Performance Ratings

OFFICE OF PERSONNEL MANAGEMENT

5 CFR Parts 430 and 534

RIN 3206-AH77

Performance Ratings

AGENCY: Office of Personnel Management.

ACTION: Proposed rule.

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

regulations to codify longstanding policy regarding retroactive,

assumed, and carry-over ratings of record. The proposed regulations

amend the current performance management regulations to explicitly

specify that ratings of record are final upon issuance unless

challenged by the employee, and that retroactive, assumed, and carry-

over ratings of record are prohibited.

DATES: Comments must be submitted on or before June 19, 1998.

ADDRESSES: Comments may be sent or delivered to: Henry Romero,

Associate Director, Workforce Compensation and Performance Service,

U.S. Office of Personnel Management, Room 7508, 1900 E Street NW.,

Washington, DC 20415.

FOR FURTHER INFORMATION CONTACT: Barbara Colchao, (202) 606-2720.

SUPPLEMENTARY INFORMATION: The purpose of these amendments is to

clarify the Office of Personnel Management's (OPM) longstanding

interpretation of the law regarding the finality of a rating of record

given to reflect the actual work performed during one appraisal period,

which has been the consistent response to agencies' inquiries for many

years. OPM is experiencing an increasing number of inquiries, as

agencies develop new performance management programs to encourage high

performance organizations, and to conform to the requirements of the

Government Performance and Results Act. OPM concurs with the opinion

voiced by several agencies that these policies should be codified in

regulation, in order to provide this information in a more uniform and

consistent manner.

There are four issues addressed in the proposed regulations: (1) A

prohibition against an agency unilaterally changing a rating that has

been issued as a final rating of record to an employee; (2) a

prohibition against an agency going back to provide a rating of record

for a past appraisal period where none was given; (3) a prohibition

against an agency issuing an employee an ``assumed'' rating of record

that does not reflect an appraisal of actual performance; and (4) a

prohibition against ``carrying over'' a previous rating of record to

cover more than one appraisal period.

Retroactive Change to a Rating of Record

Agencies are most often confronted with the issue of whether

management has the authority to retroactively change a rating of record

in situations where information about an employee's performance has

been discovered long after the rating was finalized. This situation

generally comes about when an employee has deliberately kept

information from management and, therefore, has exhibited conduct that

would warrant adverse action under part 752, Adverse Actions.

Otherwise, if the information was not deliberately withheld but went

undiscovered at the time the rating of record was prepared, an agency

should review its appraisal process and determine if it is designed to

capture adequately all significant performance information. It is OPM's

position that only in very rare circumstances would a rating official

be unaware of significant performance issues that went undetected at

the time of appraisal due to no fault on the part of the employee or

the rating official.

While no explicit language in the law states that a rating of

record should be considered final, the prohibition on retroactively

changing a rating can be derived from the overall construction and

intent of the performance appraisal statute and regulations, as well as

OPM's regulations addressing reduction in force (RIF). The statute at 5

U.S.C. 4302(a)(3) and 5 CFR 430.102(b)(6) of the regulations require

that the results of performance appraisal must be used as a basis for

appropriate personnel actions. To allow the retroactive change of

ratings of record would result in requiring the agency to correct all

records and personnel actions that were affected by that rating. The

most obvious of these subsequent actions would involve the review of

any pay changes or monetary awards, which were based in whole or in

part on the rating of record, to determine whether the new rating would

have resulted in a different pay or award outcome.

In addition, an agency would be required to scrutinize any

intervening personnel actions that had been affected by the original

rating of record and that would need to be corrected due to the new

rating of record. For example, the regulations that prescribe RIF

procedures implicitly rely on a rating of record that can be assumed to

be final. Furthermore, agencies generally strive to avoid the

perception that RIF actions could be manipulated through the

introduction of new ratings of record. If retroactive changes to final

ratings of record were allowed, agencies would be compelled to correct

any retention register that uses a changed rating of record and would

once again run the risk that employees would perceive an unfairness in

using this changed rating of record, unless the change could be shown

to be a previous miscalculation or administrative error.

Additionally, the very structure of the performance appraisal

regulations leads to the logical conclusion that the intent of the

system is to reach a point of finality when management is held

accountable for issuing a rating of record that represents an

employee's performance for the defined time of the appraisal period.

Sections 430.206, 430.207, and 430.208 of title 5 of the Code of

Federal Regulations regulate and describe the cycle of planning,

monitoring, and issuance of a rating. Section 430.208(g) states that

when an agency extends the rating cycle, a rating of record must be

prepared as soon as practicable after the conclusion of the extension.

Section 430.209(e) establishes a requirement for agencies to report

ratings of record to OPM through the Central Personnel Data File. Taken

as a whole, the regulatory scheme for performance appraisal is

constructed around an appraisal period that concludes with a final

rating of record.

As an exception to the general prohibition regarding retroactively

changing ratings of record, there is a

[[Page 19412]]

relatively limited set of circumstances where an agency might feel

compelled to change a rating of record long after it has been presumed

to be final. An administrative error, such as a rating official who

inadvertently ``checks the wrong box'' and assigns a summary rating

level that does not correspond to the element levels that have been

assigned, would certainly be good cause for an agency's decision to

retroactively change the overall rating of record. Information

regarding the employee's performance during the appraisal period that

provides indisputable proof that the original rating of record was

erroneous, and which was previously unknown or unavailable to the

agency, could form the basis for a decision to retroactively change the

rating. This situation probably would arise most often in cases where

the employee was evaluated against numerical standards with objective

requirements, and where the rating official would have had no

subjective input into the evaluation process.

While OPM believes it was not the intent of the law governing

performance appraisal to allow for independent action by management to

retroactively alter a final rating of record, it does recognize some

circumstances where such a change would be required. These proposed

regulations are designed to be sufficiently flexible to allow for

changes to ratings of record that occur in the normal course of

communication between supervisors and employees close to the original

issuance of a rating of record, as well as changes resulting from

administrative procedures that provide employees with an avenue to

challenge their ratings of record.

Retroactively Issuing a Rating of Record Where None Existed

The second issue addressed in the proposed regulation is the

prohibition against producing a retroactive rating of record for an

appraisal period that has passed and for which no rating of record was

issued. The statute requires the periodic appraisal of employees (5

U.S.C. 4302(a)(1)), and the regulations require that a rating of record

be given to an employee as soon as practicable after the end of the

appraisal period (5 CFR 430.208(a)). When an appraisal cannot be given

at the end of the appraisal period, the regulations already provide for

extending the appraisal period until the conditions to complete a

rating of record are met (5 CFR 430.208(g)). A rating of record then is

issued that covers the entire appraisal period, including the

extension. If the appraisal period was not extended, or if a rating of

record for a later appraisal period was issued, the agency cannot go

back and ``fill in the blanks'' at some future point in time. To permit

such a practice would undermine the basic concepts of performance

appraisal and severely limit the accuracy of the ratings produced due

to the very passage of time involved.

Assumed Ratings of Record

The third issue addressed in the proposed regulation is the

prohibition against issuing to an employee a rating of record that does

not reflect actual performance, but assumes a level of performance

without evaluation. The intent of the law is clear; Congress intended

Federal employees to be evaluated based upon the actual work they

performed during the appraisal period. Some confusion has arisen over

the years because of the process used to include the value of

performance credit when agencies are establishing retention registers

in preparation for a reduction in force. In situations where an

employee did not receive a rating of record, an agency previously

could, for RIF purposes only, assign the value of performance credit

for that appraisal period at the Fully Successful level. Regulations,

published in November 1997, changed the procedures for dealing with

missing ratings of record and changed the reference point for assigning

additional service credit for performance for employees who have no

rating of record to the value assigned to the applicable modal rating

level in the competitive area, or some larger agency population

aggregation. These proposed regulations make no further change to the

reduction in force process. Their sole purpose is to regulate that an

agency may not issue a bona fide rating of record to an employee that

assumes some level of performance since employees are entitled to a

rating of record that reflects their actual level of performance. This

does not impose a requirement that performance must be reflected only

by means of a narrative justification. Agencies are free to design the

process and procedures they will use to evaluate employee performance.

These regulations are intended to ensure that an evaluation of actual

employee performance is the basis of the rating of record.

Carrying Over a Rating of Record

Finally, these proposed regulations would codify the prohibition

against carrying over a previous rating of record into another

appraisal period as a bona fide rating of record. This is obviously

tied closely to the above requirement that employees be given a rating

of record that reflects their performance during a specific appraisal

period. This prohibition does not negate the fact that an employee may

perform at the same level for several years and, therefore,

appropriately be assigned the same summary level in the rating of

record for each of those separate appraisal periods. As noted in 5

U.S.C. 4302 (b) (1) and (2), agencies are required by law to provide

performance standards to employees at the beginning of each appraisal

period, and to evaluate the employee ``during the appraisal period.''

To allow agencies to carry over a previous year's rating of record

without an actual evaluation of the employee's performance would defeat

the intent of the law and render the performance appraisal program of

the agency meaningless. This provision would not prohibit an agency

from using previous ratings of record as the basis for personnel

actions when a current rating of record is not available, provided the

recency of the previous rating of record is reasonable. Such a feature

was used by the Performance Management and Recognition System for pay

administration purposes, and also is contained in some of the

demonstration projects, where a past rating of record, usually not more

than one year old, is used as the basis for a pay adjustment when a

current rating is not available.

Technical Correction

The Office of Personnel Management is taking this opportunity to

make minor corrections to citations that were overlooked when

regulations revising the awards provisions were finalized in September

1995.

Regulatory Flexibility Act

I certify that these regulations will not have a significant

economic impact on a substantial number of small entities because they

apply only to Federal agencies and employees.

List of Subjects

5 CFR Part 430

Decorations, medals, awards, Government employees.

5 CFR Part 534

Government employees, Hospitals, Students, Wages.

Office of Personnel Management.

Janice R. Lachance,

Director.

Accordingly, OPM is proposing to amend parts 430 and 534 of title

5, Code of Federal Regulations, as follows:

[[Page 19413]]

PART 430--PERFORMANCE MANAGEMENT

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

follows:

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

2. In Sec. 430.208, paragraphs (a)(1), (a)(2), (a)(3) and (i) are

added; paragraph (h) is redesignated as paragraph (j) and a new

paragraph (h) is added to read as follows:

Sec. 430.208 Rating performance.

(a) * * *

(1) A rating of record shall be based only on the evaluation of

actual job performance for the designated appraisal period.

(2) An agency shall not issue a rating of record that assumes a

level of performance by an employee without an actual evaluation of

that employee's performance.

(3) Except as provided in Sec. 430.208(i), a rating of record is

final when it is issued to an employee with all appropriate reviews and

signatures.

* * * * *

(h) Each rating of record shall cover a specified appraisal period.

Agencies shall not carry over a rating of record prepared for a

previous appraisal period to a subsequent appraisal period(s).

(i) When either a regular appraisal period or an extended appraisal

period ends and a performance plan has been established for a

subsequent appraisal period with no rating of record issued for the

earlier appraisal period, an agency shall not produce a rating of

record to cover that period retroactively. Once issued, ratings of

record shall not be changed retroactively except that a rating of

record may be changed--

(1) Within 60 days of issuance based upon an informal request by

the employee;

(2) As a result of a grievance, complaint, or other formal

proceeding permitted by law that results in a final determination by

appropriate authority that the rating of record must be changed; or

(3) Where the agency determines that a rating of record was

incorrectly recorded or calculated.

PART 534--PAY UNDER OTHER SYSTEMS

3. The authority citation for part 534 continues to read as

follows:

Authority: 5 U.S.C. 1104, 5307, 5351, 5352, 5353, 5376, 5383,

5384, 5385, 5541, and 5550a.

4. In Sec. 534.505, paragraph (b) is revised to read as follows:

Sec. 534.505 Pay related matters.

* * * * *

(b) Performance awards. Performance awards may be paid under 5

U.S.C. chapter 45 and Sec. 451.104(a)(3) of this chapter.

[FR Doc. 98-10266 Filed 4-17-98; 8:45 am]

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