[Federal Register Volume 81, Number 231 (Thursday, December 1, 2016)]
[Rules and Regulations]
[Pages 86555-86561]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-28782]



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  Federal Register / Vol. 81, No. 231 / Thursday, December 1, 2016 / 
Rules and Regulations  

[[Page 86555]]



OFFICE OF PERSONNEL MANAGEMENT

5 CFR Parts 330 and 731

RIN 3206-AN25


Recruitment, Selection, and Placement (General) and Suitability

AGENCY: U.S. Office of Personnel Management.

ACTION: Final rule.

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

SUMMARY: The U.S. Office of Personnel Management (OPM) is issuing a 
final rule revising its regulations pertaining to when, during the 
hiring process, a hiring agency can request information typically 
collected during a background investigation from an applicant for 
Federal employment. OPM is making this change to promote compliance 
with Merit System Principles as well as the goals of the Federal 
Interagency Reentry Council and the President's Memorandum of January 
31, 2014, ``Enhancing Safeguards to Prevent the Undue Denial of Federal 
Employment Opportunities to the Unemployed and Those Facing Financial 
Difficulty Through No Fault of Their Own.'' In addition, the final rule 
will help agencies comply with the President's Memorandum of April 29, 
2016, ``Promoting Rehabilitation and Reintegration of Formerly 
Incarcerated Individuals.'' The intended effect of this rule is to 
encourage more individuals with the requisite knowledge, skills, and 
ability to apply for Federal positions by making it more clear that the 
Government provides a fair opportunity to compete for Federal 
employment to applicants from all segments of society, including those 
with prior criminal histories or who have experienced financial 
difficulty through no fault of their own.

DATES: Effective date: This final rule is effective January 3, 2017.
    Compliance date: March 31, 2017. As discussed below, OPM recognizes 
that there are legitimate, job/position-related reasons why a hiring 
agency may need to determine suitability at an earlier stage in the 
employment process. As such, this rule allows agencies to request from 
OPM an exception to accommodate such circumstances. Requests for an 
exception must be submitted to OPM by the agency's Chief Human Capital 
Officer (or equivalent) at the agency headquarters level. To permit 
agencies time to request exceptions where appropriate, this rule will 
have a compliance date of March 31, 2017.

FOR FURTHER INFORMATION CONTACT: Mr. Mike Gilmore by telephone on (202) 
606-2429, by fax at (202) 606-4430, by TTY at (202) 418-3134, or by 
email at [email protected].

SUPPLEMENTARY INFORMATION: On May 2, 2016, OPM issued a proposed rule 
at 81 FR 26173, to amend 5 CFR parts 330 and 731. Specifically, OPM 
proposed revisions to its regulations that would prohibit a hiring 
agency from making specific inquiries concerning an applicant's 
criminal or adverse credit background of the sort asked on the Optional 
Form (OF) 306, ``Declaration for Federal Employment'' in its 
``Background Information'' section, or in other forms used to determine 
suitability or conduct background investigations for Federal 
employment, until the hiring agency has made a conditional offer of 
employment to the applicant. The proposed rule also allows agencies to 
request from OPM an exception to collect background information earlier 
in the hiring process. OPM recognizes there are legitimate, job/
position-related reasons why a hiring agency may need to disqualify 
candidates with significant issues (including criminal history) from 
particular types of positions they are seeking to fill or to determine 
suitability at an earlier stage in the employment process. OPM received 
a total of 25 sets of comments: 17 from individuals, three from federal 
agencies, two from professional organizations, one from a trade 
association, one from a coalition of civic advocacy groups, and one 
from a private corporation. OPM's responses to the comments are 
discussed below.

Discussion of Comments

Comments Generally Opposed to the Proposed Rule

    Several individuals provided general comments opposing the proposed 
rule (two of these comments were not specific). These comments are as 
follows:
    One individual commented that Federal agencies should always 
consider an applicant's criminal background, and that all job 
announcements should advise anyone with a conviction record not to 
apply. A second commenter likewise stated that all resumes for Federal 
employment be ``unblemished'' by criminal history. OPM is not adopting 
these suggestions.
    While OPM agrees that Federal agencies must consider an applicant's 
criminal background as part of the suitability determination required 
for positions covered by part 731 of this chapter, agencies should not 
prohibit the consideration of applications from persons with conviction 
records during the selection process itself. Moreover, in most cases, 
the separate suitability determination can and should occur after the 
selection process and a conditional offer have been made, thereby 
separating criminal history as an aspect of the suitability 
determination from the factors that are relevant at the time of the 
initial assessment process. This aligns actual requirements with what 
we believe to be the predominant current practice, so that they better 
comport with the Merit System Principle stating that selection should 
be based solely on knowledge, skill, and ability, 5 U.S.C. 2301, and 
thus will encourage more individuals with the requisite knowledge, 
skills, and ability to apply for Federal positions.
    There are some positions for which Federal statute bars the 
employment of persons convicted of certain offenses. There may also be 
circumstances where a clean criminal history record must itself be one 
of the qualifications for a particular position, in light of the duties 
to be performed, and, therefore, becomes part of the examination for 
testing applicants for appointment in the competitive service that the 
President (and, in turn, through presidential redelegation, OPM) is 
entitled to prescribe. 5 U.S.C. 3301, 3302, 3304; E.O. 10577, as 
amended. Where criminal history-based disqualifications have a 
disparate

[[Page 86556]]

impact, the agency will need to be prepared to demonstrate that they 
are job-related and consistent with business necessity in order to 
defend its decisions from a challenge related to equal employment 
opportunity. Moreover, applicants cannot be found unsuitable on the 
basis of criminal conduct unless there is a nexus between that conduct 
and the efficiency of the service. Agencies have ample guidance 
relating to how to determine that nexus. Consistent with these 
principles, the proposed rule was intended to provide applicants from 
all segments of society, including those with prior criminal histories, 
a fair opportunity to compete for Federal employment.
    One commenter stated that some applicants should be eliminated from 
consideration at the start of the hiring process based on the severity 
of their criminal offense, the nature of the offense vis-a-vis the 
duties of the position being filled, and whether the position being 
filled requires a security clearance. OPM agrees that certain positions 
may require inquiries into applicants' criminal or adverse credit 
history to be conducted at the start of the hiring process, and the 
proposed rule allows agencies to request an exception from OPM to 
accommodate such circumstances. But OPM cannot agree that it is 
appropriate, as a general rule, to eliminate applicants from 
consideration based upon their criminal history, before the assessment 
process has even occurred. The purpose of this rule is to defer the 
suitability process, where criminal history must and will be considered 
as part of an overall assessment of character and conduct, until after 
the assessment of relative knowledge, skills, and abilities that leads 
to selection of the best-qualified candidate and the conditional offer 
of employment. The suitability rules expressly provide for the nature 
of the position and the nature and seriousness of the offense to be 
taken into account as additional considerations during the suitability 
process. See 5 CFR 731.202(c). Permitting agencies to consider criminal 
history information in isolation, outside of the suitability process, 
could result in an initial selection process not exclusively based upon 
each candidate's qualifications and relative level of knowledge, 
skills, and ability with respect to the position. And it might result 
in non-selection without the procedural protections that a final 
suitability action provides, which is not ideal. Accordingly, OPM 
rejects this comment, in part.

Comments in Support of the Proposed Rule

    A coalition representing criminal justice reform groups and civil 
and human rights advocates strongly supported the proposed rules, 
stating that when inquiries into criminal history are deferred until 
the conditional offer of employment, there is more clarity for the 
agency and the job applicant concerning the reason for a hiring 
decision based on a background check, and less opportunity for bias in 
the hiring process.
    A professional association cast its general support for the 
proposed changes, noting that requesting criminal history information 
on the OF-306, Declaration for Federal Employment, only after a 
conditional offer of employment has been extended constituted ``a 
sensible compromise'' between promoting fair hiring practices and 
adhering to the suitability requirements pertaining to Federal 
employment. This organization also supported the proposal to allow OPM 
to grant limited exceptions to these rules on a position-by-positon 
basis. We note that OPM would characterize what it is doing not as a 
``compromise,'' but rather as separating more clearly the process for 
assessing relative knowledge, skills, and abilities from the process 
for determining suitability for appointment to a position in a position 
covered by part 731 of this chapter.
    Two individuals also provided comments in general support of the 
proposed rule.

Comments Pertaining to the Safety, Risk, Integrity of the Civil 
Service, and Hiring Efficiency

    Three Federal agency commenters, one professional association, one 
trade association, and four members of the general public commented 
that the proposed rule would waste government resources, as well as 
applicants' time, because the hiring agency must begin the employment 
process but later may have to rescind a conditional offer of employment 
upon a determination that the applicant is ineligible for federal 
employment on the basis of suitability, security, facility access, or 
qualifications criteria. Some of these commenters noted that this could 
result in further delays because checks would then have to be performed 
on remaining candidates, or because other candidates would seek 
employment elsewhere due to the length of the hiring process. Some of 
these commenters expressed general concern that delaying applicant 
background screening could lengthen an already-lengthy Federal hiring 
process, and could have adverse effects on certain applicants with 
criminal histories by requiring them to proceed all the way through the 
application process before learning of their disqualification, and by 
giving them an unrealistic expectation of their prospects as 
candidates. In related comments, one individual stated that the 
proposal would make the federal hiring process more complex and 
cumbersome.
    One of the commenters from a Federal agency had calculated that 
over 10 percent of its law enforcement applicants who go through its 
pre-employment screening process are ultimately removed from 
consideration based on factors such as criminal history, delinquent 
debt, susceptibility to coercion, illegal use of drugs, and immigration 
violations, so that deferring the screening process would result in a 
significant unnecessary expenditure of agency time and resources in 
examination and qualifications assessment. The agency noted that these 
expenditures are significant because of its unique, agency- and 
position-related requirements, including the agency's significant 
volume of vacancies and applicants; its pre-employment polygraph and 
medical examination requirements; its law enforcement and national 
security mission; and its need for its employees to credibly testify in 
criminal proceedings. Another agency commenter emphasized that the 
nature, seriousness, recency, and job-relatedness of certain criminal 
violations would almost certainly be disqualifying for certain 
positions under OPM's suitability regulations, making deferral of an 
unfavorable decision especially unfair. The agency cited specific 
criminal conduct that would render an applicant unsuitable for 
firefighter, educator, child care worker, motor vehicle operator, or 
financial/budget positions.
    OPM acknowledges there may be instances in which an agency must 
rescind a job offer based on an applicant's criminal or adverse credit 
history, and then select another candidate, which could conceivably 
require that the agency screen and consider additional candidates in 
certain circumstances. But the commenters present no empirical evidence 
that changing the timing of background screening will have a general 
impact on time-to-hire, on the cost of background screening once it 
occurs, or on the efficiency of the Federal hiring process generally. 
As noted in the Notice of Proposed Rulemaking (81 FR at 26173), many 
agencies already wait until the later

[[Page 86557]]

stages of the hiring process to collect criminal history information. 
We also note that these comments do not adequately take into account 
OPM's concern that early inquiries into an applicant's background, 
including his or her criminal or credit history, could have the effect 
of discouraging motivated, well-qualified individuals from applying for 
a Federal job because they have an arrest record, when the arrest did 
not result in a conviction or when, following a conviction, they have 
fully complied with the penalty and have been rehabilitated in the eyes 
of the law. This discouragement also could impose a cost on the hiring 
process, by presenting hiring officials with a less competitive 
candidate pool.
    OPM does agree there may be limited circumstances or positions for 
which it is appropriate for a hiring agency to collect information 
about applicants' criminal or adverse credit history earlier in the 
hiring process, rather than at the point at which a conditional offer 
of employment is made to an applicant. The proposed rule allows for 
agencies to request an exception from OPM to accommodate such 
circumstances.
    With respect to these commenters' concerns about fairness to 
applicants, the intent of the proposed rule is to conform regulatory 
requirements to what we believe is the predominant agency practice and 
thus better serve the broader public policy ideal of providing 
applicants from all segments of society, including those with prior 
criminal histories, a fair opportunity to compete for Federal 
employment. Deferring consideration of this information to the stage at 
which suitability is adjudicated separates examining and assessment 
process from suitability, thereby encouraging applicants with criminal 
history to join the competition for vacant positions. It also means 
that the agency defers collection of criminal history information until 
the stage at which the agency is in a position to undertake a 
suitability determination, which makes the final decision reviewable 
and provides certain procedural protections.
    Two individuals commented that the proposed rule may have adverse 
national security implications because it could result in convicted 
felons having access to sensitive information. A third individual 
opposed the proposed rule and questioned the wisdom of hiring ex-
offenders who may then have access to employees' personal information 
and to sensitive taxpayer records. OPM disagrees, noting that the 
proposed rule is not eliminating the need for, nor mitigating the 
thoroughness of, background investigations and appropriate related 
adjudicative processes for applicants for Federal jobs. The proposed 
rule simply impacts when during the hiring process inquiries into an 
applicant's criminal or adverse credit history can begin.
    Another individual commented that delaying preliminary background 
screening could also delay the commencement of the full suitability 
background investigation required before appointment (or to finalize a 
contingent appointment) in the competitive service or the national 
security background investigation required to adjudicate eligibility 
for access to classified information. It is true that it could, in some 
cases, defer the commencement of the full investigation, but we 
believe, based upon earlier discussion with agencies, that most 
agencies already wait until the end of the selection process to 
commence those investigations. The proposed rule does not, in fact, 
change the current standard under 736.201(c) that a personnel 
background investigation may commence no later than the 14th day after 
placement, but that if the investigation is for a national security-
sensitive position, it must both commence and be completed prior to 
appointment unless one of the waiver or exception conditions described 
in 5 CFR 1400.202 applies. The proposed rule is fully consistent with 
the requirement in E.O. 12968 of Aug. 4, 1995, governing investigations 
for eligibility for access to classified information, which provides 
that ``[a]pplicants . . . required to provide relevant information 
pertaining to their background and character for use in investigating 
and adjudicating their eligibility for access'' are those who have 
``received an authorized conditional offer of employment for a position 
that requires access to classified information.'' E.O. 12968, 3 CFR, 
1995 Comp., p. 391, secs. 1.1(b), 3.2(a), reprinted as amended in 5 
U.S.C. 3161 note.
    One commenter mistakenly believes the proposed rule will weaken 
background checks, and thus poses a threat to the security of Federal 
employees, the American people, and U.S. government assets and secrets. 
The proposed rule does not, in any way, change the need to collect 
background information after the conditional job offer has been made 
and to evaluate any known issues prior to appointment (or after an 
appointment that is contingent upon a favorable adjudication). 
Similarly, it does not impact the integrity or thoroughness of the 
background investigation process. The proposed rule only affects the 
point at which an agency may collect information about an applicant's 
criminal or adverse credit history.
    Another individual believes the proposed rule will give the 
perception that the Federal government is establishing a hiring 
preference for ex-convicts or using Federal jobs as a relief-work or 
program for ex-convicts, which could demoralize the Government's 
workforce and discourage talented applicants from applying. This 
comment does not pertain to the merits of the rule but rather, 
expresses a concern that the rule will be misperceived to the detriment 
of the Federal hiring process. OPM believes that this concern is 
speculative. The proposed rule does not provide a hiring or selection 
priority for ex-convicts, nor does it allow individuals to be appointed 
who should be adjudicated unsuitable for Federal employment. Similarly, 
it has no bearing on whether an individual requires eligibility for 
access to classified information, and, if so, should be deemed eligible 
under the adjudicative guidelines for such decisions. The rule simply 
addresses at which point during the selection process an agency may 
make inquiries into an applicant's background, thereby helping to 
support a process where selections and conditional offers follow a fair 
and open competition based on applicants' relative knowledge, skill, 
and ability. In doing so, the rule is intended to attract all qualified 
applicants by making it more clear that, subject to certain exceptions, 
adverse background information will not be collected until after 
applicants' competencies are assessed, thereby reinforcing the notion 
that the Federal government is a model employer.
    Three commenters supported deferring the collection of applicants' 
criminal history information until later in the hiring process, but 
proposed alternative approaches that they believed would achieve a 
better balance between fairness versus timeliness, and efficiency. A 
commenter from a Federal agency suggested the rule be modified to allow 
agencies to administer the OF-306 when an employee is determined to be 
within reach for selection. Another commenter from a Federal agency 
suggested that the rule be modified to allow agencies to administer the 
OF-306 at the time of scheduling an interview, i.e., after preliminary 
qualifications screening but before selection. A professional 
association recommended following an example from state government, of 
conducting criminal history screening after an interview as part of the 
final selection process. While all of these approaches have merit, OPM 
is not adopting them

[[Page 86558]]

at this time because assessment instruments are not uniform across 
civil service examinations. Some examinations have an interview 
component while others do not; some employ multiple interviews. 
Permitting criminal history screening at the time of a conditional 
offer provides a uniform standard that is not dependent on the specific 
instruments that are being used in a competitive examination to assess 
applicant competencies.

Exception Based on Location or Type of Position

    A professional organization commented that the process by which 
agencies may seek exceptions to collect information earlier in the 
process about applicants' criminal or credit history (on a case-by-case 
basis) could result in additional delays. OPM will provide further 
guidance after the publication of this final rule, but notes that an 
agency will not have to wait until it has a vacant position to request 
an exception. If there is a position or group of positions within the 
agency for which there is a legitimate need to collect information 
earlier in the process, the hiring agency may request an exception at 
any time. Once an agency receives an exception from OPM to collect 
background information from applicants for a particular position or 
group of positions earlier in the hiring process, the agency will not 
be required to request an exception subsequently, or each time, the 
position is being filled thereafter.
    Another professional organization suggested that OPM make clear in 
the final rule that exceptions from the proposed changes must be 
requested prior to the posting of any vacancy announcement to which it 
will apply. Of course if an agency requests an exception on the ground 
that it is necessary to ask for certain background information as an 
aspect of determining whether a particular applicant is qualified for 
the position, then, the agency, of necessity, would be required to make 
that clear in advance of posting the job opportunity announcement. OPM 
agrees with this suggestion, however, even when the exception is to be 
requested in order to enable the agency to adjudicate suitability in 
advance, and has amended proposed 5 CFR part 330 subpart M accordingly.
    This organization suggested OPM modify 5 CFR 330.1300 by including 
specific conditions under which OPM may grant an exception to these 
provisions. OPM is not adopting this suggestion. OPM is not yet in a 
position to anticipate all of the circumstances that could warrant an 
exception, and wishes to gain experience with the regulation, and 
explore further the sorts of situations agencies may bring to its 
attention, before it limits its discretion to a list of specific 
conditions. Therefore we prefer, at least for now, to provide examples 
of the types of factors OPM will consider in determining whether to 
grant an exception.
    The same organization also suggested that the final rule include a 
provision requiring agencies which are granted an exception to provide 
notice of the exception in their job announcements for positions for 
which the exception was granted. OPM agrees that agencies which receive 
exceptions should provide notice of the exception in their job 
announcements. Among other things, an agency that receives an exception 
in order to use background information as an aspect of assessing 
qualifications will, of necessity, need to disclose the qualifications 
and how they will be assessed as part of the job opportunity 
announcement. We do not believe a requirement in the final rule is 
necessary; OPM will require notice in its approval letters granting 
such exceptions.
    One commenter from an agency and one individual suggested that OPM, 
in the final rule, specifically exempt from these provisions positions 
with law enforcement and national security duties. We see no reason why 
an agency filling a position that is national security sensitive cannot 
defer the collection of background information until after a putative 
selection, based upon relative degree of knowledge, skills, and 
abilities, has been made. Many agencies already do this. Moreover, even 
as to law enforcement positions, OPM is not adopting this suggestion. 
Because specific duties and agency requirements may differ, we prefer 
to rely on the mechanism for exceptions described in the proposed rule 
which allows agencies to request an exception for specific positions to 
collect background information pertaining to an applicant's criminal or 
adverse credit history earlier in the hiring process.
    A coalition representing criminal justice reform groups and civil 
and human rights advocates recommended that OPM permit no exception 
allowing agencies to collect information about applicants' criminal or 
adverse credit history prior to a conditional offer of employment. OPM 
is not adopting this suggestion. OPM leaves open the possibility that 
for certain positions there may be valid, job and position-related 
reasons why an agency may seek to disqualify applicants with 
significant criminal or adverse credit history backgrounds early in the 
process (such as law enforcement positions requiring the eventual 
appointee to be in a position to testify in legal proceedings). For 
these reasons OPM is retaining the exception provision.
    The coalition commented that, in the event the exception provision 
is retained in the final rule, OPM should place the burden of proof on 
agencies seeking exceptions, should adjudicate requests under a 
rigorous standard of proof, and should give the public the opportunity 
to respond in opposition to an agency's request for exception. OPM does 
not adopt this suggestion. Currently, there are no limitations on the 
point at which agencies may initiate the collection of background 
information. The decision to impose the restriction is a policy 
decision, not a legal requirement. Accordingly, we do not believe that 
a uniform burden and standard of proof or a public notice-and-comment 
process is necessary or would assist us in our decision-making process, 
and it would be likely to unnecessarily delay the hiring process. The 
manner in which OPM grants exceptions must be flexible.

Other Comments

    One agency commented that asking applicants whether they have been 
fired from a job, as is asked on the OF-306, in connection with 
competitive hiring is a valid question and that restricting employers 
from doing so before making a selection hinders the employer from fully 
evaluating applicants and choosing the best candidate. Another agency 
commented that it needs to use the OF-306 prior to a conditional offer 
of employment because it is not just a background screening form, but 
is also used to collect important applicant information related to an 
applicant's citizenship, Selective Service registration status, 
military service and type of discharge, and relatives. This information 
is needed to ensure that candidates meet legal requirements for 
appointment in competitive hiring. OPM agrees that inquiries into an 
applicant's prior employment may have a bearing on his or her fitness 
for the job and points out that the proposed rule does not restrict 
agencies from collecting information about an applicant's prior 
employment prior to making a selection. The context of the proposed 
rule is information of the sort asked on the OF-306's `Background 
Information' section specific to an applicant's criminal or adverse 
credit history. These provisions also do not prevent a hiring agency 
from collecting information about prior work history earlier in the 
hiring process. OPM has

[[Page 86559]]

amended the final rule to provide greater clarity with respect to this 
issue.
    OPM notes in this regard that agencies are not required to sponsor 
or conduct separate information collections subject to Office of 
Management and Budget (OMB) clearance in order to ask these kinds of 
questions to applicants as part of the competitive Civil Service hiring 
process. Under OMB's regulations implementing the Paperwork Reduction 
Act (PRA), ``[e]xaminations designed to test the aptitude, abilities, 
or knowledge of the persons tested and the collection of information 
for identification or classification in connection with such 
examinations'' do not constitute information collections subject to the 
PRA's requirements. See 5 CFR 1320.3(h)(7).
    One individual asked whether the proposed rule was ``politically 
motivated'' for an electoral purpose. It was not. The origins of the 
proposed rule began several years ago. OPM proposed this rule to better 
harmonize the the requirements concerning the timing and objectives of 
the merit selection process and the suitability function.
    One professional organization supports the proposal to include 
these rules under 5 CFR part 731 to ensure that any non-selections 
based on information from the OF-306 are appealable to the Merit 
Systems Protection Board (MSPB) under 5 CFR part 731.501. It appears 
the commenter may have misinterpreted the proposed rule. Only 
suitability actions as defined in 5 CFR part 731.203 (cancellation of 
eligibility, removal, cancellation of reinstatement rights, and 
debarment) are appealable to the MSPB. Nonselection is not appealable, 
as stated in 5 CFR 302.406(g) and 731.203(b).
    The same organization recommended that OPM codify in the final 
rules the mitigating factors described in section 2(b)(i-iii) of the 
Presidential memorandum titled, ``Promoting Rehabilitation and 
Reintegration of Formerly Incarcerated Individuals'' (81 FR 26993, 
26995). OPM is not adopting this suggestion because these criteria 
pertain to occupational licensure, not to whether an individual is 
suitable for Federal employment. The purpose of the proposed rule is to 
affect at what point in the hiring process an agency may make inquiries 
into an applicant's background, not to impact the criteria used to 
determine an applicant's suitability for employment. However, we note 
that separate sections of this Memorandum are relevant to this rule. 
Section 1 formally reconstitutes the Federal Interagency Reentry 
Council as a Presidentially-established Council; section 1(a)(xvii) 
formalizes OPM's membership; and section 2(a) directs that ``Agencies 
making suitability determinations for Federal employment shall review 
their procedures for evaluating an applicant's criminal records to 
ensure compliance with 5 CFR part 731 and any related, binding guidance 
issued by the Office of Personnel Management, with the aim of 
evaluating each individual's character and conduct.'' OPM expects that 
this rule will assist agencies in complying with the President's 
mandate.
    This organization also asked that OPM amend its suitability 
regulations to require an agency to include a record of any exception 
granted by OPM, permitting it to conduct suitability screening prior to 
a conditional offer of employment, as part of the ``materials relied 
upon'' in charging an individual. OPM does not accept this 
recommendation, because the timing of a suitability inquiry is 
unrelated to the charges brought against an applicant, appointee, or 
employee in a proposed suitability action.
    A coalition representing criminal justice reform groups and civil 
and human rights advocates recommended that OPM implement a centralized 
means of collecting data on the impact of the proposed rule by 
documenting the number of conditional offers and final hiring decisions 
of persons with prior convictions. The coalition believes this data 
would help maintain the integrity of the background check process and 
also help with oversight. OPM is not adopting this suggestion as part 
of the rulemaking but will oversee agencies' compliance with the rule, 
as part of the merit system audit and compliance process under Civil 
Service Rules V and X.
    The coalition also suggested the proposed rules should apply to 
positions filled in the excepted service. OPM notes these provisions do 
apply to certain positions in the excepted service. OPM is not 
accepting this recommendation as to all excepted service positions, but 
notes that under the current suitability regulations at 5 CFR 
731.101(b), the definition of ``Covered Position'' includes a small 
subset of excepted service positions within OPM's jurisdiction, namely 
positions in the excepted service ``where the incumbent can be 
noncompetitively converted to the competitive service. . . .''
    For other positions in the excepted service, OPM generally lacks 
the authority to prescribe qualification, fitness, or suitability 
standards or to regulate the timing of employer inquiries. For those 
positions excepted from the competitive service by Acts of Congress, 
hiring procedures and standards for making qualification or fitness 
determinations may be prescribed by statute. Where the statute is 
silent, or where the exception from the competitive service is made by 
the President (or by OPM under presidential delegation), Civil Service 
Rule VI, Sec.  6.3(b) states that ``[t]o the extent permitted by law 
and the provisions of this part, appointments and position changes in 
the excepted service shall be made in accordance with such regulations 
and practices as the head of the agency concerned finds necessary.'' 
See 5 CFR 6.3(b) (codifying this section of the Rule). Agency heads 
have the discretion to decide whether or not to establish criteria for 
making fitness determinations and determine whether their standards are 
equivalent to suitability standards established by OPM (but must 
consider OPM guidance when exercising this discretion). See Section 3 
of E.O. 13488 of January 16, 2009, 3 CFR, 2009 Comp., p. 189.
    The coalition notes, in support of its comment, that under Civil 
Service Rule VI, Sec.  6.3(a), ``OPM, in its discretion, may by 
regulation prescribe conditions under which excepted positions may be 
filled in the same manner as competitive positions are filled and 
conditions under which persons so appointed may acquire a competitive 
status in accordance with the Civil Service Rules and Regulations.'' 
The coalition cites this provision as ``clear authority'' for OPM to 
impose identical hiring requirements on the excepted service. However, 
the cited provision is not authority for OPM to override the discretion 
given to agencies in filling positions in the excepted service. Rather, 
it is a mechanism for OPM to permit agencies to hire for the excepted 
service in the same manner as for the competitive service and upon 
doing so, to give competitive status (i.e., the ability to be 
noncompetitively assigned to positions in the competitive service) to 
excepted service employees who have been hired in that manner. See 5 
CFR 212.301, 302.102(c).
    The coalition suggested that OPM include language in the final rule 
that requires agencies to comply with title VII of the Civil Rights Act 
of 1964, and Equal Employment Opportunity Commission (EEOC) guidelines 
pertaining to the use of conviction records in hiring decisions, 
including an individualized assessment of applicants' criminal history. 
OPM is not adopting this suggestion because these rules only pertain to 
the timing of inquiries into an applicant's criminal or adverse credit 
history, not to the selection process for

[[Page 86560]]

Federal employment, and agencies have an independent obligation to 
comply with title VII.

Changes to the OF-306

    One agency and a coalition representing criminal justice reform 
groups and civil and human rights advocates suggested OPM also make 
changes to the OF-306 to facilitate the rule's implementation. OPM is 
not addressing these comments at this time because the OF-306 and other 
investigative questionnaires are not promulgated through rulemaking, 
but through the separate PRA process. The comments may be resubmitted 
when the information collections are up for renewal under the PRA.
    One individual suggested that OPM remove the requirement to provide 
a Social Security number (SSN) on the OF-306. OPM is not adopting this 
suggestion because it is beyond the scope of the proposed rule, which 
pertains to when during the hiring process an agency may collect 
information about an applicant's criminal or adverse credit history.

Comments Outside the Scope of the Proposed Rule

    A private company commented that the proposed rule will 
inadvertently deter private sector employers from taking advantage of 
the Work Opportunity Tax Credit (WOTC), which is designed to encourage 
private employers to hire people with criminal histories, among others. 
This company requests that OPM clarify in the final rule that private 
employers can use the WOTC credit without violating these provisions. 
This comment is beyond the scope of the proposed regulations, which 
only pertain to Federal employment. OPM suggests private companies 
consult the Internal Revenue Service for information concerning the 
WOTC.
    The same company suggested that OPM make clear in the final rule 
that these provisions only pertain to Federal employment. OPM is not 
adopting this suggestion because we do not believe such clarification 
is necessary. By statute and under the Civil Service Rules, OPM's 
jurisdiction in these matters is limited to Federal employment.
    One organization similarly expressed concern that the proposed rule 
may persuade state and local governments to enact regulatory or 
contractual measures which, in turn, impose burdensome requirements on 
private investigative and security firms. The comment is not 
accompanied by a specific recommendation related to the rulemaking, and 
is speculative, so there is no basis for OPM to consider the comment.
    A coalition representing criminal justice reform groups and civil 
and human rights advocates recommended that OPM also extend these rules 
to its contractors. OPM cannot adopt this suggestion as part of the 
rulemaking, which pertains only to competitive Federal hiring, not 
contracting.
    One individual asked whether there is evidence that ``many'' 
agencies administer the Optional Form (OF) 306, ``Declaration for 
Federal Employment'' prior to the point at which a tentative job offer 
is made. OPM stated in the Supplementary Information section of the 
proposed rule that to the contrary ``many agencies already . . . wait 
until the later stages of the hiring process to collect this kind of 
information.'' (81 FR at 26173.) This assertion is based upon the 
results of a survey we conducted on this matter. This survey was 
developed and issued to all Chief Human Capital Officers Act agencies. 
Eighteen (18) agencies/sub-agencies responded to the survey. The 
comment was not accompanied by a recommendation related to the 
rulemaking, so there is no basis to consider the comment.
    Two commenters opposed the proposed rule in the mistaken belief 
that the rule's purpose was to improve employment opportunities for 
individuals who had become criminals ``through no fault of their own.'' 
The commenters were apparently confused by a citation, in the proposed 
rule's Supplementary Information (81 FR at 26174), to a Presidential 
Memorandum, ``Enhancing Safeguards to Prevent the Undue Denial of 
Federal Employment Opportunities to the Unemployed and Those Facing 
Financial Difficulty Through No Fault of Their Own (79 FR 7045). OPM 
cited the memorandum as a basis to defer the collection of certain 
applicant employment or credit information until the later stages of 
the hiring process, not for the reasons the commenters suggested. 
Because the comments were based on a faulty premise, OPM did not 
consider them.
    One commenter asked that OPM revise the proposed rule to improve 
the formula for cost-of-living allowances for annuities. The comment 
was outside the scope of the proposal and was not considered.

Executive Order 13563 and Executive Order 12866, Regulatory Review

    The Office of Management and Budget has reviewed this rule in 
accordance with E.O. 13563 and 12866.

Regulatory Flexibility Act

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

E.O. 13132, Federalism

    This regulation will not have substantial direct effects on the 
States, on the relationship between the National Government and the 
States, or on distribution of power and responsibilities among the 
various levels of government. Therefore, in accordance with Executive 
Order 13132, it is determined that this rule does not have sufficient 
federalism implications to warrant preparation of a Federalism 
Assessment.

E.O. 12988, Civil Justice Reform

    This regulation meets the applicable standard set forth in section 
3(a) and (b)(2) of Executive Order 12988.

Unfunded Mandates Reform Act of 1995

    This rule will not result in the expenditure by State, local or 
tribal governments of more than $100 million annually. Thus, no written 
assessment of unfunded mandates is required.

Congressional Review Act

    This action pertains to agency management, personnel and 
organization and does not substantially affect the rights or 
obligations of non-agency parties and, accordingly, is not a ``rule'' 
as that term is used by the Congressional Review Act (Subtitle E of the 
Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA)). 
Therefore, the reporting requirement of 5 U.S.C. 801 does not apply.

Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35)

    This final regulatory action will not impose any additional 
reporting or recordkeeping requirements under the Paperwork Reduction 
Act.

List of Subjects

5 CFR Part 330

    Armed forces reserves, District of Columbia, Government employees.

5 CFR Part 731

    Administrative practices and procedures, Government employees.

U.S. Office of Personnel Management
Beth F. Cobert,
Acting Director.

    Accordingly, OPM is amending 5 CFR parts 330 and 731 as follows:

[[Page 86561]]

PART 330--RECRUITMENT, SELECTION, AND PLACEMENT (GENERAL)

0
1. The authority citation for part 330 continues to read as follows:

    Authority: 5 U.S.C. 1104, 1302, 3301, 3302, 3304, and 3330; E.O. 
10577, 3 CFR, 1954-58 Comp., p. 218; Section 330.103 also issued 
under 5 U.S.C. 3327; Subpart B also issued under 5 U.S.C. 3315 and 
8151; Section 330.401 also issued under 5 U.S.C. 3310; Subparts F 
and G also issued under Presidential Memorandum on Career Transition 
Assistance for Federal Employees, September 12, 1995; Subpart G also 
issued under 5 U.S.C. 8337(h) and 8456(b).

0
2. Add subpart M, consisting of Sec.  330.1300 to read as follows:

Subpart M--Timing of Background Investigations


Sec.  330.1300   Timing of suitability inquiries in competitive hiring.

    A hiring agency may not make specific inquiries concerning an 
applicant's criminal or credit background of the sort asked on the OF-
306 or other forms used to conduct suitability investigations for 
Federal employment (i.e., inquiries into an applicant's criminal or 
adverse credit history) unless the hiring agency has made a conditional 
offer of employment to the applicant. Agencies may make inquiries into 
an applicant's Selective Service registration, military service, 
citizenship status, or previous work history, prior to making a 
conditional offer of employment to an applicant.
    However, in certain situations, agencies may have a business need 
to obtain information about the background of applicants earlier in the 
hiring process to determine if they meet the qualifications 
requirements or are suitable for the position being filled. If so, 
agencies must request an exception from the Office of Personnel 
Management in order to determine an applicant's ability to meet 
qualifications or suitability for Federal employment prior to making a 
conditional offer of employment to the applicant(s). OPM will grant 
exceptions only when the agency demonstrates specific job-related 
reasons why the agency needs to evaluate an applicant's criminal or 
adverse credit history earlier in the process or consider the 
disqualification of candidates with criminal backgrounds or other 
conduct issues from particular types of positions. OPM will consider 
such factors as, but not limited to, the nature of the position being 
filled and whether a clean criminal history record would be essential 
to the ability to perform one of the duties of the position 
effectively. OPM may also consider positions for which the expense of 
completing the examination makes it appropriate to adjudicate 
suitability at the outset of the process (e.g., a position that 
requires that an applicant complete a rigorous training regimen and 
pass an examination based upon the training before his or her selection 
can be finalized). A hiring agency must request and receive an OPM-
approved exception prior to issuing public notice for a position for 
which the agency will collect background information prior to 
completion of the assessment process and the making of a conditional 
offer of employment.

PART 731--SUITABILITY

0
3. The authority citation for part 731 continues to read as follows:

    Authority:  5 U.S.C. 1302, 3301, 7301; E.O. 10577, 3 CFR 1954-
1958 Comp., p. 218, as amended; E.O. 13467, 3 CFR 2009 Comp., p. 
198; E.O. 13488, 3 CFR 2010 Comp., p. 189; 5 CFR parts 1, 2 and 5.

0
4. In Sec.  731.103, revise paragraph (d) to read as follows:


Sec.  731.103   Delegation to agencies.

* * * * *
    (d)(1) A hiring agency may not make specific inquiries concerning 
an applicant's criminal or credit background of the sort asked on the 
OF-306 or other forms used to conduct suitability investigations for 
Federal employment (i.e., inquiries into an applicant's criminal or 
adverse credit history) unless the hiring agency has made a conditional 
offer of employment to the applicant. Agencies may make inquiries into 
an applicant's Selective Service registration, military service, 
citizenship status, or previous work history, prior to making a 
conditional offer of employment to an applicant. However, in certain 
situations, agencies may have a business need to obtain information 
about the suitability or background of applicants earlier in the 
process. If so, agencies must request an exception from the Office of 
Personnel Management, in accordance with the provisions of 5 CFR part 
330 subpart M.
    (2) OPM reserves the right to undertake a determination of 
suitability based upon evidence of falsification or fraud relating to 
an examination or appointment at any point when information giving rise 
to such a charge is discovered. OPM must be informed in all cases where 
there is evidence of material, intentional false statements, or 
deception or fraud in examination or appointment, and OPM will take a 
suitability action where warranted.
* * * * *
[FR Doc. 2016-28782 Filed 11-30-16; 8:45 am]
 BILLING CODE 6325-39-P