[Federal Register Volume 63, Number 75 (Monday, April 20, 1998)]
[Proposed Rules]
[Pages 19411-19413]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-10266]


 ========================================================================
 Proposed Rules
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
 
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 

  Federal Register / Vol. 63, No. 75 / Monday, April 20, 1998 / 
Proposed Rules  

[[Page 19411]]


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OFFICE OF PERSONNEL MANAGEMENT

5 CFR Parts 430 and 534
RIN 3206-AH77


Performance Ratings

AGENCY: Office of Personnel Management.

ACTION: Proposed rule.

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SUMMARY: The Office of Personnel Management (OPM) is issuing proposed 
regulations to codify longstanding policy regarding retroactive, 
assumed, and carry-over ratings of record. The proposed regulations 
amend the current performance management regulations to explicitly 
specify that ratings of record are final upon issuance unless 
challenged by the employee, and that retroactive, assumed, and carry-
over ratings of record are prohibited.

DATES: Comments must be submitted on or before June 19, 1998.

ADDRESSES: Comments may be sent or delivered to: Henry Romero, 
Associate Director, Workforce Compensation and Performance Service, 
U.S. Office of Personnel Management, Room 7508, 1900 E Street NW., 
Washington, DC 20415.

FOR FURTHER INFORMATION CONTACT: Barbara Colchao, (202) 606-2720.

SUPPLEMENTARY INFORMATION: The purpose of these amendments is to 
clarify the Office of Personnel Management's (OPM) longstanding 
interpretation of the law regarding the finality of a rating of record 
given to reflect the actual work performed during one appraisal period, 
which has been the consistent response to agencies' inquiries for many 
years. OPM is experiencing an increasing number of inquiries, as 
agencies develop new performance management programs to encourage high 
performance organizations, and to conform to the requirements of the 
Government Performance and Results Act. OPM concurs with the opinion 
voiced by several agencies that these policies should be codified in 
regulation, in order to provide this information in a more uniform and 
consistent manner.
    There are four issues addressed in the proposed regulations: (1) A 
prohibition against an agency unilaterally changing a rating that has 
been issued as a final rating of record to an employee; (2) a 
prohibition against an agency going back to provide a rating of record 
for a past appraisal period where none was given; (3) a prohibition 
against an agency issuing an employee an ``assumed'' rating of record 
that does not reflect an appraisal of actual performance; and (4) a 
prohibition against ``carrying over'' a previous rating of record to 
cover more than one appraisal period.

Retroactive Change to a Rating of Record

    Agencies are most often confronted with the issue of whether 
management has the authority to retroactively change a rating of record 
in situations where information about an employee's performance has 
been discovered long after the rating was finalized. This situation 
generally comes about when an employee has deliberately kept 
information from management and, therefore, has exhibited conduct that 
would warrant adverse action under part 752, Adverse Actions. 
Otherwise, if the information was not deliberately withheld but went 
undiscovered at the time the rating of record was prepared, an agency 
should review its appraisal process and determine if it is designed to 
capture adequately all significant performance information. It is OPM's 
position that only in very rare circumstances would a rating official 
be unaware of significant performance issues that went undetected at 
the time of appraisal due to no fault on the part of the employee or 
the rating official.
    While no explicit language in the law states that a rating of 
record should be considered final, the prohibition on retroactively 
changing a rating can be derived from the overall construction and 
intent of the performance appraisal statute and regulations, as well as 
OPM's regulations addressing reduction in force (RIF). The statute at 5 
U.S.C. 4302(a)(3) and 5 CFR 430.102(b)(6) of the regulations require 
that the results of performance appraisal must be used as a basis for 
appropriate personnel actions. To allow the retroactive change of 
ratings of record would result in requiring the agency to correct all 
records and personnel actions that were affected by that rating. The 
most obvious of these subsequent actions would involve the review of 
any pay changes or monetary awards, which were based in whole or in 
part on the rating of record, to determine whether the new rating would 
have resulted in a different pay or award outcome.
    In addition, an agency would be required to scrutinize any 
intervening personnel actions that had been affected by the original 
rating of record and that would need to be corrected due to the new 
rating of record. For example, the regulations that prescribe RIF 
procedures implicitly rely on a rating of record that can be assumed to 
be final. Furthermore, agencies generally strive to avoid the 
perception that RIF actions could be manipulated through the 
introduction of new ratings of record. If retroactive changes to final 
ratings of record were allowed, agencies would be compelled to correct 
any retention register that uses a changed rating of record and would 
once again run the risk that employees would perceive an unfairness in 
using this changed rating of record, unless the change could be shown 
to be a previous miscalculation or administrative error.
    Additionally, the very structure of the performance appraisal 
regulations leads to the logical conclusion that the intent of the 
system is to reach a point of finality when management is held 
accountable for issuing a rating of record that represents an 
employee's performance for the defined time of the appraisal period. 
Sections 430.206, 430.207, and 430.208 of title 5 of the Code of 
Federal Regulations regulate and describe the cycle of planning, 
monitoring, and issuance of a rating. Section 430.208(g) states that 
when an agency extends the rating cycle, a rating of record must be 
prepared as soon as practicable after the conclusion of the extension. 
Section 430.209(e) establishes a requirement for agencies to report 
ratings of record to OPM through the Central Personnel Data File. Taken 
as a whole, the regulatory scheme for performance appraisal is 
constructed around an appraisal period that concludes with a final 
rating of record.
    As an exception to the general prohibition regarding retroactively 
changing ratings of record, there is a

[[Page 19412]]

relatively limited set of circumstances where an agency might feel 
compelled to change a rating of record long after it has been presumed 
to be final. An administrative error, such as a rating official who 
inadvertently ``checks the wrong box'' and assigns a summary rating 
level that does not correspond to the element levels that have been 
assigned, would certainly be good cause for an agency's decision to 
retroactively change the overall rating of record. Information 
regarding the employee's performance during the appraisal period that 
provides indisputable proof that the original rating of record was 
erroneous, and which was previously unknown or unavailable to the 
agency, could form the basis for a decision to retroactively change the 
rating. This situation probably would arise most often in cases where 
the employee was evaluated against numerical standards with objective 
requirements, and where the rating official would have had no 
subjective input into the evaluation process.
    While OPM believes it was not the intent of the law governing 
performance appraisal to allow for independent action by management to 
retroactively alter a final rating of record, it does recognize some 
circumstances where such a change would be required. These proposed 
regulations are designed to be sufficiently flexible to allow for 
changes to ratings of record that occur in the normal course of 
communication between supervisors and employees close to the original 
issuance of a rating of record, as well as changes resulting from 
administrative procedures that provide employees with an avenue to 
challenge their ratings of record.

Retroactively Issuing a Rating of Record Where None Existed

    The second issue addressed in the proposed regulation is the 
prohibition against producing a retroactive rating of record for an 
appraisal period that has passed and for which no rating of record was 
issued. The statute requires the periodic appraisal of employees (5 
U.S.C. 4302(a)(1)), and the regulations require that a rating of record 
be given to an employee as soon as practicable after the end of the 
appraisal period (5 CFR 430.208(a)). When an appraisal cannot be given 
at the end of the appraisal period, the regulations already provide for 
extending the appraisal period until the conditions to complete a 
rating of record are met (5 CFR 430.208(g)). A rating of record then is 
issued that covers the entire appraisal period, including the 
extension. If the appraisal period was not extended, or if a rating of 
record for a later appraisal period was issued, the agency cannot go 
back and ``fill in the blanks'' at some future point in time. To permit 
such a practice would undermine the basic concepts of performance 
appraisal and severely limit the accuracy of the ratings produced due 
to the very passage of time involved.

Assumed Ratings of Record

    The third issue addressed in the proposed regulation is the 
prohibition against issuing to an employee a rating of record that does 
not reflect actual performance, but assumes a level of performance 
without evaluation. The intent of the law is clear; Congress intended 
Federal employees to be evaluated based upon the actual work they 
performed during the appraisal period. Some confusion has arisen over 
the years because of the process used to include the value of 
performance credit when agencies are establishing retention registers 
in preparation for a reduction in force. In situations where an 
employee did not receive a rating of record, an agency previously 
could, for RIF purposes only, assign the value of performance credit 
for that appraisal period at the Fully Successful level. Regulations, 
published in November 1997, changed the procedures for dealing with 
missing ratings of record and changed the reference point for assigning 
additional service credit for performance for employees who have no 
rating of record to the value assigned to the applicable modal rating 
level in the competitive area, or some larger agency population 
aggregation. These proposed regulations make no further change to the 
reduction in force process. Their sole purpose is to regulate that an 
agency may not issue a bona fide rating of record to an employee that 
assumes some level of performance since employees are entitled to a 
rating of record that reflects their actual level of performance. This 
does not impose a requirement that performance must be reflected only 
by means of a narrative justification. Agencies are free to design the 
process and procedures they will use to evaluate employee performance. 
These regulations are intended to ensure that an evaluation of actual 
employee performance is the basis of the rating of record.

Carrying Over a Rating of Record

    Finally, these proposed regulations would codify the prohibition 
against carrying over a previous rating of record into another 
appraisal period as a bona fide rating of record. This is obviously 
tied closely to the above requirement that employees be given a rating 
of record that reflects their performance during a specific appraisal 
period. This prohibition does not negate the fact that an employee may 
perform at the same level for several years and, therefore, 
appropriately be assigned the same summary level in the rating of 
record for each of those separate appraisal periods. As noted in 5 
U.S.C. 4302 (b) (1) and (2), agencies are required by law to provide 
performance standards to employees at the beginning of each appraisal 
period, and to evaluate the employee ``during the appraisal period.'' 
To allow agencies to carry over a previous year's rating of record 
without an actual evaluation of the employee's performance would defeat 
the intent of the law and render the performance appraisal program of 
the agency meaningless. This provision would not prohibit an agency 
from using previous ratings of record as the basis for personnel 
actions when a current rating of record is not available, provided the 
recency of the previous rating of record is reasonable. Such a feature 
was used by the Performance Management and Recognition System for pay 
administration purposes, and also is contained in some of the 
demonstration projects, where a past rating of record, usually not more 
than one year old, is used as the basis for a pay adjustment when a 
current rating is not available.

Technical Correction

    The Office of Personnel Management is taking this opportunity to 
make minor corrections to citations that were overlooked when 
regulations revising the awards provisions were finalized in September 
1995.

Regulatory Flexibility Act

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

List of Subjects

5 CFR Part 430

    Decorations, medals, awards, Government employees.

5 CFR Part 534

    Government employees, Hospitals, Students, Wages.

Office of Personnel Management.
Janice R. Lachance,
Director.

    Accordingly, OPM is proposing to amend parts 430 and 534 of title 
5, Code of Federal Regulations, as follows:

[[Page 19413]]

PART 430--PERFORMANCE MANAGEMENT

    1. The authority citation for part 430 continues to read as 
follows:

    Authority: 5 U.S.C. chapter 43.

    2. In Sec. 430.208, paragraphs (a)(1), (a)(2), (a)(3) and (i) are 
added; paragraph (h) is redesignated as paragraph (j) and a new 
paragraph (h) is added to read as follows:


Sec. 430.208  Rating performance.

    (a) * * *
    (1) A rating of record shall be based only on the evaluation of 
actual job performance for the designated appraisal period.
    (2) An agency shall not issue a rating of record that assumes a 
level of performance by an employee without an actual evaluation of 
that employee's performance.
    (3) Except as provided in Sec. 430.208(i), a rating of record is 
final when it is issued to an employee with all appropriate reviews and 
signatures.
* * * * *
    (h) Each rating of record shall cover a specified appraisal period. 
Agencies shall not carry over a rating of record prepared for a 
previous appraisal period to a subsequent appraisal period(s).
    (i) When either a regular appraisal period or an extended appraisal 
period ends and a performance plan has been established for a 
subsequent appraisal period with no rating of record issued for the 
earlier appraisal period, an agency shall not produce a rating of 
record to cover that period retroactively. Once issued, ratings of 
record shall not be changed retroactively except that a rating of 
record may be changed--
    (1) Within 60 days of issuance based upon an informal request by 
the employee;
    (2) As a result of a grievance, complaint, or other formal 
proceeding permitted by law that results in a final determination by 
appropriate authority that the rating of record must be changed; or
    (3) Where the agency determines that a rating of record was 
incorrectly recorded or calculated.

PART 534--PAY UNDER OTHER SYSTEMS

    3. The authority citation for part 534 continues to read as 
follows:

    Authority: 5 U.S.C. 1104, 5307, 5351, 5352, 5353, 5376, 5383, 
5384, 5385, 5541, and 5550a.

    4. In Sec. 534.505, paragraph (b) is revised to read as follows:


Sec. 534.505  Pay related matters.

* * * * *
    (b) Performance awards. Performance awards may be paid under 5 
U.S.C. chapter 45 and Sec. 451.104(a)(3) of this chapter.

[FR Doc. 98-10266 Filed 4-17-98; 8:45 am]
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