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

19411

Vol. 63, No. 75

Monday, April 20, 1998

OFFICE OF PERSONNEL

MANAGEMENT

5 CFR Parts 430 and 534

RIN 3206–AH77

Performance Ratings

AGENCY: Office of Personnel

Management.

ACTION: Proposed rule.

SUMMARY: The Office of Personnel

Management (OPM) is issuing proposed

regulations to codify longstanding

policy regarding retroactive, assumed,

and carry-over ratings of record. The

proposed regulations amend the current

performance management regulations to

explicitly specify that ratings of record

are final upon issuance unless

challenged by the employee, and that

retroactive, assumed, and carry-over

ratings of record are prohibited.

DATES: Comments must be submitted on

or before June 19, 1998.

ADDRESSES: Comments may be sent or

delivered to: Henry Romero, Associate

Director, Workforce Compensation and

Performance Service, U.S. Office of

Personnel Management, Room 7508,

1900 E Street NW., Washington, DC

20415.

FOR FURTHER INFORMATION CONTACT:

Barbara Colchao, (202) 606–2720.

SUPPLEMENTARY INFORMATION: The

purpose of these amendments is to

clarify the Office of Personnel

Management’s (OPM) longstanding

interpretation of the law regarding the

finality of a rating of record given to

reflect the actual work performed during

one appraisal period, which has been

the consistent response to agencies’

inquiries for many years. OPM is

experiencing an increasing number of

inquiries, as agencies develop new

performance management programs to

encourage high performance

organizations, and to conform to the

requirements of the Government

Performance and Results Act. OPM

concurs with the opinion voiced by

several agencies that these policies

should be codified in regulation, in

order to provide this information in a

more uniform and consistent manner.

There are four issues addressed in the

proposed regulations: (1) A prohibition

against an agency unilaterally changing

a rating that has been issued as a final

rating of record to an employee; (2) a

prohibition against an agency going

back to provide a rating of record for a

past appraisal period where none was

given; (3) a prohibition against an

agency issuing an employee an

‘‘assumed’’ rating of record that does not

reflect an appraisal of actual

performance; and (4) a prohibition

against ‘‘carrying over’’ a previous rating

of record to cover more than one

appraisal period.

Retroactive Change to a Rating of

Record

Agencies are most often confronted

with the issue of whether management

has the authority to retroactively change

a rating of record in situations where

information about an employee’s

performance has been discovered long

after the rating was finalized. This

situation generally comes about when

an employee has deliberately kept

information from management and,

therefore, has exhibited conduct that

would warrant adverse action under

part 752, Adverse Actions. Otherwise, if

the information was not deliberately

withheld but went undiscovered at the

time the rating of record was prepared,

an agency should review its appraisal

process and determine if it is designed

to capture adequately all significant

performance information. It is OPM’s

position that only in very rare

circumstances would a rating official be

unaware of significant performance

issues that went undetected at the time

of appraisal due to no fault on the part

of the employee or the rating official.

While no explicit language in the law

states that a rating of record should be

considered final, the prohibition on

retroactively changing a rating can be

derived from the overall construction

and intent of the performance appraisal

statute and regulations, as well as

OPM’s regulations addressing reduction

in force (RIF). The statute at 5 U.S.C.

4302(a)(3) and 5 CFR 430.102(b)(6) of

the regulations require that the results of

performance appraisal must be used as

a basis for appropriate personnel

actions. To allow the retroactive change

of ratings of record would result in

requiring the agency to correct all

records and personnel actions that were

affected by that rating. The most

obvious of these subsequent actions

would involve the review of any pay

changes or monetary awards, which

were based in whole or in part on the

rating of record, to determine whether

the new rating would have resulted in

a different pay or award outcome.

In addition, an agency would be

required to scrutinize any intervening

personnel actions that had been affected

by the original rating of record and that

would need to be corrected due to the

new rating of record. For example, the

regulations that prescribe RIF

procedures implicitly rely on a rating of

record that can be assumed to be final.

Furthermore, agencies generally strive

to avoid the perception that RIF actions

could be manipulated through the

introduction of new ratings of record. If

retroactive changes to final ratings of

record were allowed, agencies would be

compelled to correct any retention

register that uses a changed rating of

record and would once again run the

risk that employees would perceive an

unfairness in using this changed rating

of record, unless the change could be

shown to be a previous miscalculation

or administrative error.

Additionally, the very structure of the

performance appraisal regulations leads

to the logical conclusion that the intent

of the system is to reach a point of

finality when management is held

accountable for issuing a rating of

record that represents an employee’s

performance for the defined time of the

appraisal period. Sections 430.206,

430.207, and 430.208 of title 5 of the

Code of Federal Regulations regulate

and describe the cycle of planning,

monitoring, and issuance of a rating.

Section 430.208(g) states that when an

agency extends the rating cycle, a rating

of record must be prepared as soon as

practicable after the conclusion of the

extension. Section 430.209(e)

establishes a requirement for agencies to

report ratings of record to OPM through

the Central Personnel Data File. Taken

as a whole, the regulatory scheme for

performance appraisal is constructed

around an appraisal period that

concludes with a final rating of record.

As an exception to the general

prohibition regarding retroactively

changing ratings of record, there is a
19412 Federal Register / Vol. 63, No. 75 / Monday, April 20, 1998 / Proposed Rules

relatively limited set of circumstances

where an agency might feel compelled

to change a rating of record long after it

has been presumed to be final. An

administrative error, such as a rating

official who inadvertently ‘‘checks the

wrong box’’ and assigns a summary

rating level that does not correspond to

the element levels that have been

assigned, would certainly be good cause

for an agency’s decision to retroactively

change the overall rating of record.

Information regarding the employee’s

performance during the appraisal period

that provides indisputable proof that the

original rating of record was erroneous,

and which was previously unknown or

unavailable to the agency, could form

the basis for a decision to retroactively

change the rating. This situation

probably would arise most often in

cases where the employee was

evaluated against numerical standards

with objective requirements, and where

the rating official would have had no

subjective input into the evaluation

process.

While OPM believes it was not the

intent of the law governing performance

appraisal to allow for independent

action by management to retroactively

alter a final rating of record, it does

recognize some circumstances where

such a change would be required. These

proposed regulations are designed to be

sufficiently flexible to allow for changes

to ratings of record that occur in the

normal course of communication

between supervisors and employees

close to the original issuance of a rating

of record, as well as changes resulting

from administrative procedures that

provide employees with an avenue to

challenge their ratings of record.

Retroactively Issuing a Rating of

Record Where None Existed

The second issue addressed in the

proposed regulation is the prohibition

against producing a retroactive rating of

record for an appraisal period that has

passed and for which no rating of record

was issued. The statute requires the

periodic appraisal of employees (5

U.S.C. 4302(a)(1)), and the regulations

require that a rating of record be given

to an employee as soon as practicable

after the end of the appraisal period (5

CFR 430.208(a)). When an appraisal

cannot be given at the end of the

appraisal period, the regulations already

provide for extending the appraisal

period until the conditions to complete

a rating of record are met (5 CFR

430.208(g)). A rating of record then is

issued that covers the entire appraisal

period, including the extension. If the

appraisal period was not extended, or if

a rating of record for a later appraisal

period was issued, the agency cannot go

back and ‘‘fill in the blanks’’ at some

future point in time. To permit such a

practice would undermine the basic

concepts of performance appraisal and

severely limit the accuracy of the ratings

produced due to the very passage of

time involved.

Assumed Ratings of Record

The third issue addressed in the

proposed regulation is the prohibition

against issuing to an employee a rating

of record that does not reflect actual

performance, but assumes a level of

performance without evaluation. The

intent of the law is clear; Congress

intended Federal employees to be

evaluated based upon the actual work

they performed during the appraisal

period. Some confusion has arisen over

the years because of the process used to

include the value of performance credit

when agencies are establishing retention

registers in preparation for a reduction

in force. In situations where an

employee did not receive a rating of

record, an agency previously could, for

RIF purposes only, assign the value of

performance credit for that appraisal

period at the Fully Successful level.

Regulations, published in November

1997, changed the procedures for

dealing with missing ratings of record

and changed the reference point for

assigning additional service credit for

performance for employees who have no

rating of record to the value assigned to

the applicable modal rating level in the

competitive area, or some larger agency

population aggregation. These proposed

regulations make no further change to

the reduction in force process. Their

sole purpose is to regulate that an

agency may not issue a bona fide rating

of record to an employee that assumes

some level of performance since

employees are entitled to a rating of

record that reflects their actual level of

performance. This does not impose a

requirement that performance must be

reflected only by means of a narrative

justification. Agencies are free to design

the process and procedures they will

use to evaluate employee performance.

These regulations are intended to ensure

that an evaluation of actual employee

performance is the basis of the rating of

record.

Carrying Over a Rating of Record

Finally, these proposed regulations

would codify the prohibition against

carrying over a previous rating of record

into another appraisal period as a bona

fide rating of record. This is obviously

tied closely to the above requirement

that employees be given a rating of

record that reflects their performance

during a specific appraisal period. This

prohibition does not negate the fact that

an employee may perform at the same

level for several years and, therefore,

appropriately be assigned the same

summary level in the rating of record for

each of those separate appraisal periods.

As noted in 5 U.S.C. 4302 (b) (1) and (2),

agencies are required by law to provide

performance standards to employees at

the beginning of each appraisal period,

and to evaluate the employee ‘‘during

the appraisal period.’’ To allow agencies

to carry over a previous year’s rating of

record without an actual evaluation of

the employee’s performance would

defeat the intent of the law and render

the performance appraisal program of

the agency meaningless. This provision

would not prohibit an agency from

using previous ratings of record as the

basis for personnel actions when a

current rating of record is not available,

provided the recency of the previous

rating of record is reasonable. Such a

feature was used by the Performance

Management and Recognition System

for pay administration purposes, and

also is contained in some of the

demonstration projects, where a past

rating of record, usually not more than

one year old, is used as the basis for a

pay adjustment when a current rating is

not available.

Technical Correction

The Office of Personnel Management

is taking this opportunity to make minor

corrections to citations that were

overlooked when regulations revising

the awards provisions were finalized in

September 1995.

Regulatory Flexibility Act

I certify that these regulations will not

have a significant economic impact on

a substantial number of small entities

because they apply only to Federal

agencies and employees.

List of Subjects

5 CFR Part 430

Decorations, medals, awards,

Government employees.

5 CFR Part 534

Government employees, Hospitals,

Students, Wages.

Office of Personnel Management.

Janice R. Lachance,

Director.

Accordingly, OPM is proposing to

amend parts 430 and 534 of title 5, Code

of Federal Regulations, as follows:
Federal Register / Vol. 63, No. 75 / Monday, April 20, 1998 / Proposed Rules 19413

PART 430—PERFORMANCE

MANAGEMENT

1. The authority citation for part 430

continues to read as follows:

Authority: 5 U.S.C. chapter 43.

2. In § 430.208, paragraphs (a)(1),

(a)(2), (a)(3) and (i) are added; paragraph

(h) is redesignated as paragraph (j) and

a new paragraph (h) is added to read as

follows:

§ 430.208 Rating performance.

(a) * * *

(1) A rating of record shall be based

only on the evaluation of actual job

performance for the designated

appraisal period.

(2) An agency shall not issue a rating

of record that assumes a level of

performance by an employee without an

actual evaluation of that employee’s

performance.

(3) Except as provided in § 430.208(i),

a rating of record is final when it is

issued to an employee with all

appropriate reviews and signatures.

* * * * *

(h) Each rating of record shall cover

a specified appraisal period. Agencies

shall not carry over a rating of record

prepared for a previous appraisal period

to a subsequent appraisal period(s).

(i) When either a regular appraisal

period or an extended appraisal period

ends and a performance plan has been

established for a subsequent appraisal

period with no rating of record issued

for the earlier appraisal period, an

agency shall not produce a rating of

record to cover that period retroactively.

Once issued, ratings of record shall not

be changed retroactively except that a

rating of record may be changed—

(1) Within 60 days of issuance based

upon an informal request by the

employee;

(2) As a result of a grievance,

complaint, or other formal proceeding

permitted by law that results in a final

determination by appropriate authority

that the rating of record must be

changed; or

(3) Where the agency determines that

a rating of record was incorrectly

recorded or calculated.

PART 534—PAY UNDER OTHER

SYSTEMS

3. The authority citation for part 534

continues to read as follows:

Authority: 5 U.S.C. 1104, 5307, 5351, 5352,

5353, 5376, 5383, 5384, 5385, 5541, and

5550a.

4. In § 534.505, paragraph (b) is

revised to read as follows:

§ 534.505 Pay related matters.

* * * * *

(b) Performance awards. Performance

awards may be paid under 5 U.S.C.

chapter 45 and § 451.104(a)(3) of this

chapter.

[FR Doc. 98–10266 Filed 4–17–98; 8:45 am]

BILLING CODE 6325–01–P

FEDERAL LABOR RELATIONS

AUTHORITY

5 CFR Parts 2424 and 2429

Processing of Negotiability Petitions:

Miscellaneous and General

Requirements

AGENCY: Federal Labor Relations

Authority.

ACTION: Notice of proposed rulemaking

with request for comments.

SUMMARY: The Federal Labor Relations

Authority intends to revise its

regulations concerning the processing of

negotiability appeals (part 2424). The

Federal Labor Relations Authority

established a Task Force to study and

evaluate part 2424 of its regulations.

The Task Force proposes to conduct

focus groups to solicit and consider

customers’ views prior to undertaking

these revisions.

DATES: Written comments must be

received on or before May 29, 1998. A

meeting will be held at 10:00 a.m. on

May 12, 1998, in Washington, DC.

ADDRESSES: Mail or deliver written

comments to the Office of Case Control,

Federal Labor Relations Authority, 607

14th Street, NW, Washington, DC

20424–0001. The meeting will be held

at the Federal Labor Relations

Authority, 607 14th Street, NW, Second

Floor Agenda Room, Washington, D.C.

FOR FURTHER INFORMATION CONTACT:

Peter Constantine, Director, Office of

Case Control, at the address listed above

or by telephone: (202) 482–6540.

SUPPLEMENTARY INFORMATION:

1. Background

The Chair and Members of the Federal

Labor Relations Authority (the

Authority) intend to review and, where

appropriate, implement mechanisms to

improve the manner in which

negotiability appeals are processed, and

to revise the regulations governing

review of these appeals. The Authority

has established an internal Task Force

to study this matter.

Part 2424 of chapter XIV of Title 5 of

the Code of Federal Regulations (1997)

contains, among other things, the

current regulations which govern all

matters relating to the processing of

negotiability appeals. Part 2429 contains

general regulatory requirements which

also govern these appeals. The

regulations apply to petitions for review

of negotiability issues that concern

union proposals for bargaining as well

as petitions for review of negotiability

issues that arise from disapprovals of

collective bargaining provisions that

have been agreed on by parties.

In conjunction with its review of the

procedures for processing negotiability

appeals, the Task Force is requesting

oral and/or written comments

concerning issues to be addressed in the

regulatory revisions it is developing. A

focus group meeting has been scheduled

for Tuesday, May 12, 1998, at 10:00 a.m.

in Washington, DC to discuss matters

relevant to the negotiability appeal

process. Persons interested in attending

this meeting on the proposed

rulemaking should call or write the

point of contact listed in the preceding

section to confirm attendance. If

appropriate, other discussions may be

scheduled.

The Task Force will make written

recommendations to the Chair and

Members of the Authority, who will, as

determined appropriate, issue proposed

amendments to the existing

negotiability and miscellaneous

regulations. All agencies, unions, and

interested persons will be afforded an

opportunity to submit further comments

on any proposed specific modifications

to the existing regulations. The Task

Force will conduct additional focus

group meetings after the Authority

proposes its revisions to the existing

regulations.

2. The Federal Service LaborManagement Relations Statute (the

Statute)

Section 7117 of Title 5, United States

Code, empowers the Authority to

consider negotiability appeals under the

conditions prescribed by section 7117(b)

and (c), directs the Authority to

expedite these appeals to the extent

practicable, and instructs the Authority

to issue a written decision at the earliest

practicable date.

The appeal process is set forth in

Section 7117(c) of the Statute. Under

this process, the exclusive

representative may ‘‘institute an appeal’’

by ‘‘filing a petition with the

Authority.’’ 5 U.S.C. 7117(c)(2). Once an

exclusive representative institutes a

negotiability appeal, section

7117(c)(3)(A) and section 7117(c)(4)

provide that an agency involved in a

negotiability dispute ‘‘shall file with the

Authority’’ a statement of position

responding to the petition for review,