5 C.F.R. Subpart C—Retention Incentives
Title 5 - Administrative Personnel
Title 5: Administrative Personnel
PART 575—RECRUITMENT, RELOCATION, AND RETENTION INCENTIVES; SUPERVISORY DIFFERENTIALS; AND EXTENDED ASSIGNMENT INCENTIVES
Subpart C—Retention Incentives
Source: 70 FR 25747, May 13, 2005, unless otherwise noted.
§ 575.301 Purpose.
This subpart contains regulations implementing 5 U.S.C. 5754, which authorizes payment of retention incentives. An agency may pay a retention incentive to a current employee under the conditions specified in this subpart when an agency determines that the unusually high or unique qualifications of the employee or a special need of the agency for the employee's services makes it essential to retain the employee and that the employee would be likely to leave the Federal service in the absence of an incentive.
§ 575.302 Definitions.
In this subpart:
Agency means an executive agency or a legislative branch agency included in 5 U.S.C. 5102(a)(1).
Authorized agency official means the head of an agency or an official who is authorized to act for the head of the agency in the matter concerned.
Competencies means the knowledge, skills, abilities, behaviors, and other characteristics an employee needs to perform the duties of a position.
Employee has the meaning given that term in 5 U.S.C. 2105, except that the term also includes an employee described in 5 U.S.C. 2105(c).
Executive agency has the meaning given that term in 5 U.S.C. 105.
OPM means the Office of Personnel Management.
Rate of basic pay means the rate of pay fixed by law or administrative action for the position to which an employee is appointed before deductions and including any special rate under 5 CFR part 530, subpart C, or similar payment under other legal authority, and any locality-based comparability payment under 5 CFR part 531, subpart F, or similar payment under other legal authority, but excluding additional pay of any other kind. For example, a rate of basic pay does not include additional pay such as night shift differentials under 5 U.S.C. 5343(f) or environmental differentials under 5 U.S.C. 5343(c)(4).
Service agreement means a written agreement between an agency and an employee under which the employee agrees to a specified period of employment with the agency in return for payment of a retention incentive.
§ 575.303 Eligible categories of employees.
Except as provided in §575.304, an agency may pay a retention incentive to a current employee who holds—
(a) A General Schedule position paid under 5 U.S.C. 5332 or 5305 (or similar special rate authority);
(b) A senior-level or scientific or professional position paid under 5 U.S.C. 5376;
(c) 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;
(d) A position as a law enforcement officer, as defined in 5 CFR 550.103;
(e) A position under the Executive Schedule paid under 5 U.S.C. 5311–5317 or a position the rate of pay for which is fixed by law at a rate equal to a rate for the Executive Schedule;
(f) A prevailing rate position, as defined in 5 U.S.C. 5342(a)(3); or
(g) Any other position in a category for which payment of retention incentives has been approved by OPM at the request of the head of an executive agency.
§ 575.304 Ineligible categories of employees.
An agency may not pay a retention incentive to an employee in—
(a) A position to which an individual is appointed by the President, by and with the advice and consent of the Senate;
(b) A position in the Senior Executive Service as a noncareer appointee (as defined in 5 U.S.C. 3132(a)(7));
(c) A position excepted from the competitive service by reason of its confidential, policy-determining, policy-making, or policy-advocating character; or
(d) A position not otherwise covered by the exclusions in paragraphs (a), (b), and (c) of this section—
(1) To which an individual is appointed by the President without the advice and consent of the Senate;
(2) Designated as the head of an agency, including an agency headed by a collegial body composed of two or more individual members; or
(3) In which the employee is expected to receive an appointment as the head of an agency.
§ 575.305 Applicability to employees.
(a) An agency may pay a retention incentive to an individual employee under the conditions prescribed in this subpart when the agency determines that—
(1) The unusually high or unique qualifications (i.e., competencies) of the employee or a special need of the agency for the employee's services makes it essential to retain the employee; and
(2) The employee would be likely to leave the Federal service in the absence of a retention incentive.
(b) Except as provided in paragraph (c) of this section, an agency may pay a retention incentive to a group or category of employees under the conditions prescribed in this subpart when the agency determines that—
(1) The unusually high or unique qualifications (i.e., competencies) of the group or category of employees or a special need of the agency for the employees' services makes it essential to retain the employees in that group or category; and
(2) There is a high risk that a significant number of the employees in the group would be likely to leave the Federal service in the absence of a retention incentive.
(c) An agency may not include in a group retention incentive authorization an employee covered by §575.303(b), (c), (e) or those in similar categories of positions approved by OPM to receive retention incentives under §575.303(g).
(d) A retention incentive may be paid only when the employee's rating of record (or an official performance appraisal or evaluation under a system not covered by 5 U.S.C. chapter 43 or 5 CFR part 430) is at least “Fully Successful” or equivalent.
§ 575.306 Authorizing a retention incentive.
(a) Authority of authorized agency official. An authorized agency official retains sole and exclusive discretion, subject only to OPM review and oversight, to—
(1) Determine when the unusually high or unique qualifications (i.e., competencies) of an employee or a special need of the agency for the employee's services makes it essential to retain the employee and when the employee would be likely to leave the Federal service in the absence of a retention incentive;
(2) Determine when a group or category of employees has unusually high or unique qualifications (i.e., competencies) or when an agency has a special need for the employees' services that makes it essential to retain the employees in that group or category and when there is a high risk that a significant number of employees in the group would be likely to leave the Federal service in the absence of a retention incentive;
(3) Approve a retention incentive for an employee (or group or category of employees, except as prohibited by §575.305(c)) in a position (or positions) listed in §575.303;
(4) Establish the criteria for determining the amount of a retention incentive and the length of a service period under §§575.309 and 575.310, respectively;
(5) Request a waiver from OPM of the limitation on the maximum amount of a retention incentive for an employee (or group or category of employees) under §575.309(e); and
(6) Establish the criteria for terminating a service agreement or retention incentive payments under §575.311.
(b) Factors for authorizing a retention incentive for an individual employee. An agency must consider the following factors, as applicable to the case at hand, in determining whether the unusually high or unique qualifications of an employee or a special need of the agency for an employee's services makes it essential to retain the employee and that the employee would be likely to leave the Federal service in the absence of a retention incentive:
(1) Employment trends and labor market factors such as the availability and quality of candidates in the labor market possessing the competencies required for the position and who, with minimal training, cost, or disruption of service to the public, could perform the full range of duties and responsibilities of the employee's position at the level performed by the employee;
(2) The success of recent efforts to recruit candidates and retain employees with competencies similar to those possessed by the employee for positions similar to the position held by the employee;
(3) Special or unique competencies required for the position;
(4) Agency efforts to use non-pay authorities to help retain the employee instead of or in addition to a retention incentive, such as special training and work scheduling flexibilities or improving working conditions;
(5) The desirability of the duties, work or organizational environment, or geographic location of the position;
(6) The extent to which the employee's departure would affect the agency's ability to carry out an activity, perform a function, or complete a project that the agency deems essential to its mission;
(7) The salaries typically paid outside the Federal Government; and
(8) Other supporting factors.
(c) Factors for authorizing a retention incentive for a group or category of employees. (1) An agency must consider the factors in paragraph (b) of this section as they relate to determining whether a group or category of employees—
(i) Has unusually high or unique qualifications (i.e., competencies) or that the agency has a special need for the employees' services that makes it essential to retain the employees in that category; and
(ii) That it is reasonable to presume that there is a high risk that a significant number of employees in the targeted category would be likely to leave the Federal service in the absence of a retention incentive.
(2) An agency must narrowly define a targeted category of employees using factors that relate to the conditions described in paragraph (c)(1) of this section. Factors that may be appropriate include the following: occupational series, grade level, distinctive job duties, unique competencies required for the position, assignment to a special project, minimum agency service requirements, organization or team designation, geographic location, and required rating of record. (While a rating of record of higher than the “Fully Successful” rating of record required by §575.305(d) may be a factor used in defining the targeted category, a rating of record by itself is not sufficient to justify a retention incentive. A rating of record may function as a supporting factor in authorizing an incentive or setting the incentive rate only to the extent it directly relates to the conditions in paragraph (d) of this section.)
(d) An agency must document the determinations required under paragraphs (b) and (c) of this section as required by §575.308.
§ 575.307 Agency retention incentive plan and approval levels.
(a) Before paying retention incentives under this subpart, an agency must establish a retention incentive plan. This plan must include the following elements:
(1) The designation of officials with authority to review and approve payment of retention incentives, subject to paragraph (b) of this section;
(2) The categories of employees who are prohibited from receiving retention incentives;
(3) Required documentation for determining that an employee would be likely to leave the Federal service;
(4) Any requirements for determining the amount of a retention incentive;
(5) The payment methods that may be authorized;
(6) Requirements governing service agreements which, at a minimum, must include—
(i) The criteria for determining the length of a service period under a service agreement;
(ii) The conditions for terminating a service agreement;
(iii) The obligations of the agency and the employee, as applicable, if an agency terminates a service agreement; and
(iv) The conditions for terminating retention incentive payments when no service agreement is required (see §575.310(f)); and
(7) Documentation and recordkeeping requirements sufficient to allow reconstruction of the action and fulfill the requirements of §§575.312 and 575.313.
(b)(1) Except as provided in paragraph (b)(2) of this section, an authorized agency official who is at least one level higher than the employee's (or group of employees') supervisor must review and approve each determination to pay a retention incentive to an individual or group of employees, unless there is no official at a higher level in the agency.
(2) The higher level approval required by paragraph (b)(1) of this section is not needed when approving coverage of individual employees under a previously approved group retention incentive authorization.
(c) Unless the head of the agency determines otherwise, an agency retention incentive plan must apply uniformly across the agency.
§ 575.308 Approval criteria and written determination.
(a) An agency in its sole and exclusive discretion, subject only to OPM review and oversight, may approve a retention incentive for an individual employee or group or category of employees using the approval criteria in §575.306.
(b) For each determination to pay a retention incentive under this subpart, an agency must document in writing—
(1) The basis for determining that the unusually high or unique qualifications of the employee (or group of employees) or a special need of the agency for the employee's (or group of employees') services makes it essential to retain the employee(s);
(2) The basis for determining that the employee (or a significant number of employees in a group) would be likely to leave the Federal service in the absence of a retention incentive; and
(3) The basis for establishing the amount and timing of the approved retention incentive payment and the length of the required service period.
§ 575.309 Payment of retention incentives.
(a) An authorized agency official must determine the criteria for determining the amount of a retention incentive. An agency must establish a single retention incentive rate for each individual or group of employees that is expressed as a percentage of the employee's rate of basic pay. Except as provided in paragraph (e) of this section, a retention incentive rate may not exceed—
(1) 25 percent, if authorized for an individual employee; or
(2) 10 percent, if authorized for a group or category of employees.
(b) An agency may pay a retention incentive in—
(1) Installments after the completion of specified periods of service; or
(2) A single lump-sum payment after completion of the full service period.
(c)(1) An installment payment is derived by multiplying the rate of basic pay the employee earned in the installment period by a percentage not to exceed the incentive percentage rate established for the employee under paragraph (a) of this section. For example, an agency establishes a retention incentive percentage rate of 10 percent for an employee. The employee has a service agreement that provides for a retention incentive installment payment after completion of 6 pay periods of service at the full percentage rate established for the employee. The employee earns $15,000 during the 6 pay periods of service. Upon completion of that service period, the employee will receive the accrued retention incentive installment payment of $1,500 ($15,000 × .10).
(2) If the retention incentive installment payment percentage is less than the full percentage rate established for the employee under paragraph (a) of this section, any accrued portion of the retention incentive that is not paid as an installment payment during the service period must be paid as part of a final installment payment to the employee after completion of the full service period under the terms of the service agreement established under §575.310. For example, an agency establishes a retention incentive percentage rate of 10 percent for an employee. The employee's service agreement provides for a 7 percent retention incentive installment payment after completion of 6 pay periods of service. The employee earns $15,000 during the 6 pay periods of service. Upon completion of that installment period, the employee accrues a retention incentive installment payment of $1,500 ($15,000 × .10). However, under the terms of the service agreement, the employee will receive a $1,050 retention incentive installment payment ($15,000 × .07). The agency must pay the accrued but unpaid portion of the retention incentive payment of $450 ($1,500−$1,050) as a final lump-sum payment upon completion of the full service period required by the service agreement.
(3) An agency may not pay a retention incentive as an initial lump-sum payment at the start of a service period or in advance of fulfilling the service period for which the retention incentive is being paid.
(d) A retention incentive payment paid as a single lump-sum payment upon completion of the full service period required by the service agreement is derived by multiplying the retention incentive percentage rate established under paragraph (a) of this section by the total basic pay the employee earned during the full service period.
(e)(1) An authorized agency official may request that OPM waive the limitation in paragraph (a) of this section and permit the agency to pay an individual employee or group of employees a retention incentive of up to 50 percent of the employee's basic pay based on a critical agency need. In addition to the determination required by §575.308, the authorized agency official must determine that the employee's (or group of employees') unusually high or unique qualifications (i.e., competencies) are critical to the successful accomplishment of an important agency mission, project, or initiative (e.g., programs or projects related to a national emergency or implementing a new law or critical management initiative).
(2) Waiver requests must include—
(i) A description of the employee's work requirements and responsibilities or, if requesting a group retention incentive, a description of the group or category of employees and the number of employees to be covered by the proposed retention incentive;
(ii) A description of the critical agency need the proposed retention incentive would address;
(iii) The written documentation required by §575.308;
(iv) The proposed retention incentive percentage rate and a justification for that percentage;
(v) The timing and method of making the retention incentive payments;
(vi) The service period required; and
(vii) Any other information pertinent to the case at hand.
(3) OPM may require that waiver requests for groups or categories of employees be coordinated with other agencies having similarly situated employees in the same category.
(4) Notwithstanding §575.310(f), an authorized agency official must require a signed written service agreement for any employee who may receive a higher retention incentive as a result of approval of a waiver of the maximum limit on the amount of a retention incentive under paragraph (e)(1) of this section.
(f) An agency may not offer or authorize a retention incentive for an individual prior to employment with the agency.
(g) An agency may not commence a retention incentive service agreement (or begin paying a retention incentive) during a period of employment established under any service agreement required for payment of a recruitment incentive under 5 CFR part 575, subpart A, or a relocation incentive under 5 CFR part 575, subpart B. After a retention incentive service agreement has commenced (or retention incentive payments have commenced), an agency may pay a relocation incentive without affecting the payment of a retention incentive.
(h) A retention incentive is not part of an employee's rate of basic pay for any purpose.
(i) Payment of a retention incentive is subject to the aggregate limitation on pay under 5 CFR part 530, subpart B.
§ 575.310 Service agreement requirements.
(a) Before paying a retention incentive, an agency must require an employee, including each employee covered by a group retention incentive authorization and any employee who may receive a higher retention incentive as a result of an approved waiver of the maximum limit on the amount of a retention incentive under §575.309(e), to sign a written service agreement to complete a specified period of employment with the agency (or successor agency in the event of a transfer of function). An authorized agency official must determine the length of a service period. A written service agreement is not required under the condition described in paragraph (f) of this section.
(b) The service agreement must include the commencement and termination dates of the required service period. The service period must begin on the first day of a pay period and end on the last day of a pay period.
(c) The service agreement must specify the retention incentive percentage rate established under §575.309(a); whether the incentive will be paid in installments or in a lump-sum payment upon completion of the service period provided in the service agreement; whether any installment payments will be paid at less than the full retention incentive percentage rate established under §575.309(a), with the accrued but unpaid incentive payment being paid in a lump sum upon completion of the full service period required by the service agreement under §575.309(c)(2); and the timing of incentive payments.
(d) The service agreement must include the conditions under which the agency must terminate the service agreement before the employee completes the agreed-upon service period (i.e., if an employee is demoted or separated for cause, receives a rating of record of less than “Fully Successful” or equivalent, or otherwise fails to fulfill the terms of the service agreement) under §575.311. The service agreement must specify the effect of a termination, including the conditions under which the agency will pay an additional retention incentive payment for partially completed service under §575.311(e) and (f).
(e) The service agreement may include any other terms or conditions that, if violated, will result in a termination of the service agreement under §575.311(b). For example, the service agreement may specify the employee's work schedule, type of position, and the duties he or she is expected to perform. In addition, the service agreement may address the extent to which periods of time on detail, in a nonpay status, or in paid leave status are creditable towards the completion of the service period.
(f) A written service agreement is not required if the agency—
(1) Pays the retention incentive in biweekly installments; and
(2) Sets each biweekly installment payment at the full retention incentive percentage rate established for the employee under §575.309(a).
[70 FR 25747, May 13, 2005, as amended at 70 FR 74996, Dec. 19, 2005]
§ 575.311 Continuation, reduction, and termination of retention incentives.
(a) An authorized agency official may unilaterally terminate a retention incentive service agreement based solely on the management needs of the agency. For example, an agency may terminate a service agreement when the employee's position is affected by a reduction in force, when there are insufficient funds to continue the planned retention incentive payments, when conditions no longer warrant payment at the level originally approved or at all, or when the agency assigns the employee to a different position (if the different position is not within the terms of the service agreement).
(b) An authorized agency official must terminate a retention incentive service agreement if the employee is demoted or separated for cause (i.e., for unacceptable performance or conduct), if the employee receives a rating of record (or an official performance appraisal or evaluation under a system not covered by 5 U.S.C. chapter 43 or 5 CFR part 430) of less than “Fully Successful” or equivalent, or if the employee otherwise fails to fulfill the terms of the service agreement.
(c) The termination of a service agreement is not grievable or appealable.
(d) The agency must notify an employee in writing when it terminates a retention incentive service agreement.
(e) If an authorized agency official terminates a service agreement under paragraph (a) of this section, the employee is entitled to retain any retention incentive payments that are attributable to completed service and to receive any portion of a retention incentive payment owed by the agency for completed service.
(f) If an authorized agency official terminates a service agreement under paragraph (b) of this section, the employee is entitled to retain retention incentive payments previously paid by the agency that are attributable to the completed portion of the service period. If the employee received retention incentive payments that are less than the amount that would be attributable to the completed portion of the service period, the agency is not obligated to pay the employee the amount attributable to completed service, unless the agency agreed to such payment under the terms of the retention incentive service agreement.
(g)(1) For retention incentives that are paid when no service agreement is required under §575.310(f), an agency must review each determination to pay the incentive at least annually to determine whether payment is still warranted. An authorized agency official must certify this determination in writing.
(2) An agency may continue paying a retention incentive to an employee when no service agreement is required as long as the conditions giving rise to the original determination to pay the incentive still exist.
(3) An agency must reduce or terminate a retention incentive authorization when no service agreement is required whenever payment at the level originally approved is no longer warranted. An agency may consider the following factors in determining whether to reduce or terminate a retention incentive—
(i) Whether a lesser amount (or none at all) would be sufficient to retain the employee (or group or category of employees);
(ii) Whether labor-market factors make it more likely (or reasonably likely) to recruit a candidate with competencies similar to those possessed by the employee (or group or category of employees);
(iii) Whether the agency's need for the services of the employee (or group or category of employees) has been reduced to a level that makes it unnecessary to continue payment at the level originally approved (or at all);
(iv) Whether budgetary considerations make it difficult to continue payment at the level originally approved (or at all); or
(v) Other supporting factors.
(4) An agency must terminate a retention incentive authorization when no service agreement is required if the employee is demoted or separated for cause (i.e., for unacceptable performance or conduct), the employee receives a rating of record (or an official performance appraisal or evaluation under a system not covered by 5 U.S.C. chapter 43 or 5 CFR part 430) of less than “Fully Successful” or equivalent, or the agency assigns the employee to a different position.
(5) Termination or reduction of a retention incentive is not grievable or appealable under any law or regulation.
(6) If an agency reduces or terminates a retention incentive under paragraph (g) of this section, the agency must notify the employee in writing. The employee is entitled to receive any scheduled incentive payments through the end of the pay period in which the written notice is provided or until the date of separation, if sooner.
§ 575.312 Internal monitoring requirements and revocation or suspension of authority.
(a) Each agency must monitor the use of retention incentives to ensure that its retention incentive plan and the payment of retention incentives are consistent with the requirements and criteria established under 5 U.S.C. 5754 and this subpart.
(b) When OPM finds that an agency is not paying retention incentives consistent with the agency's retention incentive plan and the criteria established under 5 U.S.C. 5754 or this subpart or otherwise determines that the agency is not using this authority selectively and judiciously, OPM may—
(1) Direct the agency to revoke or suspend the authority granted to any organizational component of the agency and, with respect to any category or categories of employees, require that the component obtain approval from the agency's headquarters level before paying a retention incentive to such employees; or
(2) Revoke or suspend the authority granted to the agency under this subpart for all or any part of the agency and, with respect to any category or categories of employees, require that the agency obtain OPM's approval before paying a retention incentive to such employees.
§ 575.313 Records and reports.
(a) Each agency must keep a record of each determination to pay a retention incentive and make such records available for review upon OPM's request.
(b) By March 31 in each of the years 2006 through 2010, each agency must submit a written report to OPM on the use of the retention incentive authority within the agency during the previous calendar year for use in compiling an OPM report to Congress, as required by section 101(c) of Public Law 108–411. Each agency report must include—
(1) A description of how the authority to pay retention incentives was used in the agency during the previous calendar year;
(2) The number and dollar amount of retention incentives paid during the previous calendar year to individuals by occupational series and grade, pay level, or other pay classification; and
(3) Other information, records, reports, and data as OPM may require.
§ 575.314 Retention allowances in effect before May 1, 2005.
This subpart does not apply to a retention allowance authorized under 5 U.S.C. 5754 and 5 CFR part 575, subpart C, before May 1, 2005. Such allowances must continue to be paid until the retention allowance is reauthorized or terminated or until April 30, 2006, whichever comes first, subject to the regulations applicable to retention allowances before May 1, 2005. (See 5 CFR part 575 and part 530, subpart B, contained in the 5 CFR, parts 1 to 699, edition revised as of January 1, 2005.)
Browse Previous | Browse Next
