[Federal Register Volume 85, Number 243 (Thursday, December 17, 2020)]
[Proposed Rules]
[Pages 81839-81847]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-26347]


 ========================================================================
 Proposed Rules
                                                 Federal Register
 ________________________________________________________________________
 
 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. 85, No. 243 / Thursday, December 17, 2020 / 
Proposed Rules  

[[Page 81839]]



OFFICE OF PERSONNEL MANAGEMENT

5 CFR Parts 351 and 430

RIN 3206-AO06


Reduction in Force

AGENCY: Office of Personnel Management.

ACTION: Proposed rule.

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

SUMMARY: The Office of Personnel Management (OPM) is issuing a proposed 
regulation to revise its reduction-in-force (RIF) regulations to set 
forth the principle that agencies should prioritize performance over 
length of service when determining which employees will be retained in 
a RIF following regulations that OPM will issue. In addition, OPM is 
exercising its authority to modify the order of retention, clarify 
tenure group definitions, and modify how credit for performance is 
computed.

DATES: Comments must be received on or before January 19, 2021.

ADDRESSES: You may submit comments, identified by the docket number or 
Regulation Identifier Number (RIN) for this proposed rulemaking, by any 
of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for sending comments.
    All submissions received must include the agency name and docket 
number or RIN for this document. The general policy for comments and 
other submissions from members of the public is to make these 
submissions available for public viewing at http://www.regulations.gov 
as they are received without change, including any personal identifiers 
or contact information.

FOR FURTHER INFORMATION CONTACT: Kimberly A. Holden by email at 
[email protected] or by fax at (202) 606-4430.

SUPPLEMENTARY INFORMATION: The OPM is proposing to revise its 
regulations governing reduction in force and related technical changes 
under statutory authority vested in it by Congress in 5 U.S.C. 1103, 
3502, 3596, 4305, and 4315. The regulations will also assist agencies 
in carrying out certain principles set forth by the President in 
Executive Order (E.O.) 13839, titled: ``Promoting Accountability and 
Streamlining Removal Procedures Consistent with Merit Systems and 
Principles'' consistent with law, and update current procedures to make 
them more efficient and effective. The proposed regulations will change 
existing regulations regarding RIF procedures to modify the order of 
retention and enhance the value of performance relative to length of 
service when determining which employees will be retained in a RIF.
    The proposed regulations will assist agencies in better aligning, 
consistent with law, to certain of the principles articulated by the 
President to the Executive Branch in E.O. 13839 and update current 
procedures to make them more efficient and effective.\1\ Apart from 
OPM's existing authority to promulgate regulations relating to 
reductions in force, 5 U.S.C. 3502, Section 7 of the E.O. directs OPM 
to propose revisions to existing regulations, as needed, to effectuate 
the principles set forth in section 2, including those pertaining to 
RIFs.
---------------------------------------------------------------------------

    \1\ Some of the provisions of E.O. 13839 were enjoined by the 
United States District Court for the District of Columbia. Am. Fed'n 
of Gov't Employees, AFL-CIO v. Trump, 318 F. Supp. 3d 370 (D.D.C. 
2018). The principles pertaining to RIFs, however, were not among 
those provisions that were enjoined. Id. at 440. The plaintiffs did 
not seek further judicial review of this decision, so this 
determination is final. In any event, the decision imposing the 
injunction against other provisions of the E.O. was subsequently 
reversed, see Am. Fed'n of Gov't Employees, AFL-CIO v. Trump, 929 
F.3d 748 (D.C. Cir. 2019), and thus no longer has any effect.
---------------------------------------------------------------------------

Reduction in Force

    Section 2(j) of E.O. 13839 calls on agencies to prioritize 
performance over length of service in determining who will be retained 
in a RIF. Section 7 of the E.O. directs OPM to examine whether existing 
regulations effectuate the principles set forth in section 2 of the 
Order. It directs OPM, ``to the extent necessary or appropriate,'' to 
propose for notice and public comment appropriate regulations to 
effectuate the principles set forth in Section 2.
    After conducting this examination, OPM, under its statutory 
authority in 5 U.S.C. 3502, is proposing, in accordance with the 
procedural requirements under 5 U.S.C. 1103(b) and the Administrative 
Procedure Act, to amend its regulations at Subpart E of 5 CFR part 351 
and to make corresponding changes to Subparts B and Subpart G of 5 CFR 
part 351 and to Subpart B of 5 CFR part 430 to prioritize performance 
over length of service in a RIF. In addition, we are modifying the 
order of retention at 5 CFR 351.501. Specifically, when determining the 
order in which employees are placed on a RIF retention register, 
agencies will do so on the basis of tenure first, followed by 
performance, then veterans' preference, and finally length of service, 
as outlined in further detail below. In addition, we are proposing to 
clarify the definition of tenure groups.
    Proposed Sec.  351.501 Order of retention establishes that 
competing employees in a RIF will be classified on a retention register 
on the basis of (in descending order): (1) Tenure of employment, (2) 
performance, (3) veterans' preference, and (4) length of service. This 
section also clarifies that the order of retention provisions applies 
to employees in both the competitive and excepted services.
    Under current regulations at 5 CFR 351.501, the order of retention 
for classifying competing employees on a retention register is (in 
descending order): Tenure of employment, veterans' preference, length 
of service, and performance. Length of service is augmented by 
performance; an employee receives additional retention service credit 
(i.e., additional years of service) based on the employee's applicable 
ratings of record. OPM is proposing to modify the order of retention to 
be: Tenure of employment, performance, veterans' preference, and length 
of service.
    Under the current regulations at 5 CFR 351.504, credit for 
performance is used to supplement an employee's length of service for 
purposes of determining an employee's standing on a retention register 
(both of these retention factors are expressed in years). An employee 
receives additional retention service credit based on his or her 
performance ratings of record and their assigned summary levels. This 
additional credit is added to the employee's length of service to

[[Page 81840]]

determine that employee's retention standing within the employee's 
appropriate tenure group and veterans' preference subgroup. An employee 
receives additional credit for performance (added to his or her length 
of service) on the following basis: 20 additional years of service for 
each rating of record with a Level 5 (Outstanding or equivalent) 
summary level; 16 additional years of service for each rating of record 
with a Level 4 (Exceeds Fully Successful or equivalent) summary level; 
and 12 additional years of service for each rating of record with a 
Level 3 (Fully Successful or equivalent) summary level, in accordance 
with the summary levels described in 5 CFR 430.208. The additional 
years of service are added together, divided by 3, and rounded up to a 
whole number if necessary to determine the number of years that will be 
used to adjust an employee's actual service computation date and arrive 
at an adjusted service computation date for RIF purposes.
    OPM is proposing to elevate performance above length of service in 
the RIF order of retention. We propose to do this by establishing 
performance as a subgroup within the appropriate tenure group. The 
proposed order of retention will be: (1) Tenure, (2) performance, (3) 
veterans' preference, and (4) length of service. Under this proposal, 
employees competing in a RIF will first be sorted into their 
appropriate tenure group; then within each tenure group employees will 
be sorted by performance in descending order based on the total of the 
employee's three most recent ratings of record; then within each tenure 
group and performance subgroup, according to their veterans' preference 
status or subgroup; then within each tenure group, performance 
subgroup, and veterans' preference subgroup, employees will be listed 
on the retention register in terms of their length of service based on 
each employee's actual service computation date. Thus, length of 
service will be used as a tie-breaker for employees with the same 
tenure, three-year total of their summary level performance ratings, 
and veterans' preference status (i.e., the first three factors being 
equal, an employee with longer length of service will be listed ahead 
of an employee(s) with shorter length of service).
    We are proposing that an agency determine an employee's performance 
standing by adding each employee's summary level performance rating for 
the three most recent ratings of record issued under 5 CFR part 430 (or 
equivalent ratings of record established in accordance with 5 CFR 
430.201(c)) prior to the RIF. An agency will place employees on a 
retention register based on the total of each employee's summary level 
rating in descending order, within each tenure group. In most 
instances, an employee's summary level ratings of record for the three 
most recent ratings of record will be added together. Ratings of record 
will be assigned a numerical value as follows in conjunction with the 
patterns of summary level in 5 CFR 430.208(d): 5 for a Level 5 
(Outstanding or equivalent) summary level, 4 for a Level 4 (Exceeds 
Fully Successful or equivalent) summary level, 3 for a Level 3 (Fully 
Successful or equivalent) summary level, 2 for a Level 2 (Minimally 
Successful or equivalent) summary level, 1 for a Level 1 (Unacceptable) 
summary level. Agencies will list competing employees on the retention 
register in descending order (within the same tenure group) based on 
the total of their three most recent ratings of record. OPM believes 
listing employees in descending order (i.e., highest to lowest) based 
on their total summary level rating for three most recent ratings of 
record is the most objective methodology for these purposes, and best 
implements the principle of emphasizing performance over length of 
service as set forth in E.O. 13839.
    The following example illustrates and contrasts the impact of 
performance ratings of record and their summary levels on a retention 
register under the current rules and the proposed rules. Consider the 
following employees in a General Schedule (GS) 201-12 position:

----------------------------------------------------------------------------------------------------------------
                                                                                     Rating of
                      Name                         Tenure group      Vets pref    record summary   Service comp
                                                                     subgroup         levels           date
----------------------------------------------------------------------------------------------------------------
Al..............................................               I               A           3/3/3      01/01/1988
Barb............................................               I               A           5/4/5      01/01/2010
Carl............................................               I               A           3/4/3      01/01/2000
Dave............................................               I               A           4/5/4      01/01/1980
Emma............................................               I               A           3/4/4      01/01/2014
----------------------------------------------------------------------------------------------------------------

    Under the current rules, a retention register constructed in 2018 
for these employees would look like this, based on retention factors 
considered in this order: Tenure [bond] Vets Pref [bond] Adjusted 
Service Computation Date (ASCD) -- i.e., the service computation date 
(SCD) adjusted for additional service credit (ASC) based on ratings of 
record and summary levels:

[[Page 81841]]

[GRAPHIC] [TIFF OMITTED] TP17DE20.075

    Under the proposed rules, the retention register for these same 
competing employees would look like this, based on considering 
retention factors in this order: Tenure [bond] Performance based on the 
total of the employee's summary levels [bond] Vets Pref [bond] Service 
Computation Date:

    Barb: I [bond] 14 [bond] A [bond] 01/01/2010
    Dave: I [bond] 13 [bond] A [bond] 01/01/1980
    Emma: I [bond] 11 [bond] A [bond] 01/01/2014
    Carl: I [bond] 10 [bond] A [bond] 01/01/2000
    Al: I [bond] 9 [bond] A [bond] 01/01/1988

    The following illustrates how veterans' preference and length of 
service will be used under the proposed rules. Assuming the same group 
of employees but with two differences: Al and Carl have the same 
ratings of record, but Carl's veterans' preference subgroup is AD, as 
follows:

----------------------------------------------------------------------------------------------------------------
                                                                     Rating of
                      Name                         Tenure group   record summary     Vets pref     Service comp
                                                                      levels         subgroup          date
----------------------------------------------------------------------------------------------------------------
Al..............................................               I           3/3/3               A      01/01/1988
Barb............................................               I           5/4/5               A      01/01/2010
Carl............................................               I           3/3/3              AD      01/01/2000
Dave............................................               I           4/5/4               A      01/01/1980
Emma............................................               I           3/4/4               A      01/01/2014
----------------------------------------------------------------------------------------------------------------

    Under the proposed rules, the retention register for these 
employees would look like this, based on considering retention factors 
in this order (in this example Carl is listed ahead of Al because he is 
in veterans' preference subgroup AD despite having less service credit 
than Al):

    Barb: I [bond] 14 [bond] A [bond] 01/01/2010
    Dave: I [bond] 13 [bond] A [bond] 01/01/1980
    Emma: I [bond] 11 [bond] A [bond] 01/01/2014
    Carl: I [bond] 9 [bond] AD [bond] 01/01/2000
    Al: I [bond] 9 [bond] A [bond] 01/01/1988

    OPM is proposing to revamp 5 CFR part 351, sections 501 through 
505. We are proposing to renumber current Sec.  351.505 Records, and 
Sec.  351.506 Effective date of retention standing, to Sec.  351.506 
Records and Sec.  351.507 Effective date of retention standing, 
respectively. We are also proposing corresponding changes to Sec.  
351.701 Assignment rights (bump and retreat). Lastly, OPM is proposing 
to modify Sec.  430.208(d) to attune those provisions with the proposed 
changes in 5 CFR part 351. The proposed changes are as follows:
    Proposed Sec.  351.501 Order of retention establishes that 
competing employees in a RIF will be classified on a retention register 
on the basis of (in descending order): (1) Tenure of employment, (2) 
performance, (3) veterans' preference, and (4) length of service. This 
section also clarifies that the order of retention provisions applies 
to employees in both the competitive and excepted services.
    Proposed Sec.  351.502 Tenure of employment defines tenure groups 
for competitive service and excepted service employees. Proposed Sec.  
351.502(a) defines tenure groups for competitive service employees. The 
new Sec.  351.502(a) incorporates the provisions currently found in 
Sec.  351.501(b)(1)-(3) but clarifies that Tenure group I will consist 
of career employees who are not serving a probationary period. Proposed 
tenure group II will consist of career-conditional employees and other 
employees serving a probationary period, as well as the other 
categories of employees currently described in Sec.  351.501(b)(2). OPM 
is deleting the reference to ``temporary appointments pending 
establishment of a register'' listed in current Tenure group III at 
Sec.  351.501(b)(3) because these types of appointments, also known as 
TAPER appointments, were abolished in 2003 (see 68 FR 35265, 
``Organization of the Government for Personnel Management, Overseas 
Employment, Temporary and Term Employment, Recruitment and Selection 
for Temporary and Term Appointments Outside the Register, Examining 
System, and Training''). Proposed Sec.  351.502(b) defines tenure 
groups for excepted service employees. The new Sec.  351.502(b) 
incorporates the provisions currently found in Sec.  351.502 Order of 
retention--excepted service without change. OPM is proposing to 
consolidate tenure of employment definitions for both services into one 
section for the convenience of the reader.
    Proposed Sec.  351.503 Performance establishes that an agency will 
list employees on a RIF retention register (within the same tenure 
group) based on the total of each employee's summary level ratings for 
the employee's three most recent ratings of record for performance. In 
accordance with 5 CFR 430.208(d) summary level ratings of record for 
these purposes are as follows:

(i) 5 for a Level 5 (Outstanding or equivalent) summary level
(ii) 4 for a Level 4 (Exceeds Fully Successful or equivalent) summary 
level

[[Page 81842]]

(iii) 3 for a Level 3 (Fully Successful or equivalent) summary level
(iv) 2 for a Level 2 (Minimally Successful or equivalent) summary 
level, and
(v) 1 for a Level 1 (Unacceptable) summary level

    This section also explains that an agency lists competing employees 
on the retention register in descending order (i.e., highest to lowest) 
based on their totals within the same tenure group.
    Section 351.503(b) Ratings used explains that an employee's ratings 
of record are to be used in a manner consistent with the provisions of 
subpart B of 5 CFR part 430, and provides guidance as to how an agency 
determines an employee's performance standing for RIF purposes for 
employees not covered under subpart B of 5 CFR part 430 and in other 
special circumstances. Sec.  351.503(b) remains largely unchanged from 
the provisions currently in Sec.  351.504(a)(1)-(3), though we are 
removing the reference to `additional retention service credit' 
currently found in Sec.  351.504(a)(1).
    Section 351.503(c) Consideration of performance includes language 
currently in Sec.  351.504(b) but modifies this language by removing 
the reference to ``additional retention service credit'' consistent 
with the aim of E.O. 13839 (i.e., credit for performance will no longer 
be added to an employee's length of service). Performance will now be a 
subgroup, within the tenure group, which will be based on the total of 
each employee's summary level ratings for the employee's three most 
recent ratings of record for performance consistent with Sec.  
351.503(a). Proposed Sec.  351.503(c)(1) removes the reference to 
`awarding additional retention service credit' currently found in Sec.  
351.504(b)(4).
    Section 351.503(d) How to apply performance ratings is a new 
subsection which explains to agencies that they must total the summary 
levels from an employee's three most recent ratings of record to derive 
a total summary level value for purposes of placing the employee on a 
RIF retention register under this part. This new subsection uses the 
rating of record summary levels described in subpart B of 5 CFR part 
430. For example, the employees below are covered under a pattern H 
five-summary level rating performance appraisal system as described in 
5 CFR 430.208(d). Their ratings and totals are:

------------------------------------------------------------------------
                      Employee                         Ratings    Total
------------------------------------------------------------------------
Alice...............................................     5/4/4        13
Bill................................................     4/3/3        10
Carol...............................................     4/4/3        11
Fred................................................     3/4/5        12
------------------------------------------------------------------------

    These employees would be listed on the retention register in the 
following order: Alice, Fred, Carol, then Bill.
    New paragraph Sec.  351.503(e) Single rating pattern describes how 
agencies list employees who have been covered under the same rating 
pattern of summary levels during the 4-year period prior to the date of 
issuance of the reduction in force notice or the agency-established 
cutoff date. Subparagraph (e)(ii) proposes that for employees covered 
under a summary level appraisal system in which the highest summary 
level is a level ``3'' rating (i.e., a pattern A (`pass/fail'), or 
pattern D system) the agency may create a performance subgroup for 
employees who have documented exceptional performance above the norm. 
This subparagraph explains that evidence of exceptional performance may 
include documentation showing an agency: Has awarded an employee the 
highest Agency or Departmental award (such as a Secretary's or 
Chairman's award), a special act or service award, a quality step 
increase, or other performance awards or bonus (e.g., a `time-off' for 
demonstrated performance above expectations). OPM is proposing this to 
effectuate the principle of the E.O. (which is to elevate performance 
over length of service) and to provide a method by which an agency may 
make meaningful distinctions among employees in a pattern A or D 
performance appraisal program (i.e., the highest summary level rating 
is a ``3'' or satisfactory) who have documented performance above 
expectations in these appraisals systems.
    In new subparagraph Sec.  351.503(e)(2)(B) OPM is also proposing to 
allow an agency to give more weight to certain performance-related 
actions than others for purposes of listing some level ``3'' employees 
ahead of other employees on a retention register. For example, an 
agency could list all employees who received the agency's highest 
sustained performance award ahead of all employees who received an 
organizational or component-specific award, and ahead employee who 
received a time off award (both groups would be listed ahead of the 
other level ``3'' employees). An agency that chooses this option must 
specify and document, in advance of any RIF, how it will prioritize 
performance awards for these purposes. OPM believes this option is 
consistent with the E.O. and the principle of elevating performance 
over length of service, and it provides an agency with a method for 
making meaningful distinctions among employees with a fully successful 
rating when some of these employees were recognized for exceptional 
performance.
    Section 351.503(f) Multiple rating patterns addresses situations in 
which an agency has employees in a competitive area who have ratings of 
record under more than one pattern of summary levels, as described in 5 
CFR 403.208(d). This paragraph explains that an agency shall consider 
the mix of patterns and proposes that an agency shall provide enhanced 
performance standing to employees under disparate pattern summary 
levels under certain circumstances. To do this OPM is proposing that an 
agency transmute or assign an employee a higher summary level rating 
than what he or she received under a previous rating system only when 
there is documented evidence of exceptional or higher level performance 
consistent with the criteria in proposed Sec.  351.503(e). An agency 
must transmute the rating of an employee who meets this requirement to 
the highest summary level of the pattern summary level being used 
during the RIF (i.e., a level ``4'' rating if the agency conducting the 
RIF uses a pattern C or G summary level appraisal system, or a level 
``5'' rating if the agency uses a pattern B, E, F, or H summary level 
appraisal system). Documented evidence of exceptional or higher level 
performance for these purposes includes: Award or receipt of the 
highest Agency or Departmental award (such as a Secretary's or 
Chairman's award), a quality step increase, or an annual performance 
appraisal bonus. For example, an employee was covered by a pattern A 
(pass/fail) appraisal program for two years and a pattern H (5 summary 
level) appraisal program for the one year prior to a RIF. While covered 
under the pattern A appraisal program the employee received his 
agency's highest award for excellent performance in the second year. 
Under the five-summary level system he received a level ``4'' rating. 
Under this proposal the agency must assign the employee a higher rating 
level; so in this instance the employee's performance ratings for the 
three year period would be 3/5/4 (his level 3 rating would be 
transmuted to a level 5) and his ratings of record total for the three 
year period would be 12 for purposes of 351.503(d). OPM is also 
proposing that an employee who goes from an appraisal system which uses 
a higher pattern of summary levels to a lower one (e.g., an employee 
who goes

[[Page 81843]]

from a 5 summary level appraisal program to two level system (i.e., 
pass/fail system)) with ratings above the highest summary level of the 
lower pattern system be listed ahead of any employee on the retention 
register who does not have documented evidence of exceptional 
performance as described above. Lastly, this proposed section requires 
an agency to specify the basis on which it will consider exceptional or 
higher level performance described in Sec.  351.503(e) and transmute or 
assign an employee a higher rating in accordance with the pattern of 
summary level used during the RIF, and make this information readily 
available for review prior to running a reduction in force. OPM is 
proposing enhanced performance credit or standing to implement the 
E.O.'s principle that an agency emphasize performance over length of 
service in a RIF. We believe this method prevents exceptional 
performers from being disadvantaged because they may be covered under 
two or more patterns of summary rating levels which may not make 
meaningful distinctions for performance among employees.
    Sec.  351.503(g) Missing ratings describes how an agency should 
factor performance ratings into the RIF process when an employee does 
not have three actual ratings of record during the 4-year period prior 
to the date of issuance of RIF notices, or the 4-year period prior to 
the agency-established cut-off date. Proposed Sec.  351.503(g) uses the 
modal rating concept for employees with no ratings during the 4 year 
period prior to the RIF currently found in Sec.  351.504(c)(1) but 
modifies the current provisions by removing the reference to 
''additional retention service credit'' consistent with the aim of E.O. 
13839 (i.e., credit for performance will no longer be added to an 
employee's length of service). The term `modal rating' is currently 
defined in Sec.  351.203. For employees with at least one rating of 
record but less than three, this section proposes that an agency total 
the summary levels, divide by the number of ratings, and use this value 
for the missing ratings. For example, an employee in five level pattern 
H summary level appraisal system has summary level rating of ``3'' 
fully successful and ``4'' exceeds fully successful but is missing a 
third rating. The agency would add 3 + 4, then divide by 2, for a value 
of 3.5 for the missing rating. The agency then adds the three ratings 
of record: 3, 4, and 3.5 for a total of 10.5 and enters the employee on 
the retention register accordingly.
    Proposed Sec.  351.504 Veterans' preference defines veterans' 
preference subgroups for employees in both the competitive and excepted 
services. This proposed section will consist of the provisions 
currently found in Sec.  351.501(c) and (d) without change.
    OPM is proposing to delete current Sec.  351.502 Order of 
retention--excepted service and cover these provisions in proposed 
Sec.  351.501(a).
    OPM is proposing to modify current Sec.  351.705 Administrative 
assignment to be consistent with the proposed changes to Sec. Sec.  
351.501-.505. Specifically, OPM is proposing to update Sec.  
351.705(a)(2) to incorporate the new order of retention and the 
creation of the new subgroup called `performance'.

Performance Management

    OPM is proposing to modify current Sec.  430.208(d)(4) to attune 
this language with the proposed changes in part 351. To do this, we 
propose removing the current reference to ``. . . assigning additional 
retention service credit under Sec.  351.504.''
    OPM is proposing to modify current Sec.  430.208(d)(5) by removing 
the reference to ``the number of years of additional retention service 
credit'' and replacing it with a general reference to proposed Sec.  
351.503 Performance.

Regulatory Impact Analysis

    OPM has examined the impact of this rulemaking as required by 
Executive Order 12866 and Executive Order 13563, which directs agencies 
to assess all costs and benefits of available regulatory alternatives 
and, if regulation is necessary, to select regulatory approaches that 
maximize net benefits (including potential economic, environmental, 
public, health, and safety effects, distributive impacts, and equity). 
A regulatory impact analysis must be prepared for major rules with 
economically significant effects of $100 million or more in any one 
year. While this proposed rule does not reach the economic effect of 
$100 million or more under Executive Order 12866, this proposed rule is 
still designated as a ``significant regulatory action,'' under 
Executive Order 12866.

Reducing Regulation and Controlling Regulatory Costs

    This proposed rule is not an E.O. 13771 regulatory action because 
this proposed rule is expected to be no more than de minimis costs.

Regulatory Flexibility Act

    The Office of Personnel Management certifies that this proposed 
rule will not have a significant economic impact on a substantial 
number of small entities.

Federalism

    We have examined this proposed rule in accordance with Executive 
Order 13132, Federalism, and have determined that this proposed rule 
will not have any negative impact on the rights, roles and 
responsibilities of State, local, or tribal governments.

Civil Justice Reform

    This regulation meets the applicable standard set forth in 
Executive Order 12988.

Unfunded Mandates Reform Act of 1995

    This proposed rule will not result in the expenditure by state, 
local, and tribal governments, in the aggregate, or by the private 
sector, of $100 million or more in any year and it will not 
significantly or uniquely affect small governments. Therefore, no 
actions were deemed necessary under the provisions of the Unfunded 
Mandates Reform Act of 1995.

Congressional Review Act

    The Congressional Review Act (5 U.S.C. 801 et seq.) requires rules 
to be submitted to Congress before taking effect. OPM will submit to 
Congress and the Comptroller General of the United States a report 
regarding the issuance of this proposed rule before its effective date, 
as required by 5 U.S.C. 801. This proposed rule is not a major rule as 
defined by the Congressional Review Act (CRA) (5 U.S.C. 804).

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

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

List of Subjects in 5 CFR Parts 351 and 430

    Government employees.

Office of Personnel Management.
Alexys Stanley,
Regulatory Affairs Analyst.

    Accordingly, for the reasons stated in the preamble, OPM proposes 
to amend 5 CFR parts 351, and 430 as follows:

PART 351--REDUCTION IN FORCE

0
1. Revise the authority citation for part 351 to read as follows:

    Authority:  5 U.S.C. 1302, 3502, 3503; sec. 351.801 also issued 
under E.O. 12828, 58 FR 2965; E.O. 13839, 83 FR 25343.

[[Page 81844]]

Subpart B--General Provisions

0
2. In Sec.  351.203, revise the definition of ``Current rating of 
record'' to read as follows:


Sec.  351.203  Definitions.

* * * * *
    Current rating of record is the rating of record for the most 
recently completed appraisal period as provided in Sec.  351.503(c)(3).
* * * * *

Subpart E--Retention Standing

0
3. Revise Subpart E to read as follows:

Subpart E--Retention Standing

Sec.
351.501 Order of retention.
351.502 Tenure of employment.
351.503 Performance.
351.504 Veterans' preference.
351.505 Length of service.
351.506 Records.
351.507 Effective date of retention standing.


Sec.  351.501  Order of retention.

    Competing employees in the competitive and excepted services shall 
be classified on a retention register on the basis of four factors: 
Tenure of employment, performance, veterans' preference, and length of 
service as follows:
    (a) On the same retention register in descending order by tenure 
group I, group II, group III, as described in Sec.  351.502;
    (b) Within each tenure group by performance based on the sum of the 
summary levels for the employee's three most recent ratings of record 
for performance in accordance with Sec.  351.503;
    (c) Within each performance subgroup by veterans' preference 
subgroup AD, subgroup A, subgroup B, as described in Sec.  351.504; and
    (d) Within each veterans' preference subgroup by years of service 
beginning with the earliest service computation date, as computed under 
Sec.  351.505, when two or more employees have the same summary level 
total value for the employees' three most recent ratings of record.


Sec.  351.502  Tenure of employment.

    (a) Competitive service. Tenure groups in the competitive service 
are defined as follows:
    (1) Group I includes each career employee who is not serving a 
probationary period. (A supervisory or managerial employee serving a 
probationary period required by subpart I of part 315 of this chapter 
is in group I if the employee is otherwise eligible to be included in 
this group.) The following employees are in group I as soon as the 
employee completes any required probationary period for initial 
appointment:
    (i) An employee for whom substantial evidence exists of eligibility 
to immediately acquire status and career tenure, and whose case is 
pending final resolution by OPM (including cases under Executive Order 
10826 to correct certain administrative errors);
    (ii) An employee who acquires competitive status and satisfies the 
service requirement for career tenure when the employee's position is 
brought into the competitive service;
    (iii) An administrative law judge;
    (iv) An employee appointed under 5 U.S.C. 3104, which provides for 
the employment of specially-qualified scientific or professional 
personnel, or a similar authority; and
    (v) An employee who acquired status under 5 U.S.C. 3304(c) on 
transfer to the competitive service from the legislative or judicial 
branches of the Federal Government.
    (2) Group II includes each career-conditional employee, and each 
employee serving a probationary period under subpart H of part 315 of 
this chapter. (A supervisory or managerial employee serving a 
probationary period required by subpart I of part 315 of this chapter 
is in group II if the employee has not completed a probationary period 
under subpart H of part 315 of this chapter.) Group II also includes an 
employee when substantial evidence exists of the employee's eligibility 
to immediately acquire status and career-conditional tenure, and the 
employee's case is pending final resolution by OPM (including cases 
under Executive Order 10826 to correct certain administrative errors).
    (3) Group III includes all employees serving under indefinite 
appointments, status quo appointments, term appointments, and any other 
non-status non-temporary appointments which meet the definition of 
provisional appointments contained in Sec. Sec.  316.401 and 316.403 of 
this chapter.
    (b) Excepted service. Tenure groups in the excepted service are 
defined as follows:
    (1) Group I includes each permanent employee whose appointment 
carries no restriction or condition such as conditional, indefinite, 
specific time limit, or trial period.
    (2) Group II includes each employee:
    (i) Serving a trial period; or
    (ii) Whose tenure is equivalent to a career-conditional appointment 
in the competitive service in agencies having such excepted 
appointments.
    (3) Group III includes each employee:
    (i) Whose tenure is indefinite (i.e., without specific time limit), 
but not actually or potentially permanent;
    (ii) Whose appointment has a specific time limitation of more than 
1 year; or
    (iii) Who is currently employed under a temporary appointment 
limited to 1 year or less, but who has completed 1 year of current 
continuous service under a temporary appointment with no break in 
service of 1 workday or more.


Sec.  351.503  Performance.

    (a) Performance subgroup. Within the tenure groups an agency shall 
list competing employees in descending order (i.e., highest to lowest) 
based on the total of the summary levels for each employee's three most 
recent ratings of record for performance in accordance with part 430 of 
this Chapter.
    (b) Ratings used. (1) Except as provided at Sec.  351.503(d)(3), 
only ratings of record as defined in Sec.  351.203 shall be used as the 
basis for classifying an employee's performance in a reduction in 
force.
    (2) For employees who received ratings of record while covered by 
part 430, subpart B, of this chapter, the summary levels assigned for 
those ratings of record shall be used to establish the employee's 
performance subgroup in a reduction in force in accordance with 5 CFR 
351.501, except as provided in 5 CFR 351.503(d)(3).
    (3) For employees who received performance ratings while not 
covered by the provisions of 5 U.S.C. chapter 43 and subpart B of part 
430 of this chapter, those performance ratings shall be considered 
ratings of record with summary levels for designating an employee's 
performance subgroup in a reduction in force only when it is determined 
that those performance ratings are equivalent ratings of record under 
the provisions of Sec.  430.201(c) of this chapter. The agency 
conducting the reduction in force shall make that determination.
    (c) Consideration of performance. (1) An employee's entitlement to 
performance consideration under this subpart shall be based on the 
employee's three most recent ratings of record received during the 4-
year period prior to the date of issuance of reduction in force 
notices, except as otherwise provided in paragraphs (c)(2) and (g) of 
this section.
    (2) To provide adequate time to determine employee performance 
total values, an agency may provide for a cutoff date, a specified 
number of days prior to the issuance of reduction in force notices 
after which no new ratings of record will be put on record and used

[[Page 81845]]

for purposes of this subpart. When a cutoff date is used, an employee's 
performance average will be based on the three most recent ratings of 
record received during the 4-year period prior to the cutoff date.
    (3) To be considered for purposes of this subpart, a rating of 
record and its assigned summary level (including any adjustments to 
performance consistent with this subpart) must have been issued to the 
employee, with all appropriate reviews and signatures, and must also be 
on record (i.e., the rating of record is available for use by the 
office responsible for establishing retention registers).
    (4) The use of performance ratings of record and assigned summary 
levels (including any adjustments to performance) for purposes of this 
subpart must be uniformly and consistently applied within a competitive 
area, and must be consistent with any agency's appropriate issuance(s) 
that implement these policies in part 351. Each agency must specify in 
its appropriate issuance(s):
    (i) The conditions under which a rating of record is considered to 
have been received for purposes of determining whether it is within the 
4-year period prior to either the date the agency issues reduction in 
force notices or the agency-established cutoff date for ratings of 
record, as appropriate; and
    (ii) If the agency elects to use a cutoff date, the number of days 
prior to the issuance of reduction in force notices after which no new 
ratings of record will be put on record and used for purposes of this 
subpart.
    (d) How to apply performance ratings of record. Agencies determine 
each competing employee's performance standing (or numerical value) by 
adding the employee's three most recent summary level ratings of record 
during the 4-year period prior to the date of issuance of the reduction 
in force notice or the agency-established cutoff date. An agency lists 
competing employees on the retention register in descending order 
(i.e., highest to lowest) based on these totals.
    (e) Single rating pattern. (1) If all employees in a reduction in 
force competitive area have received ratings of record under a single 
pattern of summary levels as set forth in Sec.  430.208(d) of this 
chapter, agencies must apply the method described in paragraph (d) of 
this section.
    (2) An agency may give additional credit for performance for 
employees covered under a summary level appraisal system in which the 
highest summary level is a level ``3'' rating (i.e., a pattern A `pass/
fail', or pattern D system), consistent with Sec.  430.208(d) of this 
chapter. At its discretion an agency may create a subgroup of level 
``3'' employees with demonstrated exceptional performance and list them 
ahead of other level ''3'' employees if, within the 4-year period prior 
to either the date the agency issues reduction in force notices or the 
agency-established cutoff date for ratings of record, the following 
condition is met:
    (i) The agency has applied performance-related criteria and taken 
an action that recognizes the employee's exceptional performance; such 
actions may include but are not limited to awarding an employee: The 
highest Agency or Departmental award (such as a Secretary's or 
Chairman's award), a special act or service award, a quality step 
increase, or other performance awards or bonus (e.g., a 'time-off' for 
demonstrated performance above expectations), etc.
    (ii) An agency may determine on its own whether to give more weight 
to the performance-related action described in paragraph (e)(2)(i) of 
this section for purposes of listing some level ``3'' employees ahead 
of other on a retention register. For example, an agency could list all 
employees who received the agency's highest sustained performance award 
ahead of all employees who received an organizational or component-
specific award, and ahead of an employee who received a time off award. 
An agency which chooses this option must specify and document, in 
advance of the RIF, how it will prioritize performance awards for these 
purposes.
    (iii) An agency that chooses to give an employee additional credit 
for performance must specify and document, in advance of the RIF, how 
it will prioritize performance awards for these purposes and make this 
criterion readily available for review.
    (f) Multiple rating patterns. (1) If an agency has employees in a 
competitive area who have ratings of record under more than one pattern 
of summary levels, as set forth in Sec.  430.208(d) of this chapter, it 
shall consider the mix of patterns and provide additional retention 
credit for performance in accordance with the following:
    (i) Transmute or assign an employee a higher summary level rating 
than what he or she received under their previous appraisal system in 
accordance with the appraisal system (i.e., pattern of summary level) 
being applied to the Reduction in Force;
    (ii) Transmute or assign an employee a summary level rating only 
when there is documented evidence of exceptional or higher level 
performance as evidenced by an employee who received the highest Agency 
or Departmental award (such as a Secretary's or Chairman's award), a 
quality step increase, or appraisal performance awards or bonus (e.g., 
a ``time-off'' for demonstrated performance above expectations in lieu 
of a cash bonus); and
    (iii) Each agency must specify and document, in advance of a RIF, 
the basis on which it will transmute an employee's rating; i.e., the 
agency needs to describe how it will translate evidence of documented 
exceptional performance to a higher performance rating under the 
appraisal system (i.e., pattern of summary level) being applied to the 
RIF and make this criteria readily available for review.
    (iii) An agency must transmute the rating of an employee who meets 
the requirement in 351.503(f)(1)(B) to the highest summary level of the 
pattern summary level being applied to the RIF (i.e., a level ``4'' 
rating if the agency conducting the RIF uses a pattern C or G summary 
level appraisal system, or a level ``5'' rating if the agency uses a 
pattern B, E, F, or H summary level appraisal system). An agency cannot 
transmute a rating to a summary level which is not among those in the 
pattern being applied to the RIF.
    (ii) In situations in which the agency running the RIF is using a 
pattern summary level rating appraisal system with a summary level no 
higher than a level ``3'' (i.e., a pass/fail system) but has employees 
rated previously under a pattern with higher summary levels the agency 
must place the employees with the higher summary ratings at the 
performance subgroup at the top of retention register, or ahead of, 
other summary level ``3'' employees with no documented evidence of 
exceptional performance.
    (g) Missing ratings. (1) Use of performance ratings for employees 
who do not have three actual ratings of record during the 4-year period 
prior to the date of issuance of reduction in force notices or the 4-
year period prior to the agency-established cutoff date for ratings of 
record permitted in paragraph (c)(2) of this section shall be 
determined under paragraph (d) of this section, as appropriate, and as 
follows:
    (2) The performance standing of an employee who has not received 
any rating of record for any year during the 4-year period shall be 
based on the modal rating as defined in 5 CFR 351.203 for the summary 
level pattern that applies to the employee's official position of 
record at the time of the reduction in force.

[[Page 81846]]

    (3) The performance standing of an employee who has received at 
least one but fewer than three previous ratings of record during the 4-
year period shall have his or her performance standing determined on 
the basis of the value of summary levels for the actual rating(s) of 
record divided by the number of actual ratings received. If an employee 
has received only two actual ratings of record during the period, the 
value of the summary levels is added together and divided by 2, with 
the result being either (1) a whole number or (2) a number with .5 
decimal value. The agency totals these values and lists the employee in 
score order in accordance with Sec.  351.204(d). If an employee has 
received only one actual rating of record during the period, its 
summary level value determines the employee's performance subgroup for 
purposes of this part.


Sec.  351.504  Veterans' preference.

    (a) Veterans' preference subgroups. Veterans' preference subgroups 
for both competitive and excepted service employees are defined as 
follows:
    (1) Subgroup AD includes each preference eligible employee who has 
a compensable service-connected disability of 30 percent or more.
    (2) Subgroup A includes each preference eligible employee not 
included in subgroup AD.
    (3) Subgroup B includes each nonpreference eligible employee.
    (b) A retired member of a uniformed service is considered a 
preference eligible under this part only if the member meets at least 
one of the conditions of the following paragraphs (b)(1), (2), or (3) 
of this section, except as limited by paragraph (b)(4) or (b)(5):
    (1) The employee's military retirement is based on disability that 
either:
    (i) Resulted from injury or disease received in the line of duty as 
a direct result of armed conflict; or
    (ii) Was caused by an instrumentality of war incurred in the line 
of duty during a period of war as defined by sections 101 and 301 of 
title 38, United States Code.
    (2) The employee's retired pay from a uniformed service is not 
based upon 20 or more years of full-time active service, regardless of 
when performed but not including periods of active duty for training.
    (3) The employee has been continuously employed in a position 
covered by this part since November 30, 1964, without a break in 
service of more than 30 days.
    (4) An employee retired at the rank of major or above (or 
equivalent) is considered a preference eligible under this part if such 
employee is a disabled veteran as defined in section 2108(2) of title 
5, United States Code, and meets one of the conditions covered in 
paragraphs (b)(1), (2), or (3) of this section.
    (5) An employee who is eligible for retired pay under chapter 67 of 
title 10, United States Code, and who retired at the rank of major or 
above (or equivalent) is considered a preference eligible under this 
part at age 60, only if such employee is a disabled veteran as defined 
in section 2108(2) of title 5, United States Code.


Sec.  351.505   Length of service.

    (a) All civilian service as a Federal employee, as defined in 5 
U.S.C. 2105(a), is creditable for purposes of this part. Civilian 
service performed in employment that does not meet the definition of 
Federal employee set forth in 5 U.S.C. 2105(a) is creditable for 
purposes of this part only if specifically authorized by statute as 
creditable for retention purposes.
    (b)(1) As authorized by 5 U.S.C. 3502(a)(A), all active duty in a 
uniformed service, as defined in 5 U.S.C. 2101(3), is creditable for 
purposes of this part, except as provided in paragraphs (b)(2) and 
(b)(3) of this section.
    (2) As authorized by 5 U.S.C. 3502(a)(B), a retired member of a 
uniformed service who is covered by Sec.  351.503(b) is entitled to 
credit under this part only for:
    (i) The length of time in active service in the Armed Forces during 
a war, or in a campaign or expedition for which a campaign or 
expedition badge has been authorized; or
    (ii) The total length of time in active service in the Armed Forces 
if the employee is considered a preference eligible under 5 U.S.C. 2108 
and 5 U.S.C. 3501(a), as implemented in Sec.  351.504(b).
    (3) An employee may not receive dual service credit for purposes of 
this part for service performed on active duty in the Armed Forces that 
was performed during concurrent civilian employment as a Federal 
employee, as defined in 5 U.S.C. 2105(a).
    (c)(1) The agency is responsible for establishing the service 
computation date applicable to each employee competing for retention 
under this part. If applicable, the agency is also responsible for 
adjusting the service computation date to withhold retention service 
credit for non-creditable service.
    (2) The service computation date includes all actual creditable 
service under paragraph (a) and paragraph (b) of this section.
    (d) Service computation date. The service computation date is 
computed on the following basis:
    (1) The effective date of appointment as a Federal employee under 5 
U.S.C. 2105(a) when the employee has no previous creditable service 
under paragraph (a) or (b) of this section; or if applicable,
    (2) The date calculated by subtracting the employee's total 
previous creditable service under paragraph (a) or (b) of this section 
from the most recent effective date of appointment as a Federal 
employee under 5 U.S.C. 2105(a).


Sec.  351.506  Records.

    (a) The agency is responsible for maintaining correct personnel 
records that are used to determine the retention standing of its 
employees competing for retention under this part.
    (b) The agency must allow its retention registers and related 
records to be inspected by:
    (1) An employee of the agency who has received a specific reduction 
in force notice, and/or the employee's representative if the 
representative is acting on behalf of the individual employee; and
    (2) An authorized representative of OPM.
    (c) An employee who has received a specific notice of reduction in 
force under authority of subpart H of this part has the right to review 
any completed records used by the agency in a reduction in force action 
that was taken, or will be taken, against the employee, including:
    (1) The complete retention register with the released employee's 
name and other relevant retention information (including the names of 
all other employees listed on that register, and their individual 
service computation dates calculated under Sec.  351.505(d)), so that 
the employee may consider how the agency constructed the competitive 
level, and how the agency determined the relative retention standing of 
the competing employees; and
    (2) The complete retention registers for other positions that could 
affect the composition of the employee's competitive level, and/or the 
determination of the employee's assignment rights (e.g., registers to 
which the released employee may have potential assignment rights under 
Sec.  351.701(b) and (c)).
    (d) An employee who has not received a specific reduction in force 
notice has no right to review the agency's retention registers and 
related records.

[[Page 81847]]

    (e) The agency is responsible for ensuring that each employee's 
access to retention records is consistent with both the Freedom of 
Information Act (5 U.S.C. 552), and the Privacy Act (5 U.S.C. 552a).
    (f) The agency must preserve all registers and records relating to 
a reduction in force for at least 1 year after the date it issues a 
specific reduction in force notice.


Sec.  351.507  Effective date of retention standing.

    (a) The retention standing of each employee released from a 
competitive level in the order prescribed in Sec.  351.601 is 
determined as of the date the employee is so released.
    (b) The retention standing of each employee retained in a 
competitive level as an exception under Sec.  351.606(b), Sec.  
351.607, or Sec.  351.608, is determined as of the date the employee 
would have been released had the exception not been used. The retention 
standing of each employee retained under any of these provisions 
remains fixed until completion of the reduction in force action which 
resulted in the temporary retention.
    (c) When an agency discovers an error in the determination of an 
employee's retention standing, it shall correct the error and adjust 
any erroneous reduction-in-force action to accord with the employee's 
proper retention standing as of the effective date established by this 
section.
0
5. Revise Sec.  351.705(a)(2) to read as follows:


Sec.  351.705  Administrative assignment.

    (a) * * *
    (2) Permit an employee in tenure group III, same performance 
subgroup, veterans' preference subgroup AD to displace an employee in 
tenure group III, same performance subgroup, veterans' preference 
subgroup A or B, or permit an employee in tenure group III, same 
performance subgroup, veterans' preference subgroup A to displace an 
employee in tenure group III, same performance subgroup, veterans' 
preference subgroup B consistent with Sec.  351.701 (e.g., an employee 
in tenure group III, performance summary level ratings of record total 
of 12, veterans' preference subgroup AD to displace an employee tenure 
group III, performance summary level ratings of record total of 12, 
veterans' preference subgroup A or B).
* * * * *

PART 430--PERFORMANCE MANAGEMENT

Subpart B--Performance Appraisal for General Schedule, Prevailing 
Rate, and Certain Other Employees

0
6.Revise Sec.  430.208(d)(4) to read as follows:


Sec.  430.208  Rating Performance.

* * * * *
    (d) * * *
    (4) The designation of a summary level and its pattern shall be 
used to provide consistency in describing ratings of record and as a 
reference point for applying other related regulations, excluding 
enhanced performance values under Sec.  351.503(d) and (f) of this 
chapter.


Sec.  430.208  [Amended]

0
7. In Sec.  430.208, remove paragraph (d)(5).
[FR Doc. 2020-26347 Filed 12-16-20; 8:45 am]
BILLING CODE 6325-39-P