Reduction in Force

Federal RegisterAug 3, 2026

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OFFICE OF PERSONNEL MANAGEMENT

5 CFR Parts 316, 330, 351, 353, 359, 362 and 430

[Docket ID: OPM-2025-0107]

RIN 3206-AO86

Reduction in Force

AGENCY:

Office of Personnel Management.

ACTION:

Final rule.

SUMMARY:

The Office of Personnel Management (OPM) is revising its reduction in force (RIF) regulations to make the RIF regulations more streamlined, efficient, and merit-based by prioritizing performance over tenure and length of service when determining which employees will be retained in a RIF and by modifying the types of employees who are excluded from RIF competition. OPM is also revising its regulations regarding the reemployment priority list (RPL), career transition assistance program (CTAP), the interagency career transition assistance program (ICTAP), and transfers of function.

DATES:

This rule is effective September 2, 2026. An agency that issued a RIF notice before the effective date of the rule must process the RIF under the regulations in effect when the RIF notice was issued. An agency that issues a RIF notice on or after the effective date must apply the RIF provisions as amended by this final rule.

FOR FURTHER INFORMATION CONTACT:

Mr. Aaron Gottesman at (202) 606-0960 or by email at

employ@opm.gov.

SUPPLEMENTARY INFORMATION:

I. Executive Summary

OPM is revising its regulations governing RIFs and making related changes to its regulations under statutory authority found at 5 U.S.C. 1103, 1104, 1302, 3304, 3320, 3330, 3502, 3503, 3596, 4305, and 4315, and 38 U.S.C. 4331. The rule makes the following changes:

Replaces the current tenure-group framework with a simplified competitive service and excepted service structure.

The rule consolidates current tenure groups I, II, and III into a “competitive service tenure group” and an “excepted service tenure group,” with two subgroups in each.

Excludes certain employees from RIF competition.

Employees serving initial probationary periods, trial periods, temporary or time-limited appointments of one year or less, and Schedule C and Schedule G employees are not “competing employees” for RIF purposes and can be retained, furloughed, separated, demoted, or reassigned without using RIF procedures.

Reorders retention standing to place performance first.

Agencies will maintain separate retention registers for competitive service and excepted service employees; within each group, employees will be ranked by performance credit, augmented by veterans' preference, with tenure subgroup and length of service used as tie-breakers.

Creates a new numerical performance credit methodology.

Agencies will calculate performance credit using the three most recent ratings of record from the relevant four-year period, assigning 7 points for Level 5, 5 points for Level 4, 3 points for Level 3, and 0 points for Level 1 or Level 2 ratings, with special rules for missing ratings and differing appraisal patterns.

Applies veterans' preference by adding points to performance credit.

Preference eligibles with a compensable service-connected disability of 30 percent or more receive 5 additional points; other preference eligibles receive 3 additional points; non-preference eligibles receive no additional points.

Adds definitions of key terms.

The rule defines “competing employee,” “competitive service tenure group,” “excepted service tenure group,” “reduction in force,” “initial probationary period,” “trial period,” “government obligation,” and “military spouse.”

Excludes emergency shutdown furloughs from the RIF furlough definition.

The rule excludes emergency shutdown furloughs caused by lapses in appropriations from the RIF furlough definition.

Removes erosion of duties reclassifications from actions requiring RIF procedures, while adding an anti-manipulation safeguard.

Agencies will no longer need to use RIF procedures for such reclassifications but could not undertake an erosion of duties reclassification after announcing a RIF if it would adversely affect an employee's retention standing.

Narrows and simplifies transfer-of-function requirements.

The rule narrows transfer-of-function requirements to transfers between agencies, rather than transfers within a single agency, and simplifies identification of employees tied to a transferring function by focusing on whether the employee performs the function at least half of the time.

10.

Clarifies how agencies define competitive areas.

Under this

ule, competitive areas may be based on official organizational units or combinations of units. Agencies may define certain geographic locations as separate competitive areas, while employees working at approved alternate locations remain assigned to their official organizational unit for competitive area purposes. In addition, an organizational unit for RIF purposes must be clearly distinguished from other organizational units with regard to its operation, work function, staff, and supervisory oversight.

11.

Clarifies and simplifies procedures when an entire competitive area is being abolished.

When abolishing all positions in a competitive area within 180 days, agencies may release employees without ranking them on a retention register or applying assignment rights, and with a simplified notice.

12.

Revises and simplifies assignment rights by replacing “bump and retreat” concepts with assignment rights to a position held by an employee with a lower-retention-standing.

A released employee in the competitive service will receive assignment rights to a qualifying position held by another employee with lower retention standing in the same tenure group, generally within three grades below the released employee's position, or five grades for certain 30-percent-or-more disabled veterans.

13.

Requires skills-based assessments for RIF assignment qualifications and RPL selection.

Agencies must assess whether employees or RPL candidates have the capacity, adaptability, and skills needed for the position through job-related assessments based on job analysis (unless the employee held the same or substantially similar position within five years of the RIF and achieved a rating of Level 3 (Fully Successful), or higher, or equivalent, for performing the duties of the position). This change requires agencies to use more rigorous assessments in accordance with the Chance to Compete Act of 2024 (Pub. L. 118-188) to determine whether the individual is qualified.

14.

Updates RPL, CTAP and ICTAP rules to conform to the new RIF framework.

The rule replaces references to prior tenure groups with the new competitive service tenure group, preserves preexisting eligibility through OPM-recognized qualifying appointments, updates selection methods to emphasize skills-based assessments, and adds exceptions allowing agencies to retain or finalize appointments of probationary employees.

15.

Updates Pathways and post-secondary student regulations to conform to the new RIF framework.

The rule modifies regulations in 5 CFR parts 316 and 362, pertaining to post-secondary students and Pathways Programs, to clarify how such appointments are treated for RIF purposes in conformance with the changes made by this rule.

16.

Revises RIF exceptions, notices, and records, and makes various conforming changes in other regulatory sections.

The rule clarifies continuing and temporary exceptions allowing agencies to retain employees who would otherwise be separated via a RIF, including for government obligations, parental leave, sick-leave-related circumstances, annual leave, and military spouses; fixes retention standing as of the date the employee receives a specific RIF notice (rather than the date the RIF is executed); updates required notice content; and makes conforming changes for post-secondary students, Pathways interns, compensable-injury restoration rights, Senior Executive Service (SES) furloughs, and performance management cross-references.

In addition, in this rule, OPM is modifying the proposed rule in the following ways:

Clarifying how retention and restoration rights under the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA) apply in a RIF.

In response to public comments, this rule provides additional clarity regarding how USERRA applies to RIFs. It requires that agencies apply USERRA retention protections and restoration rights as a mandatory exception to the order of release under a RIF. When an entire competitive area is abolished pursuant to § 351.605, an employee entitled to USERRA retention protections or restoration rights must be assigned to a different position at the agency. If an entire agency is abolished, OPM will provide placement assistance elsewhere in the Executive Branch.

Reinforcing Merit System Principles.

OPM is revising § 351.204 to clarify that agencies have a responsibility not only to follow and apply the regulations in Part 351 when conducting a RIF, but to ensure that the RIF regulations are administered and applied consistent with all applicable laws, including the merit system principles set forth in 5 U.S.C. 2301(b).

Providing additional competitive area safeguards.

OPM is requiring that, when a competitive area will be in effect less than 90 days prior to a specific RIF notice, or has been materially modified, an agency must submit a description of the competitive area and provide, for OPM review, a written explanation of the bona fide organizational basis for the competitive area.

Clarifying exclusions of employees from RIF competition in § 351.202(d).

The final rule clarifies that if the individuals among the categories of employees specified in § 351.202(d) as excluded from RIF competition are released for the reasons described in § 351.201(a)(2) (

i.e.,

lack of work, shortage of funds, insufficient personnel ceiling, reorganization, or the exercise of reemployment rights or restoration rights), they must receive a modified RIF notice, unless the release is the natural expiration of the temporary or time-limited appointment.

Making various clarifying and conforming changes and updating an outdated reference.

The final rule makes changes to the wording of § 351.605, dealing with abolishment of a competitive area, to further clarify the meaning of this provision; makes minor changes to the definition of “emergency shutdown furlough” in § 351.203 and § 359.802 to remove potentially confusing language; updates § 353.110 to replace outdated OPM contact information for placement assistance; adds an introductory phrase to § 351.802(a); and makes conforming changes to § 351.805, dealing with successive RIF notices, and § 362.306, dealing with Pathways recent graduates, to ensure consistency with other changes made in this rulemaking.

Not finalizing changes to RIF furlough procedures.

In response to input from public comments, OPM has elected not to finalize a further change to provide greater flexibility for agencies to conduct unpaid furloughs of more than 30 days.

II. Digest of Public Comments

During the 60-day comment period, OPM received 721 unique comments from current and former Federal employees, Federal agencies, unions, veterans' groups, professional organizations, think tanks, and other interested parties. One comment was submitted as 100 entries; following review, OPM determined that the submission in fact represented the views of one commenter.

Some commenters supported the rule, contending that Federal agencies should be able to retain their highest-performing employees when downsizing, and applauding OPM for seeking to simplify an unnecessarily complicated regulatory structure. Many other commenters objected to the proposal, arguing that it would conflict with the relevant statutory framework and weaken tenure, seniority, and veterans' preference. OPM appreciates the many thoughtful comments it received, and it has closely considered them. Responses to the most common issues raised by commenters are below; other section-specific comments are addressed in the section-by-section analysis.

A. The Rule Is Consistent With the Statutory RIF Framework

Several commenters (for example, 0660, 0672, 0532 and 0157) argued that the proposed rule is inconsistent with the statutory framework governing RIFs. OPM disagrees.

The relevant statute, 5 U.S.C. 3502, directs OPM to prescribe RIF regulations giving “due effect” to four factors: tenure of employment, military preference, length of service, and efficiency or performance ratings. The statute does not prescribe the current regulatory order of retention, does not require performance to be converted into additional years of service (as under the current 5 CFR part 351 regulations), and does not require OPM to retain the current adjusted-service-computation-date model. Nor does the statute require OPM to rank tenure, veterans' preference, length of service, and performance in the precise order reflected in current 5 CFR part 351. As Commenter 0673 pointed out, 5 U.S.C. 3502 “demands no hierarchy among the four retention factors in terms of how each is weighted.” Commenter 0673 contended that Congress's decision not to rank the factors supports the view that OPM may weigh them flexibly.

The final rule continues to give due effect to all statutory factors, but in a more transparent, administrable, and merit-based sequence. Employees will be placed on separate registers by tenure group. Performance credit will then be calculated from ratings of record. Veterans' preference will be applied by adding preference points. Tenure subgroup will resolve ties, and service computation date (SCD) will resolve remaining ties. OPM is not eliminating tenure, veterans' preference, or length of service as factors in RIF retention. Rather, OPM is changing the way those factors are integrated into retention standing, consistent with its statutory authority to prescribe RIF regulations and give “due effect” to all four statutory factors in 5 U.S.C. 3502(a).

The current regulatory formula is not mandated by statute. It is a regulatory choice, and OPM may revise that choice when it reasonably concludes that a different approach better serves the statutory purposes and the needs of the

civil service. In the context of an earlier rulemaking that also gave greater weight to performance in RIF determinations, the D.C. Circuit noted expressly that OPM's decision about how much weight to give to performance in RIF retention is “a policy decision, not a technical question for which data can provide a mathematically `correct' answer.”

Am. Fed'n of Gov't Emps., AFL-CIO

Off. of Pers. Mgmt.,

821 F.2d 761, 765 (D.C. Cir. 1987) (“

AFGE

OPM”

The various weights given by OPM to each of the four statutory factors have varied over time. For example, as Commenter 0687 noted, the initial RIF regulations issued by the Civil Service Commission in 1943 weighed performance much more heavily than OPM's current regulations. Seniority began to play a more prominent role as the regulations were revised through successive Civil Service Commission rulemakings. In the 1980s, OPM revised the RIF regulations to give more effect to performance ratings. However, performance and veterans' preference currently remain subordinate to tenure, with performance being applied as an additional credit to length of service.

OPM concludes, consistent with 5 U.S.C. 3502, that giving “due effect” to the four prescribed statutory factors is best achieved by giving greater practical weight to performance, while still preserving tenure, veterans' preference, and length of service as factors in determining the RIF register. The current rules are cumbersome, intricate, resource-intensive, and prone to error. The complexity of the current rules, and their failure to weight employee performance as the primary consideration in retaining an employee, justify replacing the performance-adjusted-SCD model with a more direct scoring model.

Commenter 0680 argued that the rule fails to give due effect to tenure subgroup and length of service because those factors will matter only in ties. OPM disagrees with the premise that a factor lacks “due effect” unless it alters every ranking in every retention register. The current rule itself does not cause every factor to affect every comparison. For example, performance and length of service do not allow a Group II disabled veteran to outrank a Group I non-veteran under current rules, because tenure controls first. The current rules therefore also contain factors that may be dispositive in some comparisons and irrelevant in others.

The rule gives due effect to all four factors as follows: tenure determines whether the employee is placed on the competitive-service or excepted-service register and, within those registers, tenure subgroup resolves ties; military preference is converted into additional retention points; performance is measured directly through ratings of record; and length of service is reflected through actual SCD as the final tie-breaker. The statute does not require equal weight, identical sequencing, or universal decisiveness for each factor in every case.

Commenters 0458 and 0680 contended that tenure is unlawfully diminished because current Groups I, II, and III would be replaced with a competitive-service tenure group and an excepted-service tenure group, each with two tenure subgroups. Commenter 0678 argued that non-performance factors, including tenure and length of service, would be rendered “functionally irrelevant” under the rule. OPM disagrees.

The rule continues to account for tenure and length of service. It first separates competitive service and excepted service employees into distinct tenure-group registers. It then uses tenure subgroup I and II to resolve ties within those registers when employees have the same performance credit, as augmented by veterans' preference, with length of service as a second tiebreaker. OPM reasonably concluded that reducing the current tenure structure is appropriate because the current system gives tenure a controlling effect that can require agencies to release higher-performing employees before lower-performing employees. This rule gives tenure effect as a tiebreaker when two employees have the same performance credit after augmenting for veterans' preference, but not the overriding effect that tenure currently enjoys, as illustrated below:

Rank

Name

Tenure group

Vets

preference

subgroup

Rating of record

summary

levels

Performance credit total

Tenure

subgroup

Service comp date

Rivera

5/5/4

2018-04-02

Singh

5/4/3

2013-08-15

Morgan

5/4/3

2020-01-27

Taylor

4/4/3

2023-07-10

Nguyen

4/4/4

2023-11-06

Owens

5/5/3

2016-05-12

In the example above, Rivera ranks first because Rivera has the highest total performance credit. Singh, Morgan, Taylor, and Nguyen all have the same total score of 18, so the tie is broken first by tenure subgroup: Singh and Morgan in subgroup I rank ahead of Taylor and Nguyen in subgroup II. Within each subgroup, SCD breaks the remaining tie: Singh ranks ahead of Morgan because Singh has the earlier SCD, and Taylor ranks ahead of Nguyen because Taylor has the earlier SCD. Owens has subgroup I status and more service than Taylor and Nguyen, but Owens ranks below them because Owens has a lower total performance credit.

If one position were abolished, Owens would be released first. If two positions were abolished, Owens and Nguyen would be released first.

The example below illustrates how length of service is given due effect as a second tiebreaker:

Rank

Name

Tenure group

Vets

preference

subgroup

Rating of record

summary

levels

Performance credit total

Tenure

subgroup

Service comp date

Bennett

5/5/5

2021-09-13

Alvarez

5/4/3

2014-02-24

Chen

5/5/3

2016-11-01

Diaz

5/4/3

2019-06-17

Evans

5/5/3

2023-08-21

Flores

5/5/4

2015-04-10

In the example above, Bennett ranks first because Bennett has the highest score: 21. Alvarez, Chen, Diaz, and Evans all have a total score of 20, so tenure subgroup breaks the first tie: Alvarez, Chen, and Diaz in subgroup I rank ahead of Evans in subgroup II. Alvarez, Chen, and Diaz are still tied because they have the same score and the same tenure subgroup, so SCD determines their order: Alvarez first, then Chen, then Diaz. Flores has more service than Evans and is in subgroup I, but Flores ranks below Evans because Flores has a lower total score. If one position were abolished, Flores would be released first. If two positions were abolished, Flores and Evans would be released first.

Commenter 0680's position would effectively freeze the current tenure-group hierarchy. Nothing in 5 U.S.C. 3502 or any other provision, statute or law requires that result. Congress required OPM to give due effect to tenure; it did not mandate current Groups I, II, and III as permanent statutory categories.

B. The Rule Preserves Veterans' Preference as a Substantial Factor in RIF Retention

Many commenters (for example, 0005, 0660, 0672, 0680, and 0157) criticized OPM's proposal because, in their view, the proposal undermines veterans' preference. OPM disagrees. The relevant statute, 5 U.S.C. 3502, requires that preference eligibles under 5 U.S.C. 2108 receive preference in RIF retention, with 30-percent-or-more disabled veterans receiving preference above other veterans. However, the statute does not require the current regulatory subgroup structure and does not forbid OPM from giving more weight to performance in RIF retention.

OPM gives veterans' preference due and substantial effect through an explicit point augmentation that changes an employee's relative standing in the retention register. The rule retains veterans' preference as a meaningful part of retention standing by adding 5 points for preference eligibles with a compensable service-connected disability of 30 percent or more and 3 points for other preference eligibles. Those points are added to performance credit before tenure subgroup and service computation date are considered. This level of veterans' preference meaningfully honors veterans' sacrifice and service

while appropriately balancing the government's interest in retaining top performers when an agency undergoes restructuring. This rule thus gives effect to Congress's direction that disabled veterans be retained “in preference to” other veterans, 5 U.S.C. 3502(b), and that veterans be retained “in preference to other competing employees.” 5 U.S.C. 3502(c).

This rule also allows consideration for the sacrifice endured by other categories of preference eligibles under 5 U.S.C. 2108(3), such as certain close family members of veterans.

Notably, the amount of veterans' preference provided under these provisions is much greater than the preference veterans receive in competitive examining for hiring using numerical rating and ranking under 5 U.S.C. 3309 and 5 CFR 337.101(a). Under these authorities, disabled veterans receive an additional 10 points on a 100-point scale, while veterans receive an extra 5 points on a 100-point scale. By contrast, this rule adds 5 points (for disabled veterans) or 3 points (for other preference eligibles) out of an ordinary maximum performance credit score of 21. Thus, on a scale-normalized basis, veterans' preference points in RIF retention are far greater than in typical competitive hiring. This is illustrated by the chart below showing how veterans' preference is applied in ordinary competitive examining with numerical rating and ranking:

Hiring preference category

Earned-rating scale

Preference points

Preference as percent of 100-point scale

5-point preference eligible

100

10-point preference eligible

100

+10

Compare this to how RIF retention will work under the revised RIF regulations:

RIF preference category

Performance-

credit scale

Preference percent points

Preference as percent of 21-point scale

Other preference eligible, Subgroup A

14.3

30%+ compensably disabled preference eligible, Subgroup AD

23.8

Thus, the RIF preference can offset a much larger share of the performance scale than hiring preference offsets of the examining scale. In hiring, a 10-point preference eligible with an earned score of 90 reaches an augmented score of 100. A 5-point preference eligible with an earned score of 95 reaches an augmented score of 100. That means hiring preference bridges the top 10% or 5% of the 100-point earned-rating scale.

Under this rule, a 30%+ disabled preference eligible with a raw performance-credit score of 16 reaches 21 after the +5 preference addition. Other preference eligibles with a raw performance-credit score of 18 reach 21 after the +3 preference addition. Because the maximum ordinary performance-credit score is 21, the RIF preference bridges the top 23.8% or 14.3% of the performance-credit scale. That makes the revised RIF veterans' preference materially stronger than hiring preference as a scoring weight.

Further, the practical effect of veterans' preference under this rule is far greater than preference in competitive hiring, because RIF performance-credit increments are relatively small. Under the new RIF formula, the difference between a Level 5 rating and a Level 4 rating is only 2

points, and the difference between a Level 4 rating and a Level 3 rating is also only 2 points. That means a +3 veterans' preference credit is larger than one ordinary one-level rating difference, and a +5 credit is larger than two ordinary one-level rating differences. For example:

Employee

Ratings

Raw

performance

credit

Veterans'

preference

Augmented RIF score

Non-preference employee

5/5/4

30%+ disabled preference eligible

4/4/4

In this example, the 30%+ disabled preference eligible with three Level 4 ratings ranks ahead of a non-preference employee with two Level 5 ratings and one Level 4 rating.

Similarly:

Employee

Ratings

Raw performance credit

Veterans' preference

Augmented RIF score

Non-preference employee

5/4/4

Other preference eligible

4/4/4

In that example, the non-disabled preference eligible with three Level 4 ratings ranks ahead of a non-preference employee with one Level 5 and two Level 4 ratings. These examples show that Commenter 0157's contention that veterans' preference would be “largely illusory” under these revised regulations is not accurate; instead, it provides substantial retention preference for both disabled veterans and non-disabled veterans.

OPM believes that veterans' preference under 5 U.S.C. 3502(b) and (c) may lawfully be operationalized through a points-based addition to performance credit. The statute provides that a preference eligible employee with a compensable service-connected disability of 30 percent or more whose performance has not been rated “unacceptable” is entitled to retention preference ahead of other veterans. 5 U.S.C. 3502(b). Other preference eligibles whose performance has not been rated “unacceptable” are entitled to retention “in preference to other competing employees.” 5 U.S.C. 3502(c).

Commenters 0660 and 0680 read 5 U.S.C. 3502(b) and (c) to mean that a preference eligible whose performance is not unacceptable must always be retained ahead of every non-preference eligible, regardless of comparative performance. OPM disagrees. The statute does not require that disabled veterans and other preference eligibles must always appear first on the retention register, only that they be retained “in preference to” other competing employees. These provisions create an entitlement to a meaningful retention preference, not a categorical right to be retained ahead of every non-veteran regardless of performance.

Further, sections 3502(b) and (c) must be read together with section 3502(a). Subsection (a) requires OPM to issue regulations that give “due effect” in a RIF not only to military preference, but also to tenure, length of service, and performance ratings, without establishing any categorical hierarchy concerning how the factors must be applied.

This lack of specific direction is notable, because Congress has elsewhere directed

specifically

that disabled veterans with a compensable service-connected disability of 10 percent or more “be entered on appropriate registers or list of eligibles” before other candidates for positions other than scientific and technical positions in GS-9 or higher. 5 U.S.C. 3313;

see also Legislative History of the Civil Service Reform Act of 1978

at p. 789 (“Certain other disabled veterans go to the top of the list of eligibles, except in competition for professional and scientific positions in grade and [sic] GS-9 and above”). This provision was codified at the same time as the modern RIF statute.

See

Pub. L. 89-554, Sept. 6, 1966. Congress's use of much more general language—“is entitled to be retained in preference to” other preference eligibles or competing employees, as applicable—in the RIF statute, when contrasted with the specific direction in 5 U.S.C. 3313 that disabled veterans appear before other candidates on hiring registers—indicates that Congress did not intend to create a rigid structure under which disabled veterans or veterans must always appear at the top of the retention register.

As a further example, USERRA states expressly that veterans who are required to be reemployed by their employers after a tour of duty in the uniformed services “shall not be discharged from such employment, except for cause” for periods of six months (for military service between 30 days and 180 days) or one year (for military service of more than 180 days). 38 U.S.C. 4316. This provision underscores that Congress speaks directly when it means to give absolute retention rights to certain groups of employees, as opposed to a preference.

Indeed, OPM's current RIF regulations subordinate veterans' preference to another factor, namely tenure. That is, employees are currently ranked according to tenure groups I, II, III, and veterans only enjoy preference ahead of other employees in their tenure group. Thus, a veteran in tenure group II is ranked below a non-veteran in tenure group I in retention standing.

This longstanding feature of OPM's RIF regulations reflects the fact that, in 5 U.S.C. 3502, Congress did not prescribe that veterans or disabled veterans must always appear first on the register. As the Director of the Civil Service Commission's Bureau of Recruitment and Examining testified in 1977 concerning RIF regulations:

In retention, veterans have the right to be retained over competing non-veterans in a reduction in force. Retention standing under the law is based on four factors: type of appointment, veterans preference, performance rating, and length of service. Although this gives veterans a significant advantage, it is not absolute. For example, in fiscal year, 1976, 1800 veterans were separated in Reduction in Force actions versus 3,000 nonveterans. An equal number of veterans and nonveterans (approximately 4,500) were also reduced in grade. (quoted in

Legislative History of the Civil Service Reform Act of 1978

at p. 789; emphasis added)

Under OPM's current RIF rules, a Group II preference eligible can be released—and ultimately separated—before a Group I non-veteran, even if the preference eligible has a stronger performance credit, as in the example below (which assumes that both employees are in the same competitive area and competitive level, one position is abolished, no mandatory or permissive exception applies, and there is no position for Employee B to bump or retreat to):

Rank

Employee

Veteran status

Tenure group

Veterans' preference subgroup

Adjusted SCD

Result

Employee A

Non-veteran

Group I

Subgroup B

2002-01-01

Retained.

Employee B

30%+ disabled veteran

Group II

Subgroup AD

1995-01-01

Released.

However, under this rule, the higher-performing preference eligible may be retained over the longer-tenured non-veteran, as shown below:

Rank

Employee

Tenure group

Vets pref group

Rating of record summary levels

Vets pref points

Total performance credit

Tenure subgroup

SCD

Result

Employee B

5/5/5

2024-01-01

Retained.

Employee A

4/5/4

2015-01-01

Released.

In this example, Employee B will fare better than Employee A because the revised regulations no longer rank all Group I employees ahead of all Group II employees. Instead, both will be placed in the competitive-service tenure group, and Employee A's former Group I status will function as tenure subgroup I, while Employee B's former Group II status will function as tenure subgroup II. Tenure subgroup would operate as a tie-breaker after performance credit, as augmented by veterans' preference.

In sum, this rule changes the method of operationalizing preference, but not the underlying principle. Current rules operationalize preference through categorical subgroups within tenure groups. This final rule operationalizes preference through numerical augmentation of performance credit. Both are regulatory methods for giving effect to military preference within a multi-factor RIF system.

Title 5 elsewhere confirms that veterans' preference can be implemented through points. As noted above, in competitive examining, 5 U.S.C. 3309 provides that preference eligibles who receive passing scores are entitled to additional points above their earned rating: 10 points for certain preference eligibles and 5 points for others. OPM's regulation implements that provision on a 100-point examining scale, adding 5 or 10 points to passing applicants' earned numerical ratings.

See

5 CFR 337.101(b).

The general veterans' preference policy in 5 U.S.C. 1302(b) and (c) states that preference shall be given in certification, appointment, reinstatement, reemployment, and retention. OPM has discretion under 5 U.S.C. 1302(b) to “prescribe and enforce regulations for the administration of” veterans' preference in the civil service. In the examining context, Congress and OPM implement that preference through a point credit, not an automatic selection entitlement. The same conceptual approach is available in RIF retention unless the RIF statute clearly forecloses it. Section 3502 does not. It requires due effect to military preference and specifically grants a retention preference, but it does not prescribe a fixed subgroup hierarchy or prohibit OPM from implementing that preference through a substantial numerical credit.

Commenter 0532's example, in which a non-veteran with three Outstanding ratings may rank above a disabled veteran with three Fully Successful ratings, does not show that veterans' preference has been erased. Instead, the example confirms that veterans' preference operates as a significant preference within a performance-centered RIF system rather than as an absolute rule that overrides all performance distinctions. OPM considers that approach consistent with the statutory direction to give due effect to all required factors.

Commenter 0680 similarly offers an example in which a veteran with ratings of 4/4/5 and 40 years of service receives 20 total points, while a non-veteran with ratings of 5/5/5 and 4 years of service receives 21 points. Commenter 0680 argues that the non-veteran's higher ranking shows that veterans' preference has been unlawfully denied.

OPM disagrees. The example shows only that, under the rule, a non-preference eligible with a materially stronger performance record may rank ahead of a preference eligible in some circumstances. That is a feature of a system designed to give meaningful effect to both veterans' preference and performance, not evidence that veterans' preference has been erased. The veteran in the commenters' example receives an additional 3 points solely by virtue of preference status. Without that preference, the veteran's performance score would be 17, not 20. The preference therefore materially improves the veteran's standing, but it does not operate as an absolute override of all higher performance. It operationalizes Congress's direction that veterans be retained “in preference to other competing employees.” 5 U.S.C. 3502(c).

C. Giving Greater Weight to Performance in RIF Retention Standing is Consistent With Merit-System Principles

Commenter 0673 strongly supported the proposed rule because, in its view, it “helps correct a longstanding imbalance between tenure and merit in policies governing federal employee retention during” a RIF. OPM agrees.

Commenter 0673 pointed out that the Merit System Principles demand that “[e]mployees should be retained on the basis of the adequacy of their performance, inadequate performance should be corrected, and employees should be separated who cannot or will not improve their performance to meet required standards.” 5 U.S.C. 2301(b)(6). The Merit System Principles further

direct that “selection and advancement should be determined solely on the basis of relative ability, knowledge, and skills.”

Id.

sec. 2301(b)(1). The Merit System Principles were codified by Congress into Federal law in the Civil Service Reform Act of 1978 (“CSRA”), reinforcing the centrality of merit to modern Federal workforce management.

In addition, Commenter 0673 pointed out that the CSRA requires agencies to create performance appraisal systems for their employees and to “use the results of performance appraisals as a basis for training, rewarding, reassigning, promoting, reducing in grade, retaining, and removing employees.” 5 U.S.C. 4302(a)(3). In so doing, Commenter 0673 argued that OPM's changes to give performance more weight in RIF retention more closely align OPM's RIF regulations with the Merit System Principles and the overall CSRA statutory scheme, which emphasizes the importance of performance ratings of record in determining retention and advancement in the Federal civil service.

Commenter 0091, the U.S. Office of Special Counsel, agreed that OPM's changes are more aligned with the Merit System Principles and the overall CSRA statutory scheme because the rules now make performance the primary retention factor.

OPM concurs with Commenters 0091 and 0673 that the Merit System Principles, particularly Merit System Principle 6 (“[e]mployees should be retained on the basis of the adequacy of their performance”) strongly support making performance ratings of record the main factor in RIF retention. In addition, allowing agencies to restructure efficiently helps fulfill Merit System Principle 5, that “[t]he Federal work force should be used efficiently and effectively.” 5 U.S.C. 2301(b)(5). OPM also agrees that the CSRA's requirement that agencies use “the results of performance appraisals as a basis for,”

inter alia,

reassigning, reducing in grade, retaining, and removing employees, 5 U.S.C. 4302(a)(3), provides significant support for making performance ratings of record the main factor in RIF retention.

OPM also agrees with Commenter 0685, who concluded that “elevating performance within the RIF framework is not only reasonable but also consistent with broader principles of effective workforce management.”

Commenters 0532, 0672, and 0678 alleged that OPM's RIF reforms are part of a larger plan to undermine the merit system and non-partisan civil service. But OPM believes that putting performance first in RIF retention enhances the merit system, as do the other changes in this final rule that allow more streamlined restructuring. To underscore that agencies must not use RIFs in a targeted manner against particular employees, OPM is adding a new provision to § 351.204 requiring that agencies must administer OPM's RIF regulations consistent with the merit system principles set forth in 5 U.S.C. 2301. OPM notes that existing law continues to prohibit discriminatory, retaliatory, politically motivated, or otherwise unlawful personnel actions.

D. Concerns About Subjectivity in Performance Ratings do not Justify Retaining the Current RIF Formula

Many commenters (0002, 0532, 0672, and 0683, for example) objected to the reliability of agency performance-management systems. Many commenters (for example, 0504, 0532, 0672, 0678 and 0617) also asserted that the current system properly relies on objective measures such as tenure and length of service, while the proposed rule gives too much weight to performance ratings. OPM disagrees.

Performance is not an extraneous or improper factor in RIF retention. Instead, Congress expressly included “efficiency or performance ratings” among the factors to which OPM must give due effect in RIF regulations. This rule changes how performance is credited, not whether it is considered. In addition, 5 U.S.C. 4302 provides that agencies must use the results of performance appraisals as a basis for, among other things, rewarding, reassigning, promoting, retaining, and removing employees. Performance appraisal systems also must establish performance standards that, to the maximum extent feasible, permit accurate evaluation of job performance based on objective criteria related to the job. 5 U.S.C. 4302(c). It is therefore consistent with the statutory framework to give performance a more central role in determining which employees are retained during a RIF.

That some agencies may need to improve rating practices does not make it unreasonable for OPM to give greater effect to the performance factor that Congress expressly included in 5 U.S.C. 3502. As the D.C. Circuit noted in rejecting similar arguments against an earlier OPM RIF rulemaking that gave more weight to performance, “[t]he federal government has long employed subjective performance evaluations to help make RIF decisions.”

AFGE

OPM,

821 F.2d at 765. As in that prior rulemaking, the commenters “allege potential problems associated with the general use of performance evaluations, and not with their increased importance” in the RIF context.

Id.

OPM believes that concerns over performance appraisal systems are better addressed through the rules governing performance appraisal systems and rating administration. Indeed, OPM revised its performance appraisal regulations at 5 CFR part 430, subpart B, to enable more meaningful distinctions in performance by allowing a standardized distribution of at least some rating levels, while continuing to require ratings of record to be based on actual job performance and objective criteria.

That rulemaking requires OPM to engage in biennial review of agency performance appraisal systems to ensure that they make meaningful distinctions in relative performance and comply with applicable laws, including the Merit System Principles codified in 5 U.S.C. 2301. It also reduces the number of permissible patterns of summary levels to reduce variation between agency performance appraisal systems. These reforms tackle head-on the issues identified by commenters, such as ratings inflation (identified by Commenters 0683 and 0678) and differing ratings systems across agencies (identified by Commenter 0683).

Performance Appraisal for General Schedule, Prevailing Rate, and Certain Other Employees, 91 FR 41521 (July 7, 2026). OPM proposed similar reforms to its performance appraisal regulations at 5 CFR part 430, subpart E. Managing Senior Professional Performance, 91 FR 8763 (Feb. 24, 2026).

OPM has taken concrete steps to ensure the accuracy and fairness of employee ratings systems. It has provided guidance to agencies that employee performance plans “should be written as clearly and specifically as possible to provide a firm benchmark towards which employees must aim their performance and permit the accurate evaluation of job performance on the basis of objective criteria.”

Further, it has emphasized that “[p]erformance elements and standards should be measurable, understandable, verifiable, and achievable,” and that performance standards “must include a clear result to achieve and a specific measure of success reflecting `fully successful' performance.”

While OPM believes that there is room for improvement in performance ratings, it disagrees with Commenter 0683's contention that performance ratings are

too subjective to be given additional weight in RIF retention.

OPM,

Performance Management for Federal Employees

(June 17, 2025),

https://www.opm.gov/chcoc/latest-memos/performance-management-for-federal-employees.pdf.

Id.

Commenter 0672 suggested that OPM's proposal to give greater weight to performance ratings should be viewed against a background of alleged efforts to target particular employees or functions. But using performance ratings in administering a RIF is not a license for arbitrary action or targeting employees based on favoritism. This rule does not change the basic premise that a RIF is a position-based workforce-restructuring action, not a disciplinary or conduct-based removal tool. The rule's definition of a “reduction in force” continues to tie a RIF action to reasons such as lack of work, shortage of funds, insufficient personnel ceiling, reorganization, or the exercise of reemployment or restoration rights. Allegations that an agency might misuse RIF authority do not justify retaining unnecessarily complex governmentwide procedures for all agencies.

Further, OPM has built in safeguards to prevent performance ratings from being manipulated to target individual employees in the RIF context. Ratings of record must be generated under applicable performance-management requirements. And RIF retention standing must be calculated under the regulatory formula. This rule makes the formula more transparent by converting ratings into stated numerical values and adding veterans' preference points, rather than burying performance within an adjusted SCD calculation.

This rule also contains several provisions that reduce the risk of manipulation and retaliation, thus addressing concerns expressed by several commenters (0003, 0677, 0064, for example). It uses the three most recent ratings of record during the four-year period before RIF notices, and it permits agencies to establish a cutoff date after which no new rating will be considered. It also freezes the effective date of RIF retention standing at the date that the RIF notice is issued, meaning that agencies cannot alter RIF retention standing by altering ratings of record after RIF notices are issued. For agencies using appraisal systems that do not meaningfully distinguish among higher levels of performance, the rule permits enhanced performance credit where the agency specifies and documents the basis for doing so in advance, makes the information available before running the RIF, and applies the criteria consistently to all competing employees.

Existing law also continues to prohibit discriminatory, retaliatory, politically motivated, or otherwise unlawful personnel actions. Performance evaluations and awards are personnel actions covered by the prohibited-personnel-practice framework, and the statute prohibits discrimination, political coercion, reprisal, unauthorized preferences, and actions violating veterans' preference requirements. In addition, in the final rule, OPM is adding an express provision in § 351.204 that agencies must administer OPM's RIF regulations consistent with the merit system principles set forth in 5 U.S.C. 2301, and to underscore that agencies must not use RIFs in a targeted manner against particular employees.

E. OPM Has Adequately Justified the Need for the Changes

Commenters 0672 and 0532 asserted that OPM has not justified the changes. OPM disagrees.

Federal agencies perform essential public functions: national defense, border and transportation security, veterans' care, public-health protection, disaster response, cybersecurity, financial oversight, benefits administration, scientific research, law enforcement, and stewardship of public lands and infrastructure. Many of these functions involve substantial public resources and critical services.

Agency needs and missions are constantly shifting in response to external events, changing priorities, and evolving public needs. OPM's Human Capital Framework recognizes that agencies must align workforce decisions with agency missions “even in the midst of constant change,” and that modern agencies face budget fluctuations, changing public expectations, unforeseen crises, and other complex and unpredictable external factors.

Agencies therefore must be agile and responsive in managing talent to accomplish their missions, and must continuously adapt to new requirements and expectations. Merit System Principle 5 demands that “[t]he Federal work force should be used efficiently and effectively,” 5 U.S.C. 2301(b)(5), which means that Federal agencies must be able to restructure efficiently in response to evolving mission needs and the public interest. OPM has repeatedly emphasized that agencies must be able to restructure efficiently to align their workforces with changing missions, budget realities, technology, and service-delivery needs.

OPM,

Human Capital Framework, https://www.opm.gov/policy-data-oversight/human-capital-framework/.

See

OPM,

Implementing Reshaping Options, https://www.opm.gov/policy-data-oversight/workforce-restructuring/reshaping/implementing-reshaping-options/;

OPM,

Executive Playbook for Workforce Reshaping, https://www.opm.gov/policy-data-oversight/workforce-restructuring/reshaping/accelerating-the-gears-of-transformation/executive-playbook-for-workforce-reshaping.pdf.

Commenter 0687 observed that “the government should not presume that it has the right talent today for the missions of tomorrow”—particularly as technology rapidly advances—and thus the government needs flexible personnel systems to accommodate this reality. OPM agrees with Commenter 0687's observation that, “if the goal of personnel policymaking is to ensure agencies are staffed with the right people, at the right time, for the missions they're given, it is sometimes necessary to reduce headcount in some areas while bolstering it in others.”

OPM believes that Federal agencies should be able to retain their highest-performing employees during a RIF. A RIF is a workforce-reshaping action that determines whether an agency will still have the people needed to carry out its statutory mission after the reduction is complete. Thus, OPM agrees with Commenter 0687, who supports the decision to elevate performance above other statutory retention factors, and explains that this change will help avoid some historical adverse selection effects (release of junior but higher-performing staff as opposed to those with longer tenure but who are less highly rated) historically associated with RIFs.

Indeed, when an agency is reducing positions because of budget, reorganization, lack of work, or changing priorities, the employees who remain often must absorb mission-critical work, maintain continuity, solve new operational problems, and implement new statutory, technological, or policy requirements with fewer resources. OPM believes that employees with a demonstrated record of high performance, as reflected in their rating of record, are more likely to possess the technical expertise, judgment, adaptability, and execution capacity needed to maintain essential operations after restructuring. They are also more likely to help agencies implement new priorities, train or support remaining staff, and sustain service quality when staffing levels decline.

Current RIF rules prioritize tenure and length of service over performance, which can result in high-performing employees being separated while lower-performing, more senior employees are retained. OPM believes that agencies need a more streamlined and merit-based RIF framework and that these regulatory changes will give

performance a more central role in determining retention standing.

Federal agencies have confirmed that they would like greater ability to retain their highest-performing employees during a RIF. Commenter 0720, a Federal agency, stated that it “would like to be able to retain its higher performing employees during RIF actions and this rule would enable it to do so.” Commenter 0720 noted that OPM's proposed performance-weighted RIF framework “offers a more accurate reflection of employee contributions and reduces the likelihood that restructuring disproportionately affects high performers.” Under the current rules, performance affects retention standing only after tenure group and veterans' preference subgroup are applied, and only by being translated into additional years of service. As Commenter 0720 observed: “Under the current RIF rules an employee's performance functions primarily as a modest supplement to their seniority.” OPM believes that this structure can cause higher-performing employees to be released ahead of lower-performing employees and that a more direct performance-credit system better promotes an efficient and effective civil service.

In OPM's view, current RIF rules are unnecessarily cumbersome, inflexible, intricate, time-consuming, and resource-intensive, and they can create unnecessary risk of implementation error. In the proposed rule, OPM cited a longtime Federal employee who described the current RIF rules and regulations as “complex and cumbersome,” creating a “time-consuming and demoralizing process” that leads to outcomes that are “haphazard and invariably negative.” Fred Mills,

Civil Disservice: Federal Employment Culture and the Challenge of Genuine Reform,

at p. 42 (iUniverse 2010). Commenter 0720 noted recent difficulties in implementing workforce reshaping that imposed unnecessary costs and burdens and contended that these difficulties “provide compelling evidence of the need for the streamlined, modernized, and more administratively feasible framework proposed by OPM.” Commenter 0720 states that OPM's reforms “will simplify execution, reduce administrative errors, and increase consistency across agency components.”

Commenter 0685 noted that “[a] central feature of the current [RIF] framework is its administrative complexity, which can significantly impede implementation.” Commenter 0685 observed that “[t]he procedural demands of the current system also contribute to significant delays in the execution of workforce restructuring decisions.” Further, Commenter 0685 noted that the current framework imposes substantial resource costs on agencies. Implementing a RIF under existing rules often requires human resources specialists, legal counsel, and management personnel to dedicate significant time and effort to navigating procedural requirements. Commenter 0091, a Federal agency, noted that the current rules contribute to an existing “critical weakness”; namely, the “federal government's historic lack of agility in dynamic environments.”

Indeed, the current rules require agencies to classify employees by tenure group, veterans' preference subgroup, service computation date, and performance-adjusted service credit, and then apply additional rules governing release, assignment rights, bumping, retreating, notices, and related placement obligations. They increase the likelihood of error, impede timely restructuring, and make it more difficult for agencies to retain top performing employees in a RIF. OPM believes that a clearer register based on performance points, veterans' preference points, tenure subgroup, and actual SCD will be easier for agencies to apply and easier for employees to understand.

Commenter 0680 argued that the current regulations do not prioritize length of service over performance because performance credit and length of service are added together. OPM disagrees.

Under the current RIF rules, performance and length of service are combined only after tenure group and veterans' preference subgroup have already been applied. In addition, performance is capped through the current additional-service-credit formula, while actual service may continue to accumulate over an employee's career. That means current RIF ordering is not a simple comparison of Employee A's performance against Employee B's performance. Agencies must first place employees into tenure groups, then veterans' preference subgroups, then calculate adjusted service dates. Performance affects ranking only inside the employee's already-determined tenure/veterans' category. The current formula therefore does not give performance the same effect as this final rule does.

The current system therefore does not allow performance to overcome many of the most important retention categories. A high-performing employee in a lower tenure group cannot outrank a lower-performing employee in a higher tenure group; and within the same tenure group, performance cannot overcome veterans' preference subgroup placement. Performance matters only within the employee's already-determined group and subgroup. That means current performance credit is not a true performance-first retention rule; it is a service-date adjustment applied at the end of a categorical ranking system.

Even within the same tenure group and veterans' preference subgroup, the current system gives performance a relatively narrow practical effect. The difference between three Level 5 ratings and three Level 3 ratings is only 8 years of adjusted service credit: 20 years versus 12 years. So a long-serving employee with three Fully Successful ratings can still outrank a much higher-performing employee with three Outstanding ratings if the long-serving employee has more than an 8-year service advantage. Current 5 CFR 351.504 requires the performance credits to be averaged, rounded, and expressed as additional years of service. Level 5 ratings add 20 years, Level 4 ratings add 16 years, and Level 3 ratings add 12 years to the employee's retention-service credit.

For example, assume two employees are in the same tenure group and veterans' preference subgroup:

Employee

Actual SCD

Ratings

Current performance credit

Adjusted SCD

Current rule

outcome

Employee A

1996

3/3/3

+12 years

1984

Ranks higher.

Employee B

2021

5/5/5

+20 years

2001

Ranks lower.

Employee B is clearly the higher performer, but Employee A is retained because Employee A's longer service overwhelms the 8-year performance differential. That illustrates the core problem: the current system does not really prioritize performance but merely gives performance a modest service-date boost.

The current method is also opaque. It requires agencies and employees to translate ratings into artificial years of service, average those values, round them, subtract them from the employee's actual SCD, and then rank employees by the resulting adjusted SCD. That makes performance harder to see and harder to explain because the final ranking appears as a date rather than as a performance score.

The approach in this final rule is more transparent. Performance remains performance, measured in points. Length of service remains length of service, measured by actual SCD. OPM reasonably concluded that this system is easier to administer and easier for employees to understand than a performance-adjusted SCD. These regulations still give length of service effect as a tie-breaker when employees have the same augmented performance credit and tenure subgroup.

The direct point system that OPM adopts in this rule better advances the goal of a merit-based workforce because it makes performance a central, visible, and auditable factor in determining retention standing. Under these regulations, agencies will assign direct point values to ratings (Level 5 = 7 points, Level 4 = 5 points, Level 3 = 3 points, and Level 1 or 2 = 0 points) and then sum the values for the employee's three most recent ratings. Employees will then be ranked within the same tenure group by performance credit as augmented by veterans' preference points; only if employees tie would the agency use tenure subgroup and then actual SCD.

Using the same example under the proposed rule:

Employee

Ratings

Proposed

performance credit

Result

Employee A

3/3/3

Ranks lower.

Employee B

5/5/5

Ranks higher.

That outcome better reflects merit. The employee with three Outstanding ratings outranks the employee with three Fully Successful ratings, regardless of the fact that the lower-performing employee has longer service. Length of service is still considered, but only as a tie-breaker after performance credit, veterans' preference, and tenure subgroup have been applied.

In short, the current system gives performance nominal credit but not meaningful priority. It buries performance inside seniority, lets long service overwhelm even large performance differences, and prevents performance from crossing tenure and veterans' preference subgroup boundaries. This final rule makes performance visible, direct, auditable, and outcome-affecting, while still preserving veterans' preference, tenure, and length of service in the retention framework.

F. The Final Rule Reasonably Balances Retention of Institutional Knowledge With Retention of High Performers

Commenter 0672 argued that the rule may harm recruitment, retention, and institutional knowledge. OPM acknowledges that length of service and institutional knowledge are important. However, OPM believes that the current system overvalues tenure at the expense of performance. This final rule does not eliminate length of service; it uses length of service as the final tie-breaker after performance credit, veterans' preference, and tenure subgroup are considered. OPM has reasonably determined that the public interest is better served by a RIF system that allows agencies to retain employees with the strongest demonstrated performance while still recognizing tenure, veterans' preference, and service.

Long service may reflect valuable experience. But performance ratings are a more direct measure of how well an employee is contributing to agency mission needs than seniority alone. As Commenter 0720, a Federal agency, noted: “Where more senior employees have gained experience that makes them more effective in advancing the agency's mission this greater effectiveness is typically reflected in their performance ratings.” Thus, Commenter 0720 stated that “it makes more sense for the RIF regulations to target retaining high performers directly, by prioritizing performing as a retention criterion, than indirectly through seniority,” as in its experience, “employee performance ratings are more strongly correlated with their performance and effectiveness than pure seniority.”

Commenter 0686, another Federal agency, noted that prioritizing performance over tenure and length of service “ensures top performance, regardless of tenure, continues to be prioritized for retention decisions. This revision acknowledges that tenure is not always a reflection of an employee's knowledge or capabilities” and “ensures that merit-based performance takes precedence over seniority, which is a more effective way to retain skilled and high-performing staff.”

OPM agrees with Commenters 0720 and 0686 that a RIF system that retains higher performers better serves the public and better supports agency operations after restructuring—and that high performance is more accurately measured through performance ratings, not pure seniority. OPM rejects Commenter 0653's assertion that performance appraisals cannot capture the value of institutional knowledge; instead, OPM believes that institutional knowledge that meaningfully advances agency missions will be appropriately reflected in performance ratings of record issued under 5 U.S.C. 4302.

OPM agrees that agencies must protect mission delivery during and after a RIF but disagrees that a tenure-first system is the best way to do so. A RIF leaves an agency with fewer employees, making it especially important that the employees retained are those with the strongest demonstrated ability to perform the agency's evolving mission-critical work.

OPM rejects Commenter 0532's characterization that the proposal assumes longer-serving employees are poor performers. The rule does not rest on any such assumption. It simply recognizes that length of service and performance are distinct statutory factors, and that a modern RIF system should give greater weight to demonstrated performance when agencies must make difficult retention decisions.

A merit-based RIF system should not operate solely based on how long employees have served or on the formal category into which they fall. It should also reflect demonstrated performance and the government's need to retain an effective workforce during restructuring. Congress made performance one of the statutory RIF factors, and this rule gives that factor more transparent and meaningful effect.

G. The Size of Recent Workforce Reductions Does Not Undermine the Basis for the Rule

Commenters 0532, 0320, and 0616 contended that, because the Government was able to reduce the workforce under existing rules, OPM cannot claim the current RIF rules are burdensome. OPM disagrees.

The ability to reduce workforce size through a combination of tools does not establish that the current RIF regulations are efficient, clear, or optimal. Workforce reductions may occur through attrition, retirements, voluntary separation incentives, voluntary early retirement authority, term expirations, resignations, or other tools that do not require full part 351 RIF procedures. The question in this rulemaking is not whether agencies can ever reduce headcount under the current framework, but whether the current part 351 RIF process is unnecessarily complex and whether the rules should better enable agencies to retain high performers when a RIF is necessary.

OPM reasonably concluded that the current RIF framework imposes unnecessary burdens and that the changes in this rule will provide agencies with a more efficient, merit-based process. The revised rules are intended to work alongside other downsizing tools, such as Voluntary Early Retirement Authority (VERA) and Voluntary Separation Incentive Payments (VSIP), and to reduce burden when agencies must invoke RIF procedures.

Further, as Commenter 0687 noted, voluntary downsizing tools like VERA and VSIP have clear downsides. For example, VERA is only available to those in a narrow eligibility group and can impose burdens on public pension funds. VSIP has a dollar cap that has not been updated since the mid-1990s and which limits its utility as a workforce reshaping tool. With respect to RIFs, as Commenter 0687 noted, the main downside is their complexity and the primacy of non-performance factors like tenure and seniority, meaning that such layoffs are often disproportionately targeted at newer employees that have the most marketable skills. OPM agrees and notes that its revision to the RIF rules addresses these very issues: the complexity of RIFs and the primacy of non-performance factors in determining retention.

Commenter 0685 observed that one of the more significant consequences of the over-complexity of RIF procedures is that it discourages agencies from utilizing RIF authority even when it may be the most appropriate tool. Commenter 0685 noted that reliance on voluntary separation programs or attrition can be effective in certain contexts, but they do not always provide the level of control or precision needed to align workforce structures with mission requirements. Commenter 0680 argued that the current regulations have been in place for decades and that this longevity shows they work. OPM disagrees. Longevity is not the same as effectiveness. The fact that agencies have struggled for many decades to conduct RIFs under the current rules does not mean the rules are efficient, easy to administer, or properly aligned with modern merit-based workforce needs. OPM reasonably concluded that current rules have not kept pace with the complexity of modern agency missions, organizational structures, funding arrangements, work schedules, hiring authorities, and skill requirements. OPM is not required to keep in place RIF regulations that one longtime former Federal employee described as “the ultimate bureaucratic poison pill” merely because they have largely been unchanged for decades. Fred Mills,

Civil Disservice: Federal Employment Culture and the Challenge of Genuine Reform,

at p. 42 (iUniverse 2010).

H. OPM Reasonably Relied on the Department of Defense's Experience as Relevant Support

Commenter 0532 argued that OPM's reliance on Department of Defense (“DOD”) RIF procedures is misplaced because DOD has a separate statutory framework, including congressional-notice provisions for certain RIFs. OPM disagrees.

DOD is by far the largest employer within the Federal government. It adopted a performance-first RIF system in January 2017. The change was prompted by language in Section 1101 of the National Defense Authorization Act for 2016 directing DOD to make RIF separation decisions “primarily on the basis of performance.” The language was codified at 10 U.S.C. 1597(e).

Congress later revised that language in the FY 2022 NDAA to remove the phrase “primarily on the basis of performance.” The current version of 10 U.S.C. 1597(e) instead requires DOD RIF procedures to “account for employee performance,” among other factors determined by the Secretary of Defense. But the revision did not prohibit a performance-first system. DOD has retained a performance-first RIF framework, even though its statutory authority currently only requires it to account for employee performance as one factor in RIF retention.

The existence of this DOD-specific statutory provision does not make DOD's experience irrelevant. OPM remains responsible for prescribing Government-wide RIF regulations under 5 U.S.C. 3502, and it may consider other federal personnel systems in determining whether a revised approach is workable and beneficial.

Indeed, DOD's current statutory RIF framework no longer requires that it place performance first in determining RIF retention—yet DOD continues to do so, reflecting its judgment that prioritizing performance supports mission readiness and retention of a high-performing workforce. DOD's continued use of performance-first after the FY 2022 NDAA undercuts the argument that performance-first RIF retention is legally permissible only when Congress uses the word “primarily.” The current DOD statute requires DOD to account for performance among other factors determined by the Secretary, and DOD has continued to implement a performance-first system under that broader language.

OPM is not importing DOD's statutory scheme wholesale. Rather, DOD's experience serves as powerful evidence that a performance-focused RIF system can support mission readiness and workforce effectiveness. DOD's experience demonstrates that a performance-first RIF system is both administrable and consistent with statutory direction to consider multiple retention factors. OPM reasonably relies on that experience in elevating performance in governmentwide RIF retention standing while continuing to give effect to tenure, veterans' preference, and length of service.

Further, OPM believes there is an independent interest in ensuring some level of consistency across government in RIF procedures, in that all agencies should place performance first in determining RIF retention.

I. This Final Rule Does Not Violate the APA Because the Proposed Rule Was Issued Alongside Other Rulemakings

Several commenters argued that OPM's RIF procedures proposal should have been issued in a single consolidated rulemaking with OPM's separate proposals concerning performance appraisal and RIF appeals. Commenter 0532, for example, argued that OPM's RIF proposal must be viewed together with OPM's separate proposals concerning RIF appeals and performance appraisal, and that OPM violated the APA by issuing the

proposals separately. OPM has considered these comments and disagrees that the Administrative Procedure Act (“APA”) required OPM to combine the rulemakings, delay this rulemaking, reopen the comment period, or provide a separate comment period devoted solely to the interaction among the three proposals.

The APA requires a notice of proposed rulemaking to identify the time, place, and nature of the proceeding, the legal authority for the proposal, and either the proposed rule's terms or substance or a description of the subjects and issues involved; after notice, the agency must provide interested persons an opportunity to submit written data, views, or arguments and must consider relevant matter presented. 5 U.S.C. 553(b)-(c). The RIF proposal satisfied those requirements. It identified the statutory authorities for the rulemaking, identified the affected CFR Parts, described the proposed changes to the RIF regulations and related provisions, provided proposed regulatory text, invited public comment on the RIF proposal, and set a comment deadline. In addition, OPM provided a section in the proposed rule titled “Other regulatory changes” that identified the concurrent rulemakings with respect to RIF appeals and performance appraisals as potentially intersecting with the current rulemakings.

The APA does not require an agency to combine every related regulatory initiative into a single notice-and-comment proceeding. Agencies routinely address related but distinct issues in separate rulemakings, particularly where the rules amend different regulatory provisions, address different legal questions, rest on different administrative records, and can operate independently. That is the case here. This rule concerns the substantive procedures for conducting RIFs, including RIF coverage, retention standing, release from competitive level, assignment rights, notices, RPL, CTAP, ICTAP, transfers of function, and related conforming provisions. The performance-appraisal proposal concerned the standards and procedures for rating employee performance under part 430. The RIF appeals proposal concerned the forum and procedures for administrative review of RIF actions. Those subjects are related, but they are not the same rulemaking.

The fact that OPM also proposed related personnel-management reforms around the same time does not make the RIF proposal procedurally defective. Agencies may address related subjects in separate rulemakings, particularly where, as here, the rulemakings address distinct regulatory parts and distinct issues: RIF retention procedures, performance appraisal administration, and RIF appeals. Indeed, OPM's proposals involving performance appraisal and RIF appeals have separate administrative records, involve separate regulatory provisions, tackle distinct issues and problems, and are based on distinct justifications.

Nor did OPM conceal the existence or potential relevance of the related rulemakings. The RIF proposed rule contained a section titled “Other Regulatory Changes,” which expressly identified other pending rulemakings that included proposed changes to part 351 or part 430 and explained that OPM might need to make conforming cross-reference changes depending on how those rulemakings were finalized. The RIF proposed rule specifically identified the RIF appeals rulemaking as addressing subpart I, which this rulemaking did not address, and separately identified the performance-appraisal rulemaking as potentially requiring conforming changes to part 351. That disclosure gave interested parties fair notice that OPM was proceeding through separate, related rulemakings and that commenters could address any asserted interactions they believed relevant. Indeed, numerous commenters did so, which confirms that the public had a meaningful opportunity to raise interaction-based objections.

Many commenters (0003, 0678, and 0606, for example) who objected to giving greater weight to performance ratings in RIF retention cited the separate OPM rulemaking allowing a standardized distribution of performance ratings as part of their objection. But OPM notes that the intent of its separate rulemaking is to increase meaningful differentiation in performance ratings and thus address concerns raised by commenters about compression of performance ratings. As Commenter 0720 stated, “If OPM finalizes its proposed rule to require performance ratings follow a standardized distribution, then performance ratings would even more effectively distinguish between employees' relative performance.”

The performance-appraisal proposal does not contradict this rule. This rule determines how ratings of record, once issued under applicable performance-management systems, are converted into RIF retention-standing credit. The separate performance appraisal proposal addresses how agencies evaluate employee performance in the first instance and how performance appraisal systems may be structured to better distinguish levels of performance. OPM explained in that separate proposal that recent rating distributions showed substantial concentration in the highest rating levels and very few ratings below Fully Successful, and that OPM sought to improve performance differentiation and accountability. Those objectives are consistent with, not contrary to, this rule's decision to give greater effect to ratings of record in RIF retention standing. A rule that makes performance matter more in RIF retention and a rule that seeks to improve the accuracy and differentiation of performance ratings address complementary parts of the same merit-based personnel system.

This rule also does not depend on the performance-appraisal rule. Regardless of the performance-appraisal rule, this rule still operates using ratings of record issued under then-applicable performance-management rules. This rule does not require a standardized distribution to function. It does not change the legal standards governing issuance of ratings of record, and it does not adjudicate whether any individual rating was properly assigned. It simply establishes the RIF consequence of ratings of record lawfully issued under applicable appraisal systems. For that reason, objections directed to the separate performance-appraisal proposal are properly addressed in that rulemaking, while this rulemaking addresses the RIF use of ratings once they exist. As the D.C. Circuit has noted, “[t]he federal government has long employed subjective performance evaluations to help make RIF decisions,” and broader concerns regarding agency administration of these performance appraisal systems do not undermine OPM's decision to give greater weight to this factor as opposed to non-merit factors like tenure and length of service.

See AFGE

OPM,

821 F.2d at 765.

Many commenters also expressed opposition to OPM's separate proposed rulemaking to transfer RIF appeals from the Merit Systems Protection Board to OPM's Office of Merit Systems Accountability and Compliance. The RIF appeals rule concerns where and how challenges to those RIF actions may be reviewed. The validity of the retention-standing formula, competitive-area rules, notice provisions, and related RIF procedures does not turn on whether RIF appeals are heard by MSPB, OPM, or another lawfully designated forum. OPM explained in the RIF appeals rule that MSPB review of RIF actions is regulatory rather than statutory, that OPM had delegated RIF appeal review to MSPB by regulation,

and that the rule addressed whether RIF appeals should instead be reviewed through OPM procedures. Regardless of which forum hears administrative appeals, agencies will still need a substantive rule governing how RIFs are conducted. This rule supplies that substantive framework.

OPM notes that the changes proposed in its RIF appeals rule are broadly consistent with its broader policy goal of streamlining the execution of RIFs across the Federal government while ensuring accuracy and legal and regulatory compliance in implementation. However, OPM also believes that the changes in the two rules are distinct and may reasonably be evaluated separately. This rule concerns retention standing and related RIF procedures, not the full scope of RIF appeal rights. The two proposals address different subjects and concerns, and OPM believes that the two proposals are sensibly treated in separate rulemakings. OPM notes that the changes in this rule do not depend on OPM's finalizing the RIF appeals rule (and vice versa), and it would have proposed and finalized the changes in this final rule regardless of whether OPM or the MSPB were adjudicating RIF appeals. Further, while OPM acknowledges concerns about transferring the administrative adjudication of RIF appeals to OPM, it does not believe that those concerns impact the reforms proposed in this rulemaking such that another comment period is required or helpful. Instead, those concerns are best dealt with in the context of the separate RIF appeals rulemaking.

OPM also disagrees with the assertion that it was required to provide a separate opportunity for comment on the combined effect of the three rules. The APA requires notice and comment on the rule being proposed, not a single omnibus proceeding for every related agency initiative. The RIF proposed rule provided the terms and substance of the RIF proposal and invited comment. The performance-appraisal and RIF appeals proposals likewise provided notice and opportunities for comment in their respective dockets. Interested parties who believed the proposals interacted were free to say so, and many did. The fact that commenters submitted detailed arguments about those interactions demonstrates that they were not deprived of a meaningful opportunity to participate.

Commenter 0683 urged OPM to delay finalization of this rule until the rulemakings on performance management and RIF appeals are completed, or else reopen the comment period for this rulemaking after the other two rulemakings are finalized. OPM disagrees. As noted, concerns about agency performance management systems are longstanding. OPM believes that improvements to those systems are properly addressed in separate rulemakings, and do not affect the decision as to whether to weight performance ahead of non-merit factors like tenure and length of service. While OPM agrees that current performance ratings systems should be improved to reduce ratings inflation, OPM disagrees with Commenter 0683 that the Federal government must wait until performance management systems have achieved an ideal state before it may increase the relative weight given performance vis-à-vis the other statutory retention factors. The fact that OPM is seeking to address two different problems in two different rulemakings—a RIF retention order that does not adequately value performance, and performance appraisal systems that too often yield inflated ratings—does not make its approach irrational or contradictory.

OPM also declines to delay this rule until the performance-appraisal and RIF-appeals rulemakings are complete. Delay would leave in place a RIF system that OPM has found overly complex, costly to administer, and insufficiently aligned with merit and mission needs. Supportive commenters (for example, 0685, 0719 and 0720) similarly emphasized that the current framework is resource-intensive, difficult to administer, and insufficiently responsive to modern workforce needs.

Finally, OPM does not adopt Commenter 0532's characterization of the three proposals as a coordinated effort to evade the APA or dismantle the civil service. OPM issued separate proposals because they amend different regulatory provisions and address different problems: how performance is appraised, how RIF actions are conducted, and how RIF appeals are reviewed. Separate rulemakings allowed the public to comment in a focused way on each proposal's legal authority, operational effects, and regulatory text. Consolidating all three into one proceeding would not have improved notice; it would have made the record less clear by combining distinct statutory and regulatory issues. The APA does not require that result.

III. Section-by-Section Analysis and Response to Comments

OPM responds to comments regarding specific sections of this rule below.

A. Part 351, Subpart B: Changes in Definitions, Coverage, Use of Regulations, and Agency Responsibilities

1. Erosion of Duties Reclassifications

OPM is modifying § 351.201(a)(2) to remove from the list of actions that require agencies to use RIF procedures reclassification of an employee's position due to erosion of duties if the action would take effect after an agency had formally announced a RIF in the employee's competitive area and the RIF would take effect within 180 days.

Commenter 0532 argued that OPM has not justified removing erosion-of-duties reclassifications from the actions requiring RIF procedures. OPM disagrees.

The proposed rule explains the history of the erosion-of-duties provision. In 1986, OPM generally removed erosion-of-duties reclassifications from the categories of actions subject to RIF procedures, but retained a narrow RIF-procedure requirement for reclassifications occurring after announcement of a RIF and within 180 days of the RIF effective date. OPM is now removing that narrow procedural trigger because it is unreasonable and impracticable to require agencies to build a retention register for such reclassifications, and OPM is not aware of any agency actually executing an erosion-of-duties reclassification action using RIF procedures since the 1986 revision.

Commenter 0037 argued that the “erosion of duties” changes could be used to constructively demote disfavored employees. OPM disagrees. Erosion of duties reclassifications have generally been excluded from RIF procedures since 1986, except in the narrow circumstance where the reclassification will take effect after an agency has formally announced a RIF in the employee's competitive area that will take effect within 180 days. This rule directly addresses concerns that erosion-of-duties reclassifications could be used to undermine the RIF retention order. Rather than requiring a full RIF process for erosion-of-duties reclassifications, this rule will bar agencies from undertaking an erosion-of-duties reclassification between the formal announcement and completion of a RIF if the action would adversely affect an employee's retention standing in the RIF. This is a more direct and administrable safeguard than the current rule. Notably, commenters 0037 and 0532 do not identify any concrete instance in which the existing erosion-of-duties RIF trigger has been necessary to protect employees, nor do

commenters 0037 or 0532 explain why the proposed anti-manipulation prohibition would be inadequate.

Instead, OPM agrees with Commenter 0720, a Federal agency, that the current erosion-of-duties provision is outdated, and OPM's approach in this rule “reduces unnecessary confusion and risk while preserving safeguards against improper alterations to retention outcomes.”

2. Employees Excluded From RIF Competition

This rule modifies the definition of the term

Competing employee

in § 351.203 to mean an employee in the competitive service tenure group or the excepted service tenure group. It also adds a definition of

Competitive service tenure group

to mean all employees within competitive service tenure subgroups I and II; that is, all employees in the competitive service who, as of the date of the RIF notice, are not serving an initial probationary period or a temporary appointment of 1 year or less under subpart D of 5 CFR part 316. This rule defines the

Excepted service tenure group

as all employees within excepted service tenure subgroups I and II; that is, all excepted service appointees serving in a career position (that is, not in Schedule C or G) who, as of the date of the RIF notice, are not serving a trial period or in a temporary or time-limited appointment of 1 year or less.

OPM is also adding definitions of

initial probationary period

and

trial period

to § 351.203. With respect to these provisions, OPM notes that a supervisory or managerial employee with career tenure who is only on probation with respect to those supervisory or managerial functions (

i.e.,

is entitled to be returned to a nonsupervisory or non-managerial position rather than being subject to removal under 5 CFR part 315, subpart I) would be included in the RIF in the supervisory or managerial position, and would not be subject to the exclusion from RIF procedures applicable to individuals serving an initial probationary period under 5 CFR 11.2. Further, an employee who is serving both an initial probationary period and a supervisory probationary period simultaneously is exempt from RIF procedures.

In the proposed rule, OPM proposed to add a § 351.202(d) that lists categories of employees excluded from RIF retention procedures, as they fall outside the definition of “competing employees” under 5 U.S.C. 3502(a). Under OPM's definition of “competing employees,” employees in the competitive service who are serving an initial probationary period would be excluded from RIF procedures, as would employees in the excepted service who are serving a trial period. In addition, competitive and excepted service employees who are serving temporary or time-limited appointments of 1 year or less would be excluded from RIF competition, as would Schedule C and Schedule G employees.

In this final rule, OPM is revising the wording of § 351.202(d). The revised wording narrows § 351.202(d) from a broad statement that certain employees are excluded from part 351 altogether to a more precise statement that they are not “competing employees” for RIF purposes. The final rule clarifies the consequences of this classification: an agency may retain such an employee while releasing a competing employee, and may furlough, separate, demote, or reassign such an employee for a reason described in § 351.201(a)(2) (lack of work, shortage of funds, insufficient personnel ceiling, reorganization, or the exercise of reemployment rights or restoration rights) without determining the employee's retention standing under subparts D and E, applying the order-of-release provisions in subpart F, or providing assignment rights under subpart G, provided the action is otherwise consistent with the terms of the employee's appointment and applicable law. Further, the revised text clarifies that these excluded employees are still subject to the notice provisions of § 351.801 where they are furloughed for more than 30 days, separated, demoted, or reassigned for the reasons described in § 351.201(a)(2), and the action is not merely the expiration of a temporary or time-limited appointment according to its terms. Under such circumstances the agency must provide the employee a modified written notice that includes the action to be taken, the reasons for the action, and its effective date; a link to 5 CFR part 351 and access to the agency's records pertinent to the reduction in force being taken; information on reemployment rights; and any appeal rights.

In addition, the final rule makes other wording changes to § 351.202(d). It revises the Schedule C and Schedule G language by referring to employees “serving under” those appointments and removes a proposed reference to term appointments under part 316 subpart C, making clear that the competitive-service temporary-appointment exclusion is limited to temporary appointments of 1 year or less under part 316 subpart D.

Commenter 0719, a Federal agency, supported the proposed changes excluding initial probationary period and trial period employees from RIF competition, noting that the current RIF rules demand that probationary and trial period employees be released first in a RIF. Commenter 0719 noted that this results in “the loss of high potential individuals essential for long term succession planning and mission continuity.” The agency noted that “[r]emoving these groups from RIF competition will allow [it] greater flexibility to retain high potential early career employees even in constrained budget conditions.” Commenter 0687 noted that termination of probationary employees as part of workforce reshaping activities can “weaken[] early career pipelines” and result in the loss of some of the agency's “best talent.” OPM agrees.

Commenter 0678 claimed that these exclusions would mean that the RIF regulations would no longer provide a comprehensive system to govern workforce reductions, while Commenter 0684 argued that this change would conflict with 5 U.S.C. 3501(b)'s broad coverage provision. OPM disagrees. OPM has long used its authority under 5 U.S.C. 3502 to define the otherwise-undefined statutory term “competing employees” subject to RIF competition to exclude certain groups of employees from RIF retention procedures. For example, in its regulations at 5 CFR 316.911, OPM recognizes that employees “whose initial appointment [is] for a period of 1 year or less are not assigned a tenure group and do not compete with other employees in a RIF.” In its regulations at 5 CFR 353.209, OPM stated that an employee performing duty with the uniformed services “is not a `competing employee' under” the RIF regulations. And OPM's regulations at 5 CFR 351.705 have long provided that an agency may, but is not required to, provide assignment rights to excepted service employees.

Related statutory provisions, and the broader history of probationary and trial periods in the Federal service, support OPM's determination that probationary and trial period employees should not be considered “competing employees” for purposes of 5 U.S.C. 3502. The phrase “competing employee” in 5 U.S.C. 3502 must be read against a long background tracing to the Pendleton Act of 1883 whereby Congress has consistently and deliberately maintained a distinction between employees whose appointments have become final and employees still serving a probationary or trial period. This distinction reflects a longstanding congressional and regulatory judgment that competitive selection alone is not the final test of fitness for Federal

service. Rather, an initial period of actual service has always served as the Government's final opportunity to determine whether an employee should receive the full procedural protections associated with continuing Federal employment.

The Pendleton Act (22 Stat. 403) required that the “there shall be a period of probation before any absolute appointment or employment aforesaid.” That statutory formulation indicates that Congress did not treat appointment and final appointment as the same event. It preserved a two-step process—competitive appointment first, with final appointment only after satisfactory completion of probation.

In its first annual report in 1884, the Civil Service Commission characterized the probationary period as lasting “six months before any absolute appointment can be made. At the end of this time the appointee goes out of the service unless then reappointed.”

Two years later, the Commission wrote in its third annual report that “doing the public work is precisely what the Merit System provides. If at its termination the appointing officer is not . . . willing to make an unconditional appointment, the probationer is . . . absolutely out of the service without any action on the part of the Government.”

First Annual Report of the United States Civil Service Commission to the President (1884), p. 29,

https://babel.hathitrust.org/cgi/pt?id=nnc1.cu09006737&seq=9.

Third Annual Report of the United States Civil Service Commission to the President (1886), p. 36,

https://babel.hathitrust.org/cgi/pt?id=njp.32101073361022&seq=40.

With the enactment of the Lloyd-La Follette Act of 1912, Congress created the first legislative codification of protection against removal for civil servants. The Act established “[t]hat no person in the classified civil service of the United States shall be removed therefrom except for such cause as will promote the efficiency of said service.”

The Act also imposed certain procedural requirements on removals including advance notice and an opportunity to respond in writing. However, Congress did not establish employment protections for probationary employees, and has maintained this exclusion through every subsequent recodification of the civil service laws.

The Lloyd-La Follette Act, 37 Stat. 555 (1912), as amended, 62 Stat. 354 (1948), 5 U.S.C.A. 652(a).

Congress legislated against this backdrop in using the term “competing employees” in the Veterans' Preference Act of 1944

—the direct legislative predecessor of 5 U.S.C. 3502. The Veterans' Preference Act of 1944 did not define “competing employees” to include all individuals serving in Federal positions. Instead, Section 12 of that Act provided that, in a reduction in personnel, “competing employees” would be released in accordance with Civil Service Commission regulations giving due effect to the statutory retention factors. Congress thus left the identification of the competitive group to regulation.

Public Law 78-359, 58 Stat. 387 (codified, as amended in part, at 5 U.S.C. 3309-3320).

This is particularly significant because, in Section 14, the Veterans' Preference Act expanded civil service protections to preference eligible Federal employees, but it explicitly excluded probationers, limiting its protections to a “permanent or indefinite preference eligible, who has completed a probationary or trial period.” Section 12 and section 14 were enacted in the same statute. If Congress believed probationary and trial-period employees necessarily had to be treated the same as final appointees for all retention-related purposes, it would be odd for Congress, two sections later, to condition major procedural protections on completion of probationary or trial service. The better reading is that the 1944 Act preserved a two-step civil-service model: an employee could enter Federal service and receive whatever preference rights the statute and regulations afforded, but the employee did not necessarily become part of the competitive retention workforce before completing the probationary or trial period.

The statutory text of 5 U.S.C. 3502(a) therefore does not compel OPM to include employees serving an initial probationary or trial period in RIF competition; rather, it permits OPM to determine by regulation that such employees are not “competing employees” for purposes of retention registers and order of release, while preserving any independently applicable statutory or regulatory protections.

Commenter 0684 points to

Fathauer

United States,

566 F.3d 1352 (Fed. Cir. 2009), but that case is inapposite. Here, OPM is not defining “employee” in 5 U.S.C. 3501(b) to nullify statutory coverage. Instead, it is defining the narrower, undefined term “competing employee” in section 3502(a), a term Congress expressly left for implementation through OPM regulations.

The current 5 U.S.C. 7511 codifies the longstanding exclusion of probationary and trial period employees from the adverse-action definition of “employee.” Under 5 U.S.C. 7511, an “employee” in the competitive service or excepted service generally means an individual who is not serving a probationary or trial period under an initial appointment or who has completed one year of current continuous service under other than a temporary appointment limited to one year or less.

Courts interpreting section 7511 and related CSRA provisions have repeatedly recognized that Congress intended agencies to retain substantial flexibility over probationary and trial-period employees. In

Department of Justice

FLRA,

the D.C. Circuit relied on the CSRA's structure and legislative history in concluding that probationary employees could not obtain through negotiated grievance procedures the kind of review Congress deliberately withheld from them in chapter 75.

709 F.2d 724, 730 (D.C. Cir. 1983). In

United States

Connolly,

the Federal Circuit likewise treated the exclusion of probationary employees from chapter 75 appeal rights as a deliberate congressional choice, not a statutory gap for courts or agencies to fill.

And in

National Treasury Employees Union

FLRA,

the D.C. Circuit reaffirmed that the CSRA's treatment of probationary employees reflects Congress's judgment that agencies must have latitude to assess and separate employees who have not yet completed the testing period for Federal service.

This history does not mean that section 7511 directly controls chapter 35 RIF procedures. It does, however, confirm that OPM's treatment of probationary, trial-period, and short-term temporary employees in this rule is consistent with the broader civil-service framework Congress enacted.

See Dep't of Justice

FLRA,

709 F.2d 724, 730 (D.C. Cir. 1983).

See U.S.

Connolly,

716 F.2d 882, 886 (Fed. Cir. 1983).

See Nat'l Treasury Emps. Union

FLRA,

848 F.2d 1273, 1275 (D.C. Cir. 1988).

In addition, 5 U.S.C. 3502 should be read consistent with 5 U.S.C. 3321, which contemplates a probationary period before an appointment becomes final and allows the President to issue rules and regulations effectuating probationary periods. Current Civil Service Rule 11, issued by the President under Executive Order (E.O.) 14284, already supplies a comprehensive framework for probationary and trial-period employment. It requires agencies to use probationary and trial periods to evaluate whether an employee's continuation in Federal service advances the public interest and expressly permits agencies to consider agency needs and interests, whether continued employment would advance agency or Government organizational goals, and whether continued

employment would advance the efficiency of the service.

Those considerations substantially overlap with the reasons agencies conduct RIFs, including lack of work, shortage of funds, and reorganization. Requiring agencies to apply full part 351 retention-register, order-of-release, and assignment-right procedures to employees whose appointments have not yet become final would duplicate Rule 11 and could produce inconsistent outcomes. For example, Rule 11 might support retaining a probationary employee because the employee has scarce skills, strong actual performance, and is needed for the agency's future mission. But a part 351 retention register would likely place the same employee low because the employee has little service time and may lack a rating of record. Thus, excluding probationary and trial period employees from the statutory definition of “competing employees” in 5 U.S.C. 3502(a) eliminates duplication and makes sense of the overall statutory scheme.

With respect to temporary employees, OPM's regulations at 5 CFR part 316, subpart D make clear that such appointments are only appropriate to meet short-term needs, including “for such reasons as abolishment, reorganization, or contracting of the function, anticipated reduction in funding, or completion of a specific project or peak workload.” 5 CFR 316.401(a)(2). Further, “[t]he supervisor of each position filled by temporary appointment must certify that the employment need is truly temporary and that the proposed appointment meets the regulatory time limits.”

Id.

316.401(b). Thus, these regulations indicate that temporary employees do not have a reasonable expectation of long-term employment and thus should not be considered “competing employees” for purposes of 5 U.S.C. 3502.

Further, in the final rule, OPM has clarified that the employees excluded from RIF competition are not entirely outside the regulatory scheme and must receive a notice in accordance with 5 U.S.C. 3502(d) when they are furloughed for more than 30 days, separated, demoted, or reassigned for reasons of lack of work, shortage of funds, insufficient personnel ceiling, reorganization, or the exercise of reemployment rights or restoration rights and the action is not merely the expiration of a temporary or time-limited appointment according to its terms. In addition, the regulations provide in § 351.605 that all positions in the competitive area, including those of employees excluded from RIF competition under § 351.202(d), must be abolished within 180 days for an agency to permissibly use the streamlined procedures of that subpart.

Commenter 0672 objected that probationary employees can be covered by the proposal's missing-rating rules and therefore should remain in RIF competition. OPM does not agree that the proposed modal-rating provision eliminates the need to exclude probationary and trial-period employees from RIF competition. The modal-rating rule is a limited proxy for competing employees who lack ratings in the applicable lookback period; it does not provide an individualized measure of performance for employees whose appointments have not yet been finalized and who often have not served long enough to receive a rating of record. In a performance-first RIF system, assigning retention standing to such employees based on the most common rating assigned to other employees would fail to measure the employee's own performance. OPM therefore reasonably treats probationary and trial-period employees outside the retention-register process and permits agencies to retain, finalize, or separate them under the rules applicable to their appointments, instead of the RIF rules.

Further, the modal-rating approach does not address the separate legal and personnel-management function of probationary and trial periods. Civil Service Rule 11 provides that agencies must use probationary and trial periods to evaluate an employee's fitness and whether continued employment advances the public interest; the agency may consider performance and conduct, agency needs, organizational goals, and efficiency of the service before finalizing the appointment. A modal RIF rating cannot replace that appointment-finalization judgment. It does not tell the agency whether the employee has demonstrated sufficient fitness, adaptability, conduct, judgment, or mission fit to warrant final appointment. It simply imputes a rating based on how other employees were rated. That is a poor fit for employees who are still in the government's final assessment period.

Commenters 0674 and 0680 argued that excluding temporary, probationary and trial period employees from RIF procedures could mean that certain employees still covered by RIF regulations would be released ahead of more junior employees, thus undermining tenure as a statutory retention factor. But 5 U.S.C. 3502 does not prescribe a strict “last in, first out” system. It does not define “competing employees,” does not require every employee in an agency to compete against every other employee, and does not require agencies to retain every more senior employee ahead of every less senior employee in all circumstances. Instead, it directed OPM to create regulations for the release of competing employees and to give “due effect” to several factors. “Due effect” does not mean controlling effect, equal effect, or absolute effect in every possible comparison. Nor does it mean that tenure must always override appointment status, performance, agency needs, or the threshold question whether an employee has a finalized appointment and belongs in RIF competition at all. OPM therefore may reasonably distinguish between employees who have completed the period necessary to obtain a finalized appointment and employees who remain in a temporary, probationary, or trial status.

Commenter 0115 expressed concern that excluding probationary and temporary employees from RIF procedures might hurt efforts to recruit early-career talent. However, probationary, trial period, and temporary employees are the most likely to be separated under the current RIF rules, which require agencies to place these employees at the bottom of the retention register due to their lack of tenure and seniority. The changes in this rulemaking make it much more likely that an agency will be able to retain these employees post-restructuring, as the decision to retain or separate these employees would no longer depend on their retention standing.

Commenter 0683 urged OPM to consider the impact of the exclusion of probationary employees from RIF procedures on leadership pipeline investments, and to recommend that agencies account for leadership development considerations in their workforce planning. OPM agrees that agencies should closely consider the impact on leadership pipelines in determining whether agencies should release probationary employees in a reduction in force. Indeed, OPM notes that the regulatory flexibility to exclude probationary employees from RIF procedures is essential to protecting investments that agencies have made in recruiting outstanding early career employees.

Commenters 0037 and 0678 argued that the changes remove procedural protections from these employees, while Commenters 0680 and 0672 referenced past instances where probationary employees were allegedly subject to termination without regard to their

performance. However, probationary, trial period and temporary employees will continue to be protected by the Merit System Principles codified in 5 U.S.C. 2301, which require that Federal employees receive fair and equitable treatment in personnel management without regard to political affiliation, and that they receive protection against arbitrary action or coercion for partisan political purposes. In addition, probationary and trial period employees will also continue to be subject to applicable procedures under Civil Service Rule 11, while probationary employees would be able to appeal their terminations to OPM under the proposed rule “Streamlining Probationary and Trial Period Appeals” (90 FR 61070). In addition, in the final rule, OPM is revising § 351.202(d) to note specifically that actions to retain, furlough, separate, demote or reassign employees excluded from RIF competition must be consistent with the terms of the employee's appointment and applicable law, and that such employees must be provided a modified RIF notice.

Thus, these changes will not subject probationary and trial period employees to arbitrary action, retaliation, or pretextual decision-making without redress. Instead, the changes make it more likely that these employees could be retained post-restructuring and recognize relevant differences between these categories of employees and others (namely, their limited performance history) while maintaining the procedural rights appropriate to their employment.

Commenter 0685 urged that OPM adopt a presumption of retention for probationary employees. OPM does not adopt this suggestion, as the subject of probationary employment is covered comprehensively in E.O. 14284 and Civil Service Rule 11 (5 CFR part 11), which provide clear processes for evaluating probationary employees. In addition, OPM notes that the Merit System Principles codified in 5 U.S.C. 2301 and OPM's parallel rulemaking regarding appeals for probationary employees provide further protections for this group of employees.

3. Emergency Shutdown Furloughs

OPM is modifying the definition of the term

furlough

in § 351.203 to exclude an emergency shutdown furlough caused by a lapse in congressional appropriations where the ultimate duration of the furlough is not known by the agency at the outset of the furlough. Commenters generally supported this change. Commenter 0687 noted that because “Congress has subsequently guaranteed backpay to federal employees in a law signed by President Trump in 2019” and thus “all employees are eventually compensated by law for time they would otherwise be at work” (unlike in the case of an unpaid RIF furlough), a RIF furlough notice should not be required in emergency shutdown furloughs. Commenter 0686, a Federal agency, commented that “[t]his change improves efficiency and ensures employees are not subject to repeated, unnecessary notices when a furlough is based on a lack of appropriations.” In the final rule, OPM is making a minor, non-substantive change to remove the limitation that the length of the furlough must be “dependent entirely on congressional action, rather than agency action” to avoid confusion (as agencies often call employees back to work during government shutdowns of unknown length that are caused by lapses in appropriations).

4. Transfers of Function

OPM is revising § 351.203 to modify the definition of

transfer of function

to adhere to the text of the applicable statute enacted by Congress to govern transfers of function, 5 U.S.C. 3503. That statute only applies to a situation “[w]hen a function is transferred from one

agency

to another . . . .” (emphasis added).

Commenters 0672 and 0674 argued that narrowing transfer-of-function procedures would weaken employee protections and allow agencies to evade RIF rules through internal reorganizations. OPM disagrees. This rule does not allow agencies to evade RIF requirements when an internal reorganization results in release from a competitive level for RIF reasons. Rather, it distinguishes between interagency transfers of function, where governmentwide transfer-of-function protections are statutorily required, and internal management realignments, where ordinary reassignment principles can address any resulting personnel actions and offer adequate protections for employees. Specifically, transfers and reassignments of employees in the competitive service within agencies will continue to be governed by 5 CFR part 335. Transfers and reassignments of employees within agencies in the excepted service will continue to be governed by 5 CFR parts 213 and 302. Further, 5 U.S.C. 2301 requires agencies to adhere to Merit System Principles in personnel management, including transfers and reassignments of employees, and in the final rule OPM is amending § 351.204 to provide specifically that its 5 CFR part 351 regulations must be administered and applied consistent with all applicable laws, including the Merit System Principles set forth in 5 U.S.C. 2301(b).

Commenter 0719, a Federal agency, stated that “[t]he updated definition for transfer of function will remove constraints that currently impede timely organizational adjustments,” noting that existing rules result in “administrative obstacles that slow [its] ability to adapt quickly to emerging needs.” Commenter 0719 noted that, “[u]nder existing regulations, even straightforward internal realignments can require extensive procedures, discouraging agencies from implementing changes that could reduce duplication, improve efficiency, or better align staff with mission priorities.” OPM agrees.

5. Other Definitions

In this rule, OPM is providing a formal definition of “reduction in force”: the release of a competing employee from his or her competitive level by furlough for more than 30 days, separation, or demotion, or reassignment requiring displacement, when the release is required because of lack of work; shortage of funds; insufficient personnel ceiling; reorganization; or the exercise of reemployment rights or restoration rights. OPM did not receive significant comments regarding its definition of “reduction in force,” as this definition closely tracks the longstanding coverage of OPM's RIF regulations, as reflected in 5 CFR 351.201(a)(2).

This rule modifies the current definitions in § 351.203 for

current rating of record

and

rating of record.

The revision to

current rating of record

updates the cross reference within part 351. The revision to

rating of record

clarifies that only the annual performance evaluation—and not a mid-year within-grade evaluation—can be used when computing the performance credit, which is used for determining standing on the retention register. OPM did not receive significant adverse comment regarding these changes.

OPM is also adding meanings for

agency, Government obligation

and

military spouse,

and to correct a typo in § 351.204 to change “reduction force” to “reduction in force.” OPM did not receive significant adverse comment regarding these proposed changes. As discussed further below, OPM is also adding a definition for

restoration protected employee.

Commenter 0687 suggested that OPM add an anti-manipulation provision to state clearly that agencies may not manipulate competitive areas to purposefully target employees in ways

that are inconsistent with Merit System Principles. OPM agrees, in part, and is adding a provision to § 351.204, setting forth the responsibilities of agencies, to clarify that agencies are not only responsible for following and applying the RIF regulations, but for ensuring that such regulations are administered and applied consistent with the Merit System Principles set forth in 5 U.S.C. 2301(b). OPM agrees with Commenter 0687 that “[t]his issue is the crux of what OPM has historically attempted to do with its regulations.”

B. Part 351, Subpart C: Changes in Transfer of Function Procedures

OPM is substituting the word “agency” for “competitive area” throughout subpart C and making other conforming changes, so as to align with the text of the statute Congress enacted governing transfers of functions (5 U.S.C. 3503), which applies to transfers of functions

between

agencies, not

within

agencies. Notably, the regulations governing transfers of function applicable to the SES apply only to “the transfer of the performance of a continuing function from one

agency

to one or more other

agencies.”

5 CFR 359.608 (emphasis added);

see also

5 U.S.C. 3595 (providing to the SES rights comparable to those provided by 5 U.S.C. 3503). Similarly, OPM's regulations in § 353.109 regarding restoration to duty from uniformed service or compensable injury only speak of transfers between agencies.

Commenter 0687 suggested that “OPM should require agencies to provide advance notice and the opportunity to follow one's function when functions are transferred between competitive areas within a single agency, even if the full transfer-of-function procedures of Subpart C are not required.” OPM disagrees. It believes that agencies will appropriately seek to retain talented and knowledgeable employees during intra-agency transfers of function even without a regulatory requirement to provide advance notice and the opportunity to transfer when a function is transferred within a single agency. OPM believes that this current regulatory requirement unduly inhibits agencies from carrying out internal restructurings and generates litigation without a corresponding benefit to the government.

OPM is revising § 351.302(b) to remove the unclear term “liquidation” and make the meaning of this section more plain by adapting language from OPM's

Workforce Reshaping Handbook

explaining its practical operation. OPM did not receive significant adverse comment regarding this provision and is therefore finalizing it. In addition, in this rule, OPM is revising § 351.302(b) to state that, except as permitted in paragraph (e) of this section, the losing agency must use the adverse action procedures found in 5 CFR part 752, if applicable, or other procedures required by law, regulation, or the terms of the employee's appointment, if it chooses to separate a competing employee who declines to transfer with his or her function. That is because some employees affected by transfer-of-function procedures may not be covered by part 752, and some separations may be governed by other procedures.

OPM is revising § 351.302(g) to clarify the procedures that agencies must follow in asking employees whether they wish to transfer with the function, when functions are transferred between agencies. OPM is also revising § 351.303 to simplify the process for identifying which employees are identified with the transferring function. OPM did not receive significant adverse comment regarding these provisions and is finalizing them.

C. Part 351, Subpart D: Changes in How Competitive Areas Are Defined and Approved

This rule revises § 351.402(b) to allow agencies to designate a competitive area as being any organizational unit, or combination of organizational units, on an agency's official organizational chart. Organizational charts must be available on the agency's public facing web page or otherwise appropriately documented by the agency. An organizational unit for these purposes must be designated/approved by the head of the agency, or designee, and the designation or approval cannot be redelegated to an official below the agency's headquarters level.

In addition, OPM is revising § 351.402(b) to require that an organizational unit for purposes of a RIF must be clearly distinguished from other organizational units with regard to its operation, work function, staff, and supervisory oversight. In addition, OPM is clarifying that field or regional offices officially established by the agency as discrete organizational units and shown on the agency's official organizational chart may be their own competitive area(s).

Commenter 0684 contended that the previous regulatory phrase “under separate administration” was not vague but had an accepted meaning as encompassing “the authority to take or direct personnel actions.” Commenter 0684 argued that the requirement in this rule that an organizational unit be differentiated from other organizational units with regard to its operation, work function, staff, and supervisory oversight is not equivalent to the previous phrase.

However, the previous OPM rulemaking and Federal Circuit case cited by Commenter 0684 state that “under separate administration” may be satisfied by as little as the authority to “assign duties,” a power that any front-line supervisor would possess. Further, OPM's current

Workforce Reshaping Operations Handbook

rejects Commenter 0684's definition of “under separate administration,” as OPM states that the definition “[r]ecognizes that individual organizational components may be under separate administration even though many agencies reserve final approval of certain personnel actions to a higher level in the agency.”

Ultimately, Commenter 0684 only underscores that the phrase “under separate administration” is confusing, and that OPM was correct in the proposed rule in stating that “the current terminology is not aligned with the operational realities of Federal agencies, where many components may be `under separate administration' in some important respects, but under centralized administration in other important respects.”

OPM,

Workforce Reshaping Operations Handbook,

at pp. 30-31,

https://www.opm.gov/policy-data-oversight/workforce-restructuring/reductions-in-force-rif/workforce_reshaping.pdf.

Commenter 0684 also contended that § 351.402(b) “no longer specifies that the definition is the

minimum

competitive area, and thus strips agencies of the flexibility to expand a small competitive area to allow for competition.” But that is not so: section 351.402(b) continues to state that a “competitive area may consist of any organizational unit or combination of units established on the agency's official organizational chart,” which allows agencies to expand a small competitive area to allow for greater competition.

Commenter 0687 expressed appreciation that “OPM is taking competitive area manipulation seriously and agree[d] with OPM's stated intent to preserve rules against it,” but presented several issues with OPM's new proposed definition. The commenter noted that Federal agencies are not required to maintain a single “official” organizational chart, and in practice agencies or their subparts may maintain several organizational charts for different purposes, which may not reflect how the agency manages itself on a day-to-day basis. Therefore, Commenter 0687 suggested that OPM

“pick a single, authoritative dataset for the purposes of competitive area definition: the hierarchy utilized during administration of the Federal Employee Viewpoint Survey [FEVS] in the most immediately prior year.”

OPM appreciates Commenter 0687's suggestion but does not adopt it. OPM believes that administration of FEVS should remain flexible and responsive to agency needs and not be tied to administration of RIFs. OPM also believes that agencies may reasonably adopt new organizational charts that deviate from the structure reflected in their previous year's administration of FEVS based on evolving mission needs, including changes in agency budgets, technology, and presidential and congressional priorities. Indeed, the RIF regulations have long applied where release is required due to,

inter alia,

“reorganization,”

see

5 CFR 351.201(a)(2), defined as “the planned elimination, addition, or redistribution of functions or duties in an organization,”

see

5 CFR 351.203. OPM believes that the limitations in § 351.402(c) against recognizing new competitive areas that will be in effect for less than 90 days before issuance of RIF notices, as augmented by changes described below, provide sufficient guardrails against competitive area manipulation.

Commenter 0683 also expressed concern about the “potential for gerrymandering competitive areas to target particular employees or groups of employees.” It suggested that “OPM require agencies to establish competitive area designations through a transparent process, with documentation available for review, and to prohibit agencies from establishing or modifying competitive areas after a decision to conduct a RIF has been made.”

OPM agrees with this suggestion, in part. In this final rule, OPM is adding an additional safeguard against competitive area manipulation: when agencies are seeking approval from OPM for a new competitive area that has existed for less than 90 days prior to issuing specific RIF notices, the agency shall submit a description of the competitive area, along with a written statement explaining the bona fide organizational basis for the competitive area, to OPM for approval in advance of the RIF. Such approval is also required where an agency materially modifies a competitive area. In addition, descriptions of all competitive areas, and accompanying explanations submitted to OPM, must be made readily available for review consistent with national security considerations and applicable laws including the Freedom of Information Act (5 U.S.C. 552), and the Privacy Act (5 U.S.C. 552a). In addition, as noted above, OPM is requiring expressly that the RIF regulations be administered consistent with the merit system principles set forth in 5 U.S.C. 2301. OPM believes that these suggestions adequately address the concerns expressed by Commenters 0683 and 0687 regarding competitive area manipulation. These further advance Commenter 0685's call for OPM to “strengthen requirements related to transparency and documentation” in the final rule.

D. Part 351, Subpart E: New Method of Deriving Retention Standing, Revised Order of Retention Examples, and Additional Examples

OPM is finalizing its changes to 5 CFR part 351, subpart E “Retention Standing,” including revised and reorganized content in §§ 351.501 through 351.504. In addition, OPM is renumbering current § 351.505

Records

and § 351.506

Effective date of retention standing

to § 351.506

Records

and § 351.507

Effective date of retention standing,

respectively.

As noted above, under this rule (and particularly § 351.501

Order of retention

), when determining the order in which employees are placed on a RIF retention register, agencies will now do so based on whether the employee is in the competitive service tenure group or excepted service tenure group. Within each group, employees will be ranked based on performance, as augmented by additional points for veterans' preference. Where employees are tied, the employee in the higher tenure subgroup (with subgroup I ranked ahead of subgroup II) will be ranked ahead. When employees are still tied, the employee with the longer service will be ranked ahead.

In § 351.502

Tenure of employment,

OPM is redefining the tenure groups for both the competitive and excepted services. The competitive service tenure group will consist of all competitive service employees (in accordance with the provisions of § 315.201) who are not (as of the date of the RIF notice) serving an initial probationary period or a temporary or time-limited appointment of 1 year or less under 5 CFR part 316. The excepted service tenure group will consist of excepted service employees occupying a career position (as defined in § 213.101) who are not serving a trial period and are not serving in a temporary or time-limited appointment of 1 year or less.

In addition, competitive service tenure subgroup I will include each career employee in the competitive service who, as of the date the employee receives a specific reduction in force notice, is not serving an initial probationary period. This definition is substantially the same as the current competitive service tenure group I.

Competitive service tenure subgroup II will consist of every other competitive service employee who, as of the date of the RIF notice, is not serving an initial probationary period or a temporary or term appointment of 1 year or less. For example, an employee serving under a career-conditional competitive service appointment who has completed a probationary period but not yet completed the service requirements for career tenure (under 5 CFR 315.201) would be included in subgroup II.

Excepted service tenure subgroup I will include all employees occupying a career position (that is to say, not in Schedule C or G) in the excepted service who, as of the date the employee receives a specific reduction in force notice, are not serving a trial period and whose appointment carries no restriction or condition such as conditional, indefinite, or specific time limit. This definition is substantially the same as current excepted service tenure group I.

Excepted service tenure subgroup II will consist of all other career employees in the excepted service (that is to say, not in Schedule C or G) who are not serving a trial period or a temporary or time-limited appointment of 1 year or less. Examples of employees in excepted service tenure subgroup II include employees occupying career positions in the excepted service who have completed any required trial period and who are serving under conditional, indefinite, or specific time-limited appointments of more than 1 year.

OPM revises § 351.503

Performance

to state that an agency will list employees on a RIF retention register (within the same tenure group) based on each employee's calculated performance credit. Generally, the three most recent ratings of record received during the 4-year period prior to the date of issuance of reduction in force notices may be considered; however, an agency may establish a cut-off date after which no new rating of record will be considered. Ratings of record will be assigned a numerical value in conjunction with the patterns of summary level in 5 CFR 430.208(e) as follows:

Summary level

Rating description

Performance

credit

Level 5

Outstanding or equivalent

Level 4

Exceeds Fully Successful or equivalent

Level 3

Fully Successful or equivalent

Level 2

Minimally Satisfactory or equivalent

Level 1

Unacceptable

Agencies will list competing employees on the retention register in descending order (within the same tenure group) based on each employee's performance credit, which is the sum of the values assigned for their three most recent ratings of record received during the 4-year period prior to the issuance of RIF notices. Employees would then receive additional performance credit based on veteran status: each preference eligible veteran with a compensable service-connected disability of 30 percent or more receives an additional 5 points added to their total performance credit, while every other preference eligible veteran would then receive an additional 3 points added to their total performance credit.

For example, the employees below are covered under a pattern C four-summary level rating performance appraisal system as described in 5 CFR 430.208(e). Their ratings and totals are:

Employee

Ratings

Performance credit

Total

Alice

5/4/4

7/5/5

Bill

4/3/3

5/3/3

Carol

4/4/3

5/5/3

Fred

3/4/5

3/5/7

These employees would be listed on the retention register in the following order: Alice, Fred, Carol, then Bill.

Section 351.503(b)

Ratings used

establishes which ratings of record may be used as the basis for calculating an employee's performance credit. For most employees, an employee's ratings of record are those recorded pursuant to subpart B of 5 CFR part 430.

Section 351.503(c)

Consideration of performance

includes language currently in § 351.504(b) but modifies this language by removing the reference to “additional retention service credit” (

i.e.,

credit for performance will no longer be added to an employee's length of service). Performance will now be the primary basis for rating employees within each tenure group. Performance will be measured based on performance credit,

i.e.,

the total of each employee's summary level ratings for the employee's three most recent ratings of record for performance consistent with § 351.503(a), which will then be augmented by additional credit for veterans' preference status as set forth in § 351.504.

New paragraph § 351.503(d)

Single rating pattern

describes how agencies list employees who have been covered under the same rating pattern of summary levels during the 4-year period prior to the date of issuance of the reduction in force notice or the agency-established cutoff date. Paragraph (d) provides that, for employees covered under a summary level appraisal system in which the highest summary level is a level “3” rating (

i.e.,

a pattern A (`pass/fail'), or pattern D system authorized under 430.208(d) prior to the final rule prescribed at 91 FR 41521), the agency may, in its sole and exclusive discretion, give additional credit for employees who have documented exceptional performance to give more weight to certain performance-related actions than others for purposes of listing some level “3” employees ahead of other employees on a retention register. Evidence of exceptional performance may include documentation showing an agency has awarded: an employee with the highest Agency or Departmental award (such as a Secretary's or Chairman's award), a special act or service award, a quality step increase (QSI), or other performance awards or bonuses (

e.g.,

a “time-off” award for demonstrated performance above expectations).

Commenter 0683 expressed concern that this could “create[] a system in which the same level of actual performance could yield materially different retention outcomes depending on which agency the employee works for and what award budget was available.” OPM disagrees. Instead, it believes this change will provide a method by which an agency may make meaningful distinctions among employees in a pattern A performance appraisal program (

i.e.,

the highest summary level rating is a “3” or satisfactory) who have documented performance above expectations in these appraisal systems. It thus directly addresses Commenter 0683's concern that existing performance appraisal systems do not always meaningfully differentiate relative performance, along with Commenter 0683's concerns regarding variations in rating patterns across agencies.

For example, the employees below are covered under a three-summary level pattern as described in 5 CFR 430.208(e). Their agency has an established policy of providing enhanced performance credit by assigning 7 points for agency awards, 5 points for organizational awards, and 4 points for various performance awards. (An agency award is designated by “A”; a component-level award is designated by “O”; and a performance award or QSI is designated by “P”.) Their ratings and totals are:

Employee

Ratings

Performance credit

Award(s)

Assigned

values for awards

Total

Carol

3/3/3

O/O/A

5/5/7

3+3+3+5+5+7=26

Alice

3/3/3

A/-/P

7/0/4

3+3+3+7+4=20

Bill

2/3/3

0/3/3

-/-/P

0/0/4

0+3+3+0+0+4=10

Fred

3/3/3

-/-/-

0/0/0

3+3+3+0+0+0=9

New paragraph § 351.503(e)

Multiple rating patterns

addresses situations in which an agency has employees in a competitive area who have ratings of record under more than one pattern of summary levels, as described in 5 CFR 430.208(e). An agency may, in its sole and exclusive discretion, choose to provide enhanced performance credit to employees under disparate pattern summary levels. It may do so by transmuting or assigning an employee a higher summary level rating than what he or she received under a previous rating system when there is documented evidence of exceptional or higher-level performance consistent with the criteria in revised § 351.503(d).

In addition, for an employee who goes from an appraisal system which uses a higher pattern of summary levels to a lower one (

e.g.,

an employee who goes from a 5 summary level appraisal program to a two level system (

i.e.,

pass/fail system)), an agency may adopt policies which would allow employees with ratings above the highest summary level of the lower pattern system to be listed ahead of any employee on the retention register who does not have documented evidence of exceptional performance as described above. This method allows agencies to adopt policies that would prevent exceptional performers from being disadvantaged because they may be covered under two or more patterns of summary rating levels which may not make meaningful distinctions for performance among employees. Further, § 351.503 will require RIF performance ratings and assigned summary levels, including adjustments, to be uniformly and consistently applied within the competitive area and consistent with the agency's implementing issuances. Where an agency elects to assign additional performance credit, the agency must specify and document the criteria in advance and make them available for review.

Paragraph (f) of § 351.503 describes how an agency should factor performance ratings into the RIF process when an employee does not have three actual ratings of record during the 4-year period prior to the date of issuance of RIF notices, or the 4-year period prior to the agency-established cut-off date. It uses the modal rating concept for employees with no ratings during the 4-year period prior to the RIF, as currently found in § 351.504(c)(1), but modifies the current provisions by removing the reference to “additional retention service credit.”

Section 351.504

Veterans' preference

defines how veterans' preference will be applied in a RIF in both the competitive and excepted services. Each preference eligible employee with a compensable service-connected disability of 30 percent or more will receive an additional 5 points added to their performance credit, while every other preference eligible employee will receive an additional 3 points added to their performance credit. “Preference eligibles” is defined in 5 U.S.C. 2108(3) to include not only veterans, but also certain close family members of deceased or service-disabled veterans. Non-preference eligible employees do not receive any additional points added to their performance score.

Commenter 0660 asserted, without any additional information, that “the proposed rules are vague and unclear as to exactly how performance and veterans' issues are to be determined,” but does not indicate in what manner the proposed rule is vague or unclear, providing no supporting information whatsoever. Commenter 0660 contended that “[t]he proposed regulation will make it likely that the classifications will result in numerous appeals challenging the order and create chaos in their implementation as a result,” but failed to explain how the new regulation is more complicated than the current rules.

OPM disagrees with Commenter 0660's assertions. The current rules require agencies to categorize employees based on tenure group and veterans' preference subgroup. Employees are ranked first by tenure group I, II, III; then within each tenure group by veterans' preference subgroup AD, A, B; and only then by years of service as augmented by performance credit, starting with the earliest service date. Agencies then prepare an “adjusted SCD” calculation where extra years of service are added to an employee's actual service computation date. That means current RIF ordering is not a simple comparison of Employee A's performance against Employee B's performance. Agencies must first place employees into tenure groups, then veterans' preference subgroups, then calculate adjusted service dates. Performance affects ranking only inside the employee's already-determined tenure/veterans' preference category.

Agencies then must undergo multiple rounds of complicated bumping and retreating before arriving at a final retention register. Notably, “bump and retreat” can create a chain. If Employee A bumps Employee B, then Employee B is released from that competitive level, and the agency must determine whether Employee B has his or her own bump or retreat right. This process is highly burdensome and prone to errors.

This rule replaces the current rules with a streamlined system that eliminates the need for multiple, complicated rounds of bump and retreat, replacing it with a straightforward comparison of employee performance as augmented by veterans' preference, with ties broken by tenure and length of service. Further, OPM's new rules are simpler because they eliminate the most confusing features of the current rules: using performance to manufacture an adjusted service computation date and complicated bump-and-retreat procedures.

This rule addresses that problem by making performance credit more transparent and direct: Level 5 ratings receive 7 points, Level 4 ratings receive 5 points, Level 3 ratings receive 3 points, and Level 1 or 2 ratings receive no points. Veterans' preference is then added to that performance credit.

This rule's use of defined point values—Level 5 = 7 points, Level 4 = 5 points, Level 3 = 3 points, and Level 1 or 2 = 0 points—also makes the RIF calculation easier to understand and audit than an artificial performance-adjusted SCD. As Commenter 0687 noted, this reform simplifies the composition of retention registers.

In addition, this rule does not change the basic record-keeping requirements in current § 351.505 (renumbered to § 351.506) or the notice requirements in § 351.802, except to conform their provisions to other changes made in this rulemaking. Thus, OPM does not agree with Commenter 0678's assertion that the rule “reduces notice and transparency” regarding RIFs. Instead, OPM agrees with Commenter 0687, who noted that the revisions “simplify[ ] the composition of retention registers . . . such that retention standing is faster to compute, more transparent, and more equitably applied.”

In the proposed rule, OPM provided order of retention examples. Commenter 0680 points out correctly that some of the tables illustrating the operation of the proposed rule contained errors, as they incorrectly ranked employees in a higher tenure subgroup ahead of employees with a greater performance credit. OPM is therefore correcting these examples below. OPM is also publishing further examples of how retention standing will work under the new regulations to aid with administration of the new rules.

OPM disagrees with Commenter 0680 that these inadvertent errors show a lack of reasoned decision-making, that the new rules increase the risk of mistakes, or that OPM or agencies are unprepared to administer the new rules. Such a correction is consistent with ordinary rulemaking practice: agencies often revise, add, delete, or correct examples to conform them to the operative regulatory standard or to respond to comments.

The binding rule is the regulatory text, which provides that employees are ranked by performance credit as augmented by veterans' preference, with tenure subgroup and service computation date used as tie-breakers. The proposed rule text clearly stated that, within each tenure group, employees are ranked by performance credit as augmented by veterans' preference, and only when employees have the same augmented performance credit are they further ranked by tenure subgroup and then by length of service.

Indeed, OPM believes the new RIF formula is much simpler to understand and apply than the current formula, as it involves a simple calculation of performance credits adjusted for veterans' status, with tenure subgroup and length of service serving as tiebreakers. The current system, by contrast, involves a multi-layered system where employees were sorted into three tenure groups, with veterans' status subgroups within each tenure group, with employees then further sorted by service computation date that is adjusted based on performance. That process required agencies to translate performance into years, average the credited years, round where necessary, and then move the employee's service date backward to create an “adjusted SCD.” That made the register harder to understand because the service computation date was not the employee's actual service date, but an artificial service date reflecting both service and performance. Further, agencies were then required to engage in complicated “bump and retreat” exercises between employees in different tenure groups, often encompassing multiple rounds of RIF competition governed by detailed rules that were understood by very few beyond a very small group of Federal HR specialists and consultants.

Under this rule, by contrast, performance remains a score that corresponds to direct numerical values, augmented by consistent numerical values for veterans' preference. Thus, the new rules will likely result in far fewer errors than the old rules. They are also easier and more streamlined, making them easier to apply and understand by both HR offices and Federal employees. Employees who inspect the register will be much more likely to understand how their retention standing was calculated and be able to spot errors.

Several commenters agree that the new regulations are simpler than the current ones. Commenter 0687 noted that the new rule simplifies the composition of retention registers and the application of assignment rights, versus the current complicated “bump and retreat” process. Commenter 0685 noted that the benefits of OPM's simplification of RIF rules are “substantial and should not be understated,” and that “the proposal's effort to simplify the RIF framework represents a meaningful and constructive reform.”

The following examples illustrate and contrast the impact of performance ratings of record and their summary levels on a retention register under the current rules and this final rule. Consider the following employees in a General Schedule (GS) 201-12 position:

Name

Tenure group

Vets pref

subgroup

Rating of

record

summary

levels

Service comp

date

3/3/3

01/01/1998

Barb

5/4/5

01/01/2020

Carl

3/4/4

01/01/2022

Dave

4/5/4

01/01/1990

Emma

3/4/4

01/01/2024

Example 1: Current Rules

Compare Internal Revenue Service,

Qualified Business Income Deduction,

84 FR 2952 (2019) with Internal Revenue Service,

Qualified Business Income Deduction; Correction,

84 FR 15954 (2019). Also compare EEOC,

Implementation of the Pregnant Workers Fairness Act,

89 FR 29096 (2024) with final interpretive guidance.

Under the current rules, a retention register for these employees would look like this, based on retention factors considered in this order: Tenure | Vets Pref | Adjusted Service Computation Date (ASCD)—

i.e.,

the service computation date (SCD) adjusted for additional service credit (ASC) based on ratings of record summary levels:

ER03AU26.051

Example 2: Final Rule

Under this final rule, the retention register for these same competing employees will look like this, based on considering retention factors in this order: Tenure, Performance based on the total of the employee's summary levels augmented by Veterans' Preference, Tenure Subgroup, and Service Computation Dates:

Name

Tenure group

Veterans' preference subgroup

Rating of record

summary

levels

Performance credit totals

Tenure

subgroup

Service

computation date

Barb:

5/4/5

7+5+7+3 = 22

01/01/2020

Dave:

4/5/4

5+7+5+3 = 20

01/01/1990

Carl:

3/4/4

3+5+5+3 = 16

01/01/2022

Emma:

3/4/4

3+5+5+3 = 16

01/01/2024

3/3/3

3+3+3+ 3 = 12

01/01/1998

Example 3: Final Rule

The following illustrates how veterans' preference and length of service apply under this final rule. Assume the same group of employees but with one difference: Emma receives additional performance credit based on status as a veteran with a compensable service-connected disability, as follows:

Name

Tenure group

Vets pref subgroup

Rating of record

summary

levels

Performance credit totals

Tenure

subgroup

Service comp date

Barb

5/4/5

01/01/2020

Dave

4/5/4

01/01/1990

Emma

3/4/4

01/01/2024

Carl

3/4/4

01/01/2022

3/3/3

01/01/1998

Under this final rule, the retention register for these employees would look like this, based on considering retention factors in this order: Tenure | Performance based on the total of the employee's summary levels | Vets Pref | Service Computation Date. In this example Emma is listed ahead of Carl because she receives additional performance credit as a veteran with a compensable service-connected disability, despite being in the same tenure subgroup and having less service credit than Carl.

Name

Tenure group

Vets preference subgroup

Rating of record

summary

levels

Performance credit totals

Tenure

subgroup

Service comp date

Barb:

5/4/5

01/01/2020

Dave:

4/5/4

01/01/1990

Emma:

3/4/4

01/01/2024

Carl:

3/4/4

01/01/2010

Al:

3/3/3

01/01/1998

To aid in implementation, OPM is providing additional examples of how the new rules will work below.

Example 4: Final Rule

Name

Tenure group

Vets

preference

subgroup

Rating of record

summary

levels

Performance credit totals

Tenure

subgroup

Service comp date

Harper

5/5/5

21 + 0 = 21

2024-06-01

Imani

5/4/4

17 + 0 = 17

2016-02-15

Jorge

4/3/3

11 + 5 = 16

2002-11-01

Kai

3/3/3

9 + 3 = 12

2008-07-20

Lena

3/3/3

9 + 0 = 9

1996-04-05

Under the final rule, Harper ranks first even though Harper is in tenure subgroup II and has the latest service computation date, because Harper has the highest augmented performance-credit total. Lena has the earliest service computation date, but the lowest performance credit. If two employees must be released from this competitive level, the agency would release Lena first, then Kai.

Example 4: Current Rules

Name

Current tenure group

Vets

preference subgroup

Current

performance

service credit

Service comp date

Adjusted

service

comp date

Current-rule reason

Kai

12 years

2008-07-20

1996-07-20

Group I, subgroup A ranks ahead of Group I, subgroup B.

Lena

12 years

1996-04-05

1984-04-05

Within Group I/B, earliest adjusted SCD.

Imani

18 years

2016-02-15

1998-02-15

Same Group I/B as Lena, but later adjusted SCD.

Jorge

14 years

2002-11-01

1988-11-01

Group II ranks after all Group I employees.

Harper

20 years

2024-06-01

2004-06-01

Group II/B ranks after Group II/AD.

Harper moves from last under current rules to first under this final rule because the final rule makes performance credit the primary ordering factor within the competitive-service tenure group. Kai moves from first under current rules to fourth under this final rule because veterans' preference and tenure no longer control ahead of performance; veterans' preference adds points to the performance score instead.

Example 5: Final Rule

Name

Tenure group

Vets

preference

subgroup

Rating of record

summary levels

Performance

credit totals

Tenure

subgroup

Service comp date

Mallory

5/5/5

21 + 0 = 21

2024-03-01

Nikhil

4/4/4

15 + 5 = 20

2012-01-30

Olivia

5/4/3

15 + 0 = 15

1998-09-01

Priya

4/3/missing

12 + 3 = 15

2024-05-10

For Priya, the final rule's missing-rating method gives a proxy value equal to the average of the two actual final rule point values: Level 4 = 5 and Level 3 = 3, so the missing rating is 4 points and Priya's raw performance total is 5 + 3 + 4 = 12. Priya is also given 3 points as a preference eligible veteran for a total performance credit of 15.

Under this final rule, Mallory ranks first because Mallory's augmented performance-credit total is highest. Olivia and Priya tie at 15, so the tie is broken by tenure subgroup: Olivia's subgroup I beats Priya's subgroup II. If one competitive-service position is abolished, Priya would be released first from this register.

Example 5: Current Rules

Name

Current tenure group

Vets

preference

subgroup

Current

performance service

credit

Service comp date

Adjusted

service comp

date

Current-rule reason

Nikhil

16 years

2012-01-30

1996-01-30

Group I/AD ranks first.

Olivia

16 years

1998-09-01

1982-09-01

Group I ranks before Group II.

Priya

14 years

2024-05-10

2010-05-10

Group II/A ranks ahead of Group II/B.

Mallory

20 years

2024-03-01

2004-03-01

Group II/B ranks after Group II/A.

Mallory moves from fourth under current rules to first under this final rule because Mallory's three Level 5 ratings become the dominant factor. Nikhil remains high in both systems, but for different reasons: under current rules, Nikhil is protected first by Group I/AD status; under this final rule, Nikhil ranks high because AD preference adds 5 points to a strong performance-credit total.

OPM is modifying § 351.506(c) to make these provisions consistent with changes in § 351.505. It did not receive significant adverse comment on these provisions. In this final rule, OPM is also clarifying § 351.506(d) that employees who have not received specific RIF notices may have rights to review retention registers and related records under other laws such as the Freedom of Information Act (FOIA).

OPM is revising § 351.507 to make clear that the effective date of retention standing is measured as of the date the employee receives a specific reduction in force notice, not the date a RIF separation actually occurs. Commenters did not express significant concerns regarding this change, which will make it more administratively feasible for agencies to conduct a RIF in instances where the actual date of RIF separation is delayed due to litigation or other unforeseen factors. This change also addresses concerns expressed by some commenters (like Commenter 0449) that agencies might change performance ratings between announcement and execution of a RIF.

OPM is making additional changes to § 351.805(b),

New notice required,

to conform with the changes to § 351.507 and confirm that an amended notice issued solely to state a later effective date is not a new specific reduction in force notice for purposes of § 351.507 and does not require the agency to redetermine or recalculate retention standing under subpart E. This amendment affirms the necessary consequence of the changes to § 351.507: once retention standing is fixed as of the date of the specific RIF notice, a ministerial amended notice delaying the effective date does not restart the retention-standing calculation.

E. Part 351, Subpart F: Furloughs, Abolishment of Competitive Area, USERRA Rights, and Exceptions

OPM is modifying § 351.601 for consistency with how retention standing is to be calculated under Subpart E of part 351. OPM is also modifying § 351.602 to remove the prohibition on retaining an employee serving a specifically limited temporary appointment in a competitive level while releasing a competing employee from that level. OPM did not receive significant adverse comments on these provisions and is finalizing them.

1. RIF Furloughs

In the proposed rule, OPM proposed to modify its regulations in § 351.604 regarding furloughs of more than 30 consecutive calendar days (or more than 22 workdays if done on a discontinuous basis over a period not exceeding 1 year) to remove the requirement that agencies furlough employees based on retention standing and recall employees to duty from furlough based on retention standing.

Commenter 0687 opposed these changes, contending that they had “no obvious use case and could create mechanisms for abuse.” Commenter 0687 noted that agencies typically do not engage in unpaid furloughs of any length, whether greater or less than 30 days, and that OPM's proposed revision would create risks that agencies could use long furloughs to circumvent normal RIF

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