PUBLIC LAW 108–411—OCT. 30, 2004 118 STAT. 2305

Public Law 108–411

108th Congress

An Act

To provide for reform relating to Federal employment, and for other purposes.

Be it enacted by the Senate and House of Representatives of

the United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

(a) SHORT TITLE.—This Act may be cited as the ‘‘Federal

Workforce Flexibility Act of 2004’’.

(b) TABLE OF CONTENTS.—The table of contents of this Act

is as follows:

Sec. 1. Short title; table of contents.

TITLE I—REFORMS RELATING TO FEDERAL HUMAN CAPITAL

MANAGEMENT

Sec. 101. Recruitment, relocation, and retention bonuses.

Sec. 102. Streamlined critical pay authority.

TITLE II—REFORMS RELATING TO FEDERAL EMPLOYEE CAREER

DEVELOPMENT AND BENEFITS

Sec. 201. Agency training.

Sec. 202. Annual leave enhancements.

Sec. 203. Compensatory time off for travel.

TITLE III—PROVISIONS RELATING TO PAY ADMINISTRATION

Sec. 301. Corrections relating to pay administration.

Sec. 302. Technical corrections.

TITLE I—REFORMS RELATING TO FEDERAL HUMAN CAPITAL MANAGEMENT

SEC. 101. RECRUITMENT, RELOCATION, AND RETENTION BONUSES.

(a) BONUSES.—

(1) IN GENERAL.—Chapter 57 of title 5, United States Code,

is amended by striking sections 5753 and 5754 and inserting

the following:

‘‘§ 5753. Recruitment and relocation bonuses

‘‘(a)(1) This section may be applied to—

‘‘(A) employees covered by the General Schedule pay system

established under subchapter III of chapter 53; and

‘‘(B) employees in a category approved by the Office of

Personnel Management at the request of the head of an Executive agency.

‘‘(2) A bonus may not be paid under this section to an individual

who is appointed to or who holds—

5 USC 101 note.

Federal

Workforce

Flexibility Act of

2004.

Oct. 30, 2004

[S. 129]

118 STAT. 2306 PUBLIC LAW 108–411—OCT. 30, 2004

‘‘(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 such term is defined under section 3132(a));

or

‘‘(C) a position which has been excepted from the competitive service by reason of its confidential, policy-determining,

policy-making, or policy-advocating character.

‘‘(3) In this section, the term ‘employee’ has the meaning given

that term in section 2105, except that such term also includes

an employee described in subsection (c) of that section.

‘‘(b) The Office of Personnel Management may authorize the

head of an agency to pay a bonus under this section to an individual

only if—

‘‘(1) the position to which such individual is appointed

(as described in paragraph (2)(A)) or to which such individual

moves or must relocate (as described in paragraph (2)(B)) is

likely to be difficult to fill in the absence of such a bonus;

and

‘‘(2) the individual—

‘‘(A) is newly appointed as an employee of the Federal

Government; or

‘‘(B)(i) is currently employed by the Federal Government; and

‘‘(ii)(I) moves to a new position in the same geographic

area under circumstances described in regulations of the

Office; or

‘‘(II) must relocate to accept a position in a different

geographic area.

‘‘(c)(1) Payment of a bonus under this section shall be contingent

upon the employee entering into a written service agreement to

complete a period of employment with the agency, not longer than

4 years. The Office may, by regulation, prescribe a minimum service

period for purposes of this section.

‘‘(2)(A) The agreement shall include—

‘‘(i) the commencement and termination dates of the

required service period (or provisions for the determination

thereof);

‘‘(ii) the amount of the bonus;

‘‘(iii) the method of payment; and

‘‘(iv) other terms and conditions under which the bonus

is payable, subject to the requirements of this section and

regulations of the Office.

‘‘(B) The terms and conditions for paying a bonus, as specified

in the service agreement, shall include—

‘‘(i) the conditions under which the agreement may be

terminated before the agreed-upon service period has been completed; and

‘‘(ii) the effect of the termination.

‘‘(C) The required service period shall commence upon the

commencement of service with the agency or movement to a new

position or geographic area, as applicable, unless the service agreement provides for a later commencement date in circumstances

and to the extent allowable under regulations of the Office, such

as when there is an initial period of formal basic training.

‘‘(d)(1) Except as provided in subsection (e), a bonus under

this section shall not exceed 25 percent of the annual rate of

Contracts.

PUBLIC LAW 108–411—OCT. 30, 2004 118 STAT. 2307

basic pay of the employee at the beginning of the service period

multiplied by the number of years (including a fractional part

of a year, as determined under regulations of the Office) in the

required service period of the employee involved.

‘‘(2) A bonus under this section may be paid as an initial

lump sum, in installments, as a final lump sum upon the completion

of the full period of service required by the agreement, or in a

combination of these forms of payment.

‘‘(3) A bonus under this section is not part of the basic pay

of an employee for any purpose.

‘‘(4) Under regulations of the Office, a recruitment bonus under

this section may be paid to an eligible individual before that individual enters on duty.

‘‘(e) The Office may authorize the head of an agency to waive

the limitation under subsection (d)(1) based on a critical agency

need, subject to regulations prescribed by the Office. Under such

a waiver, the maximum bonus allowable shall—

‘‘(1) be equal to the maximum that would be determined

if subsection (d)(1) were applied by substituting ‘50’ for ‘25’;

but

‘‘(2) in no event exceed 100 percent of the annual rate

of basic pay of the employee at the beginning of the service

period.

Nothing in this subsection shall be considered to permit the waiver

of any requirement under subsection (c).

‘‘(f) The Office shall require that an agency establish a plan

for the payment of recruitment bonuses before paying any such

bonuses, and a plan for the payment of relocation bonuses before

paying any such bonuses, subject to regulations prescribed by the

Office.

‘‘(g) The Office may prescribe regulations to carry out this

section, including regulations relating to the repayment of a bonus

under this section in appropriate circumstances when the agreedupon service period has not been completed.

‘‘§ 5754. Retention bonuses

‘‘(a)(1) This section may be applied to—

‘‘(A) employees covered by the General Schedule pay system

established under subchapter III of chapter 53; and

‘‘(B) employees in a category approved by the Office of

Personnel Management at the request of the head of an Executive agency.

‘‘(2) A bonus may not be paid under this section to an individual

who is appointed to or who holds—

‘‘(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 such term is defined under section 3132(a));

or

‘‘(C) a position which has been excepted from the competitive service by reason of its confidential, policy-determining,

policy-making, or policy-advocating character.

‘‘(3) In this section, the term ‘employee’ has the meaning given

that term in section 2105, except that such term also includes

an employee described in subsection (c) of that section.

‘‘(b) The Office of Personnel Management may authorize the

head of an agency to pay a retention bonus to an employee if—

118 STAT. 2308 PUBLIC LAW 108–411—OCT. 30, 2004

‘‘(1) 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

‘‘(2) the agency determines that, in the absence of a retention bonus, the employee would be likely to leave—

‘‘(A) the Federal service; or

‘‘(B) for a different position in the Federal service under

conditions described in regulations of the Office.

‘‘(c) The Office may authorize the head of an agency to pay

retention bonuses to a group of employees in 1 or more categories

of positions in 1 or more geographic areas, subject to the requirements of subsection (b)(1) and regulations prescribed by the Office,

if there is a high risk that a significant portion of employees

in the group would be likely to leave in the absence of retention

bonuses.

‘‘(d)(1) Payment of a retention bonus is contingent upon the

employee entering into a written service agreement with the agency

to complete a period of employment with the agency.

‘‘(2)(A) The agreement shall include—

‘‘(i) the length of the required service period;

‘‘(ii) the amount of the bonus;

‘‘(iii) the method of payment; and

‘‘(iv) other terms and conditions under which the bonus

is payable, subject to the requirements of this section and

regulations of the Office.

‘‘(B) The terms and conditions for paying a bonus, as specified

in the service agreement, shall include—

‘‘(i) the conditions under which the agreement may be

terminated before the agreed-upon service period has been completed; and

‘‘(ii) the effect of the termination.

‘‘(3)(A) Notwithstanding paragraph (1), a written service agreement is not required if the agency pays a retention bonus in

biweekly installments and sets the installment payment at the

full bonus percentage rate established for the employee with no

portion of the bonus deferred.

‘‘(B) If an agency pays a retention bonus in accordance with

subparagraph (A) and makes a determination to terminate the

payments, the agency shall provide written notice to the employee

of that determination. Except as provided in regulations of the

Office, the employee shall continue to be paid the retention bonus

through the end of the pay period in which such written notice

is provided.

‘‘(4) A retention bonus for an employee may not be based

on any period of such service which is the basis for a recruitment

or relocation bonus under section 5753.

‘‘(e)(1) Except as provided in subsection (f), a retention bonus,

which shall be stated as a percentage of the employee’s basic

pay for the service period associated with the bonus, may not

exceed—

‘‘(A) 25 percent of the employee’s basic pay if paid under

subsection (b); or

‘‘(B) 10 percent of an employee’s basic pay if paid under

subsection (c).

‘‘(2)(A) A retention bonus may be paid to an employee in installments after completion of specified periods of service or in a single

Notices.

Contracts.

PUBLIC LAW 108–411—OCT. 30, 2004 118 STAT. 2309

lump sum at the end of the full period of service required by

the agreement.

‘‘(B) An installment payment is derived by multiplying the

amount of basic pay earned in the installment period by a percentage not to exceed the bonus percentage rate established for the

employee.

‘‘(C) If the installment payment percentage established for the

employee is less than the bonus percentage rate established for

the employee, the accrued but unpaid portion of the bonus is payable

as part of the final installment payment to the employee after

completion of the full service period under the terms of the service

agreement.

‘‘(D) For purposes of this paragraph, the bonus percentage

rate established for an employee means the bonus percentage rate

established for such employee in accordance with paragraph (1)

or subsection (f), as the case may be.

‘‘(3) A retention bonus is not part of the basic pay of an

employee for any purpose.

‘‘(f) Upon the request of the head of an agency, the Office

may waive the limit established under subsection (e)(1) and permit

the agency head to pay an otherwise eligible employee or category

of employees retention bonuses of up to 50 percent of basic pay,

based on a critical agency need.

‘‘(g) The Office shall require that, before paying any bonuses

under this section, an agency shall establish a plan for the payment

of any such bonuses, subject to regulations prescribed by the Office.

‘‘(h) The Office may prescribe regulations to carry out this

section.’’.

(2) CLERICAL AMENDMENT.—The table of sections for

chapter 57 of title 5, United States Code, is amended by striking

the item relating to section 5754 and inserting the following:

‘‘5754. Retention bonuses.’’.

(3) SENSE OF CONGRESS.—It is the sense of the Congress

that the Director of the Office of Personnel Management—

(A) should, each time a bonus is paid under the amendment made by paragraph (1) to recruit or relocate a Federal

employee from one Government agency to another within

the same geographic area or to retain a Federal employee

who might otherwise leave one Government agency for

another within the same geographic area, be notified of

that payment within 60 days after the date on which

such bonus is paid; and

(B) should monitor the payment of such bonuses (in

the circumstances described in subparagraph (A)) to ensure

that they are an effective use of the Federal Government’s

funds and have not adversely affected the ability of those

Government agencies that lost employees to other Government agencies (in such circumstances) to carry out their

mission.

(b) RELOCATION PAYMENTS.—Section 407 of the Federal

Employees Pay Comparability Act of 1990 (5 U.S.C. 5305 note;

104 Stat. 1467) is repealed.

(c) REPORTS.—

(1) RECRUITMENT AND RELOCATION BONUSES.—

(A) IN GENERAL.—The Office of Personnel Management

shall submit to the Committee on Governmental Affairs

of the Senate and the Committee on Government Reform

118 STAT. 2310 PUBLIC LAW 108–411—OCT. 30, 2004

of the House of Representatives annually, for each of the

first 5 years during which section 5753 of title 5, United

States Code (as amended by subsection (a)(1)) is in effect,

a report on the operation of such section.

(B) CONTENTS.—Each report submitted under this

paragraph shall include, with respect to the period covered

by such report, a description of how the authority to pay

bonuses under the section of title 5, United States Code,

referred to in subparagraph (A) was used by the respective

agencies, including, with respect to each such agency and

each type of bonus under such section—

(i) the number and dollar-amount of bonuses

paid—

(I) to individuals holding positions within each

pay grade, pay level, or other pay classification;

and

(II) if applicable, to individuals who moved

between positions that were in different agencies

but the same geographic area (including the names

of the agencies involved); and

(ii) a determination of the extent to which such

bonuses furthered the purposes of such section.

(2) RETENTION BONUSES.—

(A) IN GENERAL.—The Office of Personnel Management

shall submit to the Committee on Governmental Affairs

of the Senate and the Committee on Government Reform

of the House of Representatives annually, for each of the

first 5 years during which section 5754 of title 5, United

States Code (as amended by subsection (a)(1)) is in effect,

a report on the operation of such section.

(B) CONTENTS.—Each report submitted under this

paragraph shall include, with respect to the period covered

by such report, a description of how the authority to pay

bonuses under the section of title 5, United States Code,

referred to in subparagraph (A) was used by the respective

agencies, including, with respect to each such agency—

(i) the number and dollar-amount of bonuses

paid—

(I) to individuals holding positions within each

pay grade, pay level, or other pay classification;

and

(II) if applicable, to prevent individuals from

moving between positions that were in different

agencies but the same geographic area (including

the names of the agencies involved); and

(ii) a determination of the extent to which such

bonuses furthered the purposes of such section.

(d) EFFECTIVE DATE AND APPLICATION.—

(1) EFFECTIVE DATE.—Except as provided under paragraphs

(2) and (3), this section shall take effect on the first day of

the first applicable pay period beginning on or after the 180th

day after the date of the enactment of this Act.

(2) APPLICATION TO AGREEMENTS.—A recruitment or relocation bonus service agreement that was authorized under section

5753 of title 5, United States Code, before the effective date

under paragraph (1) shall continue, until its expiration, to

5 USC 5753 note.

PUBLIC LAW 108–411—OCT. 30, 2004 118 STAT. 2311

be subject to such section as in effect on the day before such

effective date.

(3) APPLICATION TO ALLOWANCES.—Payment of a retention

allowance that was authorized under section 5754 of title 5,

United States Code, before the effective date under paragraph

(1) shall continue, subject to such section as in effect on the

day before such effective date, until the retention allowance

is reauthorized or terminated (but no longer than 1 year after

such effective date).

SEC. 102. STREAMLINED CRITICAL PAY AUTHORITY.

Section 5377 of title 5, United States Code, is amended—

(1) by striking ‘‘Office of Personnel Management’’ each place

it appears and inserting ‘‘Office of Management and Budget’’;

(2) by striking ‘‘Office of Management and Budget’’ each

place it appears and inserting ‘‘Office of Personnel Management’’;

(3) in subsection (g), by striking ‘‘prescribing regulations

under this section or’’; and

(4) in subsection (h), by striking ‘‘Committee on Post Office

and Civil Service’’ and inserting ‘‘Committee on Government

Reform’’.

TITLE II—REFORMS RELATING TO FEDERAL EMPLOYEE CAREER DEVELOPMENT AND BENEFITS

SEC. 201. AGENCY TRAINING.

(a) TRAINING TO ACCOMPLISH PERFORMANCE PLANS AND STRATEGIC GOALS.—Section 4103 of title 5, United States Code, is

amended by adding at the end the following:

‘‘(c) The head of each agency shall, on a regular basis—

‘‘(1) evaluate each program or plan established, operated,

or maintained under subsection (a) with respect to accomplishing specific performance plans and strategic goals in performing the agency mission; and

‘‘(2) modify such program or plan as needed to accomplish

such plans and goals.’’.

(b) SPECIFIC TRAINING PROGRAMS.—

(1) IN GENERAL.—Chapter 41 of title 5, United States Code,

is amended by adding after section 4120 the following:

‘‘§ 4121. Specific training programs

‘‘In consultation with the Office of Personnel Management,

the head of each agency shall establish—

‘‘(1) a comprehensive management succession program to

provide training to employees to develop managers for the

agency; and

‘‘(2) a program to provide training to managers on actions,

options, and strategies a manager may use in—

‘‘(A) relating to employees with unacceptable performance;

‘‘(B) mentoring employees and improving employee

performance and productivity; and

‘‘(C) conducting employee performance appraisals.’’.

118 STAT. 2312 PUBLIC LAW 108–411—OCT. 30, 2004

(2) CLERICAL AMENDMENT.—The table of sections for

chapter 41 of title 5, United States Code, is amended by adding

at the end the following:

‘‘4121. Specific training programs.’’.

SEC. 202. ANNUAL LEAVE ENHANCEMENTS.

(a) CREDITABILITY OF PRIOR NONGOVERNMENTAL SERVICE FOR

PURPOSES OF DETERMINING RATE OF LEAVE ACCRUAL.—

(1) IN GENERAL.—Section 6303 of title 5, United States

Code, is amended by adding at the end the following:

‘‘(e)(1) Not later than 180 days after the date of the enactment

of this subsection, the Office of Personnel Management shall prescribe regulations under which, for purposes of determining years

of service under subsection (a), credit shall, in the case of a newly

appointed employee, be given for any prior service of such employee

that would not otherwise be creditable for such purposes, if—

‘‘(A) such service—

‘‘(i) was performed in a position the duties of which

directly relate to the duties of the position to which

such employee is so appointed; and

‘‘(ii) meets such other requirements as the Office

may prescribe; and

‘‘(B) in the judgment of the head of the appointing agency,

the application of this subsection is necessary in order to

achieve an important agency mission or performance goal.

‘‘(2) Service described in paragraph (1)—

‘‘(A) shall be creditable, for the purposes described in paragraph (1), as of the effective date of the employee’s appointment;

and

‘‘(B) shall not thereafter cease to be so creditable, unless

the employee fails to complete a full year of continuous service

with the agency.

‘‘(3) An employee shall not be eligible for the application of

paragraph (1) on the basis of any appointment if, within 90 days

before the effective date of such appointment, such employee has

held any position in the civil service.’’.

(2) CONFORMING AMENDMENT.—The second sentence of section 6303(a) of title 5, United States Code, is amended by

striking the period and inserting ‘‘, and for all service which

is creditable by virtue of subsection (e).’’.

(b) OTHER ANNUAL LEAVE ENHANCEMENTS.—Section 6303 of

title 5, United States Code, is amended by adding after subsection

(e) (as added by subsection (a)) the following:

‘‘(f) Notwithstanding any other provision of this section, the

rate of accrual of annual leave under subsection (a) shall be 1

day for each full biweekly pay period in the case of any employee

who holds a position which is subject to—

‘‘(1) section 5376 or 5383; or

‘‘(2) a pay system equivalent to either of the foregoing,

as determined by the Office of Personnel Management.’’.

(c) APPLICABILITY.—None of the amendments made by subsection (a) shall apply in the case of any employee holding a position

pursuant to an appointment made before the effective date of the

regulations implementing such amendments.

5 USC 6303 note.

Deadline.

Regulations.

PUBLIC LAW 108–411—OCT. 30, 2004 118 STAT. 2313

SEC. 203. COMPENSATORY TIME OFF FOR TRAVEL.

(a) IN GENERAL.—Subchapter V of chapter 55 of title 5, United

States Code, is amended by adding at end the following:

‘‘§ 5550b. Compensatory time off for travel

‘‘(a) Notwithstanding section 5542(b)(2), each hour spent by

an employee in travel status away from the official duty station

of the employee, that is not otherwise compensable, shall be treated

as an hour of work or employment for purposes of calculating

compensatory time off.

‘‘(b) An employee who has any hours treated as hours of work

or employment for purposes of calculating compensatory time under

subsection (a), shall not be entitled to payment for any such hours

that are unused as compensatory time.’’.

(b) CLERICAL AMENDMENT.—The table of sections for chapter

55 of title 5, United States Code, is amended by inserting after

the item relating to section 5550a the following:

‘‘5550b. Compensatory time off for travel.’’.

(c) EFFECTIVE DATE.—The amendments made by this section

shall take effect on the earlier of—

(1) the effective date of any regulations prescribed to carry

out such amendments; or

(2) the 90th day after the date of the enactment of this

Act.

TITLE III—PROVISIONS RELATING TO

PAY ADMINISTRATION

SEC. 301. CORRECTIONS RELATING TO PAY ADMINISTRATION.

(a) IN GENERAL.—Chapter 53 of title 5, United States Code,

is amended—

(1) in section 5302, by striking paragraph (8) and inserting

the following:

‘‘(8) the term ‘rates of pay under the General Schedule’,

‘rates of pay for the General Schedule’, or ‘scheduled rates

of basic pay’ means the rates of basic pay under the General

Schedule as established by section 5332, excluding pay under

section 5304 and any other additional pay of any kind; and’’;

(2) in section 5305—

(A) by striking subsection (a) and inserting the following:

‘‘(a)(1) Whenever the Office of Personnel Management finds

that the Government’s recruitment or retention efforts with respect

to 1 or more occupations in 1 or more areas or locations are,

or are likely to become, significantly handicapped due to any of

the circumstances described in subsection (b), the Office may establish for the areas or locations involved, with respect to individuals

in positions paid under any of the pay systems referred to in

subsection (c), higher minimum rates of pay for 1 or more grades

or levels, occupational groups, series, classes, or subdivisions

thereof, and may make corresponding increases in all rates of

the pay range for each such grade or level. However, a minimum

rate so established may not exceed the maximum rate of basic

pay (excluding any locality-based comparability payment under section 5304 or similar provision of law) for the grade or level by

5 USC 5550b

note.

118 STAT. 2314 PUBLIC LAW 108–411—OCT. 30, 2004

more than 30 percent, and no rate may be established under this

section in excess of the rate of basic pay payable for level IV

of the Executive Schedule. In the case of individuals not subject

to the provisions of this title governing appointment in the competitive service, the President may designate another agency to

authorize special rates under this section.

‘‘(2) The head of an agency may determine that a category

of employees of the agency will not be covered by a special rate

authorization established under this section. The head of an agency

shall provide written notice to the Office of Personnel Management

(or other agency designated by the President to authorize special

rates under the last sentence of paragraph (1)) which identifies

the specific category or categories of employees that will not be

covered by special rates authorized under this section. If the head

of an agency removes a category of employees from coverage under

a special rate authorization after that authorization takes effect,

the loss of coverage will take effect on the first day of the first

pay period after the date of the notice.’’;

(B) in subsection (b), by striking paragraph (4) and

inserting the following:

‘‘(4) any other circumstances which the Office of Personnel

Management (or such other agency as the President may under

the last sentence of subsection (a)(1) designate) considers appropriate.’’;

(C) in subsection (d)—

(i) by striking ‘‘President’’ and inserting ‘‘Office

of Personnel Management’’; and

(ii) by striking ‘‘or by such agency as he may

designate’’ and inserting ‘‘(or by such other agency

as the President may designate under the last sentence

of subsection (a)(1))’’;

(D) in subsection (e), by striking ‘‘basic pay’’ and

inserting ‘‘pay’’;

(E) by striking subsection (f) and inserting the following:

‘‘(f) When a schedule of special rates established under this

section is adjusted under subsection (d), a covered employee’s special

rate will be adjusted in accordance with conversion rules prescribed

by the Office of Personnel Management (or by such other agency

as the President may under the last sentence of subsection (a)(1)

designate).’’;

(F) in subsection (g)(1)—

(i) by striking ‘‘basic pay’’ and inserting ‘‘pay’’;

and

(ii) by striking ‘‘President (or his designated

agency)’’ and inserting ‘‘Office of Personnel Management (or such other agency as the President may under

the last sentence of subsection (a)(1) designate)’’;

(G) by striking subsection (h) and inserting the following:

‘‘(h) An employee shall not for any purpose be considered to

be entitled to a rate of pay established under this section with

respect to any period for which such employee is entitled to a

higher rate of basic pay under any other provision of law. For

purposes of this subsection, the term ‘basic pay’ includes any

applicable locality-based comparability payment under section 5304

or similar provision of law.’’; and

Effective date.

Notification.

PUBLIC LAW 108–411—OCT. 30, 2004 118 STAT. 2315

(H) by adding at the end the following:

‘‘(i) If an employee who is receiving a rate of pay under this

section becomes subject, by virtue of moving to a new official duty

station, to a different pay schedule, such employee’s new rate of

pay shall be initially established under conversion rules prescribed

by the Office of Personnel Management (or such other agency

as the President may under the last sentence of subsection (a)(1)

designate) in conformance with the following:

‘‘(1) First, determine the rate of pay to which such employee

would be entitled at the new official duty station based on

such employee’s position, grade, and step (or relative position

in the rate range) before the move.

‘‘(2) Then, if (in addition to the change in pay schedule)

the move also involves any personnel action or other change

requiring a rate adjustment under any other provision of law,

rule, or regulation, apply the applicable rate adjustment provisions, treating the rate determined under paragraph (1) as

if it were the rate last received by the employee before the

rate adjustment.

‘‘(j) A rate determined under a schedule of special rates established under this section shall be considered to be part of basic

pay for purposes of subchapter III of chapter 83, chapter 84, chapter

87, subchapter V of chapter 55, and section 5941, and for such

other purposes as may be expressly provided for by law or as

the Office of Personnel Management may by regulation prescribe.’’;

(3) in section 5334—

(A) in subsection (b), by adding at the end the following:

‘‘If an employee’s rate after promotion or transfer is greater than

the maximum rate of basic pay for the employee’s grade, that

rate shall be treated as a retained rate under section 5363. The

Office of Personnel Management shall prescribe by regulation the

circumstances under which and the extent to which special rates

under section 5305 (or similar provision of law) or locality-adjusted

rates under section 5304 (or similar provision of law) are considered

to be basic pay in applying this subsection.’’; and

(B) by adding at the end the following:

‘‘(g) In the case of an employee who—

‘‘(1) moves to a new official duty station, and

‘‘(2) by virtue of such move, becomes subject to a different

pay schedule,

any rate adjustment under the preceding provisions of this section,

with respect to such employee in connection with such move, shall

be made—

‘‘(A) first, by determining the rate of pay to which such

employee would be entitled at the new official duty station

based on such employee’s position, grade, and step (or relative

position in the rate range) before the move, and

‘‘(B) then, by applying the provisions of this section that

would otherwise apply (if any), treating the rate determined

under subparagraph (A) as if it were the rate last received

by the employee before the rate adjustment.’’;

(4) in section 5361—

(A) by amending paragraph (4) to read as follows:

‘‘(4) ‘rate of basic pay’ means—

‘‘(A) the rate of basic pay payable to an employee

under law or regulations before any deductions or additions

of any kind, but including—

Regulations.

118 STAT. 2316 PUBLIC LAW 108–411—OCT. 30, 2004

‘‘(i) any applicable locality-based comparability

payment under section 5304 or similar provision of

law;

‘‘(ii) any applicable special pay under section 5305

or similar provision of law; and

‘‘(iii) subject to such regulations as the Office of

Personnel Management may prescribe, any applicable

existing retained rate of pay established under section

5363 or similar provision of law; and

‘‘(B) in the case of a prevailing rate employee, the

scheduled rate of pay determined under section 5343;’’;

(B) in paragraph (6), by striking ‘‘and’’ at the end;

(C) in paragraph (7), by striking the period and

inserting ‘‘; and’’; and

(D) by adding at the end the following:

‘‘(8) ‘retained rate’ means the rate of basic pay to which

an employee is entitled under section 5363(b)(2).’’;

(5) in section 5363—

(A) in subsection (a), by striking the matter following

paragraph (4) and inserting the following:

‘‘is entitled to a rate of basic pay in accordance with regulations

prescribed by the Office of Personnel Management in conformity

with the provisions of this section.’’; and

(B) by striking subsections (b) and (c) and inserting

the following:

‘‘(b)(1)(A) If, as a result of any event described in subsection

(a), the employee’s former rate of basic pay is less than or equal

to the maximum rate of basic pay payable for the grade of the

employee’s position immediately after the occurrence of the event

involved, the employee is entitled to basic pay at the lowest rate

of basic pay payable for such grade that equals or exceeds such

former rate of basic pay.

‘‘(B) This section shall cease to apply to an employee to whom

subparagraph (A) applies once the appropriate rate of basic pay

has been determined for such employee under this paragraph.

‘‘(2)(A) If, as a result of any event described in subsection

(a), the employee’s former rate of basic pay is greater than the

maximum rate of basic pay payable for the grade of the employee’s

position immediately after the occurrence of the event involved,

the employee is entitled to basic pay at a rate equal to the lesser

of—

‘‘(i) the employee’s former rate of basic pay; or

‘‘(ii) 150 percent of the maximum rate of basic pay payable

for the grade of the employee’s position immediately after the

occurrence of the event involved,

as adjusted by subparagraph (B).

‘‘(B) A rate to which an employee is entitled under this paragraph shall be increased at the time of any increase in the maximum

rate of basic pay payable for the grade of the employee’s position

by 50 percent of the dollar amount of each such increase.

‘‘(3) For purposes of this subsection, the term ‘former rate

of basic pay’, as used with respect to an employee in connection

with an event described in subsection (a), means the rate of basic

pay last received by such employee before the occurrence of such

event.

‘‘(c)(1) Notwithstanding any other provision of this section, in

the case of an employee who—

PUBLIC LAW 108–411—OCT. 30, 2004 118 STAT. 2317

‘‘(A) moves to a new official duty station, and

‘‘(B) in conjunction with such move, becomes subject to

both a different pay schedule and (disregarding this subsection)

the preceding provisions of this section,

this section shall be applied—

‘‘(i) first, by determining the rate of pay to which such

employee would be entitled at the new official duty station

based on such employee’s position, grade, and step (or relative

position in the pay range) before the move, and

‘‘(ii) then, by applying the provisions of this section that

would apply (if any), treating the rate determined under clause

(i) as if it were the rate last received by the employee before

the application of this section.

‘‘(2) A reduction in an employee’s rate of basic pay resulting

from a determination under paragraph (1)(ii) is not a basis for

an entitlement under this section.

‘‘(3) The rate of basic pay for an employee who is receiving

a retained rate at the time of moving to a new official duty station

at which different pay schedules apply shall be subject to regulations prescribed by the Office of Personnel Management consistent

with the purposes of this section.

‘‘(d) A retained rate shall be considered part of basic pay for

purposes of this subchapter and for purposes of subchapter III

of chapter 83, chapters 84 and 87, subchapter V of chapter 55,

section 5941, and for such other purposes as may be expressly

provided for by law or as the Office of Personnel Management

may by regulation prescribe. The Office shall, for any purpose

other than any of the purposes referred to in the preceding sentence,

prescribe by regulation what constitutes basic pay for employees

receiving a retained rate.

‘‘(e) This section shall not apply, or shall cease to apply, to

an employee who—

‘‘(1) has a break in service of 1 workday or more;

‘‘(2) is entitled, by operation of this subchapter, chapter

51 or 53, or any other provision of law, to a rate of basic

pay which is equal to or higher than, or declines a reasonable

offer of a position the rate of basic pay for which is equal

to or higher than, the retained rate to which the employee

would otherwise be entitled; or

‘‘(3) is demoted for personal cause or at the employee’s

request.’’; and

(6) in section 5365(b), by inserting after ‘‘provisions of

this subchapter’’ the following: ‘‘(subject to any conditions or

limitations the Office may establish)’’.

(b) SPECIAL RATES FOR LAW ENFORCEMENT OFFICERS.—Section

403(c) of the Federal Employees Pay Comparability Act of 1990

(5 U.S.C. 5305 note) is amended by striking all after ‘‘provision

of law)’’ and inserting ‘‘and shall be basic pay for all purposes.

The rates shall be adjusted at the time of adjustments in the

General Schedule to maintain the step linkage set forth in subsection (b)(2).’’.

(c) REPEAL.—Section 4505a(a)(2) of title 5, United States Code,

is amended—

(1) by striking ‘‘(2)(A)’’ and inserting ‘‘(2)’’; and

(2) by striking subparagraph (B).

(d) EFFECTIVE DATE; CONVERSION RULES.— 5 USC 5363 note.

Regulations.

118 STAT. 2318 PUBLIC LAW 108–411—OCT. 30, 2004

(1) EFFECTIVE DATE.—This section shall take effect on the

first day of the first applicable pay period beginning on or

after the 180th day after the date of the enactment of this

Act.

(2) CONVERSION RULES.—

(A) INDIVIDUALS RECEIVING A RETAINED RATE OR A RATE

GREATER THAN THE MAXIMUM RATE FOR THE GRADE.—Subject to any regulations the Office of Personnel Management

may prescribe, an employee under a covered pay schedule

who, on the day before the effective date of this section,

is receiving a retained rate under section 5363 of title

5, United States Code, or is receiving under similar

authority a rate of basic pay that is greater than the

maximum rate of basic pay payable for the grade of the

employee’s position shall have that rate converted as of

the effective date of this section, and the employee shall

be considered to be receiving a retained rate under section

5363 of such title (as amended by this section). The newly

applicable retained rate shall equal the formerly applicable

retained rate as adjusted to include any applicable localitybased payment under section 5304 of title 5, United States

Code, or similar provision of law.

(B) DEFINITION.—For purposes of this paragraph, the

term ‘‘covered pay schedule’’ has the meaning given such

term by section 5361 of title 5, United States Code.

SEC. 302. TECHNICAL CORRECTIONS.

(a)(1) Section 5304 of title 5, United States Code, as amended

by section 1125 of the National Defense Authorization Act for

Fiscal Year 2004 (Public Law 108–136), is amended—

(A) in subsection (g)(2)(A), by striking ‘‘(A)–(D)’’ and

inserting ‘‘(A)–(C)’’; and

(B) in subsection (h)(2)(B)(i), by striking ‘‘or (vii)’’ and

inserting ‘‘or (vi)’’.

(2) The amendments made by this subsection shall take effect

as if included in the enactment of the National Defense Authorization Act for Fiscal Year 2004 (Public Law 108–136).

Effective date.

5 USC 5304 note.

PUBLIC LAW 108–411—OCT. 30, 2004 118 STAT. 2319

LEGISLATIVE HISTORY—S. 129:

HOUSE REPORTS: No. 108–733 (Comm. on Government Reform).

SENATE REPORTS: No. 108–223 (Comm. on Governmental Affairs).

CONGRESSIONAL RECORD, Vol. 150 (2004):

Apr. 8, considered and passed Senate.

Oct. 6, considered and passed House, amended.

Oct. 11, Senate concurred in House amendment.

Æ

(b) Section 5314 of title 5, United States Code, is amended

by adding at the end the following:

‘‘Administrator of the Office of Electronic Government.’’.

Approved October 30, 2004.