This section of the FEDERAL REGISTER

contains notices to the public of the proposed

issuance of rules and regulations. The

purpose of these notices is to give interested

persons an opportunity to participate in the

rule making prior to the adoption of the final

rules.

Proposed Rules Federal Register

19126 

Vol. 72, No. 73 

Tuesday, April 17, 2007 

OFFICE OF PERSONNEL 

MANAGEMENT 

5 CFR Part 9501 

RIN 3206–AL02 

Office of Personnel Management 

Criteria for Internal Revenue Service 

Broadbanding Systems 

AGENCY: Office of Personnel 

Management. 

ACTION: Proposed rule with request for 

comments. 

SUMMARY: The Office of Personnel 

Management (OPM) is issuing proposed 

regulations to revise the criteria for 

Internal Revenue Service (IRS) 

broadbanding systems. The proposed 

regulations would provide the 

Department of the Treasury with the 

flexibility, in coordination with OPM, to 

establish broader bands for covered IRS 

employees. The proposed regulations 

also would establish a more direct 

relationship between pay and 

performance. Finally, the proposed 

regulations would revise the criteria 

consistent with the changes in the 

General Schedule pay administration 

rules made by the Federal Workforce 

Flexibility Act of 2004 and OPM 

implementing regulations. 

DATES: Comments must be received on 

or before June 18, 2007. 

ADDRESSES: Send or deliver written 

comments to Jerry Mikowicz, Deputy 

Associate Director for Pay and Leave 

Administration, Strategic Human 

Resources Policy Division, Office of 

Personnel Management, Room 7H31, 

1900 E Street, NW., Washington, DC 

20415–8200; by fax at (202) 606–0824; 

or by e-mail at pay-performancepolicy@opm.gov. 

FOR FURTHER INFORMATION CONTACT: 

Jeanne Jacobson, by telephone at (202) 

606–2858; by fax at (202) 606–0824; or 

by e-mail at pay-performancepolicy@opm.gov. 

SUPPLEMENTARY INFORMATION: The Office 

of Personnel Management (OPM) is 

issuing proposed regulations to revise 

the criteria for Internal Revenue Service 

(IRS) broadbanding systems. Under 5 

U.S.C. 9509, the Secretary of the 

Treasury may establish one or more 

broadbanding systems covering all or 

any portion of the IRS workforce under 

the General Schedule (GS). Note that 

under 5 U.S.C. 9501(c), employees 

within a unit to which a labor 

organization is accorded exclusive 

recognition under 5 U.S.C. chapter 71 

will not be subject to the broadbanding 

flexibility provided by § 9509 unless the 

exclusive representative and IRS have 

entered into a written agreement that 

specifically provides for the exercise of 

the broadbanding flexibility. Section 

9509(b) of title 5, United States Code, 

directs OPM to prescribe criteria for IRS 

broadbanding systems and specifies 

certain principles that such criteria 

must follow, at a minimum. OPM 

published the final criteria as a notice 

in the Federal Register on December 19, 

2000 (65 FR 79433). We propose to issue 

these criteria as regulations in 5 CFR 

part 9501 with the revisions discussed 

in this Supplementary Information. 

Under 5 U.S.C. 9508, the Secretary of 

the Treasury must develop a 

performance management system for the 

IRS. These criteria include the 

definition of certain performance 

appraisal terms consistent with the 

concepts and terminology found in 5 

U.S.C. 9508. Any performance 

management system that supports 

broadbanding must include the 

concepts defined by these terms. 

However, in its operating instructions, 

the IRS may continue to use current 

terminology that captures these 

concepts or apply these definitions to 

currently used terms if it determines 

that such an approach is the most 

effective for employee understanding 

and acceptance. The supplemental 

information explaining the criteria 

contains language describing the 

relevant application of these concepts 

and terms as currently used by IRS, 

where applicable. 

Maximum Number of Grades in a Band 

We are proposing to revise the criteria 

to provide the Department of the 

Treasury additional flexibility in 

combining GS grades into bands under 

IRS broadbanding systems. Section 

9501.203(a) of the proposed regulations 

(section V.B. of the current criteria) 

provides the minimum and maximum 

number of GS grades that may be 

combined into bands. In § 9501.203(b), 

we propose to allow the Department of 

the Treasury, after coordination with 

OPM, to establish one or more bands 

that encompass grades not otherwise 

permitted by § 9501.203(a). 

In addition, we propose to add a new 

provision in § 9501.203(c) to require 

each IRS broadbanding system to 

include at least one band that combines 

two or more General Schedule grades, 

consistent with the definition of 

‘‘broadbanded system’’ in 5 U.S.C. 

9509(a). We have also amended the 

definition of broadbanding system in 

§ 9501.104 to provide that all positions 

covered by the regulations are 

considered to be in a single 

broadbanding system unless the 

Department of the Treasury determines 

that a separate system is needed for 

supervisors and managerial employees 

(as authorized in § 9501.206(a)). 

Within-Band Pay Adjustments 

The proposed regulations at 

§ 9501.205 revise the criteria currently 

found in section V.D. concerning 

within-band pay adjustments. This 

section includes some minor wording 

changes for clarity, consistency, and 

regulatory formatting. As discussed 

further, the other changes in the criteria 

for within-band adjustments are 

intended primarily to establish a more 

direct relationship between pay and 

performance. 

Section 9501.205(f)(1) of the proposed 

regulations requires IRS to use 

performance assessments derived under 

a performance appraisal system 

established under 5 U.S.C. 9508 (i.e., 

ratings of record as currently applied by 

IRS) as a basis for within-band pay 

increases. This paragraph provides that 

IRS policies for granting within-band 

pay increases on the basis of a positive 

assessment must provide for pay 

distinctions based on levels of 

performance and requires that a positive 

assessment in the IRS performance 

appraisal system supporting the 

broadbanding system must have two or 

more summary rating levels that 

represent performance equivalent to 

fully successful or better (i.e., a rating of 

record of ‘‘Fully Successful’’ or higher 

level as currently applied by IRS). In 

§ 9501.104, we have added a definition 

of positive assessment to mean a 


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summary performance assessment 

documenting that employee 

performance is the equivalent of fully 

successful or better (i.e., a rating of 

record of ‘‘Fully Successful’’ or higher 

as currently applied by IRS). In 

addition, we have added a definition of 

negative assessment to mean a summary 

performance assessment documenting 

that employee performance is less than 

the equivalent of fully successful (i.e., a 

rating of record of ‘‘Minimally 

Successful’’ or ‘‘Unacceptable’’ as 

currently applied by IRS). Furthermore, 

for clarification and ease of reference, 

we have included definitions for 

performance assessment and 

unacceptable performance. 

The proposed regulations at 

§ 9501.205(f)(6) allow IRS to establish a 

separate pay progression plan and 

separate salary increase budget for 

entry/developmental employees in 

recognition of the fact that pay 

progression for entry/developmental 

employees is often designed to be more 

rapid (as with GS entry/developmental 

employees who are in career ladders 

and receive regular promotions 

providing sizable pay increases 

typically each year). Because of this 

additional flexibility, the proposed 

regulations at § 9501.401 require that, if 

IRS provides prorated career-ladder 

promotion payments to a group of 

employees converted to entry/ 

developmental positions covered by a 

separate pay progression plan, the first 

salary increase budget for these entry/ 

developmental employees following 

conversion must be determined after 

taking into account the length of time 

between the prorated promotion 

payments and the first performancebased payments under the IRS 

broadbanding system. Generally, the 

normal salary increase budget for entry/ 

developmental employees should be 

reduced if that length of time is less 

than 52 weeks. Similarly, if an 

individual employee enters the 

broadbanding system by transfer or 

reassignment from another Federal 

position and receives a prorated withingrade increase or career-ladder 

promotion payment at conversion, the 

employee’s first performance-based 

payment under the IRS broadbanding 

system may be reduced, as allowed 

under § 9501.205(f)(8) and discussed 

below. 

Section 9501.205(f)(8) provides IRS 

with the flexibility to reduce an 

employee’s performance-based withinband increase from that generally 

provided under the pay progression 

plan when, for example, an employee 

enters the broadbanding system during 

the appraisal period that is the basis for 

the within-band increase, an employee 

was in a leave without pay status during 

the appraisal period (except for 

employees with restoration rights under 

5 CFR part 353), or an employee entered 

the broadbanding system and received a 

prorated within-grade increase or 

career-ladder promotion payment less 

than 52 weeks before the performancebased within-band increase. 

The proposed regulations provide IRS 

additional flexibility to grant withinband pay increases. For example, 

§ 9501.205(f)(7) allows IRS to take into 

account an employee’s position in the 

rate range in determining within-band 

pay increases. Section 9501.205(f)(5) 

continues to allow IRS to use other 

individual factors to provide withinband pay increases, such as the 

acceptance of a supervisory position 

within the same band. However, 

§ 9501.205(f)(2) continues to prohibit 

within-band pay increases based solely 

on time at pay level. 

Section 9501.205(g) allows IRS to 

provide general pay increases to 

specified categories of employees with 

current positive assessments when band 

rate ranges are adjusted under 

§ 9501.204. We added a definition of 

general pay increase to § 9501.104 to 

help clarify that general pay increases 

for employees under IRS broadbanding 

systems are different from General 

Schedule across-the-board increases 

under 5 U.S.C. 5303. Such general pay 

increases may be paid in combination 

with performance-based pay increases 

under § 9501.205(f). The amount of such 

pay increases may be any percentage 

amount up to the percentage amount by 

which band rate ranges are adjusted. IRS 

may authorize different general pay 

increases for different employee 

categories. However, if IRS provides an 

increase that is less than the band rate 

range adjustment, the resulting unused 

funds must be redirected and applied to 

performance-based pay increases. The 

proposed regulations also provide IRS 

the flexibility to forgo paying any 

general pay increase and to use 

performance-based pay increases 

exclusively. Under § 9501.205(f)(4), the 

pay of an employee with a positive 

assessment must not fall below the 

minimum rate of a band as a result of 

receiving a pay increase that is less than 

the band rate range increase. 

Section 9501.205(h) prohibits IRS 

from providing any kind of pay increase 

(including a locality pay increase or a 

staffing supplement increase) to an 

employee with a negative assessment, 

even if it were to cause the employee to 

fall below the band minimum rate. This 

section requires IRS to establish 

procedures for dealing with employees 

who do not receive a performance-based 

pay increase, a general pay increase, or 

other pay increase because of a negative 

assessment. Such procedures may allow 

an employee who later receives a 

positive assessment to receive such 

increases prospectively. 

Section 9501.205(h) prescribes 

procedures for dealing with employees 

who do not receive a locality pay 

increase because of a negative 

assessment. The locality payment for 

such an employee must be frozen at its 

existing level. The regulations include 

provisions for adjusting a frozen locality 

payment when an employee moves to a 

new locality pay area and when an 

employee subsequently receives a 

positive assessment. The regulations 

include similar rules for employees 

receiving a frozen staffing factor under 

the staffing supplement provisions at 

§ 9501.304(b). 

Section 9501.205(i) provides the 

requirements for adjusting the pay of a 

retained rate employee, consistent with 

the proposed criteria in other 

paragraphs of § 9501.205. IRS must 

provide a retained rate employee a pay 

increase equal to 50 percent of the 

dollar increase in the maximum rate of 

the applicable band (including any 

locality payment or staffing 

supplement). A retained rate employee 

with a negative assessment may not 

receive a pay increase. This is a 

variation of the pay retention rules in 5 

U.S.C. 5363, as authorized by 5 U.S.C. 

9509(c). 

Finally, § 9501.205(j) provides that 

within-band pay reductions authorized 

on the basis of unacceptable 

performance and/or conduct may not 

exceed 10 percent or cause an 

employee’s rate of pay to fall below the 

minimum rate of his or her band. An 

employee’s rate of pay may not be 

reduced more than once in a 12-month 

period based on unacceptable 

performance and/or conduct. 

Pay Administration Changes 

The proposed regulations contain 

changes in the IRS broadbanding criteria 

consistent with the changes in the GS 

pay administration rules made by 

sections 101 and 301 of the Federal 

Workforce Flexibility Act of 2004 

(Public Law 108–411, October 30, 2004) 

and OPM implementing regulations. 

Section 101 of the Federal Workforce 

Flexibility Act of 2004 amended 5 

U.S.C. 5753 and 5754 by providing a 

new authority to make recruitment, 

relocation, and retention incentive 

payments. OPM issued interim 

regulations to implement the new 

authority on May 13, 2005 (70 FR 

25732). We propose to amend the 


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criteria for IRS broadbanding systems to 

reflect the new terms ‘‘recruitment, 

relocation, and retention incentives,’’ as 

used in the interim regulations. The 

remaining proposed revisions in the 

criteria are a result of amendments 

made by section 301 of the Act and 

implementing regulations. 

Section 301 of the Federal Workforce 

Flexibility Act of 2004 amended 

provisions in 5 U.S.C. chapter 53 

relating to the administration of special 

rates, locality rates, and retained rates. 

These statutory amendments became 

effective on the first day of the first pay 

period beginning on or after April 28, 

2005—i.e., May 1, 2005. OPM issued 

interim regulations to implement the 

amendments and revise the rules that 

govern pay setting for Federal 

employees covered by the GS pay 

system on May 31, 2005 (70 FR 31278). 

We are proposing to revise the criteria 

for IRS broadbanding systems to be 

consistent with the Federal Workforce 

Flexibility Act of 2004 amendments 

because 5 U.S.C. 9509(b)(3) provides 

that ‘‘except as otherwise provided 

under this section, employees under a 

broad-banded system shall continue to 

be subject to the law and regulations 

covering employees under the pay 

system that otherwise would apply to 

such employees.’’ That is, employees 

are to be treated as GS employees, 

except as otherwise provided by 5 

U.S.C. 9509. For example, section V.G. 

of the current criteria, proposed in 

§ 9501.208, states that the provisions in 

the criteria related to grade and pay 

retention are based on the current grade 

and pay retention authority in 5 U.S.C. 

chapter 53, subchapter VI, and 5 CFR 

part 536. Section 301 of the Federal 

Workforce Flexibility Act of 2004 

amended 5 U.S.C. 5302 so that locality 

payments under 5 U.S.C. 5304 are no 

longer paid on top of a retained rate. 

Rather, an employee’s pay retention 

entitlement is derived by comparing an 

employee’s payable (highest) rate of 

basic pay (including any locality rate or 

special rate) to the highest applicable 

rate range (including a locality rate or 

special rate range) for the employee’s 

current position. Consistent with this 

change, we are proposing to revise the 

procedures for converting the pay of an 

employee to a retained rate under an 

IRS broadbanding system in § 9501.401 

(Appendix B of the current criteria). We 

are also proposing to revise the 

procedures for determining the 

converted GS-equivalent pay rate for an 

employee who is retaining a band or pay 

rate under an IRS broadbanding system 

in § 9501.402 (Appendix C of the 

current criteria), consistent with the 

changes in the GS pay retention rules. 

The Federal Workforce Flexibility Act 

of 2004 also amended 5 U.S.C. 5303 so 

that an employee is not entitled to a 

special rate if he or she is entitled to a 

higher rate of basic pay under another 

authority (e.g., a locality rate or retained 

rate). We are proposing to delete a 

reference in the current Appendix C to 

a situation where an employee who is 

entitled to a higher locality rate of pay 

also is entitled to a special rate. We are 

also proposing to revise terminology 

throughout the criteria to be consistent 

with new terminology in the interim 

regulations implementing the Federal 

Workforce Flexibility Act of 2004. 

Publishing the Criteria in Regulations 

The IRS broadbanding criteria were 

originally published in the Federal 

Register as a notice with three 

appendices. Since that time, significant 

developments have occurred to 

establish agency-specific personnel 

systems in regulations (e.g., the 

Department of Homeland Security 

Human Resources Management System 

in 5 CFR Chapter XCVII and part 9701 

and the Department of Defense Human 

Resources Management and Labor 

Relations Systems in 5 CFR chapter 

XCIX and part 9901). Consequently, 

OPM proposes to pursue the option of 

organizing and establishing the criteria 

for the Internal Revenue Service 

broadbanding systems and related 

appendices as four subparts in a new 5 

CFR chapter XCV and part 9501.. 

Subpart A of the proposed regulations 

provides the purpose and the general 

provisions governing the IRS 

broadbanding system and defines terms 

that are used throughout the new part 

9501. Subpart A also clarifies the 

relationship of the regulations in part 

9501 to other provisions of law and 

regulations. Subpart B of the proposed 

regulations provides the criteria for the 

IRS broadbanding system. The criteria 

follow the principles outlined in 5 

U.S.C. 9509(b)(4)(A)–(F). Subpart C 

consists of the former Appendix A, but 

we are proposing to delete the formulas 

in the current Appendix A because the 

rules the formulas express are 

adequately described in proposed 

§ 9501.303(a). Subpart D consists of the 

current Appendices B and C. We have 

also taken this opportunity to make 

other minor clarifications and 

formatting changes. 

E.O. 12866, Regulatory Review 

This rule has been reviewed by the 

Office of Management and Budget in 

accordance with E.O. 12866. 

Regulatory Flexibility Act 

I certify that these regulations would 

not have a significant economic impact 

on a substantial number of small entities 

because they would apply only to 

Federal agencies and employees. 

List of Subjects in 5 CFR Part 9501 

Administrative practice and 

procedure, Government employees, 

Wages. 

Office of Personnel Management. 

Linda M. Springer, 

Director. 

Accordingly, under the authority of 

section 9509 of title 5, United States 

Code, OPM is proposing to amend title 

5, Code of Federal Regulations, by 

establishing chapter XCV consisting of 

part 9501, as follows: 

CHAPTER XCV—OFFICE OF PERSONNEL 

MANAGEMENT CRITERIA FOR INTERNAL 

REVENUE SERVICE BROADBANDING 

SYSTEMS 

PART 9501—OFFICE OF PERSONNEL 

MANAGEMENT CRITERIA FOR 

INTERNAL REVENUE SERVICE 

BROADBANDING SYSTEMS 

Subpart A—General Provisions 

Sec. 

9501.101 Authority. 

9501.102 Applicability. 

9501.103 Broadbanding system plan. 

9501.104 Definitions. 

Subpart B—Broadbanding Criteria 

9501.201 General. 

9501.202 Structure of broadbanding 

systems. 

9501.203 Minimum and maximum number 

of grades in a band. 

9501.204 Setting minimum and maximum 

rates of pay in a band. 

9501.205 Adjusting an employee’s pay 

within a band. 

9501.206 Setting the pay of a supervisor. 

9501.207 Setting the pay of an employee. 

9501.208 Related provisions. 

Subpart C—Staffing Supplements 

9501.301 Authority. 

9501.302 Eligibility. 

9501.303 Conversion to staffing 

supplement. 

9501.304 Administration of staffing 

supplements. 

9501.305 Treatment of staffing supplements 

as basic pay. 

9501.306 New staffing supplements. 

Subpart D—Conversion Rules 

9501.401 Conversion into broadbanding 

systems. 

9501.402 Conversion to the General 

Schedule pay system. 

Authority: 5 U.S.C. 9509(b). 


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Subpart A—General Provisions 

§ 9501.101 Authority. 

This part contains regulations 

providing the criteria for Internal 

Revenue Service (IRS) broadbanding 

systems, as authorized by 5 U.S.C. 

9509(b). Section 9509 of title 5, United 

States Code, as added by the IRS 

Restructuring and Reform Act of 1998 

(Pub. L. 105–206), provides the 

Secretary of the Treasury the authority 

to establish one or more broadbanding 

systems covering all or any portion of 

the IRS workforce under the General 

Schedule (GS). Section 9509(b) of title 5, 

United States Code, directs the Office of 

Personnel Management (OPM) to 

prescribe criteria for IRS broadbanding 

systems and specifies certain principles 

that such criteria must follow, at a 

minimum. 

§ 9501.102 Applicability. 

(a) A broad-banded system is defined 

in 5 U.S.C. 9509(a) as a system for 

grouping positions for pay, job 

evaluation, and other purposes that is 

different from the General Schedule pay 

and classification system established 

under 5 U.S.C. chapter 51 and chapter 

53, subchapter III. Employees covered 

by IRS broadbanding systems are not 

covered by subchapter III of chapter 53 

or by those provisions of chapter 51 that 

define General Schedule grades. 

However, selected provisions from those 

parts of law are used in applying 

parallel features to employees in IRS 

broadbanding systems, as provided in 

this part. 

(b)(1) As required by 5 U.S.C. 

9509(b)(3), employees covered by IRS 

broadbanding systems are to be treated 

as if they are General Schedule 

employees for the purpose of applying 

other laws and regulations governing 

General Schedule employees, except as 

otherwise provided in this part. 

Applicable laws and regulations 

include, but are not limited to 5 U.S.C. 

5304, authorizing locality-based 

comparability payments (except as 

provided in § 9501.205(h)); 5 U.S.C. 

chapter 53, subchapter VI, authorizing 

grade and pay retention (except as 

otherwise provided in this part); and 5 

U.S.C. 5753 and 5754, authorizing 

recruitment, relocation, and retention 

incentives. (Many title 5 provisions 

apply to Federal employees on a more 

general basis and do not base coverage 

on whether an employee is covered by 

the General Schedule system—e.g., 

aggregate pay limitation under 5 U.S.C. 

5307; premium pay under 5 U.S.C. 

chapter 55, subchapter V; severance pay 

under 5 U.S.C. 5595; leave under 5 

U.S.C. chapter 63; retirement under 5 

U.S.C. chapters 83 and 84; and 

insurance under 5 U.S.C. chapter 87.) 

(2) Employees in IRS broadbanding 

systems are not covered by the special 

rate program established under 5 U.S.C. 

5305. However, IRS broadbanding 

systems may use a parallel authority to 

establish staffing supplements, which 

are linked to established special rates as 

described in subpart C of this part. 

(c) The criteria in this part apply only 

to broadbanding systems that cover 

General Schedule positions. Section 

9509(b)(1)(B) of title 5, United States 

Code, authorizes the Secretary of the 

Treasury, with the prior approval of the 

Director of OPM, to include in a 

broadbanding system positions that 

otherwise would be subject to 5 U.S.C. 

chapter 53, subchapter IV (prevailing 

rate systems), or 5 U.S.C. 5376 (seniorlevel positions). Including such 

positions requires OPM’s separate 

review and approval of a specific plan 

for that purpose. The criteria in this part 

do not apply to broadbanding systems 

that include such positions. 

§ 9501.103 Broadbanding system plan. 

Before implementing any 

broadbanding system under this part, 

IRS must develop a written plan that 

includes policies and implementing 

procedures to address each criterion 

relevant to the broadbanding system, 

including descriptions of broadbanding 

structure(s), positions covered, 

classification criteria, the method of pay 

progression within a band, policies for 

setting and adjusting pay, policies for 

paying supervisors or managerial 

employees, and policies for converting 

positions into broadbanding systems. 

§ 9501.104 Definitions. 

In this part: 

Band means a pay level or work level 

within a career path containing one or 

more General Schedule grades and 

related ranges of pay. 

Broadbanding system means a system 

for grouping positions for pay, job 

evaluation, and other purposes that is 

different from the General Schedule 

system established under 5 U.S.C. 

chapter 51 and chapter 53, subchapter 

III, as a result of combining the grades 

and related ranges of pay for one or 

more occupational series. All positions 

covered by this part are considered to be 

in a single broadbanding system unless 

the Department of the Treasury 

determines that a separate system is 

needed for supervisors and managerial 

employees (as authorized in 

§ 9501.206(a)). 

Career path means a grouping of one 

or more occupational series into broad 

occupational families or career tracks 

for job evaluation, pay, or other 

purposes. A career path may contain 

one or more bands. 

Employee means an individual who 

otherwise would be covered by 5 U.S.C. 

chapter 51 and chapter 53, subchapter 

III, if not covered by a broadbanding 

system. 

General pay increase means a pay 

increase IRS may provide to specified 

categories of employees when the 

minimum and maximum rates of pay for 

band rate ranges are adjusted under 

§ 9501.204. 

Managerial has the meaning given 

that term in OPM’s General Schedule 

Supervisory Guide. 

Negative assessment means a 

summary performance assessment 

consistent with 5 U.S.C. 9508 prepared 

at the end of the established period 

covering an employee’s performance 

over the applicable period or to support 

a pay determination, including one 

granted in accordance with § 9501.205, 

and documenting that the employee’s 

performance is less than the equivalent 

of fully successful. 

Performance assessment has the 

meaning given that term in 5 U.S.C. 

9508(b)(1). 

Positive assessment means a summary 

performance assessment consistent with 

5 U.S.C. 9508 prepared at the end of the 

established period covering an 

employee’s performance over the 

applicable period or to support a pay 

determination, including one granted in 

accordance with § 9501.205, and 

documenting that the employee’s 

performance is the equivalent of fully 

successful or better. Positive 

assessments must include a minimum of 

two levels of distinction and may 

include more than two. 

Supervisor has the meaning given that 

term in OPM’s General Schedule 

Supervisory Guide. 

Unacceptable performance has the 

meaning given that term in 5 U.S.C. 

9508(b)(2). 

Subpart B—Broadbanding Criteria 

§ 9501.201 General. 

Under 5 U.S.C. 9509(b)(3), the criteria 

for IRS broadbanding systems in this 

subpart must—

(a) Ensure that the structure of any 

broadbanding system maintains the 

principle of equal pay for substantially 

equal work (see § 9501.202); 

(b) Establish the minimum and 

maximum number of grades that may be 

combined into bands (see § 9501.203); 

(c) Establish the requirements for 

setting the minimum and maximum 

rates of pay in a band (see § 9501.204); 


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(d) Establish the requirements for 

adjusting the pay of an employee within 

a band (see § 9501.205); 

(e) Establish the requirements for 

setting the pay of a supervisory 

employee whose position is in a band or 

who supervises employees whose 

positions are in bands (see § 9501.206); 

and 

(f) Establish the requirements and 

methodologies for setting the pay of an 

employee upon conversion to a 

broadbanding system, initial 

appointment, change of position or type 

of appointment (including promotion, 

demotion, transfer, reassignment, 

reinstatement, placement in another 

broad band, or movement to a different 

geographic location), and movement 

between a broadbanding system and 

another pay system (see § 9501.207). 

§ 9501.202 Structure of broadbanding 

systems. 

(a) IRS broadbanding systems must—

(1) Link to the General Schedule; 

(2) Assign occupations to career paths 

based on the nature of work performed, 

the qualifications required, the normal 

career and pay progression, and other 

characteristics of those occupations; 

(3) Combine General Schedule grades 

into bands following the criteria in 

paragraph (b) of this section and 

§ 9501.203; 

(4) Place positions into bands within 

career paths in accordance with—

(i) Classification standards published 

by OPM under 5 U.S.C. 5105; or 

(ii) Any agency guidance that places 

a position within its correct band and 

career path (but which need not be 

sufficient to determine a position’s 

correct General Schedule grade); 

(5) Not include law enforcement 

officers covered by special base rates 

under section 403 of the Federal 

Employees Pay Comparability Act of 

1990 (section 529 of Public Law 101–

509, November 5, 1990, as amended) in 

the same band as non-law enforcement 

officers when the maximum grade in the 

band is any one of grades 3 through 10; 

and 

(6) Use established General Schedule 

rates of pay (including any applicable 

locality rates or special rates) for 

premium pay purposes under 5 U.S.C. 

chapter 55, subchapter V, and 5 CFR 

part 550, subpart A (i.e., for the purpose 

of determining the maximum hourly 

overtime rate and the biweekly 

premium pay limitation). 

(b) The range of difficulty and 

responsibility of each band must be the 

same as the range of difficulty and 

responsibility of the band’s constituent 

grades (i.e., consistent with the grade 

level criteria in standards published by 

OPM in accordance with 5 U.S.C. 5105) 

and must represent the normal range of 

work performed in the organization. 

§ 9501.203 Minimum and maximum 

number of grades in a band. 

(a) Except as provided in paragraphs 

(b) and (c) of this section, a band under 

an IRS broadbanding system must 

contain—

(1) At least one General Schedule 

grade; and 

(2) Not more than—

(i) Eight General Schedule grades 

when grades 13, 14, and 15 are not 

included in the band; 

(ii) Five General Schedule grades 

when grade 13 is included, but neither 

grade 14 nor 15 is included in the band; 

(iii) Three General Schedule grades 

when grade 14 is included, but grade 15 

is not included in the band; and 

(iv) Two General Schedule grades 

when grade 15 is included in the band. 

(b)(1) The Department of the Treasury 

may, after coordination with OPM (as 

defined in paragraph (b)(2) of this 

section), approve the establishment of 

one or more bands containing General 

Schedule grades not otherwise 

permitted under paragraph (a) of this 

section. 

(2) For the purpose of applying 

paragraph (b)(1) of this section, 

coordination with OPM means the 

process by which the Department of the 

Treasury, after appropriate staff-level 

consultation, officially provides OPM 

with notice of a proposed band and its 

intended effective date. If OPM concurs, 

or does not respond to that notice 

within 30 calendar days, the 

Department of the Treasury may 

proceed to establish the proposed band. 

However, in the event that OPM objects 

to the combination of grades that would 

be grouped together in a proposed band, 

the Department of the Treasury may not 

proceed until the matter is resolved. 

OPM may condition its concurrence on 

the establishment of appropriate withinband control points, as provided in 

§ 9501.205(d). 

(c) Each IRS broadbanding system 

must include at least one band that 

combines two or more General Schedule 

grades subject to the limits in paragraph 

(a)(2) of this section. 

§ 9501.204 Setting minimum and maximum 

rates of pay in a band. 

(a)(1) The minimum rate of pay for 

each band must equal the minimum rate 

of pay payable under 5 U.S.C. 5332 for 

the lowest General Schedule grade in 

that band. The maximum rate of pay for 

each band must equal the maximum rate 

of pay payable under 5 U.S.C. 5332 for 

the highest General Schedule grade in 

that band. Unless otherwise stated in 

this part, references in this part to the 

minimum rate of pay or maximum rate 

of pay for a band exclude any applicable 

locality payment or staffing supplement. 

(2) Notwithstanding paragraph (a)(1) 

of this section, the minimum rates of 

pay and the maximum rates of pay for 

bands covering law enforcement officers 

must equal the minimum and maximum 

special base rates for grades 3 through 

10 established under section 403 of the 

Federal Employees Pay Comparability 

Act of 1990, as applicable. 

(3) The maximum rate of pay for any 

band may not exceed the maximum rate 

of pay for grade 15 under 5 U.S.C. 5332. 

(b) The minimum rate of pay and 

maximum rate of pay that define each 

band must be adjusted at the same time 

and in the same manner as adjustments 

are made in the corresponding 

minimum and maximum General 

Schedule rates of pay under 5 U.S.C. 

5303 or similar provision of law. 

(c) Employees in IRS broadbanding 

systems are not covered by the special 

rate authority in 5 U.S.C. 5305. 

However, IRS broadbanding systems 

may provide for the use of staffing 

supplements instead of special rates 

under subpart C of this part. If special 

rates are not replaced with staffing 

supplements, special rate employees 

must be converted into a broadbanding 

system under the procedures 

established in subpart D of this part. 

(d) Only employees receiving retained 

rates of pay under 5 U.S.C. chapter 53, 

subchapter VI, as applied in the 

broadbanding system, may receive rates 

of pay that exceed the locality-adjusted 

or staffing supplement-adjusted band 

maximum rates. 

(e) Only employees who fail to receive 

a pay increase under § 9501.205(h) may 

receive rates of pay that are less than the 

band minimum rate of pay (as a result 

of the rate range adjustment made under 

paragraph (b) of this section). 

§ 9501.205 Adjusting an employee’s pay 

within a band. 

(a) IRS broadbanding systems must 

establish policies providing for pay 

adjustments within a band consistent 

with the requirements of this section. 

(b) IRS must establish policies 

concerning which level of management 

will make pay adjustment decisions for 

employees. 

(c) IRS must establish principles for 

managing pay progression and payroll 

costs associated with pay adjustments 

and provide funding for salary increases 

under its broadbanding systems. 

Because broadbanding systems provide 

more choices on how to distribute pay 

to employees, IRS must have an overall 


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budget to manage the costs associated 

with such choices. At a minimum, the 

salary increase budget must include 

funds approximately equal to the 

amounts that would be required for 

individual pay adjustments made at the 

time of schedule adjustments under 5 

U.S.C. 5303 (or similar provision of 

law), locality-based comparability 

payments under 5 U.S.C. 5304, and 

staffing supplement adjustments under 

subpart C of this part, as applicable. A 

salary increase budget must meet salary 

cost objectives and be consistent with 

policies and procedures for adjusting 

pay under a broadbanding system that 

are established to ensure equal pay for 

work of equal value, as required by 5 

U.S.C. 2301(b)(3). 

(d) IRS may use control points within 

bands. Control points are dollar points 

within bands that limit or restrict the 

movement of employees through the 

rate range of the band. They may be 

expressed as a percentage of the rate 

range or as a percentage of the range 

maximum rate of pay. If control points 

are used, IRS broadbanding systems 

must include policies governing the 

establishment of control points within 

bands including the circumstances 

under which an employee’s rate of pay 

may be set or adjusted above a control 

point. 

(e) IRS must provide for locality 

payments as if its employees were 

General Schedule employees covered by 

5 U.S.C. 5304 and 5 CFR part 531, 

subpart F, except as provided by 

paragraph (h) of this section. (See 

subpart C of this part for information on 

possible staffing supplements.) 

(f) IRS must establish policies for 

providing performance-based withinband pay increases to employees 

consistent with the criteria in this 

section, including the following: 

(1) IRS must use employee 

performance assessments as a basis for 

within-band pay increases for 

employees. IRS policies for granting 

within-band pay increases on the basis 

of a positive assessment must provide 

for pay distinctions based on levels of 

performance. The IRS performance 

appraisal system supporting the IRS 

broadbanding system must have two or 

more summary rating levels that 

represent performance equivalent to 

fully successful or better. 

(2) Within-band pay increases may 

not be based solely on time at pay level. 

(3) As required by paragraph (h) of 

this section, an employee with a current 

negative assessment may not receive a 

pay increase under this paragraph. 

(4) The rate of pay of an employee 

with a current positive assessment may 

not fall below the band minimum rate 

of pay. 

(5) IRS may also use other individual 

factors to provide additional withinband pay increases, such as the 

acceptance of a supervisory position 

within the same band. 

(6) IRS may cover entry/ 

developmental employees under a 

different pay progression plan than that 

which is applicable to employees at the 

full performance (journey) level. IRS 

may establish a tailored salary increase 

budget for entry/developmental 

employees who are covered by a 

separate pay progression plan. 

(7) IRS policies may take into account 

an employee’s position in the rate range 

in determining the amount of a withinband pay increase. 

(8) IRS policies may provide for 

proration of an employee’s performancebased within-band increase (i.e., 

reduction from the amount generally 

provided under the pay progression 

plan) in specified appropriate 

circumstances, such as—

(i) An employee entered the 

broadbanding system during the 

appraisal period that is the basis for the 

within-band increase; 

(ii) An employee was in leavewithout-pay status during the appraisal 

period that is the basis for the withinband increase (except for employees 

covered by 5 CFR part 353); or 

(iii) An employee entered the 

broadbanding system and received a 

prorated within-grade increase or 

career-ladder promotion payment under 

§ 9501.401(b) less than 52 weeks before 

the within-band increase. 

(g) IRS may provide general pay 

increases for specified categories of 

employees when the minimum and 

maximum rates of pay for band rate 

ranges are adjusted under § 9501.204, 

consistent with the following criteria: 

(1) As provided in paragraph (h) of 

this section, an employee with a current 

negative assessment may not receive a 

pay increase under this paragraph. 

(2) A pay increase under this 

paragraph may be used in combination 

with performance-based pay increases 

under paragraph (f)(1) of this section. 

Alternatively, IRS may exclusively use 

performance-based pay increases under 

paragraph (f)(1) of this section and not 

grant general pay increases under this 

paragraph. 

(3) The amount of a pay increase 

under this paragraph for a specified 

category of employees may be any 

percentage amount up to the percentage 

amount by which band rate ranges are 

adjusted under § 9501.204. IRS may 

authorize different pay increases under 

this paragraph for different employee 

categories. If IRS provides an increase 

under this paragraph that is less than 

the band rate range adjustment, the 

resulting unused funds must be 

redirected and applied to performancebased pay increases under paragraph (f) 

of this section. 

(h) Except as provided in paragraph 

(h)(2) of this section and 

§ 9501.304(b)(1), IRS may not provide 

any kind of pay increase to any 

employee who has a current negative 

assessment, even if this causes the 

employee’s rate of pay to fall below the 

minimum rate of pay of the employee’s 

band because of a simultaneous rate 

range adjustment. In addition, IRS may 

not allow such an employee to receive 

a pay increase as a result of a higher 

locality pay percentage (as described in 

paragraph (e) of this section). The 

locality pay percentage for that 

employee must be frozen at its existing 

level. IRS must apply the following 

rules for employees who do not receive 

pay increases under this paragraph: 

(1) IRS must establish procedures for 

dealing with employees described in 

this paragraph who do not receive a pay 

increase under paragraphs (f) and/or (g) 

of this section because of a negative 

assessment. Those procedures may 

allow an employee who later receives a 

positive assessment to receive a pay 

increase. However, any such increase 

may not be retroactive and may not 

exceed the pay increase the employee 

would have received if the employee 

had a positive assessment at the time 

pay increases under paragraphs (f) and/ 

or (g) of this section were determined. 

(2) For an employee receiving a frozen 

locality payment because of a negative 

assessment, if such an employee moves 

to a new official worksite in a different 

locality pay area, the employee must 

receive the locality payment applicable 

in the new locality pay area as in effect 

on the day before the locality rate was 

frozen. See § 9501.304(b)(1) if the 

employee’s position of record is covered 

by a staffing supplement at the new 

official worksite. 

(3) If an employee receiving a frozen 

locality payment because of a negative 

assessment subsequently receives a 

positive assessment, the employee will 

become entitled to the currently 

applicable locality payment on the first 

day of the first pay period beginning on 

or after the date when he or she receives 

a positive assessment. See 

§ 9501.304(b)(2) if the employee’s 

position of record is covered by a 

staffing supplement when he or she 

receives a positive assessment. 

(i) IRS policies on adjusting a retained 

rate for employees on pay retention 

must provide a retained rate employee 


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a pay increase equal to 50 percent of the 

dollar increase in the maximum rate of 

the applicable band (including any 

applicable locality payment or staffing 

supplement), except that a retained rate 

employee with a negative assessment 

may not receive a pay increase. (This is 

a variation of the pay retention rules in 

5 U.S.C. 5363, as authorized by 5 U.S.C. 

9509(c). See § 9501.208(b).) 

(j) IRS may establish policies for 

reducing an employee’s rate of pay 

within a band, but only for unacceptable 

performance and/or conduct, or the 

voluntary loss of supervisory status (if 

such loss results in a reversal of a 

within-band adjustment granted at the 

time of placement in a supervisory 

position). These reductions may be 

made effective at any time. However, 

reductions based on unacceptable 

performance, as defined in 5 U.S.C. 

9508, and/or conduct may not occur 

more than once in a 12-month period. 

Any reductions in an employee’s rate of 

pay based on unacceptable performance 

and/or conduct are adverse actions 

under 5 U.S.C. 7512 as long as the 

employee and the action are otherwise 

covered by that section. (See 5 CFR 

752.401.) A reduction based on 

unacceptable performance and/or 

conduct may not exceed 10 percent of 

the employee’s rate of pay or cause an 

employee’s rate to fall below the 

minimum rate of pay of the employee’s 

band. 

§ 9501.206 Setting the pay of a supervisor. 

(a) IRS broadbanding systems may 

provide for a separate broadbanding 

system or career path for supervisors 

and managerial employees. 

(b) A supervisor’s or managerial 

employee’s rate of pay may not be based 

on the salaries of the employees he or 

she supervises or manages. 

§ 9501.207 Setting the pay of an employee. 

(a) IRS broadbanding systems must 

include policies for determining the 

career path, band, and rate of pay for 

employees upon conversion into the 

system consistent with the provisions in 

§ 9501.401. IRS broadbanding systems 

may also include policies for making 

prorated within-grade increase or 

career-ladder promotion payments to 

employees as an adjustment in pay or a 

lump-sum payment upon conversion 

from the General Schedule to a 

broadbanding system consistent with 

the provisions in § 9501.401. 

(b) IRS broadbanding systems must 

include policies for determining an 

employee’s career path, band, and rate 

of pay upon initial appointment, 

promotion, demotion, transfer, 

reassignment, or placement in a 

different band or career path. The 

methods used to set pay must be 

consistent with the principle of equal 

pay for substantially equal work and the 

following: 

(1) Pay must be set at least at the 

minimum rate of pay and must not 

exceed the maximum rate of pay of the 

band to which assigned (except for 

employees who receive a rate below the 

minimum rate of pay as described in 

§ 9501.205(h) or who receive a rate 

above the maximum rate of pay under 

pay retention provisions). (See 

§ 9501.204(d) and (e).) 

(2) Policies must specify the 

conditions under which pay may be set 

above the minimum rate of pay upon 

initial placement in a band and the 

amount of any minimum or maximum 

pay increase upon promotion. The timein-grade provisions in 5 CFR 300.601–

605 do not apply to employees under a 

broadbanding system. 

(3) Upon movement to a different 

official worksite, IRS must process a 

geographic conversion as provided in 5 

CFR 531.205. 

(4) Movement of an employee to a 

band with a lower maximum rate of pay 

than the employee’s former band is 

equivalent to a reduction in grade for 

the purpose of applying 5 U.S.C. 

chapters 43 and 75. 

(c) Agencies must use the procedures 

in § 9501.402 for determining an 

employee’s GS equivalent grade and pay 

rate upon conversion from a 

broadbanding system to the General 

Schedule. 

§ 9501.208 Related provisions. 

(a) For provisions of 5 U.S.C. chapter 

51 that apply to the determination of 

General Schedule grades, other than 

sections 5104 and 5105, the term grade 

is deemed to mean band within a career 

path. 

(b) The provisions in this part related 

to grade and pay retention are based on 

the grade and pay retention authority in 

5 U.S.C. chapter 53, subchapter VI, and 

5 CFR part 536. When applying the 

grade and pay retention provisions, the 

term band has the same meaning as 

grade under the statute and regulations. 

Under 5 U.S.C. 9509(c), the Secretary of 

the Treasury may provide for variations 

from the grade and pay retention 

authority for employees who are 

covered by broadbanding systems with 

prior approval of the Director of OPM 

and in accordance with a plan for 

implementing such variations. Section 

9501.205(i) is an implementation of this 

variation authority. 

(c) When applying the severance pay 

provisions to employees covered by IRS 

broadbanding systems, the term band 

has the same meaning as grade in 

paragraph (c)(4) of the definition of 

reasonable offer in 5 CFR 550.703. 

When applying this definition, IRS will 

also consider a position one band below 

the employee’s current band level to be 

a reasonable offer in the case of a 

broadbanding system under which the 

next lower band comprises two or more 

grades. 

Subpart C—Staffing Supplements 

§ 9501.301 Authority. 

IRS broadbanding systems may use 

staffing supplements under the terms 

and conditions in this subpart. 

§ 9501.302 Eligibility. 

If an employee is assigned to a 

position meeting the coverage 

requirements for a special rate under 5 

U.S.C. 5305 and is in a band where the 

maximum rate for the banded GS grades 

is a special rate that exceeds the 

maximum GS rate of basic pay 

(including any applicable locality rate 

under 5 U.S.C. 5304 or similar provision 

of law) for the banded grades, the 

employee is eligible for a staffing 

supplement. 

§ 9501.303 Conversion to staffing 

supplement. 

(a) Upon conversion, the employee’s 

broadbanding rate of pay is established 

by dividing the employee’s former GS 

special rate or locality rate (whichever 

was higher) by the staffing factor. The 

staffing factor is determined by dividing 

the maximum special rate for the 

banded grades by the GS base rate 

corresponding to that special rate (step 

10 of the GS rate for the same grade as 

the special rate, excluding any locality 

payment). The employee’s staffing 

supplement is derived by multiplying 

the employee’s broadbanding rate of pay 

by the staffing factor minus one. The 

employee’s final staffing supplementadjusted rate equals the employee’s 

broadbanding rate of pay plus the 

staffing supplement. This amount will 

equal the employee’s former GS special 

rate or locality rate. Since the 

employee’s total pay rate immediately 

after conversion into the broadbanding 

system will be the same as immediately 

before conversion, the provisions 

regarding adverse action under 5 U.S.C. 

chapter 75, subchapter II, and pay 

retention under 5 U.S.C. 5363 do not 

apply. 

(b) If an employee is in a band where 

the maximum GS rate for the banded 

grades is a locality rate, the 

broadbanding rate upon conversion into 

a broadbanding system is derived by 

dividing the employee’s former locality 

rate or special rate by the applicable 


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locality pay factor (e.g., 1.1750 in the 

Washington-Baltimore-Northern 

Virginia locality pay area in 2006). The 

employee’s broadbanding localityadjusted rate will equal the employee’s 

former GS locality rate or special rate. 

Since there is no change in total pay 

rate, the provisions regarding adverse 

action under 5 U.S.C. chapter 75, 

subchapter II, and pay retention under 

5 U.S.C. 5363 do not apply. 

(c) The rules for converting an 

employee on pay retention who is in a 

position meeting the coverage 

requirements for a special rate under 5 

U.S.C. 5305 are in § 9501.401(d). 

§ 9501.304 Administration of staffing 

supplements. 

(a) A staffing supplement is added to 

an employee’s broadbanding rate much 

like a locality adjustment is added to a 

GS base rate, as follows: 

(1) Any General Schedule or special 

rate schedule adjustment will require 

recomputation of the staffing 

supplement under § 9501.303. 

Employees receiving a staffing 

supplement remain entitled to a locality 

rate, which may, over time, supersede 

the need for a staffing supplement. If the 

employee is entitled to a higher locality 

rate, the employee is not entitled to a 

staffing supplement for any purpose. 

(2) If OPM discontinues or decreases 

a special rate schedule on which staffing 

supplements are based, pay retention 

rules will be applied, as appropriate. 

(3) Upon geographic movement, an 

employee who receives a staffing 

supplement will have the supplement 

removed or recomputed to reflect any 

applicable staffing supplement or 

locality rate in the new official worksite, 

consistent with § 9501.303(a). Any 

resulting reduction in pay is not an 

adverse action under 5 U.S.C. chapter 

75, subchapter II, or a basis for pay 

retention under 5 U.S.C. 5363. 

(b) IRS may not allow an employee 

with a current negative assessment to 

receive a pay increase as a result of a 

staffing factor increase. The staffing 

supplement for that employee must be 

frozen at its existing level. IRS must 

apply the following rules for employees 

who do not receive pay increases under 

this paragraph: 

(1) For an employee receiving a frozen 

staffing supplement because of a 

negative assessment, if such an 

employee moves to a new position of 

record or official worksite where a 

different staffing supplement applies, 

the employee must receive the staffing 

supplement applicable to the 

employee’s new position of record and/ 

or official worksite as in effect on the 

day before the staffing supplement was 

frozen. If no staffing supplement applies 

to the employee’s new position of 

record or official worksite, apply the 

rules in § 9501.205(h)(1) to determine 

the employee’s entitlement to any 

locality payment. 

(2) If an employee receiving a frozen 

staffing supplement because of a 

negative assessment subsequently 

receives a positive assessment, the 

employee will become entitled to the 

currently applicable staffing supplement 

on the first day of the first pay period 

beginning on or after the date when he 

or she receives a positive assessment. If 

no staffing supplement is applicable to 

the employee’s position of record, the 

employee will become entitled to the 

currently applicable locality payment, 

as provided in § 9501.205(h)(2). 

(c) An employee’s broadbanding rate 

adjusted by a staffing supplement may 

not exceed the rate for level IV of the 

Executive Schedule. 

§ 9501.305 Treatment of staffing 

supplements as basic pay. 

The employee’s broadbanding rate 

adjusted by the staffing supplement is 

basic pay for the same purposes as a 

special rate under 5 CFR 530.308—e.g., 

for retirement, life insurance, premium 

pay, pay retention, and severance pay 

purposes, and for determining 

recruitment, relocation, and retention 

incentives. The staffing supplement is 

also basic pay under 5 U.S.C. chapter 

75, subchapter II, for the limited 

purpose of determining whether a 

reduction in pay occurs at the point of 

an employee’s conversion into a 

broadbanding system. The staffing 

supplement will also be used to 

compute worker’s compensation 

payments and lump-sum payments for 

accrued and accumulated annual leave. 

§ 9501.306 New staffing supplements. 

OPM may approve staffing 

supplements for categories of employees 

within an IRS broadbanding system who 

are not in approved special rate 

categories for General Schedule 

employees, consistent with the 

provisions in 5 U.S.C. 5305(a) and (b). 

Subpart D—Conversion Rules 

§ 9501.401 Conversion into broadbanding 

systems. 

(a)(1) General. IRS broadbanding 

systems must include policies for 

determining the career path, band, and 

pay rate for employees upon conversion 

into a broadbanding system under the 

terms and conditions in this section. 

(2) An employee may not suffer a 

reduction in his or her total pay rate 

upon initial conversion to a 

broadbanding system. For this purpose, 

‘‘total pay rate’’ includes any applicable 

locality payment, special rate 

supplement, and staffing supplement—

each of which will be considered to be 

part of basic pay under 5 U.S.C. chapter 

75, subchapter II, for the limited 

purpose of determining whether a 

reduction in pay occurs at conversion. 

(3) If conversion into a broadbanding 

system is accompanied by any 

simultaneous pay action, the employee’s 

General Schedule pay entitlements must 

be determined before converting the 

employee into the broadbanding system. 

(b) Prorated within-grade increase 

and career-ladder promotion payments. 

IRS broadbanding systems may include 

policies for making prorated withingrade increase or career-ladder 

promotion payments to employees as an 

adjustment in pay or a lump-sum 

payment after conversion from the 

General Schedule to a broadbanding 

system under the following conditions: 

(1) An employee may receive a 

prorated within-grade increase or a 

career-ladder promotion payment after 

conversion to an IRS broadbanding 

system under this section, but not both. 

(2) The amount of any within-grade 

increase or career-ladder promotion 

payment may not be more than the 

prorated value of the employee’s withingrade increase or career-ladder 

promotion at the time of conversion, 

based on the number of weeks of 

creditable service the employee has 

performed as of the date of initial 

conversion into the broadbanding 

system. There is no restriction on when 

such payments may be made. 

(3) A prorated within-grade increase 

or career-ladder promotion payment 

may be made only to an employee with 

a positive assessment at the time of 

conversion into a broadbanding system. 

(4) A within-grade increase payment 

may not be made to an employee 

receiving the maximum rate of pay for 

his or her grade or a retained rate 

immediately before conversion. 

(5) If IRS provides career-ladder 

promotion payments to a group of 

employees converted to entry/ 

developmental positions for which the 

IRS has established a special pay 

progression plan under § 9501.205(f)(6), 

the first salary increase budget for these 

entry/developmental employees 

following conversion must be 

determined after taking into account the 

length of time between the prorated 

career-ladder promotion payment and 

the first performance-based payments 

under an IRS broadbanding system. 

(6) A within-grade increase or careerladder promotion payment paid as an 

adjustment to pay after conversion into 

a broadbanding system may not cause 


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an employee’s pay to exceed the 

maximum rate of pay of a band. 

(c) Special rate employees. If an IRS 

broadbanding system uses staffing 

supplements instead of special rates 

under 5 U.S.C. 5305, special rate 

employees must be converted into the 

system consistent with the provisions in 

subpart C of this part. If an IRS 

broadbanding system eliminates special 

rates, a new locality-adjusted rate of pay 

must be derived for each employee, as 

follows: 

(1) Divide the employee’s special rate 

by the locality pay factor for the area 

(e.g., 1.1750 for the WashingtonBaltimore-Northern Virginia locality pay 

area in 2006) to determine the new 

broadbanding rate of pay. 

(2) Multiply the employee’s new 

broadbanding rate of pay by the locality 

pay factor for the area to determine the 

employee’s broadbanding locality rate of 

pay. If the employee’s broadbanding 

locality rate of pay exceeds the 

maximum locality-adjusted rate for the 

employee’s band, the employee must be 

placed on pay retention (if not 

otherwise excluded from the pay 

retention authority at 5 U.S.C. chapter 

53, subchapter VI). The locality 

adjustment is basic pay under 5 U.S.C. 

chapter 75, subchapter II, for the limited 

purpose of determining whether a 

reduction in basic pay occurs at the 

point of an employee’s conversion into 

a broadbanding system. 

(d) Employees on pay retention. Upon 

conversion, employees on pay retention 

must be assigned to the band that 

encompasses the grade of their position. 

Determine the employee’s broadbanding 

rate of pay as follows: 

(1) Compare the employee’s retained 

rate to the highest applicable maximum 

rate of pay for the employee’s band 

(including any applicable locality 

payment or staffing supplement). 

(2) If the employee’s retained rate is 

higher than the highest applicable 

maximum rate of pay for the band, the 

employee will continue to receive a 

retained rate. 

(3) If the employee’s retained rate is 

less than the highest applicable 

maximum rate of pay for the band, 

divide the employee’s retained rate by 

the applicable locality pay factor or 

staffing factor that applies to the 

employee’s new position of record and 

official worksite to derive the 

employee’s new broadbanding rate of 

pay. Multiply the employee’s new 

broadbanding rate of pay by the 

applicable locality pay or staffing factor 

to derive the employee’s broadbanding 

locality-adjusted or staffing supplementadjusted rate of pay. The locality 

adjustment and staffing supplement are 

basic pay under 5 U.S.C. chapter 75, 

subchapter II, for the limited purpose of 

determining whether a reduction in 

basic pay occurs at the point of an 

employee’s conversion into a 

broadbanding system. 

(e) Employees on grade retention. 

Upon conversion, employees on grade 

retention must be assigned to the band 

that encompasses their retained grade 

until the original 2-year grade retention 

period expires. When the 2-year period 

expires, the employee’s rate of pay must 

be determined under the pay retention 

rules at 5 CFR 536.304 in the band for 

his or her position of record. 

§ 9501.402 Conversion to the General 

Schedule pay system. 

(a)(1) Except as provided in paragraph 

(a)(2) of this section, when an employee 

covered by a broadbanding system 

moves voluntarily or involuntarily to a 

GS position, IRS must use the 

procedures in this section to convert the 

employee’s band and pay rate to a GSequivalent grade and rate of pay before 

the employee moves out of the system. 

IRS must determine the converted GSequivalent grade and rate of pay before 

any accompanying geographic move, 

promotion, or other simultaneous 

action. The new employing organization 

must use the converted GS-equivalent 

grade and rate of pay in applying 

various pay administration rules that 

govern how pay is set in the GS position 

(e.g., rules for promotion and highest 

previous rate under 5 CFR part 531, 

subpart B, and grade and pay retention 

under 5 CFR part 536). For the purpose 

of those rules, the converted GS grade 

and rate of pay are deemed to have been 

in effect at the time the employee left 

the broadbanding system. The rules for 

determining the converted GS grade for 

pay administration purposes do not 

apply to the determination of an 

employee’s GS-equivalent grade for 

other purposes, such as reduction-inforce or adverse action. 

(2) The conversion procedures in this 

section do not apply to employees who 

involuntarily move back to the same 

General Schedule career-ladder position 

they held immediately before 

conversion into the broadbanding 

system prior to any pay adjustment 

event under the system (including any 

promotion, demotion, or pay adjustment 

provided under § 9501.205). (A pay 

adjustment event does not include any 

prorated within-grade or career-ladder 

promotion pay increase received as part 

of conversion into the system.) For such 

employees, IRS must subtract any 

prorated within-grade or career-ladder 

promotion payment and reconstruct the 

employee’s grade and rate of pay under 

the General Schedule as if he or she had 

never entered the broadbanding system. 

(3) The provisions regarding adverse 

action under 5 U.S.C. chapter 75, 

subchapter II, and pay retention under 

5 U.S.C. 5363 do not apply to reductions 

in pay that occur when the IRS subtracts 

any prorated within-grade or careerladder promotion increase from a 

career-ladder employee’s rate of pay 

upon conversion back to the General 

Schedule as required by paragraph (a)(2) 

of this section. 

(b) GS grade level determination. (1) 

Upon voluntary or involuntary 

conversion of an employee out of a 

broadbanding system to the GS pay 

system (other than an involuntary 

conversion covered by paragraph (a)(2) 

of this section), IRS must determine the 

employee’s GS-equivalent grade level as 

follows (except as otherwise provided in 

paragraphs (b)(2), (b)(3), and (d) of this 

section): 

(i) Convert an employee in a band 

encompassing a single GS grade to that 

grade. 

(ii) For an employee in a band 

encompassing more than one GS grade, 

compare the employee’s rate of pay 

(including any locality adjustment or 

staffing supplement, as applicable) with 

the rates of pay in the highest applicable 

GS rate range for each grade 

encompassed by the employee’s band. If 

the employee’s occupational series is a 

two-grade interval series, consider only 

odd-numbered grades between GS–5 

and GS–11. In identifying the highest 

applicable GS rate range consider the 

following types of rate ranges: 

(A) The GS base pay schedule; 

(B) The LEO special base rate 

schedule; 

(C) An applicable locality pay 

schedule for the locality pay area in 

which the employee’s official worksite 

is located; or 

(D) A special rate schedule for the 

employee’s position and official 

worksite, as applicable. 

(iii) If the employee’s rate of pay 

(including any locality adjustment or 

staffing supplement) fits into an area of 

the highest applicable GS rate range for 

a GS grade that does not overlap with 

the rate range of the next higher or 

lower grade in the same band, convert 

the employee to that GS grade. 

(iv) If the employee’s rate of pay 

(including any locality adjustment or 

staffing supplement) fits into an area of 

the highest applicable GS rate range for 

a grade that overlaps with the highest 

applicable GS rate range of the next 

higher or lower grade in the same band, 

compare the employee’s rate of pay with 

the dollar midpoint of the overlap area. 

If the employee’s rate of pay is lower 


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Federal Register / Vol. 72, No. 73 / Tuesday, April 17, 2007 / Proposed Rules 19135 

than the dollar midpoint of the overlap 

area, convert the employee to the lower 

grade. If the employee’s rate of pay is 

equal to or higher than the dollar 

midpoint of the overlap area, convert 

the employee to the higher grade. 

(v) If an employee’s rate of pay 

(including any locality payment or 

staffing supplement) is lower than the 

minimum rate of the highest applicable 

GS rate range for the lowest GS grade in 

the band, convert the employee to the 

lowest grade. 

(2) Notwithstanding paragraphs 

(b)(1)(i)–(b)(1)(v) of this section, upon 

voluntary or involuntary conversion of 

an employee out of a broadbanding 

system to the GS pay system (other than 

an involuntary conversion covered by 

paragraph (a)(2) of this section), an 

employee’s converted GS grade may not 

be lower than the GS grade held by the 

employee immediately preceding a 

lateral conversion into the broadbanding 

system, unless the employee was 

retaining a GS grade immediately before 

conversion or the employee underwent 

a reduction in band while in the 

broadbanding system. 

(3) Notwithstanding paragraphs 

(b)(1)(i) through (b)(1)(v) of this section, 

upon voluntary or involuntary 

conversion of an employee out of a 

broadbanding system to the GS pay 

system (other than an involuntary 

conversion covered by paragraph (a)(2) 

of this section), if an employee moves 

back to the General Schedule before any 

pay adjustment event under the 

broadbanding system (including any 

promotion, demotion, or pay adjustment 

provided under § 9501.205), the 

employee’s converted GS grade is the 

grade the employee held immediately 

before conversion into the broadbanding 

system. (A pay adjustment event does 

not include any prorated within-grade 

or career-ladder promotion pay increase 

received as part of conversion into the 

system.) 

(c) GS pay rate determination. Upon 

voluntary or involuntary conversion of 

an employee out of a broadbanding 

system to the GS pay system (other than 

an involuntary conversion covered by 

paragraph (a)(2) of this section), IRS 

must determine the employee’s GSequivalent rate of pay under the rules in 

this paragraph (except as otherwise 

provided in paragraph (d) of this 

section). If an employee voluntarily 

moves back to the General Schedule 

before any pay adjustment event under 

the broadbanding system (including any 

promotion, demotion, or pay adjustment 

provided under § 9501.205), IRS must 

subtract any prorated pay increase 

received as part of conversion into the 

broadbanding system (including any 

applicable locality payment or staffing 

supplement associated with that 

increase) before applying the rules in 

this paragraph. (The preceding sentence 

does not apply to an employee who 

involuntarily moves back to the General 

Schedule.) As provided in paragraph 

(a)(3) of this section, any resulting 

reduction in pay is not an adverse 

action. 

(1) Convert the employee’s rate of pay 

under the broadbanding system 

(including any locality adjustment or 

staffing supplement) to a rate on the 

highest applicable GS rate range for the 

converted GS grade derived under 

paragraph (b) of this section. In 

identifying the highest applicable GS 

rate range consider the following types 

of rate ranges: 

(i) The GS base pay schedule; 

(ii) The LEO special base rate 

schedule; 

(iii) An applicable locality pay 

schedule for the locality pay area in 

which the employee’s official worksite 

is located; or 

(iv) A special rate schedule for the 

employee’s position and official 

worksite, as applicable. 

(2) If the highest applicable GS rate 

range is under a locality pay schedule, 

convert the employee’s rate of pay 

(including any locality adjustment or 

staffing supplement) to a GS locality 

rate of pay. Since this converted rate is 

used only as a basis for setting the 

employee’s rate in the new position, do 

not adjust the converted rate to equal a 

standard step rate. The rate of pay 

underlying the converted GS locality 

rate of pay becomes the employee’s 

converted GS base rate. 

(3) If the highest applicable GS rate 

range is a special rate range, convert the 

employee’s rate of pay (including any 

locality adjustment or staffing 

supplement) to a special rate. The 

converted special rate may fall between 

the standard step rates. The rate of pay 

underlying the converted GS special 

rate becomes the employee’s converted 

GS base rate. 

(4) If the employee’s rate of pay 

(including any locality adjustment or 

staffing supplement) exceeds the 

maximum rate of the highest applicable 

GS rate range, convert the rate of pay to 

a retained rate (if not otherwise 

excluded from the pay retention 

authority at 5 U.S.C. chapter 53, 

subchapter VI). 

(5) If the employee’s rate of pay 

(including any locality adjustment or 

staffing supplement) is lower than the 

minimum rate of the highest applicable 

GS rate range, convert the employee’s 

rate of pay to a GS locality rate, or 

special rate, as applicable. Since this 

converted rate is used only as a basis for 

setting the employee’s rate in the new 

position, do not adjust the converted 

rate to equal a standard step rate. If the 

employee’s converted rate is a locality 

rate, the rate of pay underlying the 

locality rate becomes the employee’s GS 

base rate. 

(d) Employees on band or pay 

retention. Apply the following 

procedures to determine the converted 

GS-equivalent grade and pay rate upon 

voluntary or involuntary conversion of 

an employee from a broadbanding 

system to the GS system (other than an 

involuntary conversion covered by 

paragraph (a)(2) of this section) when 

the employee is retaining a band or pay 

rate under the broadbanding system: 

(1) If an employee is retaining a band, 

apply the procedures in paragraphs (b) 

and (c) of this section using the grades 

encompassed by the employee’s 

retained band to determine the 

employee’s GS-equivalent retained 

grade and pay rate. The time in a 

retained band counts toward the 2-year 

limit on grade retention in 5 U.S.C. 

5362. (If the employee is also receiving 

a retained rate, apply the procedures in 

paragraph (d)(2) of this section instead 

of paragraph (c) of this section to 

determine the employee’s GS-equivalent 

rate of pay.) 

(2) If the employee’s rate of pay under 

the broadbanding system is a retained 

rate, the employee’s GS-equivalent 

grade is the highest grade encompassed 

in his or her band (unless the employee 

is also retaining a band in which case 

apply paragraph (d)(1) of this section to 

determine the employee’s GS-equivalent 

grade). If the employee’s retained rate is 

less than the maximum rate of the 

highest applicable GS rate range for the 

employee’s GS-equivalent grade, apply 

the procedures in paragraph (c)(1)–(c)(3) 

of this section to determine the 

employee’s GS-equivalent pay rate. If 

the employee’s retained rate exceeds the 

maximum rate of the highest applicable 

GS rate range for the employee’s GSequivalent grade, convert the 

employee’s broadbanding retained rate 

to an equal GS-equivalent retained rate. 

(e) Within-grade increase equivalent 

increase determinations. Service under 

a broadbanding system is creditable for 

within-grade increase purposes upon 

conversion to the GS pay system. (See 

5 CFR 531.407(b) for additional 

information on equivalent increase 

determinations.) 

[FR Doc. E7–7255 Filed 4–16–07; 8:45 am] 

BILLING CODE 6325–39–P 


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