Reduction in Force and Performance Management

SUMMARY: The Office of Personnel Management (OPM) is proposing

regulations that enhance the opportunity for Federal employees to

receive retention service credit during reductions in force based on

their actual job performance. The proposal also gives agencies with

employees who have been rated under different patterns of summary

rating levels a mechanism to take this into account when awarding

employees additional retention service credit for reduction in force.

These proposed regulations also clarifying certain other retention

rights, including the coverage of employees serving under term

appointments.

DATES: Comments must be received by April 7, 1997.

ADDRESSES: Send or deliver written comments to: Mary Lou Lindholm,

Associate Director for Employment Service, Room 6F08, Office of

Personnel Management, Washington, DC 20415.

FOR FURTHER INFORMATION CONTACT: Thomas A. Glennon, Jacqueline Yeatman,

or Edward P. McHugh (part 351); (202) 606-0960, FAX (202) 606-2329; or

Barbara Colchao or Doris Hausser (parts 293, 430 and 531); (202) 606-

2720, FAX (202) 606-2395.

SUPPLEMENTARY INFORMATION:

(1) Performance

Crediting Performance in Reductions in Force

Background to Proposed Regulations

Employee performance is one of four factors specified in 5 U.S.C.

3502(a), and regulations in 5 CFR part 351, that determine an

employee's retention standing during reductions in force. The other

three factors are tenure of appointment, veterans' preference and

length of service. Traditionally, performance has been recognized in

the reduction in force process by providing employees with additional

years of retention service credit based on the average of their three

most recent ratings of record received under the provisions of 5 CFR

part 430, subpart B, during the 4 years prior to the reduction in

force.

These proposed changes enhance the opportunity for Federal

employees to receive retention credit during reductions in force based

on their job performance. They do not, however, change the relative

importance of performance vis a vis the other retention factors:

tenure, veterans' preference and length of service. Further, they

retain the present range of additional retention service credit that is

provided to good performers during reductions in force (i.e., 12 to 20

years additional retention service credit) and the requirement that

additional retention service credit be awarded based on the average of

the three most recent ratings of record whenever possible.

Current regulations at section 351.504(d) define the specific

amount of additional retention service credit awarded for each rating

level and require that it be applied in the same way by each agency

subject to the reduction in force regulations. Twenty years of

additional retention service credit is specified for a Level 5 rating

of record (i.e., ``Outstanding'' or equivalent), 16 years of additional

retention service credit for a Level 4 rating of record (i.e.,

``Exceeds Fully Successful'' or equivalent), and 12 years of additional

retention service credit for a Level 3 rating of record (i.e., ``Fully

Successful'' or equivalent). No additional retention service credit is

provided for a Level 2 rating of record (i.e., ``Minimally Successful''

or equivalent) or for a Level 1 rating of record (i.e.,

``Unacceptable.'').

Currently credit is provided on the basis of the three most recent

ratings of record received during the 4 years prior to the reduction in

force. The sum of the three most recent ratings is divided by three and

rounded to a whole number. For example, an employee whose three most

recent ratings are ``Exceeds Fully Successful'' (16), Exceeds Fully

Successful (16), and Outstanding (20) is given 18 years extra seniority

(16+16+20 = 52/3 = 17.3 = 18). If employees have received fewer than

three actual ratings in the last 4 years, agencies are required to

substitute an assumed rating of Fully Successful for each missing

rating.

New Procedures for Increasing Use of Actual Ratings in RIF

Extending time period during which ratings are considered. One

element of the proposal addresses the circumstance where employees have

not received three actual ratings of record in the last 4 years. They

may have received two ratings, or one, or none. This could occur due to

a variety of circumstances; for example: Employees on extended

assignments on military reserve duty; employees on official time under

chapter 71 of title 5, United States Code; employees new to Government

service; or employees who have been absent due to an on-the-job injury.

To minimize the use of assumed ratings and to maximize the extent to

which additional retention service credit is based on actual job

performance, OPM is proposing to lengthen the period of time from which

ratings are taken into account from 4 years to 6 years prior to the

reduction in force. For example, if an employee has been given two

ratings of record during the previous 4 years, a rating given in the

fifth year prior to the reduction in force may be taken into account in

order to use three actual ratings. In all cases, however, the three

most recent ratings of record must be used. OPM is proposing

appropriate changes to the recordkeeping requirements in 5 CFR part

293. This change in the time period for crediting performance ratings

will be phased in to allow agencies time to change their recordkeeping

procedures. The implementation schedule for this provision is explained

in the paragraph below on ``Special implementation/effective dates.''

New computation methods for crediting performance in reduction in

force. OPM is also proposing to remove the requirement to fill in

missing ratings of record with assumed Fully Successful ratings when an

employee has received only one or two actual ratings of record during

the 6-year period when ratings can be credited. Under the proposed

change, the actual rating(s) of record available will serve as the sole

basis of

[[Page 5175]]

the employee's credit, and no assumed ratings will be used.

Consequently, if an employee has received only two actual ratings of

record during this period, the value of each rating will be added

together and divided by two to determine the amount of additional

retention service credit. If the employee has received only one actual

rating during the period, it will be divided by one to determine

additional retention service credit. The same computation method

(dividing the rating value by one) will be used when crediting an

assumed rating when the value is determined under the procedures

outlined below.

Crediting performance for employees with no actual ratings. Only in

the unusual situation where an employee has no actual rating of record

in a 6-year period will an assumed rating be used. The value of that

assumed rating will be determined on the basis of two factors: (1) The

summary level pattern that applies to the employee's official position

of record at the time of the reduction in force; and (2) the amount of

current continuous service the employee has.

Employees who have no ratings and have more than one year of

current continuous service. An employee who has completed at least one

year of current continuous service at the time that reduction in force

notices are issued (or by the cutoff date the agency specifies prior to

the issuance of RIF notices after which no new annual ratings are put

on record) will be given the additional retention service credit for

the most common, or ``modal'', summary rating level, as defined in 5

CFR 351.203, for the summary level pattern that applies to the

employee's position at the time of the reduction in force. The agency

may determine the modal rating using summary ratings in the competitive

area, in a larger subdivision of the agency, or agencywide. The

applicable modal rating(s) must be applied uniformly and consistently

within the competitive area.

For example, if the employee's position would be covered under a

five-level rating pattern, the agency would compile the summary ratings

on record for the most recently completed appraisal period that were

given to employees in the competitive area, subdivision or agency who

were rated under a five-level rating pattern. If the results were: 78

Outstanding, 153 Exceeds Fully Successful, 129 Fully Successful, 42

Marginal, and 7 Unacceptable, then the modal rating in this instance

would be Exceeds Fully Successful. In this example, the assumed rating

for an employee with no rating in the past 6 years, who has at least

one year of current continuous service, and whose position is under a

five-level program, would be Level 4. This employee would be given

additional retention service credit based on a Level 4 rating.

If, using the same process, the most commonly given rating for

employees under a four-level summary rating pattern was determined to

be a Level 3 rating, this would be the modal rating used for employees

covered by this pattern.

Employees without ratings who have less than one year of current

continuous service: The modal rating is not used for employees who have

completed less than one year of current continuous service. Additional

retention service credit is given based on a Level 3 (Fully Successful

or equivalent) rating of record under the summary level pattern which

applies to the employee's position at the time of reduction in force.

Awarding Retention Service Credit When Employees in the Same RIF

Competitive Area Have Been Rated Under More Than One Pattern of Summary

Rating Levels

On August 23, 1995, OPM issued final regulations, at 60 FR 43936,

giving agencies the option to determine the pattern of summary rating

levels under their performance appraisal programs. There are eight

possible patterns ranging from a traditional five-level program to a

two-level program that uses only Level 1 and Level 3. Agencies can

design their appraisal systems to permit the use of different patterns

in different organizations and can change the patterns used without

prior OPM approval.

This flexibility in the design of performance appraisal programs

can affect employees' relative retention standing for reduction in

force. Employees compete for retention within a competitive area. It is

possible for a competitive area to cover two or more organizations that

each use a different pattern of summary rating levels. Also, employees

may have been transferred or reassigned into the competitive area from

other agencies with different rating patterns. Some employees may have

ratings of record from two-level appraisal programs, while others have

ratings under five-level programs.

During the comment period on the performance management

regulations, agencies asked for flexibility in awarding additional

retention service credit when conducting reductions in force when

competitive areas include employees rated under different patterns of

summary levels. In the final performance management regulations

published on August 23, 1995, OPM stated that it would review the

existing reduction in force regulations in 5 CFR part 351 and consider

whether any changes should be made to address mixed pattern situations.

These proposed regulations are a result of that review.

OPM considered the consequences that could occur as a result of

agencies making maximum use of performance management flexibilities,

resulting in competitive areas that include employees with ratings

given under different patterns. OPM concluded that to credit actual

performance more appropriately when conducting retention competition

among employees rated under different patterns, agencies need

flexibility to adjust the credit assigned to rating levels in their

patterns. The proposed regulations revise 5 CFR 351.504 to require an

agency to take into account different patterns of summary rating levels

when awarding employees additional retention service credit in

reduction in force competition based on their performance.

New agency authority to determine retention service credit. Under

the proposed regulations, an agency with employees in a RIF competitive

area who have been rated under different patterns of summary rating

levels must decide how many years of retention service credit within

the allowable range of 12 to 20 years to assign to particular summary

rating levels. OPM has determined that too many potential combinations

of rating patterns within a competitive area will occur in the future

to mandate any particular crediting formula. The objective of applying

flexibility should be to give, to the extent possible, the same credit

for equivalent performance. The appropriate solution will of necessity

be specific to the RIF competitive area as the agency takes into

account the combination of rating patterns used and the relative

numbers of employees rated under each pattern.

For example, one RIF competitive area is composed of 200 employees,

each with three actual ratings of record. Of those employees, 180 have

been rated under a five-level performance appraisal program. Of their

ratings, 2 percent were below Fully Successful, 20 percent were Fully

Successful, 53 percent were Exceeds Fully Successful, and 25 percent

were Outstanding. The other 20 employees were rated under a two-level

(pass/fail) program, with 98

[[Page 5176]]

percent of their ratings at Level 3 (Pass or Fully Successful).

Under the current regulations, all the Fully Successful ratings of

record would receive 12 years of additional retention service credit,

Exceeds Fully Successful ratings would receive 16 years credit, and

Outstanding ratings would receive 20 years credit. Employees in the

two-level system never had the opportunity to be rated and receive

credit for performing above the Fully Successful level, even though

their performance might well have been rated Exceeds Fully Successful,

or even Outstanding, under a five-level program.

Under the proposed regulations, the agency may decide, for example,

that to credit performance more appropriately, the Fully Successful

ratings of record given under the two-level program should receive the

same number of years additional credit as the Exceeds Fully Successful

ratings given under the five-level program, because the record

indicates that 78 percent of ratings given under a five-level program

are above Fully Successful and most of those are Exceed Fully

Successful. Under this scenario, the agency might use the flexibility

to assign credit based on a mix of rating level patterns within the RIF

competitive area to provide what the agency determined to be equivalent

credit for similar performance.

If an agency has RIF competitive areas in which all employee

ratings of records to be credited were given under the same pattern of

summary levels, it is required to follow the current regulations for

crediting performance in a reduction in force which now appear in

paragraph (d) of section 351.504.

Uniform and consistent treatment of employees in the same RIF

competitive area. In using the proposed regulations, the agency's

application must be uniform and consistent within the RIF competitive

area. For example, each employee covered by a two-level program within

the competitive area must receive the same amount of additional

retention service credit for their Level 3 rating of record. Under

proposed paragraph (f) of section 351.504, the agency must establish

its performance crediting procedures for the applicable reduction in

force and must keep the procedures available for review. The agency is

not required, however, to apply the same performance crediting

procedures in different competitive areas, or in different reductions

in force.

The proposed regulations are specific to the agency conducting the

reduction in force, at the time it carries out the reduction in force

action. Thus an agency carrying out a reduction in force may provide

different amounts of additional retention service credit for ratings of

record received in an employee's former agency than were provided by

that former organization.

The proposed regulations also include conforming changes that have

been made throughout section 351.504 to make consistent the various

references to rating of record and the summary levels. In addition, the

exceptions to a current rating of record that are presently in

paragraph (e) of section 351.504 are removed and the new definition of

``Current Rating'' in section 351.203 clarifies what the current rating

of record is.

Additional Retention Service Credit for Certain Ratings From Appraisal

Systems Not Covered by the Provisions of 5 CFR Part 430

Employees in a competitive area may have been rated under an

appraisal system not established under the provisions of 5 CFR part

430. OPM is proposing language in the revised section 351.504 that will

require agencies to use all ratings of record given to employees for

assigning additional retention service credit during a reduction in

force. However, a performance evaluation given to an employee under an

appraisal system not covered by the provisions of 5 CFR part 430,

subpart B, would be considered a rating of record only if it meets the

conditions specified in the new paragraph (c) of section 430.201 of the

proposed regulations. The agency conducting the reduction in force will

make the determination of whether or not such ``non-430'' performance

ratings meet the specified conditions.

Related Conforming Amendments

At section 430.201, General, OPM is proposing a new paragraph,

Equivalent ratings of record, to specify the conditions which must be

met before performance evaluations given under evaluation systems not

covered by 5 U.S.C. 43 and 5 CFR 430, subpart B, can be used as the

basis for granting additional retention service credit in a reduction

in force. These conditions in part address fundamental requirements

comparable to those in statute, such as communicating performance

standards in advance and evaluating work performance against those

standards. In some situations, the agency may need to take the step of

identifying a summary level and pattern based on available information.

OPM expects that some ``non-430'' performance evaluations will not meet

one or more of the specified conditions.

At section 430.208, Rating performance, OPM is proposing amendments

and additional language to support the use of additional flexibility

for crediting performance in a reduction in force, as proposed here in

section 351.504. Regulatory language is added to section 430.208,

Rating performance, to include in paragraphs (d)(2) and (d)(4)

designation of the summary level pattern as an integral part of a

rating of record, and to establish in paragraph (d)(5) an authority to

permit, but not require, assigning the same rating of record a

different number of years additional retention service credit in a

different summary level pattern, competitive area, or reduction in

force. To conform with these changes, OPM is also revising the

definitions of performance rating and rating of record regarding a

summary level within a pattern in section 430.203.

Technical Amendments

OPM is proposing to add regulatory language in the recently issued

regulations on performance appraisal systems and programs. In two

places, the additions are being made solely to clarify and state

explicitly restrictions on the use of critical and noncritical elements

that are implicit in the existing regulations. Other clarifying changes

are being made regarding the appraisal period and a delay of an

acceptable level of competence determination.

Critical Element Definition

In the first instance, OPM proposes to amend the definition in

section 430.203 of a critical element to clarify that critical elements

may be used to measure performance only at the individual level. A

corresponding editorial change is proposed at section 430.206(b)(4) for

the description of elements contained in an employee's performance

plan. These represent no substantive change in the regulations because

of the statutory definition of a critical element. The statutory intent

of chapter 43 is to establish and maintain individual accountability.

At section 4303, the chapter includes a provision for removing an

employee who fails to meet the established performance standard for one

or more critical elements. A critical element that measures performance

where individual contributions and control are not identifiable would

be unusable as a basis for taking such a performance-based action

because we conclude that individual control over the performance that

meets the standard is a necessary condition for applying the standard

and taking that action.

[[Page 5177]]

Using a group-level critical element raises the implications of the

group or team failing to meet the element's established standards and

being deemed, by statutory definition, Unacceptable on the element. The

agency would be obligated to carry out the notification and assistance

provisions of 5 CFR 432.104, Addressing unacceptable performance, for

each member of the group or team, irrespective of the caliber of his or

her individual performance. Also, should the timing of an appraisal

period coincide with the end of their waiting periods, group members

would be denied within-grade pay increases or career ladder promotions,

once again without reference to their personal performance. We do not

believe that this is in accord with the intent of the statute.

Barring Non-Critical Elements When Only Two Summary Levels Are Used

In the second instance, OPM proposes to add explicit regulatory

language in section 430.206(b)(6) prohibiting the use of non-critical

elements in employee performance plans in ``Pass/Fail'' summary

appraisal situations, and thereby prevent confusion and inappropriate

use of non-critical elements in appraisal programs. Adding this

language is not a substantive change because it merely states a

condition that is the logical consequence of applying other definitions

and restrictions already included in the regulations.

This logical conclusion operates with an appraisal program that

uses only two summary levels, Level 1 (Unacceptable) and Level 3 (Fully

Successful or equivalent), which is commonly referred to as a ``Pass/

Fail'' program. The relevant definitions and restrictions are: (1) the

definition at section 430.203 of a non-critical element, which includes

the requirement that it must affect the summary level; and (2) the

provisions at section 430.208(b) (1) and (2), which make it clear that

a non-critical element cannot have the effect of summarizing

performance as ``Unacceptable.''

In an appraisal program that uses only two summary levels, if an

employee's performance on any or all elements not designated as

critical was appraised as Unacceptable, but performance on all critical

elements was appraised as better than Unacceptable, then the assigned

summary level would have to be Level 3. Level 1 cannot be used because

no critical element performance was Unacceptable. The only summary

level available other than Level 1 is Level 3. This illustrates that

under a two-level program, the summary level can only be affected by

critical elements. Of course, additional elements could still be

included in the employee's performance plan if it was not appropriate

to designate them as critical elements (e.g., they measure performance

at the team or organizational level).

Appraisal Period

In section 430.206(a)(2), a change is being made to clarify that

each appraisal program can designate only one appraisal period. The

change reflects OPM's ongoing position that the appraisal period chosen

for the program affects the application of all the program's other

provisions and is one of the key features that distinguishes one

program from another. The other two distinguishing features are

employee coverage and pattern of summary levels for ratings of record.

The appraisal period is a specified period of time (e.g., 12

months). Within a single program, agencies are free to start the

appraisal period on different dates for different employees or groups

of employees.

Delay of an Acceptable Level of Competence Determination

OPM also is proposing technical amendments to 5 CFR 531.409(c) to

eliminate any unintended confusion regarding the delay of an acceptable

level of competence determination (ALOC) and to make terminology

consistent with the performance management regulations. The first

change incorporates into regulation OPM's longstanding interpretation

of the present regulation, thus clarifying that the two circumstances

described in the regulations are the only ones under which the ALOC

determination is delayed. A corresponding change is being made to the

definition of rating of record in section 430.203 to clarify that a

rating of record done to comply with 5 CFR 531.404(a)(1) is a bona fide

rating of record for all purposes. In addition, other changes are made

to bring the terminology used into conformance with the recent changes

in the performance management regulations.

(2) Definitions

``Annual Performance Rating of Record.'' Performance is one of the

four factors agencies use to determine an employee's retention rights.

(The other three factors are Tenure, Veterans' Preference, and

Service.)

Consistent with final performance regulations published in the

Federal Register at 60 FR 43936, August 23, 1995, proposed section

351.203 removes the definition of ``Annual Performance Rating of

Record'' and adds the definition of ``Rating of Record'' consistent

with the meaning given that term in section 430.203 of this chapter.

The new definition also introduces equivalent ratings of record.

(3) Competitive Area

Agencies establish ``Competitive Areas'' to set the organizational

and geographical boundaries within which employees compete for

retention. Proposed section 351.402(b) clarifies existing policy on

OPM's minimum standard for a competitive area. This regulatory change

maintains the same standard for a minimum competitive area, but

reflects current organizational structure and terminology in lieu of

existing language.

(4) Competitive Level

Agencies establish ``Competitive Levels'' to group interchangeable

positions in the process of determining employees' retention rights.

Proposed section 351.403(c) is added to clarify existing policy that an

agency may not establish a competitive level based solely upon: (1) A

difference in the number of hours or weeks scheduled to be worked by

other-than-full-time employees who would otherwise be in the same

competitive level; (2) a requirement to work changing shifts; (3) the

grade promotion potential of the position; or (4) a difference in the

local wage areas in which wage grade positions are located.

(5) Retention Register

Proposed section 351.404(a) clarifies existing policy that upon

displacing another employee under this section, an employee retains the

same status and tenure in the new position.

Proposed section 351.404(b)(2) provides that the name of each

employee in the competitive level with a written decision of removal

under part 432 or 752 of this chapter is listed at the bottom of the

retention register. Under present section 351.404(b)(2), the name of

each employee in the competitive level with a written decision of

removal because of ``Unacceptable'' or equivalent performance under

part 432 is listed at the bottom of the retention register.

Proposed section 351.405 provides that the name of each employee in

the competitive level with a written decision of demotion under part

432 or 752 of this chapter competes for retention from the position to

which the employee will be or has been demoted. Under present section

351.405, the name of each employee in the competitive level with a

written decision of demotion under part 432

[[Page 5178]]

because of ``Unacceptable'' or equivalent performance competes for

retention from the position to which the employee will be or has been

demoted.

(6) Retention Subgroups

Retention Groups and Subgroups include two of the factors (i.e.,

Tenure and Veterans' Preference) that are used to determine an

employee's retention standing. Proposed section 351.501(b)(3) is

revised to clarify existing policy that employees serving under Term

appointments are included in retention subgroup III.

(7) Release From Competitive Level

Proposed section 351.602 provides that an agency may not release a

competing employee from a competitive level while still retaining in

that competitive level another employee who has received a written

notice of demotion or removal under either part 432 or 752.

(8) Assignment Rights

Proposed section 351.701(f) is added to clarify existing policy on

the procedures agencies use to determine the appropriate grade or

grade-interval basis for setting employees' assignment rights.

Excepted service employees have no right of assignment to a

position in a different competitive level. Section 351.705(a)(3)

provides that, at its discretion, an agency may offer assignment rights

to its excepted service employees. Proposed section 351.705(a)(3)

clarifies existing policy that an excepted service employee may have a

right of assignment on the same basis (i.e., ``Bump'' and ``Retreat'')

as provided to competitive service employees, and only to another

excepted service position under the same appointing authority.

(9) RIF Notices

Section 351.504(b)(1) provides that an employee is entitled to

additional retention service credit based upon the employee's three

most recent ratings of record during the applicable 4-, 5-, 6-year

period prior to, as appropriate, the date the agency issues specific

reduction in force notices or the date the agency freezes ratings

before issuing reduction in force notices.

Section 351.802(a)(2) presently provides that an employee's

reduction in force notice must identify the employee's annual

performance ratings of record received during the last 4 years.

Proposed section 351.802(a)(2) provides that the agency must identify

the employee's three most recent ratings of record, rather than all

ratings of record received in the applicable 4-, 5-, 6-year

period, since only the three most recent ratings of record are used to

determine the employee's retention standing.

Proposed section 351.803(a) is revised to add a requirement that

each employee who receives a specific notice of separation by reduction

in force must be given an estimate of severance pay if eligible, and

information on benefits available under new subparts F and G (Career

Transition Assistance Programs) of part 330 of this chapter and from

the applicable State dislocated worker unit(s), as designated or

created under title III of the Job Training Partnership Act. To

increase placement opportunities for employees affected by downsizing,

the proposed section also provides that agencies must give employees

receiving a reduction in force separation notice a form to authorize,

at their option, the release of their resumes for employment referral

to State Dislocated Worker units and potential public and private

sector employers.

Proposed section 351.804 clarifies existing policy on when a

specific reduction in force notice expires.

Proposed section 351.805 clarifies existing policy on when an

agency is required to issue a new or amended specific reduction in

force notice.

Special Implementation/Effective Dates for New Reduction in Force/

Performance Credit Provisions

Except as noted below, it is OPM's intention to make the provisions

of these proposed regulations effective 30 days after the publication

of final regulations. In order to give agencies adequate lead time to

implement some of the procedural changes outlined in these regulations,

certain provisions will be implemented as follows:

(a) When implementing proposed section 351.504(b), which extends

the time period during which ratings are considered, agencies would

have the option to immediately begin using a 5- or 6-year period for

consideration of the employee's three most recent ratings. The 5-year

period would become mandatory in reductions in force for which notices

are issued or performance ratings are frozen on or after October 1,

1998. The 6-year period would become mandatory on October 1, 1999.

(b) The new agency authority to determine retention service credit

when employees in a competitive area are rated under multiple rating

patterns described in section 351.504(e) would apply only to ratings of

record that are put on record, as defined in paragraph (b)(3) of

section 351.504, on or after October 1, 1997. The agency credits any

ratings of record put on record on or before September 30, 1997, based

on the governmentwide 12-, 16-, and 20-year formula for additional

retention service credit currently in effect.

(c) Section 351.504(c)(1)(i), in which a modal rating is used as an

assumed rating for an employee with no actual ratings, would become

effective October 1, 1997. Until that date, agencies would apply the

provisions of section 451.504(c)(1)(ii) to employees who have no actual

ratings.

Regulatory Flexibility Act

I certify that this regulation will not have a significant economic

impact on a substantial number of small entities because it only

affects Federal employees.

Executive Order 12866, Regulatory Review

This rule has been reviewed by the Office of Management and Budget

in accordance with Executive Order 12866.

List of Subjects

CFR Part 293

Archives and records, Freedom of information, Government employees,

Health records, Privacy.

CFR Part 351

Administrative practice and procedure, Government employees.

CFR Part 430

Decorations, medals, awards, Government employees.

CFR Part 531

Government employees, Law enforcement officers, Wages.

U.S. Office of Personnel Management.

James B. King,

Director.

Accordingly, OPM proposes to amend parts 293, 351, 430, and 531 of

title 5, Code of Federal Regulations, as follows:

PART 293--PERSONNEL RECORDS

1. The authority citation for part 293 continues to read as

follows:

Authority: 5 U.S.C. 552 and 4315; E.O. 12107 (December 28,

1978), 3 CFR 1954-1958 Comp.; 5 U.S.C. 1103, 1104, and 1302; 5 CFR

7.2; E.O. 9830; 3 CFR 1943-1948 Comp.; 5 U.S.C. 2951(2) and 3301;

and E.O. 12107.

2. In Sec. 293.404, paragraph (a)(1) is revised to read as follows:

Sec. 293.404 Retention schedule.

(a)(1) Except as provided in Sec. 293.405(a), performance ratings

or documents supporting them are generally records and shall, except

for

[[Page 5179]]

appointees to the SES and including incumbents of executive positions

not covered by SES, be retained as prescribed as follows:

(i) Agencies shall retain the three (3) most recent ratings of

record issued to the employee in the past: 4 years through September

30, 1998; 5 years from October 1, 1998, through September 30, 1999; and

6 years beginning October 1, 1999;

(ii) Supporting documents shall be retained for as long as the

agency deems appropriate, but not to exceed 6 years;

(iii) Performance records superseded (e.g., through an

administrative or judicial procedure) and performance-related records

pertaining to a former employee (except as prescribed in

Sec. 293.405(a)) need not be retained for a minimum of 6 years. Rather,

in the former case they are to be destroyed and in the latter case

agencies shall retain in accordance with General Records Schedule 1;

and

(iv) Except where prohibited by law, retention of automated records

longer than the maximum prescribed in this section is permitted for

purposes of statistical analysis so long as the data are not used in

any action affecting the employee when the manual record has been or

should have been destroyed.

* * * * *

3. In section 293.405, paragraph (a) is revised to read as follows:

Sec. 293.405 Disposition of records.

(a) When the OPF of a non-SES employee is sent to another servicing

office in the employing agency, to another agency, or to the National

Personnel Records Center, the ``losing'' servicing office shall include

in the OPF information for the three (3) most recent ratings of record

issued to the employee that are 4 years old or less through September

30, 1998, (5 years old or less from October 1, 1998, through September

30, 1999, and 6 years old or less beginning October 1, 1999). The

information included shall be the summary pattern within which the

rating of record was assigned, the summary level assigned, the date the

rating was put on record for reduction in force purposes, and the

ending date of the appraisal period. Also, the ``losing'' office will

purge from the OPF all rating of record information that is more than 4

years old (more than 5 years old from October 1, 1998, through

September 30, 1999, and more than 6 years old beginning October 1,

1999), and other performance-related records, according to agency

policy established under Sec. 293.404(a)(2) and in accordance with OPM

Operating Manual, ``The Guide to Personnel Recordkeeping.''

PART 351--REDUCTION IN FORCE

4. The authority citation for part 351 continues to read as

follows:

Authority: 5 U.S.C. 1302, 3502, 3503.

5. In Sec. 351.203, the definition of ``Annual Performance rating

of record`` is removed, and the definitions of Current rating of

record, Modal rating, and Rating of record are added in alphabetical

order, to read as follows:

Sec. 351.203 Definitions.

* * * * *

Current rating is the rating of record for the most recently

completed appraisal period as provided in Sec. 351.504(b)(3).

* * * * *

Modal rating is the summary rating level assigned most frequently

among the actual ratings of record that are:

(1) Assigned under the summary level pattern that applies to the

employee's position of record on the date of the reduction in force;

(2) Given within the same competitive area, or at the agency's

option within a larger subdivision of the agency or agencywide; and

(3) On record for the most recently completed appraisal period

prior to the date of issuance of reduction in force notices or the

cutoff date the agency specifies prior to the issuance of reduction in

force notices after which no new ratings will be put on record.

Rating of record has the meaning given that term in Sec. 430.203 of

this chapter. For an agency not subject to 5 U.S.C. 43, or part 430 of

this chapter, it means the officially designated performance rating, as

provided for in the agency's appraisal system, that is considered to be

an equivalent rating of record under the provisions of Sec. 430.201(c)

of this chapter.

* * * * *

7. In Sec. 351.402, paragraph (b) is revised to read as follows:

Sec. 351.402 Competitive area.

* * * * *

(b) A competitive area must be defined solely in terms of the

agency's organizational unit(s) and geographical location, and it must

include all employees within the competitive area so defined. A

competitive area may consist of all or part of an agency. The minimum

competitive area is a subdivision of the agency under separate

administration within the local commuting area.

* * * * *

8. In Sec. 351.403, paragraph (c) is added to read as follows:

Sec. 351.403 Competitive level.

* * * * *

(c) An agency may not establish a competitive level based solely

upon:

(1) A difference in the number of hours or weeks scheduled to be

worked by other-than-full-time employees who would otherwise be in the

same competitive level;

(2) A requirement to work changing shifts;

(3) The grade promotion potential of the position; or

(4) A difference in the local wage areas in which wage grade

positions are located.

9. In Sec. 351.404, paragraph (a) introductory text, and paragraph

(b)(2), are revised to read as follows:

Sec. 351.404 Retention register.

(a) When a competing employee is to be released from a competitive

level under this part, the agency shall establish a separate retention

register for that competitive level. The retention register is prepared

from the current retention records of employees. Upon displacing

another employee under this part, an employee retains the same status

and tenure in the new position. Except for an employee on military duty

with a restoration right, the agency shall enter on the retention

register, in the order of retention standing, the name of each

competing employee who is:

* * * * *

(b) * * *

(2) The agency shall list, at the bottom of the list prepared under

paragraph (b)(1) of this section, the name of each employee in the

competitive level with a written decision of removal under part 432 or

752 of this chapter.

10. Section 351.405 is revised to read as follows:

Sec. 351.405 Demoted employees.

An employee who has received a written decision under part 432 or

752 of this chapter to demote him or her competes under this part from

the position to which he or she will be or has been demoted.

11. In Sec. 351.501, paragraph (b)(3) is revised to read as

follows:

Sec. 351.501 Order of retention--competitive service.

* * * * *

(b) * * *

(3) Group III includes all employees serving under indefinite

appointments, temporary appointments pending establishment of a

register, status quo appointments, term appointments, and any other

nonstatus nontemporary appointments which meet the definition of

provisional appointments contained

[[Page 5180]]

in Secs. 316.401 and 316.403 of this chapter.

* * * * *

12. Section 351.504 is revised to read as follows:

Sec. 351.504 Credit for performance.

(a) Ratings used. (1) Only ratings of record as defined in

Sec. 351.203 shall be used as the basis for granting additional

retention service credit in a reduction in force.

(2) For employees who received ratings of record while covered by

part 430, subpart B, of this chapter, those ratings of record shall be

used to grant additional retention service credit in a reduction in

force.

(3) For employees who received performance ratings while not

covered by the provisions of 5 U.S.C. 43 and part 430, subpart B, of

this chapter, those performance ratings shall be considered ratings of

record for granting additional retention service credit in a reduction

in force only when it is determined that those performance ratings are

equivalent ratings of record under the provisions of Sec. 430.201(c) of

this chapter. The agency conducting the reduction in force shall make

that determination.

(b) Time frame. (1) An employee's entitlement to additional

retention service credit for performance under this subpart shall be

based on the employee's three most recent ratings of record received

during the 4-year period prior to the date of issuance of reduction in

force notices, except as otherwise provided in this paragraph (b)(1),

and in paragraphs (b)(2) and (c) of this section. At its option, an

agency may instead use the employee's three most recent ratings of

record received during a 5-year or 6-year period prior to the date of

issuance of reduction in force notices or an agency established cutoff

date after which no new ratings of record will be put on record. The 5-

year period becomes mandatory on October 1, 1998. The 6-year period

becomes mandatory on October 1, 1999.

(2) To provide adequate time to determine employee retention

standing, an agency may provide for a cutoff date, a specified number

of days prior to the issuance of reduction in force notices after which

no new ratings of record will be put on record and used for purposes of

this subpart. When a cutoff date is used, an employee will receive

performance credit for the three most recent ratings of record received

during the applicable 4-, 5-, or 6-year period prior to the cutoff

date.

(3) To be creditable for purposes of this subpart, a rating of

record must have been issued to the employee, with all appropriate

reviews and signatures, and must also be on record (i.e., the rating of

record is available for use by the office responsible for establishing

retention registers).

(4) The awarding of additional retention service credit based on

performance for purposes of this subpart, including the decision to use

a 4-, 5-, or 6-year period for performance ratings, must be uniformly

and consistently applied within a competitive area, and must be

consistent with the agency's appropriate issuance(s) that implement

these policies. Each agency must specify in its appropriate

issuance(s):

(i) The conditions under which a rating of record is considered to

have been received for purposes of determining whether it is within the

applicable 4-, 5-, or 6-year period prior to either the date the agency

issues reduction in force notices or the agency-established cutoff date

for ratings of record, as appropriate; and

(ii) If the agency elects to use a cutoff date, the number of days

prior to the issuance of reduction in force notices after which no new

ratings of record will be put on record and used for purposes of this

subpart.

(c) Missing ratings. Additional retention service credit for

employees who do not have three actual ratings of record during the

applicable 4-, 5-, or 6-year period prior to the date of issuance of

reduction in force notices or the applicable 4-, 5-, or 6-year period

prior to the agency-established cutoff date for ratings of record

permitted in paragraph (b)(2) of this section shall be determined, as

appropriate, under paragraphs (d) or (e) of this section, as follows:

(1) An employee who has not received any rating of record during

the applicable 4-, 5-, or 6-year period shall receive credit for

performance on the basis of an assumed rating. The value of that

assumed rating will be determined according to the length of the

employee's current continuous service and on the basis of the summary

level pattern that applies to the employee's official position of

record at the time of the reduction in force.

(i) An employee who has completed at least one year of current

continuous service will be given the additional retention service

credit based on the modal rating for that summary level pattern.

(ii) An employee who has not completed at least one year of current

continuous service will be given the additional retention service

credit for a Level 3 (Fully Successful or equivalent) rating of record

under that summary level pattern.

(2) An employee who has received at least one but fewer than three

previous ratings of record shall receive credit for performance on the

basis of the value of the actual rating(s) of record divided by the

number of actual ratings received. If an employee has received only two

actual ratings of record during the period, the value of the ratings is

added together and divided by two to determine the amount of additional

retention service credit. If an employee has received only one actual

rating during the period, its value is the amount of additional

retention service credit provided.

(d) Single rating pattern. If all employees in a reduction in force

competitive area have received ratings of record under a single pattern

of summary levels as set forth in Sec. 430.208(d) of this chapter, the

additional retention service credit provided to employees shall be

expressed in additional years of service and shall consist of the

mathematical average (rounded in the case of a fraction to the next

higher whole number) of the employee's applicable ratings of record,

under paragraphs (b)(1) and (c) of this section computed on the

following basis:

(1) Twenty additional years of service for each rating of record

with a Level 5 (Outstanding or equivalent) summary;

(2) Sixteen additional years of service for each rating of record

with a Level 4 summary; and

(3) twelve additional years of service for each rating of record

with a Level 3 (Fully Successful or equivalent) summary.

(e) Multiple rating patterns. If an agency has employees in a

competitive area who have ratings of record under more than one pattern

of summary levels, as set forth in Sec. 430.208(d) of this chapter, it

shall consider the mix of patterns and provide additional retention

service credit for performance to employees expressed in additional

years of service in accordance with the following:

(1) Additional years of service shall consist of the mathematical

average (rounded in the case of a fraction to the next higher whole

number) of the additional retention service credit that the agency

established for the summary levels of the employee's applicable

rating(s) of record.

(2) The agency shall establish the amount of additional retention

service credit provided for summary levels only in full years; the

agency shall not establish additional retention service credit for

summary levels below Level 3 (Fully successful or equivalent).

[[Page 5181]]

(3) When establishing additional retention service credit for the

summary levels at Level 3 (Fully Successful or equivalent) and above,

the agency shall establish at least 12 years, and no more than 20

years, additional retention service credit for a summary level.

(4) The agency may establish the same number of years additional

retention service credit for more than one summary level.

(5) The agency shall establish the same number of years additional

retention service credit for all ratings of record with the same

summary level in the same pattern of summary levels as set forth in

Sec. 430.208(d) of this chapter.

(6) The agency may establish a different number of years additional

retention service credit for the same summary level in different

patterns.

(7) The agency may apply paragraphs (e)(1) through (e)(6) of this

section only to ratings of record put on record on or after October 1,

1997. The agency shall establish the additional retention service

credit for ratings of record put on record prior to that date in

accordance with paragraphs (d)(1) through (d)(3) of this section.

(f) Documentation of credit. In implementing paragraph (e) of this

section, the agency shall specify the number(s) of years additional

retention service credit that it will establish for summary levels.

This information shall be made readily available for review.

13. In Sec. 351.602, paragraph (c) is revised to read as follows:

Sec. 351.602 Prohibitions.

* * * * *

(c) A written decision under part 432 or 752 of this chapter of

removal or demotion from the competitive level.

14. In Sec. 351.701, paragraph (f) is added to read as follows:

Sec. 351.701 Assignment involving displacement.

* * * * *

(f)(1) In determining applicable grades (or grade intervals) under

Secs. 351.701(b)(2) and 351.701(c)(2), the agency uses the grade

progression of the released employee's position of record to determine

the grade (or interval) limits of the employee's assignment rights.

(2) For positions covered by the General Schedule, the agency must

determine whether a one-grade, two-grade, or mixed grade interval

progression is applicable to the position of the released employee.

(3) For positions not covered by the General Schedule, the agency

must determine the normal line of progression for each occupational

series and grade level to determine the grade (or interval) limits of

the released employee's assignment rights. If the agency determines

that there is no normal line of progression for an occupational series

and grade level, the agency provides the released employee with

assignment rights to positions within three actual grades lower on a

one-grade basis. The normal line of progression may include positions

in different pay systems.

(4) For positions where no grade structure exists, the agency

determines a line of progression for each occupation and pay rate, and

provides assignment rights to positions within three grades (or

intervals) lower on that basis.

(5) If the released employee holds a position that is less than

three grades above the lowest grade in the applicable classification

system (e.g., the employee holds a GS-2 position), the agency provides

the released employee with assignment rights up to three actual grades

lower on a one-grade basis in other pay systems.

15. In Sec. 351.705, paragraph (a)(3) is revised to read as

follows:

Sec. 351.705 Administrative assignment.

(a) * * *

(3) Provide competing employees in the excepted service with

assignment rights to other positions under the same appointing

authority on the same basis as assignment rights provided to

competitive service employees under Sec. 351.701 and in paragraphs (a)

(1) and (2) of this section.

* * * * *

16. In Sec. 351.802, paragraph (a)(2) is revised to read as

follows:

Sec. 351.802 Content of notice.

(a) * * *

(2) The employee's competitive area, competitive level, subgroup,

service date, and three most recent ratings of record received in

the applicable 4-, 5-, 6-year period, as provided in

Sec. 351.504(b)(1).

* * * * *

17. In Sec. 351.803, paragraph (a) is revised to read as follows:

Sec. 351.803 Notice of eligibility for reemployment and other

placement assistance.

(a) An employee who receives a specific notice of separation under

this part must be given information concerning the right to

reemployment consideration and career transition assistance under

subparts B (Reemployment Priority List), F and G (Career Transition

Assistance Programs) of part 330 of this chapter. The employee must

also be given a form to authorize, at his or her option, the release of

his or her resume and other relevant employment information for

employment referral to State Dislocated Worker Units and potential

public or private sector employers. The employee must also be given

information concerning how to apply both for unemployment insurance

through the appropriate State program and benefits available under the

State dislocated worker unit(s), as designated or created under title

III of the Job Training Partnership Act, and an estimate of severance

pay (if eligible).

* * * * *

18. Section 351.804 is revised to read as follows:

Sec. 351.804 Expiration of notice.

(a) A notice expires when followed by the action specified, or by

an action less severe than specified, in the notice or in an amendment

made to the notice before the agency takes the action.

(b) An agency may not take the action before the effective date in

the notice; instead, the agency may cancel the reduction in force

notice and issue a new notice subject to this subpart.

19. Section 351.805 is revised to read as follows:

Sec. 351.805 New notice required.

(a) An employee is entitled to a written notice of, as appropriate,

at least 60 or 120 full days if the agency decides to take an action

more severe than first specified.

(b) An agency must give a employee an amended written notice if the

reduction in force is changed to a later date. A reduction in force

action taken after the date specified in the notice given to the

employee is not invalid for that reason, except when it is challenged

by a higher-standing employee in the competitive level who is reached

out of order for a reduction in force action as a result of the change

in dates.

(c) An agency must give an employee an amended written notice and

allow the employee to decide whether to accept a better offer of

assignment under subpart G of this part that becomes available before

or on the effective date of the reduction in force. The agency must

give the employee the amended notice regardless of whether the employee

has accepted or rejected a previous offer of assignment, provided that

the employee has not voluntarily separated from his or her official

position.

[[Page 5182]]

PART 430--PERFORMANCE MANAGEMENT

20. The authority citation for part 430 continues to read as

follows:

Authority: 5 U.S.C. chapter 43.

21. In Sec. 430.201, paragraph (c) is added to read as follows:

Sec. 430.201 In General.

* * * * *

(c) Equivalent ratings of record. (1) If an agency has

administratively adopted and applied the procedures of this subpart to

evaluate the performance of its employees, the ratings of record

resulting from that evaluation are considered ratings of record for

reduction in force purposes.

(2) Other performance evaluations given while an employee is not

covered by the provisions of this subpart are considered ratings of

record for reduction in force purposes when the performance

evaluation--

(i) Was issued as an officially designated evaluation under the

employing agency's performance evaluation system,

(ii) Was derived from the appraisal of performance against

expectations that are established and communicated in advance and are

work related, and

(iii) identified whether the employee performed acceptably.

(3) When the performance evaluation does not include a summary

level designator and pattern comparable to those established at

Sec. 430.208(d), the agency may identify a level and pattern based on

information related to the appraisal process.

22. In Sec. 430.203. the definitions of Critical element,

Performance rating, and Rating of record are revised to read as

follows:

Sec. 430.203 Definitions.

* * * * *

Critical element means a work assignment or responsibility of such

importance that unacceptable performance on the element would result in

a determination that an employee's overall performance is unacceptable.

Such elements shall be used to measure performance only at the

individual level.

* * * * *

Performance rating means the written, or otherwise recorded,

appraisal of performance compared to the performance standard(s) for

each critical and non-critical element on which there has been an

opportunity to perform for the minimum period. A performance rating may

include the assignment of a summary level within a pattern (as

specified in Sec. 430.208(d)).

* * * * *

Rating of record means the performance rating prepared at the end

of an appraisal period for performance of agency assigned duties over

the entire period and the assignment of a summary level within a

pattern (as specified in Sec. 430.208(d)) or in accordance with

Sec. 531.404(a)(1) of this chapter. These constitute official ratings

of record referenced in this chapter.

23. In Sec. 430.206, paragraphs (a)(2) and (b)(4) are revised,

paragraphs (b)(6) and (b)(7) are redesignated as paragraphs (b)(7) and

(b)(8) respectively, and a new paragraph (b)(6) is added to read as

follows:

Sec. 430.206 Planning performance.

(a) * * *

(2) Each program shall specify a single length of time as its

appraisal period. The appraisal period generally shall be 12 months so

that employees are provided a rating of record on an annual basis. A

program's appraisal period may be longer when work assignments and

responsibilities so warrant or performance management objectives can be

achieved more effectively.

(b) * * *

(4) Each performance plan shall include all elements which are used

in deriving and assigning a summary level, including at least one

critical element and any non-critical element(s).

* * * * *

(6) A performance plan established under an appraisal program that

uses only two summary levels (pattern A as specified in

Sec. 430.208(d)(1)) shall not include non-critical elements.

* * * * *

24. In Sec. 430.208, the introductory text to paragraph (d)(2) is

revised, paragraph (d)(4) is revised, and a new paragraph (d)(5) is

added to read as follows:

Sec. 430.208 Rating performance.

* * * * *

(d) * * *

(2) Within any of the patterns shown in paragraph (d)(1) of this

section, summary levels shall comply with the following requirements:

* * * * *

(4) The designation of a summary level and its pattern shall be

used to provide consistency in describing ratings of record and as a

reference point for applying other related regulations, including, but

not limited to, assigning additional retention service credit under

Sec. 351.504 of this chapter.

(5) Under the provisions of Sec. 351.504(f) of this chapter, the

number of years additional retention service credit established for a

summary level of a rating of record shall be applied in a uniform and

consistent manner within a competitive area in any given reduction in

force, but the number of years may vary:

(i) In different reductions in force;

(ii) In different competitive areas; and

(iii) In different summary level patterns within the same

competitive area.

* * * * *

PART 531--PAY UNDER THE GENERAL SCHEDULE

25. The authority citation for part 531 continues to read as

follows:

Authority: 5 U.S.C. 5115, 5307, and 5338; sec. 4 of Pub. L. 103-

89, 107 Stat. 981; and E.O. 12748, 56 FR 4521, 3 CFR 1991 Comp., p.

316;

Subpart B also issued under 5 U.S.C. 5303(g), 5333, 5334(a), and

7701(b)(2);

Subpart C also issued under 5 U.S.C. 5304, 5305, and 5553; sections

302 and 404 of FEPCA, Pub. L. 101-509, 104 Stat. 1462 and 1466; and

section 3(7) of Pub. L. 102-378, 106 Stat. 1356;

Subpart D also issued under 5 U.S.C. 5335(g) and 7701(b)(2);

Subpart E also issued under 5 U.S.C. 5336;

Subpart F also issued under 5 U.S.C. 5304, 5305(g)(1), and 5553;

and E.O. 12883, 58 FR 63281, 3 CFR, 1993 Comp., p. 682;

Subpart G also issued under 5 U.S.C. 5304, 5305, and 5553; section

302 of the Federal Employees Pay Comparability Act of 1990 (FEPCA),

Pub. L. 101-509, 104 Stat. 1462; and E.O. 12786, 56 FR 67453, 3 CFR,

1991 Comp., p. 376.

26. In Sec. 531.409, paragraphs (c)(1), (c)(2)(i), and (c)(2)(ii)

are revised to read as follows:

Sec. 531.409 Acceptable level of competence determinations.

* * * * *

(c) Delay in determination. (1) An acceptable level of competence

determination shall be delayed when, and only when, either of the

following applies:

(i) An employee has not had the minimum period of time established

at Sec. 430.207(a) of this chapter to demonstrate acceptable

performance because he or she has not been informed of the specific

requirements for performance at an acceptable level of competence in

his or her current position, and the employee has not been given a

performance rating in any position within the minimum period of time

(as established at Sec. 430.207(a) of this chapter) before the end of

the waiting period; or

[[Page 5183]]

(ii) An employee is reduced in grade because of unacceptable

performance to a position in which he or she is eligible for a within-

grade increase or will become eligible within the minimum period as

established at Sec. 430.207(a) of this chapter.

(2) * * *

(i) The employee shall be informed that his or her determination is

postponed and the appraisal period extended and shall be told of the

specific requirements for performance at an acceptable level of

competence.

(ii) An acceptable level of competence determination shall then be

made based on the employee's rating of record completed at the end of

the extended appraisal period.

* * * * *

[FR Doc. 97-2686 Filed 2-3-97; 8:45 am]

BILLING CODE 6325-01-M