Reduction in Force and Mandatory Exceptions

SUMMARY: The Office of Personnel Management (OPM) is issuing interim

regulations that implement recent legislation giving employees the

right to use annual leave to establish initial retirement eligibility

for employees in reduction in force and other restructuring situations.

These regulations also implement related provisions concerning the

availability of annual leave to qualify for continuance of health

benefits in the same situation.

DATES: These regulations are effective March 10, 1997. Comments must be

received on or before May 9, 1997.

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

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

Personnel Management, Washington, DC 20415.

FOR FURTHER INFORMATION CONTACT:

(part 351) Thomas A. Glennon or Edward P. McHugh, (202) 606-0960, FAX

(202) 606-2329; (part 630) Jo Ann Perrini, (202) 606-2858, FAX (202)

606-0824.

SUPPLEMENTARY INFORMATION: Section 634 of the Treasury, Postal Service,

and General Government Appropriations Act, 1997, as contained in

section 101(f) of the Omnibus Consolidated Appropriations Act, 1997

(P.L. 104-208, approved September 30, 1996), provides that an employee

who is being involuntarily separated from an agency due to reduction in

force or transfer of function may elect to use annual leave and remain

on the agency's rolls after the effective date the employee would

otherwise have been separated in order to establish initial eligibility

for immediate retirement, including discontinued service or voluntary

early retirement. The same option is also available to acquire

eligibility to continue health benefits into retirement. These

provisions are codified in new 5 U.S.C. 6302(g).

Since January 1993, OPM has provided similar benefits by

regulation. Presently, an agency may elect to retain on annual leave an

employee who has received a specific reduction in force notice so that

the employee may establish initial eligibility for retirement, and/or

for continuance of health benefits into retirement (58 FR 5563, January

22, 1993, as amended at 60 FR 2678, January 11, 1995). For an employee

to achieve initial eligibility in a reduction in force situation,

agencies use a ``Permissive Temporary Exception'' under authority of

section 5 CFR 351.608(d) to retain an employee past the effective date

that the employee would have been separated.

The new 5 U.S.C. 6302(g) required two major changes to OPM's

regulatory provisions: (1) an employee who is being involuntarily

separated now has a right to use his or her annual leave to achieve

initial eligibility for retirement and/or continued health benefits

coverage; and (2) this right extends to transfer of function relocation

situations.

To implement 5 U.S.C. 6302(g), section 5 CFR 351.606, Mandatory

exceptions, is revised by adding a new paragraph (b).

Section 5 CFR 351.606(b)(1) provides that an employee who is being

involuntarily separated from an agency because of reduction in force

under authority of 5 CFR part 351 may elect to use annual leave past

the date that the employee would otherwise have been separated for the

purpose of establishing initial eligibility under sections 5 U.S.C.

8336, 8412, or 8414 for immediate retirement, including discontinued

service or voluntary early retirement.

Section 5 CFR 351.606(b)(1) also provides the same election option

so that an employee who is being involuntarily separated from an agency

because of reduction in force may use annual leave for the purpose of

acquiring initial eligibility under 5 U.S.C. 8905 to continue health

benefits into retirement.

Section 5 CFR 351.606(b)(2) provides that an employee who is being

involuntarily separated as an adverse action because of the employee's

decision to decline relocation (including transfer of function) may use

annual leave to remain on the agency's rolls after the effective date

of the relocation to establish initial eligibility for immediate

retirement under 5 U.S.C. 8336, 8412, or 8414 (including discontinued

service or voluntary early retirement), and/or to establish initial

eligibility under 5 U.S.C. 8905 to continue health benefits coverage

into retirement.

Section 5 CFR 351.606(b)(3) provides that the entitlements under 5

U.S.C. 6302(g) apply to employees covered by chapter 63 of title 5,

United States Code.

Section 5 CFR 351.606(b)(4) provides that an agency may not retain

any employee under the provisions of 5 U.S.C. 6302(g) past the date

that the employee first becomes eligible for immediate retirement, and/

or for continuation of health benefits into retirement.

Section 5 CFR 351.606(b)(5) provides that, except as permitted by 5

CFR 351.608(d), an agency may not approve an employee's use of any

other type of leave after the employee has been retained under a

temporary exception.

Section 5 CFR 351.606(b)(6) clarifies that the annual leave that

may be used for the purpose of remaining on an agency's rolls to

establish eligibility for immediate retirement and/or establish initial

eligibility to continue health benefits coverage into retirement is

described in 5 CFR 630.212.

Section 630.212 states that all accumulated, accrued, and restored

annual leave to an employee's credit prior to the effective date of a

reduction in force or relocation and annual leave earned by an employee

while in a paid leave status after the effective date of the reduction

in force or relocation may be used for these purpose. However, annual

leave that is advanced to an employee under 5 U.S.C. 6302(d) may not be

used for these purposes. In addition, an employing agency may permit an

approved leave recipient to use for these purposes any or all annual

leave donated under 5 CFR part 630,

[[Page 10682]]

subpart I, or made available under 5 CFR part 630, subpart J, as of the

effective of the reduction in force or relocation.

In conforming changes, section 5 CFR 351.606(a) is revised with a

reference label, and former section 5 CFR 351.606(b) is found in a new

section 5 CFR 351.606(c), also with a reference label.

In another conforming change, section 5 CFR 351.608 is revised as a

result of the entitlements provided under 5 U.S.C. 6302(g). Also, a new

section 5 CFR 351.608(e) provides that an employee who is not covered

by chapter 63 of title 5, United States Code, but who is being

involuntarily separated from an agency because of reduction in force

under part 5 CFR 351, may, at the agency's discretion, elect to use

annual leave past the date that the employee would otherwise have been

separated for the purpose of establishing initial eligibility under

sections 5 U.S.C. 8336, 8412, or 8414 (or other authority) for

immediate retirement, including discontinued service or voluntary early

retirement, and/or establishing eligibility under 5 U.S.C. 8905 (or

other authority) to continue health benefits coverage into retirement.

An additional conforming change revises section 351.506(b) to

provide, consistent with prior policy, that the retention standing of

each employee retained in a competitive level as an exception under

section 351.606(b), as well as sections 351.607 or section 351.608, is

determined as of the date the employee would have been released had the

exception not been used. The retention standing of each employee

retained under any of these three exceptions remains fixed until

completion of the reduction in force action which resulted in the

mandatory or permissive temporary retention.

Waiver of Notice of Proposed Rulemaking and Delay in Effective Date

Pursuant to 5 U.S.C. 553(b)(3)(B), I find that good cause exists

for waiving the general notice of proposed rulemaking because it would

be contrary to the public interest to delay access to benefits. Also,

pursuant to 5 U.S.C. 553(d)(3), I find that good cause exists to make

this amendment effective in less than 30 days. The delay in the

effective date is being waived because these regulations provide a

benefit authorized by statute rather than eliminating or modifying

existing benefits. This amendment gives full effect to the benefits

extended by the amended provisions of the statute at the earliest

practicable date.

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 in Parts 351 and 630

Administrative practice and procedure, Government employees.

U.S. Office of Personnel Management.

James B. King,

Director.

Accordingly, OPM is amending parts 351 and 630 of title 5, Code of

Federal Regulations, as follows:

PART 351--REDUCTION IN FORCE

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

follows:

Authority: 5 U.S.C. 1302, 3502, 3503; sec. 351.801 also issued

under E.O. 12828, 58 FR 2965.

2. In Sec. 351.506, paragraph (b) is revised to read as follows:

Sec. 351.506 Effective date of retention standing.

* * * * *

(b) The retention standing of each employee retained in a

competitive level as an exception under Sec. 351.606(b), Sec. 351.607,

or Sec. 351.608, is determined as of the date the employee would have

been released had the exception not been used. The retention standing

of each employee retained under any of these provisions remains fixed

until completion of the reduction in force action which resulted in the

temporary retention.

* * * * *

3. Sec. 351.606 is revised to read as follows:

Sec. 351.606 Mandatory exceptions.

(a) Armed Forces restoration rights. When a agency applies

Sec. 351.601 or Sec. 351.605, it shall give retention priorities over

other employees in the same subgroup to each group I or II employee

entitled under 38 U.S.C. 2021 or 2024 to retention for, as applicable,

6 months or 1 year after restoration, as provided in part 353 of this

chapter.

(b) Use of annual leave to reach initial eligibility for retirement

or continuance of health benefits. (1) An agency shall make a temporary

exception under this section to retain an employee who is being

involuntarily separated under this part, and who elects to use annual

leave to remain on the agency's rolls after the effective date the

employee would otherwise have been separated by reduction in force, in

order to establish initial eligibility for immediate retirement under 5

U.S.C. 8336, 8412, or 8414, and/or to establish initial eligibility

under 5 U.S.C. 8905 to continue health benefits coverage into

retirement.

(2) An agency shall make a temporary exception under this section

to retain an employee who is being involuntarily separated under

authority of part 752 of this chapter because of the employee's

decision to decline relocation (including transfer of function), and

who elects to use annual leave to remain on the agency's rolls after

the effective date the employee would otherwise have been separated by

adverse action, in order to establish initial eligibility for immediate

retirement under 5 U.S.C. 8336, 8412, or 8414, and/or to establish

initial eligibility under 5 U.S.C. 8905 to continue health benefits

coverage into retirement.

(3) An employee retained under paragraph (b) by this section must

be covered by chapter 63 of title 5, United States Code.

(4) An agency may not retain an employee under paragraph (b) of

this section past the date that the employee first becomes eligible for

immediate retirement, or for continuation of health benefits into

retirement, except that an employee may be retained long enough to

satisfy both retirement and health benefits requirements.

(5) Except as permitted by 5 CFR 351.608(d), an agency may not

approve an employee's use of any other type of leave after the employee

has been retained under a temporary exception authorized by paragraph

(b) of this section.

(6) Annual leave for purposes of paragraph (b) of this section is

described in Sec. 630.212 of this chapter.

(c) Documentation. Each agency shall record on the retention

register, for inspection by each employee, the reasons for any

deviation from the order of release required by Sec. 351.601 or

Sec. 351.605.

4. Section 351.608 is revised to read as follows:

Sec. 351.608 Permissive temporary exceptions.

(a) General. (1) In accordance with this section, an agency may

make a temporary exception to the order of release in Sec. 351.601, and

to the action provisions of Sec. 351.603, when needed to retain an

employee after the effective date of a reduction in force. Except as

[[Page 10683]]

otherwise provided in paragraphs (c) and (e) of this section, an agency

may not make a temporary exception for more than 90 days.

(2) After the effective date of a reduction in force action, an

agency may not amend or cancel the reduction in force notice of an

employee retained under a temporary exception so as to avoid completion

of the reduction in force action. This does not preclude the employee

from receiving or accepting a job offer in the same competitive area in

accordance with a Reemployment Priority List established under part

330, subpart B, of this chapter, or under a Career Transition

Assistance Plan established under part 330, subpart E, of this chapter,

or equivalent programs.

(b) Undue interruption. An agency may make a temporary exception

for not more than 90 days when needed to continue an activity without

undue interruption.

(c) Government obligation. An agency may make a temporary exception

to satisfy a Government obligation to the retained employee without

regard to the 90-day limit set forth under paragraph (a)(1) of this

section.

(d) Sick leave. An agency may make a temporary exception to retain

on sick leave a lower standing employee covered by chapter 63 of title

5, United States Code (or other applicable leave system for Federal

employees), who is on approved sick leave on the effective date of the

reduction in force, for a period not to exceed the date the employee's

sick leave is exhausted. Use of sick leave for this purpose must be in

accordance with the requirements in part 630, subpart D, of this

chapter (or other applicable leave system for Federal employees).

Except as authorized by Sec. 351.606(b), an agency may not approve an

employee's use of any other type of leave after the employee has been

retained under this paragraph (d).

(e)(1) An agency may make a temporary exception to retain on

accrued annual leave a lower standing employee who:

(i) Is being involuntarily separated under this part;

(ii) Is covered by a Federal leave system under authority other

than chapter 63 of title 5, United States Code; and,

(iii) Will attain first eligibility for an immediate retirement

benefit under 5 U.S.C. 8336, 8412, or 8414 (or other authority), and/or

establish eligibility under 5 U.S.C. 8905 (or other authority) to carry

health benefits coverage into retirement during the period represented

by the amount of the employee's accrued annual leave.

(2) An agency may not approve an employee's use of any other type

of leave after the employee has been retained under this paragraph (e).

(3) This exception may not exceed the date the employee first

becomes eligible for immediate retirement or for continuation of health

benefits into retirement, except that an employee may be retained long

enough to satisfy both retirement and health benefits requirements.

(4) Accrued annual leave includes all accumulated, accrued, and

restored annual leave, as applicable, in addition to annual leave

earned and available to the employee after the effective date of the

reduction in force. When approving a temporary exception under this

provision, an agency may not advance annual leave or consider any

annual leave that might be credited to an employee's account after the

effective date of the reduction in force other than annual leave earned

while in an annual leave status.

(f) Other exceptions. An agency may make a temporary exception

under this section to extend an employee's separation date beyond the

effective date of the reduction in force when the temporary retention

of a lower standing employee does not adversely affect the right of any

higher standing employee who is released ahead of the lower standing

employee. The agency may establish a maximum number of days, up to 90

days, for which an exception may be approved.

(g) Notice to employees. When an agency approves an exception for

more than 30 days, it must:

(1) Notify in writing each higher standing employee in the same

competitive level reached for release of the reasons for the exception

and the date the lower standing employee's retention will end; and

(2) List opposite the employee's name on the retention register the

reasons for the exception and the date the employee's retention will

end.

PART 630--ABSENCE AND LEAVE

5. The authority citation for part 630 continues to read as

follows:

Authority: 5 U.S.C. 6311; Sec. 630.301 also issued under Pub. L.

103-356, 108 Stat. 3410; Sec. 630.303 also issued under 5 U.S.C.

6133(a); Secs. 630.306 and 630.308 also issued under 5 U.S.C.

6304(d)(3), Pub. L. 102-484, 106 Stat. 2722, and Pub. L. 103-337,

108 Stat. 2663; subpart D also issued under Pub. L. 103-329, 108

Stat. 2423; Sec. 630.501 and subpart F also issued under E.O. 11228,

30 FR 7739, 3 CFR 1974 Comp., p. 163; subpart G also issued under 5

U.S.C. 6305; subpart H also issued under 5 U.S.C. 6326; subpart I

also issued under 5 U.S.C. 6332, Pub. L. 100-566, 102 Stat. 2834,

and Pub. L. 103-103, 107 Stat. 1022, subpart J also issued under 5

U.S.C. 6362, Pub. L. 100-566, and Pub. L. 103-103; subpart K also

issued under Pub. L. 102-25, 105 Stat. 92; and subpart L also issued

under 5 U.S.C. 6387 and Pub. L. 103-3, 107 Stat. 23.

6. In part 630, Sec. 630.212 is added to read as follows:

Sec. 630.212 Use of annual leave to establish initial eligibility for

retirement or continuation of health benefits.

(a) An employee may elect to use annual leave and remain on the

agency's rolls in order to establish initial eligibility for immediate

retirement under 5 U.S.C. 8336, 8412, or 8414, and/or to establish

initial eligibility under 5 U.S.C. 8905 to continue health benefits

coverage into retirement, as provided in:

(1) Section 351.606(b)(1) for an employee who would otherwise have

been separated by reduction in force procedures under part 351 of this

chapter; or

(2) Section 351.606(b)(2) of this chapter for an employee who would

otherwise have been separated by adverse action procedures under

authority of part 752 of this chapter because of the employee's

decision to decline relocation (including transfer of function).

(b)(1) Annual leave that may be used for the purposes described in

paragraph (a) of this section includes all accumulated, accrued, and

restored annual leave to the employee's credit prior to the effective

date of the reduction in force or relocation (including transfer of

function) and annual leave earned by an employee while in a paid leave

status after the effective date of the reduction in force or relocation

(including transfer of function).

(2) Annual leave that is advanced to an employee under 5 U.S.C.

6302(d), including any advance annual leave that may be credited to an

employee's leave account after the effective date of the reduction in

force or relocation (including transfer of function), may not be used

for purpose of this section.

(3) For purposes of this section, the employing agency may approve

the use of any or all annual leave donated to an employee under part

630, subpart I, of this chapter (Voluntary Leave Transfer Program), or

made available to the employee under part 630, subpart J, of this

chapter (Voluntary Leave Bank Program), as of the effective date of the

reduction in force or relocation.

[FR Doc. 97-5835 Filed 3-7-97; 8:45 am]

BILLING CODE 6325-01-M