Advancing Pay Equity in Governmentwide Pay Systems, 5737-5757 [2024-01337]
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5737
Rules and Regulations
Federal Register
Vol. 89, No. 20
Tuesday, January 30, 2024
This section of the FEDERAL REGISTER
contains regulatory documents having general
applicability and legal effect, most of which
are keyed to and codified in the Code of
Federal Regulations, which is published under
50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by
the Superintendent of Documents.
OFFICE OF PERSONNEL
MANAGEMENT
5 CFR Parts 531, 532, 534, and 930
RIN 3206–AO39
Advancing Pay Equity in
Governmentwide Pay Systems
Office of Personnel
Management.
ACTION: Final rule.
AGENCY:
The Office of Personnel
Management is issuing final regulations
governing the criteria for making salary
determinations based on salary history
to advance pay equity in the General
Schedule, prevailing rate,
Administrative Appeals Judge,
Administrative Law Judge, Senior
Executive Service, and senior-level and
scientific or professional pay systems.
For individuals receiving their first
appointment as a civilian employee of
the Federal Government (or a
reappointment after a break in service)
in one of these pay systems, agencies
will not be able to set pay based on a
job candidate’s non-Federal salary or
pay history, which could vary between
equally qualified candidates, or based
on a competing job offer. Agencies will
also be required to have policies
regarding setting pay based on a
previous Federal salary for employees
who have previous civilian service in
the Federal Government.
DATES: This final rule is effective April
1, 2024. Agencies must be in full
compliance with this final rule not later
than October 1, 2024.
FOR FURTHER INFORMATION CONTACT:
Carey Jones by telephone at (202) 606–
2858 or by email at paypolicy@opm.gov.
SUPPLEMENTARY INFORMATION:
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SUMMARY:
Overview
The Federal Government strives to be
a model employer that values diversity,
equity, inclusion, and accessibility
(DEIA). After consideration of public
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comments on the proposed rule, OPM is
issuing a final rule that amends the
criteria for making salary
determinations for the General Schedule
(GS), prevailing rate, Administrative
Appeals Judge (AAJ), Administrative
Law Judge (ALJ), Senior Executive
Service (SES), and senior-level and
scientific or professional (SL/ST) pay
systems to advance pay equity in pay
setting for Federal employees. OPM is
issuing this rule pursuant to its
authority to issue regulations governing
these pay systems in 5 U.S.C. 5333,
5338, 5343, 5372, 5372b, 5376, and
5382.
Generally, when an individual applies
for a job and is being considered for
employment, the employer may inquire
about the individual’s salary or pay
history 1 and consider it as part of the
pay-setting process, if not otherwise
prohibited from doing so. The employer
may ask the candidate 2 direct questions
about salary history or the candidate
may offer the information without
prompting. The information can be
solicited or shared at various points
before an offer is accepted or rejected.
These and other considerations of a job
candidate’s salary history are
permissible under current statutes and
regulations governing the GS, prevailing
rate, AAJ, ALJ, SES, and SL/ST pay
systems. Consideration of salary history
is explicitly allowed under the Federal
Government’s GS pay system and is not
prohibited by the prevailing rate, AAJ,
ALJ, SES, and SL/ST pay systems.
As described in the proposed rule and
in this final rule, however, salary
history is not necessarily a good
indicator of worker value, experience,
and expertise, and it also may contain
or exacerbate biases. Pay setting based
on salary history may be inequitable,
can perpetuate biases from job to job,
and may contribute to a pay gap
between the earnings of men and
women. Nationally, on average women
earn less than men, and this pay gap is
1 For this rulemaking, ‘‘salary history’’ or ‘‘pay
history’’ refer to the salary or pay a job candidate
is currently receiving (i.e., their existing salary or
pay) or the salary or pay the candidate has been
paid in a previous job (i.e., prior salary or pay). The
terms are used interchangeably.
2 In this final rule, the terms ‘‘applicant’’ and
‘‘candidate’’ are used interchangeably to refer to an
individual under consideration for appointment to
a Federal civil service position.
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even greater for most women of color.3
Gender and race/ethnicity pay gaps also
exist in the Federal Government’s civil
service. Although such gaps are
typically smaller than those in the
private sector, they may represent an
inequity as acknowledged by the
President in Executive Orders (E.O.)
14035 (86 FR 34593) and 14069 (87 FR
15315). As discussed further below, by
eliminating a factor that may contain or
exacerbate biases inconsistent with
merit system principles, this final rule
seeks to promote pay equity consistent
with the President’s Executive Orders.
For individuals receiving their first
appointment as a civilian employee of
the Federal Government (or a
reappointment after a break in Federal
service), agencies will no longer be able
to set pay based on non-Federal salary
history, which could vary between
equally qualified candidates. Agencies
also will not be permitted to consider a
candidate’s competing job offer when
setting pay. Finally, agencies will be
required to have policies regarding
setting pay based on a previous Federal
salary for employees who have previous
civilian service in the Federal
Government.
Background
On June 25, 2021, President Biden
signed E.O. 14035, titled ‘‘Diversity,
Equity, Inclusion, and Accessibility in
the Federal Workforce.’’ 4 To address
any pay inequities and advance equal
pay, section 12 of E.O. 14035 requires
the Director of OPM to review
Governmentwide regulations and, as
appropriate and consistent with
applicable law, consider prohibiting the
use of an applicant’s salary history
when setting pay for a Federal
employee.
On March 15, 2022, the President
issued E.O. 14069, titled ‘‘Advancing
Economy, Efficiency, and Effectiveness
in Federal Contracting by Promoting Pay
Equity and Transparency.’’ 5 Section 1
of that E.O., describing the policy
objectives of the E.O., notes that OPM
‘‘anticipates issuing a proposed rule that
would address the use of salary history
in the hiring and pay-setting processes
3 Data on the national pay gap is available on the
Department of Labor Women’s Bureau website at
https://www.dol.gov/agencies/wb/data/earnings.
4 See 86 FR 34593 (June 25, 2021).
5 See 87 FR 15315 (Mar. 15, 2022).
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for Federal employees,’’ consistent with
E.O. 14035.
OPM reviewed the pay-setting
regulations governing the GS, prevailing
rate, AAJ, and ALJ, SES, and SL/ST pay
systems. On May 11, 2023, OPM issued
a proposed rule at 88 FR 30251 in
response to E.O. 14035 and pursuant to
its regulatory authorities in 5 U.S.C.
5333, 5338, 5343(c), 5372(c), and
5372b(b).6 As explained in the proposed
rule, the Federal Government’s civilian
personnel management systems are
required to adhere to merit system
principles established in law at 5 U.S.C.
2301, including:
• All employees and applicants for
employment should receive fair and
equitable treatment in all aspects of
personnel management without regard
to political affiliation, race, color,
religion, national origin, sex, marital
status, age, or handicapping condition,
and with proper regard for their privacy
and constitutional rights. 5 U.S.C.
2301(b)(2).
• Equal pay should be provided for
work of equal value, with appropriate
consideration of both national and local
rates paid by employers in the private
sector, and appropriate incentives and
recognition should be provided for
excellence in performance. 5 U.S.C.
2301(b)(3).
For the GS, prevailing rate, AAJ, and
ALJ structured pay systems, generally,
an agency must set pay at the minimum
rate for a new entrant to the civil
service. The GS system is designed with
standardized classification criteria for
determining the grade levels of
positions, and each GS grade has a range
of pay consisting of ten step rates. The
prevailing rate system under 5 U.S.C.
chapter 53, subchapter IV, is a uniform
pay-setting system that covers Federal
Wage System (FWS) appropriated fund
and nonappropriated fund employees.
Generally, a new appointment to a GS
or a prevailing rate position must be
made at the minimum (step 1) rate of
the grade of the employee’s position.
The AAJ pay system has six rates of
basic pay—AA–1, 2, 3, 4, 5 and 6. Upon
initial appointment, an agency generally
must set the rate of basic pay of an AAJ
who is new to the Federal Government
at the minimum rate AA–1 of the AAJ
pay system. The ALJ pay system has
three levels of basic pay: AL–1, AL–2,
and AL–3. Pay level AL–3 has six rates
of basic pay. Upon appointment to a
position at level AL–3, an ALJ is
generally paid at the minimum rate.
Under each of these systems, the
default is to set pay at the minimum
rate, but agencies have the authority to
6 See
88 FR 30251 (May 11, 2023).
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set pay above the minimum rate for
newly appointed employees if specific
factors are shown. Under the GS pay
system, the largest of the pay systems at
issue in this final rule, an agency has
the authority to set pay above the
minimum rate if it determines that the
candidate has superior qualifications or
that the agency has a special need for
the candidate’s services under the
criteria in 5 CFR 531.212(b). The current
regulations at 5 CFR 531.212(c) state
that an agency may consider one or
more of nine specified factors or other
relevant factors in making this step rate
determination. One factor an agency can
consider is the candidate’s existing pay,
recent salary history, or a salary
documented in a competing job offer. 5
CFR 531.212(c)(2). Similarly, the AAJ,
and ALJ pay systems allow
consideration of current pay when
setting pay for an applicant with
superior qualifications who is not a
current Federal employee. Under those
circumstances, an agency sets the AAJ
or ALJ pay at the rate that is next above
the applicant’s existing pay or earnings.
5 CFR 534.604 (for AAJ pay system),
930.205 (for ALJ pay system). The
prevailing rate pay systems also allow
setting pay above the minimum rate
based on special qualifications. The
prevailing rate pay systems do not
specifically list salary or pay history as
an allowable factor in setting pay. See
5 CFR 532.403.
There are also standard rules when
setting pay for current and former
employees upon various personnel
actions such as reemployment,
reassignment, promotion, transfer, or
demotion, and the flexibility to set pay
above the rate to which the employee
would otherwise be entitled based on
the employee’s Federal salary history.
For the GS pay system, an agency may
use the ‘‘maximum payable rate’’ rule,
which bases pay on the employee’s
highest previous rate of pay in a Federal
civilian position. 5 CFR 531.221. The
prevailing rate pay system also allows
an agency to set an employee’s pay at
any rate (of the relevant grade) that does
not exceed the employee’s highest
previous rate. 5 CFR 532.405. For the
AAJ and ALJ pay systems, an agency
can set pay above the minimum rate for
an appointee with prior Federal service
either based on superior qualifications
as used for new entrants or based on the
highest previous Federal rate of basic
pay. 5 CFR 534.604 (for AAJ pay
system), 930.205 (for ALJ pay system).
The SES and SL/ST pay systems do
not require an agency to set pay at the
minimum rate and, instead, require an
agency to consider specific factors when
setting pay. See 5 CFR 534.404(a), (g);
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534.506. The SES and SL/ST pay
systems are discussed in more detail in
the SES & SL/ST Pay Systems section of
this final rule.
This final rule prohibits agencies from
considering a candidate’s salary history
as a factor in setting pay for new Federal
civilian employees. If an agency seeks to
set pay above the minimum rate of the
applicable rate range under the GS,
prevailing rate, AAJ, or ALJ pay
systems, that adjustment must be based
on factors other than a candidate’s nonFederal pay history, such as how pay
has been set for employees who had
similar qualifications (based on the
level, type, or quality of the candidate’s
skills or competencies or other qualities
and experiences) and have been newly
appointed to positions that are similar
to the candidate’s position (based on the
position’s occupational series, grade
level, organization, geographic location,
or other job-relevant factors), if
applicable. Similarly, when setting pay
under the SES or SL/ST pay systems,
the agency must base the pay on
enumerated factors and cannot consider
a candidate’s non-Federal pay history.
When setting pay based on prior Federal
salary for reappointed or current
employees, agencies must have a policy
that supports consistency in setting pay
for employees.
In addition to the data summarized in
the proposed rule, OPM considered
comments received in response to the
proposal. OPM received 63 submissions
representing 512 commenters during the
30-day public comment period from a
variety of individuals (including Federal
employees), organizations (including
labor organizations), and Federal
agencies regarding the substance of the
proposed rule.7 8 Comments ranged from
strong support of the proposed rule to
categorical rejection. OPM reviewed and
carefully considered all comments.
They are summarized below, together
with a discussion of the suggestions for
revisions and OPM’s rationale for either
adopting or declining those suggestions.
In the first section below, we discuss
comments that address topics related to
7 OPM determined one comment was beyond the
scope of the proposed changes; that comment is not
addressed below.
8 One commenter recommended that OPM extend
the rulemaking process and do more outreach to
Federal employees about the proposal. Comment
23, available at https://www.regulations.gov/
comment/OPM-2023-0005-0023. In addition to
publishing the proposed rule in the Federal
Register, at the beginning of the comment period,
OPM shared the proposed rule with numerous
stakeholders, including Federal employee unions,
and publicized the proposed rule in a press release.
Multiple media sources such as Forbes, CNN,
Axios, Gov Exec, Federal News Network, and
Federal Times, covered the publication of the
proposed regulatory changes.
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the background and context of this rule,
including responses to questions posed
by OPM in the proposed rule. In the
sections that follow, we address
comments related to specific aspects of
this final rule.
Comments Regarding Background and
Context
Federal Government Pay Gaps and
Occupational Segregation
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OPM has been periodically updating
its pay gap data analysis since issuing
its 2014 Governmentwide strategy.9
Based on September 2021 EHRI 10 data
covering nonseasonal, full-time,
permanent Executive branch employees,
on average for all race/ethnicity groups
combined, women are paid 94 cents for
every dollar paid to a man—a gender
pay gap of six percent. This raw,
unadjusted gender pay gap is before
considering any factors that might
explain the gap, such as occupation.
As discussed in the proposed rule,
OPM also conducted an analysis
regarding pay gaps for groups of
employees identified by both gender
and race/ethnicity. This analysis
revealed that pay gaps varied
significantly depending on the specific
population. OPM found that many
factors may contribute to the overall
gender and race/ethnicity pay gaps in
the Federal Government. In conducting
its data analysis, OPM observed
evidence of the impact of other factors,
including occupational segregation. A
November 2020 study 11 focused on
national pay gaps found that the gender
pay gap varied significantly by
occupation. OPM’s findings regarding
Federal pay gaps are consistent with
research on pay gaps in the national
workforce. Comments on OPM’s pay gap
analysis are discussed in more detail in
the Regulatory Alternatives section.
In instances where pay disparities are
found, one organization recommended
that OPM ‘‘require agencies to
immediately scale up to raise lower
gender and racial/ethnic median wage
to match the higher median pay at the
beginning of the fiscal year.’’ Comment
9 Office of Personnel Management.
‘‘Governmentwide Strategy for Advancing Pay
Equality in the Federal Government.’’ https://
www.opm.gov/policy-data-oversight/pay-leave/
reference-materials/reports/GovernmentwideStrategy-on-Advancing-Pay-Equality-in-the-FederalGovernment.pdf.
10 Office of Personnel Management. ‘‘About Our
Data (EHRI–SDM).’’ https://www.fedscope.opm.gov/
datadefn/aehri_sdm.asp.
11 Foster, T., Murray-Close, M., Landivar, L., & de
Wolf, M. ‘‘An Evaluation of the Gender Wage Gap
Using Linked Survey and Administrative Data,’’
November 2020. https://www.census.gov/library/
working-papers/2020/adrm/CES-WP-20-34.html.
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64.12 Two organizations, several
commenters, and an agency also
suggested that OPM encourage agencies
to conduct pay audits and raise the
wages of individuals subject to
inequitable pay disparities. See
Comments 24, 27, 29, 46, 62, 64.
Putting aside the questions of
whether, as a policy and legal matter, it
would be appropriate and workable to
have automatic pay adjustments to
achieve a zero pay gap in median pay,
OPM has no general statutory authority
to require agencies to increase pay of
current employees when gender and
racial/ethnic pay gaps are found. We
note, however, that there are several
authorities (e.g., the Equal Pay Act, Title
VII of the Civil Rights Act of 1964, the
Americans with Disabilities Act, the
Age Discrimination in Employment Act)
under which an agency is authorized to
increase the salary of a Federal
employee found to be subject to an
inequitable pay disparity. We also note
that there may be legitimate, nondiscriminatory factors that could
contribute to pay disparities for selected
categories of employees, such as
employee seniority, performance, or
other factors not controlled for in the
analysis. In 2015, OPM encouraged
agencies to conduct pay gap analyses by
gender, race/ethnicity, or other
characteristics for their own workforces
to identify where potential pay
disparities exist within an agency in
order to develop targeted strategies to
reduce disparities and has issued
guidance to help agencies complete this
exercise.13
OPM invited comments on what
factors OPM should consider for
positions of high occupational
segregation (wherein women and men
often tend to work in different
occupations, and the occupations that
are predominantly held by women pay
less, compared to those predominantly
held by men at the same level of skill
or education). Four organizations
responded to this request for comment.
One recommended that OPM consider
race and ethnicity alongside gender
when looking into the issue of positions
of high occupational segregation.
Comment 33. Another stated that
12 A reference at the end of a comment quotation
or paraphrase provides the location of the item in
the public record. (i.e., the two-digit number
associated with the location in the docket).
Comments filed in response to the proposed rule
are available at https://www.regulations.gov/
comment/OPM-2023-0005-00nn, where nn is the
comment number.
13 Office of Personnel Management. ‘‘Guidance
for Agencies Conducting Gender Pay Data
Analysis.’’ https://chcoc.gov/sites/default/files/
Attachment-Agency%20Gender%20Data%20
Analysis%20Guidance-rev_0.pdf.
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‘‘[g]iven that the goal is equal pay for
equal work, the focus of these initial
steps to fight pay discrimination needs
to be on ensuring fairness in pay setting
for like positions. Ultimately, changes in
pay between different positions will
require modification of the classification
standards used to adjust the scoring
results, as those classification standards
are the main measure OPM has in place
for instilling uniformity in pay-setting
across different agencies.’’ Comment 49.
The two other organizations
recommended that OPM consider job
evaluations. Comments 60, 61. One of
these organizations stated that
conducting job evaluations is a strategy
‘‘to identify and remedy pay inequities
so that women and people of color
receive equitable compensation for their
labor. Job evaluation schemes assess
jobs across occupations on a range of
factors to establish fair and equitable
pay and promotion. These schemes
make it more likely that pay and
promotion are based on performance
rather than bias.’’ Comment 61.
Occupational segregation in both the
public and private sectors is a systemic
and persistent issue identified in pay
equity studies. Addressing occupational
segregation, however, is outside the
scope of the Federal pay and
classification system. OPM will assist
agencies, in exercising their delegated
classification authority, in collecting
metrics and other relevant agency data
to examine classification practices based
on a variety of factors, including gender
analysis by occupation. OPM will also
assist agencies to expand the use of
skills-based hiring practices to address
occupational segregation.
Pay Equity in Structured Pay Systems
OPM invited comments on whether
there is any research we should
consider regarding the impact that
structured pay systems have on pay
equity, and the impact that pay policies
that allow organizations to set pay above
the minimum rate of the rate range for
new employees based on specified
criteria have on pay equity. OPM
received two comments that addressed
this question. First, an agency suggested
that OPM look at agencies that have
converted to pay banded systems, such
as demonstration projects under 5
U.S.C. chapter 47, to determine the
benefits of such systems. Comment 34.
The GS, prevailing rate, ALJ, and AAJ
pay systems are all structured with
grades or work levels and defined steps
or pay rates within each grade or work
level. It would be difficult to draw
direct comparisons between pay-setting
policies for pay banded systems (that
combine multiple grades into a single
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work level and/or have open salary
ranges instead of step rates within a
range) and the effect on pay equity. We
do not have information on agency pay
banding policies and practices nor has
OPM conducted any pay equity analysis
on agency pay banding systems or their
policies and practices.
We also note that section 12(b) of E.O.
14035 requires agencies to review
regulations and guidance and, as
appropriate and consistent with
applicable law, revise compensation
practices for pay systems authorized
outside of title 5 of the United States
Code to address any pay inequities and
advance equal pay. OPM will ask
agencies to report any revisions to
compensation practices made to
implement the President’s direction.
Such reports may include information
on beneficial compensation practices
under alternative pay systems, such as
pay banding systems.
Second, an organization shared two
sources and stated that structured pay
systems can help address pay gaps and
are essential to attracting and retaining
a talented and diverse workforce.
Comment 61. One article summarized
how implementing transparency and
accountability procedures reduced the
extent to which women and people of
color received lower monetary
performance-based rewards.14 As OPM’s
regulatory changes affect certain
structured pay systems with specified
salaries rather than performance award
determinations, this article is not
directly applicable. As discussed in the
proposed rule, however, we agree that
pay transparency—as exists in Federal
pay systems—can help reduce gender
pay gaps and that written policies
support agencies’ consistent use of pay
flexibilities.
The other article stated that, in
developing a pay structure, ‘‘grades
enable flexibility and internal equity in
an organization by providing a
framework in which equivalent jobs are
treated equally for pay purposes.’’ 15 As
explained in the proposed rule, the GS
classification and pay system is
designed with standardized
classification criteria for determining
the grade levels of positions, and each
GS grade has a range of pay consisting
of 10 step rates. The GS system has
14 Castilla,
E. ‘‘Accounting for the Gap: A Firm
Study Manipulating Organizational Accountability
and Transparency in Pay Decisions,’’ Organization
Science, vol 26(2), March–April 2015, pages 311–
333.
15 Strategic Human Resource Management.
‘‘Building a Market-Based Pay Structure from
Scratch.’’ https://www.shrm.org/resourcesandtools/
tools-and-samples/toolkits/pages/buildingamarketbasedpaystructurefromscratch.aspx.
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standardized pay-setting rules that help
promote the equitable treatment among
employees. The FWS has three main
pay plans (Wage Grade (WG), Wage
Leader (WL), and Wage Supervisor
(WS)); the WG and WL pay plans have
15 grades and WS has 19. Each grade
has five steps. The AAJ pay system has
six rates of basic pay. An ALJ in level
AL–3 also has six rates of basic pay.
OPM agrees that these structured pay
systems provide a framework that
provides equal pay for work of an equal
value, consistent with the merit system
principle in 5 U.S.C. 2301(b)(3). Because
structured pay systems minimize
discriminatory influence on pay setting,
OPM is not banning consideration of
prior Federal pay when setting pay but
is requiring agencies to establish
policies that further promote equity in
pay setting. OPM expects that, over
time, any residual pay gaps in the
Federal systems will shrink.
Classification
OPM received a few comments
regarding how employees qualify for
positions, how positions are classified,
and how these decisions impact pay.
One commenter requested that OPM
require that agencies be more
transparent about the pay for which new
Federal employees qualify and
specifically how the grade assessments
are made or calculated. Comment 04.
Another commenter similarly stated that
‘‘clearly the source of inequity is in
grade-setting, not step-setting as this
rule targets.’’ Comment 09. A third
commenter stated, ‘‘[t]his proposed rule
appears to consider pay setting within a
grade level, but it ignores another
primary method of pay-setting in the
government—grade level.’’ Comment 20.
Although pay is often associated with
position classification, position
classification is based solely on work
performed or the core duties and
responsibilities of a position. The
classification of positions recognizes
levels of difficulty and responsibility in
terms of the grade levels established in
law at 5 U.S.C. 5104. While these gradelevel definitions are used to determine
grades that are linked to ranges of basic
pay rates, those definitions are not
based on pay factors or pay
relationships. All OPM GS position
classification standards are based on the
difficulty and responsibility of the work
at each level and the qualifications
required to do that work. Under 5 U.S.C.
5107, Federal agencies are responsible
for classifying their GS positions
consistent with position classification
standards issued by OPM. Similarly,
under 5 U.S.C. 5346, agencies are
responsible for grading their prevailing
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rate jobs consistent with the job grading
standards issued by OPM. Therefore,
similar or like positions and jobs across
Federal agencies should be classified or
graded in a consistent manner since
they are evaluated against the same
standards rather than position-toposition comparisons.
An agency also stated that ‘‘a proposal
to cease or significantly limit how
Federal agencies can take into account
past salary history must be paired with
a wholesale reexamination of the GS
pay scale and how hiring managers
determine which qualifications meet
which GS levels.’’ Comment 21. The GS
pay structure of 15 grades and 10 steps
within each grade is defined in statute
at 5 U.S.C. 5332(a)(2) and rates are
adjusted in accordance with 5 U.S.C.
5303. The agency also recommended
that OPM issue revised guidance on the
minimum qualifications associated with
each grade level. In May 2022, OPM
issued updated guidance and
qualifications policy including the
General Schedule Qualifications
Operating Manual.16 Qualification
requirements are aligned with
classification policy for an occupational
series. Similarly, OPM’s Federal Wage
System Qualifications provide guidance
regarding the knowledge, skills, and
abilities (KSAs) or job elements needed
for jobs and provides a reference for
assessing the qualifications of
applicants for a particular grade.17
Candidates for Federal employment
and/or Federal employees may qualify
for Federal jobs based on training,
experience, education, and/or other
requirements aligned with the position.
Both the Manual and the FWS
Qualifications provide detailed
information to assist with aligning the
qualifications of a candidate with the
appropriate KSAs needed for jobs by
grade, providing consistency between
candidates, within an agency, and
between agencies.
A commenter also expressed concern
that ‘‘to the extent that agencies are
limited in their ability to set pay within
GS levels, they are more likely to adjust
the GS levels such that step 1 of the
offered GS level is closer to the market
rate.’’ Comment 20. OPM cautions that
the intentional misclassification of
positions to manipulate recruitment,
16 Office of Personnel Management. ‘‘Guidance
Release—E.O. 13932; Modernizing and Reforming
the Assessment and Hiring of Federal Job
Candidates.’’ https://www.chcoc.gov/content/
guidance-release-eo-13932-modernizing-andreforming-assessment-and-hiring-federal-job.
17 Office of Personnel Management. ‘‘Federal
Wage System Qualifications.’’ https://
www.opm.gov/policy-data-oversight/classificationqualifications/federal-wage-system-qualifications/
#url=Overview.
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qualifications, and/or pay may be a
prohibited personnel practice subject to
review by the Office of Special Counsel.
Consideration of Salary History
Executive Order 14035 directed OPM
to consider, as appropriate and
consistent with applicable law,
prohibiting the use of an applicant’s
salary history to set pay or when setting
pay for a Federal employee. OPM has
authority to issue regulations governing
the GS, prevailing rate, AAJ, ALJ, SES,
and SL/ST pay systems in 5 U.S.C.
5333, 5338, 5343, 5372, 5372b, 5376,
5382, and consistent with merit system
principles established in law at 5 U.S.C.
2301. Relevant to this final rule is the
requirement that all employees and
candidates for employment receive fair
and equitable treatment in all aspects of
personnel management (5 U.S.C.
2301(b)(2)) and that equal pay should be
provided for work of equal value, with
‘‘appropriate consideration’’ for both
national and local rates paid by
employers in the private sector (5 U.S.C.
2301(b)(3)).
Throughout the proposed rule and
this final rule, OPM adheres to these
authorities and merit system principles.
We have identified the reasons—based
on OPM data, Department of Labor data,
examples of state salary history bans
and their impacts on salary equity,
research regarding the benefits of such
bans, and other information—why
salary history should not be a
consideration in the pay-setting process
for new Government employees.
OPM administers pay systems that
have taken a variety of approaches to
setting initial pay. The GS pay system
specifically allows salary history as a
factor to be considered when setting pay
for an initial appointment in Federal
service (or reappointment after a break
in service). The prevailing rate pay
systems allow agencies to set pay above
a minimum rate based on ‘‘special’’
qualifications but provide no direction
on what factors to consider when
determining the step at which to set pay
within the grade. The AAJ pay system
allows agencies to offer an AAJ
applicant with superior qualifications a
higher than minimum rate of pay that is
next above the applicant’s existing pay
or earnings, up to the maximum rate.
The ALJ pay system allows agencies,
with prior OPM approval, to pay an ALJ
applicant with superior qualifications
the rate of pay that is next above the
applicant’s existing pay or earnings up
to the maximum rate. The SES and SL/
ST pay systems provide a specific list of
factors—which does not include salary
history—that an agency must consider
when setting initial pay.
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OPM has determined that salary
history should no longer be considered
in setting pay for new Federal
employees entering into the GS,
prevailing rate, AAJ, ALJ, SES, and SL/
ST pay systems. Accordingly, OPM is
modifying the regulatory language for
the GS pay system by removing salary
history as a factor to consider in setting
pay for newly appointed employees.
Similarly, OPM is adding language to
the prevailing rate systems, AAJ, ALJ,
SES, and SL/ST pay system regulations
to detail the factors that should be
considered in setting pay and/or to
make clear that salary history is no
longer a permitted factor.
National unions, a local union, as
well as multiple other organizations,
Federal employees, and members of the
public expressed strong support for
many of the regulatory amendments in
the proposed rule. One commenter
reported an academic research study in
which a description of the proposed
salary history ban was shared with
1,605 Americans and found that about
two-thirds of those surveyed favored the
policy somewhat or strongly. See
Comment 58. Commenters provided
sources of information and data arguing
against using salary history in the pay
setting process. These commenters and
the cited sources demonstrate multiple
rationales supporting OPM’s decision
not to permit continued consideration of
salary history in setting initial pay. The
main rationales presented by
commenters are discussed in the
following sections along with
consideration of countervailing
comments.
Salary history does not demonstrate
an individual’s qualifications or fitness
for a position. Commenters argued that
past salary in a non-Federal job is not
indicative of ability to perform in the
Federal position. One organization
wrote that ‘‘prior salary is not an
accurate measure of a job candidate’s
qualifications, skill, or ability to perform
a job,’’ referencing an Issue Brief from
the Women’s Bureau of the U.S.
Department of Labor (DOL). Comment
56. A union commented that including
salary history as an allowable
consideration is at odds with the
principles reflected in the current
regulations. See Comment 44. The
commenter explained that salary history
‘‘does not directly reflect either the
employee’s superior qualifications or
the agency’s special needs,’’ noting that
those are the types of interests for which
OPM regulations allow consideration.
Id.
Another commenter also expressed
concern that consideration of past salary
information ‘‘perpetuates the flawed
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5741
assumption’’ that a lower paid
candidate is of lower quality. Comment
60. That commenter cited a study,
which found that ‘‘salary history is not
an effective tool for assessing a
candidate’s value . . . because
organizations do not accurately match
pay to an employee’s productivity’’ and
‘‘there [is] too much variation on the
relationship between pay and
performance.’’ 18 Id. For example,
candidates who have had a break in
their career to serve as full-time
caregivers to children or other family
members may have a salary history that
is lower than market value, but the
candidate is well-qualified to perform
the duties of the position. Id. Several
other commenters also cited the
example of lower pay for caregivers not
being indicative of lower quality
employees. See, e.g., Comments 20, 33,
56.
Commenters raised the issue that
variability in current pay may reflect the
aspects of the current employer rather
than any factors relevant to Federal
employment. For example, an
organization commented that ‘‘those
who take lower-paying jobs, such as
those at non-profits or state and local
government . . . should not be
penalized [compared to those working
for private sector employers].’’
Comment 46.
Several commenters disagreed,
contending that past pay can be
indicative of superior skills and/or high
performance. An agency recommended
that OPM expand the criteria for
determining an employee’s salary based
on qualifications to allow agencies to
consider the ‘‘whole of the individual
and their experience’’ rather than
banning agencies from considering a
candidate’s salary history. Comment 34.
An individual commented that the
rule was arbitrary and capricious
because it is inconsistent with merit
system principles at 5 U.S.C. 2301(b)(1)
and 2301(b)(3), calling for equal pay for
work of equal value. Comment 28. The
commenter argues that the
determination of ‘‘relative ability,
knowledge, and skills’’ in ‘‘fair and
open competition’’ means comparing
individuals with others in a market, or
competitive, economy, and that this
requires a review of salary history
because it is ‘‘the price of a worker’s
labor per unit time.’’
OPM disagrees with this analysis. As
an initial matter, ‘‘fair and open
competition’’ in 5 U.S.C. 2301(b)(1) does
18 Adler, L. ‘‘What’s a Job Candidate Worth?
Explaining Variation in Pay-Setting Practices,
SOCARXIV (2020). https://osf.io/preprints/
socarxiv/ctu8m.
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not mean the Government should
compare salaries vis-a`-vis others in a
market economy. It refers to the
recruitment, selection, and
advancement of qualified individuals
based on merit (as opposed to, for
example, political favor). More
significantly, OPM disagrees that salary
history is a consistently accurate proxy
for worker value. Non-Federal
employers can have widely varying
compensation structures, policies, and
funding. Lower paying jobs, such as
non-profit organizations or entry-level
professional positions, could have
compensation packages that include
non-salary benefits (e.g., more generous
leave or childcare flexibilities) that
would be difficult to capture by only
looking at past salary. Also, many
higher paying jobs have an expectation
or requirement of longer hours (as many
are exempt from the overtime pay
provisions of the Fair Labor Standards
Act), such that the salary per hours
worked would more closely resemble
that of a lower paying job with a lower
hours expectation or requirement. See
Comments 20, 33, 44, 62, 68. But that
nuance would not be captured by
looking only at a monetary figure. In
addition, OPM’s regulations already
allow—and will continue to allow—
agencies to consider several factors
including the level, type, or quality of
the candidate’s skills or competencies.
Agencies do not typically have access
to the information that a previous nonFederal employer used to determine a
job candidate’s salary, whether the
previous employer conducted any salary
survey or labor market analysis when
making pay-setting determinations, or
how a candidate’s employment history
may have affected the previous
employer’s salary decisions. Under this
final rule, agencies will set pay above
the minimum of the rate range based on
factor(s) such as the level, type, or
quality of the candidate’s skills or
competencies, which will be more
equitable and relevant than salary
history.
Salary history bans break the cycle of
pay discrepancies arising from
discrimination and inequity and have
positive impacts on pay gaps.
Commenters noted that setting starting
pay based on salary history can
contribute to inequitable pay gaps.
Citing a DOL Issue Brief, an
organization noted that salary history
may ‘‘reflect past pay discrimination or
other factors with gender-based
implications.’’ Comment 56. Therefore,
setting starting pay based on past pay
can compound the ‘‘effects of
discrimination and inequity,’’ in part
because starting salary can affect
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subsequent salary increases. Id. That
commenter, citing a Harvard Business
Review study, noted that ‘‘nearly twothirds’’ of businesses found that pay
disparities ‘‘stemmed from reliance on
salary history.’’ Id. Another commenter
also noted that prior salary history may
reflect ‘‘prior economic downturns in
which women and minority workers are
often harder hit.’’ Comment 44.
Several commenters referenced a 2020
paper showing that implementing a
salary history ban results in greater
increases in salary for job changers for
populations that have historically
experienced discrimination. See, e.g.,
Comments 51, 56, 61.19 A Federal
employee union expressed the view that
the proposed approach would likely
lead to an increase in pay for women
and people of color. Comment 59.
Another commenter argued that
implementing a salary history ban
would ‘‘increase the diversity of our
workforce and leadership.’’ Comment
22. That commenter also argued that the
proposed ban would ‘‘provide greater
footing to women and minority groups.’’
Id. A Federal employee-run organization
commented that ‘‘in eliminating the use
of salary history when setting pay the
Government will emphasize its
commitment to gender and racial
equality while also reducing costly legal
challenges to pay disparities.’’ Comment
62. Similarly, an organization
commented that the proposal would
help to ‘‘ensure that the Federal
Government is in compliance with the
Equal Pay Act.’’ Comment 56.
In contrast, an agency expressed
concern that prohibiting the
consideration of salary history was not
in line with the November 2021
Governmentwide DEIA Strategic Plan,20
which discouraged ‘‘solely’’ relying on
salary history to set pay. OPM believes
the rule is consistent with the DEIA
strategic plan. The DEIA strategic plan
listed this suggestion among many
policy examples the Government could
adopt to ensure fair outcomes. Further,
the President, through E.O. 14035 and
E.O. 14069, directs OPM to consider
prohibiting setting pay based on salary
history, which OPM has concluded is
appropriate.
Many of the comments arguing that
salary history bans can reduce pay gaps
19 See Bessen, James E., Chen Meng, and Erich
Denk. 2020. ‘‘Perpetuating Inequality: What Salary
History Bans Reveal About Wages.’’ https://papers.
ssrn.com/sol3/papers.cfm?abstract_id=3628729.
20 The White House. ‘‘Governmentwide Strategic
Plan to Advance Diversity, Equity, Inclusion, and
Accessibility in the Federal Workforce,’’ November
2021. https://www.whitehouse.gov/wp-content/
uploads/2021/11/Strategic-Plan-to-AdvanceDiversity-Equity-Inclusion-and-Accessibility-in-theFederal-Workforce-11.23.21.pdf.
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cited the experiences of states and
localities, noting that 21 states and 22
localities have enacted laws prohibiting
the use of salary history in setting pay.
See, e.g., Comments 33, 56, 59, 60, 61.
One organization cited to data from
Colorado, Nevada, and Rhode Island in
support of implementing a prohibition
on considering a candidate’s salary
history. Comment 33. Several
organizations further noted, citing
multiple studies, that these salary bans
have helped narrow pay gaps. See, e.g.,
Comments 33, 60, 61. One of those
organizations asserted that OPM’s
proposed changes would help bring the
Federal Government in line with these
states, localities, and private firms that
have already taken steps to limit or ban
employers from using an applicant’s
prior or current salary in determining
pay. Comment 33.
In contrast, an agency commented
that, OPM should not ‘‘ban any pay
flexibility across the board’’ based on
pay gaps specific to an agency, to
certain occupations within an agency, or
a limited number of agencies. Comment
34. It stated that agencies with such
issues should ‘‘seek to remedy those
gaps or impose their own limits based
on OPM authorities.’’ Id. Further, some
commenters questioned the existence of
pay gaps (Comment 16) or the
effectiveness of a salary history ban
(Comments 18, 23), and argued that a
salary history ban could harm women
who earn a competitive wage (Comment
23). OPM does not believe that these
comments warrant consideration of
prior salary. The governing merit system
principles are not unique to one agency,
and OPM believes that eliminating
consideration of prior salary is most
consistent with those principles
regardless of whether any agency or
occupation currently has an inequitable
pay gap. Additionally, even if a
particular agency or occupation does
not currently have a pay gap, that does
not eliminate the possibility that a pay
gap could develop if new hires have
differing starting salary ranges for
reasons unrelated to any merit system
principles (including but not limited to
prior discrimination); eliminating
consideration of prior salary can help
prevent inequities from developing in
the future. No commenters provided
data showing that a salary history ban
is not an effective tool for eliminating
inequitable pay gaps or preventing such
gaps from occurring. OPM concludes
that, based on the evidence, prohibiting
consideration of salary history has been
demonstrated to reduce pay gaps and,
thus, is a valid tool for the Federal
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Government to implement for these pay
systems.
Additional Considerations Regarding
Setting Pay
Commenters raised several other
considerations regarding the pay-setting
processes at issue in this rule.
OPM proposed that, when setting pay
above the minimum rate for an
employee newly appointed to a GS,
prevailing rate system, AAJ, and ALJ
position, an agency would be required
to consider how pay has been set for
employees who had similar
qualifications (based on the level, type,
or quality of the appointee’s skills or
competencies or other qualities and
experiences) and who have been newly
appointed to positions that are similar
to the appointee’s position (based on the
position’s occupational series, grade
level, organization, geographic location,
or other job-relevant factors), if
applicable. A commenter noted that
‘‘this may have the effect of locking in
low pay and creating disparities across
teams or across agencies.’’ Comment 20.
The commenter suggested OPM
‘‘provide a type of pay-setting authority
that would allow an agency to remedy
this by raising the pay for current
employees to achieve equity with
incoming employees.’’ Id. There is no
statutory authority for this suggested
change. For example, 5 U.S.C. 5334
provides OPM with the authority to
prescribe regulations regarding setting a
GS employee’s pay when an employee
transfers from a non-GS position or
another GS position, or upon demotion,
reinstatement, reappointment, change in
type of appointment, change in
employment status, or change in grade.
The law does not allow OPM to
prescribe regulations regarding
adjusting pay for existing employees to
achieve equity.
An organization recommended that
‘‘OPM provide additional guidance,
including examples, to agencies about
what constitutes ‘similar work,’ and
how agencies should make
determinations for employees doing
‘similar work’ who have different levels
of experience.’’ Comment 56. This final
rule specifies that determinations
regarding whether work is similar
would be based on the position’s
occupational series, grade level, types of
duties, or other job-relevant factors.
While agencies will be responsible for
making these determinations within
these parameters, OPM will consider the
need to provide further agency
assistance on this issue in future
implementing guidance.
Commenters noted that OPM
proposed only banning the
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consideration of salary history in setting
pay. Several organizations
recommended that OPM explicitly ban
agencies from asking for and discussing
salary history with job candidates. See,
e.g., Comments 33, 56, 60, 61. The
organizations also recommended that
OPM guidance should clarify that
agencies should not instead ask about
an individual’s salary expectation and
that agencies should appropriately train
relevant staff to ensure effective
implementation of OPM’s proposal. Id.
The regulations that OPM is
amending relate to the factors agencies
use in setting pay, not to agencies’
conduct in the hiring process, but OPM
agrees that agencies should not solicit
salary history from job candidates. As
an initial matter, agencies are prohibited
from using this information, so there is
simply no reason why agencies should
request it, as there is no use for this
information, if acquired. Moreover,
doing so could suggest to a candidate
that the agency intended to consider the
information in violation of the
regulation, which further militates
against an agency from asking.
Therefore, agencies should not request a
candidate’s salary history, and OPM
will issue guidance saying the same.
OPM will consider the scope and
content of implementation guidance,
trainings, and other means of sharing
best practices following the publication
of this rule.
We note, of course, that an agency has
no control over what information a
candidate may volunteer to provide and
that a candidate could disclose their
prior salary during the interview
process. In the event of voluntary salary
disclosure, agencies will continue to be
prohibited from considering that
information to set pay, regardless of
how they learn that information.
With respect to candidates providing
salary expectations, OPM notes that
nothing in this rule limits candidates’
ability to offer this information. Under
this final rule, agencies can still set pay
above the minimum rate (using factors
other than salary history or a competing
job offer). Information regarding
candidates’ salary expectations may
help agencies effectively recruit and
onboard these candidates by increasing
minimum pay based on factors other
than salary history or a competing job
offer.
An agency was concerned that not
allowing Federal agencies to consider
salary when setting initial pay ‘‘could
lead to a biased pay-setting process and
have unintended consequences.’’
Comment 48. The commenter suggests
that salary is a factor that helps to
remove subjective bias. OPM disagrees
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that the changes could lead to a biased
pay-setting process. Under the current
regulations, agencies may consider one
or more of the factors listed in the
regulations when setting pay for a GS
appointee with superior qualifications
or for which the agency has a special
need. Under the revised regulations for
the GS pay system, agencies must
consider the step at which pay has been
set for employees who had similar
qualifications and who have been newly
appointed to positions that are similar
to the candidate’s position and at least
one other factor listed in the regulations.
Similarly, under the current prevailing
rate regulations, an agency applying the
special qualifications authority
currently has no limitations. Under the
revised regulations, OPM provides
specific factors for an agency to
consider, which will make pay setting
less subjective and less prone to bias.
Under the AAJ and ALJ pay systems,
adjustments from the minimum rate for
superior qualifications are currently
based primarily on current pay. With
the revisions in this final rule, AAJs and
ALJs that are new to Federal
employment or reappointed after a
break in service may have pay set based
on qualifications with consideration
given to the pay received by AAJs or
ALJs, respectively, with similar
qualifications and in similar positions.
This means that we expect a lower risk
of bias because salary history, a factor
known to perpetuate gender and racial/
ethnic biases, is being removed from
consideration.
Pay Systems Outside of Title 5
An agency noted that the proposed
revisions would not apply to pay
systems under authorities outside of
title 5 of the United States Code and
implied that implementing these
changes for the title 5 pay systems but
not for other pay systems would result
in some sort of inequity. Comment 52.
Another agency asked whether OPM’s
proposed regulatory changes would
apply to employees under the
Department of Defense Civilian
Acquisition Workforce Personnel
Demonstration Project (AcqDemo) or
Science and Technology Reinvention
Laboratories (STRL). Comment 57. OPM
proposed revising the GS, prevailing
rate system, AAJ, and ALJ regulations
because OPM has authority to regulate
pay setting for these systems under 5
U.S.C. 5333, 5338, 5343(c), 5372(c), and
5372b(b). The regulatory changes do not
apply to AcqDemo, which is authorized
under 10 U.S.C. 1762, or to STRL,
which is authorized under 10 U.S.C.
4121, as the Department of Defense
waived provisions of title 5 pertaining
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to setting pay for GS employees under
these demonstration projects’
authorizing legislation and 5 U.S.C.
chapter 47. See 82 FR 52104 and 87 FR
72462.
We note, however that under section
12(b) of E.O. 14035, the head of each
agency that administers a pay system
other than one established under title 5
of the United States Code must review
the agency’s regulations and guidance
and, as appropriate and consistent with
applicable law, revise compensation
practices to address any pay inequities
and advance equal pay. OPM will be
requesting agency reports on any
revisions to compensation practices
made to implement the direction in E.O.
14035.
Impact on Recruitment
The commenters who categorically
disagreed with the proposed rule and
those commenters who only cited
opposition to portions were largely
concerned that prohibiting agencies
from using a candidate’s salary history
to set pay would hurt the Federal
Government’s ability to recruit
employees, especially for occupations
for which non-Federal salaries exceed
Federal salaries. See, e.g., Comments 6,
8, 9, 18, 21, 23, 26, 35, 52, 57, 61.
Conversely, several commenters
argued that prohibiting consideration of
salary would improve recruitment
because it forces consideration of more
equitable factors in setting pay. See, e.g.,
Comments 17, 33, 44, 51, 56. For
example, one union noted that
eliminating salary history refocuses
‘‘consideration on . . . factors such as
the nature and necessity of the job to the
agency, disparities between Federal and
non-Federal salaries for similar
positions’’ and comparability to pay
received by similarly qualified
candidates for similar positions.
Comment 44. An organization, citing a
working paper summarizing a field
experiment, noted that ‘‘[r]esearch
shows that when employers are not able
to rely on salary history to set pay,
employers collect more information
from candidates and ask more
substantive and probing questions to
evaluate an applicant for the job.’’
Comment 56. Many commenters cited as
a benefit the stronger emphasis on a
candidate’s knowledge and skills. See,
e.g., Comments 10, 57.
An organization commented that
changing Federal Government hiring
practices to be more equitable ‘‘will
likely result in economy-wide gains as
the federal government will be better
able to attract and hire a wider pool of
workers.’’ Comment 33. The
organization also noted that the revised
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practices could improve retention,
noting that ‘‘removing salary history
from the application and interview
process can contribute to a sense of a
fair and equitable organization culture
that can lead to increased retention and
talent attraction’’ since ‘‘workers who
report a sense [of] unfairness in the
workplace are more likely to voluntarily
leave their job.’’ Id.
An agency suggested that the salary
history ban would improve its ability to
recruit and retain ‘‘highly skilled
employees with specific technical
expertise’’ due to the perception of the
Federal Government as an ideal
employer. Comment 51. It argued that
the ‘‘halo effect’’ of a salary history ban
was an important tool for competing in
tight labor markets. Id.
OPM agrees that this rule will have a
positive impact on recruitment and
believes that any recruitment challenges
resulting from this rule will be minimal.
Agencies will still be able to set pay
above the minimum of the rate range to
recruit new employees based on other
applicable factors. For example, one of
the factors agencies will be able to
consider when setting pay under 5 CFR
531.212(c) is whether there are
significant disparities between Federal
and non-Federal salaries for the skills
and competencies required in the
position to be filled.
Several commenters, including an
agency, expressed concern that the
changes would slow down the paysetting process or that agencies will be
discouraged from using pay flexibilities
because of the additional work required
if use of salary history is prohibited in
setting pay. See Comments 26, 41, 52.
OPM disagrees that agencies will be
discouraged from using the pay
flexibilities that are being revised.
Instead of being allowed to consider a
candidate’s salary history, an agency
can, where a candidate’s superior
qualifications or an agency’s special
need merits setting pay above the
minimum rate, consider one or more
factors directly related to the position to
be filled and how pay has been set for
employees who had similar
qualifications and who have been newly
appointed to positions that are similar
to the candidate’s position, if
applicable. This information should be
readily available to agencies and will
give agencies the ability to increase a
candidate’s starting pay as appropriate.
Competing Job Offers
OPM’s proposal to allow agencies to
consider a competing job offer when
setting pay within limitations specified
in the proposed rule received a
significant number of comments.
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One commenter said that it was
‘‘arbitrary and capricious to propose
that agencies may consider a competing
offer but to ignore an applicant’s current
salary or salary history’’ because ‘‘their
current compensation represents a
competing offer to the Government’s
offer.’’ Comment 20. That commenter
argued that there are racial disparities
with respect to who ‘‘may be able to
wait out longer for a competing [job]
offer than others due to higher wealth.’’
Id. Another commenter stated that
allowing consideration of private sector
job offers would be ‘‘more available to
beneficiaries of private sector
discrimination than to those that have
been treated unfairly, and those offers
would precisely reflect the private
sector salary history that the proposed
rule disallows directly.’’ Comment 32. A
commenter expressed that relying on
competing job offers in negotiation of
pay ‘‘only serve[s] to perpetuate pay
disparities and should be eliminated.’’
Comment 40. An organization
commented that a competing job offer
could be ‘‘another reflection of past pay
discrimination, bias, negotiation bias, or
other factors with gender-based
implications that are irrelevant to a
candidate’s skills, qualifications, or
experience.’’ Comment 56. Another
organization stated that ‘‘women and
people of color likely have lower
competing offers or may have none.
Therefore, using this information to
determine compensation could
perpetuate inequality.’’ Comment 61.
An organization recommended
revising the regulations ‘‘to require that
the competing job offer be
contemporaneous to the Federal offer at
issue, and to require that the competing
job offer be bona fide (as certified in
writing by the applicant) and not, for
example, be an offer that is made at the
request of the applicant with no real
intention of resulting in actual hiring for
the purpose of affecting pay-setting in
the hiring agency’s job offer.’’ Comment
49.
In contrast, one agency supported
allowing agencies to consider competing
job offers as necessary for the agency to
compete with the private sector.
Comment 57.
OPM is persuaded that the same
principles that apply to consideration of
salary history apply to consideration of
a competing job offer. A competing job
offer could, itself, be based on salary
history. And, as noted by multiple
commenters, an individual’s current pay
is effectively a competing offer. Setting
pay based on the factors enumerated in
this final rule is better suited to
establishing equitable pay than
comparison to a competing offer.
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Because of the rationales for removing
consideration of salary history and
based on the comments received, OPM
is revising this element of its proposed
rule and, in this final rule, is removing
a salary documented in a competing job
offer from the list of factors that an
agency may consider when setting pay
above the minimum rate. OPM reiterates
that agencies will be able to consider
other applicable factors when setting
pay above the minimum rate, such as
significant disparities between Federal
and non-Federal salaries for the
required skills and competencies.
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Comments Regarding Specific Pay
Systems
SES & SL/ST Pay Systems
OPM’s proposed rule explained that,
although the SES and SL/ST pay
systems are among the pay systems
administered by OPM, OPM believed
that it was not necessary to prohibit
consideration of salary history in the
SES and SL/ST pay systems because the
regulations governing those pay systems
provide a specific list of factors to
consider when setting pay that does not
include salary history. Further, the
gender pay gap for these positions,
based on September 2021 data, is less
than one percent. OPM requested
comments, however, on a wide range of
topics to inform how OPM could best
promote pay equity in its pay systems.
OPM received several comments
objecting to OPM’s proposal not to
revise SES and SL/ST pay systems and
advocating that these positions be
treated the same as those in the GS,
prevailing rate, AAJ, and ALJ pay
systems. See Comments 07, 32, 47, 56,
62. After further consideration, OPM
agrees and is amending the regulations
for the SES and SL/ST pay systems to
make explicit that salary history and
competing job offers cannot be
considered when setting pay for new
entrants to Federal civilian positions.
The commenters that disagreed with
excluding SES and SL/ST pay systems
from these new rules argued that this
exclusion created arbitrary
inconsistency. Id. One commenter
stated that ‘‘exempting these [SES and
SL/ST] positions from the strict
prohibition on considering an
applicant’s salary history appears
arbitrary and would create unnecessary
inconsistencies in the regulations.’’
Comment 56. Another commenter
voiced support for the use of salary
history, generally, describing it as ‘‘a
factor that is helpful for setting the
starting pay’’ but supported either a
total inclusion or total exclusion of the
use of salary history across pay systems,
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stating that the exclusion of SES and
SL/ST ‘‘shows prejudice in applications
of this policy.’’ Comment 07.
Commenters also objected to the
exclusion of SES and SL/ST from this
rule on the basis that any gender/racial
pay gap, even below one percent,
should be addressed. Comments 56, 62.
A Federal employee-run organization
stated that ‘‘[t]he salary history ban is a
critical step towards shrinking unjust
and inequitable salary gaps, which is
why we encourage OPM to include all
positions (including Senior Executive
Service jobs) unless OPM can provide
compelling reasons for their exclusion.’’
Comment 62. Similarly, when
commenting on the existing pay gap for
SES and SL/ST positions, an
organization stated that ‘‘[a]bsent
evidence that prohibiting consideration
of salary history for SES, SL, and ST
positions would increase the pay gap for
those positions, the fact that the pay gap
is small does not provide an adequate
justification for failing to apply rules
designed to promote equity to these
positions.’’ Comment 56. OPM did not
receive any comments in support of this
aspect of the proposed rule.
OPM agrees with the commenters that
the SES and SL/ST pay regulations
should be revised consistent with
changes being made to the pay-setting
rules for other pay systems. Although
the SES and SL/ST systems currently do
not include salary history as a factor
when setting pay for individuals
receiving their first appointment as a
civilian employee of the Federal
Government, they also do not specify
that the list of factors is exhaustive. That
is, the SES and SL/ST pay regulations
mandate what must be considered when
setting an initial rate of pay—to include
merit-based factors such as the nature
and quality of the individual’s
experience, qualifications,
accomplishments, and current
responsibilities, which could be read to
allow for the consideration of additional
factors such as salary history. 5 CFR
534.404; 5 CFR 534.506. Similarly,
agencies currently have broad discretion
in setting pay for an individual being
reappointed to the SES following a
break in SES service and for
reappointment to an SL or ST position.
5 CFR 534.404(i); 5 CFR 534.506(c).
OPM agrees with commenters that
consideration of salary history for SES
and SL/ST positions presents the same
concerns as for the GS, prevailing rate,
AAJ, and ALJ pay systems. Further,
even though the SES and SL/ST pay
systems do not have a significant pay
gap, eliminating consideration of salary
history information, as discussed above,
is most consistent with merit system
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principles and can help prevent
inequitable pay discrepancies from
arising. Salary history also is unlikely to
reflect an individual’s qualifications or
fitness for a position relative to the
qualifications of other new appointees.
Therefore, we are adding language to the
SES and SL/ST pay regulations
explicitly prohibiting the use of salary
information for appointees who are
entering the Federal Government for the
first time and prohibiting the use of
non-Federal salary information upon
reappointment to an SES, SL, or ST
position.
Unlike the GS, prevailing rate, AAJ,
and ALJ pay systems for which OPM is
adding a requirement for agencies to
implement policies for setting pay for
current and former Federal employees,
OPM is not adding a similar provision
for the SES and SL/ST pay systems. The
regulations for SES pay already require
agencies to have a plan for setting and
adjusting rates for SES members. 5 CFR
534.404(g). With respect to setting
initial pay, plans must provide for
transparency in pay setting, may
consider the executive’s scope of
authority and level of responsibility in
the agency, and must consider the
distribution of pay rates within the SES
rate range. Id. Similarly, the SL/ST pay
system regulations require an agency to
have written procedures for setting pay.
5 CFR 534.505. The procedures must
provide for transparency in pay setting.
Id. These written SES and SL/ST plans
already address the pay-setting issues
this final rule requires agencies to
develop for the GS, prevailing rate, AAJ
and ALJ pay systems.
General Schedule Pay Setting
OPM received a number of comments
related specifically to the General
Schedule pay system and the General
Schedule regulations. While some of
these comments implicate issues that
affect each of the pay systems at issue
in this final rule, we address the General
Schedule-specific comments here.
An agency suggested modifying or
eliminating 5 CFR 531.211(a), which
requires that pay be set at the minimum
rate. Comment 30. OPM cannot
eliminate this regulation because it
implements the law in 5 U.S.C. 5333.
The statute states, ‘‘New appointments
shall be made at the minimum rate of
the appropriate grade’’ and provides
OPM with authority to prescribe
regulations to allow setting pay above
the minimum rate of the grade based on
considerations such as existing pay, the
candidate’s unusually high or unique
qualifications, or a special need of the
Government for the candidate’s services.
While the statute authorizes regulations
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that provide pay-setting flexibility, the
default is to have pay set at the
minimum of the grade. Also, while the
statute refers to consideration of
‘‘existing pay,’’ it is listed as an example
of what OPM regulations may consider.
As discussed in this final rule and the
proposed rule, OPM has determined to
prohibit consideration of existing pay or
salary history when setting pay above
the minimum rate of a GS grade.
An agency questioned the
applicability of 5 CFR 531.212 to
nonappropriated fund instrumentality
(NAFI) employees who move to GS
positions. Comment 52. As stated in 5
CFR 531.212(a)(4), employees who
move from a NAFI position to a GS
position with a break in service of 3
days or less and without a change in
agency are not eligible to have pay set
under 5 CFR 531.212 because their
NAFI employment is considered
employment by the Federal
Government. Such NAFI employees are
covered by the regulations in 5 CFR
531.216, which allow consideration of a
NAFI employee’s highest previous rate
when setting pay. NAFI employees who
are not covered by 5 CFR 531.216 (i.e.,
those who have a break in service of
more than 3 days or a change in agency
upon movement to a GS position) may
be eligible to have their pay set under
the GS superior qualifications and
special needs pay-setting authority at 5
CFR 531.212, as revised by this final
rule.21
An agency was concerned that OPM
does not ‘‘have the agency data to
accurately state whether salary history
was the basis for justifying [setting pay
above step 1 in the GS system] or
whether it was one of the other eight
factors considered.’’ Comment 45. The
agency recommended ‘‘[mandating] . . .
that setting pay above step 1 cannot be
based solely on salary history,’’ that
agencies ‘‘communicate to applicant/
candidate/selectee that they are not
required to provide any salary history,’’
and that ‘‘OPM request the data/
information they are lacking to make a
more informed decision regarding the
proposed removal of this factor.’’
Comment 52. Another commenter also
suggested that OPM collect more data.
OPM does not believe that it is practical
to ask agencies to submit the written
documentation of their justifications to
use the superior qualifications and
special needs pay-setting authority that
is required by 5 CFR 531.212(e) when it
was used for over 9,000 GS employees
in fiscal year 2021. In 2013, some
21 OPM has a fact sheet on NAFI employees
moving to GS positions, which is based on the law
in 5 U.S.C. 5334(f).
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agencies reported that their policy on
this authority required the use of a job
candidate’s existing salary, or that
existing salary must be considered when
setting pay of a new GS employee.
While OPM revised its fact sheet on the
authority in 2015 to remind agencies
that existing salary is only one factor an
agency may use when setting pay under
this authority, the regulations have not
changed since that time so agency
policies may not have changed either.
OPM will update its guidance on setting
pay to reflect the changes made by this
final rule.
A Federal employee-run organization
‘‘agree[d] that it is prudent for agencies
to consider the wages of existing
comparable peers when setting a new
employee’s pay’’ but encouraged ‘‘OPM
to clarify that agencies should not look
at the actual salary a comparable peer
made when starting, but rather the grade
and step the peer was originally given.’’
Comment 62 (emphasis added). The
organization suggested revising 5 CFR
531.212(c)(1) to replace ‘‘How pay has
been set for’’ with ‘‘Which grade and
step had been given to’’ and replacing
‘‘have’’ with ‘‘had’’ in the paragraph
reading ‘‘How pay has been set for
employees who had similar
qualifications (based on the level, type,
or quality of the candidate’s skills or
competencies or other qualities and
experiences) and who have been newly
appointed to positions that are similar
to the candidate’s position (based on the
position’s occupational series, grade
level, organization, geographic location,
or other job-relevant factors), if
applicable.’’ Id. Another organization
similarly supported ‘‘requiring the
hiring agency to search comparative pay
of current employees at the hiring
agency when setting pay for new hires,
with measures taken to account for
differences in locality pay and post-hire
merit-based pay increases, such as
within-grade increases and quality step
increases.’’ Comment 49. The proposed
rule accounts for the grade level and
geographic location (which would
account for differences in locality pay
and other location-based payments
applicable to GS employees) of the
position. However, OPM has clarified in
this final rule that agencies must
consider the step at which pay has been
set for employees who had similar
qualifications and who have been newly
appointed to positions that are similar
to the candidate’s position.
Another organization commented that
consideration of labor market factors to
set a higher than minimum rate can
maintain pay inequities. The regulations
in 5 CFR 531.212 allow an agency to
consider ‘‘existing labor market
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conditions and employment trends,
including the availability and quality of
candidates for the same or similar
positions.’’ Comment 61. The
organization writes that ‘‘workers who
enter during a competitive labor market
could earn a higher wage than workers
who perform the same job but entered
during a less competitive labor market’’
and that ‘‘this is fundamentally at odds
with the notion of equal pay,’’ and
‘‘when the affected workers are women
or people of color, this approach can
exacerbate gender and racial pay
inequities.’’ Id. We are not revising the
regulations in response to this comment.
This factor—which an agency has
discretion to consider—recognizes that
it may be difficult to recruit employees
during a competitive labor market,
especially when the agency has a
special need for the candidate’s services
and may need to set pay at a higher rate
in the rate range. Agencies will be
required to consider how pay has been
set for employees who had similar
qualifications (based on the level, type,
or quality of the candidate’s skills or
competencies or other qualities and
experiences) and who have been newly
appointed to positions that are similar
to the candidate’s position (based on the
position’s occupational series, grade
level, organization, geographic location,
or other job-relevant factors), if
applicable. This required factor will
better advance pay equity.
A commenter asked, with respect to 5
CFR 531.212(e) for the GS pay system,
whether it would be permissible for
agencies to create a uniform policy by
which a certain step is always assigned,
such as step 4, for candidates with
similar qualifications for similar
positions. Comment 14. The commenter
suggested that this would ensure that all
candidates that benefit from the
regulation always have their pay set the
same to reduce variability in outcomes.
Id. OPM notes that agencies may create
such policies if the agency also
approves and documents each
determination to use the authority
consistent with 5 CFR 531.212(e).
OPM proposed adding in 5 CFR
531.221 that an agency must establish a
policy regarding use of the GS
maximum payable rate (MPR) rule that
included elements specified in the
proposed rule, such as considering how
pay has been set for employees
performing similar work in the
organization (based on the position’s
occupational series, grade level, types of
duties, or other job-relevant factors).
One agency suggested requiring
agencies in most circumstances to
provide a salary offer no lower than the
highest rate of pay the employee
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previously received in another Federal
job (the employee’s highest previous
rate or HPR). OPM is not making this
change. An agency’s decision to use the
MPR rule or how to set pay under the
MPR rule may be influenced by
different factors, such as budget, and
under this final rule must reflect
consideration of how pay has been set
for employees performing similar work
in support of pay equity. Under the
regulations, agencies will list these
factors in their policies. Agencies may
establish policies under which they will
always set pay at the employee’s MPR.
A commenter recommended
additional revisions, including that
OPM require that agencies post and
maintain their MPR policies on their
websites and that agency decisions
regarding any exceptions to these
policies be made on a centralized basis.
OPM declines to add these requirements
to the rule. OPM will be issuing
implementation guidance separately,
which will include best practices.
The same commenter also
recommended that OPM permit
agencies to set an employee’s salary up
to 15 percent higher than an employee’s
highest previous rate in recognition that
some Federal agencies have the
independent statutory authority to
provide benefits that are greater than
those provided under title 5 of the
United States Code to most Federal
employees. This recommendation is
beyond the scope of this rulemaking.
This rule is not intended to address pay
discrepancies resulting from
independent agency authority to
provide alternative compensation and
benefits.
Prevailing Rate Pay Setting
OPM did not receive any comments
specific to the prevailing rate pay
systems regulations. Accordingly, OPM
is adopting its proposals with two
changes, as described above. First, as
discussed in the Competing Job Offers
section, in this final rule, an agency will
not be able to consider a competing job
offer when setting pay for a new
prevailing rate pay system employee.
Second, we are also clarifying that
agencies must consider the ‘‘step’’ at
which pay has been set (instead of
‘‘pay’’) for employees who had similar
qualifications and who have been newly
appointed to positions that are similar
to the candidate’s position.
Administrative Appeals Judge Pay
Setting
Under 5 CFR 534.604, an agency may
offer an AAJ applicant with prior
Federal service a rate up to the lowest
rate of basic pay of the AAJ pay system
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that equals or exceeds the employee’s
highest previous rate of basic pay in a
Federal civil service position, not to
exceed the rate of basic pay for AA–6.
OPM proposed adding that an agency
must establish a policy regarding use of
this provision that includes elements
specified in the regulations, including
that the policy must require
consideration of how pay has been set
for other AAJs if the agency decides to
use this authority.
Also under the AAJ pay-setting
regulations, an agency may offer an AAJ
applicant with superior qualifications
who is not a current Federal employee
a higher than minimum rate when such
a rate is clearly necessary to meet the
needs of the Government. An agency
may pay a higher than minimum rate of
pay that is next above the applicant’s
existing pay or earnings, up to the
maximum rate AA–6. OPM proposed
several revisions to this authority,
including allowing agencies to set pay at
any rate within the AAJ pay system.
OPM proposed adding language
requiring an agency to document the
superior qualifications of the applicant,
the need of the Government for the
applicant’s services, consideration of
how pay has been set for AAJs who had
similar qualifications (based on the
level, type, or quality of the appointee’s
skills or competencies or other qualities
and experiences) and have been newly
appointed to positions that are similar
to the applicant’s position (based on the
position’s occupational series, grade
level, organization, geographic location,
or other job-relevant factors), if
applicable, and an explanation of the
factors that were used to justify the rate
at which the employee’s pay is set.
Factors an agency could consider
include the success of recent efforts to
recruit for the same or similar AAJ
positions or significant disparities
between Federal and non-Federal
salaries for the skills and competencies
required in the position to be filled.
This documentation would allow an
agency to evaluate for equity purposes
how pay has been set and reconstruct
the action if necessary.
An organization supported OPM’s
proposal to require agencies to
document the superior qualifications of
AAJs when setting pay above the
minimum rate. Comment 61.
As discussed in prior sections, in this
final rule, an agency will not be
permitted to consider an applicant’s or
former AAJ’s salary history or a salary
documented in a competing job offer.
OPM is modifying its proposed
regulatory text to make clear that, when
setting pay for a former AAJ, an agency
may set pay using either the highest
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previous Federal rate of pay (which
necessarily considers salary history) or
the superior qualifications authority;
however, if an agency uses the superior
qualifications authority, then the agency
may not consider salary history. OPM is
adopting the remainder of its proposal
without change.
Administrative Law Judge Pay Setting
Under 5 CFR 930.205, upon
appointment to a position at level AL–
3, an ALJ is paid at the minimum rate
unless the agency chooses to set pay at
a higher rate based on prior service or
superior qualifications. OPM proposed
revising § 930.205 to add that, before an
agency sets pay based on the ALJ’s
highest previous Federal rate of basic
pay, the agency must establish a policy
that includes certain elements specified
in the regulations, including that the
policy must require consideration of
how pay has been set for other ALJs if
the agency decides to use this authority.
OPM also proposed revisions to the
regulations on setting pay based on the
ALJ applicant’s superior qualifications
in § 930.205. Agencies would be able to
submit a request to OPM to set pay at
any rate within the AL–3 level.
Agencies’ requests to OPM would be
required to include: (1) the applicant’s
or former ALJ’s superior qualifications;
(2) how pay has been set for ALJs who
had similar qualifications (based on the
level, type, or quality of the appointee’s
skills or competencies or other qualities
and experiences) and have been newly
appointed to positions that are similar
to the ALJ’s position (based on the
position’s occupational series, grade
level, organization, geographic location,
or other job-relevant factors), if
applicable; and (3) the proposed rate of
basic pay and justification for that rate.
Agencies would not be able to consider
an applicant’s or former ALJ’s salary
history or the salary in a competing job
offer. Other factors an agency could
consider include the success of recent
efforts to recruit for the same or similar
ALJ positions or significant disparities
between Federal and non-Federal
salaries for the skills and competencies
required in the position to be filled.
OPM also proposed minor revisions to
reflect changes resulting from Executive
Order 13843 ‘‘Excepting Administrative
Law Judges from the Competitive
Service,’’ signed July 10, 2018.22 For
example, OPM proposed to modify the
language of § 930.202 to remove the
reference to a ‘‘certificate of eligibles’’ to
reflect that ALJ positions are now
excepted service.
22 83
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An organization noted that ‘‘the past
practice of relying upon salary history
has, in certain instances, limited the
starting salary potential of newly hired
ALJs without fairly considering the
experience and expertise these newly
hired individuals would bring to the
position.’’ Comment 36. The
organization stated it supports the goal
of ‘‘[increasing] pay equity by removing
reliance on salary history as a central
factor for setting pay, while retaining
the use of past Federal salary as the
minimum starting salary for a newly
hired ALJ with a history of Federal
employment.’’ Id. The organization also
requested that OPM consider ‘‘taking
steps to adjust. . . the maximum salary
of a Federal ALJ [to be] equivalent to the
salary paid to a Federal magistrate or
bankruptcy judge.’’ Id. OPM is not
adopting this recommendation. The
President determines the appropriate
adjustment for each level in the ALJ pay
system by executive order. See 5 U.S.C.
5372(b)(4).
Another organization supported
OPM’s proposal to require agencies to
document the superior qualifications of
ALJs when setting pay above the
minimum rate. Comment 61.
As discussed in prior sections, in this
final rule, an agency will not be able to
consider an applicant’s or former ALJ’s
salary history (defined as existing salary
or prior salary) or a salary documented
in a competing job offer when setting
pay based on an applicant’s superior
qualifications. OPM is adopting the
remaining aspects of its proposal
without change.
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Expected Impact of This Final Rule
A. Statement of Need
OPM is issuing this rule pursuant to
its authority to issue regulations
governing the GS, prevailing rate, AAJ,
ALJ, SES, and SL/ST pay systems in 5
U.S.C. 5333, 5338, 5343, 5372, 5372b,
5376, and 5382. The purpose of this
final rule is to advance pay equity
consistent with merit system principles
and position the Federal Government as
a model employer while reaping the
benefits that this policy will have for the
economy and efficiency of the
Government workforce. This rule is also
consistent with diversity, equity,
inclusion, and accessibility principles.
Based on September 2021 EHRI data
covering nonseasonal, full-time,
permanent Executive branch employees,
gender and racial pay gaps persist. On
average for all race/ethnicity groups
combined, women are paid 94 cents for
every dollar paid to a man—a gender
pay gap of 6 percent. This raw,
unadjusted gender pay gap is before
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considering any factors that might
explain the gap, such as occupation.
Because salary history is not always a
good proxy for worker value,
experience, and expertise and setting
pay based on a candidate’s salary
history could perpetuate a pay rate that
was inequitable, the Federal
Government is taking steps to address
the treatment of salary history and
establish policies that support equitable
pay determinations anticipating that
these policies in turn will also support
certain economies and efficiencies for
the Federal Government. Currently,
certain regulations allow agencies to
consider a candidate’s salary history or
use a competing salary offer as a factor
in setting initial pay. Agencies are not
required by OPM’s current regulations
to consider the assigned grades and
steps for employees performing similar
work or candidates who had similar
qualifications, if applicable, when using
pay-setting flexibilities. Nor are agencies
required to have policies regarding use
of an employee’s highest previous
Federal rate to set pay.
OPM invited comments on whether
there are additional ways that the
Federal Government can be a model
employer with respect to pay equity and
received several responses. A union
recommended that OPM ‘‘emphasize
pay equity and ensure employee
qualifications and the needs of agencies
struggling to hire and retain qualified
employees are both adequately
considered in pay-setting decisions.’’
Comment 44. The union’s
recommendations are generally
consistent with this final rule. An
organization recommended that OPM
‘‘add language formally stating that the
Federal Government intends to serve as
a model employer with respect to pay
equity. . . maintain oversight and track
how these pay-setting authorities are
employed. . . [and] continue to use the
General Schedule or other similar
regimented pay schedules.’’ Comment
49. We note that OPM’s strategic plan
for fiscal years 2022–2026 already states
that ‘‘OPM strives for the Federal
Government to be a model employer
where every Federal job provides fair
pay and benefits that reflect the diverse
needs of the workforce.’’ 23 This final
rule does not modify OPM’s current
oversight responsibilities regarding the
use of pay-setting flexibilities and does
not eliminate any Governmentwide pay
23 Office of Personnel Management. ‘‘Goal 1:
Position the federal government as a model
employer.’’ https://www.opm.gov/about-us/
strategic-plan/goal-1-position-the-federalgovernment-as-a-model-employer./
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system, such as the GS system, which
would require a statutory change.
Several commenters offered other
suggestions for ways the Federal
Government could improve pay equity.
These included examining veterans’
preference, ‘‘performing a market
analysis and paying civil servants fair
wages,’’ and shortening the required
waiting period that is required to
advance to the next higher step or rate
or reducing the number of steps in the
GS pay system or, more generally,
reforming how agencies set pay upon
promotion. Comments 58, 02, 08, 48,
respectively.
These suggestions would require a
statutory change—
• Veterans’ preference is provided by
5 U.S.C. 2108 and 2108a.
• GS, FWS, AAJ, and ALJ pay
schedules are typically adjusted
annually as provided by the statutes that
govern those pay systems, which
include consideration of changes in the
cost of labor or, in the case of the FWS,
prevailing rates (5 U.S.C. 5303, 5304,
5304a, 5343, 5372b, and 5372).
• The waiting periods that are
required to advance to the next higher
step or rate and the number of steps in
the GS pay system are specified in 5
U.S.C. 5335.
• Pay setting upon promotion for GS
employees is governed by 5 U.S.C. 5334.
Commenters also suggested regulating
pay-banding systems more strictly, fully
implementing the Federal Employees
Pay Comparability Act (FEPCA) of 1990,
allowing agencies to establish
developmental programs that allow for
‘‘retained pay’’ when changing career
fields, and providing current Federal
employees with more information on
promotions including specific
benchmarks that employees must
achieve to move between pay levels.
Comments 09, 18, 34, 56, respectively.
OPM does not administer any pay
banding systems—they are administered
by the agency that has the pay banding
system under its independent statutory
pay authority or under a demonstration
project authority, following provisions
under 5 U.S.C. chapter 47. OPM has
prescribed criteria under 5 U.S.C. 9509
for the U.S. Department of the Treasury
to follow in exercising its authority to
establish one or more pay banding
systems covering all or any portion of
the Internal Revenue Service
workforce.24 Any such system is
administered by the U.S. Department of
the Treasury and is outside the scope of
this final rule.
24 65
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Several other of the above
recommendations are also outside the
scope of this final rule—
• With regard to the FEPCA
recommendation, on August 31, 2023,
the President determined that it was
appropriate to exercise his authority to
set alternative pay adjustments for 2024
pursuant to 5 U.S.C. 5303(b) and 5
U.S.C. 5304a. These alternative pay
adjustments mean FEPCA will continue
to not be implemented fully.25
• OPM regulations at 5 CFR
536.301(a)(5) provide for retained pay
when an agency places an employee in
a formal employee development
program that is generally utilized
Governmentwide, such as the Recent
Graduates Program. Agencies have
discretion to determine whether to use
formal employee development programs
generally utilized Governmentwide to
fill their positions.
• Information on classification and
qualifications for GS and FWS positions
is available on OPM’s website.26
Commenters also suggested
prohibiting applicants from placing pay
on their resumes, prohibiting agencies
from asking about gaps in employment,
and considering how many hours a
candidate works in a non-Federal
position when setting pay. See, e.g.,
Comments 09, 23, 60, 20.
This final rule does not address what
topics may be discussed during salary
negotiations, including what
information a job candidate may share
with an agency on an employment
application or resume, as an agency
cannot completely control what
information a job candidate may
provide. See the ‘Additional
Considerations Regarding Setting Pay’
section for further discussion. Instead,
this final rule focuses on the agency’s
action by removing from consideration
any salary history information it may
receive. Because OPM is requiring
agencies not to consider salary history,
the number of hours a candidate works
in a non-Federal position becomes
irrelevant, since there is no reason to
standardize salary information (for
example, annualizing a non-Federal
hourly rate to compare with annual
salaries).
25 The White House. ‘‘Letter to the Speaker of the
House and President of the Senate on the
Alternative Plan for Pay Adjustments for Civilian
Federal Employees.’’ https://www.whitehouse.gov/
briefing-room/presidential-actions/2023/08/31/
letter-to-the-speaker-of-the-house-and-thepresident-of-the-senate-on-the-alternative-plan-forpay-adjustments-for-civilian-federal-employees-2/.
26 Office of Personnel Management.
‘‘Classification and Qualifications.’’ https://
www.opm.gov/policy-data-oversight/classificationqualifications/.
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Another suggestion was to take strong
disciplinary action against managers
who discriminate when setting pay to
deter deliberate pay discrimination from
occurring. Comment 49. An employee’s
violation of an agency’s regulations or
policies may cause the employee’s
agency to take disciplinary or corrective
action using well-established tools
available to agencies for addressing
performance issues and misconduct. If
an individual fails to follow pay-setting
policy, it could be a performance or
misconduct issue addressable under 5
U.S.C. chapters 43 or 75.
B. Impact
The rule will impact pay setting for
new Federal hires in the affected pay
systems when agencies exercise
discretionary authority to set pay within
the rate range. The rule may also impact
pay setting for current Federal
employees for certain personnel actions
as agencies review or develop policies
addressing use of an employee’s highest
previous rate of pay received in a
previous Federal civilian position.
Based on data regarding non-seasonal,
full-time permanent Executive branch
employees reported to OPM’s EHRI
database as of September 2021, there
were more than 1.3 million GS
employees, approximately 160,000 FWS
(the largest pay system under the
prevailing rate systems) appropriated
fund employees,27 8,000 SES, 900 SL
positions, 400 ST positions, 1,700 ALJs,
and 63 AAJs in the Federal Government.
This included approximately 97,000
new hires in the GS pay system, 13,000
new FWS appropriated fund hires, 700
new hires in the SES pay system, 24
new SL hires, 10 new ST hires, 17 new
hires in the ALJ pay system, and 3 new
hires in the AAJ pay system.
In fiscal year 2021, 9.5 percent of new
GS employees (9,216 individual pay
actions/authorizations) had their pay set
using the superior qualifications and
special needs pay-setting authority in 5
CFR 531.212. With respect to the
prevailing rate pay system, agencies
used the authority in 5 CFR 532.403(b)
to set pay above the minimum rate of
the appropriate grade for around 210
appointees with special qualifications.
During the same period, one agency set
pay above the minimum rate for an ALJ
applicant based on their superior
qualifications under 5 CFR 930.205(f)(2)
with OPM approval.28 No agencies
reported setting pay under 5 CFR
27 Nonappropriated fund FWS prevailing rate
employees are not reported to EHRI.
28 Agencies must seek OPM pre-approval to use
this pay-setting flexibility for ALJs. 5 CFR 930.205.
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5749
534.604 based on an AAJ’s superior
qualifications.
Because this pay authority is
delegated to agencies and agencies’
written justifications for its use are not
reported to EHRI, OPM does not have
information regarding which factor or
factors were used to justify the rate at
which each new employee’s pay is set
under the GS superior qualifications
and special needs pay-setting authority
or similar prevailing rate, ALJ, and AAJ
pay-setting authorities. As a result, we
are not able to predict with specificity
how the regulations will affect the rate
at which pay is set for candidates based
on their special or superior
qualifications or a special agency need.
Although OPM does not have data on
the specific factors agencies used to
justify use of these pay-setting
authorities, OPM reviewed hiring and
pay data from fiscal year 2021, which
demonstrated the extent to which
agencies set pay under the GS superior
qualifications and special needs paysetting authority, the occupations for
which these pay authorities are used,
and how use of these authorities varied
by gender. Looking more specifically at
the 9.5 percent of new GS employees
(9,216 individual pay actions/
authorizations) who had their pay set
using the superior qualifications and
special needs pay-setting authority in 5
CFR 531.212, 21.5 percent of those were
authorized for employees in the 06XX
Medical, Hospital, Dental, and Public
Health occupational family, 17.4
percent were authorized for employees
in the 08XX Engineering and
Architecture occupational family, 12.1
percent were authorized for employees
in the 03XX General Administrative,
Clerical, and Office Services
occupational family, and 10.6 percent
were authorized for employees in the
22XX Information Technology
occupational family. The authority was
used more frequently (on a percentage
basis) for men than for women: 11.2
percent of non-seasonal full-time
permanent GS new hires who were men
had their pay set using the superior
qualifications and special needs paysetting authority, but only 7.9 percent of
non-seasonal full-time permanent GS
hires who were women had their pay set
using the superior qualifications and
special needs pay-setting authority.
Of the four occupational families that
had the majority of the superior
qualifications and special needs paysetting authorizations, the two
occupational families that were
overwhelmingly male dominated (08XX
Engineering and Architecture and 22XX
Information Technology) are also the
occupational families that had the
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greatest percentage of new hires with
pay set under the superior qualifications
and special needs pay-setting authority.
In the 08XX occupational family
(Engineering and Architecture), 21
percent of new hires were women, and
79 percent of new hires were men.
About 29 percent of new hires in the
08XX occupational family had their pay
set using the superior qualifications and
special needs pay-setting authority. In
the 22XX occupational family
(Information Technology), 24 percent of
new hires were women, and 76 percent
of new hires were men. About 22
percent of new hires in the 22XX
occupational family had their pay set
using the superior qualifications and
special needs pay-setting authority.
Conversely, in the 06XX occupational
family (Medical, Hospital, Dental, and
Public Health), 79 percent of new hires
were women, and 21 percent of new
hires were men, but only about 9
percent of new hires had their pay set
using the superior qualifications and
special needs pay-setting authority.
Similarly, in the 03XX occupational
family (General Administrative,
Clerical, and Office Services), 54
percent of new hires were women, and
46 percent of new hires were men, but
only about 8 percent of new hires had
their pay set under the superior
qualifications and special needs paysetting authority.
OPM does not collect data on agency
use of the other pay flexibilities that this
regulation will revise (that is, the GS
maximum payable rate rule in 5 CFR
531.221–223, the authority in 5 CFR
532.405 to set pay for a prevailing rate
employee based on their highest
previous rate, the authority in 5 CFR
534.604 to set pay based on an AAJ
applicant’s Federal highest previous rate
of basic pay, or the authority in 5 CFR
930.205(f)(1) to set pay based on an ALJ
applicant’s highest previous Federal rate
of basic pay). Because OPM is not
prohibiting the use of an employee’s
highest previous Federal rate of pay to
set pay, OPM does not anticipate that
the regulatory changes in this final rule
will result in a change in how
frequently these pay flexibilities are
used.
OPM invited comments on what data
the Federal Government should
consider when measuring the effects of
greater pay equity achieved through a
salary history ban, including effects on
Federal worker turnover.
A professional organization stated
that OPM should consider possible data
sources such as exit interviews and
Equal Employment Opportunity
Commission (EEOC) data on pay
discrimination cases. Comment 49.
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OPM does not collect exit interview
data or data on EEO complaints, which
are collected and maintained at
agencies. An overview of the Federal
Sector EEOC complaint process is
available on EEOC’s website.29
Employees can appeal agency decisions
to EEOC, but such data would not be
complete and may not be readily
available. EEOC provides annual reports
on the Federal Workforce,30 but it is
summary-level data that is not specific
enough to inform OPM’s analyses of
these regulatory changes. The
organization also suggested that OPM
should consider latitudinal studies
across a sample of agencies to determine
if there are differences between different
hiring agencies and between different
facilities on how frequently these
authorities are invoked, and if there are
any demographic disparities for subject
employees in when and how these
authorities are invoked. Id. As
explained in the proposed rule, OPM
analyzes the use of pay flexibilities by
occupation and gender. OPM could also
examine the use of pay flexibilities by
racial/ethnic group. Pay flexibilities are
discretionary so there may be
differences between agencies’ use of
these authorities.
Also in response to OPM’s request for
comment, an agency suggested that the
Federal Government should consider
labor costs. Comment 57. The agency
stated that ‘‘agencies may be paying
more without salary history’’ and that
‘‘the Federal Government should focus
on career progression or upward
mobility and associated pay increases
after a person enters civil service rather
than starting salary.’’ Id. When
completing Management Directive 715
for the EEOC, agencies already explore
all levels of the workforce to determine
if EEO groups have the same
opportunities for career advancement.31
An organization recommended
comparing the salaries of newly hired
Federal employees after OPM’s proposal
is enacted, with a control group of
employees that would have been subject
to the rule had it been in effect at time
of hire, to isolate the effects of a salary
history ban on wages, pay equity, and
worker turnover. Comment 33. As these
are discretionary pay authorities, it
29 Equal Employment Opportunity Commission.
‘‘Overview of Federal Sector EEO Complaint
Process.’’ https://www.eeoc.gov/federal-sector/
overview-federal-sector-eeo-complaint-process.
30 Equal Employment Opportunity Commission.
‘‘Federal Sector Reports’’. https://www.eeoc.gov/
federal-sector/reports.
31 Equal Employment Opportunity Commission.
‘‘Instructions to Federal Agencies for EEO MD–
715.’’ https://www.eeoc.gov/federal-sector/
management-directive/instructions-federalagencies-eeo-md-715-1.
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would be unworkable to identify a
control group of employees that could
be appropriately compared to
employees in which the discretionary
pay authorities had been used.
C. Costs
This rule will affect the operations of
more than 80 Federal agencies—ranging
from cabinet-level departments to small
independent agencies—that have
employees under the GS, prevailing
rate, ALJ, AAJ, SES, and SL/ST pay
systems. We estimate that this rule will
require individuals employed by these
agencies to spend time reviewing the
rule and updating agency policies and
procedures for the pay flexibilities. For
this cost analysis, the assumed average
salary rate of Federal employees
performing this work will be the rate in
2023 for GS–14, step 5, from the
Washington, DC, locality pay table
($150,016 annual locality rate and
$71.88 hourly locality rate). We assume
the total dollar value of labor, which
includes wages, benefits, and overhead,
is equal to 200 percent of the wage rate,
resulting in an assumed labor cost of
$143.76 per hour.
We estimate that, in the first year
following publication of this final rule,
compliance with this rule would require
an average of 160 hours of work by
employees with an average hourly cost
of $143.76 per hour. This would result
in estimated costs in that first year of
implementation of about $23,000 per
agency, and about $1.8 million
Governmentwide. There are costs
associated with administering the pay
flexibilities in this rule, such as
surveying and comparing similar
positions, but not necessarily an
increase in administrative costs for
agencies that are already using these pay
flexibilities.
A labor organization expressed
concern that agency HR professionals
may not have the necessary training to
set pay based on the factors enumerated
in the regulations. Comment 41. The
organization recommended that OPM
provide mandatory training and
generate detailed worksheets to help
generate justifications for pay setting. Id.
OPM appreciates this suggestion and
will consider the scope and content of
implementation guidance, trainings, and
other means of sharing best practices
following the publication of this rule.
Another individual commented that
OPM did not account for the cost of the
increased wages that the commenter
expects will be paid out because of the
proposal. Comment 28. The commenter
suggested that the cost impact of the
proposed rule could be in excess of
$570 million if the rule is successful in
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eliminating pay gaps. The commenter
seems to assume that the rule would
directly result in increases in pay for
existing employees to close pay gaps. As
noted in the prior section, the purpose
of this rule is consistent with Executive
Orders and OPM statutes and
regulations, to remove from the paysetting process consideration of a
variable the agency has found to be
inequitable. OPM, however, does not
have authority to raise the pay for
current employees to achieve equity
with incoming employees. This rule
does not purport to systematically
increase existing pay and therefore
cannot be the proximate cause of
commenter’s claimed increased costs to
the Government.
D. Benefits
This final regulation provides the
opportunity for the Federal Government
to experience the benefits that certain
states have found after enacting salary
history bans, which includes benefits in
economy and efficiency such as
promoting equitable pay, improving
wages and job mobility for workers who
began their careers during a recession,
and creating hiring efficiencies such as
improved recruitment and retention.
The Federal Government may also
experience benefits related to increased
equity and fairness within the Federal
workforce.
Salary history bans can help close
inequitable pay gaps that disadvantage
women, workers of color, and workers
who began their career during a
recession. By enhancing equal treatment
and compensation of similarly situated
workers, salary history bans could lead
to increased job satisfaction,
commitment, and motivation among
workers. This may help attract and
retain a diverse and qualified workforce,
and result in improved job performance
and enhanced productivity for the
employer. In addition to these economic
gains, the Federal Government may see
cost savings through reduced turnover,
saving time and money from avoiding
new hiring searches and new employee
trainings. Salary history bans can also
increase efficiencies by enhancing
employers’ talent pools.32 In addition,
by curbing inequitable pay decisions, a
salary history ban can promote the
values of equity, human dignity, and
fairness within the Federal workforce
described in E.O. 13563. Salary history
bans can also promote more equitable
and fairer pay-setting practices that are
32 National Women’s Law Center. ‘‘Asking for
Salary History Perpetuates Pay Discrimination from
Job to Job.’’ March 2022. https://nwlc.org/wpcontent/uploads/2020/12/Asking-for-SalaryHistory-2022.pdf.
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based on workers’ skills, experience, or
meeting a special agency need and
eliminate reliance on the pay decisions
of previous employers for which there is
no context and that may have been
arbitrary or potentially discriminatory.
OPM invited comments on whether
there is any social science research or
other evidence OPM should consider
that suggests that limiting reliance on
salary history advances equity and/or
has other workplace benefits including
for the employer.
Many commenters referenced a
variety of social science research papers
and data that show positive effects of
salary history bans. See, e.g., Comments
31, 33, 56, 61, 68. One commenter
shared three articles regarding gender
differences in negotiations. The first
article reported on an experiment that
found significant gender differences
when men and women asked for more
money as compensation for playing a
game in the absence of overt
prescriptions to negotiate.33 Framing the
situations as opportunities for
negotiation was particularly
intimidating to women. By contrast,
framing situations as opportunities for
asking was much less intimidating to
women, as this language is viewed as
more polite and role-consistent. The
next article reported on an experiment
that found that men benefitted more
than women from having a strong
alternative when negotiating a
compensation package, which
supported the author’s hypothesis that
women suffer a backlash from male and
female negotiation partners when
women negotiate assertively.34 The
authors suggest that ‘‘managers looking
to reduce gender gaps in the workplace
may want to install guidelines and
processes to minimize the possibility
that such backlash occurs.’’ Id. The
third article reported on experiments in
which ‘‘evaluators penalized female
candidates more than male candidates
for initiating negotiations [for higher
compensation].’’ 35 These articles
suggest that removing consideration of
salary history may advance gender pay
equity because it will help promote a
33 Small,
D., Gelfand, M., Babcock, L., and
Gettman, H. ‘‘Who Goes to the Bargaining Table?
The Influence of Gender and Framing on the
Initiation of Negotiation.’’ Journal of Personality
and Social Psychology, 2007, Vol. 3, No. 4, 600–
613.
34 Dallanls, J., Zlatev, J., Halevy, N., and Neale, M.
‘‘The Dynamics of Gender and Alternatives in
Negotiation.’’ Journal of Applied Psychology, 2021,
Vol. 106, No. 11, 1655–1672.
35 Bowles, H., Babcock, L., and Lai, L. ‘‘Social
Incentives for Gender Differences in the Propensity
to Initiate Negotiations: Sometimes it Does Hurt to
Ask.’’ Organizational Behavior and Human Decision
Processes, 2007, Vol. 103, 84–103.
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level playing field between men and
women in salary negotiations.
An organization and an individual
suggested that OPM review pay
discrimination litigation relating to
Federal employees and data regarding
private sector pay discrimination to
determine the potential benefit of this
rule in helping to avoid a category of
pay lawsuits. Comments 27, 62. The
EEOC has a fact sheet on notable EEOC
litigation involving pay
discrimination.36 The commenters did
not identify specific precedents, but
OPM identified several cases that
resulted in restrictions on considering
prior salary in various contexts. In Rizo
v. Yovino, the Ninth Circuit found that
relying on prior wages when setting pay
would perpetuate a wage disparity
between men and women. 950 F.3d
1217 (9th Cir. 2020) (en banc). In a
consent decree settling a pay
discrimination suit, a bank agreed not to
inquire about applicants’ prior earnings
history during the hiring process. EEOC
v. First Metropolitan Financial Services,
Inc., 1:18–cv–177 (N.D. Miss. March 18,
2021). Similarly, in EEOC v. Cummins,
Inc., d/b/a Cummins Business Services,
the company agreed not to rely solely on
prior salary in determining
compensation. 3:17–cv–01306 (M.D.
Tenn. Mar. 29, 2019). EEOC v. Covenant
Medical Center, Inc., resulted in a
consent decree to equalize pay where a
woman had been paid less than two
male peers based on one man’s prior
salary history and the other man’s
negotiation of pay (where the woman
had not been permitted to negotiate
pay). EEOC v. Covenant Medical Center,
Inc., 2:20–cv–10662 (E.D. Mich. Sept. 2,
2020).
Similarly, the organization referenced
an academic report, which noted that
asking candidates to disclose their
salary history can ‘‘embed any
previously encountered pay inequities
into an employee’s starting pay with a
new employer.’’ 37 These cases and
report provide further information
indicating that limiting reliance on
salary history to set pay has positive
benefits.
E. Regulatory Alternatives
Executive Orders 12866, 13563, and
14094 direct agencies to assess available
36 Equal Employment Opportunity Commission.
‘‘Fact Sheet: Notable EEOC Litigation Involving Pay
Discrimination.’’ https://www.eeoc.gov/fact-sheetnotable-eeoc-litigation-involving-paydiscrimination.
37 National Academies of Sciences, Engineering,
and Medicine. ‘‘Evaluation of Compensation Data
Collected Through the EEO–1 Form.’’ https://nap.
nationalacademies.org/catalog/26581/evaluationof-compensation-data-collected-through-the-eeo-1form.
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regulatory alternatives and to select
regulatory approaches that maximize
net benefits.
As discussed, agencies are required to
set pay at the minimum of the rate range
for new GS, prevailing rate, AAJ, and
ALJ employees unless the agency
chooses to set pay above the minimum
based on one of the pay flexibilities that
are available in regulations. To advance
pay equity for new hires, one regulatory
alternative OPM considered was
eliminating pay flexibilities to set pay
above the minimum rate of the
applicable rate range. This option,
however, would have been detrimental
to agencies and job candidates. Agencies
use pay flexibilities to set pay above the
minimum rate to recruit candidates with
superior qualifications or when agencies
have a special need for the candidate’s
services. Agencies risk candidates
rejecting employment if the offered
salary does not meet their expectations.
Another option was to allow agencies
to set pay based on a candidate’s salary
history if provided voluntarily and
without prompting. OPM invited
comments on what the advantages and
disadvantages would be of prohibiting
Federal agencies from relying on prior
salary history, if the candidate
voluntarily provided it, and possible
justifications for allowing an exception
to the prior salary history prohibition.
OPM asked whether such an exception
would be consistent with the goals of
this regulation. OPM received many
comments in response.
Most commenters were in favor of
prohibiting Federal agencies from
relying on prior salary history even if
the candidate voluntarily provides it.
One commenter stated that allowing an
exception would be ‘‘counterproductive
[to] the goal of reducing or eliminating
the gender pay gap . . . [because] many
academic studies have shown that males
will engage in salary negotiation about
four times as often as females.’’
Comment 18. Organizations similarly
commented that men are more likely to
disclose their salaries than women.
A commenter said that ‘‘allowing
private sector compensation to be
considered when a candidate
voluntarily supplies that information
replicates private sector discrimination
because candidates treated unfairly in
the private sector will have no helpful
salary history information to volunteer.’’
Comment 32. A union and an
organization stated that allowing
voluntary disclosure of salary history
would ‘‘perpetuate current inequalities
in the Federal workforce.’’ Comment 44.
An organization stated that allowing an
exception would make the rule
‘‘pointless’’ and would provide ‘‘no
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added independent benefit.’’ Comment
46.
Two organizations agreed with OPM
that ‘‘a strict prohibition on considering
salary history allows for more effective
administration of the regulations and
avoids confusion.’’ Comment 56. An
organization stated that ‘‘allowing
reliance on voluntary disclosure would
tend to benefit those who have
sufficient awareness of Federal hiring
processes to know that this flexibility is
potentially available and is likely to
harm those who have less extensive
experience or networks, a group that
likely disproportionately includes
women, people of color, and other
traditionally marginalized candidates.’’
Comment 56. The organization also
shared results from a study that found
that women are disproportionately
penalized for declining to disclose their
salaries whereas men are
disproportionately rewarded.38 Id.
Another organization stated that
reliance on prior salary is unnecessary
because ‘‘the Federal Government’s paysetting practices allow for consideration
of a broad range of factors in
determining appropriate pay setting.’’
Comment 60.
One agency suggested that possible
justifications for allowing an exception
to the prior salary prohibition are that
5 U.S.C. 2301(b)(3) allows for
‘‘appropriate consideration of both
national and local rates paid by
employers in the private sector’’ and
‘‘allows for competitiveness in hiring.’’
Comment 09. The agency suggested
limiting agencies to setting pay at the
lowest step that equals or exceeds the
candidate’s salary history. Id. Another
agency also stated that ‘‘salary history,
if available, should be factored when
setting initial pay for an external
candidate’’ because otherwise
‘‘individual hiring managers [may]
randomly select a step or salary rate’’
and setting a candidate’s salary above
their salary history would result in an
‘‘increase in costs to taxpayers.’’
Comment 57.
We find the reasons for prohibiting
Federal agencies from considering prior
salary history even if the candidate
voluntarily provides it more compelling
than the reasons for allowing an
exception to the prior salary history
prohibition. Agencies would still be
able to set pay above step 1 to be
competitive based on factors specified
in the regulations, including significant
disparities between Federal and nonFederal salaries for the skills and
38 Payscale. ‘‘Is Asking for Salary History . . .
History?’’ https://www.payscale.com/research-andinsights/salary-history/.
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competencies required in the position to
be filled. OPM is retaining its proposed
approach of prohibiting agencies from
considering prior salary history even if
the candidate voluntarily provides it.
Lastly, OPM could maintain the status
quo and not propose regulations to
change salary determinations based on
salary history. As explained throughout
the proposed rule and this final rule,
banning salary history as a
consideration when setting pay
promotes greater pay equity consistent
with merit system principles. Because
the Federal Government should serve as
a model employer in establishing
policies that advance pay equity,
regulatory change is needed to help
advance pay equity for Federal
employees.
In evaluating the regulatory
alternatives, OPM considered the
information it had available regarding
the pay gaps in Federal employment.
Many factors, including disparities in
salary history, may contribute to the
overall gender and race/ethnicity pay
gaps in the Federal Government. For
example, more women than men occupy
positions classified at lower GS grades
with lower pay, while more men than
women occupy positions classified at
higher GS grades with higher pay and in
higher-paying Senior Executive Service
positions. Data indicated that, for each
GS grade, women and men had close to
the same average position in range
(average step position). Factors such as
length in service, quality step increases,
and—most significantly for this
regulation—how pay is set upon
personnel actions such as appointment
or promotion affect an employee’s step
position. OPM also found that the size
of the gender pay gap varied by
occupation.39
OPM’s findings regarding Federal pay
gaps are consistent with research on pay
gaps in the national workforce. A
November 2020 study 40 focused on
national pay gaps and found that the
gender pay gap varied significantly by
occupation. There was no gender pay
gap in some occupations, but gender
pay gaps as large as 45 percent in others.
The researchers found larger gender pay
gaps in occupations that were more
competitive and hazardous, occupations
that reward longer hours of work, and
those that have a larger proportion of
women workers.
OPM’s discussion in the proposed
rule regarding the calculation and
39 88
FR 30251, 30253 (May 11, 2023).
T., Murray-Close, M., Landivar, L., & de
Wolf, M. ‘‘An Evaluation of the Gender Wage Gap
Using Linked Survey and Administrative Data,’’
November 2020. https://www.census.gov/library/
working-papers/2020/adrm/CES-WP-20-34.html.
40 Foster,
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presentation of Federal Government pay
gaps received multiple comments. One
commenter requested more detailed
data, such as data by occupational
series. Comment 15. The commenter
expressed that the public should have
access to more detailed data behind our
calculations in the proposed rule. A
national union that supported the
proposed rule asked OPM to examine
‘‘potential clusters of inequity, whether
it is within certain position series or
grades, or individual agencies’’ as part
of its pay equity analyses. Comment 59.
An agency commented that the Federal
Government already has a diverse
workforce and that women earn salaries
that are the same as or higher than
salaries earned by men when comparing
both genders in the same position.
An organization cited international
pay equity regulations, such as those in
the European Union, as an example of
a ‘‘comprehensive approach,’’ which
requires reporting pay gap data in an
open and transparent manner. Comment
31. OPM reviewed the European Union
pay transparency regulations but
concluded that requiring agencies to
conduct and report on pay gap analyses
is not within the scope of this
rulemaking.
Another organization had several
recommendations including that OPM:
(1) update its multivariate regressiondecomposition analysis using 2022 or
2023 data; (2) take an intersectional
approach when updating its analysis; (3)
break out Asian and Native Hawaiian/
Pacific Islander employees into separate
groups rather than combining them; (4)
use medians instead of means; and (5)
examine worker characteristics
including supervisory status, education
level, geography, tenure, age, and
disability status. Comment 33. An
international professional and technical
union asked OPM to ‘‘undertake an
annual review of gender-based and
racial/ethnic-based bias in median pay,
matched for positions and seniority.’’
Comment 64.
These data analysis recommendations
raise several issues that are beyond the
scope of this rule. Certain data from
EHRI is available to the public on
FedScope.41 However, complete raw
data is not available due to concerns
about identifying employees at the
individual level.42 OPM has been
reviewing 2022 data and plans to release
a report in the coming months that will
summarize pay gap information by
gender and race/ethnicity and will
present pay gap data for key worker
characteristics such as pay system,
grade (where applicable), occupation,
agency, and age. OPM also plans to
release detailed 2022 pay gap data with
that report. OPM combines Asian and
Native Hawaiian/Pacific Islander ethnic
groups due to small sample sizes. OPM
uses average, instead of median,
salaries, in part, because means are
readily available in OPM’s EHRI 43 data
system. Average salaries are an
appropriate metric because a mean
reflects the salary of all employees
rather than focusing on a typical
employee. OPM notes that the risks
normally associated with using an
average salary as a metric are minimal
because Federal salaries have statutory
pay limitations, which decrease the
occurrence of outliers that would
influence average salaries. Although
OPM will continue to monitor and
evaluate data regarding pay gaps based
on gender or race/ethnicity, this final
rule is not being promulgated simply to
address potential pay gaps; this final
rule is based on OPM’s broader
determination that eliminating
consideration of prior salary history is
the best way to implement the
governing merit system principles.
F. Implementation
OPM invited comments on what
information agencies should provide on
the pay-setting flexibilities and at what
stage in the hiring process agencies
should provide this information. A
union stated that ‘‘information on how
pay-setting flexibilities influence the
final salary a candidate may be offered
in job announcements and on agency
websites helps candidates make better
informed decisions when deciding
whether to apply for such opportunities
and what information to disclose during
the application process.’’ Comment 44.
Similarly, several commenters
recommended that OPM require
agencies to provide this information in
job announcements. Comments 44, 56.
An agency stated that ‘‘agencies should
not solicit candidates to negotiate pay
when hiring.’’ Comment 57. An
organization suggested that ‘‘hiring
agencies should be required to give
applicants notice and the opportunity to
submit to [the] agency pay-setting
authorities documentation of any job
offers or data on comparative pay for
non-Federal positions that the applicant
may have’’ at the initial offer stage.
Comment 49. Then ‘‘only after receipt
and review of any response from the
41 https://www.fedscope.opm.gov/.
42 See the FedScope Data Release Policy at
https://www.fedscope.opm.gov/download_
Data%20Release%20Policy.pdf.
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43 Office of Personnel Management, ‘‘About Our
Data (EHRI–SDM).’’ https://www.fedscope.opm.gov/
datadefn/aehri_sdm.asp.
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5753
applicant (or the passing of the deadline
with no response) should the hiring
agency finalize the starting pay offer
grade and step for the position being
offered.’’ Id. OPM appreciates the
responses received but declines to
impose specific requirements for job
announcements. OPM will consider
these comments and suggestions in
developing recommended best
practices. In addition, as discussed in
the Competing Job Offers section, OPM
is revising the regulations in this final
rule such that an agency will no longer
be able to set pay based on a competing
job offer.
Commenters recommended that OPM
address other implementation issues.
An agency, an organization, and a union
recommended that hiring managers and
human resources staff be trained on
these regulatory changes. Comments 33,
41, 43. The union also recommended
that OPM ‘‘develop a standard form that
would guide HR practitioners and/or
hiring managers in developing a wellsupported justification for pay-setting.’’
Comment 41. The union suggested that
agencies should provide service credit
for the non-Federal work experience
towards determining the step or rate at
which to set the candidate’s pay. Id. An
organization suggested that OPM
provide guidance ‘‘on standards for
what constitutes an effective
comparative pay information search.’’
Comment 49. The organization
recommended that OPM ‘‘modify the
USAJOBS website and its standard
forms for Federal job applications to
eliminate rote requests for . . . prior
salaries for non-Federal positions as part
of detailing their employment
histories.’’ Id. OPM will review the
USAJOBS website as OPM supports
implementation of this final rule.
This final rule covers approximately
1.5 million Federal employees in the
GS, prevailing rate, AAJ, ALJ, SES, and
SL/ST pay systems combined who are
employed in more than 80 Federal
agencies. OPM’s pay-setting regulations
for the pay systems covered by this final
rule prescribe broad criteria and
limitations that agencies must apply in
developing and implementing their own
agency-specific pay-setting policies and
procedures. OPM’s regulations do not
address the form or content of offers of
employment that agencies make to
candidates, nor do they address the
process by which agencies engage with
candidates. For these reasons, agency
pay setting, job offer, and candidate
communication policies, procedures,
and practices may vary widely.
This final rule has a 60-day effective
date. OPM recognizes, however, that
agencies may need implementing
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guidance and additional time to modify
their own policies and procedures and
provide new instructions to their human
resources professionals and hiring
managers regarding setting pay and
making pay offers in compliance with
this final rule. To accommodate the
scope of coverage and range of agency
policies and practices this final rule will
affect and to minimize disruptions to
ongoing agency hiring processes where
offers of pay have already been made to
candidates, OPM is allowing additional
time for agencies to implement this final
rule. During this time, agencies should
take steps to revise their policies and
procedures. As soon as practicable, any
new offers for employment including
salary information for GS, FWS, ALJ,
AAJ, SES, SL, ST positions and new
pay-setting decisions for such positions
based on an employee’s previous
Federal salary should reflect the
requirements in this final rule. Agencies
must be in full compliance with the
final rule by October 1, 2024. OPM
considers ‘‘full compliance’’ to refer to
the pay setting decision as documented
in the required justifications for use of
these pay flexibilities—not necessarily
the final processing of the personnel
action. Therefore, these justifications
that are approved on or after October 1,
2024, must be in full compliance. In
accordance with 5 U.S.C. 7116(a)(7),
this final rule cannot override any
collective bargaining agreement in effect
prior to the effective date of this
regulation. Such collective bargaining
agreement would need to come into
compliance with this government wide
regulation when the agreement is due to
be renegotiated or expires.
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G. Severability
If any of the provisions of this final
rule is held to be invalid or
unenforceable by its terms, or as applied
to any person or circumstance, it shall
be severable from its respective
section(s) and shall not affect the
remainder thereof or the application of
the provision to other persons not
similarly situated or to other dissimilar
circumstances. For example, if a court
were to invalidate any portion of this
proposed rule as finalized imposing
procedural requirements on agencies
with respect to one pay system, the
other portions of the rule—including the
portions applying to each of the other
affected pay systems—would
independently remain workable and
valuable. In enforcing the pay equity
provisions of this rule, OPM will
comply with all applicable legal
requirements.
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Regulatory Flexibility Act
The Director of OPM certifies that
these regulations will not have a
significant economic impact on a
substantial number of small entities
because they will apply only to Federal
agencies and employees.
Regulatory Review
OPM has examined the impact of this
rule as required by Executive Orders
12866, 13563, and 14094, which direct
agencies to assess all costs and benefits
of available regulatory alternatives and,
if regulation is necessary, to select
regulatory approaches that maximize
net benefits (including potential
economic, environmental, public,
health, and safety effects, distributive
impacts, and equity). This rule is
considered a ‘‘significant regulatory
action’’ under section 3(f) of Executive
Order (12866).
E.O. 13132, Federalism
This regulation will not have
substantial direct effects on the States,
on the relationship between the
National Government and the States, or
on distribution of power and
responsibilities among the various
levels of government. Therefore, in
accordance with Executive Order 13132,
it is determined that this final rule does
not have sufficient federalism
implications to warrant preparation of a
Federalism Assessment.
E.O. 12988, Civil Justice Reform
This regulation meets the applicable
standards set forth in section 3(a) and
(b)(2) of Executive Order 12988.
Unfunded Mandates Reform Act of
1995
This final rule will not result in the
expenditure by State, local or tribal
governments of more than $100 million
annually. Thus, no written assessment
of unfunded mandates is required.
Congressional Review Act
OMB’s Office of Information and
Regulatory Affairs has determined this
is not a major rule as defined by the
Congressional Review Act (5 U.S.C.
804(2)).
Paperwork Reduction Act of 1995 (44
U.S.C. Chapter 35)
This regulatory action will not impose
any reporting or recordkeeping
requirements under the Paperwork
Reduction Act.
List of Subjects in Title 5 CFR Parts 531,
532, 534, and 930
Administrative practice and
procedure, Computer technology,
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Freedom of information, Government
employees, Hospitals, Law enforcement
officers, Motor vehicles, Reporting and
recordkeeping requirements, Students,
Wages.
Office of Personnel Management.
Stephen Hickman,
Federal Register Liaison.
Accordingly, OPM is amending 5 CFR
parts 531, 532, 534, and 930 as follows:
PART 531—PAY UNDER THE
GENERAL SCHEDULE
1. The authority citation for part 531
continues to read as follows:
■
Authority: 5 U.S.C. 5115, 5307, and 5338;
sec. 4 of Public Law 103–89, 107 Stat. 981;
and E.O. 12748, 56 FR 4521, 3 CFR, 1991
Comp., p. 316; Subpart B also issued under
5 U.S.C. 5303(g), 5305, 5333, 5334(a) and (b),
and 7701(b)(2); Subpart D also issued under
5 U.S.C. 5335 and 7701(b)(2); Subpart E also
issued under 5 U.S.C. 5336; Subpart F also
issued under 5 U.S.C. 5304, 5305, and
5941(a); E.O. 12883, 58 FR 63281, 3 CFR,
1993 Comp., p. 682; and E.O. 13106, 63 FR
68151, 3 CFR, 1998 Comp., p. 224.
Subpart B—Determining Rate of Basic
Pay
2. In § 531.212—
a. Revise paragraph (c) introductory
text;
■ b. Remove paragraph (c)(2);
■ c. Redesignate paragraph (c)(1) as
(c)(2)(i) and paragraphs (c)(3) through
(c)(10) as (c)(2)(ii) through (c)(2)(ix);
■ d. Add a new paragraph (c)(1) and
new paragraph (c)(2) introductory text;
■ e. Revise newly redesignated
paragraph (c)(2)(ix); and
■ f. Revise paragraph (e)(2)(ii).
The revisions and additions read as
follows:
■
■
§ 531.212 Superior qualifications and
special needs pay-setting authority.
*
*
*
*
*
(c) Pay rate determination. To
determine the step at which to set an
employee’s payable rate of basic pay
using the superior qualifications and
special needs pay-setting authority, an
agency must consider:
(1) The step at which pay has been set
for employees who had similar
qualifications (based on the level, type,
or quality of the candidate’s skills or
competencies or other qualities and
experiences) and who have been newly
appointed to positions that are similar
to the candidate’s position (based on the
position’s occupational series, grade
level, organization, geographic location,
or other job-relevant factors), if
applicable; and
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(2) One or more of the following
factors, as applicable in the case at
hand:
*
*
*
*
*
(ix) Other relevant factors, except that
an agency may not consider the
candidate’s salary history (i.e., existing
salary or prior salary) or a salary from
a competing job offer.
*
*
*
*
*
(e) * * *
(2) * * *
(ii) An explanation of the factors and
supporting documentation under
paragraph (c) of this section which were
used to justify the rate at which the
employee’s pay is set. The written
documentation must explain how the
factors directly relate to the rate
approved; and
*
*
*
*
*
■ 3. In § 531.221, add paragraph (a)(6) to
read as follows:
§ 531.221
Maximum payable rate rule.
(a) * * *
(6) Before setting pay under this
section, an agency must establish a
policy on its use of the maximum
payable rate rule that includes—
(i) Designation of officials with the
authority to approve and set pay under
this section;
(ii) Any situations in which the
agency must use the authority;
(iii) Any situations in which the
agency may exercise its discretion in
using the authority;
(iv) Consideration of the step at which
pay has been set for other employees
performing similar work in the
organization (based on the position’s
occupational series, grade level, types of
duties, or other job-relevant factors) and
any other factors the designated
official(s) may or must consider in
determining the step at which to set the
employee’s pay between the employee’s
entitlement under any other applicable
pay-setting rule and the employee’s
maximum payable rate; and
(v) Documentation and recordkeeping
requirements sufficient to allow
reconstruction of the action.
*
*
*
*
*
PART 532—PREVAILING RATE
SYSTEMS
4. The authority citation for part 532
continues to read as follows:
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■
Authority: 5 U.S.C. 5343, 5346; § 532.707
also issued under 5 U.S.C. 552.
Subpart D—Pay Administration
5. In § 532.403, revise paragraph (b) to
read as follows:
■
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§ 532.403
New appointments.
*
*
*
*
*
(b) An agency may make a new
appointment at a rate above the
minimum rate of the appropriate grade
in recognition of an appointees’ special
qualifications. In determining the rate at
which to set the appointee’s pay:
(1) An agency must consider how the
step has been set for employees who
had similar qualifications (based on the
level, type, or quality of the appointee’s
skills or competencies or other qualities
and experiences) and who have been
newly appointed to positions that are
similar to the appointee’s position
(based on the position’s occupational
series, grade level, organization,
geographic location, or other jobrelevant factors), if applicable;
(2) An agency may not consider the
appointee’s pay history (i.e., existing
pay or prior pay) or a pay rate from a
competing job offer; and
(3) An agency must consider other
relevant factors (e.g., the level, type, or
quality of the appointee’s skills or
competencies; or significant disparities
between Federal and non-Federal
salaries for the skills and competencies
required in the position to be filled).
*
*
*
*
*
■ 6. In 532.405, add paragraph e to read
as follows:
§ 532.405
Use of highest previous rate.
*
*
*
*
*
(e) Before setting pay under this
section, an agency must establish a
policy regarding use of employees’
highest previous rates. The policy must
include the following elements:
(1) Designation of officials with the
authority to approve and set pay under
this section;
(2) Any situations in which the
agency must use an employee’s highest
previous rate;
(3) Any situations in which the
agency may exercise its discretion in
using an employee’s highest previous
rate;
(4) Consideration of the step at which
pay has been set for other employees
performing similar work in the
organization (based on the position’s
occupational series, grade level, types of
duties, or other job-relevant factors) and
any other factors the designated
official(s) may or must consider in
determining the step at which to set the
employee’s pay between the employee’s
entitlement under any other applicable
pay-setting rule and the employee’s
highest previous rate; and
(5) Documentation and recordkeeping
requirements sufficient to allow
reconstruction of the action.
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5755
PART 534—PAY UNDER OTHER
SYSTEMS
7. The authority citation for part 534
continues to read as follows:
■
Authority: 5 U.S.C. 1104, 3161(d), 5307,
5351, 5352, 5353, 5376, 5382, 5383, 5384,
5385, 5541, 5550a, sec. 1125 of the National
Defense Authorization Act for FY 2004, Pub.
L. 108–136, 117 Stat. 1638 (5 U.S.C. 5304,
5382, 5383, 7302; 18 U.S.C. 207); and sec. 2
of Pub. L. 110–372, 122 Stat. 4043 (5 U.S.C.
5304, 5307, 5376).
Subpart D—Pay and Performance
Awards Under the Senior Executive
Service
8. In § 534.404—
a. Amend paragraph (a) by adding a
sentence to the end of the paragraph;
and
■ b. Amend paragraph (i)(1) by adding
a sentence to the end of the paragraph.
The revisions read as follows:
■
■
§ 534.404 Setting and adjusting pay for
senior executives.
(a) * * * When making a first
appointment (regardless of tenure) as a
civilian employee of the Federal
Government, an agency may not
consider the individual’s salary history
(i.e., existing salary or prior salary) or a
salary from a competing job offer.
*
*
*
*
*
(i) * * *
(1) * * * When setting pay upon
reappointment to the SES, an agency
may not consider the individual’s nonFederal salary history (i.e., existing
salary or prior salary) or a salary from
a competing job offer.
*
*
*
*
*
Subpart E—Pay for Senior-Level and
Scientific or Professional Positions
9. In § 534.506, revise paragraphs (a)
and (c)(1) to read as follows:
■
§ 534.506 Setting a rate of basic pay upon
appointment.
(a) An authorized agency official may
set the rate of basic pay of an individual
who is not currently an SL or ST
appointee of the agency at any rate
within the applicable rate range under
§ 534.504(a) upon appointment to an SL
or ST position in the agency, subject to
the requirements of this section. In
setting a new senior professional’s rate
of basic pay, an agency must consider
the nature and quality of the
individual’s experience,
accomplishments, and any unique
skills, qualifications, or competencies
the individual possesses as they relate
to requirements of the senior
professional position and its impact on
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the agency’s performance. When making
a first appointment (regardless of
tenure) as a civilian employee of the
Federal Government, an agency may not
consider the individual’s salary history
(i.e., existing salary or prior salary) or a
salary from a competing job offer. Rates
of basic pay above the rate for level III
of the Executive Schedule, but less than
or equal to the rate for level II of the
Executive Schedule, generally are
reserved for those newly appointed
senior professionals who possess
superior leadership, scientific,
professional or other competencies
necessary to address key program and
mission requirements, as determined by
the agency through its strategic human
capital planning process.
*
*
*
*
*
(c)(1) Consistent with the agency’s
written procedures and paragraph (a) of
this section, except as provided in
paragraph (c)(2) of this section, an
authorized agency official may set pay
upon reappointment of a former SL or
ST employee at any rate of basic pay
within the pay range that applies to the
SL or ST position under § 534.504(a).
When setting pay, the agency may not
consider the individual’s non-Federal
salary history (i.e., existing salary or
prior salary) or a salary from a
competing job offer.
*
*
*
*
*
Subpart F—Pay for Administrative
Appeals Judge Positions
10. In § 534.604—
a. Revise paragraph (b);
b. Redesignate paragraphs (c) and (d)
as paragraphs (f) and (g), respectively;
and
■ c. Add new paragraphs (c) and (d) and
paragraph (e).
The revision and additions read as
follows:
■
■
■
§ 534.604
Pay administration.
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*
*
*
*
*
(b) Upon initial appointment, an
agency must set the rate of basic pay of
an administrative appeals judge at the
minimum rate AA–1 of the
administrative appeals judge pay
system, except as provided in
paragraphs (c), (d), and (e) of this
section.
(c) An agency must set the pay of an
employee under the General Schedule
pay system who is appointed to an
administrative appeals judge position
without a break in service at the lowest
rate of basic pay of the administrative
appeals judge pay system that equals or
exceeds the rate of basic pay the
employee received immediately prior to
such appointment, not to exceed the
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rate of basic pay for AA–6. If the
resulting basic pay increase is less than
one-half of the dollar value of the
employee’s next within-grade increase,
the agency must set the employee’s rate
of basic pay at the next higher rate of
basic pay in the basic rate range of the
administrative appeals judge pay
system, not to exceed the rate of basic
pay for AA–6.
(d) An agency may offer an
administrative appeals judge applicant
with prior Federal service a rate up to
the lowest rate of basic pay of the
administrative appeals judge pay system
that equals or exceeds the employee’s
highest previous rate of basic pay in a
Federal civil service position, not to
exceed the rate of basic pay for AA–6.
Before setting pay under this paragraph,
an agency must establish a policy that
includes the following elements:
(1) Designation of officials with the
authority to approve and set pay under
this paragraph (d);
(2) Whether use of this authority is
discretionary or mandatory;
(3) The factors the designated officials
may or must consider in determining
the rate at which to set the applicant’s
pay and which must include
consideration of the rate of basic pay set
for other administrative appeals judges
(based on the level, type, or quality of
the appointee’s skills or competencies
or other qualities and experiences); and
(4) Documentation and recordkeeping
requirements sufficient to allow
reconstruction of the action.
(e) An agency may offer an
administrative appeals judge applicant
(including a former administrative
appeals judge) with superior
qualifications who is not a current
Federal employee a higher than
minimum rate up to the maximum rate
AA–6 when such a rate is clearly
necessary to meet the needs of the
Government. Superior qualifications for
applicants include, but are not limited
to, having legal practice before the
hiring agency, having practice in
another forum with legal issues of
concern to the hiring agency, or having
an outstanding reputation among others
in the field. An agency must document
all of the following:
(1) The superior qualifications of the
applicant;
(2) The need of the Government for
the applicant’s services;
(3) Consideration of how pay has been
set for administrative appeals judges
who had similar qualifications (based
on the level, type, or quality of the
applicant’s skills or competencies or
other qualities and experiences) and
who have been newly appointed to
positions that are similar to the
PO 00000
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Fmt 4700
Sfmt 4700
applicant’s position (based on the
position’s occupational series,
organization, geographic location, or
other job-relevant factors), if applicable;
and
(4) An explanation of the factors
which were used to justify the rate at
which the employee’s pay is set, except
an agency may not consider the
applicant’s salary history (i.e., existing
salary or prior salary) or a salary from
a competing job offer.
*
*
*
*
*
PART 930—PROGRAMS FOR
SPECIFIC POSITIONS AND
EXAMINATIONS (MISCELLANEOUS)
Subpart B—Administrative Law Judge
Program
11. The authority citation for subpart
B continues to read as follows:
■
Authority: 5 U.S.C. 1104(a), 1302(a), 1305,
3105, 3301, 3304, 3323(b), 3344, 4301(2)(D),
5372, 7521, and E.O. 10577, 3 CFR, 1954–
1958 Comp., p. 219.
12. In § 930.201, revise paragraph
(e)(5) to read as follows:
■
§ 930.201
Coverage.
*
*
*
*
*
(e) * * *
(5) Approve personnel actions related
to pay for administrative law judges
under § 930.205(c), (g), (h), and (k);
*
*
*
*
*
■ 13. In § 930.205—
■ a. In paragraph (e), remove the words
‘‘paragraph (f)’’ and add ‘‘paragraphs (f)
and (g)’’ in their place;
■ b. Revise paragraph (f);
■ c. Redesignate paragraphs (g) through
(j) as paragraphs (h) through (k),
respectively; and
■ d. Add a new paragraph (g).
The revision and addition read as
follows:
§ 930.205
system.
Administrative law judge pay
*
*
*
*
*
(f) When an applicant to an
administrative law judge position at
AL–3 has prior Federal service, the
agency may set pay at a higher than
minimum rate up to the lowest rate of
basic pay that equals or exceeds the
applicant’s highest previous Federal rate
of basic pay, not to exceed the
maximum rate F. Before setting pay
under this paragraph, an agency must
establish a policy regarding use of this
pay-setting authority that includes the
following elements:
(1) Designation of officials with the
authority to approve and set pay under
this paragraph;
(2) Whether use of this authority is
discretionary or mandatory;
E:\FR\FM\30JAR1.SGM
30JAR1
Federal Register / Vol. 89, No. 20 / Tuesday, January 30, 2024 / Rules and Regulations
(3) The factors the designated officials
may or must consider in determining
the rate at which to set the applicant’s
pay, which must include how the rate
of basic pay has been set for other
administrative law judges; and
(4) Documentation and recordkeeping
requirements sufficient to allow
reconstruction of the action.
(g) With prior OPM approval, an
agency may offer a higher than
minimum rate, up to the maximum rate
F, to an administrative law judge
applicant or a former administrative law
judge with superior qualifications who
is eligible for appointment to a position
at AL–3. An agency request to OPM
must include:
(1) A description of the superior
qualifications (as defined in § 930.202)
of the applicant or former
administrative law judge;
(2) How pay has been set for
administrative law judges who had
similar qualifications (based on the
level, type, or quality of the applicant’s
or former administrative law judge’s
skills or competencies or other qualities
and experiences) and who have been
newly appointed to positions that are
similar to the administrative law judge’s
position (based on the position’s
occupational series, organization,
geographic location, or other jobrelevant factors), if applicable; and
(3) The proposed rate of basic pay and
a justification for that rate, except an
agency may not consider an applicant’s
or former administrative law judge’s
salary history (i.e., existing salary or
prior salary) or a salary from a
competing job offer.
*
*
*
*
*
[FR Doc. 2024–01337 Filed 1–29–24; 8:45 am]
BILLING CODE 6325–39–P
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 984
[Doc. No. AMS–SC–23–0030]
Walnuts Grown in Califfornia;
Decreased Assessment Rate
Agricultural Marketing Service,
USDA.
ACTION: Final rule.
khammond on DSKJM1Z7X2PROD with RULES
AGENCY:
This rule implements a
recommendation from the California
Walnut Board (Board) to decrease the
assessment rate established for the
2023–2024 and subsequent marketing
years. The assessment rate will remain
in effect indefinitely unless modified,
suspended, or terminated.
SUMMARY:
VerDate Sep<11>2014
16:02 Jan 29, 2024
Jkt 262001
DATES:
Effective February 29, 2024.
FOR FURTHER INFORMATION CONTACT:
Joshua R. Wilde, Marketing Specialist,
or Barry Broadbent, Acting Chief, West
Region Branch, Market Development
Division, Specialty Crops Program,
AMS, USDA; Telephone: (503) 326–
2724, or Email: Joshua.R.Wilde@
usda.gov or Barry.Broadbent@usda.gov.
Small businesses may request
information on complying with this
regulation by contacting Richard Lower,
Market Development Division, Specialty
Crops Program, AMS, USDA, 1400
Independence Avenue SW, STOP 0237,
Washington, DC 20250–0237;
Telephone: (202) 720–8085, or Email:
Richard.Lower@usda.gov.
SUPPLEMENTARY INFORMATION: This
action, pursuant to 5 U.S.C. 553,
amends regulations issued to carry out
a marketing order as defined in 7 CFR
900.2(j). This rule is issued under
Marketing Agreement and Order No.
984, both as amended (7 CFR part 984),
regulating the handling of walnuts
grown in California. Part 984 (referred to
as the ‘‘Order’’) is effective under the
Agricultural Marketing Agreement Act
of 1937, as amended (7 U.S.C. 601–674),
hereinafter referred to as the ‘‘Act.’’ The
Board locally administers the Order and
is comprised of growers and handlers of
California walnuts operating within the
area of production, and a public
member.
The Agricultural Marketing Service
(AMS) is issuing this rule in
conformance with Executive Orders
12866, 13563, and 14094. Executive
Orders 12866 and 13563 direct agencies
to assess all costs and benefits of
available regulatory alternatives and, if
regulation is necessary, to select
regulatory approaches that maximize
net benefits (including potential
economic, environmental, public health
and safety effects, distributive impacts,
and equity). Executive Order 13563
emphasizes the importance of
quantifying both costs and benefits,
reducing costs, harmonizing rules, and
promoting flexibility. Executive Order
14094 reaffirms, supplements, and
updates Executive Order 12866 and
further directs agencies to solicit and
consider input from a wide range of
affected and interested parties through a
variety of means. This proposed action
falls within a category of regulatory
actions that the Office of Management
and Budget (OMB) exempted from
Executive Order 12866 review.
This rule has been reviewed under
Executive Order 13175—Consultation
and Coordination with Indian Tribal
Governments, which requires Federal
agencies to consider whether their
PO 00000
Frm 00021
Fmt 4700
Sfmt 4700
5757
rulemaking actions would have Tribal
implications. AMS has determined that
this rule is unlikely to have substantial
direct effects on one or more Indian
Tribes, on the relationship between the
Federal Government and Indian Tribes,
or on the distribution of power and
responsibilities between the Federal
Government and Indian Tribes.
This rule has been reviewed under
Executive Order 12988, Civil Justice
Reform. Under the Order now in effect,
California walnut handlers are subject to
assessments. Funds to administer the
Order are derived from such
assessments. It is intended that the
assessment rate will be applicable to all
assessable California walnuts for the
2023–2024 marketing year, and
continue until amended, suspended, or
terminated.
The Act provides that administrative
proceedings must be exhausted before
parties may file suit in court. Under
section 608c(15)(A) of the Act, any
handler subject to an order may file
with the U.S. Department of Agriculture
(USDA) a petition stating that the order,
any provision of the order, or any
obligation imposed in connection with
the order is not in accordance with law
and request a modification of the order
or to be exempted therefrom. Such
handler is afforded the opportunity for
a hearing on the petition. After the
hearing, USDA would rule on the
petition. The Act provides that the
district court of the United States in any
district in which the handler is an
inhabitant, or has his or her principal
place of business, has jurisdiction to
review USDA’s ruling on the petition,
provided an action is filed not later than
20 days after the date of the entry of the
ruling.
This rule decreases the assessment
rate for California walnuts handled
under the Order from $0.0125 per
inshell pound, the rate that was initially
established for the 2023–2024 and
subsequent marketing years, to $0.011
per inshell pound.
Section 984.68 authorizes the Board,
with the approval of AMS, to formulate
an annual budget of expenses and
collect assessments from handlers to
administer the program. The members
of the Board are familiar with the
Board’s needs and with the costs of
goods and services in their local area
and are able to formulate an appropriate
budget and assessment rate. The
assessment rate is formulated and
discussed in a public meeting, and all
directly affected persons have an
opportunity to participate and provide
input.
On September 21, 2021, at the request
of the Board, AMS issued a temporary
E:\FR\FM\30JAR1.SGM
30JAR1
Agencies
[Federal Register Volume 89, Number 20 (Tuesday, January 30, 2024)]
[Rules and Regulations]
[Pages 5737-5757]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-01337]
========================================================================
Rules and Regulations
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
under 50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by the Superintendent of Documents.
========================================================================
Federal Register / Vol. 89, No. 20 / Tuesday, January 30, 2024 /
Rules and Regulations
[[Page 5737]]
OFFICE OF PERSONNEL MANAGEMENT
5 CFR Parts 531, 532, 534, and 930
RIN 3206-AO39
Advancing Pay Equity in Governmentwide Pay Systems
AGENCY: Office of Personnel Management.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Office of Personnel Management is issuing final
regulations governing the criteria for making salary determinations
based on salary history to advance pay equity in the General Schedule,
prevailing rate, Administrative Appeals Judge, Administrative Law
Judge, Senior Executive Service, and senior-level and scientific or
professional pay systems. For individuals receiving their first
appointment as a civilian employee of the Federal Government (or a
reappointment after a break in service) in one of these pay systems,
agencies will not be able to set pay based on a job candidate's non-
Federal salary or pay history, which could vary between equally
qualified candidates, or based on a competing job offer. Agencies will
also be required to have policies regarding setting pay based on a
previous Federal salary for employees who have previous civilian
service in the Federal Government.
DATES: This final rule is effective April 1, 2024. Agencies must be in
full compliance with this final rule not later than October 1, 2024.
FOR FURTHER INFORMATION CONTACT: Carey Jones by telephone at (202) 606-
2858 or by email at [email protected].
SUPPLEMENTARY INFORMATION:
Overview
The Federal Government strives to be a model employer that values
diversity, equity, inclusion, and accessibility (DEIA). After
consideration of public comments on the proposed rule, OPM is issuing a
final rule that amends the criteria for making salary determinations
for the General Schedule (GS), prevailing rate, Administrative Appeals
Judge (AAJ), Administrative Law Judge (ALJ), Senior Executive Service
(SES), and senior-level and scientific or professional (SL/ST) pay
systems to advance pay equity in pay setting for Federal employees. OPM
is issuing this rule pursuant to its authority to issue regulations
governing these pay systems in 5 U.S.C. 5333, 5338, 5343, 5372, 5372b,
5376, and 5382.
Generally, when an individual applies for a job and is being
considered for employment, the employer may inquire about the
individual's salary or pay history \1\ and consider it as part of the
pay-setting process, if not otherwise prohibited from doing so. The
employer may ask the candidate \2\ direct questions about salary
history or the candidate may offer the information without prompting.
The information can be solicited or shared at various points before an
offer is accepted or rejected. These and other considerations of a job
candidate's salary history are permissible under current statutes and
regulations governing the GS, prevailing rate, AAJ, ALJ, SES, and SL/ST
pay systems. Consideration of salary history is explicitly allowed
under the Federal Government's GS pay system and is not prohibited by
the prevailing rate, AAJ, ALJ, SES, and SL/ST pay systems.
---------------------------------------------------------------------------
\1\ For this rulemaking, ``salary history'' or ``pay history''
refer to the salary or pay a job candidate is currently receiving
(i.e., their existing salary or pay) or the salary or pay the
candidate has been paid in a previous job (i.e., prior salary or
pay). The terms are used interchangeably.
\2\ In this final rule, the terms ``applicant'' and
``candidate'' are used interchangeably to refer to an individual
under consideration for appointment to a Federal civil service
position.
---------------------------------------------------------------------------
As described in the proposed rule and in this final rule, however,
salary history is not necessarily a good indicator of worker value,
experience, and expertise, and it also may contain or exacerbate
biases. Pay setting based on salary history may be inequitable, can
perpetuate biases from job to job, and may contribute to a pay gap
between the earnings of men and women. Nationally, on average women
earn less than men, and this pay gap is even greater for most women of
color.\3\ Gender and race/ethnicity pay gaps also exist in the Federal
Government's civil service. Although such gaps are typically smaller
than those in the private sector, they may represent an inequity as
acknowledged by the President in Executive Orders (E.O.) 14035 (86 FR
34593) and 14069 (87 FR 15315). As discussed further below, by
eliminating a factor that may contain or exacerbate biases inconsistent
with merit system principles, this final rule seeks to promote pay
equity consistent with the President's Executive Orders.
---------------------------------------------------------------------------
\3\ Data on the national pay gap is available on the Department
of Labor Women's Bureau website at https://www.dol.gov/agencies/wb/data/earnings.
---------------------------------------------------------------------------
For individuals receiving their first appointment as a civilian
employee of the Federal Government (or a reappointment after a break in
Federal service), agencies will no longer be able to set pay based on
non-Federal salary history, which could vary between equally qualified
candidates. Agencies also will not be permitted to consider a
candidate's competing job offer when setting pay. Finally, agencies
will be required to have policies regarding setting pay based on a
previous Federal salary for employees who have previous civilian
service in the Federal Government.
Background
On June 25, 2021, President Biden signed E.O. 14035, titled
``Diversity, Equity, Inclusion, and Accessibility in the Federal
Workforce.'' \4\ To address any pay inequities and advance equal pay,
section 12 of E.O. 14035 requires the Director of OPM to review
Governmentwide regulations and, as appropriate and consistent with
applicable law, consider prohibiting the use of an applicant's salary
history when setting pay for a Federal employee.
---------------------------------------------------------------------------
\4\ See 86 FR 34593 (June 25, 2021).
---------------------------------------------------------------------------
On March 15, 2022, the President issued E.O. 14069, titled
``Advancing Economy, Efficiency, and Effectiveness in Federal
Contracting by Promoting Pay Equity and Transparency.'' \5\ Section 1
of that E.O., describing the policy objectives of the E.O., notes that
OPM ``anticipates issuing a proposed rule that would address the use of
salary history in the hiring and pay-setting processes
[[Page 5738]]
for Federal employees,'' consistent with E.O. 14035.
---------------------------------------------------------------------------
\5\ See 87 FR 15315 (Mar. 15, 2022).
---------------------------------------------------------------------------
OPM reviewed the pay-setting regulations governing the GS,
prevailing rate, AAJ, and ALJ, SES, and SL/ST pay systems. On May 11,
2023, OPM issued a proposed rule at 88 FR 30251 in response to E.O.
14035 and pursuant to its regulatory authorities in 5 U.S.C. 5333,
5338, 5343(c), 5372(c), and 5372b(b).\6\ As explained in the proposed
rule, the Federal Government's civilian personnel management systems
are required to adhere to merit system principles established in law at
5 U.S.C. 2301, including:
---------------------------------------------------------------------------
\6\ See 88 FR 30251 (May 11, 2023).
---------------------------------------------------------------------------
All employees and applicants for employment should receive
fair and equitable treatment in all aspects of personnel management
without regard to political affiliation, race, color, religion,
national origin, sex, marital status, age, or handicapping condition,
and with proper regard for their privacy and constitutional rights. 5
U.S.C. 2301(b)(2).
Equal pay should be provided for work of equal value, with
appropriate consideration of both national and local rates paid by
employers in the private sector, and appropriate incentives and
recognition should be provided for excellence in performance. 5 U.S.C.
2301(b)(3).
For the GS, prevailing rate, AAJ, and ALJ structured pay systems,
generally, an agency must set pay at the minimum rate for a new entrant
to the civil service. The GS system is designed with standardized
classification criteria for determining the grade levels of positions,
and each GS grade has a range of pay consisting of ten step rates. The
prevailing rate system under 5 U.S.C. chapter 53, subchapter IV, is a
uniform pay-setting system that covers Federal Wage System (FWS)
appropriated fund and nonappropriated fund employees. Generally, a new
appointment to a GS or a prevailing rate position must be made at the
minimum (step 1) rate of the grade of the employee's position. The AAJ
pay system has six rates of basic pay--AA-1, 2, 3, 4, 5 and 6. Upon
initial appointment, an agency generally must set the rate of basic pay
of an AAJ who is new to the Federal Government at the minimum rate AA-1
of the AAJ pay system. The ALJ pay system has three levels of basic
pay: AL-1, AL-2, and AL-3. Pay level AL-3 has six rates of basic pay.
Upon appointment to a position at level AL-3, an ALJ is generally paid
at the minimum rate.
Under each of these systems, the default is to set pay at the
minimum rate, but agencies have the authority to set pay above the
minimum rate for newly appointed employees if specific factors are
shown. Under the GS pay system, the largest of the pay systems at issue
in this final rule, an agency has the authority to set pay above the
minimum rate if it determines that the candidate has superior
qualifications or that the agency has a special need for the
candidate's services under the criteria in 5 CFR 531.212(b). The
current regulations at 5 CFR 531.212(c) state that an agency may
consider one or more of nine specified factors or other relevant
factors in making this step rate determination. One factor an agency
can consider is the candidate's existing pay, recent salary history, or
a salary documented in a competing job offer. 5 CFR 531.212(c)(2).
Similarly, the AAJ, and ALJ pay systems allow consideration of current
pay when setting pay for an applicant with superior qualifications who
is not a current Federal employee. Under those circumstances, an agency
sets the AAJ or ALJ pay at the rate that is next above the applicant's
existing pay or earnings. 5 CFR 534.604 (for AAJ pay system), 930.205
(for ALJ pay system). The prevailing rate pay systems also allow
setting pay above the minimum rate based on special qualifications. The
prevailing rate pay systems do not specifically list salary or pay
history as an allowable factor in setting pay. See 5 CFR 532.403.
There are also standard rules when setting pay for current and
former employees upon various personnel actions such as reemployment,
reassignment, promotion, transfer, or demotion, and the flexibility to
set pay above the rate to which the employee would otherwise be
entitled based on the employee's Federal salary history. For the GS pay
system, an agency may use the ``maximum payable rate'' rule, which
bases pay on the employee's highest previous rate of pay in a Federal
civilian position. 5 CFR 531.221. The prevailing rate pay system also
allows an agency to set an employee's pay at any rate (of the relevant
grade) that does not exceed the employee's highest previous rate. 5 CFR
532.405. For the AAJ and ALJ pay systems, an agency can set pay above
the minimum rate for an appointee with prior Federal service either
based on superior qualifications as used for new entrants or based on
the highest previous Federal rate of basic pay. 5 CFR 534.604 (for AAJ
pay system), 930.205 (for ALJ pay system).
The SES and SL/ST pay systems do not require an agency to set pay
at the minimum rate and, instead, require an agency to consider
specific factors when setting pay. See 5 CFR 534.404(a), (g); 534.506.
The SES and SL/ST pay systems are discussed in more detail in the SES &
SL/ST Pay Systems section of this final rule.
This final rule prohibits agencies from considering a candidate's
salary history as a factor in setting pay for new Federal civilian
employees. If an agency seeks to set pay above the minimum rate of the
applicable rate range under the GS, prevailing rate, AAJ, or ALJ pay
systems, that adjustment must be based on factors other than a
candidate's non-Federal pay history, such as how pay has been set for
employees who had similar qualifications (based on the level, type, or
quality of the candidate's skills or competencies or other qualities
and experiences) and have been newly appointed to positions that are
similar to the candidate's position (based on the position's
occupational series, grade level, organization, geographic location, or
other job-relevant factors), if applicable. Similarly, when setting pay
under the SES or SL/ST pay systems, the agency must base the pay on
enumerated factors and cannot consider a candidate's non-Federal pay
history. When setting pay based on prior Federal salary for reappointed
or current employees, agencies must have a policy that supports
consistency in setting pay for employees.
In addition to the data summarized in the proposed rule, OPM
considered comments received in response to the proposal. OPM received
63 submissions representing 512 commenters during the 30-day public
comment period from a variety of individuals (including Federal
employees), organizations (including labor organizations), and Federal
agencies regarding the substance of the proposed rule.7 8
Comments ranged from strong support of the proposed rule to categorical
rejection. OPM reviewed and carefully considered all comments. They are
summarized below, together with a discussion of the suggestions for
revisions and OPM's rationale for either adopting or declining those
suggestions.
---------------------------------------------------------------------------
\7\ OPM determined one comment was beyond the scope of the
proposed changes; that comment is not addressed below.
\8\ One commenter recommended that OPM extend the rulemaking
process and do more outreach to Federal employees about the
proposal. Comment 23, available at https://www.regulations.gov/comment/OPM-2023-0005-0023. In addition to publishing the proposed
rule in the Federal Register, at the beginning of the comment
period, OPM shared the proposed rule with numerous stakeholders,
including Federal employee unions, and publicized the proposed rule
in a press release. Multiple media sources such as Forbes, CNN,
Axios, Gov Exec, Federal News Network, and Federal Times, covered
the publication of the proposed regulatory changes.
---------------------------------------------------------------------------
In the first section below, we discuss comments that address topics
related to
[[Page 5739]]
the background and context of this rule, including responses to
questions posed by OPM in the proposed rule. In the sections that
follow, we address comments related to specific aspects of this final
rule.
Comments Regarding Background and Context
Federal Government Pay Gaps and Occupational Segregation
OPM has been periodically updating its pay gap data analysis since
issuing its 2014 Governmentwide strategy.\9\ Based on September 2021
EHRI \10\ data covering nonseasonal, full-time, permanent Executive
branch employees, on average for all race/ethnicity groups combined,
women are paid 94 cents for every dollar paid to a man--a gender pay
gap of six percent. This raw, unadjusted gender pay gap is before
considering any factors that might explain the gap, such as occupation.
---------------------------------------------------------------------------
\9\ Office of Personnel Management. ``Governmentwide Strategy
for Advancing Pay Equality in the Federal Government.'' https://www.opm.gov/policy-data-oversight/pay-leave/reference-materials/reports/Governmentwide-Strategy-on-Advancing-Pay-Equality-in-the-Federal-Government.pdf.
\10\ Office of Personnel Management. ``About Our Data (EHRI-
SDM).'' https://www.fedscope.opm.gov/datadefn/aehri_sdm.asp.
---------------------------------------------------------------------------
As discussed in the proposed rule, OPM also conducted an analysis
regarding pay gaps for groups of employees identified by both gender
and race/ethnicity. This analysis revealed that pay gaps varied
significantly depending on the specific population. OPM found that many
factors may contribute to the overall gender and race/ethnicity pay
gaps in the Federal Government. In conducting its data analysis, OPM
observed evidence of the impact of other factors, including
occupational segregation. A November 2020 study \11\ focused on
national pay gaps found that the gender pay gap varied significantly by
occupation. OPM's findings regarding Federal pay gaps are consistent
with research on pay gaps in the national workforce. Comments on OPM's
pay gap analysis are discussed in more detail in the Regulatory
Alternatives section.
---------------------------------------------------------------------------
\11\ Foster, T., Murray-Close, M., Landivar, L., & de Wolf, M.
``An Evaluation of the Gender Wage Gap Using Linked Survey and
Administrative Data,'' November 2020. https://www.census.gov/library/working-papers/2020/adrm/CES-WP-20-34.html.
---------------------------------------------------------------------------
In instances where pay disparities are found, one organization
recommended that OPM ``require agencies to immediately scale up to
raise lower gender and racial/ethnic median wage to match the higher
median pay at the beginning of the fiscal year.'' Comment 64.\12\ Two
organizations, several commenters, and an agency also suggested that
OPM encourage agencies to conduct pay audits and raise the wages of
individuals subject to inequitable pay disparities. See Comments 24,
27, 29, 46, 62, 64.
---------------------------------------------------------------------------
\12\ A reference at the end of a comment quotation or paraphrase
provides the location of the item in the public record. (i.e., the
two-digit number associated with the location in the docket).
Comments filed in response to the proposed rule are available at
https://www.regulations.gov/comment/OPM-2023-0005-00nn, where nn is
the comment number.
---------------------------------------------------------------------------
Putting aside the questions of whether, as a policy and legal
matter, it would be appropriate and workable to have automatic pay
adjustments to achieve a zero pay gap in median pay, OPM has no general
statutory authority to require agencies to increase pay of current
employees when gender and racial/ethnic pay gaps are found. We note,
however, that there are several authorities (e.g., the Equal Pay Act,
Title VII of the Civil Rights Act of 1964, the Americans with
Disabilities Act, the Age Discrimination in Employment Act) under which
an agency is authorized to increase the salary of a Federal employee
found to be subject to an inequitable pay disparity. We also note that
there may be legitimate, non-discriminatory factors that could
contribute to pay disparities for selected categories of employees,
such as employee seniority, performance, or other factors not
controlled for in the analysis. In 2015, OPM encouraged agencies to
conduct pay gap analyses by gender, race/ethnicity, or other
characteristics for their own workforces to identify where potential
pay disparities exist within an agency in order to develop targeted
strategies to reduce disparities and has issued guidance to help
agencies complete this exercise.\13\
---------------------------------------------------------------------------
\13\ Office of Personnel Management. ``Guidance for Agencies
Conducting Gender Pay Data Analysis.'' https://chcoc.gov/sites/default/files/Attachment-Agency%20Gender%20Data%20Analysis%20Guidance-rev_0.pdf.
---------------------------------------------------------------------------
OPM invited comments on what factors OPM should consider for
positions of high occupational segregation (wherein women and men often
tend to work in different occupations, and the occupations that are
predominantly held by women pay less, compared to those predominantly
held by men at the same level of skill or education). Four
organizations responded to this request for comment. One recommended
that OPM consider race and ethnicity alongside gender when looking into
the issue of positions of high occupational segregation. Comment 33.
Another stated that ``[g]iven that the goal is equal pay for equal
work, the focus of these initial steps to fight pay discrimination
needs to be on ensuring fairness in pay setting for like positions.
Ultimately, changes in pay between different positions will require
modification of the classification standards used to adjust the scoring
results, as those classification standards are the main measure OPM has
in place for instilling uniformity in pay-setting across different
agencies.'' Comment 49. The two other organizations recommended that
OPM consider job evaluations. Comments 60, 61. One of these
organizations stated that conducting job evaluations is a strategy ``to
identify and remedy pay inequities so that women and people of color
receive equitable compensation for their labor. Job evaluation schemes
assess jobs across occupations on a range of factors to establish fair
and equitable pay and promotion. These schemes make it more likely that
pay and promotion are based on performance rather than bias.'' Comment
61.
Occupational segregation in both the public and private sectors is
a systemic and persistent issue identified in pay equity studies.
Addressing occupational segregation, however, is outside the scope of
the Federal pay and classification system. OPM will assist agencies, in
exercising their delegated classification authority, in collecting
metrics and other relevant agency data to examine classification
practices based on a variety of factors, including gender analysis by
occupation. OPM will also assist agencies to expand the use of skills-
based hiring practices to address occupational segregation.
Pay Equity in Structured Pay Systems
OPM invited comments on whether there is any research we should
consider regarding the impact that structured pay systems have on pay
equity, and the impact that pay policies that allow organizations to
set pay above the minimum rate of the rate range for new employees
based on specified criteria have on pay equity. OPM received two
comments that addressed this question. First, an agency suggested that
OPM look at agencies that have converted to pay banded systems, such as
demonstration projects under 5 U.S.C. chapter 47, to determine the
benefits of such systems. Comment 34. The GS, prevailing rate, ALJ, and
AAJ pay systems are all structured with grades or work levels and
defined steps or pay rates within each grade or work level. It would be
difficult to draw direct comparisons between pay-setting policies for
pay banded systems (that combine multiple grades into a single
[[Page 5740]]
work level and/or have open salary ranges instead of step rates within
a range) and the effect on pay equity. We do not have information on
agency pay banding policies and practices nor has OPM conducted any pay
equity analysis on agency pay banding systems or their policies and
practices.
We also note that section 12(b) of E.O. 14035 requires agencies to
review regulations and guidance and, as appropriate and consistent with
applicable law, revise compensation practices for pay systems
authorized outside of title 5 of the United States Code to address any
pay inequities and advance equal pay. OPM will ask agencies to report
any revisions to compensation practices made to implement the
President's direction. Such reports may include information on
beneficial compensation practices under alternative pay systems, such
as pay banding systems.
Second, an organization shared two sources and stated that
structured pay systems can help address pay gaps and are essential to
attracting and retaining a talented and diverse workforce. Comment 61.
One article summarized how implementing transparency and accountability
procedures reduced the extent to which women and people of color
received lower monetary performance-based rewards.\14\ As OPM's
regulatory changes affect certain structured pay systems with specified
salaries rather than performance award determinations, this article is
not directly applicable. As discussed in the proposed rule, however, we
agree that pay transparency--as exists in Federal pay systems--can help
reduce gender pay gaps and that written policies support agencies'
consistent use of pay flexibilities.
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\14\ Castilla, E. ``Accounting for the Gap: A Firm Study
Manipulating Organizational Accountability and Transparency in Pay
Decisions,'' Organization Science, vol 26(2), March-April 2015,
pages 311-333.
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The other article stated that, in developing a pay structure,
``grades enable flexibility and internal equity in an organization by
providing a framework in which equivalent jobs are treated equally for
pay purposes.'' \15\ As explained in the proposed rule, the GS
classification and pay system is designed with standardized
classification criteria for determining the grade levels of positions,
and each GS grade has a range of pay consisting of 10 step rates. The
GS system has standardized pay-setting rules that help promote the
equitable treatment among employees. The FWS has three main pay plans
(Wage Grade (WG), Wage Leader (WL), and Wage Supervisor (WS)); the WG
and WL pay plans have 15 grades and WS has 19. Each grade has five
steps. The AAJ pay system has six rates of basic pay. An ALJ in level
AL-3 also has six rates of basic pay. OPM agrees that these structured
pay systems provide a framework that provides equal pay for work of an
equal value, consistent with the merit system principle in 5 U.S.C.
2301(b)(3). Because structured pay systems minimize discriminatory
influence on pay setting, OPM is not banning consideration of prior
Federal pay when setting pay but is requiring agencies to establish
policies that further promote equity in pay setting. OPM expects that,
over time, any residual pay gaps in the Federal systems will shrink.
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\15\ Strategic Human Resource Management. ``Building a Market-
Based Pay Structure from Scratch.'' https://www.shrm.org/resourcesandtools/tools-and-samples/toolkits/pages/buildingamarket-basedpaystructurefromscratch.aspx.
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Classification
OPM received a few comments regarding how employees qualify for
positions, how positions are classified, and how these decisions impact
pay. One commenter requested that OPM require that agencies be more
transparent about the pay for which new Federal employees qualify and
specifically how the grade assessments are made or calculated. Comment
04. Another commenter similarly stated that ``clearly the source of
inequity is in grade-setting, not step-setting as this rule targets.''
Comment 09. A third commenter stated, ``[t]his proposed rule appears to
consider pay setting within a grade level, but it ignores another
primary method of pay-setting in the government--grade level.'' Comment
20.
Although pay is often associated with position classification,
position classification is based solely on work performed or the core
duties and responsibilities of a position. The classification of
positions recognizes levels of difficulty and responsibility in terms
of the grade levels established in law at 5 U.S.C. 5104. While these
grade-level definitions are used to determine grades that are linked to
ranges of basic pay rates, those definitions are not based on pay
factors or pay relationships. All OPM GS position classification
standards are based on the difficulty and responsibility of the work at
each level and the qualifications required to do that work. Under 5
U.S.C. 5107, Federal agencies are responsible for classifying their GS
positions consistent with position classification standards issued by
OPM. Similarly, under 5 U.S.C. 5346, agencies are responsible for
grading their prevailing rate jobs consistent with the job grading
standards issued by OPM. Therefore, similar or like positions and jobs
across Federal agencies should be classified or graded in a consistent
manner since they are evaluated against the same standards rather than
position-to-position comparisons.
An agency also stated that ``a proposal to cease or significantly
limit how Federal agencies can take into account past salary history
must be paired with a wholesale reexamination of the GS pay scale and
how hiring managers determine which qualifications meet which GS
levels.'' Comment 21. The GS pay structure of 15 grades and 10 steps
within each grade is defined in statute at 5 U.S.C. 5332(a)(2) and
rates are adjusted in accordance with 5 U.S.C. 5303. The agency also
recommended that OPM issue revised guidance on the minimum
qualifications associated with each grade level. In May 2022, OPM
issued updated guidance and qualifications policy including the General
Schedule Qualifications Operating Manual.\16\ Qualification
requirements are aligned with classification policy for an occupational
series. Similarly, OPM's Federal Wage System Qualifications provide
guidance regarding the knowledge, skills, and abilities (KSAs) or job
elements needed for jobs and provides a reference for assessing the
qualifications of applicants for a particular grade.\17\ Candidates for
Federal employment and/or Federal employees may qualify for Federal
jobs based on training, experience, education, and/or other
requirements aligned with the position. Both the Manual and the FWS
Qualifications provide detailed information to assist with aligning the
qualifications of a candidate with the appropriate KSAs needed for jobs
by grade, providing consistency between candidates, within an agency,
and between agencies.
---------------------------------------------------------------------------
\16\ Office of Personnel Management. ``Guidance Release--E.O.
13932; Modernizing and Reforming the Assessment and Hiring of
Federal Job Candidates.'' https://www.chcoc.gov/content/guidance-release-eo-13932-modernizing-and-reforming-assessment-and-hiring-federal-job.
\17\ Office of Personnel Management. ``Federal Wage System
Qualifications.'' https://www.opm.gov/policy-data-oversight/classification-qualifications/federal-wage-system-qualifications/#url=Overview.
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A commenter also expressed concern that ``to the extent that
agencies are limited in their ability to set pay within GS levels, they
are more likely to adjust the GS levels such that step 1 of the offered
GS level is closer to the market rate.'' Comment 20. OPM cautions that
the intentional misclassification of positions to manipulate
recruitment,
[[Page 5741]]
qualifications, and/or pay may be a prohibited personnel practice
subject to review by the Office of Special Counsel.
Consideration of Salary History
Executive Order 14035 directed OPM to consider, as appropriate and
consistent with applicable law, prohibiting the use of an applicant's
salary history to set pay or when setting pay for a Federal employee.
OPM has authority to issue regulations governing the GS, prevailing
rate, AAJ, ALJ, SES, and SL/ST pay systems in 5 U.S.C. 5333, 5338,
5343, 5372, 5372b, 5376, 5382, and consistent with merit system
principles established in law at 5 U.S.C. 2301. Relevant to this final
rule is the requirement that all employees and candidates for
employment receive fair and equitable treatment in all aspects of
personnel management (5 U.S.C. 2301(b)(2)) and that equal pay should be
provided for work of equal value, with ``appropriate consideration''
for both national and local rates paid by employers in the private
sector (5 U.S.C. 2301(b)(3)).
Throughout the proposed rule and this final rule, OPM adheres to
these authorities and merit system principles. We have identified the
reasons--based on OPM data, Department of Labor data, examples of state
salary history bans and their impacts on salary equity, research
regarding the benefits of such bans, and other information--why salary
history should not be a consideration in the pay-setting process for
new Government employees.
OPM administers pay systems that have taken a variety of approaches
to setting initial pay. The GS pay system specifically allows salary
history as a factor to be considered when setting pay for an initial
appointment in Federal service (or reappointment after a break in
service). The prevailing rate pay systems allow agencies to set pay
above a minimum rate based on ``special'' qualifications but provide no
direction on what factors to consider when determining the step at
which to set pay within the grade. The AAJ pay system allows agencies
to offer an AAJ applicant with superior qualifications a higher than
minimum rate of pay that is next above the applicant's existing pay or
earnings, up to the maximum rate. The ALJ pay system allows agencies,
with prior OPM approval, to pay an ALJ applicant with superior
qualifications the rate of pay that is next above the applicant's
existing pay or earnings up to the maximum rate. The SES and SL/ST pay
systems provide a specific list of factors--which does not include
salary history--that an agency must consider when setting initial pay.
OPM has determined that salary history should no longer be
considered in setting pay for new Federal employees entering into the
GS, prevailing rate, AAJ, ALJ, SES, and SL/ST pay systems. Accordingly,
OPM is modifying the regulatory language for the GS pay system by
removing salary history as a factor to consider in setting pay for
newly appointed employees. Similarly, OPM is adding language to the
prevailing rate systems, AAJ, ALJ, SES, and SL/ST pay system
regulations to detail the factors that should be considered in setting
pay and/or to make clear that salary history is no longer a permitted
factor.
National unions, a local union, as well as multiple other
organizations, Federal employees, and members of the public expressed
strong support for many of the regulatory amendments in the proposed
rule. One commenter reported an academic research study in which a
description of the proposed salary history ban was shared with 1,605
Americans and found that about two-thirds of those surveyed favored the
policy somewhat or strongly. See Comment 58. Commenters provided
sources of information and data arguing against using salary history in
the pay setting process. These commenters and the cited sources
demonstrate multiple rationales supporting OPM's decision not to permit
continued consideration of salary history in setting initial pay. The
main rationales presented by commenters are discussed in the following
sections along with consideration of countervailing comments.
Salary history does not demonstrate an individual's qualifications
or fitness for a position. Commenters argued that past salary in a non-
Federal job is not indicative of ability to perform in the Federal
position. One organization wrote that ``prior salary is not an accurate
measure of a job candidate's qualifications, skill, or ability to
perform a job,'' referencing an Issue Brief from the Women's Bureau of
the U.S. Department of Labor (DOL). Comment 56. A union commented that
including salary history as an allowable consideration is at odds with
the principles reflected in the current regulations. See Comment 44.
The commenter explained that salary history ``does not directly reflect
either the employee's superior qualifications or the agency's special
needs,'' noting that those are the types of interests for which OPM
regulations allow consideration. Id.
Another commenter also expressed concern that consideration of past
salary information ``perpetuates the flawed assumption'' that a lower
paid candidate is of lower quality. Comment 60. That commenter cited a
study, which found that ``salary history is not an effective tool for
assessing a candidate's value . . . because organizations do not
accurately match pay to an employee's productivity'' and ``there [is]
too much variation on the relationship between pay and performance.''
\18\ Id. For example, candidates who have had a break in their career
to serve as full-time caregivers to children or other family members
may have a salary history that is lower than market value, but the
candidate is well-qualified to perform the duties of the position. Id.
Several other commenters also cited the example of lower pay for
caregivers not being indicative of lower quality employees. See, e.g.,
Comments 20, 33, 56.
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\18\ Adler, L. ``What's a Job Candidate Worth? Explaining
Variation in Pay-Setting Practices, SOCARXIV (2020). https://osf.io/preprints/socarxiv/ctu8m.
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Commenters raised the issue that variability in current pay may
reflect the aspects of the current employer rather than any factors
relevant to Federal employment. For example, an organization commented
that ``those who take lower-paying jobs, such as those at non-profits
or state and local government . . . should not be penalized [compared
to those working for private sector employers].'' Comment 46.
Several commenters disagreed, contending that past pay can be
indicative of superior skills and/or high performance. An agency
recommended that OPM expand the criteria for determining an employee's
salary based on qualifications to allow agencies to consider the
``whole of the individual and their experience'' rather than banning
agencies from considering a candidate's salary history. Comment 34.
An individual commented that the rule was arbitrary and capricious
because it is inconsistent with merit system principles at 5 U.S.C.
2301(b)(1) and 2301(b)(3), calling for equal pay for work of equal
value. Comment 28. The commenter argues that the determination of
``relative ability, knowledge, and skills'' in ``fair and open
competition'' means comparing individuals with others in a market, or
competitive, economy, and that this requires a review of salary history
because it is ``the price of a worker's labor per unit time.''
OPM disagrees with this analysis. As an initial matter, ``fair and
open competition'' in 5 U.S.C. 2301(b)(1) does
[[Page 5742]]
not mean the Government should compare salaries vis-[agrave]-vis others
in a market economy. It refers to the recruitment, selection, and
advancement of qualified individuals based on merit (as opposed to, for
example, political favor). More significantly, OPM disagrees that
salary history is a consistently accurate proxy for worker value. Non-
Federal employers can have widely varying compensation structures,
policies, and funding. Lower paying jobs, such as non-profit
organizations or entry-level professional positions, could have
compensation packages that include non-salary benefits (e.g., more
generous leave or childcare flexibilities) that would be difficult to
capture by only looking at past salary. Also, many higher paying jobs
have an expectation or requirement of longer hours (as many are exempt
from the overtime pay provisions of the Fair Labor Standards Act), such
that the salary per hours worked would more closely resemble that of a
lower paying job with a lower hours expectation or requirement. See
Comments 20, 33, 44, 62, 68. But that nuance would not be captured by
looking only at a monetary figure. In addition, OPM's regulations
already allow--and will continue to allow--agencies to consider several
factors including the level, type, or quality of the candidate's skills
or competencies.
Agencies do not typically have access to the information that a
previous non-Federal employer used to determine a job candidate's
salary, whether the previous employer conducted any salary survey or
labor market analysis when making pay-setting determinations, or how a
candidate's employment history may have affected the previous
employer's salary decisions. Under this final rule, agencies will set
pay above the minimum of the rate range based on factor(s) such as the
level, type, or quality of the candidate's skills or competencies,
which will be more equitable and relevant than salary history.
Salary history bans break the cycle of pay discrepancies arising
from discrimination and inequity and have positive impacts on pay gaps.
Commenters noted that setting starting pay based on salary history can
contribute to inequitable pay gaps. Citing a DOL Issue Brief, an
organization noted that salary history may ``reflect past pay
discrimination or other factors with gender-based implications.''
Comment 56. Therefore, setting starting pay based on past pay can
compound the ``effects of discrimination and inequity,'' in part
because starting salary can affect subsequent salary increases. Id.
That commenter, citing a Harvard Business Review study, noted that
``nearly two-thirds'' of businesses found that pay disparities
``stemmed from reliance on salary history.'' Id. Another commenter also
noted that prior salary history may reflect ``prior economic downturns
in which women and minority workers are often harder hit.'' Comment 44.
Several commenters referenced a 2020 paper showing that
implementing a salary history ban results in greater increases in
salary for job changers for populations that have historically
experienced discrimination. See, e.g., Comments 51, 56, 61.\19\ A
Federal employee union expressed the view that the proposed approach
would likely lead to an increase in pay for women and people of color.
Comment 59. Another commenter argued that implementing a salary history
ban would ``increase the diversity of our workforce and leadership.''
Comment 22. That commenter also argued that the proposed ban would
``provide greater footing to women and minority groups.'' Id. A Federal
employee-run organization commented that ``in eliminating the use of
salary history when setting pay the Government will emphasize its
commitment to gender and racial equality while also reducing costly
legal challenges to pay disparities.'' Comment 62. Similarly, an
organization commented that the proposal would help to ``ensure that
the Federal Government is in compliance with the Equal Pay Act.''
Comment 56.
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\19\ See Bessen, James E., Chen Meng, and Erich Denk. 2020.
``Perpetuating Inequality: What Salary History Bans Reveal About
Wages.'' https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3628729.
---------------------------------------------------------------------------
In contrast, an agency expressed concern that prohibiting the
consideration of salary history was not in line with the November 2021
Governmentwide DEIA Strategic Plan,\20\ which discouraged ``solely''
relying on salary history to set pay. OPM believes the rule is
consistent with the DEIA strategic plan. The DEIA strategic plan listed
this suggestion among many policy examples the Government could adopt
to ensure fair outcomes. Further, the President, through E.O. 14035 and
E.O. 14069, directs OPM to consider prohibiting setting pay based on
salary history, which OPM has concluded is appropriate.
---------------------------------------------------------------------------
\20\ The White House. ``Governmentwide Strategic Plan to Advance
Diversity, Equity, Inclusion, and Accessibility in the Federal
Workforce,'' November 2021. https://www.whitehouse.gov/wp-content/uploads/2021/11/Strategic-Plan-to-Advance-Diversity-Equity-Inclusion-and-Accessibility-in-the-Federal-Workforce-11.23.21.pdf.
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Many of the comments arguing that salary history bans can reduce
pay gaps cited the experiences of states and localities, noting that 21
states and 22 localities have enacted laws prohibiting the use of
salary history in setting pay. See, e.g., Comments 33, 56, 59, 60, 61.
One organization cited to data from Colorado, Nevada, and Rhode Island
in support of implementing a prohibition on considering a candidate's
salary history. Comment 33. Several organizations further noted, citing
multiple studies, that these salary bans have helped narrow pay gaps.
See, e.g., Comments 33, 60, 61. One of those organizations asserted
that OPM's proposed changes would help bring the Federal Government in
line with these states, localities, and private firms that have already
taken steps to limit or ban employers from using an applicant's prior
or current salary in determining pay. Comment 33.
In contrast, an agency commented that, OPM should not ``ban any pay
flexibility across the board'' based on pay gaps specific to an agency,
to certain occupations within an agency, or a limited number of
agencies. Comment 34. It stated that agencies with such issues should
``seek to remedy those gaps or impose their own limits based on OPM
authorities.'' Id. Further, some commenters questioned the existence of
pay gaps (Comment 16) or the effectiveness of a salary history ban
(Comments 18, 23), and argued that a salary history ban could harm
women who earn a competitive wage (Comment 23). OPM does not believe
that these comments warrant consideration of prior salary. The
governing merit system principles are not unique to one agency, and OPM
believes that eliminating consideration of prior salary is most
consistent with those principles regardless of whether any agency or
occupation currently has an inequitable pay gap. Additionally, even if
a particular agency or occupation does not currently have a pay gap,
that does not eliminate the possibility that a pay gap could develop if
new hires have differing starting salary ranges for reasons unrelated
to any merit system principles (including but not limited to prior
discrimination); eliminating consideration of prior salary can help
prevent inequities from developing in the future. No commenters
provided data showing that a salary history ban is not an effective
tool for eliminating inequitable pay gaps or preventing such gaps from
occurring. OPM concludes that, based on the evidence, prohibiting
consideration of salary history has been demonstrated to reduce pay
gaps and, thus, is a valid tool for the Federal
[[Page 5743]]
Government to implement for these pay systems.
Additional Considerations Regarding Setting Pay
Commenters raised several other considerations regarding the pay-
setting processes at issue in this rule.
OPM proposed that, when setting pay above the minimum rate for an
employee newly appointed to a GS, prevailing rate system, AAJ, and ALJ
position, an agency would be required to consider how pay has been set
for employees who had similar qualifications (based on the level, type,
or quality of the appointee's skills or competencies or other qualities
and experiences) and who have been newly appointed to positions that
are similar to the appointee's position (based on the position's
occupational series, grade level, organization, geographic location, or
other job-relevant factors), if applicable. A commenter noted that
``this may have the effect of locking in low pay and creating
disparities across teams or across agencies.'' Comment 20. The
commenter suggested OPM ``provide a type of pay-setting authority that
would allow an agency to remedy this by raising the pay for current
employees to achieve equity with incoming employees.'' Id. There is no
statutory authority for this suggested change. For example, 5 U.S.C.
5334 provides OPM with the authority to prescribe regulations regarding
setting a GS employee's pay when an employee transfers from a non-GS
position or another GS position, or upon demotion, reinstatement,
reappointment, change in type of appointment, change in employment
status, or change in grade. The law does not allow OPM to prescribe
regulations regarding adjusting pay for existing employees to achieve
equity.
An organization recommended that ``OPM provide additional guidance,
including examples, to agencies about what constitutes `similar work,'
and how agencies should make determinations for employees doing
`similar work' who have different levels of experience.'' Comment 56.
This final rule specifies that determinations regarding whether work is
similar would be based on the position's occupational series, grade
level, types of duties, or other job-relevant factors. While agencies
will be responsible for making these determinations within these
parameters, OPM will consider the need to provide further agency
assistance on this issue in future implementing guidance.
Commenters noted that OPM proposed only banning the consideration
of salary history in setting pay. Several organizations recommended
that OPM explicitly ban agencies from asking for and discussing salary
history with job candidates. See, e.g., Comments 33, 56, 60, 61. The
organizations also recommended that OPM guidance should clarify that
agencies should not instead ask about an individual's salary
expectation and that agencies should appropriately train relevant staff
to ensure effective implementation of OPM's proposal. Id.
The regulations that OPM is amending relate to the factors agencies
use in setting pay, not to agencies' conduct in the hiring process, but
OPM agrees that agencies should not solicit salary history from job
candidates. As an initial matter, agencies are prohibited from using
this information, so there is simply no reason why agencies should
request it, as there is no use for this information, if acquired.
Moreover, doing so could suggest to a candidate that the agency
intended to consider the information in violation of the regulation,
which further militates against an agency from asking. Therefore,
agencies should not request a candidate's salary history, and OPM will
issue guidance saying the same. OPM will consider the scope and content
of implementation guidance, trainings, and other means of sharing best
practices following the publication of this rule.
We note, of course, that an agency has no control over what
information a candidate may volunteer to provide and that a candidate
could disclose their prior salary during the interview process. In the
event of voluntary salary disclosure, agencies will continue to be
prohibited from considering that information to set pay, regardless of
how they learn that information.
With respect to candidates providing salary expectations, OPM notes
that nothing in this rule limits candidates' ability to offer this
information. Under this final rule, agencies can still set pay above
the minimum rate (using factors other than salary history or a
competing job offer). Information regarding candidates' salary
expectations may help agencies effectively recruit and onboard these
candidates by increasing minimum pay based on factors other than salary
history or a competing job offer.
An agency was concerned that not allowing Federal agencies to
consider salary when setting initial pay ``could lead to a biased pay-
setting process and have unintended consequences.'' Comment 48. The
commenter suggests that salary is a factor that helps to remove
subjective bias. OPM disagrees that the changes could lead to a biased
pay-setting process. Under the current regulations, agencies may
consider one or more of the factors listed in the regulations when
setting pay for a GS appointee with superior qualifications or for
which the agency has a special need. Under the revised regulations for
the GS pay system, agencies must consider the step at which pay has
been set for employees who had similar qualifications and who have been
newly appointed to positions that are similar to the candidate's
position and at least one other factor listed in the regulations.
Similarly, under the current prevailing rate regulations, an agency
applying the special qualifications authority currently has no
limitations. Under the revised regulations, OPM provides specific
factors for an agency to consider, which will make pay setting less
subjective and less prone to bias. Under the AAJ and ALJ pay systems,
adjustments from the minimum rate for superior qualifications are
currently based primarily on current pay. With the revisions in this
final rule, AAJs and ALJs that are new to Federal employment or
reappointed after a break in service may have pay set based on
qualifications with consideration given to the pay received by AAJs or
ALJs, respectively, with similar qualifications and in similar
positions. This means that we expect a lower risk of bias because
salary history, a factor known to perpetuate gender and racial/ethnic
biases, is being removed from consideration.
Pay Systems Outside of Title 5
An agency noted that the proposed revisions would not apply to pay
systems under authorities outside of title 5 of the United States Code
and implied that implementing these changes for the title 5 pay systems
but not for other pay systems would result in some sort of inequity.
Comment 52. Another agency asked whether OPM's proposed regulatory
changes would apply to employees under the Department of Defense
Civilian Acquisition Workforce Personnel Demonstration Project
(AcqDemo) or Science and Technology Reinvention Laboratories (STRL).
Comment 57. OPM proposed revising the GS, prevailing rate system, AAJ,
and ALJ regulations because OPM has authority to regulate pay setting
for these systems under 5 U.S.C. 5333, 5338, 5343(c), 5372(c), and
5372b(b). The regulatory changes do not apply to AcqDemo, which is
authorized under 10 U.S.C. 1762, or to STRL, which is authorized under
10 U.S.C. 4121, as the Department of Defense waived provisions of title
5 pertaining
[[Page 5744]]
to setting pay for GS employees under these demonstration projects'
authorizing legislation and 5 U.S.C. chapter 47. See 82 FR 52104 and 87
FR 72462.
We note, however that under section 12(b) of E.O. 14035, the head
of each agency that administers a pay system other than one established
under title 5 of the United States Code must review the agency's
regulations and guidance and, as appropriate and consistent with
applicable law, revise compensation practices to address any pay
inequities and advance equal pay. OPM will be requesting agency reports
on any revisions to compensation practices made to implement the
direction in E.O. 14035.
Impact on Recruitment
The commenters who categorically disagreed with the proposed rule
and those commenters who only cited opposition to portions were largely
concerned that prohibiting agencies from using a candidate's salary
history to set pay would hurt the Federal Government's ability to
recruit employees, especially for occupations for which non-Federal
salaries exceed Federal salaries. See, e.g., Comments 6, 8, 9, 18, 21,
23, 26, 35, 52, 57, 61.
Conversely, several commenters argued that prohibiting
consideration of salary would improve recruitment because it forces
consideration of more equitable factors in setting pay. See, e.g.,
Comments 17, 33, 44, 51, 56. For example, one union noted that
eliminating salary history refocuses ``consideration on . . . factors
such as the nature and necessity of the job to the agency, disparities
between Federal and non-Federal salaries for similar positions'' and
comparability to pay received by similarly qualified candidates for
similar positions. Comment 44. An organization, citing a working paper
summarizing a field experiment, noted that ``[r]esearch shows that when
employers are not able to rely on salary history to set pay, employers
collect more information from candidates and ask more substantive and
probing questions to evaluate an applicant for the job.'' Comment 56.
Many commenters cited as a benefit the stronger emphasis on a
candidate's knowledge and skills. See, e.g., Comments 10, 57.
An organization commented that changing Federal Government hiring
practices to be more equitable ``will likely result in economy-wide
gains as the federal government will be better able to attract and hire
a wider pool of workers.'' Comment 33. The organization also noted that
the revised practices could improve retention, noting that ``removing
salary history from the application and interview process can
contribute to a sense of a fair and equitable organization culture that
can lead to increased retention and talent attraction'' since ``workers
who report a sense [of] unfairness in the workplace are more likely to
voluntarily leave their job.'' Id.
An agency suggested that the salary history ban would improve its
ability to recruit and retain ``highly skilled employees with specific
technical expertise'' due to the perception of the Federal Government
as an ideal employer. Comment 51. It argued that the ``halo effect'' of
a salary history ban was an important tool for competing in tight labor
markets. Id.
OPM agrees that this rule will have a positive impact on
recruitment and believes that any recruitment challenges resulting from
this rule will be minimal. Agencies will still be able to set pay above
the minimum of the rate range to recruit new employees based on other
applicable factors. For example, one of the factors agencies will be
able to consider when setting pay under 5 CFR 531.212(c) is whether
there are significant disparities between Federal and non-Federal
salaries for the skills and competencies required in the position to be
filled.
Several commenters, including an agency, expressed concern that the
changes would slow down the pay-setting process or that agencies will
be discouraged from using pay flexibilities because of the additional
work required if use of salary history is prohibited in setting pay.
See Comments 26, 41, 52. OPM disagrees that agencies will be
discouraged from using the pay flexibilities that are being revised.
Instead of being allowed to consider a candidate's salary history, an
agency can, where a candidate's superior qualifications or an agency's
special need merits setting pay above the minimum rate, consider one or
more factors directly related to the position to be filled and how pay
has been set for employees who had similar qualifications and who have
been newly appointed to positions that are similar to the candidate's
position, if applicable. This information should be readily available
to agencies and will give agencies the ability to increase a
candidate's starting pay as appropriate.
Competing Job Offers
OPM's proposal to allow agencies to consider a competing job offer
when setting pay within limitations specified in the proposed rule
received a significant number of comments.
One commenter said that it was ``arbitrary and capricious to
propose that agencies may consider a competing offer but to ignore an
applicant's current salary or salary history'' because ``their current
compensation represents a competing offer to the Government's offer.''
Comment 20. That commenter argued that there are racial disparities
with respect to who ``may be able to wait out longer for a competing
[job] offer than others due to higher wealth.'' Id. Another commenter
stated that allowing consideration of private sector job offers would
be ``more available to beneficiaries of private sector discrimination
than to those that have been treated unfairly, and those offers would
precisely reflect the private sector salary history that the proposed
rule disallows directly.'' Comment 32. A commenter expressed that
relying on competing job offers in negotiation of pay ``only serve[s]
to perpetuate pay disparities and should be eliminated.'' Comment 40.
An organization commented that a competing job offer could be ``another
reflection of past pay discrimination, bias, negotiation bias, or other
factors with gender-based implications that are irrelevant to a
candidate's skills, qualifications, or experience.'' Comment 56.
Another organization stated that ``women and people of color likely
have lower competing offers or may have none. Therefore, using this
information to determine compensation could perpetuate inequality.''
Comment 61.
An organization recommended revising the regulations ``to require
that the competing job offer be contemporaneous to the Federal offer at
issue, and to require that the competing job offer be bona fide (as
certified in writing by the applicant) and not, for example, be an
offer that is made at the request of the applicant with no real
intention of resulting in actual hiring for the purpose of affecting
pay-setting in the hiring agency's job offer.'' Comment 49.
In contrast, one agency supported allowing agencies to consider
competing job offers as necessary for the agency to compete with the
private sector. Comment 57.
OPM is persuaded that the same principles that apply to
consideration of salary history apply to consideration of a competing
job offer. A competing job offer could, itself, be based on salary
history. And, as noted by multiple commenters, an individual's current
pay is effectively a competing offer. Setting pay based on the factors
enumerated in this final rule is better suited to establishing
equitable pay than comparison to a competing offer.
[[Page 5745]]
Because of the rationales for removing consideration of salary history
and based on the comments received, OPM is revising this element of its
proposed rule and, in this final rule, is removing a salary documented
in a competing job offer from the list of factors that an agency may
consider when setting pay above the minimum rate. OPM reiterates that
agencies will be able to consider other applicable factors when setting
pay above the minimum rate, such as significant disparities between
Federal and non-Federal salaries for the required skills and
competencies.
Comments Regarding Specific Pay Systems
SES & SL/ST Pay Systems
OPM's proposed rule explained that, although the SES and SL/ST pay
systems are among the pay systems administered by OPM, OPM believed
that it was not necessary to prohibit consideration of salary history
in the SES and SL/ST pay systems because the regulations governing
those pay systems provide a specific list of factors to consider when
setting pay that does not include salary history. Further, the gender
pay gap for these positions, based on September 2021 data, is less than
one percent. OPM requested comments, however, on a wide range of topics
to inform how OPM could best promote pay equity in its pay systems.
OPM received several comments objecting to OPM's proposal not to
revise SES and SL/ST pay systems and advocating that these positions be
treated the same as those in the GS, prevailing rate, AAJ, and ALJ pay
systems. See Comments 07, 32, 47, 56, 62. After further consideration,
OPM agrees and is amending the regulations for the SES and SL/ST pay
systems to make explicit that salary history and competing job offers
cannot be considered when setting pay for new entrants to Federal
civilian positions.
The commenters that disagreed with excluding SES and SL/ST pay
systems from these new rules argued that this exclusion created
arbitrary inconsistency. Id. One commenter stated that ``exempting
these [SES and SL/ST] positions from the strict prohibition on
considering an applicant's salary history appears arbitrary and would
create unnecessary inconsistencies in the regulations.'' Comment 56.
Another commenter voiced support for the use of salary history,
generally, describing it as ``a factor that is helpful for setting the
starting pay'' but supported either a total inclusion or total
exclusion of the use of salary history across pay systems, stating that
the exclusion of SES and SL/ST ``shows prejudice in applications of
this policy.'' Comment 07.
Commenters also objected to the exclusion of SES and SL/ST from
this rule on the basis that any gender/racial pay gap, even below one
percent, should be addressed. Comments 56, 62. A Federal employee-run
organization stated that ``[t]he salary history ban is a critical step
towards shrinking unjust and inequitable salary gaps, which is why we
encourage OPM to include all positions (including Senior Executive
Service jobs) unless OPM can provide compelling reasons for their
exclusion.'' Comment 62. Similarly, when commenting on the existing pay
gap for SES and SL/ST positions, an organization stated that ``[a]bsent
evidence that prohibiting consideration of salary history for SES, SL,
and ST positions would increase the pay gap for those positions, the
fact that the pay gap is small does not provide an adequate
justification for failing to apply rules designed to promote equity to
these positions.'' Comment 56. OPM did not receive any comments in
support of this aspect of the proposed rule.
OPM agrees with the commenters that the SES and SL/ST pay
regulations should be revised consistent with changes being made to the
pay-setting rules for other pay systems. Although the SES and SL/ST
systems currently do not include salary history as a factor when
setting pay for individuals receiving their first appointment as a
civilian employee of the Federal Government, they also do not specify
that the list of factors is exhaustive. That is, the SES and SL/ST pay
regulations mandate what must be considered when setting an initial
rate of pay--to include merit-based factors such as the nature and
quality of the individual's experience, qualifications,
accomplishments, and current responsibilities, which could be read to
allow for the consideration of additional factors such as salary
history. 5 CFR 534.404; 5 CFR 534.506. Similarly, agencies currently
have broad discretion in setting pay for an individual being
reappointed to the SES following a break in SES service and for
reappointment to an SL or ST position. 5 CFR 534.404(i); 5 CFR
534.506(c).
OPM agrees with commenters that consideration of salary history for
SES and SL/ST positions presents the same concerns as for the GS,
prevailing rate, AAJ, and ALJ pay systems. Further, even though the SES
and SL/ST pay systems do not have a significant pay gap, eliminating
consideration of salary history information, as discussed above, is
most consistent with merit system principles and can help prevent
inequitable pay discrepancies from arising. Salary history also is
unlikely to reflect an individual's qualifications or fitness for a
position relative to the qualifications of other new appointees.
Therefore, we are adding language to the SES and SL/ST pay regulations
explicitly prohibiting the use of salary information for appointees who
are entering the Federal Government for the first time and prohibiting
the use of non-Federal salary information upon reappointment to an SES,
SL, or ST position.
Unlike the GS, prevailing rate, AAJ, and ALJ pay systems for which
OPM is adding a requirement for agencies to implement policies for
setting pay for current and former Federal employees, OPM is not adding
a similar provision for the SES and SL/ST pay systems. The regulations
for SES pay already require agencies to have a plan for setting and
adjusting rates for SES members. 5 CFR 534.404(g). With respect to
setting initial pay, plans must provide for transparency in pay
setting, may consider the executive's scope of authority and level of
responsibility in the agency, and must consider the distribution of pay
rates within the SES rate range. Id. Similarly, the SL/ST pay system
regulations require an agency to have written procedures for setting
pay. 5 CFR 534.505. The procedures must provide for transparency in pay
setting. Id. These written SES and SL/ST plans already address the pay-
setting issues this final rule requires agencies to develop for the GS,
prevailing rate, AAJ and ALJ pay systems.
General Schedule Pay Setting
OPM received a number of comments related specifically to the
General Schedule pay system and the General Schedule regulations. While
some of these comments implicate issues that affect each of the pay
systems at issue in this final rule, we address the General Schedule-
specific comments here.
An agency suggested modifying or eliminating 5 CFR 531.211(a),
which requires that pay be set at the minimum rate. Comment 30. OPM
cannot eliminate this regulation because it implements the law in 5
U.S.C. 5333. The statute states, ``New appointments shall be made at
the minimum rate of the appropriate grade'' and provides OPM with
authority to prescribe regulations to allow setting pay above the
minimum rate of the grade based on considerations such as existing pay,
the candidate's unusually high or unique qualifications, or a special
need of the Government for the candidate's services. While the statute
authorizes regulations
[[Page 5746]]
that provide pay-setting flexibility, the default is to have pay set at
the minimum of the grade. Also, while the statute refers to
consideration of ``existing pay,'' it is listed as an example of what
OPM regulations may consider. As discussed in this final rule and the
proposed rule, OPM has determined to prohibit consideration of existing
pay or salary history when setting pay above the minimum rate of a GS
grade.
An agency questioned the applicability of 5 CFR 531.212 to
nonappropriated fund instrumentality (NAFI) employees who move to GS
positions. Comment 52. As stated in 5 CFR 531.212(a)(4), employees who
move from a NAFI position to a GS position with a break in service of 3
days or less and without a change in agency are not eligible to have
pay set under 5 CFR 531.212 because their NAFI employment is considered
employment by the Federal Government. Such NAFI employees are covered
by the regulations in 5 CFR 531.216, which allow consideration of a
NAFI employee's highest previous rate when setting pay. NAFI employees
who are not covered by 5 CFR 531.216 (i.e., those who have a break in
service of more than 3 days or a change in agency upon movement to a GS
position) may be eligible to have their pay set under the GS superior
qualifications and special needs pay-setting authority at 5 CFR
531.212, as revised by this final rule.\21\
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\21\ OPM has a fact sheet on NAFI employees moving to GS
positions, which is based on the law in 5 U.S.C. 5334(f).
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An agency was concerned that OPM does not ``have the agency data to
accurately state whether salary history was the basis for justifying
[setting pay above step 1 in the GS system] or whether it was one of
the other eight factors considered.'' Comment 45. The agency
recommended ``[mandating] . . . that setting pay above step 1 cannot be
based solely on salary history,'' that agencies ``communicate to
applicant/candidate/selectee that they are not required to provide any
salary history,'' and that ``OPM request the data/information they are
lacking to make a more informed decision regarding the proposed removal
of this factor.'' Comment 52. Another commenter also suggested that OPM
collect more data. OPM does not believe that it is practical to ask
agencies to submit the written documentation of their justifications to
use the superior qualifications and special needs pay-setting authority
that is required by 5 CFR 531.212(e) when it was used for over 9,000 GS
employees in fiscal year 2021. In 2013, some agencies reported that
their policy on this authority required the use of a job candidate's
existing salary, or that existing salary must be considered when
setting pay of a new GS employee. While OPM revised its fact sheet on
the authority in 2015 to remind agencies that existing salary is only
one factor an agency may use when setting pay under this authority, the
regulations have not changed since that time so agency policies may not
have changed either. OPM will update its guidance on setting pay to
reflect the changes made by this final rule.
A Federal employee-run organization ``agree[d] that it is prudent
for agencies to consider the wages of existing comparable peers when
setting a new employee's pay'' but encouraged ``OPM to clarify that
agencies should not look at the actual salary a comparable peer made
when starting, but rather the grade and step the peer was originally
given.'' Comment 62 (emphasis added). The organization suggested
revising 5 CFR 531.212(c)(1) to replace ``How pay has been set for''
with ``Which grade and step had been given to'' and replacing ``have''
with ``had'' in the paragraph reading ``How pay has been set for
employees who had similar qualifications (based on the level, type, or
quality of the candidate's skills or competencies or other qualities
and experiences) and who have been newly appointed to positions that
are similar to the candidate's position (based on the position's
occupational series, grade level, organization, geographic location, or
other job-relevant factors), if applicable.'' Id. Another organization
similarly supported ``requiring the hiring agency to search comparative
pay of current employees at the hiring agency when setting pay for new
hires, with measures taken to account for differences in locality pay
and post-hire merit-based pay increases, such as within-grade increases
and quality step increases.'' Comment 49. The proposed rule accounts
for the grade level and geographic location (which would account for
differences in locality pay and other location-based payments
applicable to GS employees) of the position. However, OPM has clarified
in this final rule that agencies must consider the step at which pay
has been set for employees who had similar qualifications and who have
been newly appointed to positions that are similar to the candidate's
position.
Another organization commented that consideration of labor market
factors to set a higher than minimum rate can maintain pay inequities.
The regulations in 5 CFR 531.212 allow an agency to consider ``existing
labor market conditions and employment trends, including the
availability and quality of candidates for the same or similar
positions.'' Comment 61. The organization writes that ``workers who
enter during a competitive labor market could earn a higher wage than
workers who perform the same job but entered during a less competitive
labor market'' and that ``this is fundamentally at odds with the notion
of equal pay,'' and ``when the affected workers are women or people of
color, this approach can exacerbate gender and racial pay inequities.''
Id. We are not revising the regulations in response to this comment.
This factor--which an agency has discretion to consider--recognizes
that it may be difficult to recruit employees during a competitive
labor market, especially when the agency has a special need for the
candidate's services and may need to set pay at a higher rate in the
rate range. Agencies will be required to consider how pay has been set
for employees who had similar qualifications (based on the level, type,
or quality of the candidate's skills or competencies or other qualities
and experiences) and who have been newly appointed to positions that
are similar to the candidate's position (based on the position's
occupational series, grade level, organization, geographic location, or
other job-relevant factors), if applicable. This required factor will
better advance pay equity.
A commenter asked, with respect to 5 CFR 531.212(e) for the GS pay
system, whether it would be permissible for agencies to create a
uniform policy by which a certain step is always assigned, such as step
4, for candidates with similar qualifications for similar positions.
Comment 14. The commenter suggested that this would ensure that all
candidates that benefit from the regulation always have their pay set
the same to reduce variability in outcomes. Id. OPM notes that agencies
may create such policies if the agency also approves and documents each
determination to use the authority consistent with 5 CFR 531.212(e).
OPM proposed adding in 5 CFR 531.221 that an agency must establish
a policy regarding use of the GS maximum payable rate (MPR) rule that
included elements specified in the proposed rule, such as considering
how pay has been set for employees performing similar work in the
organization (based on the position's occupational series, grade level,
types of duties, or other job-relevant factors). One agency suggested
requiring agencies in most circumstances to provide a salary offer no
lower than the highest rate of pay the employee
[[Page 5747]]
previously received in another Federal job (the employee's highest
previous rate or HPR). OPM is not making this change. An agency's
decision to use the MPR rule or how to set pay under the MPR rule may
be influenced by different factors, such as budget, and under this
final rule must reflect consideration of how pay has been set for
employees performing similar work in support of pay equity. Under the
regulations, agencies will list these factors in their policies.
Agencies may establish policies under which they will always set pay at
the employee's MPR.
A commenter recommended additional revisions, including that OPM
require that agencies post and maintain their MPR policies on their
websites and that agency decisions regarding any exceptions to these
policies be made on a centralized basis. OPM declines to add these
requirements to the rule. OPM will be issuing implementation guidance
separately, which will include best practices.
The same commenter also recommended that OPM permit agencies to set
an employee's salary up to 15 percent higher than an employee's highest
previous rate in recognition that some Federal agencies have the
independent statutory authority to provide benefits that are greater
than those provided under title 5 of the United States Code to most
Federal employees. This recommendation is beyond the scope of this
rulemaking. This rule is not intended to address pay discrepancies
resulting from independent agency authority to provide alternative
compensation and benefits.
Prevailing Rate Pay Setting
OPM did not receive any comments specific to the prevailing rate
pay systems regulations. Accordingly, OPM is adopting its proposals
with two changes, as described above. First, as discussed in the
Competing Job Offers section, in this final rule, an agency will not be
able to consider a competing job offer when setting pay for a new
prevailing rate pay system employee. Second, we are also clarifying
that agencies must consider the ``step'' at which pay has been set
(instead of ``pay'') for employees who had similar qualifications and
who have been newly appointed to positions that are similar to the
candidate's position.
Administrative Appeals Judge Pay Setting
Under 5 CFR 534.604, an agency may offer an AAJ applicant with
prior Federal service a rate up to the lowest rate of basic pay of the
AAJ pay system that equals or exceeds the employee's highest previous
rate of basic pay in a Federal civil service position, not to exceed
the rate of basic pay for AA-6. OPM proposed adding that an agency must
establish a policy regarding use of this provision that includes
elements specified in the regulations, including that the policy must
require consideration of how pay has been set for other AAJs if the
agency decides to use this authority.
Also under the AAJ pay-setting regulations, an agency may offer an
AAJ applicant with superior qualifications who is not a current Federal
employee a higher than minimum rate when such a rate is clearly
necessary to meet the needs of the Government. An agency may pay a
higher than minimum rate of pay that is next above the applicant's
existing pay or earnings, up to the maximum rate AA-6. OPM proposed
several revisions to this authority, including allowing agencies to set
pay at any rate within the AAJ pay system. OPM proposed adding language
requiring an agency to document the superior qualifications of the
applicant, the need of the Government for the applicant's services,
consideration of how pay has been set for AAJs who had similar
qualifications (based on the level, type, or quality of the appointee's
skills or competencies or other qualities and experiences) and have
been newly appointed to positions that are similar to the applicant's
position (based on the position's occupational series, grade level,
organization, geographic location, or other job-relevant factors), if
applicable, and an explanation of the factors that were used to justify
the rate at which the employee's pay is set. Factors an agency could
consider include the success of recent efforts to recruit for the same
or similar AAJ positions or significant disparities between Federal and
non-Federal salaries for the skills and competencies required in the
position to be filled. This documentation would allow an agency to
evaluate for equity purposes how pay has been set and reconstruct the
action if necessary.
An organization supported OPM's proposal to require agencies to
document the superior qualifications of AAJs when setting pay above the
minimum rate. Comment 61.
As discussed in prior sections, in this final rule, an agency will
not be permitted to consider an applicant's or former AAJ's salary
history or a salary documented in a competing job offer. OPM is
modifying its proposed regulatory text to make clear that, when setting
pay for a former AAJ, an agency may set pay using either the highest
previous Federal rate of pay (which necessarily considers salary
history) or the superior qualifications authority; however, if an
agency uses the superior qualifications authority, then the agency may
not consider salary history. OPM is adopting the remainder of its
proposal without change.
Administrative Law Judge Pay Setting
Under 5 CFR 930.205, upon appointment to a position at level AL-3,
an ALJ is paid at the minimum rate unless the agency chooses to set pay
at a higher rate based on prior service or superior qualifications. OPM
proposed revising Sec. 930.205 to add that, before an agency sets pay
based on the ALJ's highest previous Federal rate of basic pay, the
agency must establish a policy that includes certain elements specified
in the regulations, including that the policy must require
consideration of how pay has been set for other ALJs if the agency
decides to use this authority.
OPM also proposed revisions to the regulations on setting pay based
on the ALJ applicant's superior qualifications in Sec. 930.205.
Agencies would be able to submit a request to OPM to set pay at any
rate within the AL-3 level. Agencies' requests to OPM would be required
to include: (1) the applicant's or former ALJ's superior
qualifications; (2) how pay has been set for ALJs who had similar
qualifications (based on the level, type, or quality of the appointee's
skills or competencies or other qualities and experiences) and have
been newly appointed to positions that are similar to the ALJ's
position (based on the position's occupational series, grade level,
organization, geographic location, or other job-relevant factors), if
applicable; and (3) the proposed rate of basic pay and justification
for that rate. Agencies would not be able to consider an applicant's or
former ALJ's salary history or the salary in a competing job offer.
Other factors an agency could consider include the success of recent
efforts to recruit for the same or similar ALJ positions or significant
disparities between Federal and non-Federal salaries for the skills and
competencies required in the position to be filled. OPM also proposed
minor revisions to reflect changes resulting from Executive Order 13843
``Excepting Administrative Law Judges from the Competitive Service,''
signed July 10, 2018.\22\ For example, OPM proposed to modify the
language of Sec. 930.202 to remove the reference to a ``certificate of
eligibles'' to reflect that ALJ positions are now excepted service.
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\22\ 83 FR 32755 (July 10, 2018).
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[[Page 5748]]
An organization noted that ``the past practice of relying upon
salary history has, in certain instances, limited the starting salary
potential of newly hired ALJs without fairly considering the experience
and expertise these newly hired individuals would bring to the
position.'' Comment 36. The organization stated it supports the goal of
``[increasing] pay equity by removing reliance on salary history as a
central factor for setting pay, while retaining the use of past Federal
salary as the minimum starting salary for a newly hired ALJ with a
history of Federal employment.'' Id. The organization also requested
that OPM consider ``taking steps to adjust. . . the maximum salary of a
Federal ALJ [to be] equivalent to the salary paid to a Federal
magistrate or bankruptcy judge.'' Id. OPM is not adopting this
recommendation. The President determines the appropriate adjustment for
each level in the ALJ pay system by executive order. See 5 U.S.C.
5372(b)(4).
Another organization supported OPM's proposal to require agencies
to document the superior qualifications of ALJs when setting pay above
the minimum rate. Comment 61.
As discussed in prior sections, in this final rule, an agency will
not be able to consider an applicant's or former ALJ's salary history
(defined as existing salary or prior salary) or a salary documented in
a competing job offer when setting pay based on an applicant's superior
qualifications. OPM is adopting the remaining aspects of its proposal
without change.
Expected Impact of This Final Rule
A. Statement of Need
OPM is issuing this rule pursuant to its authority to issue
regulations governing the GS, prevailing rate, AAJ, ALJ, SES, and SL/ST
pay systems in 5 U.S.C. 5333, 5338, 5343, 5372, 5372b, 5376, and 5382.
The purpose of this final rule is to advance pay equity consistent with
merit system principles and position the Federal Government as a model
employer while reaping the benefits that this policy will have for the
economy and efficiency of the Government workforce. This rule is also
consistent with diversity, equity, inclusion, and accessibility
principles. Based on September 2021 EHRI data covering nonseasonal,
full-time, permanent Executive branch employees, gender and racial pay
gaps persist. On average for all race/ethnicity groups combined, women
are paid 94 cents for every dollar paid to a man--a gender pay gap of 6
percent. This raw, unadjusted gender pay gap is before considering any
factors that might explain the gap, such as occupation.
Because salary history is not always a good proxy for worker value,
experience, and expertise and setting pay based on a candidate's salary
history could perpetuate a pay rate that was inequitable, the Federal
Government is taking steps to address the treatment of salary history
and establish policies that support equitable pay determinations
anticipating that these policies in turn will also support certain
economies and efficiencies for the Federal Government. Currently,
certain regulations allow agencies to consider a candidate's salary
history or use a competing salary offer as a factor in setting initial
pay. Agencies are not required by OPM's current regulations to consider
the assigned grades and steps for employees performing similar work or
candidates who had similar qualifications, if applicable, when using
pay-setting flexibilities. Nor are agencies required to have policies
regarding use of an employee's highest previous Federal rate to set
pay.
OPM invited comments on whether there are additional ways that the
Federal Government can be a model employer with respect to pay equity
and received several responses. A union recommended that OPM
``emphasize pay equity and ensure employee qualifications and the needs
of agencies struggling to hire and retain qualified employees are both
adequately considered in pay-setting decisions.'' Comment 44. The
union's recommendations are generally consistent with this final rule.
An organization recommended that OPM ``add language formally stating
that the Federal Government intends to serve as a model employer with
respect to pay equity. . . maintain oversight and track how these pay-
setting authorities are employed. . . [and] continue to use the General
Schedule or other similar regimented pay schedules.'' Comment 49. We
note that OPM's strategic plan for fiscal years 2022-2026 already
states that ``OPM strives for the Federal Government to be a model
employer where every Federal job provides fair pay and benefits that
reflect the diverse needs of the workforce.'' \23\ This final rule does
not modify OPM's current oversight responsibilities regarding the use
of pay-setting flexibilities and does not eliminate any Governmentwide
pay system, such as the GS system, which would require a statutory
change.
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\23\ Office of Personnel Management. ``Goal 1: Position the
federal government as a model employer.'' https://www.opm.gov/about-us/strategic-plan/goal-1-position-the-federal-government-as-a-model-employer./
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Several commenters offered other suggestions for ways the Federal
Government could improve pay equity. These included examining veterans'
preference, ``performing a market analysis and paying civil servants
fair wages,'' and shortening the required waiting period that is
required to advance to the next higher step or rate or reducing the
number of steps in the GS pay system or, more generally, reforming how
agencies set pay upon promotion. Comments 58, 02, 08, 48, respectively.
These suggestions would require a statutory change--
Veterans' preference is provided by 5 U.S.C. 2108 and
2108a.
GS, FWS, AAJ, and ALJ pay schedules are typically adjusted
annually as provided by the statutes that govern those pay systems,
which include consideration of changes in the cost of labor or, in the
case of the FWS, prevailing rates (5 U.S.C. 5303, 5304, 5304a, 5343,
5372b, and 5372).
The waiting periods that are required to advance to the
next higher step or rate and the number of steps in the GS pay system
are specified in 5 U.S.C. 5335.
Pay setting upon promotion for GS employees is governed by
5 U.S.C. 5334.
Commenters also suggested regulating pay-banding systems more
strictly, fully implementing the Federal Employees Pay Comparability
Act (FEPCA) of 1990, allowing agencies to establish developmental
programs that allow for ``retained pay'' when changing career fields,
and providing current Federal employees with more information on
promotions including specific benchmarks that employees must achieve to
move between pay levels. Comments 09, 18, 34, 56, respectively.
OPM does not administer any pay banding systems--they are
administered by the agency that has the pay banding system under its
independent statutory pay authority or under a demonstration project
authority, following provisions under 5 U.S.C. chapter 47. OPM has
prescribed criteria under 5 U.S.C. 9509 for the U.S. Department of the
Treasury to follow in exercising its authority to establish one or more
pay banding systems covering all or any portion of the Internal Revenue
Service workforce.\24\ Any such system is administered by the U.S.
Department of the Treasury and is outside the scope of this final rule.
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\24\ 65 FR 79433 (Dec. 19, 2000).
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[[Page 5749]]
Several other of the above recommendations are also outside the
scope of this final rule--
With regard to the FEPCA recommendation, on August 31,
2023, the President determined that it was appropriate to exercise his
authority to set alternative pay adjustments for 2024 pursuant to 5
U.S.C. 5303(b) and 5 U.S.C. 5304a. These alternative pay adjustments
mean FEPCA will continue to not be implemented fully.\25\
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\25\ The White House. ``Letter to the Speaker of the House and
President of the Senate on the Alternative Plan for Pay Adjustments
for Civilian Federal Employees.'' https://www.whitehouse.gov/briefing-room/presidential-actions/2023/08/31/letter-to-the-speaker-of-the-house-and-the-president-of-the-senate-on-the-alternative-plan-for-pay-adjustments-for-civilian-federal-employees-2/.
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OPM regulations at 5 CFR 536.301(a)(5) provide for
retained pay when an agency places an employee in a formal employee
development program that is generally utilized Governmentwide, such as
the Recent Graduates Program. Agencies have discretion to determine
whether to use formal employee development programs generally utilized
Governmentwide to fill their positions.
Information on classification and qualifications for GS
and FWS positions is available on OPM's website.\26\
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\26\ Office of Personnel Management. ``Classification and
Qualifications.'' https://www.opm.gov/policy-data-oversight/classification-qualifications/.
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Commenters also suggested prohibiting applicants from placing pay
on their resumes, prohibiting agencies from asking about gaps in
employment, and considering how many hours a candidate works in a non-
Federal position when setting pay. See, e.g., Comments 09, 23, 60, 20.
This final rule does not address what topics may be discussed
during salary negotiations, including what information a job candidate
may share with an agency on an employment application or resume, as an
agency cannot completely control what information a job candidate may
provide. See the `Additional Considerations Regarding Setting Pay'
section for further discussion. Instead, this final rule focuses on the
agency's action by removing from consideration any salary history
information it may receive. Because OPM is requiring agencies not to
consider salary history, the number of hours a candidate works in a
non-Federal position becomes irrelevant, since there is no reason to
standardize salary information (for example, annualizing a non-Federal
hourly rate to compare with annual salaries).
Another suggestion was to take strong disciplinary action against
managers who discriminate when setting pay to deter deliberate pay
discrimination from occurring. Comment 49. An employee's violation of
an agency's regulations or policies may cause the employee's agency to
take disciplinary or corrective action using well-established tools
available to agencies for addressing performance issues and misconduct.
If an individual fails to follow pay-setting policy, it could be a
performance or misconduct issue addressable under 5 U.S.C. chapters 43
or 75.
B. Impact
The rule will impact pay setting for new Federal hires in the
affected pay systems when agencies exercise discretionary authority to
set pay within the rate range. The rule may also impact pay setting for
current Federal employees for certain personnel actions as agencies
review or develop policies addressing use of an employee's highest
previous rate of pay received in a previous Federal civilian position.
Based on data regarding non-seasonal, full-time permanent Executive
branch employees reported to OPM's EHRI database as of September 2021,
there were more than 1.3 million GS employees, approximately 160,000
FWS (the largest pay system under the prevailing rate systems)
appropriated fund employees,\27\ 8,000 SES, 900 SL positions, 400 ST
positions, 1,700 ALJs, and 63 AAJs in the Federal Government. This
included approximately 97,000 new hires in the GS pay system, 13,000
new FWS appropriated fund hires, 700 new hires in the SES pay system,
24 new SL hires, 10 new ST hires, 17 new hires in the ALJ pay system,
and 3 new hires in the AAJ pay system.
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\27\ Nonappropriated fund FWS prevailing rate employees are not
reported to EHRI.
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In fiscal year 2021, 9.5 percent of new GS employees (9,216
individual pay actions/authorizations) had their pay set using the
superior qualifications and special needs pay-setting authority in 5
CFR 531.212. With respect to the prevailing rate pay system, agencies
used the authority in 5 CFR 532.403(b) to set pay above the minimum
rate of the appropriate grade for around 210 appointees with special
qualifications. During the same period, one agency set pay above the
minimum rate for an ALJ applicant based on their superior
qualifications under 5 CFR 930.205(f)(2) with OPM approval.\28\ No
agencies reported setting pay under 5 CFR 534.604 based on an AAJ's
superior qualifications.
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\28\ Agencies must seek OPM pre-approval to use this pay-setting
flexibility for ALJs. 5 CFR 930.205.
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Because this pay authority is delegated to agencies and agencies'
written justifications for its use are not reported to EHRI, OPM does
not have information regarding which factor or factors were used to
justify the rate at which each new employee's pay is set under the GS
superior qualifications and special needs pay-setting authority or
similar prevailing rate, ALJ, and AAJ pay-setting authorities. As a
result, we are not able to predict with specificity how the regulations
will affect the rate at which pay is set for candidates based on their
special or superior qualifications or a special agency need.
Although OPM does not have data on the specific factors agencies
used to justify use of these pay-setting authorities, OPM reviewed
hiring and pay data from fiscal year 2021, which demonstrated the
extent to which agencies set pay under the GS superior qualifications
and special needs pay-setting authority, the occupations for which
these pay authorities are used, and how use of these authorities varied
by gender. Looking more specifically at the 9.5 percent of new GS
employees (9,216 individual pay actions/authorizations) who had their
pay set using the superior qualifications and special needs pay-setting
authority in 5 CFR 531.212, 21.5 percent of those were authorized for
employees in the 06XX Medical, Hospital, Dental, and Public Health
occupational family, 17.4 percent were authorized for employees in the
08XX Engineering and Architecture occupational family, 12.1 percent
were authorized for employees in the 03XX General Administrative,
Clerical, and Office Services occupational family, and 10.6 percent
were authorized for employees in the 22XX Information Technology
occupational family. The authority was used more frequently (on a
percentage basis) for men than for women: 11.2 percent of non-seasonal
full-time permanent GS new hires who were men had their pay set using
the superior qualifications and special needs pay-setting authority,
but only 7.9 percent of non-seasonal full-time permanent GS hires who
were women had their pay set using the superior qualifications and
special needs pay-setting authority.
Of the four occupational families that had the majority of the
superior qualifications and special needs pay-setting authorizations,
the two occupational families that were overwhelmingly male dominated
(08XX Engineering and Architecture and 22XX Information Technology) are
also the occupational families that had the
[[Page 5750]]
greatest percentage of new hires with pay set under the superior
qualifications and special needs pay-setting authority. In the 08XX
occupational family (Engineering and Architecture), 21 percent of new
hires were women, and 79 percent of new hires were men. About 29
percent of new hires in the 08XX occupational family had their pay set
using the superior qualifications and special needs pay-setting
authority. In the 22XX occupational family (Information Technology), 24
percent of new hires were women, and 76 percent of new hires were men.
About 22 percent of new hires in the 22XX occupational family had their
pay set using the superior qualifications and special needs pay-setting
authority. Conversely, in the 06XX occupational family (Medical,
Hospital, Dental, and Public Health), 79 percent of new hires were
women, and 21 percent of new hires were men, but only about 9 percent
of new hires had their pay set using the superior qualifications and
special needs pay-setting authority. Similarly, in the 03XX
occupational family (General Administrative, Clerical, and Office
Services), 54 percent of new hires were women, and 46 percent of new
hires were men, but only about 8 percent of new hires had their pay set
under the superior qualifications and special needs pay-setting
authority.
OPM does not collect data on agency use of the other pay
flexibilities that this regulation will revise (that is, the GS maximum
payable rate rule in 5 CFR 531.221-223, the authority in 5 CFR 532.405
to set pay for a prevailing rate employee based on their highest
previous rate, the authority in 5 CFR 534.604 to set pay based on an
AAJ applicant's Federal highest previous rate of basic pay, or the
authority in 5 CFR 930.205(f)(1) to set pay based on an ALJ applicant's
highest previous Federal rate of basic pay). Because OPM is not
prohibiting the use of an employee's highest previous Federal rate of
pay to set pay, OPM does not anticipate that the regulatory changes in
this final rule will result in a change in how frequently these pay
flexibilities are used.
OPM invited comments on what data the Federal Government should
consider when measuring the effects of greater pay equity achieved
through a salary history ban, including effects on Federal worker
turnover.
A professional organization stated that OPM should consider
possible data sources such as exit interviews and Equal Employment
Opportunity Commission (EEOC) data on pay discrimination cases. Comment
49. OPM does not collect exit interview data or data on EEO complaints,
which are collected and maintained at agencies. An overview of the
Federal Sector EEOC complaint process is available on EEOC's
website.\29\ Employees can appeal agency decisions to EEOC, but such
data would not be complete and may not be readily available. EEOC
provides annual reports on the Federal Workforce,\30\ but it is
summary-level data that is not specific enough to inform OPM's analyses
of these regulatory changes. The organization also suggested that OPM
should consider latitudinal studies across a sample of agencies to
determine if there are differences between different hiring agencies
and between different facilities on how frequently these authorities
are invoked, and if there are any demographic disparities for subject
employees in when and how these authorities are invoked. Id. As
explained in the proposed rule, OPM analyzes the use of pay
flexibilities by occupation and gender. OPM could also examine the use
of pay flexibilities by racial/ethnic group. Pay flexibilities are
discretionary so there may be differences between agencies' use of
these authorities.
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\29\ Equal Employment Opportunity Commission. ``Overview of
Federal Sector EEO Complaint Process.'' https://www.eeoc.gov/federal-sector/overview-federal-sector-eeo-complaint-process.
\30\ Equal Employment Opportunity Commission. ``Federal Sector
Reports''. https://www.eeoc.gov/federal-sector/reports.
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Also in response to OPM's request for comment, an agency suggested
that the Federal Government should consider labor costs. Comment 57.
The agency stated that ``agencies may be paying more without salary
history'' and that ``the Federal Government should focus on career
progression or upward mobility and associated pay increases after a
person enters civil service rather than starting salary.'' Id. When
completing Management Directive 715 for the EEOC, agencies already
explore all levels of the workforce to determine if EEO groups have the
same opportunities for career advancement.\31\ An organization
recommended comparing the salaries of newly hired Federal employees
after OPM's proposal is enacted, with a control group of employees that
would have been subject to the rule had it been in effect at time of
hire, to isolate the effects of a salary history ban on wages, pay
equity, and worker turnover. Comment 33. As these are discretionary pay
authorities, it would be unworkable to identify a control group of
employees that could be appropriately compared to employees in which
the discretionary pay authorities had been used.
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\31\ Equal Employment Opportunity Commission. ``Instructions to
Federal Agencies for EEO MD-715.'' https://www.eeoc.gov/federal-sector/management-directive/instructions-federal-agencies-eeo-md-715-1.
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C. Costs
This rule will affect the operations of more than 80 Federal
agencies--ranging from cabinet-level departments to small independent
agencies--that have employees under the GS, prevailing rate, ALJ, AAJ,
SES, and SL/ST pay systems. We estimate that this rule will require
individuals employed by these agencies to spend time reviewing the rule
and updating agency policies and procedures for the pay flexibilities.
For this cost analysis, the assumed average salary rate of Federal
employees performing this work will be the rate in 2023 for GS-14, step
5, from the Washington, DC, locality pay table ($150,016 annual
locality rate and $71.88 hourly locality rate). We assume the total
dollar value of labor, which includes wages, benefits, and overhead, is
equal to 200 percent of the wage rate, resulting in an assumed labor
cost of $143.76 per hour.
We estimate that, in the first year following publication of this
final rule, compliance with this rule would require an average of 160
hours of work by employees with an average hourly cost of $143.76 per
hour. This would result in estimated costs in that first year of
implementation of about $23,000 per agency, and about $1.8 million
Governmentwide. There are costs associated with administering the pay
flexibilities in this rule, such as surveying and comparing similar
positions, but not necessarily an increase in administrative costs for
agencies that are already using these pay flexibilities.
A labor organization expressed concern that agency HR professionals
may not have the necessary training to set pay based on the factors
enumerated in the regulations. Comment 41. The organization recommended
that OPM provide mandatory training and generate detailed worksheets to
help generate justifications for pay setting. Id. OPM appreciates this
suggestion and will consider the scope and content of implementation
guidance, trainings, and other means of sharing best practices
following the publication of this rule.
Another individual commented that OPM did not account for the cost
of the increased wages that the commenter expects will be paid out
because of the proposal. Comment 28. The commenter suggested that the
cost impact of the proposed rule could be in excess of $570 million if
the rule is successful in
[[Page 5751]]
eliminating pay gaps. The commenter seems to assume that the rule would
directly result in increases in pay for existing employees to close pay
gaps. As noted in the prior section, the purpose of this rule is
consistent with Executive Orders and OPM statutes and regulations, to
remove from the pay-setting process consideration of a variable the
agency has found to be inequitable. OPM, however, does not have
authority to raise the pay for current employees to achieve equity with
incoming employees. This rule does not purport to systematically
increase existing pay and therefore cannot be the proximate cause of
commenter's claimed increased costs to the Government.
D. Benefits
This final regulation provides the opportunity for the Federal
Government to experience the benefits that certain states have found
after enacting salary history bans, which includes benefits in economy
and efficiency such as promoting equitable pay, improving wages and job
mobility for workers who began their careers during a recession, and
creating hiring efficiencies such as improved recruitment and
retention. The Federal Government may also experience benefits related
to increased equity and fairness within the Federal workforce.
Salary history bans can help close inequitable pay gaps that
disadvantage women, workers of color, and workers who began their
career during a recession. By enhancing equal treatment and
compensation of similarly situated workers, salary history bans could
lead to increased job satisfaction, commitment, and motivation among
workers. This may help attract and retain a diverse and qualified
workforce, and result in improved job performance and enhanced
productivity for the employer. In addition to these economic gains, the
Federal Government may see cost savings through reduced turnover,
saving time and money from avoiding new hiring searches and new
employee trainings. Salary history bans can also increase efficiencies
by enhancing employers' talent pools.\32\ In addition, by curbing
inequitable pay decisions, a salary history ban can promote the values
of equity, human dignity, and fairness within the Federal workforce
described in E.O. 13563. Salary history bans can also promote more
equitable and fairer pay-setting practices that are based on workers'
skills, experience, or meeting a special agency need and eliminate
reliance on the pay decisions of previous employers for which there is
no context and that may have been arbitrary or potentially
discriminatory.
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\32\ National Women's Law Center. ``Asking for Salary History
Perpetuates Pay Discrimination from Job to Job.'' March 2022.
https://nwlc.org/wp-content/uploads/2020/12/Asking-for-Salary-History-2022.pdf.
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OPM invited comments on whether there is any social science
research or other evidence OPM should consider that suggests that
limiting reliance on salary history advances equity and/or has other
workplace benefits including for the employer.
Many commenters referenced a variety of social science research
papers and data that show positive effects of salary history bans. See,
e.g., Comments 31, 33, 56, 61, 68. One commenter shared three articles
regarding gender differences in negotiations. The first article
reported on an experiment that found significant gender differences
when men and women asked for more money as compensation for playing a
game in the absence of overt prescriptions to negotiate.\33\ Framing
the situations as opportunities for negotiation was particularly
intimidating to women. By contrast, framing situations as opportunities
for asking was much less intimidating to women, as this language is
viewed as more polite and role-consistent. The next article reported on
an experiment that found that men benefitted more than women from
having a strong alternative when negotiating a compensation package,
which supported the author's hypothesis that women suffer a backlash
from male and female negotiation partners when women negotiate
assertively.\34\ The authors suggest that ``managers looking to reduce
gender gaps in the workplace may want to install guidelines and
processes to minimize the possibility that such backlash occurs.'' Id.
The third article reported on experiments in which ``evaluators
penalized female candidates more than male candidates for initiating
negotiations [for higher compensation].'' \35\ These articles suggest
that removing consideration of salary history may advance gender pay
equity because it will help promote a level playing field between men
and women in salary negotiations.
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\33\ Small, D., Gelfand, M., Babcock, L., and Gettman, H. ``Who
Goes to the Bargaining Table? The Influence of Gender and Framing on
the Initiation of Negotiation.'' Journal of Personality and Social
Psychology, 2007, Vol. 3, No. 4, 600-613.
\34\ Dallanls, J., Zlatev, J., Halevy, N., and Neale, M. ``The
Dynamics of Gender and Alternatives in Negotiation.'' Journal of
Applied Psychology, 2021, Vol. 106, No. 11, 1655-1672.
\35\ Bowles, H., Babcock, L., and Lai, L. ``Social Incentives
for Gender Differences in the Propensity to Initiate Negotiations:
Sometimes it Does Hurt to Ask.'' Organizational Behavior and Human
Decision Processes, 2007, Vol. 103, 84-103.
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An organization and an individual suggested that OPM review pay
discrimination litigation relating to Federal employees and data
regarding private sector pay discrimination to determine the potential
benefit of this rule in helping to avoid a category of pay lawsuits.
Comments 27, 62. The EEOC has a fact sheet on notable EEOC litigation
involving pay discrimination.\36\ The commenters did not identify
specific precedents, but OPM identified several cases that resulted in
restrictions on considering prior salary in various contexts. In Rizo
v. Yovino, the Ninth Circuit found that relying on prior wages when
setting pay would perpetuate a wage disparity between men and women.
950 F.3d 1217 (9th Cir. 2020) (en banc). In a consent decree settling a
pay discrimination suit, a bank agreed not to inquire about applicants'
prior earnings history during the hiring process. EEOC v. First
Metropolitan Financial Services, Inc., 1:18-cv-177 (N.D. Miss. March
18, 2021). Similarly, in EEOC v. Cummins, Inc., d/b/a Cummins Business
Services, the company agreed not to rely solely on prior salary in
determining compensation. 3:17-cv-01306 (M.D. Tenn. Mar. 29, 2019).
EEOC v. Covenant Medical Center, Inc., resulted in a consent decree to
equalize pay where a woman had been paid less than two male peers based
on one man's prior salary history and the other man's negotiation of
pay (where the woman had not been permitted to negotiate pay). EEOC v.
Covenant Medical Center, Inc., 2:20-cv-10662 (E.D. Mich. Sept. 2,
2020).
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\36\ Equal Employment Opportunity Commission. ``Fact Sheet:
Notable EEOC Litigation Involving Pay Discrimination.'' https://www.eeoc.gov/fact-sheet-notable-eeoc-litigation-involving-pay-discrimination.
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Similarly, the organization referenced an academic report, which
noted that asking candidates to disclose their salary history can
``embed any previously encountered pay inequities into an employee's
starting pay with a new employer.'' \37\ These cases and report provide
further information indicating that limiting reliance on salary history
to set pay has positive benefits.
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\37\ National Academies of Sciences, Engineering, and Medicine.
``Evaluation of Compensation Data Collected Through the EEO-1
Form.'' https://nap.nationalacademies.org/catalog/26581/evaluation-of-compensation-data-collected-through-the-eeo-1-form.
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E. Regulatory Alternatives
Executive Orders 12866, 13563, and 14094 direct agencies to assess
available
[[Page 5752]]
regulatory alternatives and to select regulatory approaches that
maximize net benefits.
As discussed, agencies are required to set pay at the minimum of
the rate range for new GS, prevailing rate, AAJ, and ALJ employees
unless the agency chooses to set pay above the minimum based on one of
the pay flexibilities that are available in regulations. To advance pay
equity for new hires, one regulatory alternative OPM considered was
eliminating pay flexibilities to set pay above the minimum rate of the
applicable rate range. This option, however, would have been
detrimental to agencies and job candidates. Agencies use pay
flexibilities to set pay above the minimum rate to recruit candidates
with superior qualifications or when agencies have a special need for
the candidate's services. Agencies risk candidates rejecting employment
if the offered salary does not meet their expectations.
Another option was to allow agencies to set pay based on a
candidate's salary history if provided voluntarily and without
prompting. OPM invited comments on what the advantages and
disadvantages would be of prohibiting Federal agencies from relying on
prior salary history, if the candidate voluntarily provided it, and
possible justifications for allowing an exception to the prior salary
history prohibition. OPM asked whether such an exception would be
consistent with the goals of this regulation. OPM received many
comments in response.
Most commenters were in favor of prohibiting Federal agencies from
relying on prior salary history even if the candidate voluntarily
provides it. One commenter stated that allowing an exception would be
``counterproductive [to] the goal of reducing or eliminating the gender
pay gap . . . [because] many academic studies have shown that males
will engage in salary negotiation about four times as often as
females.'' Comment 18. Organizations similarly commented that men are
more likely to disclose their salaries than women.
A commenter said that ``allowing private sector compensation to be
considered when a candidate voluntarily supplies that information
replicates private sector discrimination because candidates treated
unfairly in the private sector will have no helpful salary history
information to volunteer.'' Comment 32. A union and an organization
stated that allowing voluntary disclosure of salary history would
``perpetuate current inequalities in the Federal workforce.'' Comment
44. An organization stated that allowing an exception would make the
rule ``pointless'' and would provide ``no added independent benefit.''
Comment 46.
Two organizations agreed with OPM that ``a strict prohibition on
considering salary history allows for more effective administration of
the regulations and avoids confusion.'' Comment 56. An organization
stated that ``allowing reliance on voluntary disclosure would tend to
benefit those who have sufficient awareness of Federal hiring processes
to know that this flexibility is potentially available and is likely to
harm those who have less extensive experience or networks, a group that
likely disproportionately includes women, people of color, and other
traditionally marginalized candidates.'' Comment 56. The organization
also shared results from a study that found that women are
disproportionately penalized for declining to disclose their salaries
whereas men are disproportionately rewarded.\38\ Id. Another
organization stated that reliance on prior salary is unnecessary
because ``the Federal Government's pay-setting practices allow for
consideration of a broad range of factors in determining appropriate
pay setting.'' Comment 60.
---------------------------------------------------------------------------
\38\ Payscale. ``Is Asking for Salary History . . . History?''
https://www.payscale.com/research-and-insights/salary-history/.
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One agency suggested that possible justifications for allowing an
exception to the prior salary prohibition are that 5 U.S.C. 2301(b)(3)
allows for ``appropriate consideration of both national and local rates
paid by employers in the private sector'' and ``allows for
competitiveness in hiring.'' Comment 09. The agency suggested limiting
agencies to setting pay at the lowest step that equals or exceeds the
candidate's salary history. Id. Another agency also stated that
``salary history, if available, should be factored when setting initial
pay for an external candidate'' because otherwise ``individual hiring
managers [may] randomly select a step or salary rate'' and setting a
candidate's salary above their salary history would result in an
``increase in costs to taxpayers.'' Comment 57.
We find the reasons for prohibiting Federal agencies from
considering prior salary history even if the candidate voluntarily
provides it more compelling than the reasons for allowing an exception
to the prior salary history prohibition. Agencies would still be able
to set pay above step 1 to be competitive based on factors specified in
the regulations, including significant disparities between Federal and
non-Federal salaries for the skills and competencies required in the
position to be filled. OPM is retaining its proposed approach of
prohibiting agencies from considering prior salary history even if the
candidate voluntarily provides it.
Lastly, OPM could maintain the status quo and not propose
regulations to change salary determinations based on salary history. As
explained throughout the proposed rule and this final rule, banning
salary history as a consideration when setting pay promotes greater pay
equity consistent with merit system principles. Because the Federal
Government should serve as a model employer in establishing policies
that advance pay equity, regulatory change is needed to help advance
pay equity for Federal employees.
In evaluating the regulatory alternatives, OPM considered the
information it had available regarding the pay gaps in Federal
employment. Many factors, including disparities in salary history, may
contribute to the overall gender and race/ethnicity pay gaps in the
Federal Government. For example, more women than men occupy positions
classified at lower GS grades with lower pay, while more men than women
occupy positions classified at higher GS grades with higher pay and in
higher-paying Senior Executive Service positions. Data indicated that,
for each GS grade, women and men had close to the same average position
in range (average step position). Factors such as length in service,
quality step increases, and--most significantly for this regulation--
how pay is set upon personnel actions such as appointment or promotion
affect an employee's step position. OPM also found that the size of the
gender pay gap varied by occupation.\39\
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\39\ 88 FR 30251, 30253 (May 11, 2023).
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OPM's findings regarding Federal pay gaps are consistent with
research on pay gaps in the national workforce. A November 2020 study
\40\ focused on national pay gaps and found that the gender pay gap
varied significantly by occupation. There was no gender pay gap in some
occupations, but gender pay gaps as large as 45 percent in others. The
researchers found larger gender pay gaps in occupations that were more
competitive and hazardous, occupations that reward longer hours of
work, and those that have a larger proportion of women workers.
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\40\ Foster, T., Murray-Close, M., Landivar, L., & de Wolf, M.
``An Evaluation of the Gender Wage Gap Using Linked Survey and
Administrative Data,'' November 2020. https://www.census.gov/library/working-papers/2020/adrm/CES-WP-20-34.html.
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OPM's discussion in the proposed rule regarding the calculation and
[[Page 5753]]
presentation of Federal Government pay gaps received multiple comments.
One commenter requested more detailed data, such as data by
occupational series. Comment 15. The commenter expressed that the
public should have access to more detailed data behind our calculations
in the proposed rule. A national union that supported the proposed rule
asked OPM to examine ``potential clusters of inequity, whether it is
within certain position series or grades, or individual agencies'' as
part of its pay equity analyses. Comment 59. An agency commented that
the Federal Government already has a diverse workforce and that women
earn salaries that are the same as or higher than salaries earned by
men when comparing both genders in the same position.
An organization cited international pay equity regulations, such as
those in the European Union, as an example of a ``comprehensive
approach,'' which requires reporting pay gap data in an open and
transparent manner. Comment 31. OPM reviewed the European Union pay
transparency regulations but concluded that requiring agencies to
conduct and report on pay gap analyses is not within the scope of this
rulemaking.
Another organization had several recommendations including that
OPM: (1) update its multivariate regression-decomposition analysis
using 2022 or 2023 data; (2) take an intersectional approach when
updating its analysis; (3) break out Asian and Native Hawaiian/Pacific
Islander employees into separate groups rather than combining them; (4)
use medians instead of means; and (5) examine worker characteristics
including supervisory status, education level, geography, tenure, age,
and disability status. Comment 33. An international professional and
technical union asked OPM to ``undertake an annual review of gender-
based and racial/ethnic-based bias in median pay, matched for positions
and seniority.'' Comment 64.
These data analysis recommendations raise several issues that are
beyond the scope of this rule. Certain data from EHRI is available to
the public on FedScope.\41\ However, complete raw data is not available
due to concerns about identifying employees at the individual
level.\42\ OPM has been reviewing 2022 data and plans to release a
report in the coming months that will summarize pay gap information by
gender and race/ethnicity and will present pay gap data for key worker
characteristics such as pay system, grade (where applicable),
occupation, agency, and age. OPM also plans to release detailed 2022
pay gap data with that report. OPM combines Asian and Native Hawaiian/
Pacific Islander ethnic groups due to small sample sizes. OPM uses
average, instead of median, salaries, in part, because means are
readily available in OPM's EHRI \43\ data system. Average salaries are
an appropriate metric because a mean reflects the salary of all
employees rather than focusing on a typical employee. OPM notes that
the risks normally associated with using an average salary as a metric
are minimal because Federal salaries have statutory pay limitations,
which decrease the occurrence of outliers that would influence average
salaries. Although OPM will continue to monitor and evaluate data
regarding pay gaps based on gender or race/ethnicity, this final rule
is not being promulgated simply to address potential pay gaps; this
final rule is based on OPM's broader determination that eliminating
consideration of prior salary history is the best way to implement the
governing merit system principles.
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\41\ https://www.fedscope.opm.gov/.
\42\ See the FedScope Data Release Policy at https://www.fedscope.opm.gov/download_Data%20Release%20Policy.pdf.
\43\ Office of Personnel Management, ``About Our Data (EHRI-
SDM).'' https://www.fedscope.opm.gov/datadefn/aehri_sdm.asp.
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F. Implementation
OPM invited comments on what information agencies should provide on
the pay-setting flexibilities and at what stage in the hiring process
agencies should provide this information. A union stated that
``information on how pay-setting flexibilities influence the final
salary a candidate may be offered in job announcements and on agency
websites helps candidates make better informed decisions when deciding
whether to apply for such opportunities and what information to
disclose during the application process.'' Comment 44. Similarly,
several commenters recommended that OPM require agencies to provide
this information in job announcements. Comments 44, 56. An agency
stated that ``agencies should not solicit candidates to negotiate pay
when hiring.'' Comment 57. An organization suggested that ``hiring
agencies should be required to give applicants notice and the
opportunity to submit to [the] agency pay-setting authorities
documentation of any job offers or data on comparative pay for non-
Federal positions that the applicant may have'' at the initial offer
stage. Comment 49. Then ``only after receipt and review of any response
from the applicant (or the passing of the deadline with no response)
should the hiring agency finalize the starting pay offer grade and step
for the position being offered.'' Id. OPM appreciates the responses
received but declines to impose specific requirements for job
announcements. OPM will consider these comments and suggestions in
developing recommended best practices. In addition, as discussed in the
Competing Job Offers section, OPM is revising the regulations in this
final rule such that an agency will no longer be able to set pay based
on a competing job offer.
Commenters recommended that OPM address other implementation
issues. An agency, an organization, and a union recommended that hiring
managers and human resources staff be trained on these regulatory
changes. Comments 33, 41, 43. The union also recommended that OPM
``develop a standard form that would guide HR practitioners and/or
hiring managers in developing a well-supported justification for pay-
setting.'' Comment 41. The union suggested that agencies should provide
service credit for the non-Federal work experience towards determining
the step or rate at which to set the candidate's pay. Id. An
organization suggested that OPM provide guidance ``on standards for
what constitutes an effective comparative pay information search.''
Comment 49. The organization recommended that OPM ``modify the USAJOBS
website and its standard forms for Federal job applications to
eliminate rote requests for . . . prior salaries for non-Federal
positions as part of detailing their employment histories.'' Id. OPM
will review the USAJOBS website as OPM supports implementation of this
final rule.
This final rule covers approximately 1.5 million Federal employees
in the GS, prevailing rate, AAJ, ALJ, SES, and SL/ST pay systems
combined who are employed in more than 80 Federal agencies. OPM's pay-
setting regulations for the pay systems covered by this final rule
prescribe broad criteria and limitations that agencies must apply in
developing and implementing their own agency-specific pay-setting
policies and procedures. OPM's regulations do not address the form or
content of offers of employment that agencies make to candidates, nor
do they address the process by which agencies engage with candidates.
For these reasons, agency pay setting, job offer, and candidate
communication policies, procedures, and practices may vary widely.
This final rule has a 60-day effective date. OPM recognizes,
however, that agencies may need implementing
[[Page 5754]]
guidance and additional time to modify their own policies and
procedures and provide new instructions to their human resources
professionals and hiring managers regarding setting pay and making pay
offers in compliance with this final rule. To accommodate the scope of
coverage and range of agency policies and practices this final rule
will affect and to minimize disruptions to ongoing agency hiring
processes where offers of pay have already been made to candidates, OPM
is allowing additional time for agencies to implement this final rule.
During this time, agencies should take steps to revise their policies
and procedures. As soon as practicable, any new offers for employment
including salary information for GS, FWS, ALJ, AAJ, SES, SL, ST
positions and new pay-setting decisions for such positions based on an
employee's previous Federal salary should reflect the requirements in
this final rule. Agencies must be in full compliance with the final
rule by October 1, 2024. OPM considers ``full compliance'' to refer to
the pay setting decision as documented in the required justifications
for use of these pay flexibilities--not necessarily the final
processing of the personnel action. Therefore, these justifications
that are approved on or after October 1, 2024, must be in full
compliance. In accordance with 5 U.S.C. 7116(a)(7), this final rule
cannot override any collective bargaining agreement in effect prior to
the effective date of this regulation. Such collective bargaining
agreement would need to come into compliance with this government wide
regulation when the agreement is due to be renegotiated or expires.
G. Severability
If any of the provisions of this final rule is held to be invalid
or unenforceable by its terms, or as applied to any person or
circumstance, it shall be severable from its respective section(s) and
shall not affect the remainder thereof or the application of the
provision to other persons not similarly situated or to other
dissimilar circumstances. For example, if a court were to invalidate
any portion of this proposed rule as finalized imposing procedural
requirements on agencies with respect to one pay system, the other
portions of the rule--including the portions applying to each of the
other affected pay systems--would independently remain workable and
valuable. In enforcing the pay equity provisions of this rule, OPM will
comply with all applicable legal requirements.
Regulatory Flexibility Act
The Director of OPM certifies that these regulations will not have
a significant economic impact on a substantial number of small entities
because they will apply only to Federal agencies and employees.
Regulatory Review
OPM has examined the impact of this rule as required by Executive
Orders 12866, 13563, and 14094, which direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public,
health, and safety effects, distributive impacts, and equity). This
rule is considered a ``significant regulatory action'' under section
3(f) of Executive Order (12866).
E.O. 13132, Federalism
This regulation will not have substantial direct effects on the
States, on the relationship between the National Government and the
States, or on distribution of power and responsibilities among the
various levels of government. Therefore, in accordance with Executive
Order 13132, it is determined that this final rule does not have
sufficient federalism implications to warrant preparation of a
Federalism Assessment.
E.O. 12988, Civil Justice Reform
This regulation meets the applicable standards set forth in section
3(a) and (b)(2) of Executive Order 12988.
Unfunded Mandates Reform Act of 1995
This final rule will not result in the expenditure by State, local
or tribal governments of more than $100 million annually. Thus, no
written assessment of unfunded mandates is required.
Congressional Review Act
OMB's Office of Information and Regulatory Affairs has determined
this is not a major rule as defined by the Congressional Review Act (5
U.S.C. 804(2)).
Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35)
This regulatory action will not impose any reporting or
recordkeeping requirements under the Paperwork Reduction Act.
List of Subjects in Title 5 CFR Parts 531, 532, 534, and 930
Administrative practice and procedure, Computer technology, Freedom
of information, Government employees, Hospitals, Law enforcement
officers, Motor vehicles, Reporting and recordkeeping requirements,
Students, Wages.
Office of Personnel Management.
Stephen Hickman,
Federal Register Liaison.
Accordingly, OPM is amending 5 CFR parts 531, 532, 534, and 930 as
follows:
PART 531--PAY UNDER THE GENERAL SCHEDULE
0
1. The authority citation for part 531 continues to read as follows:
Authority: 5 U.S.C. 5115, 5307, and 5338; sec. 4 of Public Law
103-89, 107 Stat. 981; and E.O. 12748, 56 FR 4521, 3 CFR, 1991
Comp., p. 316; Subpart B also issued under 5 U.S.C. 5303(g), 5305,
5333, 5334(a) and (b), and 7701(b)(2); Subpart D also issued under 5
U.S.C. 5335 and 7701(b)(2); Subpart E also issued under 5 U.S.C.
5336; Subpart F also issued under 5 U.S.C. 5304, 5305, and 5941(a);
E.O. 12883, 58 FR 63281, 3 CFR, 1993 Comp., p. 682; and E.O. 13106,
63 FR 68151, 3 CFR, 1998 Comp., p. 224.
Subpart B--Determining Rate of Basic Pay
0
2. In Sec. 531.212--
0
a. Revise paragraph (c) introductory text;
0
b. Remove paragraph (c)(2);
0
c. Redesignate paragraph (c)(1) as (c)(2)(i) and paragraphs (c)(3)
through (c)(10) as (c)(2)(ii) through (c)(2)(ix);
0
d. Add a new paragraph (c)(1) and new paragraph (c)(2) introductory
text;
0
e. Revise newly redesignated paragraph (c)(2)(ix); and
0
f. Revise paragraph (e)(2)(ii).
The revisions and additions read as follows:
Sec. 531.212 Superior qualifications and special needs pay-setting
authority.
* * * * *
(c) Pay rate determination. To determine the step at which to set
an employee's payable rate of basic pay using the superior
qualifications and special needs pay-setting authority, an agency must
consider:
(1) The step at which pay has been set for employees who had
similar qualifications (based on the level, type, or quality of the
candidate's skills or competencies or other qualities and experiences)
and who have been newly appointed to positions that are similar to the
candidate's position (based on the position's occupational series,
grade level, organization, geographic location, or other job-relevant
factors), if applicable; and
[[Page 5755]]
(2) One or more of the following factors, as applicable in the case
at hand:
* * * * *
(ix) Other relevant factors, except that an agency may not consider
the candidate's salary history (i.e., existing salary or prior salary)
or a salary from a competing job offer.
* * * * *
(e) * * *
(2) * * *
(ii) An explanation of the factors and supporting documentation
under paragraph (c) of this section which were used to justify the rate
at which the employee's pay is set. The written documentation must
explain how the factors directly relate to the rate approved; and
* * * * *
0
3. In Sec. 531.221, add paragraph (a)(6) to read as follows:
Sec. 531.221 Maximum payable rate rule.
(a) * * *
(6) Before setting pay under this section, an agency must establish
a policy on its use of the maximum payable rate rule that includes--
(i) Designation of officials with the authority to approve and set
pay under this section;
(ii) Any situations in which the agency must use the authority;
(iii) Any situations in which the agency may exercise its
discretion in using the authority;
(iv) Consideration of the step at which pay has been set for other
employees performing similar work in the organization (based on the
position's occupational series, grade level, types of duties, or other
job-relevant factors) and any other factors the designated official(s)
may or must consider in determining the step at which to set the
employee's pay between the employee's entitlement under any other
applicable pay-setting rule and the employee's maximum payable rate;
and
(v) Documentation and recordkeeping requirements sufficient to
allow reconstruction of the action.
* * * * *
PART 532--PREVAILING RATE SYSTEMS
0
4. The authority citation for part 532 continues to read as follows:
Authority: 5 U.S.C. 5343, 5346; Sec. 532.707 also issued under
5 U.S.C. 552.
Subpart D--Pay Administration
0
5. In Sec. 532.403, revise paragraph (b) to read as follows:
Sec. 532.403 New appointments.
* * * * *
(b) An agency may make a new appointment at a rate above the
minimum rate of the appropriate grade in recognition of an appointees'
special qualifications. In determining the rate at which to set the
appointee's pay:
(1) An agency must consider how the step has been set for employees
who had similar qualifications (based on the level, type, or quality of
the appointee's skills or competencies or other qualities and
experiences) and who have been newly appointed to positions that are
similar to the appointee's position (based on the position's
occupational series, grade level, organization, geographic location, or
other job-relevant factors), if applicable;
(2) An agency may not consider the appointee's pay history (i.e.,
existing pay or prior pay) or a pay rate from a competing job offer;
and
(3) An agency must consider other relevant factors (e.g., the
level, type, or quality of the appointee's skills or competencies; or
significant disparities between Federal and non-Federal salaries for
the skills and competencies required in the position to be filled).
* * * * *
0
6. In 532.405, add paragraph e to read as follows:
Sec. 532.405 Use of highest previous rate.
* * * * *
(e) Before setting pay under this section, an agency must establish
a policy regarding use of employees' highest previous rates. The policy
must include the following elements:
(1) Designation of officials with the authority to approve and set
pay under this section;
(2) Any situations in which the agency must use an employee's
highest previous rate;
(3) Any situations in which the agency may exercise its discretion
in using an employee's highest previous rate;
(4) Consideration of the step at which pay has been set for other
employees performing similar work in the organization (based on the
position's occupational series, grade level, types of duties, or other
job-relevant factors) and any other factors the designated official(s)
may or must consider in determining the step at which to set the
employee's pay between the employee's entitlement under any other
applicable pay-setting rule and the employee's highest previous rate;
and
(5) Documentation and recordkeeping requirements sufficient to
allow reconstruction of the action.
PART 534--PAY UNDER OTHER SYSTEMS
0
7. The authority citation for part 534 continues to read as follows:
Authority: 5 U.S.C. 1104, 3161(d), 5307, 5351, 5352, 5353, 5376,
5382, 5383, 5384, 5385, 5541, 5550a, sec. 1125 of the National
Defense Authorization Act for FY 2004, Pub. L. 108-136, 117 Stat.
1638 (5 U.S.C. 5304, 5382, 5383, 7302; 18 U.S.C. 207); and sec. 2 of
Pub. L. 110-372, 122 Stat. 4043 (5 U.S.C. 5304, 5307, 5376).
Subpart D--Pay and Performance Awards Under the Senior Executive
Service
0
8. In Sec. 534.404--
0
a. Amend paragraph (a) by adding a sentence to the end of the
paragraph; and
0
b. Amend paragraph (i)(1) by adding a sentence to the end of the
paragraph.
The revisions read as follows:
Sec. 534.404 Setting and adjusting pay for senior executives.
(a) * * * When making a first appointment (regardless of tenure) as
a civilian employee of the Federal Government, an agency may not
consider the individual's salary history (i.e., existing salary or
prior salary) or a salary from a competing job offer.
* * * * *
(i) * * *
(1) * * * When setting pay upon reappointment to the SES, an agency
may not consider the individual's non-Federal salary history (i.e.,
existing salary or prior salary) or a salary from a competing job
offer.
* * * * *
Subpart E--Pay for Senior-Level and Scientific or Professional
Positions
0
9. In Sec. 534.506, revise paragraphs (a) and (c)(1) to read as
follows:
Sec. 534.506 Setting a rate of basic pay upon appointment.
(a) An authorized agency official may set the rate of basic pay of
an individual who is not currently an SL or ST appointee of the agency
at any rate within the applicable rate range under Sec. 534.504(a)
upon appointment to an SL or ST position in the agency, subject to the
requirements of this section. In setting a new senior professional's
rate of basic pay, an agency must consider the nature and quality of
the individual's experience, accomplishments, and any unique skills,
qualifications, or competencies the individual possesses as they relate
to requirements of the senior professional position and its impact on
[[Page 5756]]
the agency's performance. When making a first appointment (regardless
of tenure) as a civilian employee of the Federal Government, an agency
may not consider the individual's salary history (i.e., existing salary
or prior salary) or a salary from a competing job offer. Rates of basic
pay above the rate for level III of the Executive Schedule, but less
than or equal to the rate for level II of the Executive Schedule,
generally are reserved for those newly appointed senior professionals
who possess superior leadership, scientific, professional or other
competencies necessary to address key program and mission requirements,
as determined by the agency through its strategic human capital
planning process.
* * * * *
(c)(1) Consistent with the agency's written procedures and
paragraph (a) of this section, except as provided in paragraph (c)(2)
of this section, an authorized agency official may set pay upon
reappointment of a former SL or ST employee at any rate of basic pay
within the pay range that applies to the SL or ST position under Sec.
534.504(a). When setting pay, the agency may not consider the
individual's non-Federal salary history (i.e., existing salary or prior
salary) or a salary from a competing job offer.
* * * * *
Subpart F--Pay for Administrative Appeals Judge Positions
0
10. In Sec. 534.604--
0
a. Revise paragraph (b);
0
b. Redesignate paragraphs (c) and (d) as paragraphs (f) and (g),
respectively; and
0
c. Add new paragraphs (c) and (d) and paragraph (e).
The revision and additions read as follows:
Sec. 534.604 Pay administration.
* * * * *
(b) Upon initial appointment, an agency must set the rate of basic
pay of an administrative appeals judge at the minimum rate AA-1 of the
administrative appeals judge pay system, except as provided in
paragraphs (c), (d), and (e) of this section.
(c) An agency must set the pay of an employee under the General
Schedule pay system who is appointed to an administrative appeals judge
position without a break in service at the lowest rate of basic pay of
the administrative appeals judge pay system that equals or exceeds the
rate of basic pay the employee received immediately prior to such
appointment, not to exceed the rate of basic pay for AA-6. If the
resulting basic pay increase is less than one-half of the dollar value
of the employee's next within-grade increase, the agency must set the
employee's rate of basic pay at the next higher rate of basic pay in
the basic rate range of the administrative appeals judge pay system,
not to exceed the rate of basic pay for AA-6.
(d) An agency may offer an administrative appeals judge applicant
with prior Federal service a rate up to the lowest rate of basic pay of
the administrative appeals judge pay system that equals or exceeds the
employee's highest previous rate of basic pay in a Federal civil
service position, not to exceed the rate of basic pay for AA-6. Before
setting pay under this paragraph, an agency must establish a policy
that includes the following elements:
(1) Designation of officials with the authority to approve and set
pay under this paragraph (d);
(2) Whether use of this authority is discretionary or mandatory;
(3) The factors the designated officials may or must consider in
determining the rate at which to set the applicant's pay and which must
include consideration of the rate of basic pay set for other
administrative appeals judges (based on the level, type, or quality of
the appointee's skills or competencies or other qualities and
experiences); and
(4) Documentation and recordkeeping requirements sufficient to
allow reconstruction of the action.
(e) An agency may offer an administrative appeals judge applicant
(including a former administrative appeals judge) with superior
qualifications who is not a current Federal employee a higher than
minimum rate up to the maximum rate AA-6 when such a rate is clearly
necessary to meet the needs of the Government. Superior qualifications
for applicants include, but are not limited to, having legal practice
before the hiring agency, having practice in another forum with legal
issues of concern to the hiring agency, or having an outstanding
reputation among others in the field. An agency must document all of
the following:
(1) The superior qualifications of the applicant;
(2) The need of the Government for the applicant's services;
(3) Consideration of how pay has been set for administrative
appeals judges who had similar qualifications (based on the level,
type, or quality of the applicant's skills or competencies or other
qualities and experiences) and who have been newly appointed to
positions that are similar to the applicant's position (based on the
position's occupational series, organization, geographic location, or
other job-relevant factors), if applicable; and
(4) An explanation of the factors which were used to justify the
rate at which the employee's pay is set, except an agency may not
consider the applicant's salary history (i.e., existing salary or prior
salary) or a salary from a competing job offer.
* * * * *
PART 930--PROGRAMS FOR SPECIFIC POSITIONS AND EXAMINATIONS
(MISCELLANEOUS)
Subpart B--Administrative Law Judge Program
0
11. The authority citation for subpart B continues to read as follows:
Authority: 5 U.S.C. 1104(a), 1302(a), 1305, 3105, 3301, 3304,
3323(b), 3344, 4301(2)(D), 5372, 7521, and E.O. 10577, 3 CFR, 1954-
1958 Comp., p. 219.
0
12. In Sec. 930.201, revise paragraph (e)(5) to read as follows:
Sec. 930.201 Coverage.
* * * * *
(e) * * *
(5) Approve personnel actions related to pay for administrative law
judges under Sec. 930.205(c), (g), (h), and (k);
* * * * *
0
13. In Sec. 930.205--
0
a. In paragraph (e), remove the words ``paragraph (f)'' and add
``paragraphs (f) and (g)'' in their place;
0
b. Revise paragraph (f);
0
c. Redesignate paragraphs (g) through (j) as paragraphs (h) through
(k), respectively; and
0
d. Add a new paragraph (g).
The revision and addition read as follows:
Sec. 930.205 Administrative law judge pay system.
* * * * *
(f) When an applicant to an administrative law judge position at
AL-3 has prior Federal service, the agency may set pay at a higher than
minimum rate up to the lowest rate of basic pay that equals or exceeds
the applicant's highest previous Federal rate of basic pay, not to
exceed the maximum rate F. Before setting pay under this paragraph, an
agency must establish a policy regarding use of this pay-setting
authority that includes the following elements:
(1) Designation of officials with the authority to approve and set
pay under this paragraph;
(2) Whether use of this authority is discretionary or mandatory;
[[Page 5757]]
(3) The factors the designated officials may or must consider in
determining the rate at which to set the applicant's pay, which must
include how the rate of basic pay has been set for other administrative
law judges; and
(4) Documentation and recordkeeping requirements sufficient to
allow reconstruction of the action.
(g) With prior OPM approval, an agency may offer a higher than
minimum rate, up to the maximum rate F, to an administrative law judge
applicant or a former administrative law judge with superior
qualifications who is eligible for appointment to a position at AL-3.
An agency request to OPM must include:
(1) A description of the superior qualifications (as defined in
Sec. 930.202) of the applicant or former administrative law judge;
(2) How pay has been set for administrative law judges who had
similar qualifications (based on the level, type, or quality of the
applicant's or former administrative law judge's skills or competencies
or other qualities and experiences) and who have been newly appointed
to positions that are similar to the administrative law judge's
position (based on the position's occupational series, organization,
geographic location, or other job-relevant factors), if applicable; and
(3) The proposed rate of basic pay and a justification for that
rate, except an agency may not consider an applicant's or former
administrative law judge's salary history (i.e., existing salary or
prior salary) or a salary from a competing job offer.
* * * * *
[FR Doc. 2024-01337 Filed 1-29-24; 8:45 am]
BILLING CODE 6325-39-P