Paybanding Evolution

IRS Commissioner Mark Everson announced Wednesday that he's leaving the agency to run the American Red Cross. This means he won't be at the agency to see new pay rules take effect.

On Tuesday, the Office of Personnel Management published draft regulations in the Federal Register to change the paybanding system at the IRS. Paybanding, of course, is a staple of the new wave of compensation systems replacing the General Schedule across government. Broad pay bands are meant to give supervisors greater flexibility in compensating employees and to allow for pay for performance.

The IRS switched to a payband system for its senior and departmental managers in 2001, but it hasn't put the whole agency onto the system yet. OPM's draft regulations make it clear that employees covered by collective bargaining agreements can't be forced into paybands without their union's consent.

IRS was one of the first agencies to experiment with paybands, and its experience is instructive for all government employees. There are a number of developments of note in the latest regulations.

First, they allow the agency to create a new pay track that lets entry-level employees move up the payband faster than longer-term employees.

Also, the proposal would give the IRS the option to widen the bands. Right now, for example, an IRS payband that goes up to the GS-13 level can include a maximum of five GS grades. The new regulations let the IRS broaden that.

Supervisors also will have more say in determining raises. OPM's regulations would allow managers to take into account the employee's current spot in the band when making that decision, as well as his or her performance review.

In addition to pay raises derived from employees' performance reviews, the IRS also can give across-the-board raises to groups of employees as it sees fit. OPM's new regulations allow the agency to forgo any general increases in favor of entirely performance-based raises, if it wants.

There are a couple of areas that OPM makes more rigid in the IRS pay system. The new regulations require the IRS to put more than one GS grade in a band. That means the agency can't just graft the old system onto the new and call it paybanding. And the rules reiterate that IRS supervisors can't give raises just because an employee has been with the agency for a long time.

It seems this next evolution in paybands provides for more and more flexibility in setting pay. The only flexibility it doesn't provide is the ability to abandon paybanding.