6.531.1. Pay Under the General Schedule and IRS Payband System

(1) This IRM applies to:

1. Employees who occupy positions classified and paid under the GS, as provided in Title 5, United States Code (USC), Part III, Subpart D, Pay and Allowances, Sections 5102 and 5331, Definitions; application, or other applicable laws.

2. Law Enforcement Officers (LEOs) receiving LEO special base rates.

   Note: Those LEOs receiving LEO special base rates are covered by the GS classification and pay system (identified by GL pay plan) but receive higher base rates of pay in lieu of GS rates at grades 3 through 10.

3. Employees who receive special rates under 5 USC 5305, Special pay authority, and Title 5, Code of Federal Regulations (CFR) Part 530, Subpart C, Special Rate Schedules for Recruitment and Retention.

4. Managers covered under the IRS Payband System (IR), authorized by 5 USC 9509, General workforce classification and pay, and modified by the Office of Personnel Management (OPM) Criteria for IRS Broadbanding System, 65 Federal Register (FR) 79433, December 19, 2000; and

5. Employees in other pay plans who are moving into GS, GL, or IR positions.

(2) This guidance reflects applicable law, regulations, and Comptroller General (CG) and OPM decisions concerning pay administration under the General Schedule and IRS Payband System. These instructions must be applied in conjunction with pertinent law, regulation, and decisions. The IRS officials delegated authority to approve personnel actions are responsible for ensuring that employees are paid appropriately.

(3) This IRM does not apply to employees in Senior Executive Service (SES) positions, senior-level (SL) positions, those positions for which appointees are paid under 5 USC. 9503, Streamlined critical pay authority, and positions covered by the Federal Wage Schedule (FWS).

(1) Laws: Title 5, USC, Government Organization and Employees at https://uscode.house.gov/:

1. 5303 - Annual adjustments to pay schedules

2. 5304 - Locality-based comparability payments

3. 5305 - Special pay authority

4. 5331 - 5338 - General Schedule pay rates

5. 5596 - Back pay due to unjustified personnel action

6. 9509 - General workforce classification and pay

(2) Regulations: Title 5, Part 531 - Pay Under the General Schedule at https://www.ecfr.gov/cgi-bin/text-idx?SID=0e48a3bebf6bafcaeb084c7c1c04629e&mc=true&node=pt5.1.531&rgn=div5:

1. Subpart B - Determining Rate of Basic Pay

2. Subpart D - Within-Grade Increases

3. Subpart E - Quality Step Increases

4. Subpart F - Locality-Based Comparability Payments

(3) Federal Register Notice: The OPM Criteria for IRS Broadbanding System, 65 FR 79433, December 19, 2000 at http://hco.web.irs.gov/compbenefits/pdf/OPMIRSCriteria.pdf

(4) Delegation of Authority: Delegation Order 6-23, Delegations of Authority to Accomplish Pay Administration, found in IRM 1.2.2.7.13

(1) The IRS Human Capital Officer is the executive responsible for this IRM and overall Servicewide policy for pay under the General Schedule and the IRS Payband System.

(2) The ACLP Branch is responsible for developing and publishing content in this IRM.

(3) The ETS Division is responsible for setting pay in accordance with the policies outlined in this IRM.

(4) The WRD, Labor Relations/Employee Relations (LR/ER) Field Operations Office provides guidance and representation to managers in grievances, discipline, adverse action and performance cases, and contractual obligations with the National Treasury Employees Union (NTEU).

(5) The P&PS Division is responsible for providing systems, tools, and all related instructions.

(1) The ACLP branch gauges effectiveness of the policy based on feedback from customers and program owners about subjects contained in this IRM. During review and publishing of this IRM, sections are revised, added or deleted based in part on this process.

(1) The ACLP branch develops and deploys policies, materials and programs to increase Servicewide awareness and understanding of GS, IR and GL pay-setting. Additionally, HCO, WBP, collaborates with other HCO organizations and Servicewide stakeholders to support education and outreach activities as they relate to GS, IR, and GL pay-setting.

(2) The following activities help ensure program success:

1. Conducting annual policy reviews;

2. Publishing educational articles such as Leaders’ Alerts and IRS Headlines; and

3. Maintaining accurate and up-to-date program websites.

(1) The definitions used in this IRM are consistent with those contained in 5 CFR 531.203.

(2) Annual pay adjustment: The government-wide change to pay schedules provided under 5 USC 5303. This adjustment is usually effective on the first day of the first applicable pay period (PP) beginning on or after January 1 of each calendar year.

(3) Change to lower grade/ band (CLG): A change of an employee, while continuously employed, from one grade/band to a lower grade/band. May be competitive or non-competitive and is used interchangeably with demotion and termination of temporary promotion.

(4) Conversion-out process: The OPM methodology used to determine an employee’s GS equivalent grade level when the employee leaves a position covered by the IRS Payband System.

(5) Demotion: A change of an employee, while continuously employed, from one grade/band to a lower grade/band.

(6) Department Manager (DM): Second-level supervisory/managerial positions located in IRS campuses (service centers). Previously classified at the GS-11, GS-12, and GS-13 grade levels, designated by IR Payband code IR-02. The minimum rate of the DM Payband is equal to the GS-11 step 1 rate. The maximum rate of the DM payband is equal to the GS-13 step 10 rate.

(7) Detail: Temporary assignment (competitive or non-competitive) to a different position with the same or higher maximum underlying rate of basic pay. A detail is for a specified period and the employee is expected to return to their regular duties at the end of the assignment. Pay increases are not applicable for details. In certain circumstances, a detail may be to a position with a lower maximum underlying rate of basic pay. An employee who is on a detail is considered, for pay and strength purposes, to be occupying their permanent position of record.

(8) Equivalent increase: An increase in an employee’s rate of basic pay, or an opportunity for such an increase under a non-GS pay system, as described in 5 CFR 531.407.

(9) Existing rate: The rate received immediately before a pay action takes effect, after processing a general pay adjustment and any other simultaneous pay action that is higher in the order of precedence under IRM 6.531.1.2.3.

(10) Frontline Manager (FM): All supervisory/managerial positions not covered under the Senior Manager (SM) or DM Payband. Previously classified at the GS-5 through GS-15 grade levels. The FM Payband consists of 11 single grade bands, designated by IR Payband codes IR-03 through IR-13. The minimum rate of each Payband is equal to step 1 of the GS grade encompassed by the corresponding FM payband. The maximum rate of each payband is equal to step 10 of the GS grade encompassed by the corresponding FM Payband.

(11) General Schedule (GS): The classification and pay system established under 5 USC Chapter 51, Classification, and 5 USC Part III, Subpart D, Chapter 53, Subchapter III, General Schedule Pay Rates.

(12) Geographic conversion rule: When an employee’s official worksite is changed to a new location where a different pay schedule applies, the employee’s current position must first be converted to the applicable pay schedule and rate for the new official worksite, based on the grade and step (or relative position in range) of the position of record before the move and before processing applicable pay setting rules.

(13) Highest applicable rate range: The rate range applicable to a GS, GL, or IR employee based on position and official worksite that provides the highest rates of basic pay, excluding any retained rates.

(14) Highest previous rate (HPR): Highest underlying rate or LEO special base rate previously paid to an individual while employed as a civilian in any position in a branch of the Federal Government, without regard to whether that position was under the GS pay system.

(15) IRS Payband System (IR Payband or IR): The performance based classification and pay system established under 5 USC Chapter 95, Personnel Flexibilities Relating to the Internal Revenue Service, outlined in OPM criteria, that covers all IRS managers including SM, DM, and FM, referred to as band instead of grade.

(16) LEO special base rate: A special base rate established for LEOs at grades 3 through 10 under Section 403 of the Federal Employees Pay Comparability Act of 1990 (section 529 of Pub. L. 101-509, November 5, 1990, as amended), which is used in lieu of a GS rate. Identified by GL pay plan.

(17) Locality pay area: An area listed in 5 CFR 531.603, as established and modified under 5 USC 5304 by the Pay Agent designated by the President under 5 USC 5304(d)(1).

(18) Locality pay percentage: The percentage authorized for a locality pay area under 5 CFR 531.603, which is used to compute a locality payment (before applying any maximum pay limitations under 5 CFR 531.606).

(19) Locality rate: A scheduled annual rate of pay (GS, IR, or LEO special base rate if applicable) plus any applicable locality payment.

(20) Maximum payable rate (MPR): The highest rate at which an employee’s pay may be set when HPR is considered. MPR may not exceed the maximum step/rate of the employee’s current grade/band.

(21) MPR rule: The rule that allows setting pay for an employee at a rate above the rate that would be established using other rules.

(22) Official worksite: The official location of the employee’s position of record, as determined in IRM 6.531.1.5.3. Also referred to as official post of duty and official duty station.

(23) Payable rate: The highest rate of basic pay (including locality or special rate) to which an employee is entitled based on the employee's position of record, official worksite, and step (or relative position in range), or, if applicable, a retained rate.

(24) Payband: A pay structure containing one or more GS grade and related ranges of pay. The rate range of a Payband is defined by the minimum rate of pay and the maximum rate of pay for that band.

(25) Pay event: Any increase in underlying rate of basic pay, including a ‘zero’ increase, received by an employee resulting from a performance-driven salary review (performance-based increase (PBI)) or as a result of a personnel action, including promotion, reassignment or demotion into the payband.

(26) Pay schedule: A set of rate ranges established for GS, GL, and IR employees. A pay schedule covers a defined category of employees based on established coverage conditions (e.g., official worksite, pay plan, occupation).

(27) Performance based increase (PBI): An increase in base pay based on an employee’s performance, as measured by their annual summary evaluation. The PBI replaces the annual GS across-the-board increase, within-grade increases (WGIs), and quality step increases (QSIs). The PBI is effective on the same date as the GS annual pay adjustment, which is generally effective the first full pay period (PP) in January.

(28) Permanent position: A position filled by an employee whose appointment is one year (365 days) or more. For purposes of a WGI, a permanent position includes a position to which an employee is promoted on a temporary basis for at least one year.

(29) Position of record: An employee’s official position, defined by grade/band, occupational series, employing agency, LEO status, and any other condition that determines coverage under a pay schedule (other than official worksite), as documented on the employee’s most recent Notification of Personnel Action (Standard Form (SF) 50) and current position description. A position to which an employee is temporarily detailed is not documented as a position of record.

(30) Promotion: Movement from one grade/band to a higher grade/band while continuously employed (including such a movement in conjunction with a transfer). For IR, movement must be to a position with a higher maximum underlying rate of basic pay.

(31) Quality step increase (QSI): An increase in an employee’s rate of basic pay from one step of an employee's GS or GL grade to the next higher step of that grade. The purpose of a QSI is to provide appropriate incentives and recognition for excellence in performance by granting faster than normal step increases.

(32) Rate of basic pay: The rate of pay fixed by law or administrative action for a position held by an employee before any deductions. Rates of basic pay within the IRS include the underlying GS rate, LEO special base rate, GS locality rate, special rate, IR underlying rate of basic pay, IR locality rate, and a retained rate, but exclusive of additional pay of any other kind.

(33) Rate range or range or rates: A salary range with only two fixed points for setting pay, a minimum and maximum rate, within an established pay schedule, excluding any retained rate. A rate range may consist of GS, IR, LEO special base rates, locality rates, special rates or, for non-GS employees, similar rates under other legal authority.

(34) Reassignment: A permanent movement from one position to another without promotion or demotion while serving continuously in the same agency. For IR, movement must be to a position with the same maximum underlying rate of basic pay.

(35) Reemployment: Employment, including reinstatement or another type of appointment, after a break in service of at least one full workday.

(36) Retained rate: A rate above the maximum rate of the rate range applicable to an employee, which is payable under 5 CFR Part 536, Grade and Pay Retention, or, for a former member of the SES, under 5 CFR 356.705.

(37) Senior Manager (SM): First-level supervisory/managerial positions that report directly to a member of the SES and second-level supervisory/managerial positions. Previously classified at the GS-14 and GS-15 grade levels. The SM Payband is designated by IR Payband code IR-01. The minimum rate of the IR-01 Payband is equal to the GS-14 step 1 rate. The maximum rate of the IR-01 payband is equal to the GS-15 step 10 rate.

(38) Special rate: A rate of pay within a special rate schedule established under 5 CFR Part 530, Subpart C, Special Rate Schedules for Recruitment and Retention, or a similar rate for GS employees established under other legal authority (e.g., 38 USC 7455, Increases in rates of basic pay). The term special rate does not include a LEO special base rate. Note: Special salary rates do not apply to IR rates.

(39) Special rate schedule: A pay schedule established under 5 CFR Part 530, Subpart C, Special Rate Schedules for Recruitment and Retention, to provide higher rates of pay for specified categories of GS positions or employees at one or more grades or levels or a similar schedule established for GS employees under other legal authority (e.g., 38 USC 7455, Increases in rates of basic pay).

(40) Special rate supplement: The portion of a special rate paid above an employee’s GS rate. However, for a LEO special base rate, who is also entitled to a special rate, the special rate supplement equals the portion of the special rate paid above the officer’s LEO special base rate.

(41) Stacked promotion: A stacked promotion occurs when an employee already on a temporary promotion receives a second temporary promotion to a higher graded position.

(42) Telework: Permits the employee to work at an approved alternate worksite instead of the location of the employee’s official worksite.

(43) Temporary promotion: A time-limited promotion with a not-to-exceed (NTE) date or a specified term.

(44) Transfer: A change of an employee, without a break in service of one full workday, from one branch of the Federal Government (executive, legislative, or judicial) to another or from one agency to another.

(45) Underlying GS rate, underlying rate, underlying rate of basic pay, IR underlying rate, or IR underlying rate of basic pay: A rate of pay which excludes locality rates and special rates, also referred to as base pay.

(46) Waiting period: The minimum time requirement of creditable service to become eligible for consideration for a WGI.

(47) Within-grade increase or step increase (WGI): A periodic increase in an employee’s rate of basic pay from one step of the grade of their position to the next higher step of that grade.

(1) Office of Personnel Management (OPM) Pay & Leave Fact Sheets at https://www.opm.gov/policy-data-oversight/pay-leave/pay-administration/#url=Fact-Sheets

(2) The IRS Source at https://irssource.web.irs.gov/SitePages/Pay.aspx

(3) The HCO Compensation and Benefits, Pay website at http://hco.web.irs.gov/compbenefits/compleave/Pay.asp

(4) The IRS Pay Setting Desk Guide (PSDG) is a job aid for pay-setters containing examples of pay setting procedures for policies in this IRM.

(5) The Payband Resource Center at http://hco.web.irs.gov/apps/payband/index.htm, contains information for positions covered under the IRS Payband System, including topics such as PBIs, performance bonuses, salary tables, and promotion and PBI calculator.

(1) When determining an employee's GS, IR, or LEO special base rate, first identify any other rate of basic pay to which the employee is entitled, including locality and special rate. The employee is entitled to the highest applicable rate of basic pay as their payable rate. When an employee's special rate is surpassed by a higher locality rate, their entitlement to a special rate is terminated, as provided in 5 CFR 530.303(d).

(2) When setting pay in the highest applicable pay schedule (e.g., GS/IR locality or special rate schedule), determine the underlying rate by finding the corresponding underlying rate with the same grade and step (or relative position in range for an IR employee) as the payable rate.

(3) A LEO is entitled to LEO (GL) special base rates in lieu of GS rates at Grades 3 through 10.

(1) When an employee's official worksite is changed to a new location where different pay schedules apply, determine the employee's rate(s) of basic pay in the applicable pay schedule(s) in the new location based on their current position (including GS grade and step or IR band) immediately before the change in the employee's official worksite. The resulting rate must be used as the existing rate in processing the next simultaneous pay action in the order of precedence, using the applicable pay schedules in the new location.

(1) When multiple pay actions with the same effective date affect an employee's rate of basic pay, the actions are processed in the following order:

1. Annual pay adjustments, including GS across-the-board increases, PBIs and special rate adjustments;

2. Geographic conversion;

3. WGI or QSI;

4. Promotion; and

5. Except as provided above, process individual pay actions occurring on the same date in the order that gives the employee the maximum benefit.

(1) For GS employees, on the effective date of a GS across-the-board increase (normally effective the first pay period of the year), the IRS must set the pay rate at the rate on the new GS schedule which corresponds to the employee's current grade and step.

(2) For IR employees, each year, based on their annual summary evaluation, or IR rating of record, they are eligible to receive a PBI. Refer to the Payband Resource Center for additional information on PBIs, including values, processing, overview, frequently asked questions (FAQs), and calculators.

(3) For employees receiving a retained rate (i.e., pay retention) immediately before the effective date of an annual pay adjustment, the rules in 5 CFR 536.305 must be followed.

(1) First appointment : The IRS will set the payable rate of basic pay at the minimum rate (step 1 for GS) of the highest applicable rate range, except when using the superior qualifications and special needs pay-setting authority discussed later in IRM 6.531.1.2.6.

(2) Reemployment/Reinstatement: For an employee who has previous Federal service, the IRS will set the payable rate of basic pay at the minimum rate (step 1 for GS) of the highest applicable rate range unless:

1. Superior qualifications and special needs pay-setting authority is used (see IRM 6.531.1.2.6); or

2. The employee is eligible for a higher payable rate in accordance with the MPR rules at IRM 6.531.1.2.13.

(1) The IRS may use the superior qualifications and special needs pay-setting authority to set pay for a newly appointed employee above the minimum rate (step 1 for GS) of the highest applicable rate range for the following:

1. A first appointment (regardless of tenure) as a civilian employee of the Federal Government; or

2. A reappointment when the employee had a break in service of at least 90 days.

   Note: A time-limited, non-permanent, expert or consultant, provisional, or internship program appointment can occur during the 90-day break in service without affecting the employee's eligibility.

(2) The IRS must consider the possibility of authorizing a recruitment incentive before approving a superior qualifications and special needs pay-setting authority appointment. See IRM 6.575.1 , IRS Recruitment, Relocation, Retention, and Extended Assignment Incentives, for more information.

(3) The employee must meet one of the two superior qualifications or special needs pay-setting authority criteria outlined below before this authority can be used. Each candidate’s qualifications must be evaluated on an individual basis.

1. The candidate must have unusually high (superior) qualifications for the position to be filled based on the level, type, or quality of the candidate's skills or competencies demonstrated or obtained through experience and/or education. The candidate's skills, competencies, experience, education, and/or accomplishments must be relevant to the requirements of the position to be filled and be significantly higher than those minimally required; or

2. The candidate must have a unique combination of education and experience that meets a special need of the IRS. The experience that is the basis for setting pay at the higher rate must be closely related to the work of the position being filled and must be essential to accomplishing an important agency mission, goal, or program activity. A candidate also may meet the special needs criteria by meeting agency workforce needs, as documented in the agency's strategic human capital plan.

(4) In determining the step or salary at which to set an employee's payable rate under this authority, one or more of the following factors outlined in 5 CFR 531.212(c) should be considered:

1. The level, type, or quality of the candidate's skills or competencies;

2. The candidate's existing salary, recent salary history, or salary documented in a competing job offer considering the location where the salary was or would be earned, compared to the payable rates of basic pay in the same location;

3. Significant disparities between Federal and non-Federal salaries for the skills and competencies required;

4. Existing labor market conditions and employment trends, including the availability and quality of candidates for the same or similar positions;

5. The success of recent efforts to recruit candidates for the same or similar positions;

6. Recent turnover in the same or similar position;

7. The importance/criticality of the position being filled and the effect on the IRS if it is not filled;

8. The desirability of the geographic location, duties, and/or work environment associated with the position;

9. Organizational workforce needs, as documented in the strategic Human Capital Plan; and/or

10. Other relevant factors.

(5) Business Based Human Resource Directors (BBHR) and/or Business Unit Heads of Office can authorize the use of superior qualifications and special needs pay-setting authority for employees within their business unit. (See IRM 1.2.2.7.13, Delegation Order 6-23).

(6) The ETS, Employment Office Associate Directors are delegated authority to grant final approval and set salary using superior qualifications and special needs pay-setting authority for employees who meet the regulatory eligibility requirements. (See IRM 1.2.2.7.13, Delegation Order 6-23).

(7) Each determination to use superior qualifications and special needs pay-setting authority must be documented in writing prior to the individual entering on duty and include the following:

1. The superior qualifications of the candidate or the special need for the candidate's services that justifies a higher minimum rate;

2. An explanation of the factor(s) and any supporting documentation used to justify the rate at which the employee's pay was set and how those factors directly relate to the rate approved; and

3. The reason(s) for authorizing a higher than minimum rate instead of or in addition to a recruitment incentive.

   Note: A copy of the approval documentation must be placed on the permanent side of the employee's Official Personnel Folder (OPF).

(8) A copy of the approval authority and a record supporting the higher rate must be maintained for 3 years by the applicable BBHR office and/or Business Unit Head of Office, as appropriate, and must include:

1. Written documentation that a recruitment incentive was first considered;

2. Data showing the non-Federal sector rate of pay that is higher than provided by the minimum rate of basic pay for the grade/band;

3. Verification of a higher current salary or a copy of a competing job offer letter; and

4. The appointment authority (e.g., certificate or direct hire authority).

(1) If an employee is moved from one position to a different position without a change in grade/band or a break in service, the employee's payable rate of basic pay and any underlying rate of basic pay are based on the employee's:

1. New position;

2. New official worksite; and

3. Step or underlying rate of basic pay in effect before the position change.

   Note: This movement includes transfer, reassignment, change in type of appointment (e.g., conversion), change in official worksite, or other change in position. It does not include movement between IR and GS at equivalent grade/band or movement between IR Paybands (i.e., IR-05 to IR -02, IR-03 to IR-01).

(2) If an employee is afforded pay retention, apply the rules in 5 CFR Part 536, Grade and Pay Retention.

(1) These promotion rules apply to GS employees moving from one GS grade to a higher GS grade (temporary or permanent) without a break in service and are consistent with the two-step promotion rule in 5 USC 5334(b), as outlined in the PSDG.

(2) When setting pay upon promotion, follow the order for processing simultaneous pay actions in IRM 6.531.1.2.3.

(3) An employee's payable rate of basic pay is determined using one of two methods:

1. The Standard Method is applied when the employee is covered by the same pay schedules before and after the promotion (e.g., locality to locality). See 5 CFR 531.214(d)(3) for procedures, as outlined in the PSDG.

2. The Alternate Method is applied when the employee is covered by different pay schedules before and after promotion and if it produces a higher payable rate than the standard method (e.g., locality to special rate). See 5 CFR 531.214(d)(4) for procedures, as outlined in the PSDG.

(4) Employee receiving a retained rate of pay (i.e., pay retention): If an employee's existing payable rate of basic pay before promotion is a retained rate, apply the applicable promotion methods in paragraphs (a) or (b) above, as if the employee were receiving the maximum rate of the employee's grade before promotion. See 5 CFR 531.214(d)(5) for procedures, as outlined in the PSDG.

(5) Employee being promoted from GS-1 or GS-2: In applying the promotion rules to an employee who is promoted from step 9 or 10 of grade GS-1 or GS-2, the value of two WGIs is determined by doubling the WGI between steps 9 and 10 for the applicable grade.

(6) Temporary promotions: Pay is set for an employee receiving a temporary promotion on the same basis as a permanent promotion.

(7) Temporary promotions made permanent (same grade): If a temporary promotion is made permanent immediately (i.e., with no break in service) from a temporary promotion, the employee will not first be returned to the lower grade (i.e., CLG action is processed). The employee's temporary promotion is converted to a permanent promotion without a change in pay. This applies to all permanent promotion actions processed immediately from a temporary promotion (at the same GS grade) including those where the position is changing.

(8) Retroactive promotions: Federal employees may be retroactively promoted only in situations where an appropriate authority corrects or directs the correction of an unjust or unwarranted personnel action to ensure compliance with:

• law, Executive order, rule, regulation;

• mandatory personnel policy established by an agency; or

• through a collective bargaining agreement.

(1) First-time, permanent, competitive movement:

1. An individual is eligible for a one-time 10% pay increase when they are competitively selected for their firstpermanent IR Payband position. Transfers to IRS from other federal agencies may be eligible for a 10% increase, providing they meet these same criteria. GS employees with prior permanent IR experience in any IR Payband (i.e., SM, DM, FM) are not eligible for this one-time 10% pay increase. This 10% pay increase is applicable upon promotion, reassignment, or demotion, providing it is permanent, competitive, and the first-time into any IR Payband position. It is not applicable for details.

2. Managers are eligible for a one-time 10% pay increase when they are competitively selected for their firstpermanent higher level Payband position. Managers with prior permanent IR experience in the higher level Payband in which they are being placed are not eligible for this one-time 10% pay increase but may be eligible for an 8% increase (see (2) below). Movement from an FM Payband position to an FM Payband position with a higher maximum rate (e.g., IR-06 to IR-05) is not considered movement to a higher level Payband and does not qualify for this one time 10% pay increase. First time permanent movement that qualifies for this increase is defined below:

• FM to DM Payband;

• FM to SM Payband; and

• DM to SM Payband.

(2) Subsequent permanent and temporary promotion: Employees are eligible for an 8% pay increase when promoted to an IR Payband position in the situations outlined below:

• Permanent competitive promotion from a GS position to an IR Payband position and the employee has prior permanent IR experience;

• Permanent competitive promotion to a higher level Payband, and the employee has prior permanent experience in the higher level Payband to which being promoted;

• Permanent competitive promotion from an FM Payband position to an FM Payband position with a higher maximum rate (e.g., IR-06 to IR-05);

• Time-limited temporary competitive or noncompetitive promotion (GS to IR or IR to IR); or

• Permanent and non-competitive career-ladder promotion.

(3) IR temporary promotion becomes permanent: Temporary promotions to IR Payband positions may be made permanent if the original temporary promotion announcement indicated the position may become permanent without further competition.

1. When a temporary promotion is made permanent, and it is the employee’s first permanent competitive selection into an IR Payband position or a higher level Payband position, the employee may be eligible for an additional pay increase (see (1) above). The effective date of the additional pay increase is the date the temporary promotion becomes permanent and is not retroactive.

   Note: To remove temporary restrictions without first returning the employee to their permanent position of record, the employee must be made permanent in the same IR band as the temporary promotion position. If the employee is made permanent in a different IR band, the employee is first returned to the permanent position of record and re-promoted to the new permanent IR Payband position.

2. If eligible for an additional pay increase, pay is re-calculated by applying the 10% increase based on the employee’s permanent position at the time of the initial temporary promotion action. The difference between the initial 8% calculation and the 10% calculation is added to the employee’s current IR underlying rate of basic pay. The IR underlying rate of basic pay after calculation cannot exceed the maximum rate or be less than the minimum rate of the applicable Payband.

   Note: If HPR was used to set pay on the initial temporary promotion, no further calculations are required when the position becomes permanent regardless of the amount received on the initial temporary promotion. Temporary restrictions are removed, and the employee’s pay remains the same.

(1) Permanent movement to a higher grade/band while on a temporary promotion: All movement to a higher permanent grade/band from a temporary promotion will require pay be set from the position of record. Employees who are on a temporary promotion and are selected for a permanent position at a higher grade/band than the current temporary promotion will first be returned to their position of record. Pay is set on the position of record affording any WGIs or PBIs the employee would have received had they not served on the temporary promotion. Pay is set upon subsequent permanent promotion following pay-setting rules outlined in IRM 6.531.1.2.8 and IRM 6.531.1.2.9.

(2) Non-competitive temporary movement while on a temporary promotion: Employees who are on a long-term competitive temporary promotion (NTE one year or more) may be placed on a stacked non-competitive temporary promotion (NTE 120/180 days) without first being returned to their position of record.

(3) Long-term temporary movement while on a temporary promotion: All long-term competitive temporary promotions (NTE one year or more) will require pay be set from position of record. Employees who are on a temporary promotion and are selected for a long-term competitive temporary position at a higher grade/band than the current temporary promotion, will first be returned to their position of record. Pay is set on the position of record affording any WGIs/PBIs the employee would have received had they not gone on the temporary promotion. Exceptions:

1. Movement from one temporary promotion to another temporary promotion (same or different position) at the same grade/band will be processed as a temporary promotion. The employee is not first returned to the position of record. The grade, step and date of last equivalent increase (DLEI) are unchanged for GS employees. Base salary remains the same for IR employees. Locality pay may change based on any applicable geographic conversion.

2. For employees on a short-term non-competitive stacked promotion who are being returned to the same temporary grade/band held immediately prior to the stacked temporary promotion, the action will be processed as a temporary promotion. The employee is not first returned to the position of record. Pay is set as if the second (i.e., stacked) temporary promotion had not occurred. Apply any WGIs/PBIs the employee would have received on the initial temporary promotion. When returning to a GS position, the DLEI is reset to the date of the first temporary promotion as if the stacked temporary promotion had not occurred or date of WGI, if one was granted.

(4) Temporary promotions in career ladder positions: Positions may be announced temporarily at multiple grade levels (career ladders) and allow for successive career ladder promotions while serving on a competitive temporary promotion. The employee is not first returned to the position of record.

(1) Except as otherwise provided in this subsection, an employee who is demoted (i.e., CLG), is entitled to the minimum payable rate of basic pay for the lower grade/band unless the employee's pay is set at a higher rate under grade/band and pay retention rules (see IRM 6.536.1, Grade/Band and Pay Retention) or the MPR rule (see IRM 6.531.1.2.13).

(2) Voluntary change to lower grade/band: When the demotion is at the employee’s request from permanent positions (GS and IR) held:

• Less than six months, pay is set as if the employee had not been promoted (i.e., apply any WGIs/PBIs the employee would have received in the original position).

• More than six months, pay will be set considering HPR (IRM 6.531.1.2.15).

(3) First-time, permanent, competitive demotion into the Payband: A 10% pay increase may be provided for first-time, permanent, competitive demotion from a GS to an IR Payband position (see IRM 6.531.1.2.9). When the employee does not meet the 10% pay increase eligibility, HPR from the employee’s current permanent GS position of record may be used to set pay (see (2) above).

(4) Expiration or termination of temporary promotion:

1. When an employee on a temporary promotion is returned to their permanent position of record (i.e., CLG), the employee's payable rate of basic pay must be set as if they had not been temporarily promoted. Apply any WGI's/PBIs the employee would have earned in their position of record had the temporary promotion not occurred.

2. When an employee on a stacked non-competitive temporary promotion is returned to the competitive temporary promotion held just prior to that stacked promotion, the action is processed as a temporary promotion (not a CLG) in accordance with IRM 6.531.1.2.10(3)(b). Apply any WGI's/PBIs the employee would have earned on the competitive temporary promotion had the stacked temporary promotion not occurred.

3. When an employee on a temporary promotion is placed in a temporary position at a grade/band lower than that held immediately prior to the current temporary promotion, and that lower-graded/banded temporary position is at a grade/band higher than the permanent position of record, the employee will first be returned to their position of record, affording any WGIs/PBIs the employee would have received had they not gone on the temporary promotion. Pay is set upon subsequent temporary promotion following pay-setting rules outlined in IRM 6.531.1.2.8 and IRM 6.531.1.2.9.

4. HPR will not be used to set pay upon termination of a temporary promotion regardless of the time served on the temporary promotion.

5. Any PBIs earned while on a temporary promotion do not carry over when the employee is returned to their position of record or initial temporary promotion as in (b) above.

(5) Demotion upon Failure to complete a supervisory/managerial probationary period: When an employee placed permanently in a supervisory/managerial position fails to complete the probationary period prior to an involuntary CLG, pay is set as if the employee had not been placed in the supervisory/managerial position. Apply any WGIs and pay adjustments the employee would have received had the promotion not occurred. Conversion-out pay-setting rules are not applicable. HPR will not be considered per 5 CFR 531.223(c). See (7) for involuntary demotion after completing supervisory/managerial probationary period.

(6) Correcting an erroneous demotion: When a demotion is determined to be erroneous and is canceled, the rate of basic pay is set as if the employee had not been demoted. The action is a correction of the original demotion action and may not be treated as a promotion. For example, when a demotion based on a reclassification of the employee's position is found to be erroneous and is corrected retroactively, the corrective action is a cancellation of the original demotion.

(7) Demotion for cause/inefficiency: Pay is set considering partial application of HPR given the employee's length of service spent at the grade/band from which demoted, the grade/band of the demotion, and any intervening grades/bands. For example, a GS-12 employee is demoted to the GS-9. The employee has a total of 8 years of service in the three grades (2 years at the GS-12, 5 years at the GS-11, and 1 year at the GS-9). If the employee had remained at the GS-9 grade level for 8 years, they would have been a GS-9, step 6. Therefore, the business unit taking the action may set the employee's pay no lower than GS-9, step 1, and no higher than GS-9, step 6. The actual rate of basic pay at the higher grade is not considered in setting pay at the lower grade when the demotion is for cause/inefficiency.

(1) If an employee in a permanent IR position voluntarily moves to a GS position after six months, conversion-out rules are applied in accordance with Appendix C of the OPM Criteria for IRS Broadbanding System, as outlined in Chapter 11 of the IRS PSDG. The employee's Payband and pay rate must be converted to a GS equivalent grade and rate of pay before any accompanying geographic move, promotion, or other simultaneous action. The GS equivalent grade and rate determined is used in applying various pay administration rules that govern how pay is set (e.g., rules for promotion, HPR, and pay retention), in accordance with the type of action (i.e., reassignment, demotion, or promotion).

(2) When an employee in an IR position is involuntarily moved out of the Payband and;

• Prior to completing supervisory/managerial probationary period: When an employee permanently placed in an IR position does not complete the supervisory/managerial probationary period prior to involuntary movement out, pay is set as if the employee had not been placed in the IR position. Apply any WGIs and pay adjustments the employee would have received had the placement not occurred. Conversion-out pay-setting rules are not applicable. HPR will not be considered per IRM 6.531.1.2.12(2) and IRM 6.531.1.2.16(1)(c).

• After completing supervisory/managerial probationary period: When an employee permanently placed in an IR position completed the supervisory probationary period prior to involuntary movement out, conversion out rules do not apply. See IRM 6.531.1.2.11(7) for pay-setting rules.

(1) Application of the MPR rule is not required by statute or regulation. It allows the IRS to set pay for employees at a higher rate than would normally be established, based on a higher rate of pay previously received in another Federal job. The rate derived from this MPR is known as HPR. In some circumstances, the MPR rule may be used to determine an employee's rate of basic pay upon reemployment, transfer, reassignment, promotion, demotion, change in type of appointment (e.g., conversion), movement from a non-GS pay system, or upon termination of grade/band or pay retention.

(2) When an employee is reinstated/reemployed, pay is set considering the employee's experience and qualifications. An employee will be afforded the benefits of the MPR rule if the prior Federal work experience and qualifications are applicable to the position in which the employee is being reinstated or reemployed.

(3) Employees transferring without a break in service will be afforded HPR if that process will produce a higher pay rate. Pay is set in accordance with the type of action occurring (i.e., reassignment, demotion, or promotion). HPR can be based on either the employee’s:

• current federal position (position transferring from), regardless if that experience is applicable to the new position; or

• prior federal work experience (gained before employee’s current federal position), only if the previous experience is related to the position being filled.

(4) Employees voluntarily demoted from a permanent position held over six months will be afforded HPR if that process will produce a higher pay rate. See IRM 6.531.1.2.11(2)

(5) Employees promoted (temporarily or permanently) will be afforded HPR if that process will produce a higher pay rate.

(6) The authority to apply the MPR rule in discretionary situations, such as the reassignment of an employee from a special rate position, is delegated to members of the SES and officials in equivalent positions.

(7) Pay set under the MPR rule must take effect on the effective date of the action involved. The MPR rule may not be used to set an employee's rate of basic pay retroactively unless:

1. The retroactive action is required to comply with a non-discretionary IRS policy (e.g., transfers); or

2. The SF-50, Notification of Personnel Action, for the appointment contained the remark, "Pay rate is subject to upward retroactive adjustment upon verification of prior service."

(1) When calculating the employee's MPR, use the appropriate rule stated in 5 CFR 531.221, as outlined in the PSDG.

(1) A rate of pay based on a regular tour of duty (TOD) earned while serving under an appointment not limited to 90 days or less, or for a continuous period of not less than 90 days without a break in service.

(2) A special rate only when all the following conditions apply:

1. The employee is reassigned within the IRS or from another position in the Department of the Treasury (Treasury) at the same grade level;

2. The special rate is the employee's existing rate of basic pay immediately before the reassignment; and

3. The authorized official finds that the need for the employee’s services and contribution to Treasury will be greater in the position to which reassigned. An agency must make such determinations on a case-by-case basis. In each case, the agency must document the determination to use the special rate as an employee's HPR in writing.

(3) A rate earned on a permanent position held over six months.

(4) A rate earned on a temporary promotion held over one year (365 days) as follows:

1. A temporary promotion is extended so that the total time exceeds one year;

2. The combined time for consecutive multiple temporary promotions at the same or different grade(s)/band(s) exceeds one year (employee is eligible for HPR from the lower grade/band unless the total time served at the higher grade/band exceeds one year).

(5) Employees on seasonal appointments confer eligibility for HPR in the same way as other appointments. Provided all requirements are met, a rate earned in a seasonal position may be used to set pay regardless of the number of days worked during the period of seasonal employment.

(1) HPR may not be based on the following rates:

1. A rate earned under an expert or consultant appointment;

2. A rate received on a temporary promotion for less than one year;

3. A rate received in a position from which the employee was reassigned or reduced in grade/band for failure to satisfactorily complete a probationary period as a supervisor/manager;

4. A rate earned on a temporary promotion, regardless of the time served, will not be used to set pay upon termination of a temporary promotion;

5. A rate received by an individual while employed by the Government of the District of Columbia who was first employed by that government on or after October 1, 1987;

6. A rate received by an individual while employed by a Department of Defense or Coast Guard non-appropriated fund instrumentality;

7. A special rate, except as provided in IRM 6.531.1.2.15(2) above;

8. A rate received under a void appointment or a rate otherwise contrary to applicable law or regulation;

9. A rate received as a member of the uniformed services; or

10. A retained rate.

(2) The 5 USC section 5335 defines the waiting period for movement through the steps of a grade. There are situations when the application of HPR could violate statutory requirements for waiting periods. Therefore, IRS policy does not permit the use of HPR for a rate earned prior to the employee accepting a voluntary CLG when re-promotion is imminent within 6 months (e.g., employee selected to a lower-graded position with known promotion potential, and employee meets eligibility for promotion within the next 6 months). Employee may be eligible for partial HPR in these situations (see IRM 6.531.1.2.13(4).)

(1) This guidance applies to IRS employees who occupy permanent positions classified and paid under the GS or GL, and who are paid less than the maximum rate of their grades. This section does not apply to:

1. Members of the SES or appointees paid under 5 USC 9503, Streamlined critical pay authority;

2. Individuals appointed by the President, by and with the advice and consent of the Senate; and

3. Individuals occupying positions covered under the IRS Payband System.

(1) An employee paid less than the maximum step (step 10) of the grade of the position held shall advance in pay to the next higher step upon meeting the following three statutory requirements:

1. The employee's performance is at an acceptable level of competence; that is, their rating of record shall be at least Fully Successful or equivalent . If the rating of record does not reflect the employee's current performance, a more current rating of record must be prepared. The rating of record that forms the basis for awarding a WGI must not have been assigned earlier than the beginning of the most recent completed appraisal period;

2. The employee must have completed the required waiting period for movement to the next step or rate; and

3. The employee must not have received an equivalent increase during the required waiting period (see IRM 6.531.1.3.6).

(1) For advancement to the next step, an employee with a scheduled TOD must possess the following number of calendar weeks of creditable service to advance, as appropriate:

1. 52 calendar weeks for steps 2, 3, or 4;

2. 104 calendar weeks for steps 5, 6, or 7; and

3. 156 calendar weeks for steps 8, 9, or 10.

(2) For advancement to the next step, an employee without a scheduled TOD (e.g., intermittent) must possess the following number of calendar weeks of creditable service to advance, as appropriate:

1. 260 days in not less than 52 weeks for steps 2, 3, or 4;

2. 520 days in not less than 52 weeks for steps 5, 6, or 7; and

3. 780 days in not less than 52 weeks for steps 8, 9, or 10.

(1) A waiting period begins:

1. On the first appointment as an employee of the Federal Government, regardless of tenure;

2. Upon receiving an equivalent increase; or

3. After a period of nonpay status or a break in service (alone or in combination) of more than 52 calendar weeks, unless the non-pay status or break in service constitutes creditable service under 5 CFR 531.406 (e.g., military service).

(2) A waiting period is not interrupted by non-workdays intervening between the last scheduled workday in one position and the first scheduled workday in another position (i.e., with no break in service).

(1) Creditable service, including limited periods of leave without pay (LWOP), is granted as provided in 5 CFR 531.406.

(1) For GS and GL employees, an equivalent increase is considered to occur at the time of any of the following personnel actions:

1. A WGI, excluding a QSI.

2. An interim WGI that is later terminated under 5 CFR 531.414.

3. A permanent or temporary promotion to a higher grade, except when:
   • At the end of the temporary promotion, the employee is returned to the grade from which promoted; or
   • The employee does not satisfactorily complete a probationary period and is returned to a position at the lower grade held before promotion.

4. A promotion of an employee with a retained rate even when the action does not result in an increase of pay.

5. Application of the MPR rule resulting in a higher step rate within the employee's grade, except when:
   • The MPR is applied in a demotion; and
   • The employee's new rate of pay (i.e., underlying rate of pay) does not exceed the lowest step rate that equals or exceeds their underlying rate of pay before the demotion.

(2) For non-GS employees who move to the GS pay system, an equivalent increase is considered to occur at the time of any of the following actions in the non-GS pay system:

1. A promotion to a higher grade/band or work level within the non-GS pay system.

2. An opportunity to receive a within-level or within-range increase that results in forward movement in the applicable range of rates of basic pay, including a PBI, even if it results in a zero-dollar increase.

   Note: The equivalent increase must have occurred within the same pay system. That is, even if an employee receives an increase in pay moving between pay systems that pay increase is not considered an equivalent increase (e.g., IR to GS, or GS to IR).

(3) Increases in locality and special rates, and general across-the-board pay adjustments are not considered equivalent increase determinations.

(4) A QSI is given in addition to a regular WGI and is not considered an equivalent increase. A QSI does not affect the timing of an employee's next WGI unless the QSI places the employee in step 4 or 7 of their grade, in which case the waiting period is extended an additional 52 weeks, consistent with IRM 6.531.1.3.3 above.

(1) The supervisor/manager shall make determinations regarding acceptable level of competence in accordance with 5 CFR Part 430, Subpart B, Performance Appraisal for General Schedule, Prevailing Rate, and Certain Other Employees, and 5 CFR Part 531, subpart D, Within-Grade Increases. If the current rating of record is less than fully successful, consideration must be given to denying the WGI.

(2) At least 90 days prior to the date an employee is eligible for a WGI, management must contact their servicing Labor Relations Specialist, at http://hco.web.irs.gov/apps/staffdir/lrcontactguide.pdf for required action.

(3) Employees must receive at least 60 days written notice of management’s intent to deny the WGI.

(4) Before considering any action involving a BU employee, consult the negotiated agreement, Document 11678.

(5) Additional information can be found in IRM 6.432.1, Reduction in Grade, Band and Removal Based on Unacceptable Performance.

(1) Except as provided in paragraph (3) of this subsection, a WGI is effective on the first day of the first pay period following the completion of the required waiting period.

(2) An employee temporarily promoted for NTE one year may complete 52 weeks of service at the temporary grade but will not earn the WGI unless the temporary promotion is extended through at least the 27th pay period.

(3) When an acceptable level of competence is achieved at some time after a negative determination, the effective date is the first day of the first pay period after the acceptable determination has been made.

(1) Locality pay areas are listed in 5 CFR 531.603 and posted on OPM’s website at https://www.opm.gov/policy-data-oversight/pay-leave/salaries-wages/ under related information.

(1) An employee's locality rate is determined by:

1. An employee's official worksite (see IRM 6.531.1.5.3);

2. The locality pay area in which the employee's official worksite is located;

3. Identifying the locality pay percentage in effect in the applicable locality pay area;

4. Increasing the employee's underlying rate of basic pay by the applicable locality pay percentage and rounding the result to the nearest whole dollar ($.50 and higher rounds up); and

5. Applying any applicable limitation as described in 5 CFR 531.606.

(1) The location of an employee's official worksite (official POD) is determined by management and documented on SF-50, Notification of Personnel Action. It is used to:

1. Set pay;

2. Establish various benefits;

3. Determine state and local tax liabilities;

4. Calculate travel reimbursements; and

5. Determine personnel matters based on commuting area (e.g., reassignments and Reductions in Force (RIFs)).

(2) The official POD is the location of an employee's position of record, where they regularly perform their duties.

1. If the employee's work involves regular travel, or the work location varies on a recurring basis (e.g., mobile work), the official POD is the location where the work activities of the employee's position of record are based, and must be in a locality pay area in which the employee regularly performs work.

2. No more than 75 nights of an employee’s time may be spent in travel status to a single location in a 12-month period. Travel expected to last more than 75 nights to a single location must be approved in advance by the Business Unit Head of Office, in accordance with established travel procedures, and may result in a permanent change in official POD.

(3) The official POD is defined as a building in which the IRS occupies space. The official POD may not be the employee's home, or another location not occupied by the IRS, unless an employee is granted an exception to reporting to their official POD and their official POD is changed to their telework location.

(4) Employees on a telework agreement must report to the official POD at least two days each pay period. If the work location varies on a recurring basis, they must regularly perform work within the locality pay area for the official POD. Telework guidance is contained in IRM 6.800.2, IRS Telework Program.

(5) Business unit executives, BBHR Directors, and/or their equivalents are responsible for establishing business unit processes to ensure official PODs for all employees are properly designated, and approvals for exceptions to report to an official POD are within applicable laws, regulations, policies and established procedures.

(6) Managers are responsible for:

1. Knowing what determines an employee's official POD;

2. Knowing the location where each employee reports on a regular basis to perform the duties of their position;

3. Ensuring government resources are used efficiently and effectively with minimum potential for waste, fraud, and mismanagement; and

4. Administering official POD policies with integrity and in compliance within applicable laws, regulations, policies and established procedures.

(7) For an employee who is relocated and authorized to receive relocation expenses under 5 USC Chapter 57, Subchapter II, Travel and Transportation Expenses; New Appointees, Student Trainees, and Transferred Employees, the official POD is the established POD for the position in the area to which the employee has been relocated. This includes employees on long-term temporary assignments where relocation expenses were authorized.

(8) Temporary changes which impact the official POD and locality consist of:

1. A long-term assignment, as noted in (7) above;

2. Temporary promotion to a position in a different geographic area, in which case the official POD is the location of the temporary position (which also impacts locality pay entitlement); and

3. Temporary exceptions to reporting to an official POD (see IRM 6.531.1.5.3.1).

(9) Details do not impact the official POD and locality, even if the POD changes.

(10) For an employee whose assignment to a new POD is followed within three workdays by a RIF resulting in the employee's separation before they are required to report for duty at the new location, the official POD in effect immediately before the assignment remains the official POD through the date of separation.

(11) If an employee is approved to relocate on a permanent basis, a change to the official POD must be processed in accordance with procedures listed in the OPM Guide to Processing Personnel Actions (GPPA) (see EO Alert 300-56 athttp://hco.web.irs.gov/recruitstaff/ETS/EmploymentOps/EOGuidanceMatrix.shtml).

(12) An employee's official POD is documented on their SF-50, Notification of Personnel Action, in blocks 38 and 39.

(1) For information on computing hourly, daily, weekly, and biweekly rates, see 5 CFR 531.607. Tables listing hourly locality rates can be found at https://www.opm.gov/policy-data-oversight/pay-leave/salaries-wages/2020/general-schedule/.

(1) An employee must receive the greatest of the following rates of pay, as applicable:

1. The scheduled annual rate of pay;

2. A locality rate under this section;

3. A special rate; or

4. A retained rate.

(2) The employee is entitled to the higher of the locality rate or the special rate. When an employee's locality rate exceeds a corresponding special rate, the employee's entitlement to the special rate is terminated.

(3) Employees on a retained rate of pay (i.e., pay retention) are not entitled to an additional locality payment. Any applicable locality rate is already included in the retained rate.

(1) When an employee's official POD is changed to a different locality pay area, the employee's entitlement to the new locality rate begins on the effective date of the change in official POD.

(2) The geographic conversion rule applies when an employee becomes covered by one or more pay schedules because the employee is assigned to an official POD in a different locality area. The employee's pay must be converted to the applicable pay schedule in the new location before applying any other pay action (other than a general pay adjustment).

(1) A locality rate is considered to be an employee's rate of basic pay for the purpose of computing or applying:

1. Retirement deductions, contributions, and benefits;

2. Life insurance premiums and benefits;

3. Premium pay;

4. Severance pay;

5. Advances in pay;

6. Post differentials and danger pay allowances;

7. Recruitment, relocation, and retention incentives, and extended assignment incentives;

8. Performance-based cash awards, when those awards are computed as a percentage of an employee's rate of basic pay;

9. GS pay administration provisions (e.g., GS promotion provisions);

10. Pay administration provisions for prevailing rate employees which consider rates of basic pay under the GS pay system in setting pay;

11. Lump-sum payments for accumulated annual leave; and

12. Grade/band and pay retention, to the extent provided by 5 CFR Part 536, Grade and Pay Retention.

(1) A locality rate may be paid only for those hours for which an employee is in a pay status.

(2) Payment of, or an increase in, a locality rate is not an equivalent increase in pay.

(3) A locality rate is included in an employee's total compensation, as defined in 5 CFR 551.511(b), and straight-time rate of pay, as defined in 5 CFR 551.512(b), for the purpose of overtime pay computations under the Fair Labor Standards Act.

(4) A reduction or termination of a locality rate is not an adverse action and is not the basis for pay retention under 5 CFR Part 536, Grade and Pay Retention.