6.550.1. Pay Administration - General

(1) Sections pertaining to severance pay (formerly IRM 6.550.1.4) have been removed from this IRM and placed in new IRM 6.550.3, Severance Pay. The remaining sections apply to general pay administration policies and regulations under 5 CFR Part 550 that are applicable to all employees.

(1) Laws: U.S. Code (USC) at http://uscode.house.gov/browse.xhtml

1. Title 5, Government Organization and Employees

• 5514 - Installment deduction for indebtedness to the United States

• 5525 - Allotment and assignment of pay

• 5533 - Dual pay from more than one position; limitations; exceptions

• 5550a - Compensatory time off for religious observances

• 5551 - Lump-sum payment for accumulated and accrued leave on separation

• 5552 - Lump-sum payment for accumulated and accrued leave on entering active duty; election

• 5596 - Back pay due to unjustified personnel action

• 6306 - Annual leave; refund of lump-sum payment; recredit of annual leave

2. Title 31, Money and Finance

• 3702 - Authority to settle claims

(2) Regulations: Title 5, Code of Federal Regulations (CFR) at https://www.ecfr.gov/current/title-5/chapter-I/subchapter-B,

1. Part 550 - Pay Administration (General)

• Subpart C - Allotments From Federal Employees

• Subpart E - Pay From More Than One Position

• Subpart H - Back Pay

• Subpart J - Compensatory Time Off for Religious Observances

• Subpart K - Collection by Offset From Indebted Government Employees

• Subpart L - Lump-Sum Payment for Accumulated and Accrued Annual Leave

2. Part 178 - Procedures for Settling Claims

• Subpart A - Administrative Claims - Compensation and Leave, Deceased Employees' Accounts and Proceeds of Canceled Checks for Veterans' Benefits Payable to Deceased Beneficiaries

(3) Delegation of Authority: Delegation Order 6-23, Delegations of Authority to Accomplish Pay Administration. (See IRM 1.2.2.7.13.)

(1) The Human Capital Officer is the executive responsible for this IRM and overall Servicewide policy for pay administration.

(2) The HCO, OHRS, P&A is responsible for developing, maintaining and publishing content in this IRM.

(3) The HCO, OHRO, HR Shared Services (HRSS) is responsible for administering the payment of salaries covered in this IRM, offset procedures, and providing systems, tools, and all related instructions to accomplish proper recordation of time off for religious observances on official source documents from which an employee is paid (such as, time and attendance (T&A) documents, personnel action requests (PAR)).

(4) All managers are responsible for ensuring government resources are used efficiently and effectively, with minimum potential for waste, fraud, and mismanagement. They must administer procedures covered in this IRM with integrity and in compliance with applicable laws, regulations, and policies.

(5) Employees are responsible for ensuring their time and attendance is entered into the T&A system accurately, reviewing their Statement of Earnings and Leave and SF-50s, and immediately notifying their manager of any discrepancies.

(1) This IRM provides policy guidance on general pay administration for the IRS. The P&A Office gauges the effectiveness of this 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 P&A Office develops policies, materials and programs to increase Servicewide awareness and understanding of general pay administration. Additionally, P&A collaborates with other HCO organizations and Servicewide stakeholders to support education and outreach activities as they relate to general pay administration.

(1) Definitions are provided in each subsection as relevant.

(1) IRS Source at: https://irssource.web.irs.gov/Pages/Home.aspx

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

(1) Under the provisions at 5 USC 5525 and 5 CFR 550, subpart C, employees must be allowed to make payroll allotments for the following purposes:

1. Dues to a labor organization under 5 USC 7115

2. Dues to an association of management officials and/or supervisors under 5 CFR 550.331

3. Charitable contributions to Combined Federal Campaign under 5 CFR 550.341

4. Income tax withholding under 5 CFR 550.351

5. Allotments to an employee's personal account(s) at a financial organization

6. Child support and/or alimony payments under 5 CFR 550.361

7. A flexible benefit plan established by OPM under 26 USC section 125

8. To pay an employee's share of Federal Employees' Health Benefits premiums, consistent with 5 CFR 892.301

(2) In addition to the allotments in (1), employees may be permitted to make an allotment for legal purposes deemed appropriate by the head of the agency (or designee).

(1) 5 CFR 550.312 defines the limitations and requirements for making such allotments.

(1) This guidance applies to all IRS employees who make back pay claims including former employees.

(1) The definitions at 5 CFR 550.803 apply for this section.

(2) Appropriate authority: an entity having authority in the case at hand to correct or direct the correction of an unjustified or unwarranted personnel action, including:

1. A court;

2. The Comptroller General;

3. The Office of Personnel Management;

4. The Merit Systems Protection Board;

5. The Equal Employment Opportunity Commission;

6. The Federal Labor Relations Authority and its General Counsel;

7. The Foreign Service Labor Relations Board;

8. The Foreign Service Grievance Board;

9. An arbitrator in a binding arbitration case; and

10. The head of the employing agency or another official of the employing agency to whom such authority is delegated.

(3) Employee: a person holding a position in or under an Executive agency when used to describe an individual making a back pay claim. It also may mean a former employee.

(4) Pay, allowances, and differentials: pay, leave, and other monetary employment benefits to which an employee is entitled by statute or regulation and which are payable by the employing agency to an employee during periods of federal employment. (See 5 CFR 550.803 for full definition.)

(5) Unjustified or unwarranted personnel action: an act of commission or an act of omission (that is, failure to take an action or confer a benefit) that an appropriate authority subsequently determines, based on substantive or procedural defects, to have been unjustified or unwarranted under applicable law, executive order, rule, regulation or mandatory personnel policy established by an agency or through a collective bargaining agreement. Such actions include personnel actions and pay actions (alone or in combination).

(1) When an appropriate authority has determined that an employee was affected by an unjustified or unwarranted personnel action, the employee shall be entitled to back pay only if the unjustified or unwarranted personnel action resulted in the withdrawal, reduction, or denial of all or part of the pay, allowances, and differentials to which the employee would otherwise have been entitled. The criteria for such determinations are found at 5 CFR 550.804.

(2) The requirement for a timely appeal is met when:

1. The employee or their representative initiates an appeal or grievance under an appeal or grievance system, including appeal or grievance procedures included in a collective bargaining agreement, a claim against the Government of the United States, a discrimination complaint, or an unfair labor practice charge; and

2. An appropriate authority accepts that appeal, grievance, claim, complaint, or charge as timely filed.

(3) The requirement for an “administrative determination” is met when an appropriate authority determines, in writing, that an employee has been affected by an unjustified or unwarranted personnel action that resulted in the withdrawal, reduction, or denial of all or part of the pay, allowances, and differentials otherwise due the employee.

(4) An unwarranted or unjustified personnel action is corrected when the appropriate authority, consistent with law, executive order, rule, regulation or mandatory personnel policy established by the IRS or through a collective bargaining agreement, after a review, corrects or directs the correction of the unjustified or unwarranted personnel action that resulted in the loss of pay, allowances, and differentials otherwise due to the employee.

1. The pay, allowance, and differentials paid as back pay (including payments made under any grievance or arbitration decision or any settlement agreement) may not exceed that authorized by any applicable law, rule, regulation, or collective bargaining agreement, including any applicable statute of limitations.

2. The IRS may not authorize any pay, allowances, and differentials under this subpart in any case for a period beginning more than six years before the date of the filing of a timely appeal, or, absent such filing, the date of the administrative determination that the employee is entitled to back pay, consistent with 31 USC 3702(b). (See also 5 CFR 178.104 and 5 CFR 550.804(e).)

3. For back pay claims under the Fair Labor Standards Act (FLSA), an agency must apply the two-year statute of limitations (three years for willful violations) in 29 USC 255a. (See also 5 CFR 178.104,5 CFR 550.804(e) and 5 CFR 551.702.)

(1) When an appropriate authority corrects or directs the correction of an unjustified or unwarranted personnel action that resulted in the withdrawal, reduction, or denial of all or part of the pay, allowances, and differentials otherwise due an employee:

1. The employee is deemed to have performed service for the IRS during the period covered by the corrective action; and

2. The employee is entitled to the pay, allowances, and differentials that would have received if the unjustified or unwarranted personnel action had not occurred.

(2) An employee shall not be granted more pay, allowances, and differentials than what would have received if the unjustified or unwarranted personnel action had not occurred.

(3) Except as described in (4) below, the back pay computation may not include any period during which the employee:

1. Was not ready, willing, and able to perform their duties because of an incapacitating illness or injury; or

2. Was unavailable for the performance of their duties for reasons other than those related to, or caused by, the unjustified or unwarranted personnel action.

(4) The IRS will grant, upon request of the employee, any sick or annual leave available to the employee for a period of incapacitation resulting from illness or injury.

(5) HCO, HRSS calculates the net amount of back pay payable to an employee, minus the appropriate offsets and deductions in accordance with regulations in 5 CFR 550.805.

(6) When computing the amount of back pay, interest will be included in the amount from which deductions for erroneous payments are made, as required by 5 CFR 550.805(f).

(7) Annual leave restored to an employee in excess of 240 hours (or other maximum leave accumulation as applicable to the employee) is credited to a separate leave account. The employee must schedule and use restored annual leave as provided by 5 CFR 550.805(g)(1) and (2).

(8) An employee’s Thrift Savings Plan account must be corrected consistent with the Federal Retirement Thrift Investment Board regulations. (See 5 CFR 1605 and 5 CFR 1606.)

(1) HCO, HRSS calculates the amount of interest due under 5 USC 5596, in accordance with regulations in 5 CFR 550.806.

(1) An employee, or their personal representative, may request payment of reasonable attorney fees related to an unjustified or unwarranted personnel action that resulted in the withdrawal, reduction, or denial of all or part of the pay, allowances, and differentials otherwise due the employee. Such a request may be presented only to the appropriate authority that corrected or directed the correction of the unjustified or unwarranted personnel action. However, if the finding that provides the basis for a request for payment of reasonable attorney fees is made on appeal from a decision by an appropriate authority other than the employing agency, the employee or the employee’s personal representative must present the request to the appropriate authority from which the appeal was taken.

(2) The appropriate authority to which such a request is presented will provide an opportunity for the employing agency to respond to a request for payment of reasonable attorney fees.

(3) Except as provided in (5) below, when an appropriate authority corrects or directs the correction of an unjustified or unwarranted personnel action that resulted in the withdrawal, reduction, or denial of all or part of the pay, allowances, and differentials otherwise due the employee, the payment of reasonable attorney fees shall be deemed to be warranted only if:

1. The payment is in the interest of justice, as determined by the appropriate authority in accordance with standards established by the Merit Systems Protection Board under 5 USC 7701(g); and

2. There is a specific finding by the appropriate authority setting forth the reasons such payment is in the interest of justice.

(4) When an appropriate authority determines that such payment is warranted, IRS will pay attorney fees in an amount determined to be reasonable by the appropriate authority. When an appropriate authority determines that such payment is not warranted, no such payment will be made.

(5) When a determination is made by an appropriate authority that an employee has been affected by an unjustified or unwarranted personnel action based on a finding of discrimination prohibited under 5 USC 2302(b)(1), the payment of attorney fees will be made in accordance with the standards prescribed under the Civil Rights Act of 1964, as amended (see 42 USC 2000e-5(k)).

(6) The payment of attorney fees is limited to the services of members of the Bar and for the services of legal professionals assisting members of the Bar. No payment may be allowed for the services of any employee of the federal government, except as provided in 18 USC 205, relating to the activities of officers and employees in matters affecting the government.

(7) The determination concerning whether the payment of attorney fees is in the interest of justice and the amount of any such payment is subject to review or appeal only if provided for by statute or regulation.

(1) Nothing in 5 USC 5596 or 5 CFR part 550, subpart H, shall be construed as authorizing the setting aside of an otherwise proper promotion by a selecting official from a group of properly ranked and certified candidates.

(1) Under provisions of 5 USC 5550a and 5 CFR 550, subpart J, an IRS employee whose personal religious beliefs require absence from work during certain periods may elect to work additional hours to make up for absences to meet those religious requirements. Employees may also request annual leave, leave without pay (LWOP), previously earned compensatory time off earned in lieu of overtime, or previously earned credit hours. For a change to accommodate an ongoing religious requirement see Religious Conviction in IRM 6.610.1.

(2) The pay provisions for overtime work in 5 CFR 550, subpart A, and the Fair Labor Standards Act do not apply to work performed by an employee for this purpose.

(3) Managers should generally approve employee requests to use and/or earn RCT, unless:

1. The employee’s presence on the job at the time of the absence is deemed necessary; or

2. No reasonable opportunities are foreseen within (13 pay periods) during which the employee will be able to repay the compensatory time; or

3. The employee has a current balance of RCT previously earned and has yet to scheduled that time off (in no case will the accumulation of RCT exceed 80 hours unless special circumstances are present); or

4. The employee has an outstanding negative balance of RCT and has not yet begun to repay it consistent with the repayment plan.

(4) An employee may only accumulate the amount of RCT needed to meet their specific religious obligations. It cannot be accumulated in excess of what is required for use nor can it be used to supplement annual leave or circumvent the payment of credit hours, overtime, or compensatory time off in lieu of overtime.

(5) Advanced RCT balances (outstanding negative balances) should be repaid before approving employees’ voluntary requests to earn overtime, compensatory time, or credit hours.

(1) Requirements for requesting and approving RCT are as follows:

1. Employees must submit a written request to their manager and obtain prior approval to take compensatory time off for a specific religious observance. Employees may email the request or use Form 14451, Request to Earn and Use Religious Compensatory Time (RCT), to notify their manager. Notification should take place 15 calendar days in advance, whenever possible, and will include the following information:

• The name and/or description of the religious observance for which the absence is being requested;

• Date(s) and time(s) the employee must abstain from work due to the religious observance; and

• The date(s) and time(s) the employee plans to work additional hours to earn RCT or to make up for the absence (repayment plan).

2. The employee and manager must establish a repayment plan, not to exceed 13 pay periods from the date of the planned RCT use, documenting how the RCT will either be worked in advance of the requested time off or worked after the time off is taken. The repayment plan must show the date(s) and time(s) the employee is requesting to be absent for the religious observance(s) and the date(s) and time(s) the employee will work to repay the RCT used.

   Note: An employee is permitted to accumulate only the hours of work needed for anticipated absences from work for religious observances that are planned within 13 pay periods. If the date(s) of the requested absence(s) for the religious observance is not identified, the manager should disapprove the request to work RCT.

3. When RCT is advanced to an employee, the total amount must be paid back within 13 pay periods, which begins the first pay period after the date on which the RCT was used. If the RCT is not repaid within 13 pay periods, the outstanding time will be charged in the following order as applicable: annual leave, credit hours, compensatory time off in lieu of overtime, compensatory time off for travel, or time off awards. If there is a remaining negative balance, the outstanding time will be converted to LWOP, resulting in a debt subject to the debt collection procedures.

4. Managers will monitor the repayment plan to ensure that the employee is repaying the time as agreed.

5. In the event that an adjustment to the dates and times of planned additional work hours is required due to unforeseen circumstances, the employee must submit for approval a revised schedule to reflect those changes. Under no circumstance will the repayment plan be extended beyond 13 pay periods.

(2) RCT may be earned and used in 15-minute increments.

(3) First-level managers will maintain records of RCT earned and used.

(4) If advanced RCT is not repaid by the date the employee separates, the outstanding time will be charged in the following order as applicable: annual leave, credit hours, compensatory time off in lieu of overtime, compensatory time off for travel, or time-off awards. If there is a remaining negative balance, an employee must be charged LWOP, resulting in a debt and withheld from any final payments to the separating employee or subject to other debt collection procedures.

(5) When an employee separates from the Service or transfers to another agency/department with unused RCT to their credit, the employee will be paid for the unused RCT at the rate of basic pay in effect at the time the extra hours of work were performed. This should be a rare instance in that employees should not be allowed to accrue RCT without a specific time frame to use it as noted in (1)(b) above.

(6) Employees who take advanced RCT for religious observances may subsequently charge that time to annual leave, credit hours, compensatory time off in lieu of overtime, compensatory time off for travel, or time off awards. However, employees who take annual leave, credit hours, compensatory time off in lieu of overtime, compensatory time off for travel, time off awards or LWOP for religious holidays may not subsequently change that to RCT.