This is a reminder that the Office of Personnel Management (OPM) issued interim regulations on May 31, 2005, that changed the way pay is set for Federal Wage System (FWS) and other non-General Schedule (GS) employees upon movement to a GS position using the maximum payable rate rule at 5 CFR 531.221-223 and the pay retention rules under 5 CFR part 536, subpart C. (See CPM 2005-10.) These rules became effective on May 1, 2005.
Under the former maximum payable rate and pay retention rules, an FWS employee's pay was set by comparing the employee's FWS rate to the underlying GS base rate range for the employee's grade, excluding locality pay. Once pay was set in the underlying GS base rate range (or, in the case of pay retention, as a retained rate if the FWS rate exceeded the step 10 rate for the employee's grade), the applicable GS locality payment was added on top. This process of comparing a locality-based FWS rate to a GS rate range that did not include a locality adjustment resulted in substantial pay increases for affected employees-an anomalous result not intended by the maximum payable rate or pay retention rules
Under the new maximum payable rate and pay retention rules, when an employee moves from an FWS position to a GS position, his or her FWS rate is compared to the highest applicable GS rate range for the employee's grade, including locality pay. This new rule more logically compares a locality-based FWS rate of pay to a GS locality rate range to determine the employee's maximum payable rate or pay retention entitlement and avoids substantial pay increases not intended by the maximum payable rate and pay retention rules. (See example #10 at the Pay Action Examples page and example #10 at the Grade and Pay Retention Examples page.)
To help avoid confusion and false expectations, we strongly recommend that responsible agency HR staff inform FWS and other non-GS employees moving to GS positions exactly how their pay will be set under the new maximum payable rate or pay retention rules in advance of processing the personnel actions accompanying the movement.
We note that the interim regulations also changed the way pay is set using the pay retention rules at 5 CFR part 536, subpart C, for employees who move from GS to FWS positions. GS locality rates are now considered in applying the new pay retention rules for movements from GS to FWS positions. In addition, the interim regulations changed the GS rates that must be used in applying the FWS highest previous rate rules at 5 CFR 532.405(c)(2). Under new 5 CFR 531.610(j), GS locality rates are now considered in applying the FWS highest previous rate rule when the highest previous rate is earned on the GS pay system. These changes help to eliminate pay reductions that occurred under the former rules.