BONNEVILLE POWER ADMINISTRATION

**HUMAN RESOURCES**

**Portland, Oregon**

**PERSONNEL LETTER NO. 536-1 DATE: January 13, 1999**

**SUBJECT:** GRADE AND PAY RETENTION

## I. PURPOSE OF ISSUANCE

To describe Bonneville Power Administration (BPA) policy associated with
the grade and pay retention requirements contained in Title 5, Code of
Federal Regulations, 5 CFR, Part 536. This personnel letter abolishes
Personnel Letter No. 536-1, Notification of Entitlement to Grade
Retention for Annual Employees Whose Positions Have Been Reclassified to
a Lower Grade, dated August 7, 1979.

**II. REFERENCES**

> A. 5 U. S. C., Chapter 51, Classification
>
> B. 5 U.S.C., Chapter 53, Subchapter VI, Grade and Pay Retention
>
> C. 5 CFR Part 536, Grade and Pay Retention
>
> D. Personnel Letter No. 330-1, BPA's Career Transition Assistance
> Program
>
> E. Personnel Letter No. 531-3, Determining Discretionary Rates of Pay
> for General Schedule Positions

**III. COVERAGE**

This personnel letter applies to all annual positions at BPA, except for
SES positions. Hourly positions are not covered. Employees moving from
hourly jobs to annual positions may be eligible for grade and pay
retention as described in this personnel letter.

**IV. DEFINITIONS**

# 

# A. Demotion at an employee's request means a reduction in grade that is: (1) initiated by the employee for his or her benefit, convenience, or personal advantage, including consent to a demotion in lieu of one for personal cause; and (2) not caused or influenced by a management action. 

# 

> B. [Demotion for personal cause]{.underline} means a reduction in
> grade based on the conduct, character, or unacceptable performance of
> an employee.
>
> C. [Employee]{.underline} means an employee as defined in 5 U.S.C.
> 5361 and also an individual who is moved from a position that is not
> under a covered pay schedule to a position that is under a covered pay
> schedule, provided that the individual's employment immediately prior
> to the move was on other than a temporary or term basis.
>
> D. [Employment on a temporary or term basis]{.underline} means
> employment under an appointment having a definite time limitation or
> designated as temporary or term.
>
> E. [Rate of basic pay]{.underline} means, for any pay system, the rate
> of pay fixed by law or administrative action for the position held by
> an employee before any deductions and exclusive of additional pay of
> any kind such as night or environmental differentials in the case of a
> prevailing rate employee.
>
> F. [Rate schedule]{.underline} means a specific set of rates within a
> pay schedule.
>
> G. [Reorganization]{.underline} means the planned elimination,
> addition, or redistribution of functions or duties either wholly
> within an agency or between agencies.
>
> H. [Representative rate, as applied to BPA employees,]{.underline}
> means: (1) the fourth step of the grade in the case of a position
> under the General Schedule or the individual's rate under the Senior
> Executive Service; or (2) the basic rate of pay for an hourly
> employee.
>
> I. [Temporary promotion]{.underline} means a promotion with a definite
> time limitation, and one which the individual is informed in advance
> is temporary and would normally require that the individual return to
> his or her permanent position at the expiration of that promotion.
>
> J. [Temporary reassignment]{.underline} means a reassignment with a
> definite time limitation, and one which the individual is informed in
> advance is temporary and would normally require that the individual
> return to his or her permanent position at the expiration of that
> reassignment.

# **V. POLICY**

A. [General]{.underline}. It is the policy of BPA that retained grade
and retained pay will be used in accordance with provisions of
controlling law and regulation. Further, it is the policy of BPA that
pay retention may be used to address adverse salary impacts that would
otherwise occur as a result of management action, but that grade
retention, in general, will be used only in reduction-in-force or
reclassification actions. Exceptions to this policy are described in
paragraph V.B. below. In making salary determinations, management will
review all options, including use of "highest previous rate" authority
and determine individual employee pay based on business needs and
pay-setting guidance from the Office of Personnel Management (OPM).

B. [Discretionary Grade Retention]{.underline}. Discretionary grade
retention, as permitted by 5 CFR 536.103, may be used in circumstances
that will clearly preclude or mitigate reduction-in-force, and may be
approved only by the Manager for Personnel Services. Approval for the
use of discretionary grade retention may be on a continuous basis (in
all or part of BPA) or may be case-specific. In all cases, requests must
be submitted in writing. The procedure for requesting approval of
discretionary grade retention is listed below.

> C. [Discretionary Pay Retention]{.underline}. Discretionary pay
> retention, as permitted by 5 CFR.536.104, may be used in circumstances
> that will clearly preclude or mitigate impact when rates of basic pay
> would otherwise be reduced as a result of management action (i.e., in
> lieu of actions that might otherwise adversely impact the employee).
> Any discretionary use of pay retention must be approved by the Manager
> for Personnel Services. Approval for such use may be on a continuous
> basis (in all or part of BPA) or may be case-specific.

**VI. RESPONSIBILITIES**

> A. [Manager for Human Resources, Diversity, and EEO]{.underline} is
> responsible for:
>
> 1\. Ensuring that appropriate policies and procedures are developed
> and available for HR staff to use when advising managers on possible
> options regarding grade and pay retention; and
>
> 2\. Providing guidance, when needed, to the Manager for Personnel
> Services on the intended use of discretionary grade and pay retention.
>
> B. [Manager for Personnel Services]{.underline} is responsible for:
>
> 1\. Approving requests for the use of discretionary grade or pay
> retention in accordance with applicable rules and regulations, and
> seeking guidance, when needed, from the Manager for Human Resources,
> Diversity, and EEO on the intended use of discretionary grade and pay
> retention;
>
> 2\. Providing comprehensive advisory services to management regarding
> retained grade and pay options; and
>
> 3\. Providing counseling and information to impacted employees.
>
> C. [Employees]{.underline} are responsible for keeping informed
> regarding grade and pay retention requirements and submitting and
> completing appropriate documentation as required, such as an
> application for priority placement consideration.
>
> D. [Managers and Supervisors]{.underline} are responsible for:
>
> 1\. Reviewing and assessing changes to positions that may result in
> reclassification;
>
> 2\. Developing recommendations for use of discretionary grade and pay
> retention, when appropriate; and
>
> 3\. Providing priority consideration for employees eligible under
> grade retention as set forth in this Personnel Letter.

**VII. MANDATORY GRADE RETENTION**

A. An employee placed in a lower grade as a result of RIF or
re-classification of the position is eligible, except as noted below, to
retain for a period of 2 years the grade held immediately before the RIF
or reclassification. In order to be eligible for mandatory grade
retention the employee must meet either of the following criteria:

> 1\. If the reduction in grade is a result of reduction-in-force, the
> employee being reduced in grade must have served for 52 consecutive
> weeks or more in a position(s) under a covered pay schedule at a
> grade(s) higher than the position in which the employee is placed. Any
> 52-consecutive week period in a higher grade or combination of higher
> grades may be used.
>
> 2\. If the reduction in grade is a result of reclassification action,
> the position from which the employee is being reduced must have been
> classified at a higher grade(s) for a continuous period of at least 1
> year immediately before the reduction.
>
> B. An employee downgraded for cause, misconduct, or at the employee's
> request is ineligible for grade retention or its entitlements.
>
> C. At the end of the grade retention period, an employee will be
> entitled to pay retention.
>
> D. [Special Placement]{.underline}. An employee who has been granted
> grade retention as a result of reduction-in-force or reclassification
> is eligible for priority consideration as described in Personnel
> Letter 330-1, Career Transition Assistance Program. Employees granted
> discretionary grade retention as described in section VII (below) are
> not entitled to priority consideration.
>
> E. [Loss of Eligibility for Mandatory Grade Retention]{.underline}.
> Any grade retention entitlement which is mandatory by law or
> regulation ceases to apply if **any of** the following conditions
> occur at any time after the employee receives written notice of the
> reduction in grade action, but before the commencement of the two-year
> period of grade retention:
>
> 1\. The employee has a break in service of 1 workday or more;
>
> 2\. The employee is demoted for personal cause or at the employee's
> request;
>
> 3\. The employee is placed in a position the grade of which is equal
> to, or higher than, the retained grade;
>
> 4\. The employee elects in writing to have the benefits of grade
> retention terminate; or
>
> 5\. The employee declines a reasonable offer or a position at a grade
> equal to or higher than the employee's retained grade. A reasonable
> offer, as defined below, must fulfill **[all]{.underline}** of the
> following conditions:

a\. The offer must be in writing, and must include an official position
description of the offered position;

> b\. The offer must inform the employee that an entitlement to grade or
> pay retention will be terminated if the offer is declined, and that
> the employee may appeal the reasonableness of the offer, as described
> in Section XIII. in this Personnel Letter;

c\. The offered position must be of tenure equal to or greater than that
of the position creating the grade or pay retention entitlement;

> d\. The offered position must be in an agency as defined by 5 U.S.C.
> 5102, although not necessarily in the same agency in which the
> employee is serving at the time of the offer;
>
> e\. The offered position must be full-time, unless the employee's
> position immediately before the change creating the entitlement to
> grade or pay retention was less than full-time, in which case the
> offered position must have a work schedule of no less time than that
> of the position held before the change; **and**
>
> f\. The offered position must be in the same commuting area as the
> employee's position immediately before the offer, unless the employee
> is subject to a mobility agreement or a published agency policy which
> requires employee mobility.

F.  [Termination of Mandatory Grade Retention]{.underline}. Any grade
    retention entitlement which is mandatory by law or regulation ceases
    to apply if **any of** the conditions in Section VII.E. in this
    Personnel Letter occurs after commencement of the two-year period of
    grade retention.

**VIII. DISCRETIONARY GRADE RETENTION**

> A. The Manager for Personnel Services may approve grade and/or pay
> retention on a continuing basis (in all or part of BPA) in order to
> achieve organizational goals and objectives, such as a large scale
> proposed reorganization. Use of grade and/or pay retention may provide
> incentives to employees to voluntarily change positions without fear
> of impact on pay or other benefits, and will allow management maximum
> flexibility. Personnel Services is responsible for developing
> recommendations for broad use of discretionary grade and/or pay
> retention, including developing review processes, recommending
> possible exceptions, and timeframes.

B. The Manager for Personnel Services may also approve grade retention
on a case-by-case basis for employees who are or might be reduced in
grade as the result of a potential reorganization or reclassification
decision announced by management in writing. A reorganization is the
planned elimination, addition, or redistribution of functions or duties.
Management may identify situations where granting discretionary grade
retention is in the best interest of the organization and request
approval. Requests for approval should be submitted to Personnel
Services and should address the following:

> 1\. Rationale as to the reasons the grade (or pay) retention is
> required;
>
> 2\. The impact to BPA if the request is disapproved;
>
> 3\. Actual or potential cost savings to the organization, which will
> be accrued in invoking the flexibility; and
>
> 4\. Consideration of other pay setting options and their
> applicability, including the use of highest previous rate authority.
>
> C. Managers should request assistance from their assigned Human
> Resources Specialists in developing the above request.
>
> D. [Loss of Eligibility for Discretionary Grade
> Retention]{.underline}. Grade retention eligibility will be terminated
> if **either** of the following conditions occurs:
>
> 1\. **Any** of the conditions in Section VII.E. in this Personnel
> Letter occur except that an employee's request for placement in a
> lower graded position, in lieu of displacing an employee at his or her
> grade under reduction-in-force procedures, is not a declination of a
> reasonable offer for grade retention purposes.
>
> 2\. The employee fails to enroll in or to comply with reasonable
> written requirements established to assure full consideration under a
> program providing priority consideration for placement.
>
> E. Termination [of Discretionary Grade Retention]{.underline}.
> Discretionary grade retention will be terminated if any of the
> conditions in Section VIII.C. occur.

**IX. MANDATORY PAY RETENTION**

A. [Eligibility]{.underline}. Pay retention must be granted to an
employee whose rate of basic pay would otherwise be reduced as a result
of:

> 1\. The expiration of the 2-year period of mandatory grade retention;
>
> 2\. A reduction-in-force or reclassification action when the employee
> does not meet the eligibility requirements for grade retention (such
> as those who have served less than 52 weeks at a higher grade in a RIF
> situation);
>
> 3\. A reduction or elimination of special rates;
>
> 4\. Placement from a special rate position to a non-special rate
> position, or to a lower special rate position;
>
> 5\. Involuntary placement in a different pay schedule; or
>
> 6\. Placement in a formal BPA employee development program, including
> Upward Mobility and Career Intern Programs.
>
> B. [Termination of, or Loss of Eligibility for, Pay
> Retention]{.underline}. Any pay retention entitlement ceases if any of
> the following conditions occurs at any time after the employee had
> received written notification that his or her pay is to be reduced:
>
> 1\. If the employee has a break in service of 1 workday or more;
>
> 2\. If the employee is demoted for personal cause or at the employee's
> request;
>
> 3\. If the employee is entitled to a rate of basic pay which is equal
> to, or higher than, the employee's retained rate; or
>
> 4\. If the employee declines a reasonable offer of a position the rate
> of which is equal to, or higher than, the employee's retained pay.

**X. DISCRETIONARY PAY RETENTION**

As described in paragraph V.C. above, use of discretionary pay retention
may be authorized by the Manager for Personnel Services. Use of
discretionary pay retention may be authorized either continuously (in
all or part of BPA) or on a

case-by-case basis. Discretionary pay retention may be provided when
rates of basic pay would otherwise be reduced as a result of management
action (i.e., in lieu of actions that might otherwise adversely impact
the employee). Procedures and documentation requirements are identical
to those described in Section VIII. above. Termination of, or loss of
eligibility for, discretionary pay retention will occur for any of the
reasons described in paragraph IX.B. above, or for other reasons as
agreed to when granting discretionary pay retention.

**XI. EXCLUSIONS:**

An employee is excluded by regulation from either grade or pay retention
if he or she:

A. Moves from a position that is not in an agency as defined in 5 U.S.C.
5102 (e.g., the Postal Service, the Tennessee Valley Authority, and
Central Intelligence Agency);

> B. Is other than a prevailing rate employee under 5 U.S.C.
> 5342(a)(2)(B) and is paid from non-appropriated funds of the Army and
> Air Force Exchange Service, Army and Air Force Motion Picture Service,
> Navy Ships Stores Ashore, Navy exchanges, Marine Corps exchanges,
> Coast Guard exchanges and other instrumentalities of the United States
> under the jurisdiction of the Armed Forces conducted for the comfort,
> pleasure, contentment, and mental and physical improvement personnel
> of the Armed Forces;
>
> C. Is reduced in grade or pay for personal cause or at the employee's
> request; or

D. Does not satisfactorily complete the probationary period prescribed
by 5 U.S.C. 3321(a)(2), and as a result, is removed from a supervisory
or managerial position.

> An employee's entitlement to grade or pay retention is not affected by
> a temporary promotion or temporary reassignment. However, an employee
> serving under a temporary promotion or temporary reassignment may not
> retain a grade or rate of basic pay held during the temporary
> promotion or temporary reassignment.

## XII. DOCUMENTATION AND COUNSELING REQUIREMENTS

> A. The Office of Personnel Management (OPM) requires, when an employee
> is entitled to grade and/or pay retention, that an explanatory letter
> be issued to an employee with the Notification of Personnel Action
> (SF-50) that officially establishes the employee's entitlement to
> grade and/or pay retention. The letter shall describe the
> circumstances warranting grade and/or pay retention, and the nature of
> that entitlement.
>
> B. Additionally, all employees who are entitled to grade and/or pay
> retention shall receive counseling from a Human Resources Specialist
> regarding their entitlement, and information on the process for
> requesting priority consideration.
>
> C. Employees being considered for discretionary grade retention must
> otherwise be eligible, and must be informed, in writing, that a
> declination of an offer of grade retention will not have any adverse
> impact if the employee is later covered by mandatory grade retention.

## XIII. APPEAL OF TERMINATION OF BENEFITS DUE TO DECLINATION OF A REASONABLE OFFER

> A. Except as noted in paragraph XIII.E. below, an employee whose grade
> or pay retention benefits are terminated on the grounds the employee
> declined a reasonable offer of a position, the grade of which was
> equal to or greater than his or her retained grade or pay, may appeal
> the termination to the Office of Personnel Management (OPM).
>
> B. An appeal must be filed in writing with OPM not later than 20
> calendar days after being notified that his or her grade or pay
> retention benefits have been terminated. The written appeal must
> include a statement of the reasons why the employee believes the offer
> of a position was not a reasonable offer.
>
> C. OPM may conduct any investigation or hearing it determines
> necessary to ascertain the facts of the case.
>
> D. If a decision by OPM on an appeal requires corrective action by
> BPA, including retroactive or prospective restoration of grade or pay
> retention benefits, BPA will effect such corrective action.
>
> E. Termination of benefits based on a declination of a reasonable
> offer by a bargaining unit employee may be reviewed under the
> applicable negotiated grievance and arbitration procedures in
> accordance with 5 U.S.C., Chapter 71, and the terms of the applicable
> bargaining agreement. A bargaining unit employee may not appeal a
> termination of benefits to OPM if the applicable grievance procedure
> provides for review.
>
> F. Decisions issued by OPM shall be considered final decisions. OPM
> may, at its discretion, reconsider an original appellate decision when
> new and material information is presented, in writing, by the employee
> or by BPA, which establishes a reasonable doubt as to the
> appropriateness of the original decision. The request must show that
> the information was not readily available when the decision was
> issued. A request for reconsideration of an original appeal decision
> must be submitted to OPM within 30 calendar days of the date of the
> original decision.

Godfrey C. Beckett

Manager, Human Resources, Diversity, and EEO