[Federal Register Volume 59, Number 127 (Tuesday, July 5, 1994)]
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From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-16127]


[[Page Unknown]]

[Federal Register: July 5, 1994]


                                                   VOL. 59, NO. 127

                                              Tuesday, July 5, 1994

OFFICE OF PERSONNEL MANAGEMENT

5 CFR Part 575

RIN 3206-AF86

 

Recruitment and Relocation Bonuses and Retention Allowances

AGENCY: Office of Personnel Management.

ACTION: Proposed rule with request for comments.

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SUMMARY: The Office of Personnel Management (OPM) is issuing proposed 
regulations to provide agencies with greater flexibility in paying 
recruitment and relocation bonuses and retention allowances (the 3 
R's). The proposed regulations revise certain requirements in the 
current regulations to maximize agency discretion in using these 
flexibilities. The 3 R's were authorized by the Federal Employees Pay 
Comparability Act of 1990 (FEPCA).

DATES: Comments must be received on or before August 4, 1994.

ADDRESSES: Comments may be sent or delivered to Donald J. Winstead, 
Acting Assistant Director for Compensation Policy, Personnel Systems 
and Oversight Group, Office of Personnel Management, Room 6H31, 1900 E 
Street NW., Washington, DC 20415.

FOR FURTHER INFORMATION CONTACT:
Belva MacDonald or Lee Kara, (202) 606-1413.

SUPPLEMENTARY INFORMATION: On August 19, 1992, OPM published final 
regulations at 57 FR 37394 to authorize the payment of recruitment and 
relocation bonuses and retention allowances (the 3 R's) under the 
Federal Employees Pay Comparability Act of 1990 (FEPCA). These 
regulations finalized interim regulations that were published on March 
28, 1991 (56 FR 12833). Overall, use of the 3 R's has been limited.
    In a memorandum to the Interagency Advisory Group on October 24, 
1991, OPM advised agencies to consider using the 3 R's before 
requesting new or increased special salary rates under 5 U.S.C. 5305. 
In most situations, the use of the 3 R's to solve staffing problems 
will be less expensive than special rates. Special rates are basic pay 
for such purposes as retirement benefits, premium pay, and promotions, 
whereas the 3 R's are not basic pay for any purposes. The 3 R's are 
also generally less expensive than superior qualifications 
appointments. Superior qualifications appointments, like special salary 
rates, have a lasting effect on future pay entitlements.
    When necessary, the 3 R's may be used in combination with special 
salary rates and superior qualifications appointments. However, payment 
of one of the 3 R's alone may be the most appropriate solution for a 
staffing problem. For example, a candidate may prefer a lump-sum 
payment to address his or her immediate needs instead of an increase in 
basic pay that would be received in relatively small amounts over a 
long period of time.
    Agencies have found it difficult to use the 3 R's and have 
requested changes in the current regulations. OPM also has approved 
variations to the requirements bonus regulations. (This is discussed 
below under appointments required for recruitment bonus purposes.) OPM 
is proposing the regulatory changes discussed below to increase 
agencies' discretion in administering the 3 R's.

Recruitment Bonuses

    Candidate quality. In Secs. 575.101, 575.104(b)(2), 575.104(c)(1) 
and (c)(2) (i) and (iii), and 575.108(b), the current regulations allow 
payment of a recruitment bonus only when, in the absence of such a 
bonus, agencies would encounter difficulty in filling the position with 
a high quality candidate. Same agencies' recruitment needs are not 
limited to high quality candidates. Therefore, they have not considered 
offering recruitment bonuses before requesting approval of special 
salary rates. (OPM approval of special rates is not dependent upon the 
recruitment of high quality candidates.) The proposed regulations would 
allow an agency to pay a recruitment bonus to any qualified candidate 
the agency wishes to recruit for a difficult-to-fill position. The 
agency would determine the level of candidate quality it needs to 
target.
    Length of appointment and service agreement. In Sec. 575.103, the 
current definition of ``employee'' for recruitment bonus purposes 
requires an appointment of at least 2 years. The proposed regulations 
would delete the language regarding the minimum length of appointment; 
however, since, in Sec. 575.106(b), the proposed regulations require a 
service agreement of at least 6 months, any appointment would have to 
be at least that long. Currently, a minimum 12-month service agreement 
is required. Reducing the requirement to 6 months would give agencies 
more flexibility.
    Break-in service. To meet the current definition of ``newly 
appointed'' in Sec. 575.103, a candidate with prior Federal Government 
service must have a break in service of at least 1 year. The proposed 
regulations would reduce this break-in-service restriction to 90 days. 
This parallels the 90-day-break-in-service restriction for superior 
qualifications appointments in Sec. 531.203(b)(2). It allows agencies 
to consider paying a recruitment bonus in more circumstances as an 
alternative to paying advanced in-hire rates for superior 
qualifications.
    The proposed regulations add two authorized exceptions to the 
break-in-service rule in Sec. 575.103. The first is a permanent 
appointment that follows a provisional appointment (as defined in 
Sec. 316.403). The second is an appointment that follows a temporary 
appointment, provided the temporary appointment was neither full-time 
nor the principal employment of the candidate. This would allow 
agencies to pay recruitment bonuses in situations like those approved 
by OPM as variations to the current regulations. Under the variations, 
bonuses were paid to medical officers who served in temporary 
appointments prior to being offered permanent appointments. The medical 
officers did not meet the break-in-service requirement under current 
regulations. OPM determined that payment of recruitment bonuses was 
appropriate because the temporary positions were neither full-time nor 
the candidates' principal employment. Also, the inability of the hiring 
officials to take advantage of such opportunities would have resulted 
in lengthy recruitment efforts to find qualified candidates with the 
required specialized skills. (These variations were reported in former 
Federal Personnel Manual Bulletins 575-4, April 20, 1993; 575-5, 
October 25, 1993; and 575-6, November 12, 1993; and in OPM's 
Provisional Notice No. 575-1, May 25, 1994.)
    Written determination. In Sec. 575.104(c)(1), the current 
regulations for recruitment bonuses require a written determination 
made on a case-by-case basis for each employee. The proposed 
regulations would allow an agency to make a single written 
determination applicable to a group of candidates for positions that 
the agency targets as difficult to fill. This would not require OPM's 
prior approval.
    Reporting requirement. In Sec. 575.108(b), the current regulations 
for recruitment bonuses require an annual written report by each agency 
on its use of recruitment bonuses. The proposed regulations would 
remove this requirement. However, each agency would retain 
responsibility for monitoring its use of recruitment bonuses.

Relocation Bonuses

    Candidate quality. In Secs. 575.201, 575.204 (c)(1) and (c)(2) (i) 
and (iii), and 575.208(b), the current regulations allow payment of a 
relocation bonus only when, in the absence of such a bonus, difficulty 
would be encountered in filling the position with a ``high quality 
candidate.'' As for recruitment bonuses (discussed above), payment of 
relocation bonuses should be considered before requesting approval of 
special salary rates for difficult-to-fill positions. The proposed 
regulations would allow an agency to pay a relocation bonus to any 
employee the agency wishes to relocate to a position that would 
otherwise be difficult to fill.
    Length of appointment. In Sec. 575.203, the current definition of 
``employee'' for relocation bonus purposes requires an appointment of 
at least 2 years. The proposed regulation would allow the employee's 
appointment to be any length of time determined appropriate by the 
agency. Also, the proposed definition would make a technical change to 
clarify that a relocation bonus may be paid to an employee whose duty 
station is changed to a different commuting area permanently as well as 
temporarily.
    Written determination. In Sec. 575.204(d), the current regulations 
provide for exceptions to case-by-case approvals of relocation bonuses 
with prior OPM approval. The proposed regulations would allow such 
exceptions without prior OPM approval.
    Reporting requirement. In Sec. 575.208(b), the current regulations 
for relocation bonuses require an annual written report by each agency 
on its use of relocation bonuses. The proposed regulations would remove 
this requirement.

Retention Allowances

    Length of appointment. In Sec. 575.303, the current definition of 
``employee'' for retention allowance purposes requires an appointment 
of at least 2 years. The proposed regulations would allow the 
employee's appointment to be any length of time determined appropriate 
by the agency.
    Length of service. In Sec. 575.304(a), the current regulations 
permit payment of a retention allowance only to an employee who (1) has 
completed 1 year of continuous service with the agency immediately 
prior to such payment, or (2) has completed a period of employment 
established under a service agreement for a recruitment or relocation 
bonus. the proposed regulations would allow an agency to pay a 
retention allowance to an employee with less than 1 year of continuous 
service. However, the proposed regulations continue to require that an 
employee under a service agreement for a recruitment or relocation 
bonus complete such an agreement before receiving a retention 
allowance.
    Reason for being likely to leave. In Secs. 575.304(b) and 
575.305(c), the current regulations permit payment of a retention 
allowance to an employee only if he or she is likely to leave the 
Federal service for employment outside the executive, legislative, or 
judicial branch of the Federal Government. The proposed regulations 
would allow payment of a retention allowance to an employee who is 
likely to leave not only for employment outside the Federal Government, 
but for a reason other than employment, such as retirement.
    Reporting requirement. In Sec. 575.308(b), the current regulations 
for retention allowances require an annual written report by each 
agency on its use of retention allowances. The proposed regulations 
would remove this requirement.

Miscellaneous

    In Sec. 575.103, the definition of ``commuting area'' is not 
germane to the payment of recruitment bonuses and would be removed by 
the proposed regulations. (The definition would remain in Sec. 575.203 
for payment of relocation bonuses.) Finally, the proposed regulations 
add a new paragraph (d) in Sec. 575.306 to clarify that a retention 
allowance is not pay for purposes of a lump-sum payment for annual 
leave under 5 U.S.C. 5551. (See Comptroller General opinion B-249816, 
March 8, 1993.)

E.O. 12866, Regulatory Review

    This rule has been reviewed by the Office of Management and Budget 
in accordance with E.O. 12866.

Regulatory Flexibility Act

    I certify that these regulations would not have a significant 
economic impact on a substantial number of small entities because they 
would apply only to Federal agencies and employees.

List of Subjects in 5 CFR Part 575

    Administrative practice and procedure, Government employees, Wages.
James B. King,
Director.
    Accordingly, OPM is proposing to amend part 575 of title 5 of the 
Code of Federal Regulations as follows:

PART 575--RECRUITMENT AND RELOCATION BONUSES; RETENTION ALLOWANCES; 
SUPERVISORY DIFFERENTIALS

    1. The authority citation for part 575 continues to read as 
follows:

    Authority: 5 U.S.C. 1104(a)(2), 5753, 5754, and 5755; sec. 302 
and 404 of the Federal Employees Pay Comparability Act of 1990 (Pub. 
L. 101-509) 104 Stat. 1462 and 1466, respectively; E.O. 12748.

    2. Section 575.101 is revised to read as follows:


Sec. 575.101  Purpose.

    This subpart provides regulations to implement 5 U.S.C. 5753, which 
authorizes payment of a recruitment bonus of up to 25 percent of basic 
pay to a newly appointed employee or an individual to whom a written 
offer of employment has been made by the agency, provided there is a 
determination that, in the absence of such a bonus, difficulty would be 
encountered in filling the position.
    3. In Sec. 575.103, the definition of ``commuting area'' is 
removed, and the definitions of ``employee'' and ``newly appointed'' 
are revised to read as follows:


Sec. 575.103  Definitions.

* * * * *
    Employee means an employee in or under an agency who is newly 
appointed or an individual who has received a written offer of 
employment.
* * * * *
    Newly appointed refers to--
    (a) The first appointment, regardless of tenure, as an employee of 
the Federal Government;
    (b) An appointment as an employee of the Federal Government 
following a break in service of at least 90 days from the candidate's 
last period of Federal employment other than--
    (1) Employment in a cooperative work-study program under a Schedule 
B appointment made in accordance with Sec. 213.3202 of this chapter;
    (2) Employment under the Stay-in-School program, in accordance with 
Sec. 213.3102(w) of this chapter;
    (3) Employment as a law clerk trainee under Sec. 213.3102(e) of 
this chapter;
    (4) Employment while a student during school vacations under a 
short-term temporary appointing authority;
    (5) Employment under a provisional appointment designated under 
Sec. 316.403 if the new appointment is permanent and immediately 
follows the provisional appointment; or
    (6) Employment under a temporary appointment that is neither full-
time nor the principal employment of the candidate.
* * * * *
    4. In Sec. 575.104, paragraphs (b)(2), (c)(1), and (c)(2) (i) and 
(iii) are revised to read as follows:


Sec. 575.104  Agency recruitment bonus plans; higher level review and 
approval; and criteria for payment.

* * * * *
    (b)(2) When necessary to make a timely offer of employment, a 
higher level official may establish criteria for offering recruitment 
bonuses in advance and authorize the recommending official to offer a 
recruitment bonus (in any amount within a pre-established range) to any 
candidate without further review or approval.
    (c) Criteria for payment. (1) Each bonus paid under this subpart 
shall be based on a written determination that, in the absence of such 
a bonus, the agency would encounter difficulty in filling the position. 
Such a determination shall be made before any employee actually enters 
on duty in the position for which he or she was recruited. An agency 
may target groups of positions that have been difficult to fill in the 
past or that may be difficult to fill in the future and may make the 
required written determination to offer a recruitment bonus on a group 
basis.
    (2) * * *
    (i) The success of recent efforts to recruit candidates for similar 
positions, including indicators such as offer acceptance rates, the 
proportion of positions filled, and the length of time required to fill 
similar positions;
* * * * *
    (iii) Labor-market factors that may affect the ability of the 
agency to recruit candidates for similar positions now or in the 
future;
* * * * *
    5. Section 575.106 is revised to read as follows:


Sec. 575.106  Service agreement.

    (a) Before a recruitment bonus may be paid, an agency shall require 
that the employee sign a written service agreement to complete a 
specified period of employment with the appointing agency (or successor 
agency in the event of a transfer of function).
    (b) The minimum period of employment to be established under a 
service agreement for a recruitment bonus shall be 6 months.
    6. Section 575.108 is revised to read as follows:


Sec. 575.108  Internal monitoring.

    Each agency shall monitor the use of recruitment bonuses to ensure 
that its recruitment bonus plan conforms to the requirements 
established under this subpart and that the payment of recruitment 
bonuses conforms to the criteria established under this subpart.
    7. Section 575.201 is revised to read as follows:


Sec. 575.201  Purpose.

    This subpart provides regulations to implement 5 U.S.C. 5753, which 
authorizes payment of a relocation bonus of up to 25 percent of basic 
pay to an employee who must relocate to accept a position in a 
different commuting area, provided there is a determination that, in 
the absence of such a bonus, difficulty would be encountered in filing 
the position.
    8. In Sec. 575.203, the definitions of ``employee'' and ``service 
agreement'' are revised to read as follows:


Sec. 575.203  Definitions.

* * * * *
    Employee means an employee in or under an agency who is appointed 
to a position in a different commuting area or whose duty station is 
changed permanently or temporarily to a different commuting area.
* * * * *
    Service agreement means a written agreement between an agency and 
an employee under which the employee agrees to a specified period of 
employment with the agency at the new duty station to which relocated 
in return for payment of a relocation bonus.
    9. In Sec. 575.204, paragraphs (c)(1), (c)(2)(i), (c)(2)(iii), and 
(d) are revised to read as follows:


Sec. 575.204  Agency relocation bonus plans; higher level review and 
approval; criteria for payment; and exceptions to case-by-case 
approval.

* * * * *
    (c) Criteria for payment. (1) Each bonus paid under this subpart 
shall be based on a written determination that, in the absence of such 
a bonus, the agency would encounter difficulty in filling the position. 
Each such determination shall be made before the employee actually 
enters on duty in the position to which he or she was relocated. An 
agency may target groups of positions that have been difficult to fill 
in the past or that may be difficult to fill in the future. However, 
except as provided in paragraph (d) of this section, any determination 
to pay a bonus shall be made on a case-by-case basis for each employee.
    (2) * * *
    (i) The success of recent efforts to recruit candidates for similar 
positions, including indicators such as offer acceptance rates, the 
proportion of positions filled, and the length of time required to fill 
similar positions;
* * * * *
    (iii) Labor market factors that may affect the ability of the 
agency to recruit candidates for similar positions now or in the 
future; and
* * * * *
    (d) Exceptions to case-by-case approval. The head of an agency may 
authorize the payment of a relocation bonus to any employee whose 
rating of record is at least fully successful without the requirement 
for case-by-case approval when--
    (1) The employee is a member of a specified group of employees 
subject to a mobility agreement, and the head of an agency determines 
that relocation bonuses are necessary to ensure the agency's ability to 
retain employees subject to such an agreement; or
    (2) A major organizational unit of an agency is relocated to a 
different commuting area, and the head of an agency determines that 
relocation bonuses are necessary for specified groups of employees to 
ensure the continued operation of that unit without undue disruption of 
an activity or function that is deemed essential to the agency's 
mission and/or without undue disruption of service to the public.
    10. Section 575.206 is revised to read as follows:


Sec. 575.206  Service agreement.

    Before a relocation bonus may be paid, an agency shall require that 
the employee sign a written service agreement to complete a specified 
period of employment with the appointing agency (or the successor 
agency in the event of a transfer of function) at the new duty station.
    11. Section 575.208 is revised to read as follows:


Sec. 575.208  Internal monitoring.

    Each agency shall monitor the use of relocation bonuses to ensure 
that its relocation bonus plan conforms to the requirements established 
under this subpart and that the payment of relocation bonuses conforms 
to the criteria established under this subpart.
    12. In Sec. 575.303, the definition of ``employee'' is revised to 
read as follows:


Sec. 575.303  Definitions.

* * * * *
    Employee means an employee in or under an agency.
* * * * *
    13. In Sec. 575.304, paragraphs (a) and (b) are revised to read as 
follows:


Sec. 575.304  Conditions for payment.

    (a) If applicable, an agency may pay a retention allowance to an 
employee only if the employee has completed a period of employment 
established under the service agreement required for payment of a 
recruitment bonus under subpart A of this part or a relocation bonus 
under subpart B of this part, whichever occurs later.
    (b) An agency may pay a retention allowance to an employee if the 
employee is likely to leave the Federal service for any reason.
* * * * *
    14. In Sec. 575.306, a new paragraph (d) is added to read as 
follows:


Sec. 575.306  Payment of retention allowance.

* * * * *
    (d) A retention allowance is not pay for purposes of a lump-sum 
payment for annual leave under 5 U.S.C. 5551.
    15. Section 575.308 is revised to read as follows:


Sec. 575.308  Internal monitoring.

    Each agency shall monitor the use of retention allowances to ensure 
that its retention allowance plan conforms to the requirements 
established under this subpart and that the payment of retention 
allowances conforms to the criteria established under this subpart.

[FR Doc. 94-16127 Filed 7-1-94; 8:45 am]
BILLING CODE 6325-01-M