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Final Regulations on Pay for Senior Professionals

Final Regulations on Pay for Senior Professionals

On March 5, 2014, the Office of Personnel Management (OPM) published final regulations on pay for senior professionals (senior level (SL) and scientific or professional (ST)) in the Federal Register. The following information provides an explanation of several of the major provisions of these regulations.

Setting Pay upon Appointment to an SL or ST Position

The regulations treat pay setting separately from pay increases and include:

  1. Pay setting for an individual upon initial appointment to an SL or ST position;
  2. Pay setting for a current SL or ST employee upon transfer to another agency; and
  3. Pay setting upon reinstatement of a former SL or ST employee to an SL or ST position in any agency. 

Pay may be set at any rate within the applicable rate range under 5 CFR 534.504(a). An agency must consider the nature and quality of the individual’s experience, qualifications and accomplishments as they relate to requirements of the position and its impact on the agency’s performance. Pay rates above EX–III but equal to or below EX–II are reserved for those individuals who possess superior competencies necessary to address key program and mission requirements and to senior professionals whose pay rate above EX-III must be preserved upon appointment in a new agency that does not have a certified performance appraisal system.

Annual Increases in Basic Pay

The regulations treat pay increases separately from reductions in pay. Under 5 U.S.C. 5376(b)(2), an agency head is required to adjust rates of basic pay for SL and ST positions as the agency head considers appropriate at the same time statutory pay adjustments are provided for the General Schedule (GS). The new regulations provide for this annual pay adjustment to be determined under 5 CFR 534.507 based on individual performance, contribution to agency performance, or both, as determined by the agency under a rigorous performance appraisal system. Rates above EX–III but equal to or below EX–II are reserved for those senior professionals who demonstrate the highest-level performance and make the greatest contribution to agency performance.

It is OPM’s view that a senior professional rated Fully Successful (FS) or above and properly positioned within the pay range should receive a pay increase. We therefore provide that if GS pay rates are increased under 5 U.S.C. 5303, an agency head who does not adjust the pay of a senior professional rated FS or above (i.e., provides a “zero” pay adjustment) must communicate the reasons for that decision in writing. An exception would occur when a senior professional is already compensated within the top 10% of the pay range. In such cases, written communication is required only when he or she receives the highest possible rating above FS and the maximum payable rate for senior professionals has also increased due to an increase in Executive Schedule (EX) pay rates under 5 U.S.C. 5318. A senior professional employee rated below FS may not receive a pay increase unless one is required to avoid paying the employee at a rate below the minimum rate of basic pay.

Removal of the 12-Month Restriction on Pay Increases

The former 12-month restriction on pay adjustments for senior professionals is removed. In its place, new rules provide the following controls and conditions for setting and adjusting pay:

  1. Senior professional pay adjustments must be based on individual performance, contribution to the agency’s performance, or both;
  2. An executive agency that employs 10 or more senior professionals  must provide centralized review of proposed ratings and pay adjustments; and
  3. Certain pay adjustments may only be approved by the agency head or the designee who performs the functions identified in 5 CFR 430.404(a)(6).

Centralized Review of Proposed Pay Increases

Each executive agency that employs ten or more senior professionals must conduct centralized review of ratings assigned under 5 CFR 430.208 and pay increases proposed under 5 CFR 534.507 by a panel of individuals designated by the agency head to provide advice to agency officials who are authorized to determine final ratings and adjust pay. The purpose is to provide for proposed ratings and pay adjustments to be considered within the context of ratings, pay adjustments, and pay rates for all senior professionals in the executive agency. Review panels within agency components will not meet this requirement. A panel considering ratings or pay adjustments for career or career-conditional (or equivalent) senior professionals must have a majority of career appointees, which may include senior professional or SES employees.

Restrictions on Delegation of Authority for Certain Pay Actions

An agency head may delegate authority to set and adjust senior professional pay, except that only the agency head or the designee who performs the functions identified in 5 CFR 430.404(a)(6) may approve the following pay actions:

  1. A pay increase resulting in a rate of basic pay within the top 10 percent of the applicable pay range;
  2. A pay increase resulting in a rate of basic pay 10 percent or more above the senior professional’s salary at the beginning of the fiscal year, or, if more recent, upon initial appointment in the agency;
  3. A pay increase for a senior professional reappointed within 30 days to the same position or a successor position in the agency; or
  4. An off-cycle pay increase under 5 CFR 534.510.

This rule applies whether or not an agency has a certified performance appraisal system for senior professionals.

Office of Inspector General (OIG)

The Inspector General Reform Act of 2008 (Pub. L. 110-409, November 14, 2008) provided that each OIG is a separate agency and the Inspector General (IG) is the head of that agency for purposes of Senior Executive Service (SES) statutes. However, this Act did not do the same with respect to statutes pertaining to senior professional positions. OPM therefore lacks authority to designate the IG as an agency head for the purpose of setting pay for senior professionals. OPM also cannot require an agency head to delegate authority for OIG senior professional pay actions to the IG. However, OPM is providing that an agency head who delegates to the IG authority for all pay actions for OIG senior professionals, including those pay actions reserved to the agency head or the designee who performs the functions identified in 5 CFR 430.404(a)(6), need not include OIG senior professionals when determining whether the number of senior professionals in the agency requires centralized review of pay actions. An IG who has been delegated such authority by the agency head need only consider OIG senior professionals when determining whether centralized review is required.

Off-cycle Pay Increases

An agency head or the designee who performs the functions described in 5 CFR 430.404(a)(6) may grant an off-cycle pay increase to a senior professional under 5 CFR 534.510 based upon individual performance, contribution to agency performance, or both. An off-cycle pay increase must be supported by factors that distinguish the senior professional's performance from that of peers, and from that previously recognized by the annual pay adjustment. Granting such an increase should be based on one of the following factors:

  1. Exceptionally meritorious accomplishments contributing significantly to the agency's performance;
  2. Reassignment to a position that has a substantially greater impact on agency performance; and
  3. The need to retain an individual whose contributions are critical to the agency and who is likely to leave the agency.

Off-cycle pay increases are documented in accordance with 5 CFR 534.507 (b) through (e), to include use of a performance rating to distinguish the basis for the off-cycle increase from the basis for the annual pay adjustment. Information must be included to explain how and which of the additional factors supports the pay increase. Centralized review is not required for pay increases under 5 CFR 534.510.

Pay Increases after Certification of a Performance Appraisal System

A rating of record or performance rating used to support a pay increase for an SL or ST employee above EX–III must cover at least 90 days of performance beginning after the date of certification. OPM may waive this restriction upon the initial certification of a performance appraisal system, and permit an agency to use an appraisal covering time prior to certification, when OPM determines that the agency has been operating under the same performance appraisal system in a manner supporting certification for at least 90 days before certification was granted. Additional rules related to increasing pay to rates above EX-III but below EX-II are found in 5 CFR 534.507(d). Rules for off-cycle pay increases (5 CFR 534.510) apply when certification occurs after the annual pay adjustment.

No reduction in pay upon transfer to another agency or upon suspension of certification

An SL or ST employee whose rate of basic pay is higher than EX-III may not suffer a reduction in pay as a result of transferring to an agency where the maximum rate of basic pay for the applicable SL and ST rate range is equal to EX-III or as the result of the suspension or expiration of an agency’s performance appraisal system certification. The senior professional will continue to receive his or her current rate of pay and is not eligible for a pay increase until assigned to a position covered by a certified performance appraisal system. These provisions do not apply upon appointment of a senior professional to an SES position or upon appointment of an SES member to a senior professional position.

Reductions in Pay

An SL or ST employee’s rate of basic pay may be reduced for poor performance or conduct subject to adverse action rules in 5 CFR part 752, subpart D. An SL or ST employee may also be placed in a General Schedule position under rules for reductions in grade at 5 CFR part 752, subpart D (adverse action) or part 432 (performance based actions), with pay determined under applicable rules. Additionally, the regulations allow for an agency and employee to voluntarily agree to a reassignment that will involve a current or future pay reduction for the employee. If an SL or ST employee willingly accepts this pay consequence to facilitate a desired assignment and the agency documents the voluntary nature of the reduction, it will not be subject to 5 CFR part 752, subpart D.

Limited Exception to Regulatory Requirements

For agencies that are exempt from performance appraisal requirements under 5 U.S.C. 4301 or other applicable authority, section 534.511 provides a limited exception to certain requirements of the final regulation. The exception applies only to the extent that the regulation requires an agency to set or adjust pay based upon individual performance, contribution to agency performance, or both. Otherwise, the regulations apply. For example, section 534.505 still requires the agency to provide its senior professionals written procedures that explain how pay is set and adjusted. An agency using the exemption in section 534.511 may not set a pay rate for a senior professional above the rate for EX-III, except as provided in section 534.509.

If an agency elects to implement performance appraisal for its senior professionals despite being exempt from any requirement to do so, the exemption in section 534.511 does not apply. In such a case, OPM considers the Act to require the agency to set the pay of a senior professional based upon individual performance, contribution to agency performance, or both.

Written Procedures

Each agency must develop written procedures for setting and increasing SL and ST rates of basic pay explaining the criteria and administrative and management controls that will be implemented to ensure pay actions conform to statutory and regulatory requirements. The content for these procedures is described in 5 CFR 534.505(a) and includes any criteria the agency uses to establish pay ranges applicable to different SL or ST positions (e.g., pay tiers), as applicable. The procedures must be kept up to date, made available to senior professionals, and provided to OPM upon request.

Processing SL and ST Pay Actions

SL and ST pay actions are processed under rules found in the Guide to Processing Personnel Actions, the Guide to Personnel Recordkeeping, and the Guide to Personnel Data Standards. A table, to be used in conjunction with the appropriate Guides, explaining the proper Nature of Action Codes to use for these pay actions can be found on the OPM Website. For additional questions, please contact the assigned OPM agency contact in Executive Resources and Performance Management Policy, call 202-606-8046, or email sespolicy@opm.gov.

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