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Frequently Asked Questions Performance Management

  • Yes. However, agencies must be aware there are Fair Labor Standards Act (FLSA) implications when they directly link award amounts to specific ratings. When an agency predetermines an award amount or guarantees an award payment for a specific rating, the award is considered nondiscretionary. Nondiscretionary awards must be included in total remuneration and impact the calculation of overtime payments.
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  • Statute restricts performance awards to no more than 10 percent of the employee's annual rate of basic pay, except that a rating-based award may exceed 10 percent if the agency head determines that an employee's exceptional performance justifies such an award. However, in no case may a rating-based award exceed 20 percent of the employee's annual rate of basic pay.
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  • There are agencies and organizations within the Federal Government that are not covered by the performance appraisal provisions in the law and regulations. However, many of them have adopted these procedures or developed their own procedures to evaluate the performance of their employees. The regulations give agencies the basic guidelines by which they can review the performance evaluations employees bring with them from other Federal organizations and determine whether they qualify as equivalent ratings of record that can then be used as the basis for assigning additional service credit in a reduction in force.
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  • No. OPM must review and approve the agency's appraisal system, which sets out the limits within which all the agency's programs must be developed.  OPM must approve the appraisal system before any appraisal program developed under the system can be implemented.
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  • No. Case law establishes that performance elements and standards are nonnegotiable based on management's rights to direct employees and assign work through the establishment of performance plans.
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  • If neither the performance standards nor the retention level communicated to the employee at the start of the PIP have changed, the agency should be able to proceed with the opportunity period or PIP. However, a substantive change in standards or the retention level would require that the current PIP end.
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  • Governmentwide regulations specify three types of performance elements:

    • critical elements
    • non-critical elements
    • additional performance elements
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  • Agencies are encouraged to involve employees in the design and implementation of their appraisal programs, award programs, and employee performance plans.  Of course, where a union has been granted exclusive recognition, such involvement for bargaining unit employees must be through their elected union representatives.
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  • Agencies may present such certificates and vouchers if they are being used as informal recognition awards. Merchant gift certificates should not be confused with cash surrogates (which are vouchers or checks that can be easily and widely redeemable for cash, not merchandise). Gift certificates usually are given when the intent is to give something but let the recipient make the final choice. Merchandise certificates cannot meet a cash surrogate's criterion of being easily negotiable because of limitations on where, how, and for what they may be redeemed. Gift certificates fail to meet the criteria for honorary awards because they convey a clear monetary value and cannot be characterized as symbolizing the employer-employee relationship. Consequently, the only circumstance where a gift certificate may be used to recognize an employee contribution is as an informal recognition award, which may not exceed nominal value. Agencies also need to be aware that the Internal Revenue Service (IRS) considers gift certificates to be taxable fringe benefits that must be taxed on their fair market value. The face value of a gift certificate would be considered its fair market value. Further questions on taxable fringe benefits should be directed to the IRS.
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  • Yes. Governmentwide awards regulations allow agencies to use the incentive awards authority to establish a referral bonus program that provides incentives to employees who bring new talent into the agency. Each agency must determine whether using referral bonuses is appropriate for their agency. If an agency decides to establish a referral bonus program, it must establish the criteria it will use to determine when an employee would receive a referral bonus. (For more information see our Criteria for Referral Bonuses.)
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