OPM proposes to expand use of retention bonuses

Agencies could offer retention bonuses to employees who are likely to leave for another federal job, under proposed rules published in the Federal Register Friday. If approved, the draft regulations issued by the Office of Personnel Management would for the first time allow agencies to offer employees bonuses to keep them from going to higher-paying jobs in other agencies. To qualify for the retention bonus, an employee must be in a job that is under a different pay system than the new job, or must be deemed essential to a temporary but critical agency project, such as the closure of a facility.

Current regulations allow agencies to offer lump-sum recruitment bonuses to newly appointed employees and retention bonuses to employees with unique qualifications who plan to leave government for the nonfederal sector. But OPM has avoided allowing agencies to offer bonuses to employees seeking to move elsewhere in government, fearing that agencies would get into costly bidding wars for highly skilled workers. But enough agencies have voiced concerns over potential staffing problems caused by employees leaving for other federal jobs to convince OPM to change its tune. Still, under the proposed regulations, agencies must first consider non-pay incentives as retention tools, including alternative work schedules, telecommuting, training and temporary appointments to other work assignments. OPM said it would continue to monitor the potential costs of interagency competition. Under the proposed rule, agencies could offer a retention allowance to an employee working on critical project for as long as the employee is needed, but no longer than a year. Agency heads can ask OPM for extensions of bonuses, which OPM will evaluate on a case-by-case basis. The proposed rule also would allow agencies to offer recruitment and relocation bonuses and retention allowances to wage-grade employees. Current regulations state that the director of OPM can authorize bonuses for wage-grade employees upon the request of an agency head. The proposed rule would give agencies that discretion. Retention, recruitment and one-time relocation bonuses are capped at 25 percent of an employee's annual rate of basic pay. Comments on the draft rules must be submitted to OPM by March 20. E-mail comments to payleave@opm.gov or mail them to:

Donald J. Winstead
Office of Personnel Management
Room 7H31
1900 E Street NW
Washington D.C., 20415

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