PAY SETTING

1
PAY SETTING

• Training Management Branch

2
OBJECTIVES

• Without references participants will
• Identify the legal and regulatory references for
  setting pay
• Define key pay setting terms
• Apply basic pay setting rules to appointment and
  placement actions, including grade retention
• Understand impact of local pay policy when
  setting pay

3
Legal and Regulatory Base for Pay Setting

• Title 5, U.S. Code
• Chapter 53 - Pay Rates and Systems
• GS and FWS Pay Systems
• Locality Pay
• Grade and Pay Retention
• SES Pay
• Chapter 55 - Pay Administration
• Pay periods/computation
• Premium Pay
• Severance Pay

4
Legal and Regulatory Base, cont.

• Code of Federal Regulations (5 CFR)
• Key Parts
• 530 - Special Salary Rates
• 531 - Basic Pay, WGI, Locality Pay
• 532 - Federal Wage System (FWS)
• 536 - Grade and Pay Retention
• 550 - Pay Administration

5
Legal and Regulatory Base, cont.

• 5 CFR, Key Parts, cont
• 551 - Fair Labor Standards Act (FLSA)
• 553 Reemployment of civilian and military
  annuitants
• 572 - Travel for New Appointees Interviews
• 575 - Recruitment/Retention/Relocation Incentive
• 591 Allowances and Differentials
• 595 - Physicians Comparability Allowances

6
Legal and Regulatory Base, cont.

• Other Regulations
• OPM Operating Manual for Federal Wage System
• AR 690-990-2
• DOD PPP Operations Manual
• Local Pay Setting Policy
• OPM/Comptroller General Decisions

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PAY PLANS/SCHEDULES

• General Schedule (GS) - pa
• GS - 1 through 15 (10 steps)
• Established by Congress
• Federal Wage System (FWS) - ph
• WG - 1 through 15 (5 steps)
• WS - 1 through 18 (5 steps)
• Determined by locality wage surveys
• NSPS variety of schedules
• YA, YB, YC, YD, YE
• Established by SECDEF

8
KEY TERMS DEFINITIONS

• Existing Rate of Pay
• Rate received immediately before effective date
  of personnel action (or revision of a wage
  schedule for FWS)

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KEY TERMS DEFINITIONS, cont

• Geographic Conversion
• Process of placing current grade and step of
  employees position of record to the same grade
  and step on the new pay table in the new duty
  location
• Apply as if the employee was already employed at
  the new location
• Used only when the official worksite changes
• GS rate (underlying)
• General schedule rate without locality or other
  supplement

10
KEY TERMS DEFINITIONS, cont

• Highest Applicable Rate Range
• Rate range that provides the highest rate of
  basic pay for a GS employee, excluding any
  retained rates
• Highest Previous Rate (HPR)
• Highest rate of basic pay previously paid to a
  person while employed by the federal government

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KEY TERMS DEFINITIONS, cont

• Hybrid Range
• Terminology used when Special Salary Rates do not
  cover all 10 steps for a particular grade

Clerical Employees in the Washington, D.C. Area
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KEY TERMS DEFINITIONS, cont.

• Law Enforcement Officer (LEO)
• 1811 Criminal Investigator
• Maximum Payable Rate (MPR)
• Highest rate of pay to which an employee is
  entitled based on his/her highest previous rate

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KEY TERMS DEFINITIONS, cont.

• Official Worksite/Duty Station
• Location of an employees position of record
• If employee is covered by a telework agreement
• Is scheduled to report at least one day a week to
  the regular worksite the worksite is the duty
  station
• Has a variable worksite the site is determined
  on a case-by-case basis

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KEY TERMS DEFINITIONS, cont.

• Rate of Basic Pay (GS)
• Fixed by law
• GS Rate PLUS locality pay or special supplement
  pay, if applicable
• Special Salary Rates (SSR) considered basic pay
• Used to perform most pay calculations such as
  overtime
• Rate of Basic Pay (FWS)
• Scheduled rate of pay
• Includes night and/or environmental differential

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KEY TERMS DEFINITIONS, cont.

• Representative Rate
• Is determined by
• 4th step of GS grade on highest applicable rate
  range
• 2nd step of FWS grade
• Used
• When promoting from FWS to FWS
• To compare GS and FWS pay when moving from GS to
  FWS
• To Compare GS and FWS Rates
• Convert GS pay to hourly (divide by 2087) or
• FWS to annual (multiply by 2087)

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KEY TERMS DEFINITIONS, cont

• Retained Rate
• Rate above the maximum rate of current grade
• Special entitlement following RIF or
  reclassification
• Is determined by pay retention rules

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KEY TERMS DEFINITIONS, cont.

• Special Salary Rate
• (SSR) Higher minimum rate of pay for series or
  occupational group may be local, regional or
  world-wide
• Superior Qualifications Appointment
• Appointment at rate above the minimum based upon
  candidates superior or unique qualifications or
  special need of the agency

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KEY TERMS DEFINITIONS, cont.

• Within Grade Increase (WGI)
• Periodic increase based upon employees length of
  service and performance at an acceptable level of
  competence
• GS Steps 2/3/4 - 52 weeks
• Steps 5/6/7 - 104 weeks
• Steps 8/9/10 - 156 weeks
• FWS Step 2 - 26 weeks
• Step 3 - 78 weeks
• Step 4/5 - 104 weeks

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LOCAL PAY POLICIES

• Army Requirement (AR 690-990-2, Book 531)
• Covers pay setting when regulation permits
  discretion, e.g.,
• Application of highest previous rate
• Change to lower grade
• Temporary promotions as HPR
• Special salary rates as HPR
• Should include a Commanders escape clause

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LOCAL PAY CASE

• Bob Cronin left federal service in 1998 as a
  GS-6, Step 5. His salary at the time was
  25,226. He now wants to return to federal
  service and has been offered a GS-5 position.
• 1. If you compare Bobs HPR--25,226 to the GS-5
  rates of basic pay which were in effect in 1998
  using the basic pay tables), the 1998 GS-5 rate
  which equaled or was greater than Bobs HPR of
  25,226 was GS-5, Step 9 at 25,297.
• 3. Using the current pay schedule (2006), what
  would be the lowest and highest step of pay?
  How would the local policy affect this decision?

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General Schedule Pay Setting
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AUTHORIZING LEGISLATION

• Section 301 of Federal Workforce Flexibility
  Act of 2004 (Public Law 108-411, October 30,
  2004)
• Effective date May 1, 2005

23
LOCALITY PAY

• Scheduled annual rate of basic pay
• Increased by a percentage established for that
  locality pay area
• Based on a comparison with salaries of
  non-federal workers
• Reduces pay disparities between federal and
  non-federal workers
• Locality pay areas determined by Congress 31
  geographic and Rest of U.S. (RUS)
• Only applies to GS employees within CONUS

24
LOCALITY PAY, cont.

• Locality pay is considered basic pay for purposes
  of computing
• Retirement deductions and benefits
• Life insurance premiums and benefits
• Premium pay
• Severance pay
• Advances in pay
• Lump sum annual leave
• Thrift savings deposits
• Workers compensation

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LOCALITY PAY, cont.

• Locality pay is also considered basic pay for
  purposes of computing
• Post differential danger pay
• Recruitment, Relocation, Retention incentives,
  supervisory differentials extended assignment
  incentives
• Performance based cash awards when computed as a
  percentage
• Grade and pay retention

26
LOCALITY PAY

• Authorized under the Federal Employees Pay
  Comparability Act of 1990
• Shown below in comparison with the GS rate

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SPECIAL SALARY RATES (SSR)

• Assist in recruitment and retention for hard to
  fill positions and special skills
• Authorized by OPM based on agency request
• May be local, regional or world-wide
• Subject to annual review

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SIMULTANEOUS PAY ACTIONS

• Order of precedence
• General pay increase
• Geographic conversion
• Within-grade increases and QSIs
• Promotion
• Other

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MAXIMUM PAYABLE RATE (MPR) RULE

• Applies upon reemployment, transfer,
  reassignment, promotion, demotion, or change in
  type of appointment
• Employees rate of basic pay may be set at the
  maximum rate of the highest applicable rate range
  based on HPR or at a lower rate
• Must use applicable annual rates of pay e.g.,
  hourly rate is converted to an annual rate if
  moving from an hourly rate position to an annual
  rate position

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GEOGRAPHIC CONVERSION

• When official worksite changes
• Employees current position of record is moved to
  the new geographic area
• Pay is converted before processing any
  simultaneous pay actions
• Purpose
• Treats employees with the same work history as
  equals
• Employees will not have higher pay simply because
  they came from an area where higher pay rates
  applied

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GEOGRAPHIC CONVERSION

• GS-2210-09/2 in Washington, DC promoted to
  GS-0301-11 in Rock Island, IL
• Geographic
• Conversion
• (1) GS-2210-09/2 (2) GS-2210-09/2
• Washington, DC Rock Island, IL
• SSR Table 999C
  SSR Table 999B
• Then complete action to
• promote employee to
• GS-0301-11 in Rock Island
• based on pay in (2)

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NEW APPOINTMENT

• Set pay for majority of new appointees at the 1st
  step of the grade
• Can use superior qualifications and special needs
  pay-setting authority to set employees rate pay
  above the first step

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NEW APPOINTMENT

• Lilly was appointed from a DEU certificate as an
  Environmental Engineer, GS-819-07. Her salary
  would be set at which step using the SSR table
  for Engineers?
• Peter was appointment from a DEU certificate as
  an Environmental Engineer, GS-819-12. His work
  experience demonstrates experience far beyond the
  typical candidate with advanced degree, several
  publications and a patent. What step would you
  recommend that the selecting official offer?

34
SPECIAL PAY SITUATIONS

• Severance Pay
• Paid to eligible employees who are involuntarily
  separated from federal service due to reduction
  in force or transfer of function outside the
  commuting area.
• Eligibility - permanent appointment, full or part
  time work schedule, served continuously for 12
  months
• Voluntary Separation Incentive Pay (VSIP)
• Cash incentives paid to employees to retire or
  resign
• Must avoid involuntary separation
• Use severance pay formula to calculate
• Maximum VSIP is 25,000 or amount of severance
  pay -- whichever is less
• Maintain audit trail to demonstrate savings

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SPECIAL PAY SITUATIONS

• 3 Rs
• Recruitment
• Relocation
• Retention
• Financial incentives to assist in recruitment and
  retention
• Up to 25 of basic (adjusted) pay
• Requires service agreement for recruitment and
  relocation bonuses
• Approved at a level above manager who made offer

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Pay - NSPS
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PAY SETTING AUTHORITY

• Army will delegate pay setting approval authority
  to Commands with supplemental guidance
• Management responsibility to set pay
• No longer HR function

38
PAY SETTING AUTHORITY
Pay setting determinations based upon

• Level of work of position
• Labor market considerations - value and location
  of job in market
• Special requirements of a particular position
• Pay equity considerations

• Level and relevancy of candidates education /
  experience
• Scarcity of qualified applicants
• Program needs
• Current salary of candidate

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NEW HIRE / REHIRE

• Interim DoD pay setting guidance
• Determine equivalent GS grade
• Can set pay at step 01 plus up to 30
• Exceptions, e.g., Physicians, can be granted
• Time limits for reappointment determined by
  Commanders, e.g. 1 day or 90 days

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PROMOTION

• Mandatory - entitled to a minimum 6 increase
• May receive up to a 20 increase subject to
  authorized management approval
• May receive increase greater than 20 subject to
  higher level management approval
• Pay cannot be lower than minimum or higher than
  maximum of new rate range

41
REASSIGNMENT

• Voluntary reassignment Employees are eligible
  for a discretionary increase
• Employee-initiated May receive up to a 5
  increase in a 12-month period
• Management-directed May receive up to a 5
  increase with each reassignment
• Involuntary reassignment Employees may receive
  a reduction in pay
• Result of poor performance or misconduct May
  receive up to a 10 reduction in pay in a
  12-month period
• Pay cannot be lower than minimum or higher than
  maximum of new rate range

42
REDUCTION IN BAND

• Voluntary reduction in band - Employees are
  eligible for a discretionary increase
• May receive up to a 5 increase in a 12-month
  period
• Involuntary reduction in band Employees may
  receive a reduction in pay
• Result of poor performance or misconduct May
  receive up to a 10 reduction in pay in a
  12-month period
• Pay cannot be lower than the minimum or higher
  than the maximum of the new rate range

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COMPENSATION CHANGES

• Pay Retention limited to 2 years
• If employee salary does not fall within assigned
  band, salary drops to top of band
• Overtime rate for YA-2s (former non-supervisory
  GS-9s through GS-13s) changes to 1.5x regular
  rate
• Performance pay results in pay raises and bonuses
• Larger pay increases go to higher performers
• No increases go to lower performers

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FLEXIBLE PAY SETTING

• New Hires Pay Band Minimum to GS-Grade 30
• Promotions Increase 6 20
• Voluntary Reassignment Increase Up to 5or
  Reduction in Band
• Management-Directed Increase Up to 5
  Reassignment
• Involuntary Reassignment Decrease Up to 10
  or Reduction in Band
• Expiration/Termination of Re-Set to
  Previous Pay Level Temporary
  Reassignment

45
PAY CAP

• Adjusted salary may not exceed rate for Executive
  Level IV (145,400) by more than 5 percent
• LMS is reduced to comply with this limitation

46
INCREASES

• Term employees are
• Considered Federal employees for NSPS purposes
• Limited to 5 increase for reassignment within
  pay band
• Employees eligible for ACDP may
• Receive 20 at 12 months
• Receive a 10 increase at 6 months and another
  10 increase at 12 months
• It two 10 increases are awarded, total increase
  may be slightly over 20 per year

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ROUNDING

• Reassignments
• Cannot exceed 5
• Fractional amounts must be rounded down.
• For example, if calculation of a 5 increase on a
  reassignment results in 2617.65, product must be
  rounded down to 2617
• Promotions
• Require minimum increase of 6
• Fractional amounts must be rounded up.
• For example, if calculation of 6 increase on a
  promotion results in 3278.34, product must be
  rounded up to 3279

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TRACKING LIMITATION

• No specific field in DCPDS to track 5
  limitation
• Exact amount of each salary change
• Cumulative increases
• Legal authority code in conjunction with remark
  should flags specialists to look at records

49
LWOP - MILITARY

• LWOP at the time of the payout
• Salary updated in DCPDS
• Do not receive the increase until returned to
  duty in a pay status

50
YP-1 CONVERSIONS

• Setting pay for student, YP-1, who converts to an
  intern, YA-1, upon graduation
• Review both job description of current student
  position and new position
• Conduct comparable level review
• If positions are comparable, then conversion
  should be treated as a reassignment
• If student position is found to be a lower level
  of work, conversion treated as a promotion

51
TARGET PROMOTION RULE

• Employees can receive pay increases for
  noncompetitive promotion equivalents
• Is not eligible for ACDP, e.g. YA-2
• If grade level of promotion is encompassed within
  same pay band
• Performance warrants increase
• One-time exception
• During first 12 months following conversion
• Salary set at equivalent full performance GS
  position

52
EXCEPTION 1 TIME

• Only one exception authorized -if exception not
  sufficient to reach target position
• Future increases based upon
• Performance payout process
• Reassignment to different position or set of
  duties

53
NO USE OF HPR

• The maximum payable rate rule/application of
  highest previous rate is not a feature of NSPS
  pay setting

54
CONVERTING OUT OF NSPS

• Pay for employees leaving NSPS - use rules of
  gaining pay system
• Employees who become covered by NSPS again have
  pay set in accordance with NSPS pay setting rules

55
PAY RETENTION

• Pay retention used for developmental positions
  under a formal training plan is not an
  entitlement
• Components have been delegated authority to
  extend pay retention

56
COMPENSATION LANES

• Performance / assignment of duties are primary
  factors in determining progression through pay
  band
• Supervisor takes into account
• Complexity and value of the work being performed
• Difficulty in recruiting and retaining employees
  performing similar work
• What other employees in local area performing
  similar work are being paid
• Funding level

57
CHRA Compensation Lanes
58
GENRAL PAY INCREASE

• GPI IS NOT
• Cost-of-living adjustment (COLA)
• Cost-of-living increase
• Intended to compensate employees for inflation
• GPI DOES reflect general movement of salaries
  over one-year period
• NSPS compensation architecture allows for some
  portion of GPI to be put into pay pool

59
RATE RANGE ADJUSTMENTS

• If minimum of rate range is increased
• Employee's base salary will be increased
• No increase if employee's performance is
  unsatisfactory
• If maximum of rate range is adjusted - no
  adjustment to base salary
• SecDef makes decisions about rate range
  adjustments

60
MOVEMENT OUT OF NSPS -TIME IN GRADE

• If converted into NSPS less than 52 weeks - would
  not meet the TIG requirement for the GS-12
  position.
• If conversion in to NSPS was more than 52 weeks -
  TIG does not apply
• Coverage requirements for TIG can be found in 5
  CFR 300.603.

61
RATE RANGE ON ANNOUNCEMENTS

• Advertised rate ranges on vacancy announcement
• Full salary range pay band - may add statement
  that indicates base salary of selectee will be
  set based on
• Qualifications Education
• Experience Training
• Availability of funds
• Limited range within pay band
• Must announce bottom of rate range
• Pay must be limited, regardless of qualifications
  of selectee

62
Pay Setting - Summary

• Locate applicable pay setting laws and
  regulations
• Explain key pay setting terms and definitions
• Apply pay setting rules to appointment and
  placement actions
• Explain impact of local pay policy on pay setting
  actions
• Explain managements pay setting authorities and
  flexibilities