Miscellaneous Changes in Compensation Regulations

Federal RegisterNov 24, 1998

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OFFICE OF PERSONNEL MANAGEMENT

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

RIN 3206-AH11

Miscellaneous Changes in Compensation Regulations

AGENCY: Office of Personnel Management.

ACTION: Proposed rule with request for comments.

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SUMMARY: The Office of Personnel Management is issuing proposed

regulations to correct or clarify various regulatory provisions dealing

with the compensation of Federal employees. Many of the proposed

changes were prompted by questions and comments from users of the

regulations. The proposed regulations are intended to assist agencies

in administering compensation programs and to provide clearer

information to employees covered by those programs.

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

ADDRESSES: Comments may be sent or delivered to Donald J. Winstead,

Assistant Director for Compensation Administration, Workforce

Compensation and Performance Service, Office of Personnel Management,

Room 7H31, 1900 E Street NW., Washington, DC 20415 (FAX: (202) 606-0824

or e-mail: [email protected]).

FOR FURTHER INFORMATION CONTACT: Bryce Baker, (202) 606-2858, FAX:

(202) 606-0824, or e-mail: payleave @ opm.gov.

SUPPLEMENTARY INFORMATION: The Office of Personnel Management (OPM)

proposes to revise a number of miscellaneous pay administration

regulations to correct various typographical or technical errors or

omissions and to codify or clarify OPM policies. The proposed changes

were identified through a general review of compensation regulations by

OPM staff--a review that took into account many questions and comments

from users of the regulations. The following table lists the specific

regulatory sections that are being proposed for revision and briefly

describes the purpose and/or effect of each change.

------------------------------------------------------------------------

Proposed rule Description of proposed change

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Sec. 530.202............... Aggregate Limitation on Pay: Definitions.

Amends the definition of ``discretionary

payment'' to make clear that retention

allowances are the only fixed-rate

payments made on a continuing basis that

are considered to be discretionary after

they have been initially authorized.

(Also, see 58 FR 50248, Supplementary

Information accompanying the final rule

on the aggregate pay limitation, dated

September 27, 1993.) Amends the

definition of ``estimated aggregate

compensation'' to make clear that this

term includes the value of all

nondiscretionary payments to which the

employee is currently entitled as well as

projected to be entitled during the

course of the calendar year. For example,

the amount of the entitlement may be

expected to change based on known facts

(such as the scheduled date of

reassignment to a new locality pay area).

The projection would include

nondiscretionary payments for which

authorization will lapse during the

calendar year, but which are expected to

be reauthorized (e.g., physicians

comparability allowance payments under

part 595).

Sec. 530.203(c)............ Corrects a typographical error.

Sec. 530.203(f)............ Aggregate Limitation on Pay: Erroneous

Excess. Adds new language to clarify how

to correct cases where the aggregate

compensation actually received by an

employee exceeds the Executive Level I

limitation because of an earlier error in

computing the employee's estimated

aggregate compensation (i.e., the error

is discovered too late in the year to

prevent the erroneous excess). The

correction requires that any erroneous

excess be deemed to have been paid on the

first day of the next calendar year and

counted toward the next year's aggregate

compensation in applying the Level I

limitation.

Sec. 530.303(d)............ Special Salary Rates. Provides that

certifications made in conjunction with

requests to establish or adjust special

salary rate schedules may be made by an

agency official other than the head of

the agency in all cases (not just those

involving fewer than 1,000 employees or

costs of less than $4 million), as long

as that official is officially designated

to act in the agency head's behalf in

making such a certification and is the

sole designee for the agency with respect

to any given schedule. Also, eliminates

the requirement that the certification

address the availability of funds to

cover the increased costs associated with

the special salary rate request. The

funding availability requirement is

unnecessary, since an agency would not be

making the request for new or higher

special salary rates unless it had the

necessary funds or was prepared to make

adjustments in its budget. Since these

requests are made under the authorization

of the agency head and transmitted by an

agency's headquarters, the agency is in a

position to ensure that the budget

implications of any request are fully

considered.

Sec. 530.303(i)............ Official Duty Station. Revises a paragraph

defining ``official duty station'' for

use in connection with special salary

rates, consistent with the proposed

revision in Sec. 531.602. (Note:

Paragraph (i) was originally added to

Sec. 530.303 in an interim rule on

official duty station determinations

published on May 9, 1997 (62 FR 25423).)

Sec. 531.203(c)(1)......... Maximum Payable Rate. Clarifies that the

highest rate that can be derived in

applying the maximum payable rate rule is

the maximum rate (step 10) of the

employee's grade.

Sec. 531.203(d)(2)......... Highest Previous Rate. Provides that law

enforcement officer special rates under

section 403 of the Federal Employees Pay

Comparability Act of 1990 are to be used

in determining an employee's highest

previous rate because these rates are

basic pay for all purposes. Also corrects

reference to special rate authorities in

5 U.S.C. 5305 and in part 532.

Sec. 531.203(d)(3)......... Corrects reference to special rate

authorities in 5 U.S.C. 5305 and in part

532.

Sec. 531.203(f)............ Pay Adjustments. Modifies the simultaneous

action rule to clarify the longstanding

policy that general pay adjustments must

be processed before individual pay

actions that take effect at the same

time.

Sec. 531.204(a)(2)......... Corrects reference to special rate

authority in 5 U.S.C. 5305.

[[Page 64881]]

Sec. 531.301............... Official Duty Station. Revises the

definition of ``official duty station''

used in connection with law enforcement

officer geographic adjustments,

consistent with the proposed revision in

Sec. 531.602.

Sec. 531.304(b)............ SES Pay Elections. Clarifies that a career

Senior Executive Service (SES) member

also retains a law enforcement geographic

adjustment when electing to retain SES

basic pay during certain Presidential

appointments, consistent with 5 U.S.C.

3392(c)(1) and Sec. 317.801.

Sec. 531.407(d)............ Within-Grade Increases. Clarifies that the

statutory authority to pay merit

increases has been repealed. (The

regulatory reference to merit increases

is maintained because a past merit

increase is considered in making

equivalent increase determinations.)

Sec. 531.602............... Locality Pay. Revises the definition of

``employee'' to remove an obsolete

reference to the separate pay authority

for employees under the former Stay-in-

School Program. Also, revises the

definition of ``official duty station''

so that an employee's duty station is

considered unchanged for locality pay

purposes when the duty station change is

a ``paper move'' connected to a mass

transfer of jobs to another location to

facilitate a reduction in force that

results in the employee's separation

within 3 workdays after the transfer. Any

severance pay or lump-sum payment for

annual leave owed to such an employee

would be based on rates of pay applicable

in the area to which assigned before the

transfer, thus avoiding either an unfair

reduction in benefits or an unwarranted

windfall.

Sec. 531.606(b)............ SES Pay Elections. Clarifies that a career

SES member also retains locality pay when

electing to retain SES basic pay during

certain Presidential appointments,

consistent with 5 U.S.C. 3392(c)(1) and

Sec. 317.801.

Sec. 536.102............... Grade and Pay Retention. Amends the

definition of ``demotion at an employee's

request'' to clarify that the term

includes a voluntary demotion that is

caused or influenced by a management

action related to possible demotion for

personal cause. Also, corrects

typographical error in definition of

``rate of basic pay.''

Sec. 536.203(b)............ Corrects a typographical error.

Sec. 536.205(a)(2)......... Corrects an erroneous reference.

Sec. 536.205(b)(4)......... Pay Retention. Adds a new rule to ensure

that, upon change (with no break in

service) to a position where a higher

rate schedule applies, a retained rate

employee's pay would be set no lower than

the rate for step 10 on the newly

applicable schedule.

Sec. 550.101(a)(2)......... Premium Pay. Deletes an obsolete reference

to the District of Columbia (DC)

government. (DC government employees were

excluded from coverage under various

title 5 provisions by DC Law 2-139, as

amended by DC Law 3-109, as authorized by

the DC Self Government and Governmental

Reorganization Act, Public Law 93-198,

December 24, 1973.)

Sec. 550.101(d)............ Premium Pay. Revises an exclusion of

certain Customs employees consistent with

the Customs Officer Pay Reform Act of

1993 (Public Law 103-66, August 10, 1993)

and implementing regulations issued in

1994 by the Department of the Treasury

(58 FR 68520 and 19 CFR 24.16). The

exclusion now applies only to ``customs

officers''--i.e., customs inspectors and

canine enforcement officers. Clarifies

that the paragraph (d) exclusion also

applies to any Sunday pay under the

listed authorities. Removes unnecessary

references in paragraphs (d) (3) and (7).

Sec. 550.102............... Premium Pay. Deletes an obsolete reference

to the DC government. (See above

description for Sec. 550.101(a)(2).)

Sec. 550.103............... Premium Pay.

Revises definition of ``administrative

workweek'' to clarify that it may consist

of any 7 consecutive 24-hour periods.

(See parallel change in Sec. 610.102.)

Revises the definition of ``agency'' to

delete an obsolete reference to the DC

government and to delete erroneous

reference to a nonexistent paragraph.

Adds a new definition of ``day'' for

purposes of overtime pay calculations,

consistent with current policy.

Provides or corrects relevant legal

references in the definition of ``law

enforcement officer.'' Delegates to

agency heads the authority to determine

that certain employees under retirement

systems other than the Civil Service

Retirement System or the Federal

Employees Retirement System are law

enforcement officers for pay purposes,

consistent with the existing delegation

of authority to determine retirement

coverage.

Revises the definition of ``premium pay''

to clarify that it includes compensatory

time off and that the dollar value of

earned compensatory time off is the

overtime pay the employee would have

received if the employee had been paid

overtime pay instead. This reflects the

longstanding policy of the Comptroller

General. (See 37 Comp. Gen. 362 (1957).)

The same dollar value is used when

accumulated and unused compensatory time

off is paid off when an employee

transfers, separates, or otherwise is

entitled to cash payment for compensatory

time off. The same dollar value is also

used to determine when an employee has

reached the biweekly and annual

limitations on premium pay under 5 CFR

550.105 and 550.107.

Sec. 550.107............... Corrects language by changing ``period''

to ``pay period.''

Sec. 550.111(g)............ Overtime Pay. Adds a cross reference

concerning the general prohibition on

payment of overtime pay to an employee

engaged in training, as provided in Sec.

410.402.

Sec. 550.112 (k)........... Overtime Work: Standby Duty. Adds a

paragraph to clarify that an employee is

in a standby status with creditable hours

of work if, for work-related reasons, the

employee (1) is restricted to an agency's

premises, or so close to it that the

employee's time may not be used

effectively for his or her own purposes

or (2) is restricted to another location,

may not pursue non-work activities, and

is required to remain in a state of

readiness to perform work. This is

consistent with longstanding OPM policy,

OPM's regulations on standby duty premium

pay, and OPM's regulations on overtime

pay under the Fair Labor Standards Act of

1938, as amended (FLSA). (See Secs.

550.143(b) and 551.431(a).) (Note: An

employee who is compensated for standby

duty by payment of standby duty premium

pay may not also be compensated by

payment of overtime pay on an hour-for-

hour basis for the same hours of work.)

Sec. 550.112(l)............ Overtime Work: On-Call Status. Adds a new

paragraph to clarify that time in an on-

call status does not constitute hours of

work under title 5 overtime provisions.

This is consistent with OPM's

longstanding policy and parallels OPM's

regulations on FLSA overtime pay. (See

Sec. 551.431(b).) On-call status

includes periods when an employee is

required to be reachable by telephone or

electronic device and ready to report for

duty upon request, but is free to pursue

personal activities within a reasonable

call-back radius. (Note: An agency may

determine that certain hours during which

a criminal investigator is placed in a

duty agent or on-call status may be

credited as availability hours under Sec.

550.182(c), subject to the policies and

procedures established by the agency.)

[[Page 64882]]

Sec. 550.112(m)............ Overtime Work: Meal and Sleep Time. Adds a

new paragraph to clarify that bona fide

meal periods and sleep time are generally

not hours of work under title 5 premium

pay provisions, consistent with

longstanding OPM policy. However,

consistent with 5 CFR 610.111(c), meal

and sleep periods during regularly

scheduled tours of duty for which an

employee receives annual premium pay for

regularly scheduled standby duty are

included in hours of work. Also, this new

paragraph incorporates the ``two-thirds

rule'' for FLSA-exempt employees, as

established by Comptroller General

opinions, into OPM regulations for the

first time. For employees who have

substantial time in a standby status as

part of tours of duty of 24 hours or

more, for which they do not receive

annual premium pay for regularly

scheduled standby duty, the two-thirds

rule permits agencies to exclude up to 8

hours for bona fide meal and sleep

periods from hours of work. (See similar

rule in OPM's regulations on FLSA

overtime pay in Sec. 551.432.)

Sec. 550.121(c)............ Night Pay. Adds a cross reference

concerning the general prohibition on

payment of night pay to an employee

engaged in training, as provided in Sec.

410.402.

Sec. 550.131(d)............ Holiday Premium Pay. Adds a cross

reference concerning the general

prohibition on payment of holiday premium

pay to an employee engaged in training,

as provided in Sec. 410.402.

Sec. 550.153(d)............ Corrects an erroneous reference.

Sec. 550.162(f)............ Annual Premium Pay. Adds a paragraph that

provides that an agency's existing

approval of annual premium pay for

administratively uncontrollable overtime

(AUO) work or regularly scheduled standby

duty may not be discontinued during a

period after a job-related injury while

an employee is not working and is in

receipt of benefits under the Federal

Employees' Compensation Act (FECA), 5

U.S.C. chapter 81, or in a paid leave

status in lieu of receiving FECA

benefits, unless such premium pay is

discontinued for all similar positions.

This generally prevents the loss of AUO

or standby duty pay after a job-related

injury. (Note: Section 550.162(e)

provides for the continuation of AUO or

standby duty pay during paid leave

generally, but only if the premium pay

remains payable. Thus, various

Comptroller General opinions have

provided that an agency may discontinue

AUO pay for an employee on extended sick

leave if there is no reasonable

expectation that the employee will return

to duty. For example, see Comptroller

General opinion B-152061, May 4, 1982.

The proposed paragraph would provide a

limiting exception barring an agency from

so discontinuing AUO or standby duty pay

in workers' compensation cases.)

The proposed paragraph would also ensure

that, if the employee is eligible for

retirement, his or her high-3 average

salary is not adversely affected. (In

determining an employee's high-3 average

salary, the position's established rate

of ``basic pay''--including AUO pay for

law enforcement officers and standby duty

pay--is used during periods of leave

without pay. Thus, even though AUO pay

and standby pay are not actually payable

during leave without pay, the established

AUO/standby duty rates may be used in

calculating the high-3 average salary.)

Sec. 550.171(b)............ Sunday Premium Pay. Adds a cross reference

concerning the general prohibition on

payment of Sunday premium pay to an

employee engaged in training, as provided

in Sec. 410.402.

Sec. 550.202............... Advances in Pay. Revises the definition of

``newly appointed'' by replacing an

obsolete reference to the former

cooperative work-study program with a

reference to the Student Educational

Employment Program and by making other

changes to improve the clarity of the

definition.

Sec. 550.205(b)............ Corrects a typographical error.

Sec. 550.311(b)............ Corrects an erroneous reference.

Sec. 550.312............... Allotments. Clarifies that an employee's

written signature is not required to

effect an allotment from pay. Automated

computer programs that allow employees to

process allotments themselves using a

personal identification code are

permitted. Also simplifies existing

language on general limitations.

Sec. 550.341............... Allotments. Deletes redundant provisions

Sec. 550.342............... that are more fully covered in OPM's

regulations for the Combined Federal

Campaign program in part 950. Provides

appropriate cross reference.

Sec. 550.703............... Severance Pay: Definitions. Revises the

definition of ``commuting area,'' which

is used in determining whether an

employee is involuntarily separated or

has been given a reasonable offer. A

proposed new work site is in the

employee's commuting area if (1) the

employee's residence is in the standard

commuting area surrounding that work site

or (2) the employee's residence is

outside the standard commuting area but

within the employee's established

commuting range based on his or her

existing commuting trip so that the

employee would not be compelled to move

due to the change to the new work site.

The compelled-to-move criterion

represents longstanding policy as

reflected in Comptroller General opinions

(e.g., see B-182300, January 16, 1975,

and B-210524, June 6, 1983) and in

parallel determinations made for purposes

of establishing an employee's entitlement

to discontinued service retirement (e.g.,

see 5 U.S.C. 8336(d) and section 44A2.1-3

of the CSRS and FERS Handbook for

Personnel and Payroll Offices).

Revises the definition of ``employee'' to

make clear that this definition (tied to

5 U.S.C. 5595(a)(2)) is used only in

establishing an individual's initial

eligibility for severance pay upon

separation. (Note: A broader definition

of ``employee'' (as defined in 5 U.S.C.

2105) is used in determining creditable

service (Sec. 550.708).) Also clarifies

the definition of the term ``individual

employed'' in 5 U.S.C. 5595(a)(2)(A).

Defines the term ``employed by the

Government of the United States''

consistent with longstanding policy. The

Government of the United States

encompasses all Federal entities

employing civilian personnel, including

the legislative branch, the judicial

branch, the Postal Service, etc. The term

is not limited to employment as an

``employee'' as defined in 5 U.S.C. 2105.

Sec. 550.703............... Severance Pay: Definitions. (continued)

Revises the definition of ``immediate

annuity'' to clarify current policy that,

for purposes of determining eligibility

for severance pay, Social Security

benefits have no effect, but an immediate

annuity from a non-Federal retirement

system providing benefits for Federal

civilian service is disqualifying. (See

54 Comp. Gen. 905 (1975).) Also clarifies

that voluntary postponement of annuity

commencing dates under any retirement

system does not serve to exclude an

otherwise covered annuity from being

considered an immediate annuity. The key

is whether the employee is eligible for

(``fulfilled the requirements for'') an

immediate annuity.

Revises the definition of ``involuntary

separation'' to make clear that there may

be a personal element to defining an

individual employee's commuting area. As

provided in the revised definition of the

term ``commuting area'' (described

above), an employee's residence may be

outside the standard commuting area for

the new work site, but the new work site

may still be within the employee's

commuting area.

[[Page 64883]]

Revises the definition of ``nonqualifying

appointment'' to clarify that this term

includes appointments that do not convey

coverage under the severance pay

provision--e.g., an appointment at a

Federal agency not included under the

definition of ``agency'' in 5 U.S.C.

5595(a)(1). Thus, a time-limited

appointment at a noncovered agency is a

``nonqualifying time-limited

appointment'' resulting in suspension of

severance pay under Sec. 550.710,

regardless of the length of the

employee's break in service. The

definition is also revised to clarify

that Veterans Readjustment Appointments

(5 CFR part 307) and Presidential

Management Intern appointments (5 CFR

part 362) are nonqualifying time-limited

appointments.

Corrects an erroneous reference in the

definition of ``qualifying appointment''

that inadvertently resulted from removal

of an obsolete paragraph as part of

regulatory changes made in 1993 (58 FR

58257). Clarifies that a qualifying time-

limited appointment must be for full-time

employment (as required by 5 U.S.C.

5595(a)(2)(ii)) and must be otherwise

qualifying. Also clarifies that a series

of time-limited appointments at an agency

following an initial qualifying time-

limited appointment is treated as one

qualifying time-limited appointment in

applying the severance pay provisions, as

long as there is no break in service

between the time-limited appointments.

Modifies the definition of ``reasonable

offer'' so that an offered position would

not be considered unreasonable simply

because the position carries greater

tenure. (The current regulation requires

that the offered position's tenure be

exactly the same. The proposed change

parallels the tenure rule in the

definition of ``reasonable offer'' in

Sec. 536.206(3) for grade and pay.)

Sec. 550.706............... Severance Pay: Resignations. Clarifies

what constitutes a specific or general

written notice that allows a resignation

to be treated as an involuntary

separation for severance pay purposes.

The specific notice must state the

effective date of the involuntary

separation. The general notice must state

the latest date (not more than 1 year

after the notice) by which affected

employees will be separated, based on

current agency plans. In addition, the

general notice must be issued by an

official with proper authority to issue

such a notice and must state that a

subsequent resignation will be considered

an involuntary separation for severance

pay purposes. (A general notice has no

standing under the reduction-in-force

regulations in 5 CFR part 351, subpart H,

and may not be used to effect an

employee's separation.) The effect of

canceling a notice--specific or general--

is addressed separately in a new

paragraph.

Sec. 550.707(b)............ Severance Pay: Computation. Clarifies how

to determine the weekly rate of basic pay

used in computing the severance pay fund

for employees in positions with regularly

varying work schedules or rates of basic

pay. In these cases, to ensure equitable

treatment, it is necessary to compute an

appropriate weekly average for the last

position held during the 26 biweekly pay

periods immediately preceding separation.

The revised language also clarifies that

the averaging method applies to employees

with pure part-time schedules and

seasonal schedules.

Sec. 550.707(d)............ Severance Pay: Fund. Adds a provision

clarifying that the severance pay fund is

capped so that there may not be more than

52 weeks of severance pay over an

individual's lifetime, consistent with 5

U.S.C. 5595(c).

Sec. 550.708(a)............ Severance Pay: Creditable Service.

Clarifies that any service as an employee

under 5 U.S.C. 2105 is creditable for

purposes of computing service used in the

computation of the severance pay fund,

excluding only time in nonpay status

(e.g., leave without pay) that is not

creditable for leave or retirement

purposes. This would codify current OPM

policy.

Sec. 550.708(e)............ Severance Pay: Creditability of DC

Government Service. Adds a new paragraph

to clarify that employment with the

government of the District of Columbia

(DC) is creditable service if the

individual was first employed by the DC

government before October 1, 1987. (See

former Federal Personnel Manual letter

630-32, September 7, 1989. Credit for

this DC government service was formerly

provided via a linkage to the service

credit rules for annual leave accrual

purposes. Under Public Law 99-335, June

6, 1986, only DC government employees

first employed before October 1, 1987,

are considered to be employees for

purposes of administering the leave

system, excluding teachers or librarians

of the DC public schools. See 5 U.S.C.

6301(2)(B) and (i).)

Sec. 550.709............... Severance Pay: Accrual and Payment.

Clarifies that severance pay accrues on a

day-to-day basis as a recipient remains

unemployed by the Federal Government.

Thus, an individual's first and/or last

severance payment may be a partial

payment when the employee was not

eligible for severance pay for the entire

pay period. Also, clarifies when an

average rate of basic pay is used in

determining the amount of the severance

payment. Adds a reference to the special

payment provisions under 5 U.S.C. 5595(h)

for certain individuals employed by the

Department of Defense (DOD) or Coast

Guard nonappropriated fund

instrumentalities. Adds reference to law

providing that DOD employees may be paid

severance pay in one lump-sum payment.

(See section 1035 of Public Law 104-106,

February 10, 1996.)

Sec. 550.710............... Severance Pay: Suspension. Clarifies a

provision dealing with suspension of

severance pay during a nonqualifying time-

limited appointment. (Under 5 U.S.C.

5595(d), employment by the government of

the District of Columbia triggers

discontinuation of severance pay. This

provision was not affected by laws

excluding DC government employees from

entitlement to severance pay under 5

U.S.C. 5595, since those laws do not

apply to the entitlements of Federal

employees based on Federal service.)

Sec. 550.711............... Severance Pay: Termination. Clarifies a

provision dealing with termination of

severance pay upon reemployment.

Reemployment by the Federal Government or

DC government terminates severance pay in

all instances unless severance pay is

suspended under Sec. 550.710. (See note

regarding DC government in description

for Sec. 550.710.) With addition of

proposed Sec. 550.707(d), the reference

to termination due to application of 1-

year limit is unnecessary. The amount of

the severance pay fund reflects the 1-

year (52-week) limitation.

Sec. 550.713............... Severance Pay: Recordkeeping. Deletes a

nonessential recordkeeping requirement

related to separated employees hired

within 90 days by contractors assuming a

Federal function. The recordkeeping

requirement was intended as a temporary

measure to allow evaluation of a

regulatory change. (See 54 FR 23215, May

31, 1989.)

Sec. 550.803............... Back Pay: Definitions. Revises the

definitions of ``employee'' and ``pay,

allowances, and differentials'' to

clarify that, under the law, back pay

refers to monetary benefits payable

during periods of Federal employment, not

to post-separation benefits such as

retirement benefits and severance

payments. Also, clarifies that agency and

employee contributions to a retirement

investment fund, such as the Thrift

Savings Plan, are not covered by the back

pay law and regulations. (Note:

Correction of agency errors affecting an

employee's Thrift Savings Plan account

are subject to applicable law and

regulations. See 5 U.S.C. 8432a and 5 CFR

parts 1605 and 1606.)

[[Page 64884]]

Sec. 550.805(e)............ Back Pay: Deductions. Clarifies the rules

for making offsets and deductions from

gross back pay awards. Addresses the

withholding of normal pay deductions in a

separate paragraph, specifying that such

deductions are to be made in accordance

with the regular order of precedence

established by the agency, subject to

applicable law and regulations. (For

example, mandatory retirement deductions

should be made first, consistent with 5

U.S.C. 8334 (a)-(c) and 8422 (a)-(c).)

Clarifies when health and life insurance

premiums are to be deducted. Also, adds a

paragraph to clarify that agencies may

make an administrative offset to recover

a debt owed the Government.

Sec. 550.805(h)............ Back Pay: Thrift Savings Plan. Provides

cross reference to Federal Retirement

Thrift Investment Board regulations on

correction of agency errors affecting an

employee's Thrift Savings Plan account.

Sec. 550.806(a)............ Back Pay: Interest. Clarifies that

interest accrual ends at the time

selected by the agency not more than 30

days before the date of the back pay

payment, as provided by 5 U.S.C.

5596(b)(2)(B). Also clarifies that no

interest will be payable if an agency

makes the back pay payment within 30 days

after the erroneous denial, withdrawal,

or reduction of a payment and sets the

interest accrual ending point to coincide

with the interest accrual starting point.

(This matter was addressed in the

Supplementary Information section

accompanying the final regulations on

back pay interest issued on November 15,

1988. See 53 FR 45886.)

Sec. 550.806(h)............ Back Pay: Interest. Removes paragraph (h),

since the reference to the December 1987

effective date of the back pay interest

provision is no longer necessary.

Appendix A to subpart H of Back Pay: Deductions. This new appendix

part 550. includes information on how to compute

certain common deductions in back pay

cases. It includes information on making

Federal tax deductions, including new

Internal Revenue Service (IRS) guidance

clarifying that agencies may adjust

Federal tax withholdings to reflect the

withholding of corresponding taxes from

erroneous payments made in the same

calendar year. For additional information

on Federal tax withholdings and wage

repayments, agencies should review

Circular E, Employer's Tax Guide

(Publication 15) or other appropriate IRS

publications, or contact IRS directly.

Sec. 550.902............... Hazard Pay Differential: Definition of

``Employee.'' Clarifies definition of

term ``employee,'' consistent with 5

U.S.C. 5545(d).

Sec. 550.903(b)............ Hazard Pay Differential: Requests.

Clarifies that requests for new

categories and rates for hazard pay

differentials must be submitted by the

head of an agency (or authorized

designee).

Sec. 550.905............... Hazard Pay Differential: Payment.

Clarifies that the differential may not

be paid for hours for which employees

receive annual premium pay for regularly

scheduled standby duty, annual premium

pay for administratively uncontrollable

overtime work, or law enforcement

availability pay. This reflects

requirements in law that provide that

annual premium pay and availability pay

are paid instead of premium pay provided

by other provisions of subchapter V of

title 5, United States Code. While each

of the applicable provisions of law

provide for exceptions (other types of

premium pay that may be paid for the same

hours of work), in all three cases,

hazard pay differential is not one of the

exceptions. (See 5 U.S.C. 5545(c)(1), 5

U.S.C. 5545(c)(2), and 5 U.S.C.

5545a(c).)

Sec. 551.401 (f)-(g) and FLSA Overtime: Hours of Work. Corrects

Sec. 551.501(a). regulatory references to reflect recent

renumbering of sections in OPM's training

regulations. (See interim training

regulations published at 61 FR 21947, May

13, 1996.)

Sec. 551.423(a)............ FLSA Overtime: Training Hours. Clarifies

that training hours compensable under

Sec. 410.402(b) are always hours of work

for purposes of determining an employee's

FLSA overtime pay entitlements, even if

those training hours are related to entry-

level and similar types of training and

do not involve the performance of

productive work. For example, if an

employee is required to participate in

night training as part of a basic

training course because the situations he

or she must learn to handle occur only at

night, those night training hours would

be compensable under Sec. 410.402(b)(2)

and would be hours of work under Sec.

551.423(a)(3). This result is consistent

with Secs. 551.401(f) and (g). In

addition, a cross reference to Sec.

410.402(d) is added in Sec.

551.423(a)(2).

Sec. 551.432............... FLSA Overtime: Sleep Hours. Clarifies that

a special rule on excludability of bona

fide sleep time from hours of work

applies to law enforcement and fire

protection employees receiving annual

premium pay under 5 U.S.C. 5545(c)(1) or

(2). (See similar language with respect

to meal periods in 5 CFR 551.411(c).)

Makes clear that the 8-hour limit on the

amount of sleep and meal time that can be

excluded in any 24-hour period applies in

all situations--regardless of the length

of the tour of duty or the applicability

of the special rules for law enforcement

and fire protection employees. (This

parallels the ``two-thirds rule'' that

applies to exempt employees under title

5. See proposed rule in Sec.

550.112(m)(3). Compare also to FLSA

regulations in 29 CFR 553.222-223 and

785.19-23.) Also, revises regulations to

clearly provide that on-duty sleep hours

during regularly scheduled tours that are

compensated by standby duty premium pay

must be considered hours of work for FLSA

purposes. (On-duty sleep hours may be

excluded from FLSA hours of work under

certain conditions. However, such an

exclusion is not appropriate for hours

for which the employee receives standby

duty premium pay. Since standby duty

premium pay is used in the FLSA overtime

pay computation, the corresponding hours

associated with that premium pay must be

fully reflected in the computation.)

Sec. 551.501(a)(5)......... FLSA Overtime: Law Enforcement Officers.

Clarifies that OPM never intended to

restrict the application of the special

overtime standards established under

section 7(k) of the Fair Labor Standards

Act of 1938 (FLSA), as amended, in the

case of Federal employees who are covered

by the FLSA but not by the overtime pay

provisions of title 5, United States

Code. This clarification is necessary

because 5 CFR 551.501(a)(5) can be

interpreted to authorize an increase in

overtime pay for employees of the United

States Secret Service Uniformed Division

and members of the United States Park

Police. These employees are not covered

by the overtime pay provisions of title

5, United States Code, but are covered by

overtime pay provisions in title 4,

United States Code, as well as by the

overtime pay provisions of the FLSA. OPM

regulations authorized by section 4(f) of

the FLSA and 5 U.S.C. 5542(c) are

intended to permit one computation of

overtime pay instead of two (under title

5 and the FLSA) for employees who are

covered by the overtime pay provisions of

title 5 and are not intended to result in

any significant change in overtime pay

entitlement.

Sec. 551.512(b)............ FLSA Overtime: Straight Time Rate. Revises

to state expressly that bonuses and

awards (including gainsharing) are not

included in computing the FLSA straight

time rate. This is consistent with the

longstanding application of this

regulation and with similar Department of

Labor regulations. (See 29 CFR 778.110.)

[[Page 64885]]

Sec. 551.512(d)............ FLSA Overtime Pay: Nondiscretionary

Awards. Amends OPM's regulations in part

551 on earning overtime pay under the

Fair Labor Standards Act (FLSA) to

provide two new options for meeting the

FLSA requirement to include

nondiscretionary individual or group

awards (e.g., gainsharing) in overtime

pay computations. Currently, this

requirement is met using a

``recomputation method'--i.e., a

retroactive recomputation of the

employee's FLSA overtime pay in past

periods that involves retroactively

allocating the bonus money and deriving a

revised FLSA overtime pay entitlement.

Under the two new options--referred to as

the ``percentage awards method'' and the

``boosted hour method,'' FLSA overtime

requirements may be met by following

certain procedures in computing the

amount of an employee's nondiscretionary

award. These new methods are consistent

with the Department of Labor's FLSA

regulations and policies.

Sec. 551.541(b)............ Corrects an erroneous reference.

Sec. 575.102(a)(3)......... Recruitment Bonuses. Adds positions in the

Federal Bureau of Investigation (FBI) and

Drug Enforcement Administration (DEA)

Senior Executive Service to the list of

positions for which agencies have

delegated authority to approve

recruitment bonuses. Other SES positions

are already covered. This corrects an

inadvertent omission.

Sec. 575.103............... Recruitment Bonuses. Removes obsolete

language referencing a minimum 12-month

service agreement for recruitment bonus

recipients. Section 575.106 was

previously revised to require only a 6-

month minimum period. (See 60 FR 33326,

June 28, 1995.) Also, provides a revised

definition of ``commuting area'' by

referring to the revised definition used

in Sec. 575.203.

Sec. 575.202(a)(3)......... Relocation Bonuses. Adds position in the

FBI and DEA Senior Executive Service to

the list of positions for which agencies

have delegated authority to approve

relocation bonuses. Other SES positions

are already covered. This corrects an

inadvertent omission.

Sec. 575.203............... Relocation Bonuses. Provides a revised

definition of ``commuting area'',

consistent with the proposed definition

in Sec. 550.703. Also, provides a

revised definition of ``employee'' to

cover all individuals employed in the

civil service (including those in the

legislative or judicial branches) who are

relocated to a different commuting area

upon appointment to a covered position.

(The current regulation can be

interpreted to limit coverage to

individuals who, before relocation, are

in a position in an agency covered by the

General Schedule system, which is more

restrictive than the law.)

Sec. 575.205(b)(5)......... Corrects a typographical error.

Sec. 575.302(a)(3)......... Retention Allowances. Adds positions in

the FBI and DEA Senior Executive Service

to the list of positions for which

agencies have delegated authority to

approve retention allowances. Other SES

positions are already covered. This

corrects an inadvertent omission.

Sec. 575.307(a)............ Retention Allowances. Simplifies language

of provision requiring reduction or

termination of authorized retention

allowances to the extent necessary to

prevent authorization of retention

allowances that would cause estimated

aggregate compensation to exceed the rate

for Executive Level I. Clarifies that

reduction or termination of retention

allowances may be necessitated by an

event other than an increase in a

nondiscretionary payment--e.g., discovery

of an error in computing estimated

aggregate compensation.

Sec. 591.201............... Official Duty Station. Revises the

definition of ``official duty station''

used in connection with nonforeign area

cost-of-living allowances and post

differentials, consistent with the

proposed revision in Sec. 531.602.

(Note: A definition of ``official duty

station'' was originally added to Sec.

591.201 in an interim rule on official

duty station determinations published on

May 9, 1997 (62 FR 25423).)

Sec. 610.102............... Administrative Workweek. Clarifies that an

administrative workweek established by an

agency may consist of any 7 consecutive

24-hour periods. This recognizes that

certain Federal employees (e.g.,

firefighters) work 24-hour shifts that

may not be aligned to the calendar day.

Sec. 610.111............... Workweeks. Clarifies that agency policies

concerning the scheduling of work need

not be established by promulgation of a

formal regulation published in the

Federal Register. However, agency work

scheduling policies must be established

in writing, such as in an agency policy

manual or directive. In addition, all

employees must be informed of agency work

scheduling policies and be permitted to

review the written policy statements upon

request.

Sec. 610.407............... Holiday Premium Pay. Adds a cross

reference concerning the general

prohibition on receiving holiday premium

pay while engaged in training, as

provided in Sec. 410.402.

------------------------------------------------------------------------

Regulatory Flexibility Act

I certify that these regulations would not have a significant

economic impact on a substantial number of small entities because they

would apply only to Federal agencies and employees.

List of Subjects

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

Administrative practice and procedure, Claims, Freedom of

information, Government employees, Holidays, Law enforcement officers,

Reporting and Recordkeeping requirements, Travel and transportation

expenses, Wages.

U.S. Office of Personnel Management.

Janice R. Lachance,

Director.

Accordingly, OPM is proposing to amend parts 530, 531, 536, 550,

551, 575, 591, and 610 of title 5 of the Code of Federal Regulations as

follows:

PART 530--PAY RATES AND SYSTEMS (GENERAL)

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

follows:

Authority: 5 U.S.C. 5305 and 5307; E.O. 12748, 56 FR 4521, 3

CFR, 1991 Comp., p. 316;

Subpart B also issued under secs. 302(c) and 404(c) of the

Federal Employees Pay Comparability Act of 1990 (Pub. L. 101-509),

104 Stat. 1462 and 1466, respectively;

Subpart C also issued under sec. 4 of the Performance Management

and Recognition System Termination Act of 1993 (Pub. L. 103-89), 107

Stat. 981.

Subpart B--Aggregate Limitation on Pay

2. In Sec. 530.202, the definition of estimated aggregate

compensation is amended by removing the words ``is entitled'' and

adding in their place the words ``is or is expected to be entitled'',

and the definition of discretionary payment is revised to read as

follows:

Sec. 530.202 Definitions.

* * * * *

Discretionary payment means a payment that an agency has discretion

to pay or not to pay to an employee, including a retention allowance

but

[[Page 64886]]

excluding any other payment that is preauthorized to be paid to an

employee at a regular fixed rate each pay period.

* * * * *

3. In Sec. 530.203, paragraph (c) is amended by removing the word

``proved'' and adding in its place the word ``provided'', and a new

paragraph (f) is added at the end of the section to read as follows:

Sec. 530.203 Administration of aggregate limitation on pay.

* * * * *

(f) If an agency makes an incorrect estimate of aggregate

compensation at an earlier date in the calendar year, the sum of an

employee's remaining payments of basic pay (which may not be deferred)

may exceed the difference between the aggregate compensation the

employee has actually received to date in that calendar year and the

rate for level I of the Executive Schedule. In this case, the employee

will become indebted to the Federal Government for any amount that is

paid in excess of the level I aggregate limitation. To the extent that

the erroneous excess is attributable to amounts that should have been

deferred and would have been payable at the beginning of the next

calendar year, the debt will be extinguished on January 1 of the next

calendar year. As part of the correction of the error, the amount of

the erroneous excess must be deemed to have been paid on January 1 of

the next calendar year (when the debt was extinguished) as if it were a

deferred excess payment as described in Sec. 530.204 and must be

considered part of the employee's aggregate compensation for the new

calendar year.

Subpart C--Special Salary Rate Schedules for Recruitment and

Retention

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

follows:

Sec. 530.303 Establishing and adjusting special salary rate schedules.

* * * * *

(d) All requests to establish or adjust special salary rate

schedules must be transmitted directly to OPM's central office by the

agency's headquarters. Each request must include a certification by the

head of the agency (or other official designated to act on behalf of

the head of the agency with respect to the given schedule) that the

requested special salary rates are considered necessary to ensure

staffing adequate to the accomplishment of the agency's mission.

* * * * *

(i) The determination regarding whether an employee is covered by a

special salary rate schedule is based on the employee's position of

record and the official duty station for that position. For purposes of

this subpart, the employee's position of record and corresponding

official duty station are the position and station documented on the

employee's most recent notification of personnel action, excluding a

notification associated with a new assignment that is followed

immediately (i.e., within 3 workdays) by a reduction in force resulting

in the employee's separation before he or she is required to report for

duty at the new location. For an employee who is authorized to receive

relocation allowances under 5 U.S.C. 5737 in connection with an

extended assignment, the position and duty station associated with that

assignment are the employee's position of record and official duty

station.

PART 531--PAY UNDER THE GENERAL SCHEDULE

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

follows:

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

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

316;

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

7701(b)(2);

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

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

1466; and section 3(7) of Pub. L. 102-378, 106 Stat. 1356;

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

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

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

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

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

section 302 of the Federal Employees Pay Comparability Act of 1990

(FEPCA), Pub. L. 101-509, 104 Stat. 1462; and E.O. 12786, 56 FR

67453, 3 CFR, 1991 Comp., p. 376.

Subpart B--Determining Rate of Basic Pay

6. In Sec. 531.203, paragraph (d)(3) is amended by removing

``5303'' and adding in its place ``5305'' and removing ``Sec. 532.231''

and adding in its place ``part 532''; paragraph (c)(1)(ii) is amended

by adding a new sentence at the end of the paragraph; the introductory

text of paragraph (d)(2)(vii) is revised; and paragraph (f) is revised

to read as follows:

Sec. 531.203 General provisions.

* * * * *

(1) * * *

(ii) * * * If the employee's highest previous rate was greater than

the maximum rate for the grade in which pay is being fixed, the maximum

rate of basic pay that may be paid to the employee is the maximum rate

for that grade.

* * * * *

(d) * * *

(2) * * *

(vii) A special rate established under 5 U.S.C. 5305 and part 530

of this chapter, part 532 of this chapter, or other legal authority

(other than section 403 of the Federal Employees Comparability Act

(FEPCA) (Pub. L. 101-509, 104 Stat. 1465), unless, in a reassignment to

another position in the same agency--

* * * * *

(f) Simultaneous actions. (1) General pay adjustments must be

processed before any individual pay action that takes effect at the

same time. General pay adjustments include annual adjustments under 5

U.S.C. 5303, adjustments in locality rates of pay under subpart F of

this part, adjustments in special law enforcement adjusted rates of pay

under subpart C of this part, adjustments in special salary rates under

5 U.S.C. 5305 or similar provision of law (including section 403 of

FEPCA), increases in retained rates under part 536 of this chapter, and

increases in continued rates under subparts C and G of this part.

(2) Pay adjustments (other than general pay adjustments) that take

effect at the same time must be processed in the order that gives the

employee the maximum benefit. When a position or appointment change and

entitlement to a higher rate of pay occur at the same time, the higher

rate of pay is deemed to be an employee's existing rate of basic pay.

* * * * *

Sec. 531.204 [Amended]

7. In Sec. 531.204, paragraph (a)(2) is amended by removing

``5303'' and adding in its place ``5305''.

Subpart C--Special Pay Adjustments for Law Enforcement Officers

8. In Sec. 531.301, the definition of official duty station is

revised to read as follows:

Sec. 531.301 Definitions.

* * * * *

Official duty station means the duty station for an employee's

position of record as indicated on his or her most recent notification

of personnel action, excluding a new duty station for an assignment

that is followed immediately

[[Page 64887]]

(i.e., within 3 workdays) by a reduction in force resulting in the

employee's separation before he or she is required to report for duty

at the new location. For an employee who is authorized to receive

relocation allowances under 5 U.S.C. 5737 in connection with an

extended assignment, the temporary duty station associated with that

assignment is the employee's official duty station.

* * * * *

9. In Sec. 531.304, paragraph (b)(4) is amended by removing the

word ``and''; paragraph (b)(5) is amended by removing the period at the

end of the paragraph and adding a semicolon and the word ``and'' in its

place; and a new paragraph (b)(6) is added to read as follows:

Sec. 531.304 Administration of special law enforcement adjusted rates

of pay.

* * * * *

(b) * * *

(6) Basic pay that a career appointee in the Senior Executive

Service elects to continue while serving under certain Presidential

appointments, as provided by 5 U.S.C. 3392(c)(1) and Sec. 317.801 of

this chapter.

* * * * *

Subpart D--Within-Grade Increases

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

Sec. 531.407 Equivalent increase determinations.

* * * * *

(d) Merit increases. For the purpose of applying section 5335 of

title 5, United States Code, and this subpart, all or a portion of a

merit increase, or a zero merit increase, authorized under former

section 5404 of title 5, United States Code (which was repealed as of

November 1, 1993, by Public Law 103-89), is an equivalent increase.

Subpart F--Locality-Based Comparability Payments

11. In Sec. 531.602, paragraph (1) of the definition of employee

and the definition of official duty station are revised to read as

follows:

Sec. 531.602 Definitions.

* * * * *

Employee means--

(1) An employee in a position to which subchapter III of chapter 53

of title 5, United States Code, applies and whose official duty station

is located in a locality pay area within the continental United States,

including a GM employee (as defined in Sec. 531.202); and

* * * * *

Official duty station means the duty station for an employee's

position of record as indicated on his or her most recent notification

of personnel action, excluding a new duty station for an assignment

that is followed immediately (i.e., within 3 workdays) by a reduction

in force resulting in the employee's separation before he or she is

required to report for duty at the new location. For an employee who is

authorized to receive relocation allowances under 5 U.S.C. 5737 in

connection with an extended assignment, the temporary duty station

associated with that assignment is the employee's official duty

station.

* * * * *

12. In Sec. 531.606, paragraph (b)(4) is amended by removing the

word ``and''; paragraph (b)(5) is amended by removing the period at the

end of the paragraph and adding a semicolon and the word ``and'' in its

place; and a new paragraph (b)(6) is added to read as follows:

Sec. 531.606 Administration of locality rates of pay.

* * * * *

(b) * * *

(6) Basic pay that a career appointee in the Senior Executive

Service elects to continue while serving under certain Presidential

appointments, as provided by 5 U.S.C. 3392(c)(1) and Sec. 317.801 of

this chapter.

* * * * *

PART 536--GRADE AND PAY RETENTION

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

follows:

Authority: 5 U.S.C. 5361-5366; sec. 7202(f) of the Omnibus

Budget Reconciliation Act of 1990 (Pub. L. 101-508), 104 Stat. 1338-

336; sec. 4 of the Performance Management and Recognition System

Termination Act of 1993 (Pub. L. 103-89), 107 Stat. 981;

Sec. 536.307 also issued under 5 U.S.C. 552, Freedom of Information

Act, Pub. L. 92-502.

Subpart A--Definitions; Coverage and Applicability

14. In Sec. 536.102, the definition of rate of basic pay is amended

by removing the words ``or any kind'' and adding in their place the

words ``of any kind'', and the definition of demotion at an employee's

request is revised to read as follows:

Sec. 536.102 Definitions.

* * * * *

Demotion at an employee's request means a reduction in grade that

is initiated by the employee for his or her benefit, convenience, or

personal advantage. A demotion that is caused or influenced by a

management action is not considered to be at an employee's request,

except that a voluntary demotion in response to a management action

related to personal cause is considered to be at the employee's

request.

* * * * *

Subpart B--Determination of Retained Grade and Rate of Basic Pay;

Loss of, or Termination of Eligibility

Sec. 536.203 [Amended]

15. In Sec. 536.203, paragraph (b) is amended by removing the

misspelled word ``immediatley'' and adding in its place

``immediately''.

16. In Sec. 536.205, paragraph (a)(2) is amended by removing the

reference to ``531.204(d)(4)'' and adding in its place

``531.204(e)(4)'', and a new paragraph (b)(4) is added to read as

follows:

Sec. 536.205 Determination of rate of basic pay.

* * * * *

(b) * * *

(4) If an employee moves to another position at the same grade

while entitled to pay retention, the employee's rate of basic pay after

movement may not be less than the maximum rate of basic pay for the

newly applicable rate range.

* * * * *

PART 550--PAY ADMINISTRATION (GENERAL)

Subpart A--Premium Pay

17. The authority citation for subpart A of part 550 continues to

read as follows:

Authority: 5 U.S.C. 5304 note, 5305 note, 5541(2)(iv), 5548 and

6101(c); E.O. 12748, 3 CFR, 1991 Comp., p. 316.

18. In Sec. 550.101, paragraph (a)(2) is revised; the introductory

text of paragraph (d) is amended by adding ``Sunday,'' after

``night,''; paragraphs (d)(3) and (d)(7) are removed; paragraphs (d)(4)

through (d)(6) are redesignated as (d)(3) through (d)(5); paragraphs

(d)(8) and (d)(9) are redesignated as (d)(6) and (d)(7); and paragraph

(d)(1) is revised to read as follows:

Sec. 550.101 Coverage and exemptions.

(a) * * *

(2) The sections in this subpart incorporating special provisions

for certain types of work (Secs. 550.141 through 550.164, inclusive)

apply also

[[Page 64888]]

to each employee of the judicial branch or the legislative branch who

is subject to subchapter V of chapter 55 of title 5, United States

Code.

* * * * *

(d) * * *

(1) February 13, 1911, as amended (36 Stat. 899, as amended; 19

U.S.C. 261, 267), involving customs inspectors and canine enforcement

officers;

* * * * *

19. Section 550.102 is revised to read as follows:

Sec. 550.102 Entitlement.

A department (and for the purpose of Secs. 550.141 through 550.164,

inclusive, a legislative or judicial branch agency) must determine an

employee's entitlement to premium pay consistent with subchapter V of

chapter 55 of title 5, United States Code.

20. In Sec. 550.103, the definition of day is added in alphabetical

order, and the definitions of administrative workweek, agency, law

enforcement officer, and premium pay are revised to read as follows:

Sec. 550.103 Definitions.

* * * * *

Administrative workweek means any period of 7 consecutive 24-hour

periods designated in advance by the head of the agency under section

6101 of title 5, United States Code.

Agency means--

(1) A department as defined in this section; and

(2) A legislative or judicial branch agency which has positions

that are subject to subchapter V of chapter 55 of title 5, United

States Code.

* * * * *

Day (for overtime pay purposes) means any 24-hour period designated

by an agency within the administrative workweek applicable to the

employee. A day need not correspond to the 24-hour period of a calendar

day. If the agency has not designated another period of time, a day is

a calendar day.

* * * * *

Law enforcement officer means an employee who--

(1) Is a law enforcement officer within the meaning of 5 U.S.C.

8331(20) (as further defined in Sec. 831.902 of this chapter) or 5

U.S.C. 8401(17) (as further defined in Sec. 842.802 of this chapter),

as applicable;

(2) In the case of an employee who holds a secondary position, as

defined in Sec. 831.902 of this chapter, and is subject to the Civil

Service Retirement System, but who does not qualify to be considered a

law enforcement officer within the meaning of 5 U.S.C. 8331(20), would

so qualify if such employee had transferred directly to such position

after serving as a law enforcement officer within the meaning of such

section;

(3) In the case of an employee who holds a secondary position, as

defined in Sec. 842.802 of this chapter, and is subject to the Federal

Employees Retirement System, but who does not qualify to be considered

a law enforcement officer within the meaning of 5 U.S.C. 8401(17),

would so qualify if such employee had transferred directly to such

position after performing duties described in 5 U.S.C. 8401(17)(A) and

(B) for at least 3 years; and

(4) In the case of an employee who is not subject to either the

Civil Service Retirement System or the Federal Employees Retirement

System--

(i) Holds a position that the agency head (as defined in

Secs. 831.902 and 842.802 of this chapter) determines would satisfy

paragraph (1), (2), or (3) of this definition if the employee were

subject to the Civil Service Retirement System or the Federal Employees

Retirement System (subject to OPM oversight as described in

Secs. 831.911 and 842.808 of this chapter); or

(ii) Is a special agent in the Diplomatic Security Service.

* * * * *

Premium pay means additional pay authorized by subchapter V of

chapter 55 of title 5, United States Code, and this subpart for

overtime, night, Sunday, or holiday work; for compensatory time off; or

for standby duty, administratively uncontrollable overtime work, or

availability duty. The dollar value of compensatory time off is the

amount of overtime pay the employee otherwise would have received for

the hours during which compensatory time off was earned.

* * * * *

Sec. 550.107 [Amended]

21. In Sec. 550.107, the introductory text is amended by removing

``any period'' and adding in its place ``any pay period''.

22. In Sec. 550.111, a new paragraph (g) is added to read as

follows:

Sec. 550.111 Authorization of overtime pay.

* * * * *

(g) An employee is not entitled to overtime pay under this subpart

for time spent in training, except as provided in Sec. 410.402 of this

chapter.

23. In Sec. 550.112, paragraphs (k), (l), and (m) are added to read

as follows:

Sec. 550.112 Computation of overtime work.

* * * * *

(k) Standby duty. An employee is on duty, and time spent on standby

duty is hours of work if--

(1) For work-related reasons, the employee is restricted to an

agency's premises, or so close thereto that the employee cannot use the

time effectively for his or her own purposes; or

(2) For work-related reasons, the employee, although not restricted

to the agency's premises, is restricted to his or her living quarters

or designated post of duty, has his or her activities substantially

limited, and is required to remain in a state of readiness to perform

work.

(l) On-call status. An employee is off duty, and time spent in an

on-call status is not hours of work if--

(1) The employee is allowed to leave a telephone number or carry an

electronic device for the purpose of being contacted, even though the

employee is required to remain within a reasonable call-back status; or

(2) The employee is allowed to make arrangements for another person

to perform any work that may arise during the on-call period.

(m) Sleep and meal time. (1) Bona fide sleep and meal periods may

not be considered hours of work, except as provided by paragraphs

(m)(2) and (m)(3) of this section. If a sleep or meal period is

interrupted by a call to duty, the time spent on duty is hours of work.

(2) Sleep and meal periods during regularly scheduled tours of duty

are hours of work for employees who receive annual premium pay for

regularly scheduled standby duty under 5 U.S.C. 5545(c)(1).

(3) When employees have tours of duty of 24 hours or more during

which they must remain within the confines of their duty station in a

standby status, and for which they do not receive annual premium pay

for regularly scheduled standby duty under 5 U.S.C. 5545(c)(1), the

amount of bona fide sleep and meal time excluded from hours of work may

not exceed 8 hours in any 24-hour period. No sleep time may be excluded

unless the employee had the opportunity to have an uninterrupted period

of at least 5 hours of sleep during the applicable sleep period. For

tours of duty of less than 24 hours, agencies may not exclude on-duty

sleep periods from hours of work, but must exclude bona fide meal

periods during which the employee is completely relieved from duty.

24. In Sec. 550.121, a new paragraph (c) is added to read as

follows:

[[Page 64889]]

Sec. 550.121 Authorization of night pay differential.

* * * * *

engaged in training, except as provided in Sec. 410.402 of this

chapter.

25. In Sec. 550.131, a new paragraph (d) is added to read as

follows:

Sec. 550.131 Authorization of pay for holiday work.

* * * * *

(d) An employee is not entitled to holiday premium pay while

engaged in training, except as provided in Sec. 410.402 of this

chapter.

Sec. 550.153 [Amended]

26. In Sec. 550.153, paragraph (d)(1) is amended by removing

``Sec. 550.112(f)'' and adding in its place ``Sec. 550.112(h)'.

27. In Sec. 550.162, a new paragraph (f) is added to read as

follows:

Sec. 550.162 Payment provisions.

* * * * *

(f) Unless an agency discontinues authorization of premium pay

under Sec. 550.141 or Sec. 550.151 for all similar positions, it may

not discontinue authorization of such premium pay for an individual

employee's position--

(1) During a period of paid leave elected by the employee and

approved by the agency in lieu of benefits under the Federal Employees'

Compensation Act, as amended (5 U.S.C. 8101 et seq.), following a job-

related injury;

(2) During a period of continuation of pay under the Federal

Employees' Compensation Act, as amended (5 U.S.C. 8101 et seq.);

(3) During a period of leave without pay, if the employee is in

receipt of benefits under the Federal Employees' Compensation Act, as

amended (5 U.S.C. 8101 et seq.).

28. In Sec. 550.171, the current paragraph is designated as

paragraph (a), and a new paragraph (b) is added to read as follows:

Sec. 550.171 Authorization of pay for Sunday work.

* * * * *

(b) An employee is not entitled to Sunday premium pay while engaged

in training, except as provided in Sec. 410.402 of this chapter.

Subpart B--Advances in Pay

29. The authority citation for subpart B of part 550 continues to

read as follows:

Authority: 5 U.S.C. 5524a, 5545a(h)(2)(B); sections 302 and 404

of the Federal Employees Pay Comparability Act of 1990 (Public Law

101-509), 104 Stat. 1462 and 1466, respectively; E.O. 12748, 3 CFR,

1992 Comp., p. 316.

30. In Sec. 550.202, paragraph (c) of the definition of newly

appointed is revised to read as follows:

Sec. 550.202 Definitions.

* * * * *

Newly appointed * * *

termination of employment under the Student Educational Employment

Program (as described in Sec. 213.3202 of this chapter), provided such

employee--

(1) Was separated from the service, in a nonpay status, or a

combination of both during the entire 90-day period immediately before

the permanent appointment; and

(2) Has fully repaid any former advance in pay under Sec. 550.205.

* * * * *

Sec. 550.205 [Amended]

31. In Sec. 550.205, paragraph (b) is amended by removing the word

``recover'' and adding in its place the word ``recovery''.

Subpart C--Allotments and Assignments From Federal Employees

32. The authority citation for subpart C of part 550 continues to

read as follows:

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

502.

Sec. 550.311 [Amended]

33. In Sec. 550.311, paragraph (b) is amended by removing

``paragraph (b)'' and adding in its place ``paragraph (a)''.

34. In Sec. 550.312, paragraphs (a), (c), (d), and (e) are revised

to read as follows:

Sec. 550.312 General limitations.

(a) The allotter must specifically designate the allottee and the

amount of the allotment.

* * * * *

of an allotment.

(d) The agency has no liability in connection with any authorized

allotment disbursed by the agency in accordance with the allotter's

request.

(e) Any disputes regarding any authorized allotment are a matter

between the allotter and the allottee.

35. Section 550.341 is revised to read as follows:

Sec. 550.341 Scope.

An agency must permit an employee to make an allotment for

charitable contributions to a Combined Federal Campaign in accordance

with Sec. 950.901 of this chapter.

Sec. 550.342 [Amended]

36. Section 550.342 is removed.

Subpart G--Severance Pay

37. The authority citation for subpart G of part 550 continues to

read as follows:

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

357.

38. In Sec. 550.703, the definitions of commuting area and employee

are revised; a new definition of employed by the Government of the

United States is added in alphabetical order; the definition of

involuntary separation is amended by removing the words ``the commuting

area'' in both places and adding in each place the words ``his or her

commuting area''; the definition of immediate annuity is revised; the

definition of nonqualifying appointment is revised; paragraph (g) of

the definition of qualifying appointment is revised; and paragraph

(c)(3) of the definition of reasonable offer is revised to read as

follows:

Sec. 550.703 Definitions.

* * * * *

Commuting area means the geographic area surrounding a work site

that encompasses the localities where people live and reasonably can be

expected to travel back and forth daily to work, as established by the

employing agency. In the case of an employee whose place of residence

is outside the standard commuting area for a proposed new work site,

the employee's commuting area is deemed to include the expanded area

surrounding the employee's place of residence and including all

destinations that can be reached via a commuting trip that is not

significantly more burdensome than the current commuting trip. For this

purpose, a commuting trip to a new work site is considered

significantly more burdensome if it would compel the employee to change

his or her place of residence in order to continue employment, taking

into account commuting time and distance, availability of public

transportation, cost, and any other relevant factors.

Employee (for purposes of establishing initial entitlement to

severance pay upon separation) means an employee as defined in 5 U.S.C.

5595(a)(2), excluding an individual employed by the government of the

District of Columbia. (Note: The term ``individual employed'' in 5

U.S.C.

[[Page 64890]]

5595(a)(2)(A) refers to an ``employee'' as defined in 5 U.S.C. 2105.)

Employed by the Government of the United States refers to

employment by any part of the Government of the United States,

including the United States Postal Service and similar independent

entities, but excluding enlistment or activation in the armed forces

(as defined in 5 U.S.C. 2101).

Immediate annuity means--

(a) A recurring benefit payable under a retirement system

applicable to Federal civilian employees or members of the uniformed

services that the individual is eligible to receive (disregarding any

offset described in Sec. 550.704(b)(5)) at the time of the involuntary

separation from civilian service or that begins to accrue within 1

month after such separation, excluding any Social Security retirement

benefit; or

* * * * *

(b) A benefit that meets the conditions in paragraph (a) of this

definition, except that the benefit begins to accrue more than 1 month

after separation solely because the employee elected a later commencing

date (such as allowed under Sec. 842.204 of this chapter).

Nonqualifying appointment means an appointment that does not convey

eligibility for severance pay under this subpart, including--

(a) An appointment at a noncovered agency;

(b) An appointment in which the employee has an intermittent work

schedule;

(d) An emergency appointment;

(e) An excepted appointment under Schedule C; a noncareer

appointment in the Senior Executive Service, as defined in 5 U.S.C.

3132(a); or an equivalent appointment made for similar purposes; and

(f) A time-limited appointment (except for a time-limited

appointment that is qualifying because it is made effective within 3

calendar days after separation from a qualifying appointment),

including--

(1) A term appointment;

(2) A temporary appointment pending establishment of a register

(TAPER);

(3) An overseas limited appointment with a time limitation;

(4) A limited term or limited emergency appointment in the Senior

Executive Service, as defined in 5 U.S.C. 3132(a), or an equivalent

appointment made for similar purposes;

(5) A limited executive assignment under part 305 of this chapter

or an equivalent appointment made for similar purposes;

(6) A Veterans Readjustment Appointment under part 307 of this

chapter; and

(7) A Presidential Management Intern appointment under part 362 of

this chapter.

Qualifying appointment * * *

(g) A time-limited appointment (including a series of time-limited

appointments by the same agency without any intervening break in

service) for full-time employment that takes effect within 3 calendar

days after the end of one of the qualifying appointments listed in

paragraphs (a) through (f) of this definition, provided the time-

limited appointment is not nonqualifying on grounds other than the

time-limited nature of the appointment.

* * * * *

Reasonable offer means * * *

(3) Of equal or greater tenure and with the same work schedule

(part-time or full-time); and

* * * * *

39. In section 550.706, paragraph (a) is revised and paragraph (c)

is added to read as follows:

Sec. 550.706 Criteria for meeting the requirement for involuntary

separation.

(a) Employees who resign because they expect to be involuntarily

separated are considered to have been involuntarily separated if they

resign after receiving--

(1) Specific written notice that they will be involuntarily

separated by a particular action effective on a particular date; or

(2) A general written notice of reduction in force or transfer of

functions which--

(i) Is issued by a properly authorized agency official;

(ii) Announces that the agency has decided to abolish, or transfer

to another commuting area, all positions in the competitive area (as

defined in Sec. 351.402 of this chapter) by a particular date (no more

than 1 year after the date of the notice); and

(iii) States that, for all employees in that competitive area, a

resignation following receipt of the notice constitutes an involuntary

separation for severance pay purposes.

* * * * *

the specific or general written notice is canceled before the

separation (based on that resignation) takes effect.

40. In Sec. 550.707, the section heading is revised; paragraph (b)

is revised; and a new paragraph (d) is added to read as follows:

Sec. 550.707 Computation of severance pay fund.

* * * * *

(b) Basic severance pay allowance for employees with variable work

schedules or rates of basic pay. In the following circumstances, the

weekly rate of basic pay used in computing the basic severance pay

allowance is determined based on the weekly average for the last

position held by the employee during the 26 biweekly pay periods

immediately preceding separation, as follows:

(1) For positions in which the number of hours in the employee's

basic work schedule (excluding overtime hours) varies during the year

due to part-time work requirements, compute the weekly average of those

hours and multiply that average by the hourly rate of basic pay in

effect at separation.

(2) For positions in which the rate of annual premium pay for

standby duty regularly varies throughout the year, compute the average

standby duty premium pay percentage and multiply that percentage by the

weekly rate of basic pay (as defined in Sec. 550.103) in effect at

separation.

(3) For prevailing rate schedule positions in which the amount of

night shift differential pay under 5 U.S.C. 5343(f) varies from week to

week under a regularly recurring cycle of work schedules, determine for

each week in the averaging period the value of night shift differential

pay expressed as a percentage of each week's scheduled rate of pay (as

defined in Sec. 532.401 of this chapter), compute the weekly average

percentage, and multiply that percentage by the weekly scheduled rate

of pay in effect at separation.

(4) For positions with seasonal work requirements, compute the

weekly average of hours in a pay status (excluding overtime hours) and

multiply that average by the hourly rate of basic pay in effect at

separation.

* * * * *

(d) Lifetime limitation. The severance pay fund is limited to that

amount which would provide 52 weeks of severance pay (taking into

account weeks of severance pay previously received, as provided in

Sec. 550.712).

41. In Sec. 550.708, paragraph (a) is revised; paragraph (c) is

amended by removing the word ``and'' at the end of the paragraph;

paragraph (d) is amended by removing the period at the end of the

paragraph and adding a semicolon and the word ``and'' in its place; and

a new paragraph (e) is added to read as follows:

Sec. 550.708 Creditable service.

* * * * *

(a) Civilian service as an employee (as defined in 5 U.S.C. 2105),

excluding time during a period of nonpay status that is not creditable

for annual leave accrual purposes under 5 U.S.C. 6303(a);

* * * * *

[[Page 64891]]

(e) Service performed with the government of the District of

Columbia by an individual first employed by that government before

October 1, 1987, excluding service as a teacher or librarian of the

public schools of the District of Columbia.

* * * * *

42. Section 550.709 is revised to read as follows:

Sec. 550.709 Accrual and payment of severance pay.

(a) Severance pay accrues on a day-to-day basis following the

recipient's separation from Federal employment. If severance pay begins

in the middle of a pay period, 1 day of severance pay accrues for each

workday or applicable holiday left in the pay period at the same rate

at which basic pay would have accrued if the recipient were still

employed. Thereafter, accrual is based on days from Monday through

Friday, with each day worth one-fifth of 1 week's severance pay.

Accrual ceases when the severance pay entitlement is suspended or

terminated, as provided in Secs. 550.711 and 550.712. If severance pay

is suspended during a nonqualifying time-limited appointment as

provided in Sec. 550.711, accrual will resume following separation from

that appointment.

(b) Severance payments must be made at the same pay period

intervals that salary payments would be made if the recipient were

still employed. The amount of the severance payment is computed using

the recipient's rate of basic pay in effect immediately before

separation, with credit for each day of severance pay accrual during

the pay period corresponding to the payment date. A severance payment

is subject to appropriate deductions for income and Social Security

taxes.

separation from a qualifying time-limited appointment, the severance

payment is based on the rate of basic pay received at the time of

separation from the qualifying time-limited appointment.

(d) When an individual is in a nonpay status immediately before

separation, the amount of the severance payment is determined using the

basic pay that he or she would have received if he or she had been in a

pay status at the time of separation.

(e) When an individual's severance pay fund is computed under

Sec. 550.707(b) using an average rate of basic pay, that average rate

is used to determine the amount of the severance payment. Exception: In

the case of a seasonal employee, the agency may choose instead to use

the employee's rate of basic pay at separation (as computed based on

the employee's work schedule during the established seasonal work

period) and then authorize severance payments only during that seasonal

work period.

(f) In the case of individuals who become employed by a

nonappropriated fund instrumentality of the Department of Defense or

the Coast Guard under the conditions described in 5 U.S.C. 5595(h)(4),

payment of severance pay may be suspended consistent with the rules in

5 U.S.C. 5595(h) and any supplemental regulations issued by the

Department of Defense.

(g) Notwithstanding paragraph (b) of this section, the Department

of Defense may, upon application by an eligible separated employee, pay

the total amount of severance pay in one lump sum, subject to section

1035 of Public Law 104-106 and any other requirements established by

the Department of Defense. This authority applies to severance payments

based on separations taking effect on or after February 10, 1996, and

before October 1, 1999.

43. Section 550.710 is revised to read as follows:

Sec. 550.710 Suspension of severance pay.

When an individual entitled to severance pay is employed by the

Government of the United States or the government of the District of

Columbia under a nonqualifying time-limited appointment, severance pay

must be suspended during the life of the appointment. Severance pay

resumes, without any recomputation, when the employee separates from

the nonqualifying time-limited appointment.

44. Section 550.711 is revised to read as follows:

Sec. 550.711 Termination of severance pay entitlement.

Entitlement to severance pay ends when--

(a) The individual entitled to severance pay is employed by the

Government of the United States or the government of the District of

Columbia, unless employed under a nonqualifying time-limited

appointment as described in Sec. 550.710; or

(b) The severance pay fund is exhausted.

Sec. 550.713 [Amended]

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

Subpart H--Back Pay

46. The authority citation for subpart H of part 550 continues to

read as follows:

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

47. In Sec. 550.803, the definitions of employee and pay,

allowances, and differentials are revised to read as follows:

Sec. 550.803 Definitions.

* * * * *

Employee means an employee of an agency. When the term employee is

used to describe an individual who is making a back pay claim, it also

may mean a former employee.

* * * * *

Pay, allowances, and differentials means pay, leave, and other

monetary employment benefits to which an employee is entitled by

statute or regulation and which are payable by the employing agency to

an employee during periods of Federal employment. Agency and employee

contributions to a retirement investment fund, such as the Thrift

Savings Plan, are not covered. Monetary benefits payable to separated

or retired employees based upon a separation from service, such as

retirement benefits, severance payments, and lump-sum payments for

annual leave, are not covered.

* * * * *

48. In Sec. 550.805, paragraph (e) is revised and a new paragraph

(h) is added to read as follows:

Sec. 550.805 Back pay computations.

* * * * *

(e) In computing the net amount of back pay payable under section

5596 of title 5, United States Code, and this subpart, an agency must

make the following offsets and deductions (in the order shown) from the

gross back pay award:

(1) Any outside earnings (gross earnings less any associated

business losses and ordinary and necessary business expenses) received

by an employee for other employment (including a business enterprise)

undertaken to replace the employment from which the employee was

separated by the unjustified or unwarranted personnel action during the

interim period covered by the corrective action. Do not count earnings

from additional or ``moonlight'' employment the employee may have

engaged in both while Federally employed and erroneously separated.

(2) Any erroneous payments received from the Government as a result

of the

[[Page 64892]]

unjustified or unwarranted personnel action, which, in the case of

erroneous payments received from a Federal employee retirement system,

must be returned to the appropriate system. Such payments must be

recovered from the back pay award in the following order:

(i) Retirement annuity payments (i.e., gross annuity less

deductions for life insurance and health benefits premiums, if those

premiums can be recovered by the affected retirement system from the

insurance carrier);

(ii) Refunds of retirement contributions (i.e., gross refund before

any deductions);

(iii) Severance pay (i.e., gross payments before any deductions);

and

(iv) Lump-sum payment for annual leave (i.e., gross payment before

any deductions).

(3) Authorized deductions of the type that would have been made

from the employee's pay (if paid when properly due) in accordance with

the normal order of precedence for deductions from pay established by

the agency, subject to any applicable law and regulation, including,

but not limited to, the following types of deductions, as applicable:

(i) Mandatory employee retirement contributions toward a defined

benefit plan, such as the Civil Service Retirement System or the

defined benefit component of the Federal Employees Retirement System;

(ii) Social Security taxes and Medicare taxes;

(iii) Health benefits premiums, if coverage continued during a

period of erroneous retirement (with paid premiums recoverable by the

retirement system) or is retroactively reinstated at the employee's

election under 5 U.S.C. 8908(a);

(iv) Life insurance premiums if--

(A) Coverage continued during a period of erroneous retirement;

(B) Coverage was stopped during an erroneous suspension or

separation and the employee suffered death or accidental dismemberment

during that period (consistent with 5 U.S.C. 8706(d)); or

basic pay; and

(v) Federal income tax withholdings.

(Note to paragraph (e)(3): See appendix A to this subpart for

additional information on computing certain deductions.)

(4) Administrative offsets under 31 U.S.C. 3716 to recover any

other outstanding debt(s) owed to the Federal Government by the

employee, as appropriate.

* * * * *

(h) Agencies must correct errors that affect an employee's Thrift

Savings Plan account consistent with regulations prescribed by the

Federal Retirement Thrift Investment Board. (See parts 1605 and 1606 of

this title.)

49. In Sec. 550.806, paragraph (h) is removed, and paragraph (a) is

amended by redesignating paragraph (a) as paragraph (a)(1) and adding a

new paragraph (a)(2) to read as follows:

Sec. 550.806 Interest computations.

(a) * * *

(2) Interest accrual ends at a time selected by the agency that is

no more than 30 days before the date of the back pay interest payment.

No interest is payable if a complete back pay payment is made within 30

days after any erroneous withdrawal, reduction, or denial of a payment,

and the interest accrual ending date is set to coincide with the

interest accrual starting date.

* * * * *

50. A new appendix A is added to subpart H of part 550 to read as

follows:

Appendix A to Subpart H of Part 550--Information on Computing Certain

Common Deductions From Back Pay Awards

To determine the net back payment owed an employee, an agency

must make certain required deductions. (See Sec. 550.805(e)(3).) To

compute these deductions, an agency must determine the appropriate

base or follow other rules. Some deductions, such as tax deductions,

are not subject to OPM regulation. To assist agencies, this appendix

summarizes the rules for certain common deductions. For further

information on Federal tax deductions from back pay awards, please

contact the Internal Revenue Service directly or review relevant IRS

publications.

----------------------------------------------------------------------------------------------------------------

Type of deduction How to compute the deduction

----------------------------------------------------------------------------------------------------------------

Mandatory employee retirement Compute the deduction based on the basic pay portion of gross back pay

contributions. before adding interest or applying any offset or deduction.

Life insurance premiums................ Compute the deduction based on the basic pay portion of gross back pay

before adding interest or applying any offset or deduction.

Social Security (OASDI) and Medicare Compute the deduction based on adjusted gross back pay (gross back pay

taxes. less the offset for outside earnings under Sec. 550.805(e)(1), but

before adding interest). The deduction may be reduced dollar-for-

dollar by the amount of any Social Security or Medicare taxes that

were withheld from erroneous payments made in the same calendar year

as the back pay award, but only if--

(1) those erroneous payments were actually recovered by the Government

by offsetting the back pay award as provided in Sec. 550.805(e)(2);

and

(2) those withheld taxes have not already been repaid to the employee.

Note: Social Security taxes are subject to the applicable Social

Security tax wage base limit. In addition, see IRS guidance regarding

possible correction and refunding of Social Security and Medicare

taxes withheld from erroneous payments in a prior calendar year.

Federal income tax withholdings........ Compute the deduction based on adjusted gross back pay (gross back pay

less the offset for outside earnings under Sec. 550.805(e)(1), but

before adding interest) less any part of back pay not subject to

income tax deductions, such as employee contributions to the Thrift

Savings Plan and nonforeign area cost-of-living allowances. The

deduction may be reduced dollar-for-dollar by the amount of any

Federal income taxes withheld from erroneous payments made in the same

calendar year as the back pay award, but only if--

(1) those erroneous payments were actually recovered by the Government

by offsetting the back pay award as provided in Sec. 550.805(e)(2);

and

(2) those withheld taxes have not already been repaid to the employee.

Note: Additional Federal income tax withholdings from the interest

portion of the back pay award may be required by the Internal Revenue

Service in certain specific circumstances.

----------------------------------------------------------------------------------------------------------------

[[Page 64893]]

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

51. The authority citation for subpart I of part 550 continues to

read as follows:

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

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

as follows:

Sec. 550.902 Definitions.

* * * * *

Employee means an employee covered by the General Schedule (i.e.,

covered by chapter 51 and subchapter III of chapter 53 of title 5,

United States Code).

53. In Sec. 550.903, the introductory text of paragraph (b) is

revised to read as follows:

Sec. 550.903 Establishment of hazard pay differentials.

* * * * *

(b) Amendments to appendix A of this subpart may be made by OPM on

its own motion or at the request of the head of an agency (or

authorized designee). The head of an agency (or authorized designee)

may recommend the rate of hazard pay differential to be established and

must submit, with its request for an amendment, information about the

hazardous duty or duty involving physical hardship showing--

* * * * *

54. Section 550.905 is revised to read as follows:

Sec. 550.905 Payment of hazard pay differential.

(a) When an employee performs duty for which a hazard pay

differential is authorized, the agency must pay the hazard pay

differential for the hours in a pay status on the day (a calendar day

or a 24-hour period, when designated by the agency) on which the duty

is performed, except as provided in paragraph (b) of this section.

Hours in a pay status for work performed during a continuous period

extending over 2 days must be considered to have been performed on the

day on which the work began, and the allowable differential must be

charged to that day.

(b) Employees may not be paid a hazardous duty differential for

hours for which they receive annual premium pay for regularly scheduled

standby duty under Sec. 550.141, annual premium pay for

administratively uncontrollable overtime work under Sec. 550.151, or

law enforcement availability pay under Sec. 550.181.

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

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

follows:

Authority: 5 U.S.C. 5542(c); Sec. 4(f) of the Fair Labor

Standards Act of 1938, as amended by Pub. L. 93-259, 88 Stat. 55 (29

U.S.C. 204f).

Subpart D--Hours of Work

Sec. 551.401 [Amended]

56. In Sec. 551.401, paragraphs (f) and (g) are amended by removing

``Sec. 410.602'' and adding in its place ``Sec. 410.402''.

Sec. 551.423 [Amended]

57. In Sec. 551.423, paragraph (a)(2)(ii) is amended by adding at

the end of the paragraph ``(See also Sec. 410.402(d) of this

chapter.)'', and paragraph (a)(3) is amended by removing the period at

the end of the paragraph and adding in its place ``, except as provided

by Sec. 410.402(b) of this chapter and paragraphs (f) and (g) of

Sec. 551.401.''

58. In section Sec. 551.432, paragraphs (b) and (c) are revised and

a new paragraph (e) is added to read as follows:

Sec. 551.432 Sleep time.

* * * * *

(b) For employees engaged in law enforcement or fire protection

activities who receive annual premium pay under 5 U.S.C. 5545(c) (1) or

(2), the requirements of paragraph (a) of this section apply, except

that on-duty sleep time may be excluded from hours of work only if the

tour of duty is more than 24 hours.

excluded from hours of work may not exceed 8 hours in a 24-hour period.

* * * * *

(e) On-duty sleep and meal time during regularly scheduled hours

for which standby duty premium pay under 5 U.S.C. 5545(c)(1) is payable

may not be excluded from hours of work.

Subpart E--Overtime Pay Provisions

59. In Sec. 551.501, paragraph (a)(2) is amended by removing

``Sec. 410.602'' and adding in its place ``Sec. 410.402'', and

paragraph (a)(5) is revised to read as follows:

Sec. 551.501 Overtime pay.

(a) * * *

(5) On the basis of hours of work in excess of 40 hours in a

workweek for an employee engaged in fire protection or law enforcement

activities when the employee receives annual premium pay under 5 U.S.C.

5545(c) (1) or (2) or is not an employee, as defined in 5 U.S.C.

5541(2), for the purposes of 5 U.S.C. 5542, 5543, and 5544;

* * * * *

60. In Sec. 551.512, paragraph (b) is amended by removing

``(exclusive of any premiums or differentials)'' and adding in its

place ``(exclusive of any premiums, differentials, bonuses, or

awards)'', and a new paragraph (d) is added to read as follows:

Sec. 551.512 Overtime pay entitlement.

* * * * *

(d) When an employee is granted a nondiscretionary individual or

group (e.g., gainsharing) award, the award must be included in

determining overtime pay for the period of time during which the award

was earned. An agency may meet the overtime pay requirements for the

period of time during which the award was earned by employing any one

of the following procedures--

(1) Recomputation method. (i) Allocate the award payable to each

individual employee under the award plan to the weeks or hours when it

was earned;

(ii) Include any allocated award payment in total remuneration in

computing the employee's hourly regular rate of pay for each applicable

workweek in the award period;

(iii) Recompute the employee's overtime pay for each applicable

workweek in the bonus period; and

(iv) Determine the total additional overtime pay owed.

(2) Percentage awards method. Identify the amount of the award as a

fixed percentage of total pay (straight time pay plus overtime pay)

earned by the employee during the award period. The product of total

earnings times the award percentage satisfies in full the overtime pay

requirements.

(3) Boosted hour method. (i) Identify the amount of the individual

award or the group award under the bonus plan and the period of time

during which it was earned;

(ii) Determine the number of boosted hours for the individual

employee or for all employees under the group award plan by summing the

total hours of work (straight time hours plus overtime hours) plus one-

half of the total number of overtime hours;

(iii) Divide the amount of the individual award or the group award

fund by the number of boosted hours for the individual employee or for

all employees under the group award plan, as applicable, to determine

the amount of the award allocable to each hour; and

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(iv) Multiply this hourly award amount by the number of boosted

hours credited to the individual employee or to each employee under the

group award plan during the award period, as applicable, to determine

the amount of the award for the individual employee or for each

employee under the group award plan.

Sec. 551.541 [Amended]

61. In Sec. 551.541, paragraph (b) is amended by removing

``511.411(c)'' and adding in its place ``551.411(c)''.

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

SUPERVISORY DIFFERENTIALS

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

follows:

Authority: 5 U.S.C. 1104(a)(2), 5753, 5754, and 5755; secs. 302

and 404 of the Federal Employees Pay Comparability Act of 1990 (Pub.

L. 101-509), 104 Stat. 1462 and 1466, respectively; E.O. 12748, 3

CFR, 1992 Comp., p. 316.

Subpart A--Recruitment Bonuses

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

follows:

Sec. 575.102 Delegation of authority.

(a) * * *

(3) A Senior Executive Service position paid under 5 U.S.C. 5383 or

a Federal Bureau of Investigation and Drug Enforcement Administration

Senior Executive Service position paid under 5 U.S.C. 3151.

* * * * *

64. In Sec. 575.103, the definition of involuntary separation is

amended by removing the words ``the commuting area'' wherever it

appears and adding in its place the words ``his or her commuting

area''; the definition of service agreement is amended by removing the

words ``of a minimum of 12 months'' and the definition of commuting

area is revised to read as follows:

Sec. 575.103 Definitions.

* * * * *

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

* * * * *

Subpart B--Relocation Bonuses

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

follows:

Sec. 575.202 Delegation of authority.

(a) * * *

(3) A Senior Executive Service position paid under 5 U.S.C. 5383 or

a Federal Bureau of Investigation and Drug Enforcement Administration

Senior Executive Service position paid under 5 U.S.C. 3151.

* * * * *

66. In Sec. 575.203, the definition of involuntary separation is

amended by removing the words ``the commuting area'' wherever it

appears and adding in its place the words ``his or her commuting area';

and the definitions of commuting area and employee are revised to read

as follows:

Sec. 575.203 Definitions.