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

5491

Vol. 66, No. 13

Friday, January 19, 2001

OFFICE OF PERSONNEL

MANAGEMENT

5 CFR Part 575

RIN 3206–AJ08

Recruitment and Relocation Bonuses

and Retention Allowances

AGENCY: Office of Personnel

Management.

ACTION: Proposed rule with request for

comments.

SUMMARY: The Office of Personnel

Management (OPM) is issuing proposed

regulations to provide agencies with

greater flexibility to use recruitment and

relocation bonuses and retention

allowances. These proposed regulations

would provide agencies with the

flexibility to pay retention allowances to

employees who are likely to leave their

positions for other Federal employment

under certain limited circumstances.

This proposal also would allow agencies

to pay recruitment and relocation

bonuses and retention allowances to

prevailing rate (wage) employees.

DATES: Comments must be received on

or before March 20, 2001.

FOR FURTHER INFORMATION CONTACT:

Jeanne Jacobson, (202) 606–2858; FAX:

(202) 606–0824; email:

payleave@opm.gov.

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: payleave@opm.gov.

SUPPLEMENTARY INFORMATION: The Office

of Personnel Management (OPM) is

proposing to amend the recruitment and

relocation bonus and retention

allowance regulations in 5 CFR part 575,

subparts A, B, and C, to provide

agencies with additional flexibility to

use these incentives. The proposed

regulations would allow agencies to

grant a retention allowance to a current

employee likely to leave for other

Federal employment under certain

limited circumstances. The proposed

regulations also would allow agencies to

pay recruitment and relocation bonuses

and retention allowances to prevailing

rate (wage) employees.

Retention Allowances for Employees

Likely To Leave for Other Federal

Employment

Under current law (5 U.S.C. 5754),

OPM may authorize agencies to grant a

retention allowance to an employee if

the unusually high or unique

qualifications of the employee or a

special need for the employee’s services

makes it essential to retain the

employee, and the agency determines

that the employee would be likely to

leave in the absence of an allowance.

Our regulations initially authorized

agencies to grant retention allowances

only if the employee was likely to leave

the Federal service for employment

outside the executive, legislative, or

judicial branch of the Federal

Government (60 FR 12833, March 28,

1991). Later, we broadened this

authority to provide agencies with the

flexibility to grant retention allowances

to employees who were likely to leave

the Federal service for any reason (60

FR 33323, June 28, 1995). We did not

authorize agencies to pay retention

allowances to employees likely to leave

for other Federal employment because

of concerns about potentially disruptive

and costly bidding wars among Federal

agencies competing for employees with

highly desired skills or competencies.

Agencies have recently requested that

OPM amend its regulations to authorize

retention allowances for employees

likely to leave for other Federal

employment in certain limited

circumstances. We recognize that

agencies may experience significant

staffing problems that hinder their

ability to meet mission objectives when

their employees leave for other Federal

jobs. In some cases, the retention

allowance authority may be the most

effective way to resolve such problems.

However, we must also continue to be

cognizant of the potential costs of

interagency competition.

We propose to amend the regulations

at 5 CFR 575.304(b) to allow agencies to

pay a retention allowance to an

employee likely to leave for other

Federal employment when (1) the other

Federal position is under a different pay

system (with certain exceptions) or (2)

it is essential to retain the employee

during a temporary but critical work

situation. (Agencies would continue to

have authority under § 575.304(b)(1) to

pay retention allowances to employees

who are likely to leave the Federal

service for any reason.)

Section 575.304(b)(2) of the proposed

regulations would authorize an agency

to pay a retention allowance to an

employee likely to leave for another

Federal position that is under a pay

system that is different from the pay

system of the employee’s current

position. The proposed regulations

would prohibit agencies from using this

authority to pay retention allowances to

an employee likely to leave for a

General Schedule (GS), prevailing rate

(wage), senior-level and scientific or

professional (SL/ST), Senior Executive

Service (SES), administrative law judge

(ALJ), Executive Schedule (EX), or

Board of Contract Appeals (BCA)

position when his or her current

position is also under any of these pay

systems. (See proposed § 575.304(d).)

For example, using this new authority

an agency could pay a retention

allowance to a General Schedule

employee likely to leave for a higherpaying position under a pay system

outside of title 5, United States Code, (e.g.,

the Federal Aviation Administration). In

this situation, the recruiting agency may

have independent statutory authority to

offer salaries or other incentives that are

greater than those available under the

General Schedule, making it very

difficult for the employee’s current

agency to compete effectively. We

believe allowing agencies to grant

retention allowances in such situations

will help level the playing field among

agencies with similar staffing needs.

Section 575.304(b)(3) of the proposed

regulations would allow Federal

agencies to grant retention allowances to

an employee likely to leave for other

Federal employment (under the same or

different pay system) during temporary

but critical staffing situations. Private

sector organizations pay ‘‘staying-on’’ or

‘‘retention bonuses’’ to help retain

employees and keep operations running

smoothly during ‘‘crisis’’ situations,

such as mergers, acquisitions, and plant

closings. We believe it would be

reasonable to allow Federal agencies to

use the retention allowance authority on

5492 Federal Register / Vol. 66, No. 13 / Friday, January 19, 2001 / Proposed Rules

a temporary basis to help retain

experienced employees who otherwise

would be likely to leave during similar

critical periods.

For example, an agency may need to

retain an employee until the completion

of a project critical to the mission of the

agency or during the closure of a facility

or office or the relocation of an office or

facility to a different commuting area.

Such employees may be likely to leave

for other Federal employment if, for

example, the agency has announced that

it will eliminate or substantially change

the duties of the employee’s position as

a result of the critical situation or upon

completion of the important project or

if the office relocation will compel the

employee to change his or her residence

to continue employment. A retention

allowance may help entice an employee

to stay through the temporary but

critical work period.

To help ensure that agencies use this

new authority only for temporary

staffing difficulties, § 575.307(b) would

limit payment of retention allowances to

an employee working on a critical

project to a period of no longer than 1

year. On a case-by-case basis, the head

of an agency may ask OPM to extend

this time limit. The proposed

regulations would allow an agency to

pay retention allowances to an

employee likely to leave for other

Federal employment prior to an office

closure or relocation as long as the

agency continues to have an essential

need for the employee’s services.

When authorizing a retention

allowance for an employee likely to

leave for other Federal employment

under § 575.304(b)(2) and (3), the

proposed regulations would require

agencies to follow the payment criteria

and documentation provisions currently

prescribed in § 575.305(c). In addition,

before approving a retention allowance

for an employee who is likely to leave

during a critical work period,

§ 575.305(c)(2) of the proposed

regulations would require the agency to

determine how the employee’s

departure would affect its ability to

function effectively during the critical

period.

The proposed regulations at

§ 575.305(c)(3)(iii) also would require

agencies to consider other relevant

factors when authorizing a retention

allowance and determining the amount

for an employee who is likely to leave

for other Federal employment. These

factors may include the likelihood of

attracting candidates to fill the

employee’s position if the agency has

announced that it will relocate the

position, the cost and time required to

hire and train a new employee to

complete a critical project, or the

salaries typically paid by another

Federal agency.

To help avoid unwarranted and

possibly costly interagency competition,

§ 575.305(c)(4) of the proposed

regulations also would require agencies

to consider the use of non-pay

alternatives to help resolve staffing

problems before paying a retention

allowance to an employee likely to leave

for another Federal position. Such nonpay alternatives may include alternative

recruitment strategies; use of temporary

or term appointments or appointments

with varying work schedules, such as

part-time, intermittent, and seasonal

schedules; employment of experts and

consultants; alternative work schedules

(i.e., flexible or compressed work

schedules), job sharing, and

telecommuting arrangements; paying or

sharing the cost of employee training

and higher education; or redesigning

jobs so that a larger pool of candidates

may qualify for a position or to make a

job more appealing to candidates by

adding desirable duties or eliminating

undesirable duties.

All other conditions and requirements

for paying a retention allowance under

5 CFR part 575, subpart C, would

continue to apply to employees who

receive an allowance on the basis of

being likely to leave for other Federal

employment. For example, §§ 575.306(c)

and 575.307(b) would require agencies

to reduce or terminate a retention

allowance paid to an employee likely to

leave for other Federal employment

when the conditions giving rise to the

original determination to pay the

allowance have changed. In addition,

under § 575.307(d)(4), an agency could

authorize a retention allowance of up to

10 percent (or up to 25 percent with

OPM approval) of an employee’s rate of

basic pay for a group or category of

employees likely to leave for other

Federal employment. (In response to

agency inquiries, the proposed

regulations at § 575.305(c)(1) clarify

that, when the group retention

allowance authority is not used,

agencies must make likely-to-leave

determinations (for any reason,

including for other Federal

employment) only on an individual,

case-by-case basis.)

Recruitment, Relocation, and Retention

Payments for Prevailing Rate (Wage)

Employees

Sections 5753(e) and 5754(e) of title 5,

United States Code, permit the

President to authorize the application of

recruitment, relocation, and retention

payments to one or more categories of

employees in an agency who would not

otherwise be covered by these

provisions of law upon the request of

the head of the agency. Under section 6

of Executive Order 12748 of February 1,

1991, the President delegated this

authority to the Director of OPM. In

response to an agency request, these

proposed regulations would provide

agencies with discretionary authority to

pay recruitment and relocation bonuses

and retention allowances to an

employee in a prevailing rate (wage)

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

5342(a)(3). This would include Federal

Wage System or ‘‘wage grade’’

employees. Under the proposed

regulations, the same payment criteria,

procedures, and documentation

requirements that apply to other

covered groups of employees also would

apply to wage employees.

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 575

Government employees, Wages.

U.S. Office of Personnel Management.

Janice R. Lachance,

Director.

Accordingly, OPM is proposing to

amend part 575 of title 5, Code of

Federal Regulations, as follows:

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

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

and 1466, respectively; E.O. 12748, 3 CFR,

1992 Comp., p. 316.

Subpart A—Recruitment Bonuses

2. In § 575.102, paragraph (a)(5) is

amended by removing ‘‘or’’; paragraph

(a)(6) is amended by removing ‘‘.’’ and

inserting in its place ‘‘; or’’; and a new

paragraph (a)(7) is added to read as

follows:

§ 575.102 Delegation of authority.

(a) * * *

Federal Register / Vol. 66, No. 13 / Friday, January 19, 2001 / Proposed Rules 5493

(7) A prevailing rate position, as

defined in 5 U.S.C. 5342(a)(3).

* * * * *

Subpart B—Relocation Bonuses

3. In § 575.202, paragraph (a)(5) is

amended by removing ‘‘or’’; paragraph

(a)(6) is amended by removing ‘‘.’’ and

inserting in its place ‘‘; or’’; and a new

paragraph (a)(7) is added to read as

follows:

§ 575.202 Delegation of authority.

(a) * * *

(7) A prevailing rate position, as

defined in 5 U.S.C. 5342(a)(3).

* * * * *

Subpart C—Retention Allowances

4. In § 575.302, paragraph (a)(5) is

amended by removing ‘‘or’’; paragraph

(a)(6) is amended by removing ‘‘.’’ and

inserting in its place ‘‘; or’’; and

paragraph (a)(7) is added to read as

follows:

§ 575.302 Delegation of authority.

(a) * * *

(7) A prevailing rate position, as

defined in 5 U.S.C. 5342(a)(3).

* * * * *

5. In § 575.303, the definition of

commuting area is added in

alphabetical order to read as follows:

§ 575.303 Definitions.

* * * * *

Commuting area has the meaning

given that term in § 575.203.

* * * * *

6. In § 575.304, paragraph (d) is

redesignated as paragraph (e),

paragraphs (b) and (c) are revised, and

a new paragraph (d) is added, to read as

follows:

§ 575.304 Conditions for payment.

* * * * *

(b) An agency may consider an

employee likely to leave if he or she is— (1) Likely to leave the Federal service

for any reason; (2) Likely to leave his or her position

for another Federal position under a

different pay system (except as provided

in paragraph (c) of this section); or (3) Likely to leave his or her position

for a position under the same or

different Federal pay system prior to the

closure of the employee’s office or

facility; relocation of the employee’s

office or facility to a different

commuting area; or the completion of a

project critical to the mission of an

agency. (c) An agency may not pay a retention

allowance under paragraph (b)(2) of this

section to an employee likely to leave

for a General Schedule, prevailing rate

(wage), senior-level and scientific or

professional, Senior Executive Service,

administrative law judge, Executive

Schedule, or Board of Contract Appeals

position when his or her current

position is also under any of these pay

systems. (d) An agency may not pay a retention

allowance to an employee who is likely

to leave his or her position for another

Federal position other than under the

conditions described in paragraphs

(b)(2) and (3) of this section.

* * * * *

7. In § 575.305, paragraphs (a)(2)(iii),

(c), and (d)(1)(i) are revised to read as

follows:

§ 575.305 Agency retention allowance

plans; higher level review and approval;

and criteria for payment.

(a) * * *

(2) * * *

(iii) Procedures for paying allowances;

and

* * * * *

(c) Criteria for payment. (1) An agency

must base each allowance paid under

this subpart on a written determination

that 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 that, in the

absence of such an allowance, the

employee would be likely to leave

under one of the conditions specified in

§ 575.304(b). Except when using the

group retention allowance authority

under paragraph (d) of this section, an

agency must make the determination

that an employee is likely to leave on an

individual, case-by-case basis. (2) An agency must base the

determination required by paragraph

(c)(1) of this section on a written

description of the extent to which the

employee’s departure would affect the

agency’s ability to carry out an activity

or perform a function that the agency

deems essential to its mission or to

operate effectively during a critical

period. (3) An agency must consider the

following factors, as applicable in the

case at hand, in determining whether to

pay a retention allowance and the

amount of any such payment: (i) The success of recent efforts to

recruit candidates and retain employees

with qualifications similar to those

possessed by the employee for positions

similar to the position held by the

employee; (ii) The availability in the labor

market of candidates for employment

who, with minimal training or

disruption of service to the public,

could perform the full range of duties

and responsibilities of the employee’s

position; or

(iii) Other supporting factors, such as

the likelihood of attracting candidates to

fill the employee’s position if the agency

has announced that it will soon relocate

the position, the cost and time required

to hire and train a new employee to

complete a critical, time-sensitive

project, or the salaries typically paid by

another Federal agency.

(4) For an employee likely to leave for

other Federal employment under the

conditions described in § 575.304(b)(2)

and (3), the agency must consider the

use of non-pay solutions to help retain

the employee before authorizing a

retention allowance. Such solutions

may include conducting an aggressive

recruiting program, using alternative

appointing authorities, redesigning jobs,

establishing training programs,

implementing alternative work

schedules, or improving working

conditions.

(d) * * *

(1)(i) 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 to which OPM has

delegated authority to approve retention

allowances to agency heads under

§ 575.302(c)). An agency must

determine in writing that the category of

employees has unusually high or unique

qualifications, or that the agency has a

special need for the employees’ services

that makes it essential to retain the

employees in that category. The agency

must also determine in writing 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 under one of the

conditions specified in § 575.304(b) in

the absence of an allowance.

* * * * *

8. In § 575.306, paragraph (c) is

revised to read as follows:

§ 575.306 Payment of retention allowance.

* * * * *

(c) An agency may continue paying a

retention allowance as long as the

conditions giving rise to the original

determination to pay the allowance still

exist, except as provided in § 575.307(a)

and (b). However, at least annually, the

agency must review each determination

to pay an allowance to determine

whether payment is still warranted. The

agency approving official must certify

this determination in writing.

* * * * *

9. In § 575.307, paragraphs (b) and (c)

are redesignated as paragraphs (c) and

5494 Federal Register / Vol. 66, No. 13 / Friday, January 19, 2001 / Proposed Rules

(d), respectively, and a new paragraph

(b) is added to read as follows:

§ 575.307 Reduction or termination of

retention allowance.

* * * * *

(b) An agency must terminate a

retention allowance paid to an

employee (or group of employees) under

§ 575.304(b)(3) (for work on a project

critical to the mission of the agency) not

later than 1 year after the initial

allowance payment. On a case-by-case

basis, the head of an agency may ask

OPM to extend this time limit.

* * * * *

[FR Doc. 01–1486 Filed 1–18–01; 8:45 am]

BILLING CODE 6325–01–P

SOCIAL SECURITY ADMINISTRATION

20 CFR Parts 404, 416, and 422

[Regulations Nos. 4 and 16]

RIN 0960–AF44

New Disability Claims Process

AGENCY: Social Security Administration

(SSA).

ACTION: Notice of proposed rulemaking.

SUMMARY: We are proposing to revise

our regulations that pertain to the

processing of initial claims for disability

benefits under title II (Social Security

Disability Insurance) and title XVI

(Supplemental Security Income) of the

Social Security Act (the Act). The

proposed rules would incorporate

modifications to our administrative

review process and disability

determination procedures based on

testing that we are conducting. The

changes, which would apply to initial

applications for disability benefits,

would:

• First, permit disability examiners in

our State agencies the flexibility to

decide whether input from a medical or

psychological consultant is needed to

make a disability determination, so that

our State agencies may use the expertise

of the disability examiners and medical

and psychological consultants more

effectively;

• Second, provide claimants with an

opportunity for an informal disability

conference with the adjudicators of their

claims at the initial level in cases in

which it appears that the evidence does

not support a fully favorable

determination; and

• Third, eliminate the reconsideration

step of the administrative review

process.

We plan to phase in these changes

over a period of 1 year until they apply

in every State.

DATES: To be sure that your comments

are considered, we must receive them

no later than March 20, 2001.

ADDRESSES: Comments should be

submitted to the Commissioner of Social

Security, P.O. Box 17703, Baltimore,

Maryland 21235–7703; sent by telefax to

(410) 966–2830; sent by e-mail to

regulations@ssa.gov; or delivered to the

Office of Process and Innovation

Management, Social Security

Administration, L2109 West Low Rise

Building, 6401 Security Boulevard,

Baltimore, MD 21235–6401, between

8:00 a.m. and 4:30 p.m. on regular

business days. During these same hours,

you may inspect the comments that we

receive by making arrangements with

the contact person shown below.

FOR FURTHER INFORMATION CONTACT:

Georgia E. Myers, Regulations Officer,

Office of Process and Innovation

Management, L2109 West Low Rise

Building, 6401 Security Boulevard,

Baltimore, MD 21235–6401, (410) 965–

3632 or TTY (410) 966–5609, for

information about this notice. For

information on eligibility or claiming

benefits, call our national toll-free

number, 1–800–772–1213 or TTY 1–

800–325–0778, or visit our Internet web

site, Social Security Online, at

www.ssa.gov.

SUPPLEMENTARY INFORMATION:

In Brief, What Are We Proposing To

Do?

We are proposing to change our rules

in three ways:

1. We are proposing to change our

rules for how State agencies make

disability determinations for us. The

change would allow State agency

adjudicators, called ‘‘disability

examiners,’’ to decide whether input

from a medical or psychological

consultant is needed to make a

disability determination. The medical or

psychological consultant would not be

responsible for the determination; i.e.,

would not be an adjudicator of the

claim.

2. We are proposing to add rules

providing that disability examiners will

offer claimants an opportunity for an

informal conference whenever it

appears that the evidence does not

support a fully favorable determination.

3. We are proposing to eliminate the

reconsideration step of our

administrative review process.

On August 30, 1999, we published a

notice in the Federal Register

announcing a ‘‘prototype’’ involving

these three major modifications to our

disability determination process for

initial applications under titles II and

XVI of the Act. (See 64 FR 47218.) In the

notice, we stated that, before proceeding

to national implementation, we

expected that the prototype would

provide a body of information about the

impact of these modifications on agency

operations, notice and other procedures,

and the quality and timeliness of our

determinations and decisions. Although

the prototype is continuing and we

continue to gather information and gain

operational experience, we believe that

we now have sufficient information to

propose changes to our regulations.

Public comments received on these

proposed changes will assist us in finetuning these changes.

Because we now know that

implementation of the process in each

State agency requires support during the

period of transition, we are considering

a plan by which we would implement

the process in groups of State agencies

until all States use the new process. Our

projected completion date will be in

2003. We explain our current plan in

more detail later in this preamble, and

invite public comment.

What Is the Current Process?

Sections 404.1503 and 416.903 of our

regulations provide that State agencies

make disability and blindness

determinations, following rules that we

provide. Sections 404.1615(c) and

416.1015(c) of our regulations provide

with respect to initial disability claims

that, in most cases, these disability

determinations must be made by a State

agency medical or psychological

consultant and a State agency disability

examiner, a lay adjudicator with

expertise in evaluating disability. The

medical or psychological consultant and

the disability examiner work together as

a team and are jointly responsible for

the determination. Under current rules,

a disability examiner alone may make a

determination only in the very unusual

circumstance in which:

• There is no medical evidence to be

evaluated (i.e., no medical evidence

exists or we are unable, despite making

every reasonable effort, to obtain any

medical evidence that may exist); and

• The individual fails or refuses,

without good reason, to attend a

consultative examination.

State agency determinations in initial

claims are generally based on review of

the written information in a claimant’s

case record. Although our procedures

permit disability examiners and medical

and psychological consultants to speak

to claimants to obtain more information,

there are no formal requirements for

such contact. Also, we have no

procedures requiring a State agency

adjudicator to explain and discuss our

disability standards with claimants or to