This section of the FEDERAL REGISTER

contains regulatory documents having general

applicability and legal effect, most of which

are keyed to and codified in the Code of

Federal Regulations, which is published under

50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by

the Superintendent of Documents. Prices of

new books are listed in the first FEDERAL

REGISTER issue of each week.

Rules and Regulations Federal Register

34119

Vol. 63, No. 120

Tuesday, June 23, 1998

OFFICE OF PERSONNEL

MANAGEMENT

5 CFR Part 575

RIN 3206–AI31

Retention Allowances

AGENCY: Office of Personnel

Management.

ACTION: Interim rule with request for

comments.

SUMMARY: The Office of Personnel

Management (OPM) is issuing interim

regulations to provide agencies with

discretionary authority to pay retention

allowances of up to 10 percent of an

employee’s rate of basic pay (or up to 25

percent with OPM approval) to a group

or category of employees in certain

limited circumstances. This change is

being made to address the desire of

some agencies to waive the case-by-case

determination requirement contained in

current regulations in order to expedite

the authorization of retention

allowances for certain information

technology employees. This change will

have the effect of providing agencies

with greater flexibility in responding to

a possible increased need for retention

incentives for computer programmers

who must make the computer system

changes needed to meet the year 2000

conversion requirements.

DATES: June 23, 1998. Comments must

be received on or before August 24,

1998.

ADDRESSES: Comments may be sent or

delivered to Donald J. Winstead,

Assistant Director for Compensation

Administration, Workforce

Compensation and Performance Service,

Office of Personnel Management, Room

7H31, 1900 E Street NW., Washington,

DC 20415; FAX: (202) 606–0824; or

email to payleave@opm.gov.

FOR FURTHER INFORMATION CONTACT: Paul

Shields, (202) 606–2858; FAX: (202)

606–0824; or email to

payleave@opm.gov.

SUPPLEMENTARY INFORMATION: The

regulatory change set forth below is

necessary to provide agencies with

discretionary authority to pay retention

allowances of up to 10 percent of an

employee’s rate of basic pay (up to 25

percent with Office of Personnel

Management approval) to a group or

category of employees (excluding

members of the Senior Executive

Service (SES), employees in senior-level

or scientific or professional (SL/ST)

positions, Executive Schedule officials,

and Presidential appointees).

The current retention allowance

authority in 5 U.S.C. 5754 and 5 CFR

part 575, subpart C, provides agencies

with discretionary authority to pay a

retention allowance of up to 25 percent

of basic pay to an employee based on a

determination that (1) the unusually

high or unique qualifications of the

employee or a special need of the

agency for the employee’s services

makes it essential to retain the

employee, and (2) the employee would

be likely to leave Federal service

without the allowance. It is the intent of

the current retention allowance

regulations that the determination that

an employee is likely to leave the

Federal service must be made on a caseby-case basis.

Recently, some agencies have

expressed a desire to waive the case-bycase determination requirement in order

to expedite the authorization of

retention allowances for certain

information technology employees.

Specifically, agencies have indicated an

increased need for recruitment and

retention incentives for computer

programmers and other employees who

must make the required computer

system changes to meet the year 2000

conversion requirements. Agencies

believe it is essential to retain

employees with programming and other

information technology skills to meet

the year 2000 conversion goals because

some of the system changes are critical

to agency missions. Some of these

employees also have unique knowledge

and skills in special programming

languages or antiquated computer

systems that are often necessary for

making year 2000 modifications.

Agencies believe employees with such

programming skills are likely to leave

Federal service for Government

contractor or other private sector jobs

with similar programming needs.

Currently, the compensation tool that

is primarily used for resolving

recruitment and retention problems for

categories or groups of employees is the

special salary rate authority under 5

U.S.C. 5305 and 5 CFR part 530, subpart

B. However, special salary rates may not

always be the most appropriate option

for resolving temporary or immediate

staffing needs such as the year 2000

conversion projects. For example,

special rate schedules can be expensive

and difficult to terminate when no

longer needed because they are basic

pay for all purposes. Higher rates of

basic pay increase the cost of retirement,

life insurance, premium pay, and

certain other entitlements and have a

continuing effect on the employee’s

future pay entitlements (for example,

upon promotion).

Also, under current law, if a special

rate schedule is terminated, each

employee’s special pay rate must be set

at an equivalent rate in the basic

General Schedule rate range for the

employee’s grade, or, if the rate exceeds

the maximum rate for that grade, the

employee becomes entitled to pay

retention under 5 U.S.C. 5363. In both

cases, the employee’s pay rate would be

increased by locality pay, providing an

unnecessary windfall pay increase.

Establishing special rate schedules with

such long-term pay implications for

temporary staffing needs can be very

costly to agencies.

These interim regulations amend 5

CFR 575.305 by adding a new paragraph

(d) to provide agencies with authority to

authorize retention allowances of up to

10 percent of an employee’s rate of basic

pay for a group or category employees

in certain limited circumstances. This

authority does not apply to employees

in senior-level and scientific or

professional (SL/ST) positions, members

of the Senior Executive Service,

Executive Schedule officials,

Presidential appointees, or those in

similar positions with respect to which

the authority to approve retention

allowances has been delegated to agency

heads by OPM under section 575.302(c).

For employees in these categories,

retention allowances must continue to

be approved on a case-by-case basis.

Retention allowances authorized for a

category of employees must be based on

a written determination that the
34120 Federal Register / Vol. 63, No. 120 /Tuesday, June 23, 1998 /Rules and Regulations

employees have unusually high or

unique qualifications or the agency has

a special need for the employees’

services that makes it essential to retain

the employees in that category and that

it is reasonable to presume that there is

a high risk that a significant number of

employees in the targeted category are

likely to leave Federal service in the

absence of the allowance. The

determination that there is a high risk

that a significant number of employees

in the targeted category are likely to

leave may be based on evidence of

extreme labor market conditions, high

demand in the private sector for the

employees’ knowledge and skills,

significant disparities between Federal

and private sector salaries, or other

similar conditions. All other criteria and

requirements for payment under 5 CFR

part 575, subpart C, must be met before

an agency may pay a retention

allowance to an individual employee in

the targeted category.

The new paragraph (d) also authorizes

OPM to approve retention allowances in

excess of 10 percent, but not to exceed

25 percent, of an employee’s rate of

basic pay for a category of employees

upon the request of the head of an

agency. (The regulations continue to

provide agencies with authority to pay

retention allowances of up to 25 percent

of basic pay to employees on a case-bycase basis without OPM approval.) Such

group retention allowance requests must

include a description of the category

and number of employees to be covered

by the proposed retention allowance, a

written determination that the group or

category of employees meets the criteria

for payment of an allowance to a group

or category of employees, the proposed

percentage retention allowance payment

and a justification for that percentage,

the expected duration of retention

allowance payments, and any other

information pertinent to the case at

hand. OPM may require that requests be

coordinated with other agencies having

employees in the same category. This

will ensure a level playing field among

agencies with similar staffing needs and

help avoid the escalation of payroll

costs driven primarily by interagency

competition for employees.

Agencies should be as specific as

possible when identifying and defining

the targeted category of employees for

which a retention allowance is

authorized. The employee category

should be narrowly defined by a

combination of factors such as

occupational series, grade level, duties

performed and unique qualifications

required, organization or team

designation, geographic location, the

specific project the group is working on

or service the group is providing, and

the level of performance required. (Note

that, while an employee’s performance

level may be one of the supporting

factors that is considered in deciding

whether to pay a retention allowance

and in setting the allowance rate, it

should not be the primary determining

factor.)

The interim regulations will provide

the retention allowance authority as an

alternative to the special salary rate

authority for resolving recruitment and

retention problems related to the year

2000 conversion project and other

agency staffing needs on a categorical

basis. Retention allowances are more

flexible and cost effective than special

rates. For example, in the case of

allowances approved for individual

employees or groups of employees,

agencies may vary the size of retention

allowance payments based on such

factors as the severity of the turnover

problem and labor market conditions in

a geographic area, the criticality of the

particular project, the percentage of time

the employee(s) must devote to a

project, and special qualifications of the

individual employee or group of

employees.

Also, retention allowances are more

suited for temporary staffing needs

because agencies can reduce or

terminate retention allowances at any

time at no cost. Agencies may reduce or

terminate an allowance if a lesser

amount or none at all would be

sufficient to retain an employee (or

group of employees in the case of groupbased allowances), if labor market

conditions make it more likely to recruit

candidates with needed qualifications,

if the need for the services of the

employee(s) has been reduced, or if

budgetary considerations make it

difficult to continue paying the

allowance. Because retention

allowances are not basic pay, reduction

or termination of an allowance is not an

adverse action under chapter 75 of title

5, United States Code.

Agencies should be aware that

providing additional compensation is

not the only, nor always the best, way

to resolve recruitment and retention

problems. Agencies should carefully

analyze their staffing needs and

employee work situations and explore

non-pay human resources management

alternatives, as well. For example,

agencies should, as appropriate,

investigate alternative recruitment

strategies, use of temporary or term

appointments, employment of experts

and consultants, and appointments with

varying work schedules, such as parttime, intermittent, and seasonal

schedules. Agencies may redesign jobs

so that a pool of candidates may more

easily qualify for a position or to make

a job more appealing to candidates by

adding desirable duties or eliminating

undesirable duties.

Other flexibilities include establishing

alternative work schedules (i.e., flexible

or compressed work schedules) and job

sharing and telecommuting programs for

employees. As appropriate, agencies

may also pay or share the cost of

employee training and higher education.

Finally, agencies should ensure that the

employee’s work environment is safe

and conducive to enhanced

performance and retention. For

example, modern equipment and a

comfortable work space may be more of

a retention incentive than additional

compensation. Agencies should weigh

the advantages and disadvantages of

each of these and the many other human

resources management flexibilities to

ensure that the most responsive and cost

effective staffing strategy is

implemented.

Waiver of Notice of Proposed Rule

Making and Delay in Effective Date

Pursuant to 5 U.S.C. 553(b)(3)(B), I

find that good cause exists for waiving

the general notice of proposed

rulemaking. Also, pursuant to 5 U.S.C.

553(d)(3), I find that good cause exists

to make this rule effective in less than

30 days. This regulation is needed to

provide agencies with an alternative

compensation tool to meet their staffing

needs in time to successfully meet year

2000 computer system conversion

requirements.

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 this regulation will not

have a significant economic impact on

a substantial number of small entities

because it will apply only to Federal

agencies and employees.

List of Subjects in 5 CFR Part 575

Government employees, Wages.

Office of Personnel Management.

Janice R. Lachance,

Director.

Accordingly, OPM is amending part

575 of title 5 of the Code of Federal

Regulations as follows:
Federal Register / Vol. 63, No. 120 /Tuesday, June 23, 1998 /Rules and Regulations 34121

PART 575—RECRUITMENT AND

RELOCATION BONUSES; RETENTION

ALLOWANCES; SUPERVISORY

DIFFERENTIALS

1. The authority citation for part 575

continues to read as follows:

Authority: 5 U.S.C. 1104(a)(2), 5753, 5754,

and 5755; secs. 302 and 404 of the Federal

Employees Pay Comparability Act of 1990

(Pub. L. 101–509), 104 Stat. 1462 and 1466,

respectively; E.O. 12748, 3 CFR, 1992 Comp.,

p. 316.

Subpart C—Retention Allowances

2. Section 575.305 is amended by

adding paragraph (d) to read as follows:

§ 575.305 Agency retention allowance

plans; higher level review and approval;

and criteria for payment.

* * * * *

(d) Approval of retention allowances

for groups or categories of employees.

(1) An agency may authorize a retention

allowance of up to 10 percent of an

employee’s rate of basic pay for a group

or category of employees (excluding

individuals covered by § 575.302(a) (2),

(3), (5), or (6) or those in similar

positions with respect to which the

authority to approve retention

allowances has been delegated to agency

heads by OPM under § 575.302(c)) based

on a written determination that the

category of employees has unusually

high or unique qualifications, or the

agency has a special need for the

employees’ services that makes it

essential to retain the employees in that

category, and that it is reasonable to

presume that there is a high risk that a

significant number of employees in the

targeted category are likely to leave

Federal service in the absence of the

allowance. The determination that there

is a high risk that a significant number

of employees in the targeted category

are likely to leave may be based on

evidence of extreme labor market

conditions, high demand in the private

sector for the knowledge and skills

possessed by the employees, significant

disparities between Federal and private

sector salaries, or other similar

conditions.

(2) Upon the request of the head of an

agency, OPM may approve a retention

allowance in excess of 10 percent, but

not in excess of 25 percent, of an

employee’s rate of basic pay for a group

or category of employees that meets the

criteria specified in paragraph (d)(1) of

this section. OPM may require that such

requests be coordinated with other

agencies having similarly situated

employees in the same category. Group

retention allowance requests must

include—

(i) A description of the group or

category and number of employees to be

covered by the proposed retention

allowance;

(ii) A written determination that the

group or category of employees meets

the criteria specified in paragraph (d)(1)

of this section;

(iii) The proposed percentage

retention allowance payment and a

justification for that percentage;

(iv) The expected duration of

retention allowance payments; and

(v) Any other information pertinent to

the case at hand.

(3) All other criteria and requirements

for payment under this subpart must be

met before a retention allowance may be

paid to any individual employee under

this paragraph (d).

[FR Doc. 98–16667 Filed 6–22–98; 8:45 am]

BILLING CODE 6325–01–P

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 25

[Docket No. NM149, Special Conditions No.

25–138–SC]

Special Conditions: McDonnell

Douglas DC–9–81,–82 Airplanes; High

Intensity Radiated Fields (HIRF)

AGENCY: Federal Aviation

Administration (FAA), DOT.

ACTION: Final special conditions; request

for comments.

SUMMARY: These special conditions are

issued for McDonnell Douglas DC–9–81,

–82 airplanes modified by Midwest

Express Airlines. These airplanes will

have novel and unusual design features

when compared to the state of

technology envisioned in the

airworthiness standards for transport

category airplanes. These special

conditions contain the additional safety

standards that the Administrator

considers necessary to establish a level

of safety equivalent to that provided by

the existing airworthiness standards.

DATES: The effective date of these

special conditions is June 11, 1998.

Comments must be received on or

before August 7, 1998.

ADDRESSES: Comments on these special

conditions may be mailed in duplicate

to: Federal Aviation Administration,

Office of the Assistant Chief Counsel,

Attn: Rules Docket (ANM–7), Docket

No. NM149, 1601 Lind Avenue SW.,

Renton, Washington, 98055–4056; or

delivered in duplicate to the Office of

the Assistant Chief Counsel at the above

address. Comments must be marked:

Docket No. NM149. Comments may be

inspected in the Rules Docket

weekdays, except Federal holidays,

between 7:30 a.m. and 4:00 p.m.

FOR FURTHER INFORMATION CONTACT:

Connie Beeane, FAA, Standardization

Branch, ANM–113, Transport Airplane

Directorate, Aircraft Certification

Service, 1601 Lind Avenue SW.,

Renton, Washington, 98055–4056;

telephone (425) 227–2799; facsimile

(425) 227–2796.

SUPPLEMENTARY INFORMATION:

Comments Invited

The FAA has determined that good

cause exists for making these special

conditions effective upon issuance;

however, interested persons are invited

to submit such written data, views, or

arguments as they may desire.

Communications should identify the

docket and special conditions number

and be submitted in duplicate to the

address specified above. All

communications received on or before

the closing date for comments will be

considered by the Administrator. These

special conditions may be changed in

light of the comments received. All

comments submitted will be available in

the Rules Docket for examination by

interested persons, both before and after

the closing date for comments. A report

summarizing each substantive public

contact with FAA personnel concerning

this rulemaking will be filed in the

docket. Persons wishing the FAA to

acknowledge receipt of their comments

submitted in response to this request

must submit with those comments a

self-addressed, stamped postcard on

which the following statement is made:

‘‘Comments to Docket No. NM149.’’ The

postcard will be date stamped and

returned to the commenter.

Background

On March 12, 1998, Midwest Express

Airlines applied for a supplemental type

certificate (STC) to modify McDonnell

Douglas DC–9–81, –82 airplanes listed

on Type Certificate A6WE. The

modification incorporates the

installation of electronic flight

instrument system (EFIS) for display of

critical flight parameters (altitude,

airspeed, and attitude) to the crew.

These displays can be susceptible to

disruption to both command/response

signals as a result of electrical and

magnetic interference. This disruption

of signals could result in loss of all

critical flight displays and

annunciations or present misleading

information to the pilot.