[Federal Register Volume 63, Number 226 (Tuesday, November 24, 1998)]
[Proposed Rules]
[Pages 64880-64895]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-31284]


 ========================================================================
 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. 226 / Tuesday, November 24, 1998 / 
Proposed Rules  

[[Page 64880]]


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OFFICE OF PERSONNEL MANAGEMENT

5 CFR Parts 530, 531, 536, 550, 551, 575, 591, and 610

RIN 3206-AH11


Miscellaneous Changes in Compensation Regulations

AGENCY: Office of Personnel Management.

ACTION: Proposed rule with request for comments.

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SUMMARY: The Office of Personnel Management is issuing proposed 
regulations to correct or clarify various regulatory provisions dealing 
with the compensation of Federal employees. Many of the proposed 
changes were prompted by questions and comments from users of the 
regulations. The proposed regulations are intended to assist agencies 
in administering compensation programs and to provide clearer 
information to employees covered by those programs.

DATES: Comments must be received on or before January 25, 1999.

ADDRESSES: Comments may be sent or delivered to Donald J. Winstead, 
Assistant Director for Compensation Administration, Workforce 
Compensation and Performance Service, Office of Personnel Management, 
Room 7H31, 1900 E Street NW., Washington, DC 20415 (FAX: (202) 606-0824 
or e-mail: [email protected]).

FOR FURTHER INFORMATION CONTACT: Bryce Baker, (202) 606-2858, FAX: 
(202) 606-0824, or e-mail: payleave @ opm.gov.

SUPPLEMENTARY INFORMATION: The Office of Personnel Management (OPM) 
proposes to revise a number of miscellaneous pay administration 
regulations to correct various typographical or technical errors or 
omissions and to codify or clarify OPM policies. The proposed changes 
were identified through a general review of compensation regulations by 
OPM staff--a review that took into account many questions and comments 
from users of the regulations. The following table lists the specific 
regulatory sections that are being proposed for revision and briefly 
describes the purpose and/or effect of each change.

------------------------------------------------------------------------
        Proposed rule               Description of proposed change
------------------------------------------------------------------------
Sec.  530.202...............  Aggregate Limitation on Pay: Definitions.
                               Amends the definition of ``discretionary
                               payment'' to make clear that retention
                               allowances are the only fixed-rate
                               payments made on a continuing basis that
                               are considered to be discretionary after
                               they have been initially authorized.
                               (Also, see 58 FR 50248, Supplementary
                               Information accompanying the final rule
                               on the aggregate pay limitation, dated
                               September 27, 1993.) Amends the
                               definition of ``estimated aggregate
                               compensation'' to make clear that this
                               term includes the value of all
                               nondiscretionary payments to which the
                               employee is currently entitled as well as
                               projected to be entitled during the
                               course of the calendar year. For example,
                               the amount of the entitlement may be
                               expected to change based on known facts
                               (such as the scheduled date of
                               reassignment to a new locality pay area).
                               The projection would include
                               nondiscretionary payments for which
                               authorization will lapse during the
                               calendar year, but which are expected to
                               be reauthorized (e.g., physicians
                               comparability allowance payments under
                               part 595).
Sec.  530.203(c)............  Corrects a typographical error.
Sec.  530.203(f)............  Aggregate Limitation on Pay: Erroneous
                               Excess. Adds new language to clarify how
                               to correct cases where the aggregate
                               compensation actually received by an
                               employee exceeds the Executive Level I
                               limitation because of an earlier error in
                               computing the employee's estimated
                               aggregate compensation (i.e., the error
                               is discovered too late in the year to
                               prevent the erroneous excess). The
                               correction requires that any erroneous
                               excess be deemed to have been paid on the
                               first day of the next calendar year and
                               counted toward the next year's aggregate
                               compensation in applying the Level I
                               limitation.
Sec.  530.303(d)............  Special Salary Rates. Provides that
                               certifications made in conjunction with
                               requests to establish or adjust special
                               salary rate schedules may be made by an
                               agency official other than the head of
                               the agency in all cases (not just those
                               involving fewer than 1,000 employees or
                               costs of less than $4 million), as long
                               as that official is officially designated
                               to act in the agency head's behalf in
                               making such a certification and is the
                               sole designee for the agency with respect
                               to any given schedule. Also, eliminates
                               the requirement that the certification
                               address the availability of funds to
                               cover the increased costs associated with
                               the special salary rate request. The
                               funding availability requirement is
                               unnecessary, since an agency would not be
                               making the request for new or higher
                               special salary rates unless it had the
                               necessary funds or was prepared to make
                               adjustments in its budget. Since these
                               requests are made under the authorization
                               of the agency head and transmitted by an
                               agency's headquarters, the agency is in a
                               position to ensure that the budget
                               implications of any request are fully
                               considered.
Sec.  530.303(i)............  Official Duty Station. Revises a paragraph
                               defining ``official duty station'' for
                               use in connection with special salary
                               rates, consistent with the proposed
                               revision in Sec.  531.602. (Note:
                               Paragraph (i) was originally added to
                               Sec.  530.303 in an interim rule on
                               official duty station determinations
                               published on May 9, 1997 (62 FR 25423).)
Sec.  531.203(c)(1).........  Maximum Payable Rate. Clarifies that the
                               highest rate that can be derived in
                               applying the maximum payable rate rule is
                               the maximum rate (step 10) of the
                               employee's grade.
Sec.  531.203(d)(2).........  Highest Previous Rate. Provides that law
                               enforcement officer special rates under
                               section 403 of the Federal Employees Pay
                               Comparability Act of 1990 are to be used
                               in determining an employee's highest
                               previous rate because these rates are
                               basic pay for all purposes. Also corrects
                               reference to special rate authorities in
                               5 U.S.C. 5305 and in part 532.
Sec.  531.203(d)(3).........  Corrects reference to special rate
                               authorities in 5 U.S.C. 5305 and in part
                               532.
Sec.  531.203(f)............  Pay Adjustments. Modifies the simultaneous
                               action rule to clarify the longstanding
                               policy that general pay adjustments must
                               be processed before individual pay
                               actions that take effect at the same
                               time.
Sec.  531.204(a)(2).........  Corrects reference to special rate
                               authority in 5 U.S.C. 5305.

[[Page 64881]]

 
Sec.  531.301...............  Official Duty Station. Revises the
                               definition of ``official duty station''
                               used in connection with law enforcement
                               officer geographic adjustments,
                               consistent with the proposed revision in
                               Sec.  531.602.
Sec.  531.304(b)............  SES Pay Elections. Clarifies that a career
                               Senior Executive Service (SES) member
                               also retains a law enforcement geographic
                               adjustment when electing to retain SES
                               basic pay during certain Presidential
                               appointments, consistent with 5 U.S.C.
                               3392(c)(1) and Sec.  317.801.
Sec.  531.407(d)............  Within-Grade Increases. Clarifies that the
                               statutory authority to pay merit
                               increases has been repealed. (The
                               regulatory reference to merit increases
                               is maintained because a past merit
                               increase is considered in making
                               equivalent increase determinations.)
Sec.  531.602...............  Locality Pay. Revises the definition of
                               ``employee'' to remove an obsolete
                               reference to the separate pay authority
                               for employees under the former Stay-in-
                               School Program. Also, revises the
                               definition of ``official duty station''
                               so that an employee's duty station is
                               considered unchanged for locality pay
                               purposes when the duty station change is
                               a ``paper move'' connected to a mass
                               transfer of jobs to another location to
                               facilitate a reduction in force that
                               results in the employee's separation
                               within 3 workdays after the transfer. Any
                               severance pay or lump-sum payment for
                               annual leave owed to such an employee
                               would be based on rates of pay applicable
                               in the area to which assigned before the
                               transfer, thus avoiding either an unfair
                               reduction in benefits or an unwarranted
                               windfall.
Sec.  531.606(b)............  SES Pay Elections. Clarifies that a career
                               SES member also retains locality pay when
                               electing to retain SES basic pay during
                               certain Presidential appointments,
                               consistent with 5 U.S.C. 3392(c)(1) and
                               Sec.  317.801.
Sec.  536.102...............  Grade and Pay Retention. Amends the
                               definition of ``demotion at an employee's
                               request'' to clarify that the term
                               includes a voluntary demotion that is
                               caused or influenced by a management
                               action related to possible demotion for
                               personal cause. Also, corrects
                               typographical error in definition of
                               ``rate of basic pay.''
Sec.  536.203(b)............  Corrects a typographical error.
Sec.  536.205(a)(2).........  Corrects an erroneous reference.
Sec.  536.205(b)(4).........  Pay Retention. Adds a new rule to ensure
                               that, upon change (with no break in
                               service) to a position where a higher
                               rate schedule applies, a retained rate
                               employee's pay would be set no lower than
                               the rate for step 10 on the newly
                               applicable schedule.
Sec.  550.101(a)(2).........  Premium Pay. Deletes an obsolete reference
                               to the District of Columbia (DC)
                               government. (DC government employees were
                               excluded from coverage under various
                               title 5 provisions by DC Law 2-139, as
                               amended by DC Law 3-109, as authorized by
                               the DC Self Government and Governmental
                               Reorganization Act, Public Law 93-198,
                               December 24, 1973.)
Sec.  550.101(d)............  Premium Pay. Revises an exclusion of
                               certain Customs employees consistent with
                               the Customs Officer Pay Reform Act of
                               1993 (Public Law 103-66, August 10, 1993)
                               and implementing regulations issued in
                               1994 by the Department of the Treasury
                               (58 FR 68520 and 19 CFR 24.16). The
                               exclusion now applies only to ``customs
                               officers''--i.e., customs inspectors and
                               canine enforcement officers. Clarifies
                               that the paragraph (d) exclusion also
                               applies to any Sunday pay under the
                               listed authorities. Removes unnecessary
                               references in paragraphs (d) (3) and (7).
Sec.  550.102...............  Premium Pay. Deletes an obsolete reference
                               to the DC government. (See above
                               description for Sec.  550.101(a)(2).)
Sec.  550.103...............  Premium Pay.
                              Revises definition of ``administrative
                               workweek'' to clarify that it may consist
                               of any 7 consecutive 24-hour periods.
                               (See parallel change in Sec.  610.102.)
                              Revises the definition of ``agency'' to
                               delete an obsolete reference to the DC
                               government and to delete erroneous
                               reference to a nonexistent paragraph.
                              Adds a new definition of ``day'' for
                               purposes of overtime pay calculations,
                               consistent with current policy.
                              Provides or corrects relevant legal
                               references in the definition of ``law
                               enforcement officer.'' Delegates to
                               agency heads the authority to determine
                               that certain employees under retirement
                               systems other than the Civil Service
                               Retirement System or the Federal
                               Employees Retirement System are law
                               enforcement officers for pay purposes,
                               consistent with the existing delegation
                               of authority to determine retirement
                               coverage.
                              Revises the definition of ``premium pay''
                               to clarify that it includes compensatory
                               time off and that the dollar value of
                               earned compensatory time off is the
                               overtime pay the employee would have
                               received if the employee had been paid
                               overtime pay instead. This reflects the
                               longstanding policy of the Comptroller
                               General. (See 37 Comp. Gen. 362 (1957).)
                               The same dollar value is used when
                               accumulated and unused compensatory time
                               off is paid off when an employee
                               transfers, separates, or otherwise is
                               entitled to cash payment for compensatory
                               time off. The same dollar value is also
                               used to determine when an employee has
                               reached the biweekly and annual
                               limitations on premium pay under 5 CFR
                               550.105 and 550.107.
Sec.  550.107...............  Corrects language by changing ``period''
                               to ``pay period.''
Sec.  550.111(g)............  Overtime Pay. Adds a cross reference
                               concerning the general prohibition on
                               payment of overtime pay to an employee
                               engaged in training, as provided in Sec.
                               410.402.
Sec.  550.112 (k)...........  Overtime Work: Standby Duty. Adds a
                               paragraph to clarify that an employee is
                               in a standby status with creditable hours
                               of work if, for work-related reasons, the
                               employee (1) is restricted to an agency's
                               premises, or so close to it that the
                               employee's time may not be used
                               effectively for his or her own purposes
                               or (2) is restricted to another location,
                               may not pursue non-work activities, and
                               is required to remain in a state of
                               readiness to perform work. This is
                               consistent with longstanding OPM policy,
                               OPM's regulations on standby duty premium
                               pay, and OPM's regulations on overtime
                               pay under the Fair Labor Standards Act of
                               1938, as amended (FLSA). (See Secs.
                               550.143(b) and 551.431(a).) (Note: An
                               employee who is compensated for standby
                               duty by payment of standby duty premium
                               pay may not also be compensated by
                               payment of overtime pay on an hour-for-
                               hour basis for the same hours of work.)
Sec.  550.112(l)............  Overtime Work: On-Call Status. Adds a new
                               paragraph to clarify that time in an on-
                               call status does not constitute hours of
                               work under title 5 overtime provisions.
                               This is consistent with OPM's
                               longstanding policy and parallels OPM's
                               regulations on FLSA overtime pay. (See
                               Sec.  551.431(b).) On-call status
                               includes periods when an employee is
                               required to be reachable by telephone or
                               electronic device and ready to report for
                               duty upon request, but is free to pursue
                               personal activities within a reasonable
                               call-back radius. (Note: An agency may
                               determine that certain hours during which
                               a criminal investigator is placed in a
                               duty agent or on-call status may be
                               credited as availability hours under Sec.
                                550.182(c), subject to the policies and
                               procedures established by the agency.)

[[Page 64882]]

 
Sec.  550.112(m)............  Overtime Work: Meal and Sleep Time. Adds a
                               new paragraph to clarify that bona fide
                               meal periods and sleep time are generally
                               not hours of work under title 5 premium
                               pay provisions, consistent with
                               longstanding OPM policy. However,
                               consistent with 5 CFR 610.111(c), meal
                               and sleep periods during regularly
                               scheduled tours of duty for which an
                               employee receives annual premium pay for
                               regularly scheduled standby duty are
                               included in hours of work. Also, this new
                               paragraph incorporates the ``two-thirds
                               rule'' for FLSA-exempt employees, as
                               established by Comptroller General
                               opinions, into OPM regulations for the
                               first time. For employees who have
                               substantial time in a standby status as
                               part of tours of duty of 24 hours or
                               more, for which they do not receive
                               annual premium pay for regularly
                               scheduled standby duty, the two-thirds
                               rule permits agencies to exclude up to 8
                               hours for bona fide meal and sleep
                               periods from hours of work. (See similar
                               rule in OPM's regulations on FLSA
                               overtime pay in Sec.  551.432.)
Sec.  550.121(c)............  Night Pay. Adds a cross reference
                               concerning the general prohibition on
                               payment of night pay to an employee
                               engaged in training, as provided in Sec.
                               410.402.
Sec.  550.131(d)............  Holiday Premium Pay. Adds a cross
                               reference concerning the general
                               prohibition on payment of holiday premium
                               pay to an employee engaged in training,
                               as provided in Sec.  410.402.
Sec.  550.153(d)............  Corrects an erroneous reference.
Sec.  550.162(f)............  Annual Premium Pay. Adds a paragraph that
                               provides that an agency's existing
                               approval of annual premium pay for
                               administratively uncontrollable overtime
                               (AUO) work or regularly scheduled standby
                               duty may not be discontinued during a
                               period after a job-related injury while
                               an employee is not working and is in
                               receipt of benefits under the Federal
                               Employees' Compensation Act (FECA), 5
                               U.S.C. chapter 81, or in a paid leave
                               status in lieu of receiving FECA
                               benefits, unless such premium pay is
                               discontinued for all similar positions.
                               This generally prevents the loss of AUO
                               or standby duty pay after a job-related
                               injury. (Note: Section 550.162(e)
                               provides for the continuation of AUO or
                               standby duty pay during paid leave
                               generally, but only if the premium pay
                               remains payable. Thus, various
                               Comptroller General opinions have
                               provided that an agency may discontinue
                               AUO pay for an employee on extended sick
                               leave if there is no reasonable
                               expectation that the employee will return
                               to duty. For example, see Comptroller
                               General opinion B-152061, May 4, 1982.
                               The proposed paragraph would provide a
                               limiting exception barring an agency from
                               so discontinuing AUO or standby duty pay
                               in workers' compensation cases.)
                              The proposed paragraph would also ensure
                               that, if the employee is eligible for
                               retirement, his or her high-3 average
                               salary is not adversely affected. (In
                               determining an employee's high-3 average
                               salary, the position's established rate
                               of ``basic pay''--including AUO pay for
                               law enforcement officers and standby duty
                               pay--is used during periods of leave
                               without pay. Thus, even though AUO pay
                               and standby pay are not actually payable
                               during leave without pay, the established
                               AUO/standby duty rates may be used in
                               calculating the high-3 average salary.)
Sec.  550.171(b)............  Sunday Premium Pay. Adds a cross reference
                               concerning the general prohibition on
                               payment of Sunday premium pay to an
                               employee engaged in training, as provided
                               in Sec.  410.402.
Sec.  550.202...............  Advances in Pay. Revises the definition of
                               ``newly appointed'' by replacing an
                               obsolete reference to the former
                               cooperative work-study program with a
                               reference to the Student Educational
                               Employment Program and by making other
                               changes to improve the clarity of the
                               definition.
Sec.  550.205(b)............  Corrects a typographical error.
Sec.  550.311(b)............  Corrects an erroneous reference.
Sec.  550.312...............  Allotments. Clarifies that an employee's
                               written signature is not required to
                               effect an allotment from pay. Automated
                               computer programs that allow employees to
                               process allotments themselves using a
                               personal identification code are
                               permitted. Also simplifies existing
                               language on general limitations.
Sec.  550.341...............  Allotments. Deletes redundant provisions
Sec.  550.342...............   that are more fully covered in OPM's
                               regulations for the Combined Federal
                               Campaign program in part 950. Provides
                               appropriate cross reference.
Sec.  550.703...............  Severance Pay: Definitions. Revises the
                               definition of ``commuting area,'' which
                               is used in determining whether an
                               employee is involuntarily separated or
                               has been given a reasonable offer. A
                               proposed new work site is in the
                               employee's commuting area if (1) the
                               employee's residence is in the standard
                               commuting area surrounding that work site
                               or (2) the employee's residence is
                               outside the standard commuting area but
                               within the employee's established
                               commuting range based on his or her
                               existing commuting trip so that the
                               employee would not be compelled to move
                               due to the change to the new work site.
                               The compelled-to-move criterion
                               represents longstanding policy as
                               reflected in Comptroller General opinions
                               (e.g., see B-182300, January 16, 1975,
                               and B-210524, June 6, 1983) and in
                               parallel determinations made for purposes
                               of establishing an employee's entitlement
                               to discontinued service retirement (e.g.,
                               see 5 U.S.C. 8336(d) and section 44A2.1-3
                               of the CSRS and FERS Handbook for
                               Personnel and Payroll Offices).
                              Revises the definition of ``employee'' to
                               make clear that this definition (tied to
                               5 U.S.C. 5595(a)(2)) is used only in
                               establishing an individual's initial
                               eligibility for severance pay upon
                               separation. (Note: A broader definition
                               of ``employee'' (as defined in 5 U.S.C.
                               2105) is used in determining creditable
                               service (Sec.  550.708).) Also clarifies
                               the definition of the term ``individual
                               employed'' in 5 U.S.C. 5595(a)(2)(A).
                              Defines the term ``employed by the
                               Government of the United States''
                               consistent with longstanding policy. The
                               Government of the United States
                               encompasses all Federal entities
                               employing civilian personnel, including
                               the legislative branch, the judicial
                               branch, the Postal Service, etc. The term
                               is not limited to employment as an
                               ``employee'' as defined in 5 U.S.C. 2105.
Sec.  550.703...............  Severance Pay: Definitions. (continued)
                               Revises the definition of ``immediate
                               annuity'' to clarify current policy that,
                               for purposes of determining eligibility
                               for severance pay, Social Security
                               benefits have no effect, but an immediate
                               annuity from a non-Federal retirement
                               system providing benefits for Federal
                               civilian service is disqualifying. (See
                               54 Comp. Gen. 905 (1975).) Also clarifies
                               that voluntary postponement of annuity
                               commencing dates under any retirement
                               system does not serve to exclude an
                               otherwise covered annuity from being
                               considered an immediate annuity. The key
                               is whether the employee is eligible for
                               (``fulfilled the requirements for'') an
                               immediate annuity.
                              Revises the definition of ``involuntary
                               separation'' to make clear that there may
                               be a personal element to defining an
                               individual employee's commuting area. As
                               provided in the revised definition of the
                               term ``commuting area'' (described
                               above), an employee's residence may be
                               outside the standard commuting area for
                               the new work site, but the new work site
                               may still be within the employee's
                               commuting area.

[[Page 64883]]

 
                              Revises the definition of ``nonqualifying
                               appointment'' to clarify that this term
                               includes appointments that do not convey
                               coverage under the severance pay
                               provision--e.g., an appointment at a
                               Federal agency not included under the
                               definition of ``agency'' in 5 U.S.C.
                               5595(a)(1). Thus, a time-limited
                               appointment at a noncovered agency is a
                               ``nonqualifying time-limited
                               appointment'' resulting in suspension of
                               severance pay under Sec.  550.710,
                               regardless of the length of the
                               employee's break in service. The
                               definition is also revised to clarify
                               that Veterans Readjustment Appointments
                               (5 CFR part 307) and Presidential
                               Management Intern appointments (5 CFR
                               part 362) are nonqualifying time-limited
                               appointments.
                              Corrects an erroneous reference in the
                               definition of ``qualifying appointment''
                               that inadvertently resulted from removal
                               of an obsolete paragraph as part of
                               regulatory changes made in 1993 (58 FR
                               58257). Clarifies that a qualifying time-
                               limited appointment must be for full-time
                               employment (as required by 5 U.S.C.
                               5595(a)(2)(ii)) and must be otherwise
                               qualifying. Also clarifies that a series
                               of time-limited appointments at an agency
                               following an initial qualifying time-
                               limited appointment is treated as one
                               qualifying time-limited appointment in
                               applying the severance pay provisions, as
                               long as there is no break in service
                               between the time-limited appointments.
                              Modifies the definition of ``reasonable
                               offer'' so that an offered position would
                               not be considered unreasonable simply
                               because the position carries greater
                               tenure. (The current regulation requires
                               that the offered position's tenure be
                               exactly the same. The proposed change
                               parallels the tenure rule in the
                               definition of ``reasonable offer'' in
                               Sec.  536.206(3) for grade and pay.)
Sec.  550.706...............  Severance Pay: Resignations. Clarifies
                               what constitutes a specific or general
                               written notice that allows a resignation
                               to be treated as an involuntary
                               separation for severance pay purposes.
                               The specific notice must state the
                               effective date of the involuntary
                               separation. The general notice must state
                               the latest date (not more than 1 year
                               after the notice) by which affected
                               employees will be separated, based on
                               current agency plans. In addition, the
                               general notice must be issued by an
                               official with proper authority to issue
                               such a notice and must state that a
                               subsequent resignation will be considered
                               an involuntary separation for severance
                               pay purposes. (A general notice has no
                               standing under the reduction-in-force
                               regulations in 5 CFR part 351, subpart H,
                               and may not be used to effect an
                               employee's separation.) The effect of
                               canceling a notice--specific or general--
                               is addressed separately in a new
                               paragraph.
Sec.  550.707(b)............  Severance Pay: Computation. Clarifies how
                               to determine the weekly rate of basic pay
                               used in computing the severance pay fund
                               for employees in positions with regularly
                               varying work schedules or rates of basic
                               pay. In these cases, to ensure equitable
                               treatment, it is necessary to compute an
                               appropriate weekly average for the last
                               position held during the 26 biweekly pay
                               periods immediately preceding separation.
                               The revised language also clarifies that
                               the averaging method applies to employees
                               with pure part-time schedules and
                               seasonal schedules.
Sec.  550.707(d)............  Severance Pay: Fund. Adds a provision
                               clarifying that the severance pay fund is
                               capped so that there may not be more than
                               52 weeks of severance pay over an
                               individual's lifetime, consistent with 5
                               U.S.C. 5595(c).
Sec.  550.708(a)............  Severance Pay: Creditable Service.
                               Clarifies that any service as an employee
                               under 5 U.S.C. 2105 is creditable for
                               purposes of computing service used in the
                               computation of the severance pay fund,
                               excluding only time in nonpay status
                               (e.g., leave without pay) that is not
                               creditable for leave or retirement
                               purposes. This would codify current OPM
                               policy.
Sec.  550.708(e)............  Severance Pay: Creditability of DC
                               Government Service. Adds a new paragraph
                               to clarify that employment with the
                               government of the District of Columbia
                               (DC) is creditable service if the
                               individual was first employed by the DC
                               government before October 1, 1987. (See
                               former Federal Personnel Manual letter
                               630-32, September 7, 1989. Credit for
                               this DC government service was formerly
                               provided via a linkage to the service
                               credit rules for annual leave accrual
                               purposes. Under Public Law 99-335, June
                               6, 1986, only DC government employees
                               first employed before October 1, 1987,
                               are considered to be employees for
                               purposes of administering the leave
                               system, excluding teachers or librarians
                               of the DC public schools. See 5 U.S.C.
                               6301(2)(B) and (i).)
Sec.  550.709...............  Severance Pay: Accrual and Payment.
                               Clarifies that severance pay accrues on a
                               day-to-day basis as a recipient remains
                               unemployed by the Federal Government.
                               Thus, an individual's first and/or last
                               severance payment may be a partial
                               payment when the employee was not
                               eligible for severance pay for the entire
                               pay period. Also, clarifies when an
                               average rate of basic pay is used in
                               determining the amount of the severance
                               payment. Adds a reference to the special
                               payment provisions under 5 U.S.C. 5595(h)
                               for certain individuals employed by the
                               Department of Defense (DOD) or Coast
                               Guard nonappropriated fund
                               instrumentalities. Adds reference to law
                               providing that DOD employees may be paid
                               severance pay in one lump-sum payment.
                               (See section 1035 of Public Law 104-106,
                               February 10, 1996.)
Sec.  550.710...............  Severance Pay: Suspension. Clarifies a
                               provision dealing with suspension of
                               severance pay during a nonqualifying time-
                               limited appointment. (Under 5 U.S.C.
                               5595(d), employment by the government of
                               the District of Columbia triggers
                               discontinuation of severance pay. This
                               provision was not affected by laws
                               excluding DC government employees from
                               entitlement to severance pay under 5
                               U.S.C. 5595, since those laws do not
                               apply to the entitlements of Federal
                               employees based on Federal service.)
Sec.  550.711...............  Severance Pay: Termination. Clarifies a
                               provision dealing with termination of
                               severance pay upon reemployment.
                               Reemployment by the Federal Government or
                               DC government terminates severance pay in
                               all instances unless severance pay is
                               suspended under Sec.  550.710. (See note
                               regarding DC government in description
                               for Sec.  550.710.) With addition of
                               proposed Sec.  550.707(d), the reference
                               to termination due to application of 1-
                               year limit is unnecessary. The amount of
                               the severance pay fund reflects the 1-
                               year (52-week) limitation.
Sec.  550.713...............  Severance Pay: Recordkeeping. Deletes a
                               nonessential recordkeeping requirement
                               related to separated employees hired
                               within 90 days by contractors assuming a
                               Federal function. The recordkeeping
                               requirement was intended as a temporary
                               measure to allow evaluation of a
                               regulatory change. (See 54 FR 23215, May
                               31, 1989.)
Sec.  550.803...............  Back Pay: Definitions. Revises the
                               definitions of ``employee'' and ``pay,
                               allowances, and differentials'' to
                               clarify that, under the law, back pay
                               refers to monetary benefits payable
                               during periods of Federal employment, not
                               to post-separation benefits such as
                               retirement benefits and severance
                               payments. Also, clarifies that agency and
                               employee contributions to a retirement
                               investment fund, such as the Thrift
                               Savings Plan, are not covered by the back
                               pay law and regulations. (Note:
                               Correction of agency errors affecting an
                               employee's Thrift Savings Plan account
                               are subject to applicable law and
                               regulations. See 5 U.S.C. 8432a and 5 CFR
                               parts 1605 and 1606.)

[[Page 64884]]

 
Sec.  550.805(e)............  Back Pay: Deductions. Clarifies the rules
                               for making offsets and deductions from
                               gross back pay awards. Addresses the
                               withholding of normal pay deductions in a
                               separate paragraph, specifying that such
                               deductions are to be made in accordance
                               with the regular order of precedence
                               established by the agency, subject to
                               applicable law and regulations. (For
                               example, mandatory retirement deductions
                               should be made first, consistent with 5
                               U.S.C. 8334 (a)-(c) and 8422 (a)-(c).)
                               Clarifies when health and life insurance
                               premiums are to be deducted. Also, adds a
                               paragraph to clarify that agencies may
                               make an administrative offset to recover
                               a debt owed the Government.
Sec.  550.805(h)............  Back Pay: Thrift Savings Plan. Provides
                               cross reference to Federal Retirement
                               Thrift Investment Board regulations on
                               correction of agency errors affecting an
                               employee's Thrift Savings Plan account.
Sec.  550.806(a)............  Back Pay: Interest. Clarifies that
                               interest accrual ends at the time
                               selected by the agency not more than 30
                               days before the date of the back pay
                               payment, as provided by 5 U.S.C.
                               5596(b)(2)(B). Also clarifies that no
                               interest will be payable if an agency
                               makes the back pay payment within 30 days
                               after the erroneous denial, withdrawal,
                               or reduction of a payment and sets the
                               interest accrual ending point to coincide
                               with the interest accrual starting point.
                               (This matter was addressed in the
                               Supplementary Information section
                               accompanying the final regulations on
                               back pay interest issued on November 15,
                               1988. See 53 FR 45886.)
Sec.  550.806(h)............  Back Pay: Interest. Removes paragraph (h),
                               since the reference to the December 1987
                               effective date of the back pay interest
                               provision is no longer necessary.
Appendix A to subpart H of    Back Pay: Deductions. This new appendix
 part 550.                     includes information on how to compute
                               certain common deductions in back pay
                               cases. It includes information on making
                               Federal tax deductions, including new
                               Internal Revenue Service (IRS) guidance
                               clarifying that agencies may adjust
                               Federal tax withholdings to reflect the
                               withholding of corresponding taxes from
                               erroneous payments made in the same
                               calendar year. For additional information
                               on Federal tax withholdings and wage
                               repayments, agencies should review
                               Circular E, Employer's Tax Guide
                               (Publication 15) or other appropriate IRS
                               publications, or contact IRS directly.
Sec.  550.902...............  Hazard Pay Differential: Definition of
                               ``Employee.'' Clarifies definition of
                               term ``employee,'' consistent with 5
                               U.S.C. 5545(d).
Sec.  550.903(b)............  Hazard Pay Differential: Requests.
                               Clarifies that requests for new
                               categories and rates for hazard pay
                               differentials must be submitted by the
                               head of an agency (or authorized
                               designee).
Sec.  550.905...............  Hazard Pay Differential: Payment.
                               Clarifies that the differential may not
                               be paid for hours for which employees
                               receive annual premium pay for regularly
                               scheduled standby duty, annual premium
                               pay for administratively uncontrollable
                               overtime work, or law enforcement
                               availability pay. This reflects
                               requirements in law that provide that
                               annual premium pay and availability pay
                               are paid instead of premium pay provided
                               by other provisions of subchapter V of
                               title 5, United States Code. While each
                               of the applicable provisions of law
                               provide for exceptions (other types of
                               premium pay that may be paid for the same
                               hours of work), in all three cases,
                               hazard pay differential is not one of the
                               exceptions. (See 5 U.S.C. 5545(c)(1), 5
                               U.S.C. 5545(c)(2), and 5 U.S.C.
                               5545a(c).)
Sec.  551.401 (f)-(g) and     FLSA Overtime: Hours of Work. Corrects
 Sec.  551.501(a).             regulatory references to reflect recent
                               renumbering of sections in OPM's training
                               regulations. (See interim training
                               regulations published at 61 FR 21947, May
                               13, 1996.)
Sec.  551.423(a)............  FLSA Overtime: Training Hours. Clarifies
                               that training hours compensable under
                               Sec.  410.402(b) are always hours of work
                               for purposes of determining an employee's
                               FLSA overtime pay entitlements, even if
                               those training hours are related to entry-
                               level and similar types of training and
                               do not involve the performance of
                               productive work. For example, if an
                               employee is required to participate in
                               night training as part of a basic
                               training course because the situations he
                               or she must learn to handle occur only at
                               night, those night training hours would
                               be compensable under Sec.  410.402(b)(2)
                               and would be hours of work under Sec.
                               551.423(a)(3). This result is consistent
                               with Secs.  551.401(f) and (g). In
                               addition, a cross reference to Sec.
                               410.402(d) is added in Sec.
                               551.423(a)(2).
Sec.  551.432...............  FLSA Overtime: Sleep Hours. Clarifies that
                               a special rule on excludability of bona
                               fide sleep time from hours of work
                               applies to law enforcement and fire
                               protection employees receiving annual
                               premium pay under 5 U.S.C. 5545(c)(1) or
                               (2). (See similar language with respect
                               to meal periods in 5 CFR 551.411(c).)
                               Makes clear that the 8-hour limit on the
                               amount of sleep and meal time that can be
                               excluded in any 24-hour period applies in
                               all situations--regardless of the length
                               of the tour of duty or the applicability
                               of the special rules for law enforcement
                               and fire protection employees. (This
                               parallels the ``two-thirds rule'' that
                               applies to exempt employees under title
                               5. See proposed rule in Sec.
                               550.112(m)(3). Compare also to FLSA
                               regulations in 29 CFR 553.222-223 and
                               785.19-23.) Also, revises regulations to
                               clearly provide that on-duty sleep hours
                               during regularly scheduled tours that are
                               compensated by standby duty premium pay
                               must be considered hours of work for FLSA
                               purposes. (On-duty sleep hours may be
                               excluded from FLSA hours of work under
                               certain conditions. However, such an
                               exclusion is not appropriate for hours
                               for which the employee receives standby
                               duty premium pay. Since standby duty
                               premium pay is used in the FLSA overtime
                               pay computation, the corresponding hours
                               associated with that premium pay must be
                               fully reflected in the computation.)
Sec.  551.501(a)(5).........  FLSA Overtime: Law Enforcement Officers.
                               Clarifies that OPM never intended to
                               restrict the application of the special
                               overtime standards established under
                               section 7(k) of the Fair Labor Standards
                               Act of 1938 (FLSA), as amended, in the
                               case of Federal employees who are covered
                               by the FLSA but not by the overtime pay
                               provisions of title 5, United States
                               Code. This clarification is necessary
                               because 5 CFR 551.501(a)(5) can be
                               interpreted to authorize an increase in
                               overtime pay for employees of the United
                               States Secret Service Uniformed Division
                               and members of the United States Park
                               Police. These employees are not covered
                               by the overtime pay provisions of title
                               5, United States Code, but are covered by
                               overtime pay provisions in title 4,
                               United States Code, as well as by the
                               overtime pay provisions of the FLSA. OPM
                               regulations authorized by section 4(f) of
                               the FLSA and 5 U.S.C. 5542(c) are
                               intended to permit one computation of
                               overtime pay instead of two (under title
                               5 and the FLSA) for employees who are
                               covered by the overtime pay provisions of
                               title 5 and are not intended to result in
                               any significant change in overtime pay
                               entitlement.
Sec.  551.512(b)............  FLSA Overtime: Straight Time Rate. Revises
                               to state expressly that bonuses and
                               awards (including gainsharing) are not
                               included in computing the FLSA straight
                               time rate. This is consistent with the
                               longstanding application of this
                               regulation and with similar Department of
                               Labor regulations. (See 29 CFR 778.110.)

[[Page 64885]]

 
Sec.  551.512(d)............  FLSA Overtime Pay: Nondiscretionary
                               Awards. Amends OPM's regulations in part
                               551 on earning overtime pay under the
                               Fair Labor Standards Act (FLSA) to
                               provide two new options for meeting the
                               FLSA requirement to include
                               nondiscretionary individual or group
                               awards (e.g., gainsharing) in overtime
                               pay computations. Currently, this
                               requirement is met using a
                               ``recomputation method'--i.e., a
                               retroactive recomputation of the
                               employee's FLSA overtime pay in past
                               periods that involves retroactively
                               allocating the bonus money and deriving a
                               revised FLSA overtime pay entitlement.
                               Under the two new options--referred to as
                               the ``percentage awards method'' and the
                               ``boosted hour method,'' FLSA overtime
                               requirements may be met by following
                               certain procedures in computing the
                               amount of an employee's nondiscretionary
                               award. These new methods are consistent
                               with the Department of Labor's FLSA
                               regulations and policies.
Sec.  551.541(b)............  Corrects an erroneous reference.
Sec.  575.102(a)(3).........  Recruitment Bonuses. Adds positions in the
                               Federal Bureau of Investigation (FBI) and
                               Drug Enforcement Administration (DEA)
                               Senior Executive Service to the list of
                               positions for which agencies have
                               delegated authority to approve
                               recruitment bonuses. Other SES positions
                               are already covered. This corrects an
                               inadvertent omission.
Sec.  575.103...............  Recruitment Bonuses. Removes obsolete
                               language referencing a minimum 12-month
                               service agreement for recruitment bonus
                               recipients. Section 575.106 was
                               previously revised to require only a 6-
                               month minimum period. (See 60 FR 33326,
                               June 28, 1995.) Also, provides a revised
                               definition of ``commuting area'' by
                               referring to the revised definition used
                               in Sec.  575.203.
Sec.  575.202(a)(3).........  Relocation Bonuses. Adds position in the
                               FBI and DEA Senior Executive Service to
                               the list of positions for which agencies
                               have delegated authority to approve
                               relocation bonuses. Other SES positions
                               are already covered. This corrects an
                               inadvertent omission.
Sec.  575.203...............  Relocation Bonuses. Provides a revised
                               definition of ``commuting area'',
                               consistent with the proposed definition
                               in Sec.  550.703. Also, provides a
                               revised definition of ``employee'' to
                               cover all individuals employed in the
                               civil service (including those in the
                               legislative or judicial branches) who are
                               relocated to a different commuting area
                               upon appointment to a covered position.
                               (The current regulation can be
                               interpreted to limit coverage to
                               individuals who, before relocation, are
                               in a position in an agency covered by the
                               General Schedule system, which is more
                               restrictive than the law.)
Sec.  575.205(b)(5).........  Corrects a typographical error.
Sec.  575.302(a)(3).........  Retention Allowances. Adds positions in
                               the FBI and DEA Senior Executive Service
                               to the list of positions for which
                               agencies have delegated authority to
                               approve retention allowances. Other SES
                               positions are already covered. This
                               corrects an inadvertent omission.
Sec.  575.307(a)............  Retention Allowances. Simplifies language
                               of provision requiring reduction or
                               termination of authorized retention
                               allowances to the extent necessary to
                               prevent authorization of retention
                               allowances that would cause estimated
                               aggregate compensation to exceed the rate
                               for Executive Level I. Clarifies that
                               reduction or termination of retention
                               allowances may be necessitated by an
                               event other than an increase in a
                               nondiscretionary payment--e.g., discovery
                               of an error in computing estimated
                               aggregate compensation.
Sec.  591.201...............  Official Duty Station. Revises the
                               definition of ``official duty station''
                               used in connection with nonforeign area
                               cost-of-living allowances and post
                               differentials, consistent with the
                               proposed revision in Sec.  531.602.
                               (Note: A definition of ``official duty
                               station'' was originally added to Sec.
                               591.201 in an interim rule on official
                               duty station determinations published on
                               May 9, 1997 (62 FR 25423).)
Sec.  610.102...............  Administrative Workweek. Clarifies that an
                               administrative workweek established by an
                               agency may consist of any 7 consecutive
                               24-hour periods. This recognizes that
                               certain Federal employees (e.g.,
                               firefighters) work 24-hour shifts that
                               may not be aligned to the calendar day.
Sec.  610.111...............  Workweeks. Clarifies that agency policies
                               concerning the scheduling of work need
                               not be established by promulgation of a
                               formal regulation published in the
                               Federal Register. However, agency work
                               scheduling policies must be established
                               in writing, such as in an agency policy
                               manual or directive. In addition, all
                               employees must be informed of agency work
                               scheduling policies and be permitted to
                               review the written policy statements upon
                               request.
Sec.  610.407...............  Holiday Premium Pay. Adds a cross
                               reference concerning the general
                               prohibition on receiving holiday premium
                               pay while engaged in training, as
                               provided in Sec.  410.402.
------------------------------------------------------------------------

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

5 CFR Parts 530, 531, 536, 550, 551, 575, 591, and 610

    Administrative practice and procedure, Claims, Freedom of 
information, Government employees, Holidays, Law enforcement officers, 
Reporting and Recordkeeping requirements, Travel and transportation 
expenses, Wages.

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

    Accordingly, OPM is proposing to amend parts 530, 531, 536, 550, 
551, 575, 591, and 610 of title 5 of the Code of Federal Regulations as 
follows:

PART 530--PAY RATES AND SYSTEMS (GENERAL)

    1. The authority citation for part 530 continues to read as 
follows:

    Authority: 5 U.S.C. 5305 and 5307; E.O. 12748, 56 FR 4521, 3 
CFR, 1991 Comp., p. 316;
    Subpart B also issued under secs. 302(c) and 404(c) of the 
Federal Employees Pay Comparability Act of 1990 (Pub. L. 101-509), 
104 Stat. 1462 and 1466, respectively;
    Subpart C also issued under sec. 4 of the Performance Management 
and Recognition System Termination Act of 1993 (Pub. L. 103-89), 107 
Stat. 981.

Subpart B--Aggregate Limitation on Pay

    2. In Sec. 530.202, the definition of estimated aggregate 
compensation is amended by removing the words ``is entitled'' and 
adding in their place the words ``is or is expected to be entitled'', 
and the definition of discretionary payment is revised to read as 
follows:


Sec. 530.202  Definitions.

* * * * *
    Discretionary payment means a payment that an agency has discretion 
to pay or not to pay to an employee, including a retention allowance 
but

[[Page 64886]]

excluding any other payment that is preauthorized to be paid to an 
employee at a regular fixed rate each pay period.
* * * * *
    3. In Sec. 530.203, paragraph (c) is amended by removing the word 
``proved'' and adding in its place the word ``provided'', and a new 
paragraph (f) is added at the end of the section to read as follows:


Sec. 530.203  Administration of aggregate limitation on pay.

* * * * *
    (f) If an agency makes an incorrect estimate of aggregate 
compensation at an earlier date in the calendar year, the sum of an 
employee's remaining payments of basic pay (which may not be deferred) 
may exceed the difference between the aggregate compensation the 
employee has actually received to date in that calendar year and the 
rate for level I of the Executive Schedule. In this case, the employee 
will become indebted to the Federal Government for any amount that is 
paid in excess of the level I aggregate limitation. To the extent that 
the erroneous excess is attributable to amounts that should have been 
deferred and would have been payable at the beginning of the next 
calendar year, the debt will be extinguished on January 1 of the next 
calendar year. As part of the correction of the error, the amount of 
the erroneous excess must be deemed to have been paid on January 1 of 
the next calendar year (when the debt was extinguished) as if it were a 
deferred excess payment as described in Sec. 530.204 and must be 
considered part of the employee's aggregate compensation for the new 
calendar year.

Subpart C--Special Salary Rate Schedules for Recruitment and 
Retention

    4. In Sec. 530.303, paragraphs (d) and (i) are revised to read as 
follows:


Sec. 530.303  Establishing and adjusting special salary rate schedules.

* * * * *
    (d) All requests to establish or adjust special salary rate 
schedules must be transmitted directly to OPM's central office by the 
agency's headquarters. Each request must include a certification by the 
head of the agency (or other official designated to act on behalf of 
the head of the agency with respect to the given schedule) that the 
requested special salary rates are considered necessary to ensure 
staffing adequate to the accomplishment of the agency's mission.
* * * * *
    (i) The determination regarding whether an employee is covered by a 
special salary rate schedule is based on the employee's position of 
record and the official duty station for that position. For purposes of 
this subpart, the employee's position of record and corresponding 
official duty station are the position and station documented on the 
employee's most recent notification of personnel action, excluding a 
notification associated with a new assignment that is followed 
immediately (i.e., within 3 workdays) by a reduction in force resulting 
in the employee's separation before he or she is required to report for 
duty at the new location. For an employee who is authorized to receive 
relocation allowances under 5 U.S.C. 5737 in connection with an 
extended assignment, the position and duty station associated with that 
assignment are the employee's position of record and official duty 
station.

PART 531--PAY UNDER THE GENERAL SCHEDULE

    5. The authority citation for part 531 continues to read as 
follows:

    Authority: 5 U.S.C. 5115, 5307, and 5338; sec. 4 of Pub. L. 103-
89, 107 Stat. 981; and E.O. 12748, 56 FR 4521, 3 CFR, 1991 Comp., p. 
316;
    Subpart B also issued under 5 U.S.C. 5303(g), 5333, 5334(a), and 
7701(b)(2);
    Subpart C also issued under 5 U.S.C. 5304, 5305, and 5553; 
sections 302 and 404 of FEPCA, Pub. L. 101-509, 104 Stat. 1462 and 
1466; and section 3(7) of Pub. L. 102-378, 106 Stat. 1356;
    Subpart D also issued under 5 U.S.C. 5335(g) and 7701(b)(2);
    Subpart E also issued under 5 U.S.C. 5336;
    Subpart F also issued under 5 U.S.C. 5304, 5305(g)(1), and 5553; 
and E.O. 12883, 58 FR 63281, 3 CFR, 1993 Comp., p. 682;
    Subpart G also issued under 5 U.S.C. 5304, 5305, and 5553; 
section 302 of the Federal Employees Pay Comparability Act of 1990 
(FEPCA), Pub. L. 101-509, 104 Stat. 1462; and E.O. 12786, 56 FR 
67453, 3 CFR, 1991 Comp., p. 376.

Subpart B--Determining Rate of Basic Pay

    6. In Sec. 531.203, paragraph (d)(3) is amended by removing 
``5303'' and adding in its place ``5305'' and removing ``Sec. 532.231'' 
and adding in its place ``part 532''; paragraph (c)(1)(ii) is amended 
by adding a new sentence at the end of the paragraph; the introductory 
text of paragraph (d)(2)(vii) is revised; and paragraph (f) is revised 
to read as follows:


Sec. 531.203  General provisions.

* * * * *
    (c) * * *
    (1) * * *
    (ii) * * * If the employee's highest previous rate was greater than 
the maximum rate for the grade in which pay is being fixed, the maximum 
rate of basic pay that may be paid to the employee is the maximum rate 
for that grade.
* * * * *
    (d) * * *
    (2) * * *
    (vii) A special rate established under 5 U.S.C. 5305 and part 530 
of this chapter, part 532 of this chapter, or other legal authority 
(other than section 403 of the Federal Employees Comparability Act 
(FEPCA) (Pub. L. 101-509, 104 Stat. 1465), unless, in a reassignment to 
another position in the same agency--
* * * * *
    (f) Simultaneous actions. (1) General pay adjustments must be 
processed before any individual pay action that takes effect at the 
same time. General pay adjustments include annual adjustments under 5 
U.S.C. 5303, adjustments in locality rates of pay under subpart F of 
this part, adjustments in special law enforcement adjusted rates of pay 
under subpart C of this part, adjustments in special salary rates under 
5 U.S.C. 5305 or similar provision of law (including section 403 of 
FEPCA), increases in retained rates under part 536 of this chapter, and 
increases in continued rates under subparts C and G of this part.
    (2) Pay adjustments (other than general pay adjustments) that take 
effect at the same time must be processed in the order that gives the 
employee the maximum benefit. When a position or appointment change and 
entitlement to a higher rate of pay occur at the same time, the higher 
rate of pay is deemed to be an employee's existing rate of basic pay.
* * * * *


Sec. 531.204  [Amended]

    7. In Sec. 531.204, paragraph (a)(2) is amended by removing 
``5303'' and adding in its place ``5305''.

Subpart C--Special Pay Adjustments for Law Enforcement Officers

    8. In Sec. 531.301, the definition of official duty station is 
revised to read as follows:


Sec. 531.301  Definitions.

* * * * *
    Official duty station means the duty station for an employee's 
position of record as indicated on his or her most recent notification 
of personnel action, excluding a new duty station for an assignment 
that is followed immediately

[[Page 64887]]

(i.e., within 3 workdays) by a reduction in force resulting in the 
employee's separation before he or she is required to report for duty 
at the new location. For an employee who is authorized to receive 
relocation allowances under 5 U.S.C. 5737 in connection with an 
extended assignment, the temporary duty station associated with that 
assignment is the employee's official duty station.
* * * * *
    9. In Sec. 531.304, paragraph (b)(4) is amended by removing the 
word ``and''; paragraph (b)(5) is amended by removing the period at the 
end of the paragraph and adding a semicolon and the word ``and'' in its 
place; and a new paragraph (b)(6) is added to read as follows:


Sec. 531.304  Administration of special law enforcement adjusted rates 
of pay.

* * * * *
    (b) * * *
    (6) Basic pay that a career appointee in the Senior Executive 
Service elects to continue while serving under certain Presidential 
appointments, as provided by 5 U.S.C. 3392(c)(1) and Sec. 317.801 of 
this chapter.
* * * * *

Subpart D--Within-Grade Increases

    10. In Sec. 531.407, paragraph (d) is revised to read as follows:


Sec. 531.407  Equivalent increase determinations.

* * * * *
    (d) Merit increases. For the purpose of applying section 5335 of 
title 5, United States Code, and this subpart, all or a portion of a 
merit increase, or a zero merit increase, authorized under former 
section 5404 of title 5, United States Code (which was repealed as of 
November 1, 1993, by Public Law 103-89), is an equivalent increase.

Subpart F--Locality-Based Comparability Payments

    11. In Sec. 531.602, paragraph (1) of the definition of employee 
and the definition of official duty station are revised to read as 
follows:


Sec. 531.602  Definitions.

* * * * *
    Employee means--
    (1) An employee in a position to which subchapter III of chapter 53 
of title 5, United States Code, applies and whose official duty station 
is located in a locality pay area within the continental United States, 
including a GM employee (as defined in Sec. 531.202); and
* * * * *
    Official duty station means the duty station for an employee's 
position of record as indicated on his or her most recent notification 
of personnel action, excluding a new duty station for an assignment 
that is followed immediately (i.e., within 3 workdays) by a reduction 
in force resulting in the employee's separation before he or she is 
required to report for duty at the new location. For an employee who is 
authorized to receive relocation allowances under 5 U.S.C. 5737 in 
connection with an extended assignment, the temporary duty station 
associated with that assignment is the employee's official duty 
station.
* * * * *
    12. In Sec. 531.606, paragraph (b)(4) is amended by removing the 
word ``and''; paragraph (b)(5) is amended by removing the period at the 
end of the paragraph and adding a semicolon and the word ``and'' in its 
place; and a new paragraph (b)(6) is added to read as follows:


Sec. 531.606  Administration of locality rates of pay.

* * * * *
    (b) * * *
    (6) Basic pay that a career appointee in the Senior Executive 
Service elects to continue while serving under certain Presidential 
appointments, as provided by 5 U.S.C. 3392(c)(1) and Sec. 317.801 of 
this chapter.
* * * * *

PART 536--GRADE AND PAY RETENTION

    13. The authority citation for part 536 continues to read as 
follows:

    Authority: 5 U.S.C. 5361-5366; sec. 7202(f) of the Omnibus 
Budget Reconciliation Act of 1990 (Pub. L. 101-508), 104 Stat. 1338-
336; sec. 4 of the Performance Management and Recognition System 
Termination Act of 1993 (Pub. L. 103-89), 107 Stat. 981; 
Sec. 536.307 also issued under 5 U.S.C. 552, Freedom of Information 
Act, Pub. L. 92-502.

Subpart A--Definitions; Coverage and Applicability

    14. In Sec. 536.102, the definition of rate of basic pay is amended 
by removing the words ``or any kind'' and adding in their place the 
words ``of any kind'', and the definition of demotion at an employee's 
request is revised to read as follows:


Sec. 536.102  Definitions.

* * * * *
    Demotion at an employee's request means a reduction in grade that 
is initiated by the employee for his or her benefit, convenience, or 
personal advantage. A demotion that is caused or influenced by a 
management action is not considered to be at an employee's request, 
except that a voluntary demotion in response to a management action 
related to personal cause is considered to be at the employee's 
request.
* * * * *

Subpart B--Determination of Retained Grade and Rate of Basic Pay; 
Loss of, or Termination of Eligibility


Sec. 536.203  [Amended]

    15. In Sec. 536.203, paragraph (b) is amended by removing the 
misspelled word ``immediatley'' and adding in its place 
``immediately''.
    16. In Sec. 536.205, paragraph (a)(2) is amended by removing the 
reference to ``531.204(d)(4)'' and adding in its place 
``531.204(e)(4)'', and a new paragraph (b)(4) is added to read as 
follows:


Sec. 536.205  Determination of rate of basic pay.

* * * * *
    (b) * * *
    (4) If an employee moves to another position at the same grade 
while entitled to pay retention, the employee's rate of basic pay after 
movement may not be less than the maximum rate of basic pay for the 
newly applicable rate range.
* * * * *

PART 550--PAY ADMINISTRATION (GENERAL)

Subpart A--Premium Pay

    17. The authority citation for subpart A of part 550 continues to 
read as follows:

    Authority: 5 U.S.C. 5304 note, 5305 note, 5541(2)(iv), 5548 and 
6101(c); E.O. 12748, 3 CFR, 1991 Comp., p. 316.

    18. In Sec. 550.101, paragraph (a)(2) is revised; the introductory 
text of paragraph (d) is amended by adding ``Sunday,'' after 
``night,''; paragraphs (d)(3) and (d)(7) are removed; paragraphs (d)(4) 
through (d)(6) are redesignated as (d)(3) through (d)(5); paragraphs 
(d)(8) and (d)(9) are redesignated as (d)(6) and (d)(7); and paragraph 
(d)(1) is revised to read as follows:


Sec. 550.101  Coverage and exemptions.

    (a) * * *
    (2) The sections in this subpart incorporating special provisions 
for certain types of work (Secs. 550.141 through 550.164, inclusive) 
apply also

[[Page 64888]]

to each employee of the judicial branch or the legislative branch who 
is subject to subchapter V of chapter 55 of title 5, United States 
Code.
* * * * *
    (d) * * *
    (1) February 13, 1911, as amended (36 Stat. 899, as amended; 19 
U.S.C. 261, 267), involving customs inspectors and canine enforcement 
officers;
* * * * *
    19. Section 550.102 is revised to read as follows:


Sec. 550.102  Entitlement.

    A department (and for the purpose of Secs. 550.141 through 550.164, 
inclusive, a legislative or judicial branch agency) must determine an 
employee's entitlement to premium pay consistent with subchapter V of 
chapter 55 of title 5, United States Code.
    20. In Sec. 550.103, the definition of day is added in alphabetical 
order, and the definitions of administrative workweek, agency, law 
enforcement officer, and premium pay are revised to read as follows:


Sec. 550.103  Definitions.

* * * * *
    Administrative workweek means any period of 7 consecutive 24-hour 
periods designated in advance by the head of the agency under section 
6101 of title 5, United States Code.
    Agency means--
    (1) A department as defined in this section; and
    (2) A legislative or judicial branch agency which has positions 
that are subject to subchapter V of chapter 55 of title 5, United 
States Code.
* * * * *
    Day (for overtime pay purposes) means any 24-hour period designated 
by an agency within the administrative workweek applicable to the 
employee. A day need not correspond to the 24-hour period of a calendar 
day. If the agency has not designated another period of time, a day is 
a calendar day.
* * * * *
    Law enforcement officer means an employee who--
    (1) Is a law enforcement officer within the meaning of 5 U.S.C. 
8331(20) (as further defined in Sec. 831.902 of this chapter) or 5 
U.S.C. 8401(17) (as further defined in Sec. 842.802 of this chapter), 
as applicable;
    (2) In the case of an employee who holds a secondary position, as 
defined in Sec. 831.902 of this chapter, and is subject to the Civil 
Service Retirement System, but who does not qualify to be considered a 
law enforcement officer within the meaning of 5 U.S.C. 8331(20), would 
so qualify if such employee had transferred directly to such position 
after serving as a law enforcement officer within the meaning of such 
section;
    (3) In the case of an employee who holds a secondary position, as 
defined in Sec. 842.802 of this chapter, and is subject to the Federal 
Employees Retirement System, but who does not qualify to be considered 
a law enforcement officer within the meaning of 5 U.S.C. 8401(17), 
would so qualify if such employee had transferred directly to such 
position after performing duties described in 5 U.S.C. 8401(17)(A) and 
(B) for at least 3 years; and
    (4) In the case of an employee who is not subject to either the 
Civil Service Retirement System or the Federal Employees Retirement 
System--
    (i) Holds a position that the agency head (as defined in 
Secs. 831.902 and 842.802 of this chapter) determines would satisfy 
paragraph (1), (2), or (3) of this definition if the employee were 
subject to the Civil Service Retirement System or the Federal Employees 
Retirement System (subject to OPM oversight as described in 
Secs. 831.911 and 842.808 of this chapter); or
    (ii) Is a special agent in the Diplomatic Security Service.
* * * * *
    Premium pay means additional pay authorized by subchapter V of 
chapter 55 of title 5, United States Code, and this subpart for 
overtime, night, Sunday, or holiday work; for compensatory time off; or 
for standby duty, administratively uncontrollable overtime work, or 
availability duty. The dollar value of compensatory time off is the 
amount of overtime pay the employee otherwise would have received for 
the hours during which compensatory time off was earned.
* * * * *


Sec. 550.107  [Amended]

    21. In Sec. 550.107, the introductory text is amended by removing 
``any period'' and adding in its place ``any pay period''.
    22. In Sec. 550.111, a new paragraph (g) is added to read as 
follows:


Sec. 550.111  Authorization of overtime pay.

* * * * *
    (g) An employee is not entitled to overtime pay under this subpart 
for time spent in training, except as provided in Sec. 410.402 of this 
chapter.
    23. In Sec. 550.112, paragraphs (k), (l), and (m) are added to read 
as follows:


Sec. 550.112  Computation of overtime work.

* * * * *
    (k) Standby duty. An employee is on duty, and time spent on standby 
duty is hours of work if--
    (1) For work-related reasons, the employee is restricted to an 
agency's premises, or so close thereto that the employee cannot use the 
time effectively for his or her own purposes; or
    (2) For work-related reasons, the employee, although not restricted 
to the agency's premises, is restricted to his or her living quarters 
or designated post of duty, has his or her activities substantially 
limited, and is required to remain in a state of readiness to perform 
work.
    (l) On-call status. An employee is off duty, and time spent in an 
on-call status is not hours of work if--
    (1) The employee is allowed to leave a telephone number or carry an 
electronic device for the purpose of being contacted, even though the 
employee is required to remain within a reasonable call-back status; or
    (2) The employee is allowed to make arrangements for another person 
to perform any work that may arise during the on-call period.
    (m) Sleep and meal time. (1) Bona fide sleep and meal periods may 
not be considered hours of work, except as provided by paragraphs 
(m)(2) and (m)(3) of this section. If a sleep or meal period is 
interrupted by a call to duty, the time spent on duty is hours of work.
    (2) Sleep and meal periods during regularly scheduled tours of duty 
are hours of work for employees who receive annual premium pay for 
regularly scheduled standby duty under 5 U.S.C. 5545(c)(1).
    (3) When employees have tours of duty of 24 hours or more during 
which they must remain within the confines of their duty station in a 
standby status, and for which they do not receive annual premium pay 
for regularly scheduled standby duty under 5 U.S.C. 5545(c)(1), the 
amount of bona fide sleep and meal time excluded from hours of work may 
not exceed 8 hours in any 24-hour period. No sleep time may be excluded 
unless the employee had the opportunity to have an uninterrupted period 
of at least 5 hours of sleep during the applicable sleep period. For 
tours of duty of less than 24 hours, agencies may not exclude on-duty 
sleep periods from hours of work, but must exclude bona fide meal 
periods during which the employee is completely relieved from duty.
    24. In Sec. 550.121, a new paragraph (c) is added to read as 
follows:

[[Page 64889]]

Sec. 550.121  Authorization of night pay differential.

* * * * *
    (c) An employee is not entitled to night pay differential while 
engaged in training, except as provided in Sec. 410.402 of this 
chapter.
    25. In Sec. 550.131, a new paragraph (d) is added to read as 
follows:


Sec. 550.131  Authorization of pay for holiday work.

* * * * *
    (d) An employee is not entitled to holiday premium pay while 
engaged in training, except as provided in Sec. 410.402 of this 
chapter.


Sec. 550.153  [Amended]

    26. In Sec. 550.153, paragraph (d)(1) is amended by removing 
``Sec. 550.112(f)'' and adding in its place ``Sec. 550.112(h)'.
    27. In Sec. 550.162, a new paragraph (f) is added to read as 
follows:


Sec. 550.162  Payment provisions.

* * * * *
    (f) Unless an agency discontinues authorization of premium pay 
under Sec. 550.141 or Sec. 550.151 for all similar positions, it may 
not discontinue authorization of such premium pay for an individual 
employee's position--
    (1) During a period of paid leave elected by the employee and 
approved by the agency in lieu of benefits under the Federal Employees' 
Compensation Act, as amended (5 U.S.C. 8101 et seq.), following a job-
related injury;
    (2) During a period of continuation of pay under the Federal 
Employees' Compensation Act, as amended (5 U.S.C. 8101 et seq.);
    (3) During a period of leave without pay, if the employee is in 
receipt of benefits under the Federal Employees' Compensation Act, as 
amended (5 U.S.C. 8101 et seq.).
    28. In Sec. 550.171, the current paragraph is designated as 
paragraph (a), and a new paragraph (b) is added to read as follows:


Sec. 550.171  Authorization of pay for Sunday work.

* * * * *
    (b) An employee is not entitled to Sunday premium pay while engaged 
in training, except as provided in Sec. 410.402 of this chapter.

Subpart B--Advances in Pay

    29. The authority citation for subpart B of part 550 continues to 
read as follows:

    Authority: 5 U.S.C. 5524a, 5545a(h)(2)(B); sections 302 and 404 
of the Federal Employees Pay Comparability Act of 1990 (Public Law 
101-509), 104 Stat. 1462 and 1466, respectively; E.O. 12748, 3 CFR, 
1992 Comp., p. 316.

    30. In Sec. 550.202, paragraph (c) of the definition of newly 
appointed is revised to read as follows:


Sec. 550.202  Definitions.

* * * * *
    Newly appointed * * *
    (c) A permanent appointment in the competitive service following 
termination of employment under the Student Educational Employment 
Program (as described in Sec. 213.3202 of this chapter), provided such 
employee--
    (1) Was separated from the service, in a nonpay status, or a 
combination of both during the entire 90-day period immediately before 
the permanent appointment; and
    (2) Has fully repaid any former advance in pay under Sec. 550.205.
* * * * *


Sec. 550.205  [Amended]

    31. In Sec. 550.205, paragraph (b) is amended by removing the word 
``recover'' and adding in its place the word ``recovery''.

Subpart C--Allotments and Assignments From Federal Employees

    32. The authority citation for subpart C of part 550 continues to 
read as follows:

    Authority: 5 U.S.C. 5527, E.O. 10982, 3 CFR 1959-1963 Comp., p. 
502.


Sec. 550.311  [Amended]

    33. In Sec. 550.311, paragraph (b) is amended by removing 
``paragraph (b)'' and adding in its place ``paragraph (a)''.
    34. In Sec. 550.312, paragraphs (a), (c), (d), and (e) are revised 
to read as follows:


Sec. 550.312  General limitations.

    (a) The allotter must specifically designate the allottee and the 
amount of the allotment.
* * * * *
    (c) The allotter must personally authorize a change or cancellation 
of an allotment.
    (d) The agency has no liability in connection with any authorized 
allotment disbursed by the agency in accordance with the allotter's 
request.
    (e) Any disputes regarding any authorized allotment are a matter 
between the allotter and the allottee.
    35. Section 550.341 is revised to read as follows:


Sec. 550.341  Scope.

    An agency must permit an employee to make an allotment for 
charitable contributions to a Combined Federal Campaign in accordance 
with Sec. 950.901 of this chapter.


Sec. 550.342  [Amended]

    36. Section 550.342 is removed.

Subpart G--Severance Pay

    37. The authority citation for subpart G of part 550 continues to 
read as follows:

    Authority: 5 U.S.C. 5595; E.O. 11257, 3 CFR, 1964-1965 Comp., p. 
357.

    38. In Sec. 550.703, the definitions of commuting area and employee 
are revised; a new definition of employed by the Government of the 
United States is added in alphabetical order; the definition of 
involuntary separation is amended by removing the words ``the commuting 
area'' in both places and adding in each place the words ``his or her 
commuting area''; the definition of immediate annuity is revised; the 
definition of nonqualifying appointment is revised; paragraph (g) of 
the definition of qualifying appointment is revised; and paragraph 
(c)(3) of the definition of reasonable offer is revised to read as 
follows:


Sec. 550.703  Definitions.

* * * * *
    Commuting area means the geographic area surrounding a work site 
that encompasses the localities where people live and reasonably can be 
expected to travel back and forth daily to work, as established by the 
employing agency. In the case of an employee whose place of residence 
is outside the standard commuting area for a proposed new work site, 
the employee's commuting area is deemed to include the expanded area 
surrounding the employee's place of residence and including all 
destinations that can be reached via a commuting trip that is not 
significantly more burdensome than the current commuting trip. For this 
purpose, a commuting trip to a new work site is considered 
significantly more burdensome if it would compel the employee to change 
his or her place of residence in order to continue employment, taking 
into account commuting time and distance, availability of public 
transportation, cost, and any other relevant factors.
    Employee (for purposes of establishing initial entitlement to 
severance pay upon separation) means an employee as defined in 5 U.S.C. 
5595(a)(2), excluding an individual employed by the government of the 
District of Columbia. (Note: The term ``individual employed'' in 5 
U.S.C.

[[Page 64890]]

5595(a)(2)(A) refers to an ``employee'' as defined in 5 U.S.C. 2105.)
    Employed by the Government of the United States refers to 
employment by any part of the Government of the United States, 
including the United States Postal Service and similar independent 
entities, but excluding enlistment or activation in the armed forces 
(as defined in 5 U.S.C. 2101).
    Immediate annuity means--
    (a) A recurring benefit payable under a retirement system 
applicable to Federal civilian employees or members of the uniformed 
services that the individual is eligible to receive (disregarding any 
offset described in Sec. 550.704(b)(5)) at the time of the involuntary 
separation from civilian service or that begins to accrue within 1 
month after such separation, excluding any Social Security retirement 
benefit; or
* * * * *
    (b) A benefit that meets the conditions in paragraph (a) of this 
definition, except that the benefit begins to accrue more than 1 month 
after separation solely because the employee elected a later commencing 
date (such as allowed under Sec. 842.204 of this chapter).
    Nonqualifying appointment means an appointment that does not convey 
eligibility for severance pay under this subpart, including--
    (a) An appointment at a noncovered agency;
    (b) An appointment in which the employee has an intermittent work 
schedule;
    (c) A Presidential appointment;
    (d) An emergency appointment;
    (e) An excepted appointment under Schedule C; a noncareer 
appointment in the Senior Executive Service, as defined in 5 U.S.C. 
3132(a); or an equivalent appointment made for similar purposes; and
    (f) A time-limited appointment (except for a time-limited 
appointment that is qualifying because it is made effective within 3 
calendar days after separation from a qualifying appointment), 
including--
    (1) A term appointment;
    (2) A temporary appointment pending establishment of a register 
(TAPER);
    (3) An overseas limited appointment with a time limitation;
    (4) A limited term or limited emergency appointment in the Senior 
Executive Service, as defined in 5 U.S.C. 3132(a), or an equivalent 
appointment made for similar purposes;
    (5) A limited executive assignment under part 305 of this chapter 
or an equivalent appointment made for similar purposes;
    (6) A Veterans Readjustment Appointment under part 307 of this 
chapter; and
    (7) A Presidential Management Intern appointment under part 362 of 
this chapter.
    Qualifying appointment * * *
    (g) A time-limited appointment (including a series of time-limited 
appointments by the same agency without any intervening break in 
service) for full-time employment that takes effect within 3 calendar 
days after the end of one of the qualifying appointments listed in 
paragraphs (a) through (f) of this definition, provided the time-
limited appointment is not nonqualifying on grounds other than the 
time-limited nature of the appointment.
* * * * *
    Reasonable offer means * * *
    (c) * * *
    (3) Of equal or greater tenure and with the same work schedule 
(part-time or full-time); and
* * * * *
    39. In section 550.706, paragraph (a) is revised and paragraph (c) 
is added to read as follows:


Sec. 550.706  Criteria for meeting the requirement for involuntary 
separation.

    (a) Employees who resign because they expect to be involuntarily 
separated are considered to have been involuntarily separated if they 
resign after receiving--
    (1) Specific written notice that they will be involuntarily 
separated by a particular action effective on a particular date; or
    (2) A general written notice of reduction in force or transfer of 
functions which--
    (i) Is issued by a properly authorized agency official;
    (ii) Announces that the agency has decided to abolish, or transfer 
to another commuting area, all positions in the competitive area (as 
defined in Sec. 351.402 of this chapter) by a particular date (no more 
than 1 year after the date of the notice); and
    (iii) States that, for all employees in that competitive area, a 
resignation following receipt of the notice constitutes an involuntary 
separation for severance pay purposes.
* * * * *
    (c) A resignation is not considered an involuntary separation if 
the specific or general written notice is canceled before the 
separation (based on that resignation) takes effect.
    40. In Sec. 550.707, the section heading is revised; paragraph (b) 
is revised; and a new paragraph (d) is added to read as follows:


Sec. 550.707  Computation of severance pay fund.

* * * * *
    (b) Basic severance pay allowance for employees with variable work 
schedules or rates of basic pay. In the following circumstances, the 
weekly rate of basic pay used in computing the basic severance pay 
allowance is determined based on the weekly average for the last 
position held by the employee during the 26 biweekly pay periods 
immediately preceding separation, as follows:
    (1) For positions in which the number of hours in the employee's 
basic work schedule (excluding overtime hours) varies during the year 
due to part-time work requirements, compute the weekly average of those 
hours and multiply that average by the hourly rate of basic pay in 
effect at separation.
    (2) For positions in which the rate of annual premium pay for 
standby duty regularly varies throughout the year, compute the average 
standby duty premium pay percentage and multiply that percentage by the 
weekly rate of basic pay (as defined in Sec. 550.103) in effect at 
separation.
    (3) For prevailing rate schedule positions in which the amount of 
night shift differential pay under 5 U.S.C. 5343(f) varies from week to 
week under a regularly recurring cycle of work schedules, determine for 
each week in the averaging period the value of night shift differential 
pay expressed as a percentage of each week's scheduled rate of pay (as 
defined in Sec. 532.401 of this chapter), compute the weekly average 
percentage, and multiply that percentage by the weekly scheduled rate 
of pay in effect at separation.
    (4) For positions with seasonal work requirements, compute the 
weekly average of hours in a pay status (excluding overtime hours) and 
multiply that average by the hourly rate of basic pay in effect at 
separation.
* * * * *
    (d) Lifetime limitation. The severance pay fund is limited to that 
amount which would provide 52 weeks of severance pay (taking into 
account weeks of severance pay previously received, as provided in 
Sec. 550.712).
    41. In Sec. 550.708, paragraph (a) is revised; paragraph (c) is 
amended by removing the word ``and'' at the end of the paragraph; 
paragraph (d) is amended by removing the period at the end of the 
paragraph and adding a semicolon and the word ``and'' in its place; and 
a new paragraph (e) is added to read as follows:


Sec. 550.708  Creditable service.

* * * * *
    (a) Civilian service as an employee (as defined in 5 U.S.C. 2105), 
excluding time during a period of nonpay status that is not creditable 
for annual leave accrual purposes under 5 U.S.C. 6303(a);
* * * * *

[[Page 64891]]

    (e) Service performed with the government of the District of 
Columbia by an individual first employed by that government before 
October 1, 1987, excluding service as a teacher or librarian of the 
public schools of the District of Columbia.
* * * * *
    42. Section 550.709 is revised to read as follows:


Sec. 550.709  Accrual and payment of severance pay.

    (a) Severance pay accrues on a day-to-day basis following the 
recipient's separation from Federal employment. If severance pay begins 
in the middle of a pay period, 1 day of severance pay accrues for each 
workday or applicable holiday left in the pay period at the same rate 
at which basic pay would have accrued if the recipient were still 
employed. Thereafter, accrual is based on days from Monday through 
Friday, with each day worth one-fifth of 1 week's severance pay. 
Accrual ceases when the severance pay entitlement is suspended or 
terminated, as provided in Secs. 550.711 and 550.712. If severance pay 
is suspended during a nonqualifying time-limited appointment as 
provided in Sec. 550.711, accrual will resume following separation from 
that appointment.
    (b) Severance payments must be made at the same pay period 
intervals that salary payments would be made if the recipient were 
still employed. The amount of the severance payment is computed using 
the recipient's rate of basic pay in effect immediately before 
separation, with credit for each day of severance pay accrual during 
the pay period corresponding to the payment date. A severance payment 
is subject to appropriate deductions for income and Social Security 
taxes.
    (c) When an individual receives severance pay as the result of 
separation from a qualifying time-limited appointment, the severance 
payment is based on the rate of basic pay received at the time of 
separation from the qualifying time-limited appointment.
    (d) When an individual is in a nonpay status immediately before 
separation, the amount of the severance payment is determined using the 
basic pay that he or she would have received if he or she had been in a 
pay status at the time of separation.
    (e) When an individual's severance pay fund is computed under 
Sec. 550.707(b) using an average rate of basic pay, that average rate 
is used to determine the amount of the severance payment. Exception: In 
the case of a seasonal employee, the agency may choose instead to use 
the employee's rate of basic pay at separation (as computed based on 
the employee's work schedule during the established seasonal work 
period) and then authorize severance payments only during that seasonal 
work period.
    (f) In the case of individuals who become employed by a 
nonappropriated fund instrumentality of the Department of Defense or 
the Coast Guard under the conditions described in 5 U.S.C. 5595(h)(4), 
payment of severance pay may be suspended consistent with the rules in 
5 U.S.C. 5595(h) and any supplemental regulations issued by the 
Department of Defense.
    (g) Notwithstanding paragraph (b) of this section, the Department 
of Defense may, upon application by an eligible separated employee, pay 
the total amount of severance pay in one lump sum, subject to section 
1035 of Public Law 104-106 and any other requirements established by 
the Department of Defense. This authority applies to severance payments 
based on separations taking effect on or after February 10, 1996, and 
before October 1, 1999.
    43. Section 550.710 is revised to read as follows:


Sec. 550.710  Suspension of severance pay.

    When an individual entitled to severance pay is employed by the 
Government of the United States or the government of the District of 
Columbia under a nonqualifying time-limited appointment, severance pay 
must be suspended during the life of the appointment. Severance pay 
resumes, without any recomputation, when the employee separates from 
the nonqualifying time-limited appointment.
    44. Section 550.711 is revised to read as follows:


Sec. 550.711  Termination of severance pay entitlement.

    Entitlement to severance pay ends when--
    (a) The individual entitled to severance pay is employed by the 
Government of the United States or the government of the District of 
Columbia, unless employed under a nonqualifying time-limited 
appointment as described in Sec. 550.710; or
    (b) The severance pay fund is exhausted.


Sec. 550.713  [Amended]

    45. Section 550.713 is amended by removing the second sentence.

Subpart H--Back Pay

    46. The authority citation for subpart H of part 550 continues to 
read as follows:

    Authority: 5 U.S.C. 5596(c); Pub. L. 100-202, 101 Stat. 1329.

    47. In Sec. 550.803, the definitions of employee and pay, 
allowances, and differentials are revised to read as follows:


Sec. 550.803  Definitions.

* * * * *
    Employee means an employee of an agency. When the term employee is 
used to describe an individual who is making a back pay claim, it also 
may mean a former employee.
* * * * *
    Pay, allowances, and differentials means pay, leave, and other 
monetary employment benefits to which an employee is entitled by 
statute or regulation and which are payable by the employing agency to 
an employee during periods of Federal employment. Agency and employee 
contributions to a retirement investment fund, such as the Thrift 
Savings Plan, are not covered. Monetary benefits payable to separated 
or retired employees based upon a separation from service, such as 
retirement benefits, severance payments, and lump-sum payments for 
annual leave, are not covered.
* * * * *
    48. In Sec. 550.805, paragraph (e) is revised and a new paragraph 
(h) is added to read as follows:


Sec. 550.805  Back pay computations.

* * * * *
    (e) In computing the net amount of back pay payable under section 
5596 of title 5, United States Code, and this subpart, an agency must 
make the following offsets and deductions (in the order shown) from the 
gross back pay award:
    (1) Any outside earnings (gross earnings less any associated 
business losses and ordinary and necessary business expenses) received 
by an employee for other employment (including a business enterprise) 
undertaken to replace the employment from which the employee was 
separated by the unjustified or unwarranted personnel action during the 
interim period covered by the corrective action. Do not count earnings 
from additional or ``moonlight'' employment the employee may have 
engaged in both while Federally employed and erroneously separated.
    (2) Any erroneous payments received from the Government as a result 
of the

[[Page 64892]]

unjustified or unwarranted personnel action, which, in the case of 
erroneous payments received from a Federal employee retirement system, 
must be returned to the appropriate system. Such payments must be 
recovered from the back pay award in the following order:
    (i) Retirement annuity payments (i.e., gross annuity less 
deductions for life insurance and health benefits premiums, if those 
premiums can be recovered by the affected retirement system from the 
insurance carrier);
    (ii) Refunds of retirement contributions (i.e., gross refund before 
any deductions);
    (iii) Severance pay (i.e., gross payments before any deductions); 
and
    (iv) Lump-sum payment for annual leave (i.e., gross payment before 
any deductions).
    (3) Authorized deductions of the type that would have been made 
from the employee's pay (if paid when properly due) in accordance with 
the normal order of precedence for deductions from pay established by 
the agency, subject to any applicable law and regulation, including, 
but not limited to, the following types of deductions, as applicable:
    (i) Mandatory employee retirement contributions toward a defined 
benefit plan, such as the Civil Service Retirement System or the 
defined benefit component of the Federal Employees Retirement System;
    (ii) Social Security taxes and Medicare taxes;
    (iii) Health benefits premiums, if coverage continued during a 
period of erroneous retirement (with paid premiums recoverable by the 
retirement system) or is retroactively reinstated at the employee's 
election under 5 U.S.C. 8908(a);
    (iv) Life insurance premiums if--
    (A) Coverage continued during a period of erroneous retirement;
    (B) Coverage was stopped during an erroneous suspension or 
separation and the employee suffered death or accidental dismemberment 
during that period (consistent with 5 U.S.C. 8706(d)); or
    (C) Additional premiums are owed due to a retroactive increase in 
basic pay; and
    (v) Federal income tax withholdings.

(Note to paragraph (e)(3): See appendix A to this subpart for 
additional information on computing certain deductions.)

    (4) Administrative offsets under 31 U.S.C. 3716 to recover any 
other outstanding debt(s) owed to the Federal Government by the 
employee, as appropriate.
* * * * *
    (h) Agencies must correct errors that affect an employee's Thrift 
Savings Plan account consistent with regulations prescribed by the 
Federal Retirement Thrift Investment Board. (See parts 1605 and 1606 of 
this title.)
    49. In Sec. 550.806, paragraph (h) is removed, and paragraph (a) is 
amended by redesignating paragraph (a) as paragraph (a)(1) and adding a 
new paragraph (a)(2) to read as follows:


Sec. 550.806  Interest computations.

    (a) * * *
    (2) Interest accrual ends at a time selected by the agency that is 
no more than 30 days before the date of the back pay interest payment. 
No interest is payable if a complete back pay payment is made within 30 
days after any erroneous withdrawal, reduction, or denial of a payment, 
and the interest accrual ending date is set to coincide with the 
interest accrual starting date.
* * * * *
    50. A new appendix A is added to subpart H of part 550 to read as 
follows:

Appendix A to Subpart H of Part 550--Information on Computing Certain 
Common Deductions From Back Pay Awards

    To determine the net back payment owed an employee, an agency 
must make certain required deductions. (See Sec. 550.805(e)(3).) To 
compute these deductions, an agency must determine the appropriate 
base or follow other rules. Some deductions, such as tax deductions, 
are not subject to OPM regulation. To assist agencies, this appendix 
summarizes the rules for certain common deductions. For further 
information on Federal tax deductions from back pay awards, please 
contact the Internal Revenue Service directly or review relevant IRS 
publications.

----------------------------------------------------------------------------------------------------------------
           Type of deduction                                   How to compute the deduction
----------------------------------------------------------------------------------------------------------------
Mandatory employee retirement            Compute the deduction based on the basic pay portion of gross back pay
 contributions.                           before adding interest or applying any offset or deduction.
Life insurance premiums................  Compute the deduction based on the basic pay portion of gross back pay
                                          before adding interest or applying any offset or deduction.
Social Security (OASDI) and Medicare     Compute the deduction based on adjusted gross back pay (gross back pay
 taxes.                                   less the offset for outside earnings under Sec.  550.805(e)(1), but
                                          before adding interest). The deduction may be reduced dollar-for-
                                          dollar by the amount of any Social Security or Medicare taxes that
                                          were withheld from erroneous payments made in the same calendar year
                                          as the back pay award, but only if--
                                         (1) those erroneous payments were actually recovered by the Government
                                          by offsetting the back pay award as provided in Sec.  550.805(e)(2);
                                          and
                                         (2) those withheld taxes have not already been repaid to the employee.
                                         Note: Social Security taxes are subject to the applicable Social
                                          Security tax wage base limit. In addition, see IRS guidance regarding
                                          possible correction and refunding of Social Security and Medicare
                                          taxes withheld from erroneous payments in a prior calendar year.
Federal income tax withholdings........  Compute the deduction based on adjusted gross back pay (gross back pay
                                          less the offset for outside earnings under Sec.  550.805(e)(1), but
                                          before adding interest) less any part of back pay not subject to
                                          income tax deductions, such as employee contributions to the Thrift
                                          Savings Plan and nonforeign area cost-of-living allowances. The
                                          deduction may be reduced dollar-for-dollar by the amount of any
                                          Federal income taxes withheld from erroneous payments made in the same
                                          calendar year as the back pay award, but only if--
                                         (1) those erroneous payments were actually recovered by the Government
                                          by offsetting the back pay award as provided in Sec.  550.805(e)(2);
                                          and
                                         (2) those withheld taxes have not already been repaid to the employee.
                                         Note: Additional Federal income tax withholdings from the interest
                                          portion of the back pay award may be required by the Internal Revenue
                                          Service in certain specific circumstances.
----------------------------------------------------------------------------------------------------------------


[[Page 64893]]

Subpart I--Pay for Duty Involving Physical Hardship or Hazard

    51. The authority citation for subpart I of part 550 continues to 
read as follows:

    Authority: 5 U.S.C. 5545(d), 5548(b).

    52. In Sec. 550.902, the definition of employee is revised to read 
as follows:


Sec. 550.902  Definitions.

* * * * *
    Employee means an employee covered by the General Schedule (i.e., 
covered by chapter 51 and subchapter III of chapter 53 of title 5, 
United States Code).
    53. In Sec. 550.903, the introductory text of paragraph (b) is 
revised to read as follows:


Sec. 550.903  Establishment of hazard pay differentials.

* * * * *
    (b) Amendments to appendix A of this subpart may be made by OPM on 
its own motion or at the request of the head of an agency (or 
authorized designee). The head of an agency (or authorized designee) 
may recommend the rate of hazard pay differential to be established and 
must submit, with its request for an amendment, information about the 
hazardous duty or duty involving physical hardship showing--
* * * * *
    54. Section 550.905 is revised to read as follows:


Sec. 550.905  Payment of hazard pay differential.

    (a) When an employee performs duty for which a hazard pay 
differential is authorized, the agency must pay the hazard pay 
differential for the hours in a pay status on the day (a calendar day 
or a 24-hour period, when designated by the agency) on which the duty 
is performed, except as provided in paragraph (b) of this section. 
Hours in a pay status for work performed during a continuous period 
extending over 2 days must be considered to have been performed on the 
day on which the work began, and the allowable differential must be 
charged to that day.
    (b) Employees may not be paid a hazardous duty differential for 
hours for which they receive annual premium pay for regularly scheduled 
standby duty under Sec. 550.141, annual premium pay for 
administratively uncontrollable overtime work under Sec. 550.151, or 
law enforcement availability pay under Sec. 550.181.

PART 551--PAY ADMINISTRATION UNDER THE FAIR LABOR STANDARDS ACT

    55. The authority citation for part 551 continues to read as 
follows:

    Authority: 5 U.S.C. 5542(c); Sec. 4(f) of the Fair Labor 
Standards Act of 1938, as amended by Pub. L. 93-259, 88 Stat. 55 (29 
U.S.C. 204f).

Subpart D--Hours of Work


Sec. 551.401  [Amended]

    56. In Sec. 551.401, paragraphs (f) and (g) are amended by removing 
``Sec. 410.602'' and adding in its place ``Sec. 410.402''.


Sec. 551.423  [Amended]

    57. In Sec. 551.423, paragraph (a)(2)(ii) is amended by adding at 
the end of the paragraph ``(See also Sec. 410.402(d) of this 
chapter.)'', and paragraph (a)(3) is amended by removing the period at 
the end of the paragraph and adding in its place ``, except as provided 
by Sec. 410.402(b) of this chapter and paragraphs (f) and (g) of 
Sec. 551.401.''
    58. In section Sec. 551.432, paragraphs (b) and (c) are revised and 
a new paragraph (e) is added to read as follows:


Sec. 551.432  Sleep time.

* * * * *
    (b) For employees engaged in law enforcement or fire protection 
activities who receive annual premium pay under 5 U.S.C. 5545(c) (1) or 
(2), the requirements of paragraph (a) of this section apply, except 
that on-duty sleep time may be excluded from hours of work only if the 
tour of duty is more than 24 hours.
    (c) The total amount of bona fide sleep and meal time that may be 
excluded from hours of work may not exceed 8 hours in a 24-hour period.
* * * * *
    (e) On-duty sleep and meal time during regularly scheduled hours 
for which standby duty premium pay under 5 U.S.C. 5545(c)(1) is payable 
may not be excluded from hours of work.

Subpart E--Overtime Pay Provisions

    59. In Sec. 551.501, paragraph (a)(2) is amended by removing 
``Sec. 410.602'' and adding in its place ``Sec. 410.402'', and 
paragraph (a)(5) is revised to read as follows:


Sec. 551.501  Overtime pay.

    (a) * * *
    (5) On the basis of hours of work in excess of 40 hours in a 
workweek for an employee engaged in fire protection or law enforcement 
activities when the employee receives annual premium pay under 5 U.S.C. 
5545(c) (1) or (2) or is not an employee, as defined in 5 U.S.C. 
5541(2), for the purposes of 5 U.S.C. 5542, 5543, and 5544;
* * * * *
    60. In Sec. 551.512, paragraph (b) is amended by removing 
``(exclusive of any premiums or differentials)'' and adding in its 
place ``(exclusive of any premiums, differentials, bonuses, or 
awards)'', and a new paragraph (d) is added to read as follows:


Sec. 551.512  Overtime pay entitlement.

* * * * *
    (d) When an employee is granted a nondiscretionary individual or 
group (e.g., gainsharing) award, the award must be included in 
determining overtime pay for the period of time during which the award 
was earned. An agency may meet the overtime pay requirements for the 
period of time during which the award was earned by employing any one 
of the following procedures--
    (1) Recomputation method. (i) Allocate the award payable to each 
individual employee under the award plan to the weeks or hours when it 
was earned;
    (ii) Include any allocated award payment in total remuneration in 
computing the employee's hourly regular rate of pay for each applicable 
workweek in the award period;
    (iii) Recompute the employee's overtime pay for each applicable 
workweek in the bonus period; and
    (iv) Determine the total additional overtime pay owed.
    (2) Percentage awards method. Identify the amount of the award as a 
fixed percentage of total pay (straight time pay plus overtime pay) 
earned by the employee during the award period. The product of total 
earnings times the award percentage satisfies in full the overtime pay 
requirements.
    (3) Boosted hour method. (i) Identify the amount of the individual 
award or the group award under the bonus plan and the period of time 
during which it was earned;
    (ii) Determine the number of boosted hours for the individual 
employee or for all employees under the group award plan by summing the 
total hours of work (straight time hours plus overtime hours) plus one-
half of the total number of overtime hours;
    (iii) Divide the amount of the individual award or the group award 
fund by the number of boosted hours for the individual employee or for 
all employees under the group award plan, as applicable, to determine 
the amount of the award allocable to each hour; and

[[Page 64894]]

    (iv) Multiply this hourly award amount by the number of boosted 
hours credited to the individual employee or to each employee under the 
group award plan during the award period, as applicable, to determine 
the amount of the award for the individual employee or for each 
employee under the group award plan.


Sec. 551.541  [Amended]

    61. In Sec. 551.541, paragraph (b) is amended by removing 
``511.411(c)'' and adding in its place ``551.411(c)''.

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

    62. The authority citation for part 575 is revised to read as 
follows:

    Authority: 5 U.S.C. 1104(a)(2), 5753, 5754, and 5755; secs. 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, 3 
CFR, 1992 Comp., p. 316.

Subpart A--Recruitment Bonuses

    63. In Sec. 575.102, paragraph (a)(3) is revised to read as 
follows:


Sec. 575.102  Delegation of authority.

    (a) * * *
    (3) A Senior Executive Service position paid under 5 U.S.C. 5383 or 
a Federal Bureau of Investigation and Drug Enforcement Administration 
Senior Executive Service position paid under 5 U.S.C. 3151.
* * * * *
    64. In Sec. 575.103, the definition of involuntary separation is 
amended by removing the words ``the commuting area'' wherever it 
appears and adding in its place the words ``his or her commuting 
area''; the definition of service agreement is amended by removing the 
words ``of a minimum of 12 months'' and the definition of commuting 
area is revised to read as follows:


Sec. 575.103  Definitions.

* * * * *
    Commuting area has the meaning given that term in Sec. 575.203.
* * * * *

Subpart B--Relocation Bonuses

    65. In Sec. 575.202, paragraph (a)(3) is revised to read as 
follows:


Sec. 575.202  Delegation of authority.

    (a) * * *
    (3) A Senior Executive Service position paid under 5 U.S.C. 5383 or 
a Federal Bureau of Investigation and Drug Enforcement Administration 
Senior Executive Service position paid under 5 U.S.C. 3151.
* * * * *
    66. In Sec. 575.203, the definition of involuntary separation is 
amended by removing the words ``the commuting area'' wherever it 
appears and adding in its place the words ``his or her commuting area'; 
and the definitions of commuting area and employee are revised to read 
as follows:


Sec. 575.203  Definitions.

* * * * *
    Commuting area means the geographic area surrounding a work site 
that encompasses the localities where people live and reasonably can be 
expected to travel back and forth daily to work, as established by the 
employing agency. In the case of an employee whose place of residence 
is outside the standard commuting area for a proposed new work site, 
the employee's commuting area is deemed to include the expanded area 
surrounding the employee's place of residence and including all 
destinations that can be reached via a commuting trip that is not 
significantly more burdensome than the current commuting trip. For this 
purpose, a commuting trip to a new work site is considered 
significantly more burdensome if it would compel the employee to change 
his or her place of residence in order to continue employment, taking 
into account commuting time and distance, availability of public 
transportation, cost, and any other relevant factors.
    Employee means--
    (a) An individual in the civil service (as defined in 5 U.S.C. 
2101) who is relocated without a break in service upon appointment to a 
position in or under an agency in a different commuting area; or
    (b) An employee in or under an agency whose duty station is changed 
permanently or temporarily to a different commuting area.
* * * * *


Sec. 575.205  [Amended]

    67. In Sec. 575.205, paragraph (b)(5) is amended by adding a 
parenthesis after the word ``Code''.

Subpart C--Retention Allowances

    68. In Sec. 575.302, paragraph (a)(3) is revised to read as 
follows:


Sec. 575.302  Delegation of authority.

    (a) * * *
    (3) A Senior Executive Service position paid under 5 U.S.C. 5383 or 
a Federal Bureau of Investigation and Drug Enforcement Administration 
Senior Executive Service position paid under 5 U.S.C. 3151.
* * * * *
    69. In Sec. 575.307, paragraph (a) is revised to read as follows:


Sec. 575.307  Reduction or termination of retention allowances.

    (a) The agency must reduce or terminate the authorized amount of a 
retention allowance to the extent necessary to ensure that the 
employee's estimated aggregate compensation, as defined in Sec. 530.202 
of this chapter, does not exceed the rate for level I of the Executive 
Schedule at the end of the calendar year.
* * * * *

PART 591--ALLOWANCES AND DIFFERENTIALS

Subpart B--Cost-of-Living Allowance and Post Differential--
Nonforeign Areas

    70. The authority citation for subpart B of part 591 continues to 
read as follows:

    Authority: 5 U.S.C. 5941; E.O. 10000, 3 CFR, 1943-1948 Comp., p. 
792; and E.O. 12510, 3 CFR, 1985 Comp., 338.

    71. In Sec. 591.201, the definition of official duty station is 
revised to read as follows:


Sec. 591.201  Definitions.

* * * * *
    Official duty station means the duty station for an employee's 
position of record as indicated on his or her most recent notification 
of personnel action, excluding a new duty station for an assignment 
that is followed immediately (i.e., within 3 workdays) by a reduction 
in force resulting in the employee's separation before he or she is 
required to report for duty at the new location. For an employee who is 
authorized to receive relocation allowances under 5 U.S.C. 5737 in 
connection with an extended assignment, the temporary duty station 
associated with that assignment is the employee's official duty 
station.
* * * * *

PART 610--HOURS OF DUTY

Subpart A--Weekly and Daily Scheduling of Work

    72. The authority citation for subpart A of part 610 continues to 
read as follows:

    Authority: 5 U.S.C. 6101; sec. 1(1) of E.O. 11228, 3 CFR, 1964-
1965 Comp., p. 317.


[[Page 64895]]


    73. In Sec. 610.102, the definition of administrative workweek is 
revised to read as follows:


Sec. 610.102  Definitions.

* * * * *
    Administrative workweek means any period of 7 consecutive 24-hour 
periods designated in advance by the head of the agency under section 
6101 of title 5, United States Code.
* * * * *


Sec. 610.111  [Amended]

    74. Section 610.111 is amended by removing the word ``regulation'' 
in the introductory text of paragraph (a) and adding the words ``a 
written agency policy statement'' in its place; by removing the word 
``regulation'' in paragraphs (a)(1) and (a)(2) and adding in each place 
the words ``written agency policy statement''; and by removing the 
words ``regulation of the agency'' in paragraph (c)(2) and adding the 
words ``a written agency policy statement''.

Subpart D--Flexible and Compressed Work Schedules

    75. The authority citation for subpart D of part 610 continues to 
read as follows:

    Authority: 5 U.S.C. 6133(a).

    76. In Sec. 610.407, the current paragraph is designated as 
paragraph (a), and a new paragraph (b) is added to read as follows:


Sec. 610.407  Premium pay for holiday work for employees on compressed 
work schedules.

* * * * *
    (b) An employee on a compressed work schedule is not entitled to 
holiday premium pay while engaged in training, except as provided in 
Sec. 410.402 of this chapter.

[FR Doc. 98-31284 Filed 11-23-98; 8:45 am]
BILLING CODE 6325-01-P