98-31284. Miscellaneous Changes in Compensation Regulations

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

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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. 63, No. 226 / Tuesday, November 24, 1998 /
Proposed Rules

[[Page 64880]]

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OFFICE OF PERSONNEL MANAGEMENT

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

RIN 3206-AH11

Miscellaneous Changes in Compensation Regulations

AGENCY: Office of Personnel Management.

ACTION: Proposed rule with request for comments.

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

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

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

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

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

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

[[Page 64881]]

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

[[Page 64882]]

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

[[Page 64883]]

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

[[Page 64884]]

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

[[Page 64885]]

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

Regulatory Flexibility Act

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

List of Subjects

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

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

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

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

PART 530--PAY RATES AND SYSTEMS (GENERAL)

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

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

Subpart B--Aggregate Limitation on Pay

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

Sec. 530.202 Definitions.

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

[[Page 64886]]

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

Sec. 530.203 Administration of aggregate limitation on pay.

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

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

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

Sec. 530.303 Establishing and adjusting special salary rate schedules.

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

PART 531--PAY UNDER THE GENERAL SCHEDULE

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

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

Subpart B--Determining Rate of Basic Pay

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

Sec. 531.203 General provisions.

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

Sec. 531.204 [Amended]

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

Subpart C--Special Pay Adjustments for Law Enforcement Officers

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

Sec. 531.301 Definitions.

[[Page 64887]]

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

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

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

Subpart D--Within-Grade Increases

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

Sec. 531.407 Equivalent increase determinations.

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

Subpart F--Locality-Based Comparability Payments

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

Sec. 531.602 Definitions.

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

Sec. 531.606 Administration of locality rates of pay.

PART 536--GRADE AND PAY RETENTION

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

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

Subpart A--Definitions; Coverage and Applicability

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

Sec. 536.102 Definitions.

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

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

Sec. 536.203 [Amended]

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

Sec. 536.205 Determination of rate of basic pay.

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

PART 550--PAY ADMINISTRATION (GENERAL)

Subpart A--Premium Pay

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

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

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

Sec. 550.101 Coverage and exemptions.

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

[[Page 64888]]

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

Sec. 550.102 Entitlement.

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

Sec. 550.103 Definitions.

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

Sec. 550.107 [Amended]

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

Sec. 550.111 Authorization of overtime pay.

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

Sec. 550.112 Computation of overtime work.

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

[[Page 64889]]

Sec. 550.121 Authorization of night pay differential.

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

Sec. 550.131 Authorization of pay for holiday work.

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

Sec. 550.153 [Amended]

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

Sec. 550.162 Payment provisions.

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

Sec. 550.171 Authorization of pay for Sunday work.

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

Subpart B--Advances in Pay

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

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

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

Sec. 550.202 Definitions.

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

Sec. 550.205 [Amended]

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

Subpart C--Allotments and Assignments From Federal Employees

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

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

Sec. 550.311 [Amended]

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

Sec. 550.312 General limitations.

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

Sec. 550.341 Scope.

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

Sec. 550.342 [Amended]

36. Section 550.342 is removed.

Subpart G--Severance Pay

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

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

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

Sec. 550.703 Definitions.

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

[[Page 64890]]

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

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

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

Sec. 550.707 Computation of severance pay fund.

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

Sec. 550.708 Creditable service.

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

[[Page 64891]]

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

Sec. 550.709 Accrual and payment of severance pay.

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

Sec. 550.710 Suspension of severance pay.

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

Sec. 550.711 Termination of severance pay entitlement.

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

Sec. 550.713 [Amended]

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

Subpart H--Back Pay

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

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

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

Sec. 550.803 Definitions.

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

Sec. 550.805 Back pay computations.

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

[[Page 64892]]

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

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

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

Sec. 550.806 Interest computations.

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

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

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

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

[[Page 64893]]

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

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

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

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

Sec. 550.902 Definitions.

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

Sec. 550.903 Establishment of hazard pay differentials.

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

Sec. 550.905 Payment of hazard pay differential.

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

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

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

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

Subpart D--Hours of Work

Sec. 551.401 [Amended]

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

Sec. 551.423 [Amended]

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

Sec. 551.432 Sleep time.

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

Subpart E--Overtime Pay Provisions

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

Sec. 551.501 Overtime pay.

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

Sec. 551.512 Overtime pay entitlement.

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

[[Page 64894]]

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

Sec. 551.541 [Amended]

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

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

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

Authority: 5 U.S.C. 1104(a)(2), 5753, 5754, and 5755; secs. 302
and 404 of the Federal Employees Pay Comparability Act of 1990 (Pub.
L. 101-509), 104 Stat. 1462 and 1466, respectively; E.O. 12748, 3
CFR, 1992 Comp., p. 316.

Subpart A--Recruitment Bonuses

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

Sec. 575.102 Delegation of authority.

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

Sec. 575.103 Definitions.

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

Subpart B--Relocation Bonuses

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

Sec. 575.202 Delegation of authority.

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

Sec. 575.203 Definitions.

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

Sec. 575.205 [Amended]

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

Subpart C--Retention Allowances

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

Sec. 575.302 Delegation of authority.

Sec. 575.307 Reduction or termination of retention allowances.

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

PART 591--ALLOWANCES AND DIFFERENTIALS

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

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

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

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

Sec. 591.201 Definitions.

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

PART 610--HOURS OF DUTY

Subpart A--Weekly and Daily Scheduling of Work

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

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

[[Page 64895]]

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

Sec. 610.102 Definitions.

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

Sec. 610.111 [Amended]

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

Subpart D--Flexible and Compressed Work Schedules

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

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

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

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

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

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

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Document Information

Published:: 11/24/1998
Department:: Personnel Management Office
Entry Type:: Proposed Rule
Action:: Proposed rule with request for comments.
Document Number:: 98-31284
Dates:: Comments must be received on or before January 25, 1999.
Pages:: 64880-64895 (16 pages)
RINs:: 3206-AH11: Miscellaneous Changes in Compensation Regulations
RIN Links:: https://www.federalregister.gov/regulations/3206-AH11/miscellaneous-changes-in-compensation-regulations
PDF File:: 98-31284.pdf
CFR: (101): 5 CFR 536.206(3); 5 CFR 551.401.''; 5 CFR 550.712); 5 CFR 550.101(a)(2); 5 CFR 550.708(a); More ...