agreement within the 30-day period specified in paragraph (d)(2) of
this section, the agreement must take effect and is binding on the
Department or component(s), as appropriate, and the exclusive
representative, but only if consistent with law, the regulations in
this part, Governmentwide rules and regulations, Departmental
implementing directives and other policies and regulations, and
Executive orders.
(4) A local agreement subject to a national or other controlling
agreement at a higher level may be approved under the procedures of the
controlling agreement or, if none, under Departmental regulations.
Bargaining will be at the level of recognition except where delegated.
(5) Provisions in existing collective bargaining agreements are
unenforceable if an authorized agency official determines that they are
contrary to law, the regulations in this part, Governmentwide rules and
regulations, Departmental implementing directives (as provided by Sec.
9701.506) and other policies and regulations, or Executive orders.
Sec. 9701.516 Allotments to representatives.
(a) If the Department has received from an employee in an
appropriate unit a written assignment which authorizes the Department
to deduct from the pay of the employee amounts for the payment of
regular and periodic dues of the exclusive representative of the unit,
the Department must honor the assignment and make an appropriate
allotment pursuant to the assignment. Any such allotment must be made
at no cost to the exclusive representative or the employee. Except as
provided under paragraph (b) of this section, any such assignment may
not be revoked for a period of 1 year.
(b) An allotment under paragraph (a) of this section for the
deduction of dues with respect to any employee terminates when--
(1) The agreement between the Department or Department component
and the exclusive representative involved ceases to be applicable to
the employee; or
(2) The employee is suspended or expelled from membership in the
exclusive representative.
[[Page 5338]]
(c)(1) Subject to paragraph (c)(2) of this section, if a petition
has been filed with the Authority by a labor organization alleging that
10 percent of the employees in an appropriate unit in the Department
have membership in the labor organization, the Authority must
investigate the petition to determine its validity. Upon certification
by the Authority of the validity of the petition, the Department has a
duty to negotiate with the labor organization solely concerning the
deduction of dues of the labor organization from the pay of the members
of the labor organization who are employees in the unit and who make a
voluntary allotment for such purpose.
(2)(i) The provisions of paragraph (c)(1) of this section do not
apply in the case of any appropriate unit for which there is an
exclusive representative.
(ii) Any agreement under paragraph (c)(1) of this section between a
labor organization and the Department or Department component with
respect to an appropriate unit becomes null and void upon the
certification of an exclusive representative of the unit.
Sec. 9701.517 Unfair labor practices.
(a) For the purpose of this subpart, it is an unfair labor practice
for the Department--
(1) To interfere with, restrain, or coerce any employee in the
exercise by the employee of any right under this subpart;
(2) To encourage or discourage membership in any labor organization
by discrimination in connection with hiring, tenure, promotion, or
other conditions of employment;
(3) To sponsor, control, or otherwise assist any labor
organization, other than to furnish, upon request, customary and
routine services and facilities on an impartial basis to other labor
organizations having equivalent status;
(4) To discipline or otherwise discriminate against an employee
because the employee has filed a complaint or petition, or has given
any information or testimony under this subpart;
(5) To refuse, as determined by the HSLRB, to consult or negotiate
in good faith with a labor organization, as required by this subpart;
(6) To fail or refuse, as determined by the HSLRB, to cooperate in
impasse procedures and impasse decisions, as required by this subpart;
or
(7) To fail or refuse otherwise to comply with any provision of
this subpart.
(b) For the purpose of this subpart, it is an unfair labor practice
for a labor organization--
(1) To interfere with, restrain, or coerce any employee in the
exercise by the employee of any right under this subpart;
(2) To cause or attempt to cause the Department to discriminate
against any employee in the exercise by the employee of any right under
this subpart;
(3) To coerce, discipline, fine, or attempt to coerce a member of
the labor organization as punishment, reprisal, or for the purpose of
hindering or impeding the member's work performance or productivity as
an employee or the discharge of the member's duties as an employee;
(4) To discriminate against an employee with regard to the terms
and conditions of membership in the labor organization on the basis of
race, color, creed, national origin, sex, age, preferential or
nonpreferential civil service status, political affiliation, marital
status, or handicapping condition;
(5) To refuse, as determined by the HSLRB, to consult or negotiate
in good faith with the Department as required by this subpart;
(6) To fail or refuse, as determined by the HSLRB, to cooperate in
impasse procedures and impasse decisions as required by this subpart;
(7)(i) To call, or participate in, a strike, work stoppage, or
slowdown, or picketing of the Department in a labor-management dispute
if such picketing interferes with an agency's operations; or
(ii) To condone any activity described in paragraph (b)(7)(i) of
this section by failing to take action to prevent or stop such
activity; or
(8) To otherwise fail or refuse to comply with any provision of
this subpart.
(c) Notwithstanding paragraph (b)(7) of this section, informational
picketing which does not interfere with the Department's operations
will not be considered an unfair labor practice.
(d) For the purpose of this subpart, it is an unfair labor practice
for an exclusive representative to deny membership to any employee in
the appropriate unit represented by the labor organization, except for
failure to meet reasonable occupational standards uniformly required
for admission or to tender dues uniformly required as a condition of
acquiring and retaining membership. This does not preclude any labor
organization from enforcing discipline in accordance with procedures
under its constitution or bylaws to the extent consistent with the
provisions of this subpart.
(e) The HSLRB will not consider any unfair labor practice
allegation filed more than 6 months after the alleged unfair labor
practice occurred, unless the HSLRB determines, pursuant to its
regulations, that there is good cause for the late filing.
(f) Issues which can properly be raised under an appeals procedure
may not be raised as unfair labor practices prohibited under this
section. Except where an employee has an option of using the negotiated
grievance procedure or an appeals procedure in connection with an
adverse action under subpart F of this part, issues which can be raised
under a grievance procedure may, in the discretion of the aggrieved
party, be raised under the grievance procedure or as an unfair labor
practice under this section, but not under both procedures.
(g) The expression of any personal view, argument, opinion, or the
making of any statement which publicizes the fact of a representational
election and encourages employees to exercise their right to vote in
such an election, corrects the record with respect to any false or
misleading statement made by any person, or informs employees of the
Government's policy relating to labor-management relations and
representation, may not, if the expression contains no threat of
reprisal or force or promise of benefit or was not made under coercive
conditions--
(1) Constitute an unfair labor practice under any provision of this
subpart; or
(2) Constitute grounds for the setting aside of any election
conducted under any provision of this subpart.
Sec. 9701.518 Duty to bargain, confer, and consult.
(a) The Department or appropriate component(s) of the Department
and any exclusive representative in any appropriate unit in the
Department, through appropriate representatives, must meet and
negotiate in good faith as provided by this subpart for the purpose of
arriving at a collective bargaining agreement. In addition, the
Department or appropriate component(s) of the Department and the
exclusive representative may determine appropriate techniques,
consistent with the operational rules of the HSLRB, to assist in any
negotiation.
(b) If bargaining over an initial collective bargaining agreement
or any successor agreement is not completed within 90 days after such
bargaining begins, the parties may mutually agree to continue
bargaining or mutually agree to refer the matter to an independent
mediator/arbitrator for resolution. Alternatively, either party may
refer the
[[Page 5339]]
matter to the HSLRB for resolution in accordance with procedures
established by the HSLRB. Either party may refer the matter to the
Federal Mediation Conciliation Service (FMCS) for assistance at any
time.
(c) If the parties bargain during the term of an existing
collective bargaining agreement over a proposed change that is
otherwise negotiable, and no agreement is reached within 30 days after
such bargaining begins, the parties may mutually agree to continue
bargaining or mutually agree to refer the matter to an independent
mediator/arbitrator for resolution. Alternatively, either party may
refer the matter to the HSLRB for resolution in accordance with
procedures established by the HSLRB. Either party may refer the matter
to the Federal Mediation Conciliation Service (FMCS) for assistance at
any time.
(d)(1) Management may not bargain over any matters that are
inconsistent with law or the regulations in this part, Governmentwide
rules and regulations, Departmental implementing directives and other
policies and regulations, or Executive orders.
(2) In promulgating Departmental policies and regulations that deal
with otherwise negotiable subjects, the Department will utilize the
process set forth in Sec. 9701.512, except that the Department will
confer with those labor organizations that request and have been
accorded national consultation rights (NCR) established pursuant to 5
U.S.C. 7113, which is not waived for these purposes, and consult with
those organizations on other appropriate matters.
(3) Management has no obligation to bargain over a change to a
condition of employment unless the change is otherwise negotiable
pursuant to these regulations and is foreseeable, substantial, and
significant in terms of both impact and duration on the bargaining
unit, or on those employees in that part of the bargaining unit
affected by the change.
(4) Management has no obligation to confer or consult as required
by this section unless the change is foreseeable, substantial, and
significant in terms of both impact and duration on the bargaining
unit, or on those employees in that part of the bargaining unit
affected by the change.
(5) Nothing in paragraphs (b) or (c) of this section prevents or
delays management from exercising the rights enumerated in Sec.
9701.511.
(e) If a management official involved in collective bargaining with
an exclusive representative alleges that the duty to bargain in good
faith does not extend to any matter, the exclusive representative may
appeal the allegation to the HSLRB in accordance with procedures
established by the HSLRB.
Sec. 9701.519 Negotiation impasses.
(a) If the Department and exclusive representative are unable to
reach an agreement under Sec. Sec. 9701.515 or 9701.518, either party
may submit the disputed issues to the HSLRB for resolution.
(b) If the parties do not arrive at a settlement after assistance
by the HSLRB, the HSLRB may take whatever action is necessary and not
inconsistent with this subpart to resolve the impasse.
(c) Pursuant to Sec. Sec. 9701.508 and 9701.525, the HSLRB's
regulations will provide for a single, integrated process to address
all matters associated with a negotiations dispute, including unfair
labor practices, negotiability disputes, and bargaining impasses.
(d) Notice of any final action of the HSLRB under this section must
be promptly served upon the parties. The action will be binding on such
parties during the term of the agreement, unless the parties agree
otherwise.
Sec. 9701.520 Standards of conduct for labor organizations.
Standards of conduct for labor organizations are those prescribed
under 5 U.S.C. 7120, which is not waived.
Sec. 9701.521 Grievance procedures.
(a)(1) Except as provided in paragraph (a)(2) of this section, any
collective bargaining agreement must provide procedures for the
settlement of grievances, including questions of arbitrability. Except
as provided in paragraphs (d), (f), and (g) of this section, the
procedures must be the exclusive administrative procedures for
grievances which fall within its coverage.
(2) Any collective bargaining agreement may exclude any matter from
the application of the grievance procedures which are provided for in
the agreement.
(b)(1) Any negotiated grievance procedure referred to in paragraph
(a) of this section must be fair and simple, provide for expeditious
processing, and include procedures that--
(i) Assure an exclusive representative the right, in its own behalf
or on behalf of any employee in the unit represented by the exclusive
representative, to present and process grievances;
(ii) Assure such an employee the right to present a grievance on
the employee's own behalf, and assure the exclusive representative the
right to be present during the grievance proceeding; and
(iii) Provide that any grievance not satisfactorily settled under
the negotiated grievance procedure is subject to binding arbitration,
which may be invoked by either the exclusive representative or the
Department.
(2) The provisions of a negotiated grievance procedure providing
for binding arbitration in accordance with paragraph (b)(1)(iii) of
this section must, if or to the extent that an alleged prohibited
personnel practice is involved, allow the arbitrator to order a stay of
any personnel action in a manner similar to the manner described in 5
U.S.C. 1221(c) with respect to the Merit Systems Protection Board and
order the Department to take any disciplinary action identified under 5
U.S.C. 1215(a)(3) that is otherwise within the authority of the
Department to take.
(3) Any employee who is the subject of any disciplinary action
ordered under paragraph (b)(2) of this section may appeal such action
to the same extent and in the same manner as if the Department had
taken the disciplinary action absent arbitration.
(c) The preceding paragraphs of this section do not apply with
respect to any matter concerning--
(1) Any claimed violation of 5 U.S.C. chapter 73, subchapter III
(relating to prohibited political activities);
(2) Retirement, life insurance, or health insurance;
(3) A suspension or removal under Sec. 9701.613;
(4) A mandatory removal under Sec. 9701.607;
(5) Any examination, certification, or appointment; and
(6) Any subject not within the definition of grievance in Sec.
9701.504 (e.g., the classification or pay of any position), except for
any other adverse action under subpart F of this part which is not
otherwise excluded by paragraph (c) of this section.
(d) To the extent not already excluded by existing collective
bargaining agreements, the exclusions contained in paragraph (c) of
this section apply upon the effective date of this subpart, as
determined under Sec. 9701.102(b).
(e)(1) An aggrieved employee affected by a prohibited personnel
practice under 5 U.S.C. 2302(b)(1) which also falls under the coverage
of the negotiated grievance procedure may raise the matter under the
applicable statutory procedures, or the negotiated procedure, but not
both.
(2) An employee is deemed to have exercised his or her option under
paragraph (e)(1) of this section to raise the matter under the
applicable statutory procedures, or the negotiated procedure, at such
time as the employee
[[Page 5340]]
timely initiates an action under the applicable statutory or regulatory
procedure or timely files a grievance in writing in accordance with the
provisions of the parties' negotiated grievance procedure, whichever
event occurs first.
(f)(1) For matters covered by subpart G of this part (except for
mandatory removal offenses under Sec. 9701.707), an aggrieved employee
may raise the matter under the appeals procedure of Sec. 9701.706 or
under the negotiated grievance procedure, but not both. An employee
will be deemed to have exercised his or her option under this section
when the employee timely files an appeal under the applicable appellate
procedures or a grievance in accordance with the provisions of the
parties' negotiated grievance procedure, whichever occurs first.
(2) An arbitrator hearing a matter appealable under subpart G of
this part is bound by the applicable provisions of this part.
(3) Section 7121(f) of title 5, United States Code, is not waived,
but is modified to provide that--
(i) Matters covered by subpart G are deemed to be matters covered
by 5 U.S.C. 4303 and 7512 for the purpose of obtaining judicial review;
and
(ii) Judicial review under 5 U.S.C. 7703 will apply to the award of
an arbitrator in the same manner and under the same conditions as if
the matter had been decided by MSPB under Sec. 9701.706, including the
preponderance of the evidence standard.
(4) In order to ensure consistency, the Department and
representatives of those labor organizations granted national
consultation rights may establish a mutually acceptable panel of
arbitrators who have been trained and qualified to hear adverse action
grievances under this part.
(g)(1) An employee may grieve a performance rating of record that
has not been appealed in connection with an action under subpart G of
this part. Once an employee raises a performance rating issue in an
appeal under subpart G of this part, any pending grievance or
arbitration will be dismissed with prejudice.
(2) An arbitrator may cancel a performance rating upon a finding
that management applied the employee's established performance
expectations in violation of applicable law, Department rule or
regulation, or provision of collective bargaining agreement in a manner
prejudicial to the grievant. An arbitrator who has properly canceled an
employee's appraisal may order management to change the grievant's
rating only when the arbitrator is able to determine the rating that
management would have given but for the violation. When an arbitrator
is unable to determine what the employee's rating would have been but
for the violation, the arbitrator must remand the case to management
for re-evaluation. Except as otherwise provided by law, an arbitrator
may not conduct an independent evaluation of the employee's performance
or otherwise substitute his or her judgment for that of the supervisor.
(h)(1) This paragraph applies with respect to a prohibited
personnel practice other than a prohibited personnel practice to which
paragraph (e) of this section applies.
(2) An aggrieved employee affected by a prohibited personnel
practice described in paragraph (h)(1) of this section may elect not
more than one of the procedures described in paragraph (h)(3) of this
section with respect thereto. A determination as to whether a
particular procedure for seeking a remedy has been elected must be made
as set forth under paragraph (h)(4) of this section.
(3) The procedures for seeking remedies described in this paragraph
are as follows:
(i) An appeal under subpart G of this part;
(ii) A negotiated grievance under this section; and
(iii) Corrective action under 5 U.S.C. chapter 12, subchapters II
and III.
(4) For the purpose of this paragraph, an employee is considered to
have elected one of the following, whichever election occurs first:
(i) The procedure described in paragraph (h)(3)(i) of this section
if such employee has timely filed a notice of appeal under the
applicable appellate procedures;
(ii) The procedure described in paragraph (h)(3)(ii) of this
section if such employee has timely filed a grievance in writing, in
accordance with the provisions of the parties' negotiated procedure; or
(iii) The procedure described in paragraph (h)(3)(iii) of this
section if such employee has sought corrective action from the Office
of Special Counsel by making an allegation under 5 U.S.C. 1214(a)(1).
Sec. 9701.522 Exceptions to arbitration awards.
(a)(1) In the case of awards involving the exercise of management
rights or the duty to bargain under Sec. Sec. 9701.511 and 9701.518,
either party to arbitration under this subpart may file with the HSLRB
an exception to any arbitrator's award. The HSLRB may take such action
and make such recommendations concerning the award as is consistent
with this subpart.
(2) In the case of awards not involving the exercise of management
rights or the duty to bargain under Sec. Sec. 9701.511 and 9701.518,
either party may file exceptions to an arbitration award with the
Authority pursuant to 5 U.S.C. 7122 (which is not waived for the
purpose of this subpart but which is modified to apply to arbitration
awards under this section) and the Authority's regulations.
(3) Notwithstanding paragraph (a)(2) of this section, exceptions to
awards relating to a matter described in Sec. 9701.521(f) may not be
filed with the Authority.
(b) If no exception to an arbitrator's award is filed under
paragraph (a) of this section during the 30-day period beginning on the
date of such award, the award is final and binding. Either party must
take the actions required by an arbitrator's final award. The award may
include the payment of back pay (as provided under 5 U.S.C. 5596 and 5
CFR part 550, subpart H).
(c) Nothing in this section prevents the HSLRB from determining its
own jurisdiction without regard to whether any party has raised a
jurisdictional issue.
Sec. 9701.523 Official time.
(a) Any employee representing an exclusive representative in the
negotiation of a collective bargaining agreement under this subpart
must be authorized official time for such purposes, including
attendance at impasse proceedings, during the time the employee
otherwise would be in a duty status. The number of employees for whom
official time is authorized under this section may not exceed the
number of individuals designated as representing the Department for
such purposes.
(b) Any activities performed by any employee relating to the
internal business of the labor organization, including but not limited
to the solicitation of membership, elections of labor organization
officials, and collection of dues, must be performed during the time
the employee is in a nonduty status.
(c) Except as provided in paragraph (a) of this section, the
Authority or the HSLRB, as appropriate, will determine whether an
employee participating for, or on behalf of, a labor organization in
any phase of proceedings before the Authority or the HSLRB will be
authorized official time for such purpose during the time the employee
would otherwise be in a duty status.
[[Page 5341]]
(d) Except as provided in the preceding paragraphs of this section,
any employee representing an exclusive representative or, in connection
with any other matter covered by this subpart, any employee in an
appropriate unit represented by an exclusive representative, must be
granted official time in any amount the Department and the exclusive
representative involved agree to be reasonable, necessary, and in the
public interest.
Sec. 9701.524 Compilation and publication of data.
(a) The HSLRB must maintain a file of its proceedings and copies of
all available agreements and arbitration decisions and publish the
texts of its impasse resolution decisions and the actions taken under
Sec. 9701.519.
(b) All files maintained under paragraph (a) of this section must
be open to inspection and reproduction in accordance with 5 U.S.C. 552
and 552a. The HSLRB will establish rules in consultation with the
Department for maintaining and making available for inspection
sensitive information.
Sec. 9701.525 Regulations of the HSLRB.
The Department may issue initial interim rules for the operation of
the HSLRB and will consult with labor organizations granted national
consultation rights on the rules. The HSLRB will prescribe and publish
rules for its operation in the Federal Register.
Sec. 9701.526 Continuation of existing laws, recognitions,
agreements, and procedures.
(a) Except as otherwise provided by Sec. 9701.506, nothing
contained in this subpart precludes the renewal or continuation of an
exclusive recognition, certification of an exclusive representative, or
an agreement that is otherwise consistent with law and the regulations
in this part between the Department or a component thereof and an
exclusive representative of its employees, which is entered into before
the effective date of this subpart, as determined under Sec.
9701.102(b).
(b) Policies, regulations, and procedures established under, and
decisions issued under Executive Orders 11491, 11616, 11636, 11787, and
11838 or any other Executive order, as in effect on the effective date
of this subpart (as determined under Sec. 9701.102(b)), will remain in
full force and effect until revised or revoked by the President, or
unless superseded by specific provisions of this subpart or by
implementing directives or decisions issued pursuant to this subpart.
Sec. 9701.527 Savings provision.
This subpart does not apply to grievances or other administrative
proceedings already pending on the date of coverage of this subpart, as
determined under Sec. 9701.102(b). Any remedy that applies after the
date of coverage under any provision of this part and that is in
conflict with applicable provisions of this part is not enforceable.
Subpart F--Adverse Actions
General
Sec. 9701.601 Purpose.
This subpart contains regulations prescribing the requirements when
employees are furloughed for 30 days or less, suspended, demoted,
reduced in pay, or removed. DHS may issue implementing directives to
carry out the provisions of this subpart.
Sec. 9701.602 Waivers.
When a specified category of employees is covered by the adverse
action provisions established under this subpart, 5 U.S.C. 7501 through
7514 and 7531 through 7533 are waived with respect to that category of
employees. The provisions in 5 U.S.C. 7521 and 7541 through 7543 are
not waived.
Sec. 9701.603 Definitions.
In this subpart:
Adverse action means a furlough for 30 days or less, a suspension,
a demotion, a reduction in pay, or a removal.
Band means a work level or pay range within an occupational
cluster.
Competencies means the measurable or observable knowledge, skills,
abilities, behaviors, and other characteristics required by a position.
Current continuous service means a period of service immediately
preceding an adverse action in the same or similar positions without
any break in Federal civilian employment.
Day means a calendar day.
Demotion means a reduction in grade, a reduction to a lower band
within the same occupational cluster, or a reduction to a lower band in
a different occupational cluster under rules prescribed by DHS pursuant
to Sec. 9701.355.
Furlough means the placement of an employee in a temporary status
without duties and pay because of lack of work or funds or other non-
disciplinary reasons.
Grade means a level of work under a position classification or job
grading system.
Indefinite suspension means the placement of an employee in a
temporary status without duties and pay pending investigation, inquiry,
or further Department action. An indefinite suspension continues for an
indeterminate period of time and usually ends with either the employee
returning to duty or the completion of any subsequent administrative
action.
Initial service period (ISP) means the 1 to 2 years employees must
serve after selection (on or after the date this subpart becomes
applicable, as determined under Sec. 9701.102(b)) for a designated DHS
position in the competitive service for the purpose of providing an
employee the opportunity to demonstrate competencies in a specific
occupation.
Mandatory removal offense (MRO) means an offense that the Secretary
determines, in his or her sole, exclusive, and unreviewable discretion,
has a direct and substantial adverse impact on the Department's
homeland security mission.
Mandatory Removal Panel (MRP) means the three-person panel composed
of officials appointed by the Secretary for fixed terms to decide
appeals of removals based on a mandatory removal offense.
Pay means the rate of basic pay fixed by law or administrative
action for the position held by an employee before any deductions and
exclusive of additional pay of any kind. For the purpose of this
subpart, pay does not include locality-based comparability payments
under 5 U.S.C. 5304, locality or special rate supplements under subpart
C of this part, or other similar payments.
Probationary period has the meaning given that term in 5 CFR
315.801.
Removal means the involuntary separation of an employee from the
Department.
Similar positions means positions in which the duties performed are
similar in nature and character and require substantially the same or
similar qualifications, so that the incumbent could be moved from one
position to another without significant training or undue interruption
to the work.
Suspension means the temporary placement of an employee, for
disciplinary reasons, in a nonduty/nonpay status.
Trial period has the meaning given that term in 5 CFR 316.304.
Sec. 9701.604 Coverage.
(a) Actions covered. This subpart covers furloughs of 30 days or
less, suspensions, demotions, reductions in pay (including reductions
in pay within a band), and removals.
(b) Actions excluded. This subpart does not cover--
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(1) Any adverse action taken against an employee during a
probationary, trial, or initial service period, except for an adverse
action taken against a preference eligible employee in the competitive
service who has completed the first year of an initial service period;
(2) The demotion of a supervisor or manager under 5 U.S.C. 3321;
(3) An action that terminates a temporary or term promotion and
returns the employee to the position from which temporarily promoted,
or to a different position of equivalent band and pay, if the employee
was informed that the promotion was to be of limited duration;
(4) A reduction-in-force action under 5 U.S.C. 3502;
(5) An action under 5 U.S.C. 1215;
(6) An action against an administrative law judge under 5 U.S.C.
7521;
(7) A voluntary action by an employee;
(8) An action taken or directed by OPM based on suitability under 5
CFR part 731;
(9) Termination of appointment on the expiration date specified as
a basic condition of employment at the time the appointment was made;
(10) Cancellation of a promotion to a position not classified prior
to the promotion;
(11) Placement of an employee serving on an intermittent or
seasonal basis in a temporary non-duty, non-pay status in accordance
with conditions established at the time of appointment;
(12) Reduction of an employee's rate of basic pay from a rate that
is contrary to law or regulation;
(13) An action taken under a provision of statute, other than one
codified in title 5, U.S. Code, which excludes the action from 5 U.S.C.
chapter 75 or this subpart;
(14) A classification determination, including a classification
determination under subpart B of this part; and
(15) An action that entitles an employee to grade retention under 5
CFR part 536 and an action to terminate this entitlement.
(c) Employees covered. Subject to a determination by the Secretary
or designee under Sec. 9701.102(b), this subpart applies to DHS
employees, except as excluded by paragraph (d) of this section.
(d) Employees excluded. This subpart does not apply to--
(1) An employee in the competitive service who is serving a
probationary, trial, or initial service period, except for a preference
eligible employee in the competitive service who has completed the
first year of an initial service period;
(2) A preference eligible employee in the excepted service who has
not completed 1 year of current continuous service in the same or
similar positions in an Executive agency or in the United States Postal
Service or Postal Rate Commission;
(3) An employee in the excepted service (other than a preference
eligible) who has not completed 2 years of current continuous service
in the same or similar positions in an Executive agency under other
than a temporary appointment of 2 years or less;
(4) A non-preference eligible employee who is serving a time-
limited appointment (including a term appointment) of 2 years or less;
(5) Members of the Senior Executive Service;
(6) Administrative law judges;
(7) Employees who are terminated in accordance with terms specified
as conditions of employment at the time the appointment was made;
(8) Employees whose appointments are made by and with the advice
and consent of the Senate;
(9) Employees whose positions have been determined to be of a
confidential, policy-determining, policy-making, or policy-advocating
character by--
(i) The President, for a position that the President has excepted
from the competitive service;
(ii) OPM, for a position that OPM has excepted from the competitive
service; or
(iii) The President or the Secretary for a position excepted from
the competitive service by statute;
(10) An employee whose appointment is made by the President;
(11) An employee who is receiving an annuity from the Civil Service
Retirement and Disability Fund or the Foreign Service Retirement and
Disability Fund based on the service of such employee;
(12) An employee who is an alien or non-citizen occupying a
position outside the United States, as described in 5 U.S.C.
5102(c)(11);
(13) Members of the Homeland Security Labor Relations Board or the
Mandatory Removal Panel;
(14) Employees against whom an adverse personnel action is taken or
imposed under any statute or regulation other than this subpart (e.g.,
Transportation Security Administration employees); and
(15) Employees appointed and serving under a Schedule B excepted
service appointment subject to conversion to career status pursuant to
Executive Order 11203.
Sec. 9701.605 Initial service period.
(a) DHS may establish an initial service period of 1 to 2 years for
certain designated occupations in order for employees in such
occupations to demonstrate appropriate competencies. DHS will establish
standard policies for determining the applicability and the length of
the ISP for specific occupations.
(b) Employees must complete an ISP after selection for a designated
DHS position in the competitive service before obtaining coverage under
this subpart. All relevant prior Federal civilian service (including
non-appropriated fund service), as determined by appropriate standards
established by DHS, counts toward completion of this requirement.
(c) An employee who is removed during a probationary, trial, or
initial service period must be removed in accordance with 5 CFR 315.804
or 315.805, except for a preference eligible employee in the
competitive service who has completed the first year of an ISP.
Requirements for Furlough of 30 Days or Less, Suspension, Demotion,
Reduction in Pay, or Removal
Sec. 9701.606 Standard for action.
The Department may take an adverse action under this subpart only
for such cause as will promote the efficiency of the service. The
standards for mandatory removal offenses and actions taken under the
national security provisions are set forth in Sec. Sec. 9701.607 and
9701.613, respectively.
Sec. 9701.607 Mandatory removal offenses.
(a) The Secretary has the sole, exclusive, and unreviewable
discretion to identify offenses that have a direct and substantial
adverse impact on the Department's homeland security mission. Such
offenses will be identified in advance as part of the Department's
implementing directives, publicized via notice in the Federal Register,
and made known to all employees on an annual basis.
(b) When a mandatory removal action is proposed under this section,
employees will have the right to advance notice, an opportunity to
respond, a written decision, and a review by the Mandatory Removal
Panel as set forth in subpart G of this part.
(c) Prior to the issuance of a notice to the employee in question,
the Secretary or designee will review and approve a proposed notice of
removal on the grounds that the employee has committed a mandatory
removal offense.
[[Page 5343]]
(d) The Secretary has the sole, exclusive, and unreviewable
discretion to mitigate the removal penalty.
(e) Nothing in this section limits the discretion of the Department
or any component thereof to remove employees for offenses other than
those identified by the Secretary as mandatory removal offenses.
(f) Nothing in this subpart limits the discretion of the Department
or any component thereof to remove an employee based on the revocation
of that employee's security clearance.
Sec. 9701.608 Procedures.
An employee against whom an adverse action is proposed is entitled
to the following:
(a) A proposal notice under Sec. 9701.609;
(b) An opportunity to reply under Sec. 9701.610; and
(c) A decision notice under Sec. 9701.611.
Sec. 9701.609 Proposal notice.
(a) Notice period. The Department must provide at least 15 days
advance written notice of a proposed adverse action. However, if there
is reasonable cause to believe the employee has committed a crime for
which a sentence of imprisonment may be imposed, the Department must
provide at least 5 days advance written notice.
(b) Contents of notice. (1) The proposal notice must inform the
employee of the factual basis for the proposed action in sufficient
detail to permit the employee to reply to the notice, and inform the
employee of his or her right to review the Department's evidence
supporting the proposed action. The Department may not use evidence
that cannot be disclosed to the employee, his or her representative, or
designated physician pursuant to 5 CFR 297.204.
(2) When some but not all employees in a given competitive level
are being furloughed, the proposal notice must state the basis for
selecting a particular employee for furlough, as well as the reasons
for the furlough. The notice is not necessary for furlough without pay
due to unforeseeable circumstances, such as sudden breakdowns in
equipment, acts of God, or sudden emergencies requiring immediate
curtailment of activities.
(c) Duty status during notice period. An employee will remain in a
duty status in his or her regular position during the notice period.
However, when the Department determines that the employee's continued
presence in the workplace during the notice period may pose a threat to
the employee or others, result in loss of or damage to Government
property, or otherwise jeopardize legitimate Government interests, the
Department may elect one or a combination of the following
alternatives:
(1) Assign the employee to duties where the Department determines
the employee is no longer a threat to safety, the Department's mission,
or Government property;
(2) Allow the employee to take leave, or place him or her in an
appropriate leave status (annual leave, sick leave, or leave without
pay) or absence without leave if the employee has absented himself or
herself from the worksite without approved leave; or
(3) Place the employee in a paid, non-duty status for such time as
is necessary to effect the action.
Sec. 9701.610 Opportunity to reply.
(a) The Department must give employees at least 10 days, which must
run concurrently with the notice period, to reply orally and/or in
writing to a notice of proposed adverse action. However, if there is
reasonable cause to believe the employee has committed a crime for
which a sentence of imprisonment may be imposed, the Department must
give the employee at least 5 days, which must run concurrently with the
notice period, to reply orally and/or in writing.
(b) The opportunity to reply orally does not include the right to a
formal hearing with examination of witnesses.
(c) During the opportunity to reply, the Department must give the
employee a reasonable amount of official time to review the
Department's supporting evidence, and to furnish affidavits and other
documentary evidence, if the employee is otherwise in an active duty
status.
(d) The Department must designate an official to receive the
employee's written and/or oral response. The official must have
authority to make or recommend a final decision on the proposed adverse
action.
(e) The employee may be represented by an attorney or other
representative of the employee's choice and at the employee's expense,
subject to paragraph (f) of this section. The employee must provide the
Department with a written designation of his or her representative.
(f) The Department may disallow as an employee's representative--
(1) An individual whose activities as representative would cause a
conflict between the interest or position of the representative and
that of the Department,
(2) An employee of the Department whose release from his or her
official position would give rise to unreasonable costs or whose work
assignments preclude his or her release; or
(3) An individual whose activities as representative could
compromise security.
(g)(1) An employee who wishes the Department to consider any
medical condition that may be relevant to the proposed adverse action
must provide medical documentation, as that term is defined at 5 CFR
339.104, during the opportunity to reply, whenever possible.
(2) When considering an employee's medical documentation, the
Department may require or offer a medical examination pursuant to 5 CFR
part 339, subpart C.
(3) When considering an employee's medical condition, the
Department is not required to withdraw or delay a proposed adverse
action. However, the Department must--
(i) Allow the employee to provide medical documentation during the
opportunity to reply;
(ii) Comply with 29 CFR 1614.203 and relevant Equal Employment
Opportunity Commission rules; and
(iii) Comply with 5 CFR 831.1205 when issuing a decision to remove.
Sec. 9701.611 Decision notice.
(a) In arriving at its decision on a proposed adverse action, the
Department may not consider any reasons for the action other than those
specified in the proposal notice.
(b) The Department must consider any response from the employee and
the employee's representative, if the response is provided to the
official designated under Sec. 9701.610(d) during the opportunity to
reply, and any medical documentation furnished under Sec. 9701.610(g).
(c) The decision notice must specify in writing the reasons for the
decision and advise the employee of any appeal or grievance rights
under subparts E or G of this part.
(d) The Department must deliver the notice to the employee on or
before the effective date of the action.
Sec. 9701.612 Departmental record.
(a) Document retention. The Department must keep a record of all
relevant documentation concerning the action for a period of time
pursuant to the General Records Schedule and the Guide to Personnel
Recordkeeping. The record must include the following:
(1) A copy of the proposal notice;
(2) The employee's written response, if any, to the proposal;
[[Page 5344]]
(3) A summary of the employee's oral response, if any;
(4) A copy of the decision notice; and
(5) Any supporting material that is directly relevant and on which
the action was substantially based.
(b) Access to the record. The Department must make the record
available for review by the employee and furnish a copy of the record
upon the employee's request or the request of the Merit Systems
Protection Board or the MRP.
National Security
Sec. 9701.613 Suspension and removal.
(a) Notwithstanding other provisions of law or regulation, the
Secretary may suspend an employee without pay when she or he considers
suspension in the interests of national security. To the extent that
the Secretary determines that the interests of national security
permit, the suspended employee must be notified of the reasons for the
suspension. Within 30 days after the notification, the suspended
employee is entitled to submit to the official designated by the
Secretary statements or affidavits to show why he or she should be
restored to duty.
(b) Subject to paragraph (c) of this section, the Secretary may
remove an employee suspended under this section when, after
investigation and review as the Secretary considers necessary, the
Secretary determines that removal is necessary or advisable in the
interests of national security. The determination of the Secretary is
final.
(c) An employee suspended under this section who has a permanent or
indefinite appointment, has completed his or her initial service
period, probationary period, or trial period, and is a citizen of the
United States is entitled, after suspension and before removal, to--
(1) A written statement of the charges against the employee within
30 days after suspension, which may be amended within 30 days
thereafter, and which must be stated as specifically as security
considerations permit;
(2) An opportunity within 30 days thereafter, plus an additional 30
days if the charges are amended, to answer the charges and submit
affidavits;
(3) A hearing, at the request of the employee, by a Department
authority duly constituted for this purpose;
(4) A review of his or her case by the Secretary or designee,
before a decision adverse to the employee is made final; and
(5) A written decision from the Secretary.
Savings Provision
Sec. 9701.614 Savings provision.
This subpart does not apply to adverse actions proposed prior to
the date of an affected employee's coverage under this subpart.
Subpart G--Appeals
Sec. 9701.701 Purpose.
This subpart contains the regulations implementing the provisions
of 5 U.S.C. 9701(a) through (c) and (f) concerning the Department's
appeals system for certain adverse actions covered under subpart F of
this part. These provisions require that the new appeals regulations
provide Department employees fair treatment, are consistent with the
protections of due process and, to the maximum extent practicable,
provide for the expeditious handling of appeals.
Sec. 9701.702 Waivers.
When a specified category of employees is covered by an appeals
system established under this subpart, the provisions of 5 U.S.C. 7701
are waived with respect to that category of employees to the extent
they are inconsistent with the provisions of this subpart. The
provisions of 5 U.S.C. 7702 are modified as provided in Sec. 9701.709
to use ``MSPB or MRP'' wherever the terms ``Merit Systems Protection
Board'' or ``Board'' occur. The appellate procedures specified herein
supersede those of MSPB to the extent MSPB regulations are inconsistent
with this subpart. MSPB must follow the provisions in this subpart
until conforming regulations are issued by MSPB.
Sec. 9701.703 Definitions.
In this subpart:
Adjudicating official means an administrative law judge,
administrative judge, or other employee designated by MSPB to decide an
appeal.
Day means calendar day.
Harmful error means error by the Department in the application of
its procedures that is likely to have caused it to reach a conclusion
different from the one it would have reached in the absence or cure of
the error. The burden is on the appellant to show that the error was
harmful, i.e., that it caused substantial harm or prejudice to his or
her rights.
Mandatory removal offense (MRO) means an offense that the Secretary
determines in his or her sole, exclusive, and unreviewable discretion
has a direct and substantial adverse impact on the Department's
homeland security mission.
Mandatory Removal Panel (MRP) means the three-person panel composed
of officials appointed by the Secretary for fixed terms to decide
appeals of removals based on a mandatory removal offense.
MSPB means the Merit Systems Protection Board.
Petition for review means a request for review of an initial
decision of an adjudicating official.
Preponderance of the evidence means the degree of relevant evidence
that a reasonable person, considering the record as a whole, would
accept as sufficient to find that a contested fact is more likely to be
true than untrue.
Sec. 9701.704 Coverage.
(a) Subject to a determination by the Secretary or designee under
Sec. 9701.102(b), this subpart applies to employees who appeal
furloughs of 30 days or less, demotions, reductions in pay, suspensions
of 15 days or more, or removals, provided such employees are covered by
Sec. 9701.604.
(b) Appeals of suspensions shorter than 15 days and other lesser
disciplinary measures are not covered under this subpart but may be
grieved through a negotiated grievance procedure or an administrative
grievance procedure, whichever is applicable.
(c) The appeal rights in 5 CFR 315.806 apply to the removal of an
employee while serving a probationary, trial, or initial service
period, except for a preference eligible employee in the competitive
service who has completed the first year of an initial service period.
(d) Actions taken under Sec. 9701.613 are not appealable to MSPB.
Sec. 9701.705 Alternative dispute resolution.
The Department and OPM recognize the value of using alternative
dispute resolution methods such as mediation, an ombudsman, or
interest-based negotiation to address employee-employer disputes
arising in the workplace, including those which may involve
disciplinary actions. Such methods can result in more efficient and
more effective outcomes than traditional, adversarial methods of
dispute resolution. The Department will use alternative dispute
resolution methods where appropriate. Such methods will be subject to
collective bargaining to the extent permitted by subpart E of this
part.
Sec. 9701.706 MSPB appellate procedures.
(a) A covered Department employee may appeal an adverse action
identified under Sec. 9701.704(a) to MSPB. Such an employee has a
right to be represented
[[Page 5345]]
by an attorney or other representative, and to a hearing if material
facts are in dispute. However, separate procedures apply when the
action is taken because of a mandatory removal offense or is in the
interest of national security. (See Sec. Sec. 9701.707 and 9701.613,
respectively.)
(b) MSPB may decide any case appealed to it or may refer the case
to an administrative law judge appointed under 5 U.S.C. 3105 or other
employee of MSPB designated by MSPB to decide such cases. MSPB or an
adjudicating official must make a decision at the close of the review
and provide a copy of the decision to each party to the appeal and to
OPM.
(c)(1) If an employee is the prevailing party in an appeal under
this section, the employee must be granted the relief provided in the
decision upon issuance of the decision, subject to paragraph (c)(3) of
this section, and such relief remains in effect pending the outcome of
any petition for review unless--
(i) An adjudicating official determines that the granting of such
relief is not appropriate; or
(ii) The relief granted in the decision provides that the employee
will return or be present at the place of employment pending the
outcome of any petition for review, and the Department, subject to
paragraph (c)(2) of this section, determines in its sole, exclusive,
and unreviewable discretion, that the return or presence of the
employee is unduly disruptive to the work environment.
(2) If the Department makes a determination under paragraph
(c)(1)(ii) of this section that prevents the return or presence of an
employee at the place of employment, such employee must receive pay,
compensation, and all other benefits as terms and conditions of
employment pending the outcome of any petition for review.
(3) Nothing in the provisions of this section may be construed to
require that any award of back pay or attorney fees be paid before the
decision is final.
(d) The decision of the Department must be sustained under
paragraph (b) of this section if it is supported by a preponderance of
the evidence, unless the employee shows by a preponderance of the
evidence--
(1) Harmful error in the application of Department procedures in
arriving at the decision;
(2) That the decision was based on any prohibited personnel
practice described in 5 U.S.C. 2302(b); or
(3) That the decision was not in accordance with law.
(e) The Director of OPM may, as a matter of right at any time in
the proceeding, intervene or otherwise participate in any proceeding
under this section in any case in which the Director believes that an
erroneous decision will have a substantial impact on a civil service
law, rule, regulation, or policy directive.
(f) Except as provided in Sec. 9701.709, any decision under
paragraph (b) of this section is final unless a party to the appeal or
the Director of OPM petitions MSPB for review within 30 days after
receipt of the decision or MSPB reopens and reconsiders a case on its
own motion. The Director may petition MSPB for review only if he or she
believes the decision is erroneous and will have a substantial impact
on a civil service law, rule, regulation, or policy directive. MSPB,
for good cause shown, may extend the filing period.
(g) If MSPB or an adjudicating official is of the opinion that
consolidation or joinder could result in more expeditious processing of
appeals and would not adversely affect any party, MSPB or an
adjudicating official may--
(1) Consolidate appeals filed by two or more appellants; or
(2) Join two or more appeals filed by the same appellant and hear
and decide them concurrently.
(h)(1) Except as provided in paragraph (h)(2) of this section or as
otherwise provided by law, MSPB or an adjudicating official may require
payment by the Department of reasonable attorney fees incurred by an
employee if the employee is the prevailing party and MSPB or an
adjudicating official determines that payment by the Department is
warranted in the interest of justice, including any case in which a
prohibited personnel practice was engaged in by the Department or any
case in which the Department's action was clearly without merit.
(2) If the employee is the prevailing party and the decision is
based on a finding of discrimination prohibited under 5 U.S.C.
2302(b)(1), the payment of reasonable attorney fees must be in
accordance with the standards prescribed in section 706(k) of the Civil
Rights Act of 1964 (42 U.S.C. 2000e-5(k)).
(i)(1) MSPB or an adjudicating official may not require settlement
discussions in connection with any appealed action under this section.
If either party decides that settlement is not desirable, the matter
will proceed to adjudication.
(2) Where the parties agree to engage in settlement discussions
before MSPB or an adjudicating official, these discussions will be
conducted by an official specifically designated by MSPB for that sole
purpose. Nothing prohibits the parties from engaging in settlement
discussions on their own.
(j) If an employee has been removed under subpart F of this part,
neither the employee's status under any retirement system established
by Federal statute nor any election made by the employee under any such
system will affect the employee's appeal rights.
(k) The following provisions modify MSPB's appellate procedures
applicable to appeals under this subpart:
(1) All appeals, including class appeals, will be filed no later
than 20 days after the effective date of the action being appealed, or
no later than 20 days after the date of service of the Department's
decision, whichever is later.
(2) Either party may file a motion for representative
disqualification at any time during the proceedings.
(3) The parties may seek discovery regarding any matter that is
relevant to any of their claims or defenses. However, by motion, either
party may seek to limit such discovery because the burden or expense of
providing the material outweighs its benefit, or because the material
sought is privileged, not relevant, unreasonably cumulative or
duplicative, or can be secured from some other source that is more
convenient, less burdensome, or less expensive.
(i) Prior to filing a motion to limit discovery, the parties must
confer and attempt to resolve any pending objection(s).
(ii) Neither party may submit more than one set of interrogatories,
one set of requests for production of documents, and one set of
requests for admissions. The number of interrogatories or requests for
production or admissions may not exceed 25 per pleading, including
subparts; in addition, neither party may conduct/compel more than 2
depositions.
(iii) Either party may file a motion requesting additional
discovery. Such motion may be granted only if the party has shown
necessity and good cause to warrant such additional discovery.
(4) Requests for case suspensions must be submitted jointly.
(5) When there are no material facts in dispute, the adjudicating
official must render summary judgment on the law without a hearing.
However, when material facts are in dispute and a hearing is held, a
transcript must be kept.
(6) Given the Department's need to maintain an exceptionally high
degree of order and discipline in the workplace, an arbitrator,
adjudicating official, or MSPB may not modify the penalty imposed by
the Department
[[Page 5346]]
unless such penalty is so disproportionate to the basis for the action
as to be wholly without justification. In cases of multiple charges,
the third party's determination in this regard is based on the
justification for the penalty as it relates to the sustained charge(s).
When a penalty is mitigated, the maximum justifiable penalty must be
applied.
(7) An initial decision must be made no later than 90 days after
the date on which the appeal is filed. If that initial decision is
appealed to MSPB, MSPB must render its decision no later than 90 days
after the close of the record before MSPB on petition for review.
(8) If the Director seeks reconsideration of a final MSPB order,
MSPB must render its decision no later than 60 days after receipt of
the opposition to OPM's petition in support of such reconsideration.
MSPB must state the reasons for its decision so that the Director can
determine whether to seek judicial review and to facilitate expeditious
judicial review.
(9) MSPB, in conjunction with the Department and OPM, will develop
and issue voluntary expedited appeals procedures for Department cases.
(l) Failure of MSPB to meet the deadlines imposed by paragraphs
(k)(7) and (k)(8) of this section in a case will not prejudice any
party to the case and will not form the basis for any legal action by
any party.
(m) Except as otherwise provided by 5 U.S.C. 7702 with respect to
cases involving allegations of discrimination, judicial review of any
final MSPB order or decision is as prescribed under 5 U.S.C. 7703.
Sec. 9701.707 Appeals of mandatory removal actions.
(a) General. Appeals of mandatory removal actions are governed by
procedures set forth in this section. An employee may appeal such
actions to the Mandatory Removal Panel (MRP) established under Sec.
9701.708.
(b) Procedures. (1) The MRP will establish procedures for the fair,
impartial, and expeditious assignment and disposition of cases,
consistent with the requirements set forth in Sec. 9701.706(k), as
applicable, and for such other matters as may be necessary to ensure
the operation of the MRP.
(2) The MRP will conduct a hearing, for which a transcript will be
kept, to resolve any factual disputes and other relevant matters. All
members will hear a particular appeal and will decide it based on a
majority vote of the members. If only two members are serving, the vote
of the Chair will be dispositive in the event of a tie.
(3) The appellant has the right to be represented by an attorney or
other representative.
(4) The only action available to the MRP is to sustain or overturn
a mandatory removal. The MRP does not have authority to mitigate the
penalty. Only the Secretary may mitigate the penalty in these cases
after the MRP has rendered its decision.
(5) The decision of the Department must be sustained if it is
supported by a preponderance of the evidence, unless the employee shows
by a preponderance of the evidence--
(i) Harmful error in the application of Department procedures in
arriving at the decision;
(ii) That the decision was based on any prohibited personnel
practice described in 5 U.S.C. 2302(b); or
(iii) That the decision was not in accordance with law.
(6)(i) Except as provided in paragraph (b)(6)(ii) of this section
or as otherwise provided by law, the MRP may require payment by the
Department of reasonable attorney fees incurred by an employee if the
employee is the prevailing party and the Panel reviewing the initial
appeal determines that payment by the Department is warranted in the
interest of justice, including any case in which a prohibited personnel
practice was engaged in by the Department or any case in which the
Department's action was clearly without merit.
(ii) If the employee is the prevailing party and the decision is
based on a finding of discrimination prohibited under 5 U.S.C.
2302(b)(1), the payment of reasonable attorney fees must be in
accordance with the standards prescribed in Sec. 706(k) of the Civil
Rights Act of 1964 (42 U.S.C. 2000e-5(k)).
(7) The MRP must issue a written decision (including dissenting
opinions, where appropriate) in each case and serve each party and OPM
with a copy. These decisions are final and binding.
(8) Failure of the MRP to meet applicable deadlines imposed under
Sec. 9701.706(k) in a case will not prejudice any party to the case
and will not form the basis for any legal action by any party.
(c) MSPB review. (1) In order to obtain judicial review of an MRP
decision, an employee, the Department, or OPM must request a review of
the record of an MRP decision by MSPB by filing such a request in
writing within 15 days after the issuance of the decision. Within 15
days after MSPB's receipt of the request for a review of the record,
any response or OPM intervention must be filed. A party, or OPM, may
each submit, and MSPB may grant for good cause shown, a request for a
single extension of time not to exceed a maximum of 15 additional days.
MSPB will establish, in conjunction with the MRP, standards for the
sufficiency of the record and other procedures, including notice to the
parties and OPM. MSPB must accept the findings of fact and
interpretations of this part made by the MRP and sustain the MRP's
decision unless the employee shows that the MRP's decision was--
(i) Arbitrary, capricious, an abuse of discretion, or otherwise not
in accordance with law;
(ii) Caused by harmful error in the application of the MRP's
procedures in arriving at such decision; or
(iii) Unsupported by substantial evidence.
(2) MSPB must complete its review of the record and issue a final
decision within 30 days after receiving the party's timely response to
such request for review or OPM's intervention brief, whichever is filed
later. This 30-day time limit is mandatory, except that MSPB may extend
its time for review by a maximum of 15 additional days if it determines
that--
(i) The case is unusually complex; or
(ii) An extension is necessary to prevent any prejudice to the
parties that would otherwise result.
(3) No extension beyond that provided by paragraph (c)(2) of this
section is permitted.
(4) If MSPB does not issue a final decision within the mandatory
time limit established by paragraph (c) of this section, MSPB will be
considered to have denied the request for review of the MRP's decision,
which will constitute a final decision of MSPB and is subject to
judicial review in accordance with 5 U.S.C. 7703.
(d) Subsequent action. (1) If either the MRP or MSPB sustains an
employee's appeal based on a finding that the employee did not commit
an MRO, the Department is not precluded from subsequently proposing an
adverse action (other than an MRO) based on the same record evidence.
Such a proposal must be issued--
(i) In accordance with applicable law and regulation, including the
procedures set forth in Sec. 9701.609; and
(ii) Normally within 15 days after the date of MSPB's decision,
unless the Department establishes good cause for exceeding this time
limit.
(2) Nothing in this section precludes the Department from taking a
subsequent action against an employee based, in part, on additional
evidence that was not part of the record in the initial proceeding
before the MRP.
[[Page 5347]]
(e) Judicial review. Except as otherwise provided by 5 U.S.C. 7702
with respect to cases involving allegations of discrimination, judicial
review of any final MSPB order or decision on an MRO is as prescribed
under 5 U.S.C. 7703.
(f) OPM intervention. (1) The Director may, as a matter of right at
any time in the proceeding before the MRP or MSPB, intervene or
otherwise participate in any proceeding under this section in any case
in which the Director believes that an erroneous decision will have a
substantial impact on a civil service law, rule, regulation, or policy
directive.
(2) Except as provided in Sec. 9701.709, any decision under
paragraph (c) of this section is final unless the Director petitions
MSPB for review within 30 days after receipt of the decision. The
Director may petition MSPB for review only if he or she believes the
decision is erroneous and will have a substantial impact on a civil
service law, rule, regulation, or policy directive. MSPB, for good
cause shown, may extend the filing period.
(g) Appeal rights of retirees. If an employee has been removed
under subpart F of this part, neither the employee's status under any
retirement system established by Federal statute nor any election made
by the employee under any such system will affect the employee's appeal
rights.
Sec. 9701.708 Mandatory Removal Panel.
(a) Composition. (1) The Mandatory Review Panel is a standing panel
composed of three members who will be appointed by the Secretary for
terms of 3 years, except that the appointments of the initial MRP
members will be for terms of 2, 3, and 4 years, respectively. The
Secretary may extend the term of any member beyond 3 years when
necessary to provide for an orderly transition and/or appoint the
member for an additional term.
(2) Members of the MRP must be independent, distinguished citizens
of the United States who are well known for their integrity and
impartiality. Members must have expertise in either labor or employee
relations or law enforcement/homeland security matters. At least one
member of the Board must have experience in labor relations. Members
may be removed by the Secretary on the same grounds as an MSPB member.
(3) An individual chosen to fill a vacancy on the MRP will be
appointed for the unexpired term of the member who is replaced.
(b) Appointment of the Chair. The Secretary, at his or her sole and
exclusive discretion, will appoint one member to serve as Chair of the
MRP.
(c) Appointment procedures for non-Chair MRP members. (1) The
appointments of the two non-Chair MRP members will be made by the
Secretary after he or she considers any lists of nominees submitted by
labor organizations that represent employees in the Department of
Homeland Security.
(2) The submission of lists of recommended nominees by labor
organizations must be in accordance with timelines and requirements set
forth by the Secretary, who may provide for additional consultation in
order to obtain further information about a recommended nominee. The
ability of the Secretary to appoint MRP members may not be delayed or
otherwise affected by the failure of any labor organization to provide
a list of nominees that meets the timeframe and requirements
established by the Secretary.
Sec. 9701.709 Actions involving discrimination.
Section 7702 of title 5, U.S. Code, is modified to read ``MSPB or
MRP'' wherever the terms ``Merit Systems Protection Board'' or
``Board'' are used.
Sec. 9701.710 Savings provision.
This subpart does not apply to adverse actions proposed prior to
the date of an affected employee's coverage under this subpart.
[FR Doc. 05-1629 Filed 1-27-05; 8:45 am]
BILLING CODE 6325-39-P