6.530.1  Aggregate Limitations on Pay and Special Rate Schedules

6.530.1.1  (01-26-2010)
Overview

  1. Unless otherwise indicated, the policies, authorities, procedures, and instructions throughout IRM Part 6, Chapter 530, Aggregate Limitations on Pay and Special Rate Schedules, apply to all IRS organizations and employees. This guidance must be read and interpreted in accordance with pertinent law (5 U.S.C.), Governmentwide regulation (5 CFR), the Treasury Human Resources Issuance System and Comptroller General and Office of Personnel Management (OPM) decisions, as applicable. For employees in bargaining units covered by negotiated agreements, appropriate contract provisions relating to subjects in this Chapter should also be reviewed. Should any of these instructions conflict with a provision of a negotiated agreement, the agreement will prevail; however, an agreement will not prevail over law. No IRS negotiated agreement may modify Government statute or regulation, or Treasury mandates.

  2. As required, this guidance will be supplemented periodically by interim policy guidance from the IRS Human Capital Office (HCO).

  3. For additional pay-setting guidance on employees moving into paybanded positions (IR pay plan), reference the Pay Administration guidance on the Payband Resource Center for Managers web page at http://hco.web.irs.gov/apps/payband/index/htm.

  4. The material in the Chapter is generally organized consistent with the order of the regulations contained in 5 CFR, beginning with 5 CFR 530.

6.530.1.2  (01-26-2010)
Aggregate Limitation on Pay

  1. These instructions implement 5 U.S.C. 5307, 9502, and 9505 and 5 CFR part 530, subpart B, which limit an employee's aggregate compensation to the rate payable for Level I of the Executive Schedule at the end of the calendar year. See https://www.opm.gov/oca/pay/HTML/02maxgs2.asp for maximum general schedule pay limitations.

  2. The definitions used in these instructions are the same as the definitions at 5 CFR 530.202.

6.530.1.2.1  (01-26-2010)
Administration of the Aggregate Limitation on Pay

  1. Within the IRS, the aggregate limitation will be administered in accordance with the provisions at 5 CFR 530.203. Except as indicated in paragraphs (2), (3), and (4) of this section, an employee of the IRS may not receive any allowance, differential, bonus, incentive, award, or other similar cash payment under 5 U.S.C. in any calendar year to the extent such pay, in combination with basic pay, would cause the aggregate compensation of the employee to exceed the rate for Level I of the Executive Schedule at the end of the calendar year.

  2. Employees in SES positions covered under a performance appraisal system that has been certified under 5 CFR part 430, are subject to a limitation on aggregate compensation equal to the total annual compensation payable to the Vice President under 3 U.S.C.104 at the end of the calendar year.

  3. The 5 U.S.C. chapter 95 covers Personnel Flexibilities Relating to the IRS, and until July 22, 2013, the Secretary of the Treasury may under:

    1. Section 9502(a) request authority for OPM to provide critical pay for one or more position(s) to be paid up to the salary provided under 3 U.S.C. 104;

    2. Section 9503(a) set the pay of an executive under the streamlined critical pay authority appointed to a critical pay position at any rate up to the salary set in accordance with 3 U.S.C. 104; and

    3. Section 9505(e) pay a performance bonus award to an IRS member of the SES to the extent that the executive's total annual compensation does not exceed the total annual compensation payable to the Vice President (3 U.S.C. 104).

  4. The aggregate compensation of an employee receiving any payment under 5 U.S.C. 9502, 9503, and 9505 may not exceed the rate of pay determined under 3 U.S.C. 104.

  5. The aggregate limitation on pay does not include the annuity of a re-employed annuitant.

6.530.1.2.2  (01-26-2010)
Payment of Excess Amounts

  1. Amounts in excess of limitations described above shall be paid to the employee in a lump sum at the beginning of the following calendar year as provided at 5 CFR 530.204. This lump sum payment is considered as part of the employee's aggregate compensation for the new calendar year.

  2. If, in a new calendar year, any lump sum payment causes an employee's estimated aggregated compensation to exceed the applicable aggregate limitation for the current calendar year, IRS must consider only the employee's rate of basic pay (includes locality) expected to be paid to determine the extent of the lump sum payment that may be paid. An agency must defer all other payments in order to pay as much of the lump sum amount as possible. Any deferred payments (including any portion of the lump sum excess amount that was not payable) are payable at the beginning of the next calendar year.

  3. Exceptions to the calendar year deferment:

    1. Death of an employee; or

    2. Separation from Federal service following a 30-day break in service. If an individual is reemployed within the same calendar year, the lump sum payment is included in the aggregate compensation for the year.

6.530.1.2.3  (01-26-2010)
Records

  1. Agency-Wide Shared Services, Employee Support Services, Payroll-Personnel Systems, shall maintain records to facilitate the administration of the aggregate limitation on pay. Should an employee to whom this limitation applies transfer to another bureau or agency, the records applicable to the employee shall be made available to the new employer.

6.530.1.3  (01-26-2010)
Special Rate Schedules

  1. In the IRS, special rates apply to GL, GS, and GM positions, if applicable.

  2. As provided in 5 CFR 530, subpart C, this section contains rules for determining an employee's rate of pay when a special rate schedule is established, increased, decreased, or discontinued, or when conditions for coverage under a special rate schedule are changed. This section of the IRM does not contain all the paysetting rules that apply to employees covered by special rates.

  3. Pay actions involving promotions, reassignments, or grade and pay retention can be found in the appropriate IRM.

6.530.1.3.1  (01-26-2010)
Authority

  1. As provided under 5 U.S.C. 5305, OPM establishes, and the IRS is authorized to pay, salary rates established under this authority, Executive Order 12748, and 5 CFR part 530, subpart C.

6.530.1.3.2  (01-26-2010)
Definitions

  1. The terms used in this section are defined in 5 CFR 530.302.

6.530.1.3.3  (01-26-2010)
Coverage

  1. An employee's coverage under a special rate schedule is subject to conditions established by OPM and may be based on occupation, grade, employing agency, geographic location, or other similar factors.

  2. IRS must pay the applicable special rate to any employee who meets the coverage criteria established by OPM. The Commissioner can request an exception from the Department of the Treasury to exclude a category of employees within the Service from coverage under a proposed or existing special rate schedule.

  3. An employee covered by a special rate schedule will not be paid a special rate if he or she is entitled to a higher locality or retained rate.

6.530.1.3.4  (01-26-2010)
Establishing or Increasing Special Rates

  1. OPM considers the circumstances and factors listed at 5 CFR 530.304 and 530.306 when evaluating the need for special rates.

  2. OPM may increase the minimum rates of basic pay to a category of employees in order to address significant recruitment or retention difficulties.

  3. A minimum special rate may not exceed 30 percent of the maximum underlying rate for the grade, and the maximum rate may not exceed Level IV of the Executive Schedule.

6.530.1.3.5  (01-26-2010)
Agency Requests for New or Increased Special Rates

  1. The IRS may request, at any time, that a special rate schedule be established or adjusted through the Department of the Treasury as provided under 5 CFR 530.305. Business units should contact the HCO, Workforce Progression and Management (WPM) Division, Compensation Branch, regarding the initiation of such requests.

  2. The development of a request for a special rate schedule requires extensive documentation of activity over an extended period of time, usually 3 to 5 years. Previous and current vacancies, statistics regarding offers of employment, and retention and turnover rates are included. The effect of the staffing problem on the organization's mission and efforts to resolve staffing problems by other non-pay methods (e.g., training programs, aggressive recruitment) also need to be documented in the request. OPM may require that the request include a survey of prevailing non-Federal pay rates in the relevant labor market.

  3. The HCO, WPM Division, Compensation Branch staff, will provide guidance to the business units to develop the necessary documentation for a request to change, establish, or eliminate a special rate.

  4. A completed special salary rate request must be approved by the Business Unit Commissioner or equivalent to authorize the request and funding while certifying that the requested special rates are considered necessary to ensure staffing adequate to the accomplishment of the IRS Mission. The request is then forwarded to the IRS Human Capital Officer for concurrence and submission to the Department of the Treasury.

6.530.1.3.6  (01-26-2010)
Evaluating Agency Requests for New or Increased Special Rates

  1. OPM will evaluate agency requests for new or increased special rates on the basis of criteria found in 5 CFR 530.306.

6.530.1.3.7  (01-26-2010)
OPM Review and Adjustment of Special Rate Schedules

  1. OPM may review an established special rate schedule at any time, although typically on an annual basis, to determine whether that schedule should be increased, decreased, or discontinued. The OPM will request information for the review directly or designate a lead agency.

  2. At the time of an annual pay adjustment, OPM makes a separate determination whether to apply the same adjustment as for other GS employees or increase, decrease, or discontinue a special rate supplement.

  3. If OPM determines that a special rate schedule, or a rate range within a special rate schedule, is no longer needed, it may discontinue that schedule or rate range.

  4. The HCO, WPM Division, Compensation Branch, will coordinate any requests for information.

6.530.1.3.8  (01-26-2010)
Treatment of Special Rate as Rate of Basic Pay

  1. Unless otherwise specified under another legal authority, a special rate is considered to be a rate of basic pay for the same purposes for which a locality rate is considered to be a "rate of basic pay" ; i.e., retirement and life insurance deductions and benefits; premium pay; severance pay; recruitment, relocation, and retention incentives; cash awards; grade and pay retention; GS promotion provisions; and for other purposes stated in 5 CFR 531.610.

  2. Per 5 CFR 530.308, special rates are not considered part of basic pay in computing non-foreign area cost-of-living adjustments and post differentials, foreign area post differentials, and danger pay allowances.

  3. See 5 CFR 530.308(d) when setting pay for employees moving from special rate positions to prevailing rate positions.

  4. Special rates may apply to an entire special rate schedule or to a portion of the schedule. When a locality rate exceeds a special rate schedule or a portion of that schedule, the special rate is terminated. Positions may have a special rate and a locality rate as the highest applicable rate range. This is commonly referred to as a hybrid schedule or range (e.g., GS-5/1 to GS-5/4 covered by special rate and GS-5/5 and above covered by locality).

6.530.1.3.9  (01-26-2010)
Miscellaneous Provisions

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

  2. A pay increase caused by an employee becoming entitled to a new or higher special rate supplement is not considered an equivalent increase in pay (5 CFR 531.407(c)).

  3. A special rate is included in an employee's total remuneration, 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. The reduction or termination of an employee's special rate supplement, in accordance with the requirements of 5 CFR 530, subpart C (includes a change in worksite where a lower or no special rate exists), is not an adverse action under 5 CFR 752.

6.530.1.3.10  (01-26-2010)
Setting Pay When a Special Rate Schedule is Newly Established, Increased, or Decreased

  1. The following rules apply when the employee's current position is affected by a new special rate schedule; they do not cover changes in special rate entitlements based on a change in the employee's position or official worksite (see 5 CFR parts 531 and 536).

  2. These rules are considered general pay adjustments for the purpose of dealing with the order of precedence for processing simultaneous pay actions.

  3. When special rate schedules are established or increased, the rate of basic pay shall be set at the step of the new or increased special rate schedule that corresponds to the employee's existing step of the grade of his/her position of record.

  4. The rate of pay for an employee on pay retention shall be increased by 50 percent of the increase provided to the maximum step of the highest applicable rate range of the grade of the employee's position of record, as stated in 5 CFR 536.305.

  5. When a special rate schedule for a position is discontinued or decreased, pay is set as follows:

    1. If the employee's rate of basic pay is equal to one of the steps in the highest applicable rate range (includes locality or special rate supplement), pay is set at that step.

    2. If the employee's rate of basic pay is between two steps in the highest applicable rate range, pay is set at the higher of the two steps.

    3. If the employee's rate of basic pay exceeds the maximum rate of the highest applicable rate range, pay remains at its current rate, and the employee is entitled to pay retention under 5 CFR part 536.301.

  6. If the worksite of an employee changes to a worksite with no special rate or a lower special rate, no pay retention will apply. No exceptions are available (5 CFR 536.303(a)).


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