**BONNEVILLE POWER ADMINISTRATION**

**HUMAN RESOURCES**

**Portland, Oregon**

**PERSONNEL LETTER NO. 575- 1** (REV) **DATE:** April 11, 1997

**SUBJECT**

Supervisory Differentials for the Annual Supervisor and Limited
Supervisor Who Supervise Hourly Employees.

**PURPOSE**

This Personnel Letter establishes the Bonneville Power Administration's
(BPA) policies and procedures for granting, adjusting and/or terminating
supervisory differentials for annual supervisors who supervise hourly
employees. The policy and procedures outlined in this Personnel Letter
are equally applicable to General Schedule (GS) and General Merit (GM)
supervisors. This Personnel Letter supersedes Personnel Letter 575-1
(REV), dated 08/12/93.

**PURPOSE OF REVISION**

The purpose of this revision is to expand the supervisory function to
encompass "limited supervisors". This change will grant supervisory
differentials to permanent GS/GM employees who administer technical
supervision of hourly employees regardless of numbers. The operational
process by which to effect this change is outlined in this Personnel
Letter.

**I. REFERENCE**

CFR 575, Subpart D, Supervisory Differentials.

**II. DEFINITIONS**

Federal Employee Pay Comparability Act of 1990 (FEPCA) contains certain
definitions which must be understood to properly apply supervisory
differentials. They are:

A. [Basic Pay of GS/GM Supervisors]{.underline}: Includes the rate of
pay set for his/her grade and step. It does not include any supervisory
differential.

B. [Continuing Pay or Continuing Payment]{.underline}: Means basic pay,
supervisory differentials, locality pay, and retention allowances. It
may also include other forms of pay which an employee receives on a
regular basis every pay period. Before any other type of pay may be
considered "continuing pay," approval must be obtained from the
Labor/Management Relations Section.

C. [Continuing Pay of Subordinate Hourly Employees]{.underline}:
Includes basic pay, as well as premium pay paid on an annual basis under
special authorities, and any other continuing payment. Continuing pay of
subordinate hourly employees does not include night differentials, a
retained rate of pay, overtime, environmental differentials, retention
allowance, Sunday or holiday pay.

D. [Continuing Pay for the GS/GM Supervisor]{.underline}: Includes
his/her basic pay as well as any supervisory differential, any
locality-based comparability payment, differential, a retention
allowance, premium pay received on an annul basis, or any other
continuing payment. It does not include night, Sunday or holiday premium
pay, or hazardous duty differential.

E. [Supervisor]{.underline}: For purposes of supervisory differential, a
supervisor is an annual employee who provides technical supervision of
an hourly employee. Supervisor means an individual employed by an agency
that supervises three or more employees and has authority in the
interest of the agency to hire, direct, assign, promote, reward,
transfer, furlough, layoff, recall, suspend, discipline, or remove
employees, to adjust their grievances, or to effectively recommend such
action, if the exercise of the authority is not merely routine or
clerical in nature, but requires the consistent exercise of independent
judgment, except that, with respect to any unit which includes
firefighters or nurses, the term "supervisor" includes only those
individuals who devote a preponderance of their employment time to
exercising such authority.

F. [Limited Supervisor]{.underline}: An employee must, as a regular and
recurring part of their assignment, direct or lead employees. Team
leaders primarily assure that other employees in the group accomplish
their work assignments and often represent management/supervision as
experts in their field or program activity with responsibility for
performing the following:

1\. Defining the content and quality of the work program or projects for
which the group or team is responsible, including providing technical
direction or advice on work processes, content, issues, and problems;

2\. Recommending team members for specific assignments and projects
based on technical assessments of individual skills and abilities;

3\. Coordinating and assuring completion of work and recommending
evaluation of performance of team members;

4\. Preparing position papers and guidance, developing data, preparing
status reports, and performing similar duties in support of
management's/supervision's overall program goals and objectives; and

5\. Serving as a technical advisor and reviewer.

Limited supervisors are not required to approve leave or provide any
kind of discipline to their employees.

**III. POLICY**

Supervisory differentials will be granted to permanent GS/GM employees
who perform technical supervision of hourly employee(s) permanently
assigned to them. Supervisory differentials will also be granted to
annual employees who receive temporary promotions/appointments/details
to qualifying positions when: (a) their temporary
promotion/appointment/detail will last [more than 120]{.underline} days;
and (b) they provide technical supervision of the hourly employee(s)
whose salary is used to set the maximum differential rate. Supervisory
differentials will also be granted to qualifying annual supervisors when
an hourly employee has been assigned to them on a temporary basis,
provided that the assignment will last [more than 120 days]{.underline}.

In all cases, if the temporary situation is initially scheduled to last
less than 120 days, but is subsequently extended to cause the situation
to exceed more than 120 consecutive days, the supervisor will be paid
retroactively to the initial date of eligibility.

The supervisory differential, in all cases, will be equal to that amount
which causes the continuing pay of the annual employees to exceed the
highest continuing pay of hourly employees he/she provides technical
supervision to by 3 percent. This policy is non-discretionary. The
supervisory differential will not be less or more than the amount
specified above, except that the annual (dollar) amount and hourly rates
(cents) of the supervisory differential will be rounded down.

The continuing pay for the hourly employee, used to calculate the
differential, shall normally be based on the hourly employee's position
of record. However, if the hourly employee is assigned to a temporary
set of duties still under the supervision of the qualifying supervisor,
with a higher rate of continuing pay, that higher rate shall be used,
provided that it is earned for more than 120 days.

A supervisory differential for an annual supervisor, who is detailed out
of his/her qualifying position of record for two or more pay periods,
must be adjusted or terminated to reflect his/her new situation.

No more than one annual employee may be granted a supervisory
differential for supervision of the same hourly employee.

**IV. RESPONSIBILITIES**

[Human Resources]{.underline} is responsible for notifying employees
when their supervisory differential has been approved (see Attachment
B). Human Resources is also responsible for advising management on the
regulations and procedures, providing technical advice and assistance on
differential eligibility and calculation, ensuring that requests and
records of locally approved differentials are complete, and, upon
notification, adjusting or terminating differentials in a timely manner.
Supervisory differentials must be calculated and adjusted manually;
therefore, care must be exercised to monitor changes in staffing and pay
of both the non-GS subordinates, whose pay established eligibility for a
differential, and the supervisors receiving these differentials.

[Manager of employee receiving supervisory differentials]{.underline} is
responsible for making sure that the employee receiving the differential
notifies his/her manager and Human Resources of any staffing changes.

[Employee receiving differentials]{.underline} is responsible for
notifying management officials and Human Resources of staffing changes
and pay adjustments for the subordinates whose pay establishes
eligibility for the differentials which affect the amount of their
eligibility for supervisory differentials. It is also the responsibility
of the employee to notify their manager and Human Resources when
termination of supervisory differential should occur. (See Attachment C
for sample memorandum).

**V. DIFFERENTIALS VERSUS BASE PAY**

The supervisory differential is a true differential and cannot be used
as part of an employee's base pay for any purpose. A supervisory
differential does not affect an employee's life insurance coverage or
annuity, or anything else which is adjusted or impacted by base pay.
When the condition which is the basis for the supervisory differential
changes, the differential must be adjusted or terminated, as
appropriate.

**VI. WHEN SUPERVISOR'S CONTINUING PAY MATCHES OR EXCEEDS THE HOURLY
EMPLOYEE'S CONTINUING PAY**

A supervisory differential may not be granted to a supervisor whose
continuing pay, not counting the prospective supervisory differential,
exceeds the continuing pay of the subordinate hourly employee who is the
"basis" of the supervisory differential, by any amount.

A supervisory differential must be terminated when the continuing pay of
the supervisor, not including the supervisory differential, exceeds the
continuing pay of the highest paid hourly employee he/she supervises.
Such a situation may occur for any number of reasons, including granting
an annual pay comparability increase to the annual supervisor. This may
result in the supervisor's continuing pay being reduced to a lower rate
than that received prior to termination of the differential. The action
is required by OPM regulations and there is no flexibility available to
BPA to mitigate the impact.

**VII. ADJUSTMENTS TO SUPERVISORY DIFFERENTIALS**

A number of staffing and pay actions may require the supervisory
differential of a supervisor to be adjusted. The following are examples
of such actions:

-   The annual supervisor receives a within grade increase or
    Performance Management and Recognition System merit increase;

-   The hourly employee(s) receive(s) a negotiated pay adjustment;

-   The highest paid hourly employee is transferred, reassigned,
    detailed, or otherwise leaves his/her position;

-   Annual comparability adjustments for the annual supervisor; or

-   The highest-paid hourly employee is on extended leave without pay
    (not in a pay status), such as OWCP situations.

When one of the above actions, or other actions which impact the
continuing pay of the supervisor or the hourly employee (who is used to
set the differential) occurs, the differential must be recalculated and
the appropriate action must be taken.

Human Resources is responsible for calculation of supervisory
differentials. It is the responsibility of the employee to notify Human
Resources of any staffing changes that would change the adjustment of
supervisory differentials.

**VIII. CALCULATION AND PAYMENT OF SUPERVISORY DIFFERENTIAL**

A. A supervisory differential shall be calculated as a percentage of the
supervisor's rate of basic pay or as a dollar amount and shall be paid
in the same manner and at the same time as the supervisor's basic pay
(i.e., the differential shall be paid at an hourly rate for each hour
during which the supervisor receives basic pay).

B. The amount of a supervisory differential shall not cause the
supervisor's continuing pay to exceed the continuing pay of the highest
paid subordinate not under the General Schedule, by more than 3 percent.

C. For the purpose of comparing the continuing pay of a supervisor,
whose position is under the GS with the continuing pay of a subordinate
whose position is not under the GS, the following payments shall be
included in determining the amount of continuing pay received by the
[supervisor]{.underline}:

1\. Basic pay, including a retained rate of pay;

2\. A locality-based comparability payment;

3\. A staffing differential (Federal Employees Pay Comparability Act of
1990);

4\. A retention allowance;

5\. Any other continuing payment, except night, Sunday, or holiday
premium pay or a hazardous duty differential;

6\. Premium pay paid on an annual basis; and

7\. Availability pay.

D. For the purpose of comparing the continuing pay of a supervisor whose
position is under the GS, with the continuing pay of a subordinate whose
position is not under the GS, the following payments shall be included
in determining the amount of continuing pay received by the
[subordinate]{.underline}:

1\. Basic Pay, excluding a night or environmental differential;

2\. A locality-based comparability payment;

3\. Any other continuing payment, except Sunday or holiday pay; and

4\. Premium pay paid on an annual basis.

E. For the purpose of making any of the comparisons required, continuing
pay shall be calculated on an annual basis for both the supervisor and
the subordinate.

F. Payment of a supervisory differential is subject to the aggregate
limitation on pay.

G. A supervisory differential shall not be considered part of the
supervisor's rate of basic pay for any purpose.

Attachment D is the computation worksheet for the supervisory
differentials.

**IX. DETAIL OF ANNUAL SUPERVISOR**

Annual employees receive supervisory differentials because they provide
technical supervision to at least one hourly employee. If an employee
receiving a supervisory differential is "detailed out" of his/her
position of record, his/her supervisory differential must be terminated
when the detail lasts more than two pay periods. Exceptions including
the following:

A. He/she is detailed to a position where he/she provides technical
supervision to an hourly employee whose continuing pay is equal to or
greater than the rate of the hourly employee used to calculate his/her
(the technical team lead's) differential. If greater, an adjustment will
be made to increase the differential, provided that the detail will last
more than 120 days.

B. He/she is detailed to a position where he/she provides technical
supervision to an hourly employee whose continuing pay is greater than
the technical team lead's continuing pay (minus the supervisory
differential) but less than the hourly rate used to justify the
supervisory differential for the technical team lead's position of
record. In this case, the technical team lead's differential must be
adjusted downward (to a maximum continuing pay of 3 percent more than
the hourly employee he/she is supervising while on detail) at the end of
the second pay period of the detail.

**X. CERTIFYING SUPERVISORY DIFFERENTIALS OR CERTIFYING DIFFERENTIALS**

The granting, adjustment, and termination of a supervisory differential
is non-discretionary and is "driven" by personnel actions which trigger
eligibility for the differential. Regulations require that the
determination to pay a supervisory differential, including the amount of
the differential, must be reviewed and approved by an official of the
agency who is at a higher level than the official who made the initial
decision.

Line officials must certify that the individual being granted a
supervisory differential is supervising an hourly employee, including
providing technical supervision to the employee. The certification must
be in the form of a memorandum (see Attachment A for example) and
submitted to the Regulatory Approving Official (individual with
delegated personnel management authority) in the Servicing Personnel
office, where it will be filed in the employee's Official Personnel
Folder. This certification must also occur when the supervisory
differential is adjusted upward because of staffing changes other than
"vice" actions.

**XI. PROCESSING DIFFERENTIALS**

A. A Request for Personnel Action (SF 52) and accompanying certification
memorandum must be generated by the line organization to cover the
initial establishment of a supervisory differential. (Failure of the
line organization to generate a timely SF 52 is not a basis for delaying
a mandatory adjustment.) A certification memorandum (but not an SF 52)
is also needed when a supervisory differential is adjusted upward
because of a staffing change other than a "vice" action. For all other
changes (adjustment or termination), the action will be taken by the
Servicing Personnel Offices, which will also document the calculation
and place such documentation on the left side of the employee's Official
Personnel Folder; such actions do not require any paperwork to be
initiated by line management.

B. Servicing Personnel Offices must review all supervisory differential
requests, to include the basis of the differential and the calculation
of the differential, prior to the granting of the differential.
Calculations for supervisory differential should take one pay period
from the time the Servicing Personnel Office receives the request*.*

C. A supervisory differential may not cause the continuing pay of a
supervisor to exceed the continuing pay of the subordinate hourly
employee by more than 3 percent for more than 30 calendar days. As soon
as the supervisory differential causes the supervisor's pay to exceed
the 3 percent maximum, the Servicing Personnel Office must notify the
certifying official (line official who certifies the supervisor's
duties) of the required change, and process the required change to be
effective at the beginning of the next pay period.

D. When a supervisor is no longer eligible for a supervisory
differential, the Servicing Personnel Office will terminate the
supervisory differential no later than at the beginning of the first
full pay period following the action which requires the termination.

E. When a supervisory differential has been granted because of a
temporary promotion, it must be terminated on the same day that the
temporary promotion ends.

F. In the event of the required adjustment downward, the Servicing
Personnel Office will make the adjustment to the differential level
which has the least negative impact on the supervisor. This adjustment
shall be made within 30 days following the action which requires the
termination.

G. In the event of the required adjustment of the differential to a
higher dollar amount (because of BPA's non discretionary policy), the
Servicing Personnel Office will effect the adjustment no later than at
the beginning of the first full pay period following the effective date
of the action which requires the adjustment.

H. In the event that retroactive wage increases are effective for hourly
employees, qualifying supervisors will receive, or have adjustments made
to, their supervisory differentials retroactive to the beginning of the
first full pay period that starts on or after the effective date of the
wage increase.

I. The responsibility and accountability for ensuring the supervisors
are not overpaid rests with Servicing Personnel Offices, which should
continually monitor all staffing and pay actions in units where an
employee is receiving a supervisory differential in accordance with
current guidelines by Office of Personnel Management.

J. The Notification of Personnel Action (SF 50) has blocks for base pay
and supervisory differentials. Block 45 ("Remark") will contain the
following statement: Salary in Block 20 includes a supervisory
differential of \$\_\_\_\_\_\_. The SF 50 should reflect the amount of
supervisory differential.

K. Individuals who are granted the supervisory differential must be
notified by their Servicing Personnel Office that the supervisory
differential is not a part of their base pay and may be terminated for
any number of reasons. They may wish to give each employee receiving a
supervisory differential a copy of this Personnel Letter.

L. SF 50's must be generated any time there is a change in the amount of
the supervisory differential.

Veronica L. Williams

Manager, Human Resources

4 Attachments:

Sample Approval Memo (Attachment A)

Sample Memo Notifying Employee Receiving

Supervisory Differentials (Attachment B)

Sample Termination/Review Memo (Attachment C)

Supervisory Pay Differential Computation

Worksheet (Attachment D)

Attachment A

**SAMPLE APPROVAL MEMORANDUM**

**Date:**

**FROM:** (First-level supervisor of employee who will receive
supervisory differential, or an individual in a position above the
First-level supervisor).

**SUBJECT:** Supervisory Differential

**TO:** Regulatory Approving Official

**THRU:** Line Certifying Official

([Supervisor's Name]{.underline}) has been
(selected/promoted/temporarily promoted/detailed) to the position of
([position title, position series/grade/and step, position
number]{.underline}). His/her continuing pay without a supervisory
differential is (\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_).

([Supervisor's Name]{.underline}) performs direct technical supervision
and otherwise supervises an hourly employee, ([hourly employee's name,
position number, series/title, and hourly rate of pay]{.underline}). The
hourly employee's rate of pay is annualized to ([annualized
salary]{.underline}).

([Supervisor's Name]{.underline}) is thus eligible for a supervisory
differential of ([enter dollar amount of differential]{.underline}).
Her/his total continuing pay would then be ([continuing pay without
differential]{.underline}) + ([differential]{.underline}) = ([new
continuing pay]{.underline}) which exceeds the continuing pay of the
hourly employee by 3 percent.

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Line Certifying Official's Signature Date

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Line Certifying Official's Title

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Signature of Individual Granting Date

Regulatory Approval

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Title of Individual Granting

Regulatory Approval

Attachment B

**SAMPLE MEMORANDUM NOTIFYING**

**EMPLOYEE RECEIVING SUPERVISORY DIFFERENTIALS**

**Date:**

**FROM:** Human Resources

**SUBJECT:** Notification of Supervisory Differential

**TO:** Employee Receiving Supervisory Differential

**THRU:** (Supervisor of Employee Receiving Supervisory Differential)

This is to inform you that you have been approved for supervisory
differential. If at any time, a change in employment relation occurs
such as:

> 1\. Loss of employee in hourly position;
>
> 2\. Change in the hourly employee's hourly rate; and
>
> 3\. Your pay, as a supervisor, exceeds the pay of the highest paid
> hourly employee you supervise. Supervisors are only entitled to
> receive the differential as long as the supervisor's pay is less than
> the highest paid hourly employee. Failure to timely report a change
> could result in the supervisor employee repaying the amount of
> overpayment.

Please notify us immediately in writing (see Attachment C for sample
memorandum) so appropriate actions can be made.

> Attachment C

**SAMPLE TERMINATION/REVIEW**

**Date:**

**FROM:** Employee Receiving Supervisory Differentials

**SUBJECT:** Termination of Supervisory Differential

**TO:** Human Resources

**THRU:** (Supervisor of Employee Whose Supervisory Differential Will Be
Terminated).

This is to inform you that I should no longer be receiving a supervisory
differential because

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_.

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Employee's Signature Date

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Employee's Official Title

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

First-level Supervisor Date

Attachment D

**SUPERVISORY PAY DIFFERENTIAL**

Computation Worksheet

Supervisor's Name:
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Reason for Computation:
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Effective Date: \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

GS Supervisor's [Base]{.underline} Pay (GS-\_\_\_\_/\_\_\_\_ ) \$
\_\_\_\_\_\_\_\_\_\_\_ pa

Add any Continuing Pay (e.g., locality pay) + \_\_\_\_\_\_\_\_\_\_\_

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
= \$ \_\_\_\_\_\_\_\_\_\_\_ \[1\]\*

[Title and Pay]{.underline} of Highest Paid Hourly Employee Supervised:

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ /\$
\_\_\_\_\_\_\_\_\_\_\_\_\_\_ ph

[Calculation:]{.underline}

Hourly's Pay: \$ \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ ph (Do not use
retained or GS rates)

X 2087 = \$ \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ pa (If \< (#1),
[STOP]{.underline} \-- no differential allowed)

X103% = \$ \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ \[2\]\* (Round Down)

\*\[2\] \$ \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ Supervisor's
[New]{.underline} Adjusted Pay

\*\[1\] - \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ (Supervisor's Base =
Other Continuing Pay)

= \$ \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ Supervisory Differential

CSR Initials \_\_\_\_\_\_\_\_\_\_\_\_\_\_/\_\_\_\_\_\_\_\_\_\_

(date)