[Federal Register Volume 69, Number 180 (Friday, September 17, 2004)]
[Rules and Regulations]
[Pages 55941-55943]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-20952]



 ========================================================================
 Rules and Regulations
                                                 Federal Register
 ________________________________________________________________________
 
 This section of the FEDERAL REGISTER contains regulatory documents 
 having general applicability and legal effect, most of which are keyed 
 to and codified in the Code of Federal Regulations, which is published 
 under 50 titles pursuant to 44 U.S.C. 1510.
 
 The Code of Federal Regulations is sold by the Superintendent of Documents. 
 Prices of new books are listed in the first FEDERAL REGISTER issue of each 
 week.
 
 ========================================================================
 

  Federal Register / Vol. 69, No. 180 / Friday, September 17, 2004 / 
Rules and Regulations  

[[Page 55941]]



OFFICE OF PERSONNEL MANAGEMENT

5 CFR Part 550

RIN 3206-AJ56


Premium Pay Limitations

AGENCY: Office of Personnel Management.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The Office of Personnel Management is issuing final 
regulations concerning the rules governing payment of premium pay and 
premium pay limitations for Federal employees. The final rule 
implements a statute that raised the premium pay caps for most 
employees, permitted the use of an annual cap instead of a biweekly cap 
in additional circumstances, and made certain other changes.

DATES: Effective October 18, 2004.

FOR FURTHER INFORMATION CONTACT: Vicki Draper by phone at (202) 606-
2858; by fax at (202) 606-0824; or by e-mail at [email protected].

SUPPLEMENTARY INFORMATION: On April 19, 2002, the Office of Personnel 
Management (OPM) published interim regulations (67 FR 19319) to 
implement the new premium pay limitations established by section 1114 
of the National Defense Authorization Act for Fiscal Year 2002 (Pub. L. 
107-107, December 28, 2001). Section 1114 amended 5 U.S.C. 5547, which 
establishes biweekly or annual limitations on the premium pay that a 
covered Federal employee may receive.
    By law, the section 1114 amendments became effective on the first 
day of the first pay period beginning on or after the 120th day 
following enactment. The 120th day fell on Saturday, April 27, 2002. 
Since most biweekly pay periods for Federal employees begin on a 
Sunday, these provisions began to apply on either April 28 or May 5, 
2002, depending on the employing agency's payroll cycle.
    The 60-day comment period ended on June 18, 2002. We received 
comments from three Federal agencies.

Applying the Annual Premium Pay Cap

    One agency expressed concern that the exact method of applying the 
annual premium pay cap is not clearly described in the current 
regulations and that certain interpretations could result in 
significant administrative burdens. The agency observed that an 
employee may be employed in multiple locality pay areas over the course 
of a year. Thus, if the annual cap is based on the last applicable 
locality pay area in a calendar year, an agency might have to correct 
payments made in past pay periods. The agency pointed out that the 
administrative burden would be even greater in cases where an employee 
transfers to a different agency and payroll provider. The agency 
recommended that OPM address these issues in regulations. It 
specifically requested that, in cases where an employee moves from one 
agency or activity to another, OPM not require the losing agency or 
activity to recompute the employee's premium pay entitlements based on 
changes in the applicable GS-15 maximum rate after the employee's 
departure.
    While we understand the agency's concerns about administrative 
burdens, the law expressly provides that the annual premium pay cap 
must be applied to an entire calendar year and that it is based on the 
applicable rates in effect at the end of the calendar year. A 
geographic move to an area with different pay rates can raise or lower 
an employee's aggregate basic pay and the end-of-year annual cap on 
premium pay. In turn, a change in aggregate basic pay or the end-of-
year cap can change retroactively the date on which an employee reached 
the annual premium pay cap. In some cases, an agency may have to 
recompute retroactively the amount of premium pay owed for one or more 
pay periods.
    In certain cases where an employee transfers to a different agency, 
the former agency may need to provide the new agency with information 
on basic pay and premium pay received by the employee in the current 
calendar year through the date of transfer. In some cases, the new 
agency may need to provide information to the former agency regarding 
an employee's aggregate basic pay and end-of-year cap. Each agency is 
responsible for proper application of the annual cap for the pay 
periods during which it employed the employee. Agencies cannot avoid 
certain administrative burdens based on the express statutory language 
in 5 U.S.C. 5547(b)(2), and we cannot change the regulations without a 
legislative amendment to reduce or eliminate these administrative 
burdens.
    We note that Sec.  550.106(e) provides that an agency may defer--
until the end of the calendar year--payment of additional premium pay 
owed an employee who is subject to an annual cap. Thus, while some of 
the administrative burdens associated with applying the annual cap 
remain, an agency may be able to avoid the burden of collecting an 
overpayment in some cases.

Emergency and Mission-Critical Work Determinations

    Under Sec.  550.106(b)(1), the head of an agency or designee is 
authorized to make determinations concerning mission-critical work in 
order to apply the annual cap provisions of Sec.  550.107(c) instead of 
the biweekly cap provisions in Sec.  550.105(a). An agency commented 
that some readers have interpreted Sec.  550.106(b)(1) to mean that a 
new written delegation of authority is required to cover a mission-
critical work determination. The commenter recommended clarification 
that this phrase was not intended to require an agency head to generate 
new written delegations of authority.
    It is not our intent to mandate or require a new written delegation 
of authority to cover mission-critical work determinations. If an 
agency head has provided a broad delegation of authority that covers a 
variety of actions and that delegation can be interpreted to encompass 
the action of making a mission-critical work determination, a new 
delegation is not required.
    Another agency was concerned that Sec.  550.106(a) and (b) might be 
interpreted to require agencies to make emergency and mission-critical 
work determinations for each pay period, which would be 
administratively burdensome. The agency suggested that OPM clarify that 
these determinations could be made for a situation or event.

[[Page 55942]]

    The regulations do not require that separate emergency and mission-
critical determinations be made for each pay period. The reference to 
``any pay period'' at the beginning of Sec.  550.106(a) and (b) simply 
means that premium pay is subject to an annual cap instead of the 
biweekly cap for all pay periods during which the emergency or mission-
critical work determination is in effect. Each agency should maintain 
appropriate documentation to show which pay periods are covered by a 
determination for each affected employee. The agency must either (1) at 
the outset, prospectively set a specified period of time during which 
the determination will be in effect, or (2) leave the ending date open-
ended at the outset and then, at the appropriate time, take formal 
action to terminate the determination as of a specific date.
    We have received questions regarding what happens when the 
emergency or mission-critical work determination is terminated before 
the end of the calendar year. As provided in 5 U.S.C. 5547(b) and Sec.  
550.106(c), the annual cap applies to the entire calendar year. Even if 
an employee is again placed under a biweekly cap before the end of the 
calendar year (because the emergency or mission-critical work 
conditions are no longer in effect), the employee would still remain 
subject to the annual cap for the duration of the calendar year. Thus, 
we are adding a new paragraph (g) to Sec.  550.106 to state more 
clearly that an employee remains subject to the annual cap through the 
remainder of the calendar year and thus could be covered simultaneously 
by both the biweekly cap and the annual cap.

Deferred Payments

    One agency commenter was concerned that Sec.  550.106(e) might be 
interpreted as requiring an agency to defer until the end of the 
calendar year payment of all additional premium pay resulting from 
application of an annual cap. The commenter recommended revising the 
regulations to read, ``an agency may defer payment of some or all of 
the additional premium pay.'' The intent of the regulation was to 
provide agencies with broad authority to defer whatever amount of 
additional premium pay they determined to be appropriate. (In fact, an 
agency may even decide to release deferred monies to the employee well 
before the end of the calendar year if it determines this to be 
appropriate.) Accordingly, we are revising Sec.  550.106(e) as 
recommended by the commenter.

Calculation of Biweekly Cap

    An agency commenter stated that the calculations used to determine 
the biweekly cap are not clearly stated in Sec. Sec.  550.105 and 
550.107. The commenter suggested clarifying the calculations to be used 
in determining the biweekly cap. We calculate the biweekly premium pay 
cap for each locality pay area and publish this calculation in our 
annual publication of the Salary Table Book. We also post the biweekly 
premium pay cap for each locality pay area on our Web site. The premium 
pay caps can be accessed on our Web site at http://www.opm.gov/oca/pay/HTML/factindx.asp. In response to this comment, we are adding a new 
paragraph (d) to Sec.  550.105 that explains how biweekly rates are 
computed, consistent with the requirements of 5 U.S.C. 5504. Also, we 
are adding a paragraph in Sec.  550.107 that refers to Sec.  
550.105(d).

Other Comments

    An agency commenter recommended replacing the term ``paycheck'' in 
Sec.  550.106(d)(3) with the term ``salary payment,'' since most 
employees are paid by direct deposit. We adopted this suggestion.
    An agency commenter suggested including a statement in the 
regulations that ``pursuant to section 118 of the Omnibus Consolidated 
and Emergency Supplemental Appropriations for Fiscal Year 2001, the 
biweekly cap does not apply to premium pay for protective services 
authorized under 18 U.S.C. 3056(a).'' (Section 118 provides for use of 
a special annual cap. This provision applies mainly to Secret Service 
agents.) We agree that the regular biweekly and annual premium pay caps 
do not apply to employees performing such protective services. Thus, we 
are adding a new paragraph (e) to Sec.  550.105 to acknowledge that, 
notwithstanding the provisions in Sec.  550.105, premium pay for 
protective services authorized by 18 U.S.C. 3056(a) is subject to the 
requirements in section 118 of the Treasury and General Government 
Appropriations Act of 2001 (as enacted into law by section 1(3) of Pub. 
L. 106-554).
    An agency questioned why the special rules in Sec.  550.107 
(dealing with use of a biweekly cap for certain types of premium 
payments for employees otherwise under an annual cap) apply to non-law 
enforcement officers who are receiving annual premium pay for 
administratively uncontrollable overtime (AUO) work. The agency noted 
that AUO pay is retirement-creditable for law enforcement officers only 
and that one of the rationales given for continued use of a biweekly 
cap was the retirement creditability of the types of payments listed in 
Sec.  550.107. The interim regulations offered another rationale for 
the special treatment of AUO pay and other listed premium payments. 
These payments are intended to be stable salary supplements that 
employees can count on from pay period to pay period. Placing AUO pay 
under the annual cap provisions could result in loss of this salary 
supplement during the latter part of the calendar year. This rationale 
applies equally to non-law enforcement officers. Therefore, we believe 
it is appropriate that AUO pay be included under the special rules in 
Sec.  550.107 regardless of the type of employee receiving it.

Regulatory Flexibility Act

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

E.O. 12866, Regulatory Review

    The Office of Management and Budget has reviewed this rule in 
accordance with Executive Order 12866.

List of Subjects in 5 CFR Part 550

    Administrative practice and procedure, Claims, Government 
employees, Wages.

Office of Personnel Management.
Kay Coles James,
Director.

0
Accordingly, the interim rule amending part 550 of title 5 of the Code 
of Federal Regulations, which was published at 67 FR 19319 on April 19, 
2002, is adopted as final with the following changes:

PART 550--PAY ADMINISTRATION (GENERAL)

Subpart A--Premium Pay

0
1. The authority citation for subpart A of part 550 is revised to read 
as follows:

    Authority: 5 U.S.C. 5304 note, 5305 note, 5504(c), 5541(2)(iv), 
5545a(h)(2)(B) and (i), 5547(b) and (c), 5548, and 6101(c); sections 
407 and 2316 of Pub. L. 105-277, 112 Stat. 2681-101 and 2681-828 (5 
U.S.C. 5545a); E.O. 12748, 3 CFR, 1992 Comp., p. 316.


0
2. In Sec.  550.105, a new paragraph (d) and (e) are added to read as 
follows:


Sec.  550.105  Biweekly maximum earnings limitation.

* * * * *
    (d) The biweekly rates of pay for the GS-15 maximum rate and for 
level V of

[[Page 55943]]

the Executive Schedule are computed as follows:
    (1) Compute an hourly rate by dividing the applicable published 
annual rate of basic pay by 2,087 hours and rounding the result to the 
nearest cent.
    (2) Compute the biweekly rate by multiplying the hourly rate from 
paragraph (d)(1) of this section by 80 hours.
    (e) Notwithstanding any other provision in this section, premium 
pay for protective services authorized by 18 U.S.C. 3056(a) is subject 
to the requirements in section 118 of the Treasury and General 
Government Appropriations Act of 2001 (as enacted into law by section 
1(3) of Public Law 106-554).

0
3. In Sec.  550.106, paragraphs (d)(3) and (e) are revised and a new 
paragraph (g) is added to read as follows:


Sec.  550.106  Annual maximum earnings limitation.

* * * * *
    (d) * * *
    (3) Compute an annual rate of pay by multiplying the biweekly rate 
from paragraph (d)(2) of this section by the number of pay periods for 
which a salary payment is issued in the given calendar year under the 
agency's payroll cycle (i.e., either 26 or 27 pay periods).
    (e) An agency may defer payment of some or all of the additional 
premium pay owed an employee as a result of the annual limitation until 
the end of the calendar year.
* * * * *
    (g) If an agency determines that the emergency or mission-critical 
work conditions are no longer in effect for an employee, it must resume 
application of the biweekly limitation. However, any premium pay the 
employee receives during the remainder of the calendar year is also 
subject to the annual limitation (as applied to any given pay period as 
described in paragraph (c) of this section).

0
4. In Sec.  550.107, paragraph (d) is redesignated as paragraph (e) and 
a new paragraph (d) is added to read as follows:


Sec.  550.107  Premium payments capped on a biweekly basis when an 
annual limitation otherwise applies.

* * * * *
    (d) The biweekly rates under paragraph (c) of this section are 
computed as provided in Sec.  550.105(d).
* * * * *
[FR Doc. 04-20952 Filed 9-16-04; 8:45 am]
BILLING CODE 6325-39-P