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Rule2025-22738

Recruitment and Relocation Incentive Waivers

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Published

December 15, 2025

Effective

February 13, 2026

Issuing agencies

Personnel Management Office

Abstract

The Office of Personnel Management (OPM) is issuing a final rule to expand the authority to approve waivers of the normal payment limitations on recruitment and relocation incentives. An expansion of the waiver approval authority provides agencies with access to higher payment limitations for these flexibilities without requesting approval from OPM. In addition, this final rule gives agencies flexibility to set the length of the required service period for recruitment incentives to a period less than 6 months but not more than 4 years, which aligns the service requirements for recruitment incentives with those for relocation incentives.

Full Text

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<title>Federal Register, Volume 90 Issue 238 (Monday, December 15, 2025)</title>
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[Federal Register Volume 90, Number 238 (Monday, December 15, 2025)]
[Rules and Regulations]
[Pages 57867-57878]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-22738]

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Rules and Regulations
Federal Register
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The Code of Federal Regulations is sold by the Superintendent of Documents.

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Federal Register / Vol. 90, No. 238 / Monday, December 15, 2025 /
Rules and Regulations

[[Page 57867]]

OFFICE OF PERSONNEL MANAGEMENT

5 CFR Part 575

[Docket ID: OPM-2023-0027]
RIN 3206-AO36

Recruitment and Relocation Incentive Waivers

AGENCY: Office of Personnel Management.

ACTION: Final rule.

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SUMMARY: The Office of Personnel Management (OPM) is issuing a final
rule to expand the authority to approve waivers of the normal payment
limitations on recruitment and relocation incentives. An expansion of
the waiver approval authority provides agencies with access to higher
payment limitations for these flexibilities without requesting approval
from OPM. In addition, this final rule gives agencies flexibility to
set the length of the required service period for recruitment
incentives to a period less than 6 months but not more than 4 years,
which aligns the service requirements for recruitment incentives with
those for relocation incentives.

DATES: This final rule is effective February 13, 2026.

FOR FURTHER INFORMATION CONTACT: Gene Holson by telephone at (202) 606-
2858 or by email at <a href="/cdn-cgi/l/email-protection#86f6e7fff6e9eaefe5ffc6e9f6eba8e1e9f0"><span class="__cf_email__" data-cfemail="cabaabb3baa5a6a3a9b38aa5baa7e4ada5bc">[email&#160;protected]</span></a>.

SUPPLEMENTARY INFORMATION:

Overview

On November 15, 2023, OPM issued a proposed rule in the Federal
Register at 88 FR 78243 \1\ to expand the authority to approve waivers
of the normal payment limitations on recruitment and relocation
incentives. In addition, the rule proposed to give agencies flexibility
to set the length of the required service period for recruitment
incentives to a period less than 6 months but not more than 4 years,
which would align the service requirements for recruitment incentives
with those for relocation incentives and provide agencies with
additional flexibility in taking advantage of this incentive as a
recruitment tool. Finally, OPM proposed revising several sections to
use gender neutral language.
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\1\ See 88 FR 78243 (November 15, 2023).
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The 60-day comment period on the proposed rule ended on January 16,
2024. After consideration of public comments, OPM is issuing a final
rule that adopts the proposed changes to the recruitment and relocation
incentive regulations except OPM is not revising any sections to use
gender neutral language. This final rule is effective February 13,
2026.

Background

Section 101 of the Federal Workforce Flexibility Act of 2004 (Act)
(Pub. L. 108-411, October 30, 2004) amended 5 U.S.C. 5753 and 5754 by
providing enhanced authorities to pay recruitment, relocation, and
retention incentives. Congress originally provided the authority to pay
such incentives under the Federal Employees Pay Comparability Act of
1990 (Pub. L. 101-509, November 5, 1990). In the 2004 Act, Congress
expanded the circumstances under which these flexibilities may be paid
and enabled agencies to make the payments in more ways to enhance their
desired effect in assisting Federal agencies' efforts to recruit and
retain the kind of workforce needed in the 21st century. OPM's
regulations at 5 CFR part 575, subparts A, B, and C, implement these
authorities.

Recruitment Incentives

Under 5 U.S.C. 5753 and 5 CFR part 575, subpart A, an agency may
pay a recruitment incentive to an employee newly appointed to a General
Schedule or other covered position in the Federal service when the
agency determines the position is likely to be difficult to fill in the
absence of an incentive. (See 5 CFR 575.105(a).) The employee must sign
an agreement to fulfill a period of service with the agency. A
recruitment incentive may not exceed 25 percent of the employee's
annual rate of basic pay in effect at the beginning of the service
period, multiplied by the number of years (including fractions of a
year) in the service period (not to exceed 4 years). A recruitment
incentive may be paid as an initial lump-sum payment at the beginning
of the service period, in installments throughout the service period,
as a final lump-sum payment upon completion of the service period, or
in a combination of these methods. (See 5 CFR 575.109.) OPM has
provided a fact sheet with additional information on recruitment
incentives.\2\ The fact sheet will be updated to reflect the changes
made by this final rule before the effective date.
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\2\ Office of Personnel Management. ``Fact Sheet: Recruitment
Incentives.'' <a href="https://www.opm.gov/policy-data-oversight/pay-leave/recruitment-relocation-retention-incentives/fact-sheets/recruitment-incentives/">https://www.opm.gov/policy-data-oversight/pay-leave/recruitment-relocation-retention-incentives/fact-sheets/recruitment-incentives/</a>.
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Relocation Incentives

Under 5 U.S.C. 5753 and 5 CFR part 575, subpart B, an agency may
pay a relocation incentive to a current employee who must relocate to
accept a General Schedule or other covered position in a different
geographic area (permanently or temporarily) if the agency determines
that the position is likely be difficult to fill in the absence of an
incentive.\3\ (See 5 CFR 575.205(a).) The employee must sign an
agreement to fulfill a period of service with the agency. Like a
recruitment incentive, a relocation incentive may not exceed 25 percent
of the employee's annual rate of basic pay in effect at the beginning
of the service period multiplied by the number of years (including
fractions of a year) in the service period (not to exceed 4 years). The
incentive may be paid as an initial lump-sum payment at the beginning
of the service period, in installments throughout the service period,
as a final lump-sum payment upon completion of the service period, or
in a combination of these methods. (See 5 CFR 575.209.) OPM has
provided a fact sheet with additional information on relocation
incentives.\4\ The fact sheet will be updated to reflect the changes
made by this final rule before the effective date.
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\3\ Relocation incentives under 5 U.S.C. 5753 and 5 CFR part
575, subpart B are distinct from relocation allowances under the
General Services Administration's Federal Travel Regulation. (See 41
CFR part 302.)
\4\ Office of Personnel Management. ``Fact Sheet: Relocation
Incentives.'' <a href="https://www.opm.gov/policy-data-oversight/pay-leave/recruitment-relocation-retention-incentives/fact-sheets/relocation-incentives/">https://www.opm.gov/policy-data-oversight/pay-leave/recruitment-relocation-retention-incentives/fact-sheets/relocation-incentives/</a>.

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[[Page 57868]]

Amendments to Recruitment and Relocation Incentive Regulations

Recruitment and Relocation Incentive Waivers

As described the ``Background'' section above, agencies have the
authority to approve a recruitment or relocation incentive for payments
of up to 25 percent of an employee's annual rate of basic pay times the
number of years in a service agreement (not to exceed 4 years or 100
percent of annual basic pay). However, a waiver is required when an
agency would like to exceed this payment limit to make larger payments
over shorter service agreement lengths. Previously, agencies were
required to submit a waiver request to OPM if they wanted to offer a
recruitment or relocation incentive in excess of the normal payment
limitations. For example, a waiver has not been required for an agency
to pay a recruitment or relocation incentive of up to 25 percent of
annual basic pay for a 1-year service agreement, 50 percent of basic
pay for a 2-year service agreement, or 100 percent of basic pay for a
4-year service agreement. However, an agency has had to seek a waiver
from OPM to pay a recruitment or relocation incentive of 50 percent of
annual basic pay for a 1-year service agreement or 100 percent of
annual basic pay for a 2-year service agreement. OPM has provided a
fact sheet on calculating maximum recruitment and relocation incentives
for service periods of various lengths.\5\ The fact sheet will be
updated to reflect the changes made by this final rule before the
effective date.
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\5\ Office of Personnel Management. ``Fact Sheet: Calculating
Maximum Recruitment and Relocation Incentives for Service Periods of
Various Lengths.'' <a href="https://www.opm.gov/policy-data-oversight/pay-leave/recruitment-relocation-retention-incentives/fact-sheets/calculating-maximum-recruitment-and-relocation-incentives-for-service-periods-of-various-lengths/">https://www.opm.gov/policy-data-oversight/pay-leave/recruitment-relocation-retention-incentives/fact-sheets/calculating-maximum-recruitment-and-relocation-incentives-for-service-periods-of-various-lengths/</a>.
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Upon the effective date of this final rule, agencies will have the
authority to waive the normal limits and approve a recruitment or
relocation incentive of up to 50 percent of an employee's annual rate
of basic pay times the number of years in a service agreement (not to
exceed 100 percent of annual basic pay), based on a critical agency
need. Specifically, revised sections 5 CFR 575.109(c) and 575.209(c)
allow an agency to waive the limits for a recruitment or relocation
incentive, respectively, under specified conditions. Under this final
rule, a waiver determination must include a description of the critical
agency need the proposed recruitment or relocation incentive would
address. The authorized agency official must determine that the
competencies required for the position(s) are critical to the
successful accomplishment of an important agency mission, project, or
initiative (e.g., programs or projects related to a national emergency
or implementing a new law or critical management initiative). To assist
agencies in using the waiver authority, OPM has provided waiver request
templates for recruitment incentives \6\ and relocation incentives.\7\
These templates will be updated to reflect the changes made by this
final rule.
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\6\ Office of Personnel Management. ``Recruitment Incentive
Waiver Template.'' <a href="https://www.opm.gov/policy-data-oversight/pay-leave/recruitment-relocation-retention-incentives/fact-sheets/recruitment-incentive-waiver-template.pdf">https://www.opm.gov/policy-data-oversight/pay-leave/recruitment-relocation-retention-incentives/fact-sheets/recruitment-incentive-waiver-template.pdf</a>.
\7\ Office of Personnel Management. ``Relocation Incentive
Waiver Template.'' <a href="https://www.opm.gov/policy-data-oversight/pay-leave/recruitment-relocation-retention-incentives/fact-sheets/relocation-incentive-waiver-template.pdf">https://www.opm.gov/policy-data-oversight/pay-leave/recruitment-relocation-retention-incentives/fact-sheets/relocation-incentive-waiver-template.pdf</a>.
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We note that 5 U.S.C. 5754 does not permit the expansion of the
waiver authority for retention incentives found at 5 CFR part 575,
subpart C. Therefore, retention incentives were not included in the
proposed rule and are not addressed in this final rule.

Recruitment Incentive Service Agreements

This final rule amends 5 CFR 575.110(a) to remove the minimum 6-
month required service period for recruitment incentives. Under the
final rule, a recruitment incentive service agreement could be any
length up to 4 years, consistent with the allowable service agreement
lengths for relocation incentives at 5 CFR 575.210(a). For example,
this allows an agency to determine that a summer internship position is
likely to be difficult to fill and authorize a recruitment incentive
for an intern with a 3-month service agreement.

Other Revisions

This final rule does not adopt the proposed changes to several
sections of the regulations to use gender neutral language. These
proposed changes were contained at 5 CFR 575.102, 5 CFR 575.110(f), 5
CFR 575.111(e), 5 CFR 575.111(f), 5 CFR 575.210(f), 5 CFR 575.211(e),
and 5 CFR 575.211(f). The proposed changes were not adopted because
they are inconsistent with the Administration's policy regarding gender
ideology.\8\
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\8\ See Executive Order 14168, ``Defending Women From Gender
Ideology Extremism and Restoring Biological Truth to the Federal
Government,'' 90 FR 8615 (January 20, 2025).
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This final rule also makes minor typographical edits to the
Authority for part 575 to conform with the requirements of 1 CFR part
21, subpart B. No legal authorities for part 575 are added or removed.

Comments on the Proposed Rule

OPM reviewed and carefully considered the public comments received
in response to the proposed rule. OPM received 11 discrete submissions
during the 60-day public comment period from 7 individuals, 2
organizations, and 2 Federal agencies regarding the substance of the
proposed rule.\9\ The comments are summarized in the sections below.
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\9\ OPM determined one comment was beyond the scope of the
proposed changes; that comment is not addressed in this final
notice. See Comment 07 at <a href="https://www.regulations.gov/comment/OPM-2023-0027-0007">https://www.regulations.gov/comment/OPM-2023-0027-0007</a>. A reference at the end of a comment quotation or
paraphrase provides the location of the item in the public record
(i.e., the two-digit number associated with the location in the
docket). Comments filed in response to the proposed rule are
available at <a href="https://www.regulations.gov/comment/OPM-2023-0027-00nn">https://www.regulations.gov/comment/OPM-2023-0027-00nn</a>,
where nn is the comment number.
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Maximum Incentive Amounts

One commenter stated that providing larger recruitment or
relocation incentive amounts would be helpful. Comment 03. The
commenter wrote, ``[t]o meet staffing and recruitment needs, agencies
need to be able to provide larger hiring/relocation incentives. . . .''
OPM is unable to make this change through regulation because the
maximum recruitment and relocation incentive amount is established by
law. Under 5 U.S.C. 5753(c)(1) and 5753(d)(1), a recruitment or
relocation incentive may not exceed 25 percent of the employee's annual
rate of basic pay in effect at the beginning of the service period,
multiplied by the number of years (including fractions of a year) in
the service period (not to exceed 4 years). However, under 5 U.S.C.
5753(e) and this final rule, agencies now have the authority to waive
this limit and approve a recruitment or relocation incentive of up to
50 percent of an employee's annual rate of basic pay multiplied by the
number of years in a service agreement (not to exceed 100 percent of
annual basic pay), based on a critical agency need without requesting
prior OPM approval.
One commenter, who was generally supportive of the proposed rule,
stated that the proposed rule would allow a relocation incentive of 50
percent for up to 4 years. Comment 06. We appreciate the commenter's
support of the proposed rule. To clarify, under 5 U.S.C. 5753(e)(2),
the maximum incentive allowable must in no event exceed 100

[[Page 57869]]

percent of the annual rate of basic pay of the employee at the
beginning of the service period. This commenter stated that the
proposal would greatly aid the agency's ability to relocate and retain
experienced employees in Puerto Rico. We also note that agencies may
pay an extended assignment incentive (EAI) \10\ under 5 U.S.C. 5757 and
implementing regulations at 5 CFR part 575, subpart E to eligible
Federal employees assigned to positions located in a territory or
possession of the United States, the Commonwealth of Puerto Rico, or
the Commonwealth of the Northern Mariana Islands. An EAI is meant to
assist agencies in retaining experienced, well-trained employees in
these locations for a longer period than the employee's initial tour of
duty.
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\10\ Office of Personnel Management. ``Fact Sheet: Extended
Assignment Incentives.'' <a href="https://www.opm.gov/policy-data-oversight/pay-leave/pay-administration/fact-sheets/extended-assignment-incentives/">https://www.opm.gov/policy-data-oversight/pay-leave/pay-administration/fact-sheets/extended-assignment-incentives/</a>.
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One commenter stated, ``The proposed rule does not explain the
rationale or evidence for setting the maximum payment limit at 50
percent of an employee's annual rate of basic pay multiplied by the
number of years in a service agreement (not to exceed 100 percent of
annual basic pay).'' Comment 08. The commenter continued, ``This seems
to be an arbitrary amount, and it is unclear how it relates to the
market value or the performance expectations of the employees who
receive the incentives.''
The payment limits are set by law. Under 5 U.S.C. 5753(c) and
5753(d), a recruitment or relocation incentive may not exceed 25
percent of the employee's annual rate of basic pay in effect at the
beginning of the service period, multiplied by the number of years
(including fractions of a year) in the service period (not to exceed 4
years). With a waiver provided under 5 U.S.C. 5753(e), this cap may be
increased to up to 50 percent, based on a critical agency need, as long
as the total incentive does not exceed 100 percent of the employee's
annual rate of basic pay. The statute is supplemented by OPM's
regulations at 5 CFR 575.109 and 575.209.
Also, while the statute sets the maximum recruitment and relocation
incentive amounts, agencies have the flexibility to provide payment
amounts that are below the maximum. As provided by 5 CFR 575.107(a)(4)
and 575.207(a)(4), agency recruitment and relocation incentive plans
must include any requirements for determining the amount of an
incentive payment.

Expanding the Number of Positions Eligible for Incentives

A commenter stated that to meet staffing and recruitment needs,
agencies need to be able to expand the number of positions that are
eligible for recruitment and relocation incentives. Comment 03.
Agencies determine the individuals who will be offered recruitment or
relocation incentives. An agency may pay a recruitment incentive to an
employee newly appointed to a General Schedule or other covered
position in the Federal service when the agency determines the position
is likely to be difficult to fill in the absence of an incentive. An
agency may pay a relocation incentive to a current employee who must
relocate to accept a General Schedule or other covered position in a
different geographic area (permanently or temporarily) if the agency
determines that the position is likely be difficult to fill in the
absence of an incentive. (See 5 CFR 575.106(b) and 575.206(b).)
Eligible categories of employees are listed in 5 CFR 575.103.

Limiting Applicability

One agency suggested that this authority would be more useful if
limited to agencies with documented critical needs. Comment 04. The
agency wrote, ``This will ensure that we aren't competing with everyone
as we currently are now.'' We are not adopting this suggestion because
we believe agencies are in the best position to determine if they have
a critical need and to appropriately document that determination.
Agencies are most knowledgeable about their own mission, projects, and
initiatives that could meet the critical need criterion. Further,
requiring OPM to make this determination is less efficient, as it
demands additional time and resources for OPM to analyze agency waiver
requests, which could delay use of incentives to address urgent agency
recruitment efforts. We note that agencies have been approving
recruitment and relocation incentives under the normal payment
limitations for more than 20 years, so they have accumulated quite a
bit of experience with using these incentives. Over the years, agency
requests to OPM for waivers of the normal payment limitations have been
somewhat limited, indicating that agencies have been using the waiver
authority strategically. Therefore, under this final rule, OPM is
allowing any agency that determines there is a critical need to use the
waiver authority, as provided in 5 U.S.C. 5753(e). (See 5 CFR
575.109(c)(1) and 575.209(c)(1).) The authorized agency official must
determine that the competencies required for the position(s) are
critical to the successful accomplishment of an important agency
mission, project, or initiative (e.g., programs or projects related to
a national emergency or implementing a new law or critical management
initiative).

Payment of Recruitment Incentives to Current Federal Employees

Two commenters suggested that the regulations ``permit payment of
recruitment incentives to current Federal employees.'' Comments 14,
15.\11\ Further, they suggested that, ``[i]f limitations are required
on payment to current Federal employees, then one option would be to
add in a limitation that recruitment incentives can only be paid to
existing Federal employees once every four or five years.'' Under 5
U.S.C. 5753(b)(2)(A), OPM may authorize the head of an agency to pay a
recruitment incentive to an individual who is newly appointed as an
employee of the Federal Government. In addition, the statute at 5
U.S.C. 5753(b)(2)(B) permits OPM to authorize agencies to pay a
recruitment incentive to a current employee (of the same or a different
agency) who moves to a position in the same geographic area that is
likely to be difficult to fill in the absence of an incentive under
circumstances described in OPM's regulations. However, OPM's
regulations do not prescribe any circumstances that allow the use of
recruitment incentives for current employees, except in very narrow
situations involving certain employees on time-limited appointments.
(See definition of ``newly appointed'' in 5 CFR 575.102.) We appreciate
the commenters' suggestions; however, amending the regulations to
permit agencies to pay recruitment incentives to current Federal
employees in additional circumstances is outside the scope of the
proposed rule. We did not propose such a change for public comment. We
appreciate the suggestion and may consider it for possible future
proposed regulation.
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\11\ Comment 15 was a resubmission of Comment 9 by the same
commenter, so we included only Comment 15 in our review.
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Other Suggestions

These same two commenters also made suggestions involving special
rates under 5 U.S.C. 5305 and 5 CFR part 530, subpart C; availability
pay under 5 U.S.C. 5545a and 5 CFR 550.181-550.187, biweekly and annual
premium pay limitations under 5 U.S.C. 5547 and 5 CFR 550.105-550.107,
basic housing

[[Page 57870]]

allowances, and retention incentives under 5 U.S.C. 5754 and 5 CFR part
575, subpart C. Comments 14, 15. These program areas are outside the
scope of the proposed rule.

Definition of a Critical Agency Need

Two commenters expressed concern about the meaning of ``critical
agency need'' for purposes of recruitment and relocation incentive
waivers. Comments 8,\12\ 10. For example, one commenter said, ``The
proposed rule does not specify the criteria or standards for
determining a critical agency need that would justify a higher payment
limit for recruitment or relocation incentives.'' Comment 08. The
commenter continued, ``This could create inconsistency and confusion
among agencies and employees, as well as potential abuse or misuse of
the waiver authority.''
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\12\ Comment 8 was a resubmission of Comment 2 by the same
commenter, so we included only Comment 8 in our review.
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As provided under the waiver authority at 5 CFR 575.109(c)(1) and
575.209(c)(1), an authorized agency official must determine that the
competencies required for the position(s) are critical to the
successful accomplishment of an important agency mission, project, or
initiative (e.g., programs or projects related to a national emergency
or implementing a new law or critical management initiative). We
believe these examples are sufficient to describe the phrase ``critical
agency need'' and rely on agencies to apply discretion when determining
what needs are critical to the accomplishment of their various
missions. In response to the commenter's concerns about the potential
abuse or misuse of the waiver authority, see the discussion in the
``Oversight'' section.
One of the commenters also stated, ``Information on how the
agencies define and identify a critical agency need, and what kinds of
positions or occupations are eligible for the higher payment limit,
should be made public and updated regularly as part of the rule, and it
should be accessible to the public and stakeholders.'' Comment 08.
We note that agencies have the authority to determine the
individuals who will be offered waivers of the normal payment
limitations for recruitment or relocation incentives under the criteria
provided in the statute and regulations. When agencies authorize a
waiver of the normal payment limitations on recruitment and relocation
incentives, they process a personnel action and that information is
reported to OPM's Enterprise Human Resources Integration \13\ system
consistent with the guidance in chapter 29 of the Guide to Processing
Personnel Actions.\14\ Interested individuals may submit a Freedom of
Information Act request for such information to OPM following the
procedures outlined in OPM's guidance.\15\
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\13\ Office of Personnel Management. ``Enterprise Human
Resources Integration.'' <a href="https://www.opm.gov/policy-data-oversight/data-analysis-documentation/enterprise-human-resources-integration/">https://www.opm.gov/policy-data-oversight/data-analysis-documentation/enterprise-human-resources-integration/</a>.
\14\ Office of Personnel Management. ``Chapter 29: Bonuses,
Awards and Other Incentives.'' <a href="https://www.opm.gov/policy-data-oversight/data-analysis-documentation/personnel-documentation/processing-personnel-actions/gppa29.pdf">https://www.opm.gov/policy-data-oversight/data-analysis-documentation/personnel-documentation/processing-personnel-actions/gppa29.pdf</a>.
\15\ Office of Personnel Management. ``Freedom of Information
Act.'' <a href="https://www.opm.gov/information-management/freedom-of-information-act/">https://www.opm.gov/information-management/freedom-of-information-act/</a>.
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In addition, we note that under 5 CFR 575.113 and 575.213, agencies
are required to keep records regarding recruitment and relocation
incentive determinations and must make those records available for
review upon OPM's request. Further, OPM has oversight authority under 5
CFR 575.112 and 575.212. Therefore, since OPM reserves the ability to
exercise oversight should OPM determine or have reason to believe that
agencies are not properly administering these authorities, we have
determined that public disclosure of such data is unnecessary.
An agency asked whether the rule would ``limit the use of a blanket
waiver approval for certain series, locations, etc.'' that are deemed
by an agency to be critical. Comment 10. Also, an organization
commented, ``Agencies could more effectively use recruitment and
relocation incentives if the law authorizing these payments was amended
to allow for occupation-based payments using conditions for similar
positions in the private sector.'' Comment 11.
An agency may target groups of similar positions (e.g., same
occupational series, interdisciplinary positions, titles, or duties)
that have been difficult to fill in the past or that are likely to be
difficult to fill in the future and may make the required determination
to offer a recruitment incentive on a group basis. (See 5 CFR
575.105(b).) Agencies must review each decision to authorize a
recruitment incentive for a group of similar positions at least
annually to determine whether the positions are still likely to be
difficult to fill. This final rule amends 5 CFR 575.109(c)(1) to allow
an agency to waive the recruitment incentive payment limitation for a
group of employees. Also, we note that the case-by-case determination
of a relocation incentive may be waived under the limited conditions in
5 CFR 575.208(b).

Impact on Equal Pay for Similar Work

One commenter noted that the proposed rule does not address the
potential impact on equal pay for similar work for Federal employees.
Comment 08. The commenter stated, ``The increased use of recruitment
and relocation incentives could create pay disparities among employees
performing similar work.''
As noted in the proposed rule, OPM does not know how agencies will
use the additional flexibility provided by this change. It is possible
that agencies will approve more recruitment and relocation incentive
waivers if they are not required to go through the process of
submitting a waiver request to OPM. However, the criteria for approval
are not changing, so agencies will still need to determine that the
situation meets the critical need and other requirements for approving
a waiver. In other words, approval of a waiver is not automatic and
agencies will apply discretion in granting waiver requests. In
addition, agencies will need to make determinations about whether they
have funds available in their budgets to provide increased incentives.
The use of discretionary pay flexibilities such as recruitment and
relocation incentives may be limited by agency budgets.

Separation of Functions

In its comments, an association suggested that OPM modify the
regulations to include a separation of functions in the pay-setting
process. Comment 13. Specifically, the association suggested the
following changes:
(A) The persons who have discretion to set, grant or deny
recruitment or relocation benefits for a given selection should be
restricted from knowing the identity or demographics of the applicant
pool for the position at the time they exercise that discretion.
(B) The persons deciding on recruitment or relocation benefits for
a given selection should be required to make their decision based on
neutral, objective standards, preferably ones set by OPM across-the-
board, rather than being permitted to determine decisional factors
subjectively or ad hoc.
(C) Hiring agencies should be required to designate positions as
eligible for possible recruitment and relocation benefits prior to the
vacancy being advertised and should be required to then consider
granting recruitment and relocation benefits for all selection made

[[Page 57871]]

under the advertisement (as opposed to considering providing benefits
only when proposed by a selecting official).
We are not adopting these suggestions in the final rule because we
believe each agency should have the flexibility to address these issues
in the agency's plan, which can provide a framework for the payment of
incentives consistent with the approval criteria in law and
regulations. However, OPM will consider these suggestions as we develop
implementation guidance for agencies that supports merit-based hiring.
This final rule permits individual agencies to determine the specific
process for requesting and approving incentives. Before making
recruitment and relocation incentive payments, an agency must establish
a plan that includes the coverage, approval, and payment criteria
specified in OPM's regulations. An agency must make the payments in
accordance with statute, regulations, the agency's plan, and OPM
processing, documentation, and reporting requirements.
An agency may target groups of similar positions that have been
difficult to fill in the past or that may be difficult to fill in the
future and make the required determination to offer a recruitment
incentive to newly appointed employees on a group basis under 5 CFR
575.105(b). However, an agency generally must make each determination
to pay a relocation incentive on a case-by-case basis for each employee
as provided in 5 CFR 575.208(a)(2) because the agency must determine
that the worksite of the employee's new position is not in the same
geographic area as the worksite of the position held immediately before
the move. As provided by 5 CFR 575.205(b), a position is considered to
be in a different geographic area if the worksite of the new position
is 50 or more miles from the worksite of the position held immediately
before the move.
Further, agencies must keep a record of each determination to make
a recruitment or relocation incentive payment and make such records
available for review upon OPM's request. Agencies must ensure their
recruitment and relocation workforce reporting submissions meet OPM's
reporting standards and are consistent with the Privacy Act.\16\
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\16\ 5 U.S.C. 552a.
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Interaction Between the Waiver Authority and Other Existing Pay
Flexibilities

One commenter pointed out that the proposed rule did not discuss
how the waiver authority would be coordinated with existing pay
flexibilities, including retention incentives, special rates, and
setting pay above the minimum of the grade. Comment 08. The commenter
stated, ``The interaction of these pay flexibilities could have
unintended consequences for the pay administration and the employee
mobility.'' Also, an organization commented, ``Agencies should be
mindful of what other incentives they can authorize and pair them with
recruitment and relocation incentives to increase the strength of their
offers.'' Comment 11.
We note that agencies may pay recruitment and relocation incentives
to employees receiving special rates. This information is addressed in
OPM's fact sheets on recruitment incentives \17\ and relocation
incentives.\18\
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\17\ Office of Personnel Management. ``Fact Sheet: Recruitment
Incentives.'' <a href="https://www.opm.gov/policy-data-oversight/pay-leave/recruitment-relocation-retention-incentives/fact-sheets/recruitment-incentives/">https://www.opm.gov/policy-data-oversight/pay-leave/recruitment-relocation-retention-incentives/fact-sheets/recruitment-incentives/</a>.
\18\ Office of Personnel Management. ``Fact Sheet: Relocation
Incentives.'' <a href="https://www.opm.gov/policy-data-oversight/pay-leave/recruitment-relocation-retention-incentives/fact-sheets/relocation-incentives/">https://www.opm.gov/policy-data-oversight/pay-leave/recruitment-relocation-retention-incentives/fact-sheets/relocation-incentives/</a>.
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Further, agencies may pay a recruitment incentive to an employee
whose pay was set above step 1 of the applicable General Schedule grade
under the superior qualifications and special needs pay-setting
authority. This information is contained in 5 CFR 531.212(d) and in the
FAQs on OPM's website.\19\ The interaction of various flexibilities
agencies may use is also generally addressed in OPM's guidance on
Compensation Flexibilities to Recruit and Retain Cybersecurity
Professionals \20\ and guidance on Pay, Leave, and Workforce
Flexibilities for Recruitment and Retention.\21\
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\19\ Office of Personnel Management. ``Recruitment, Relocation &
Retention Incentives FAQs.'' <a href="https://www.opm.gov/policy-data-oversight/pay-leave/recruitment-relocation-retention-incentives/#url=FAQs">https://www.opm.gov/policy-data-oversight/pay-leave/recruitment-relocation-retention-incentives/#url=FAQs</a>.
\20\ Office of Personnel Management. ``Compensation
Flexibilities to Recruit and Retain Cybersecurity Professionals.''
<a href="https://www.opm.gov/policy-data-oversight/pay-leave/reference-materials/handbooks/compensation-flexibilities-to-recruit-and-retain-cybersecurity-professionals.pdf">https://www.opm.gov/policy-data-oversight/pay-leave/reference-materials/handbooks/compensation-flexibilities-to-recruit-and-retain-cybersecurity-professionals.pdf</a>.
\21\ Office of Personnel Management. ``Pay, Leave, and Workforce
Flexibilities for Recruitment and Retention.'' <a href="https://www.opm.gov/policy-data-oversight/pay-leave/pay-and-leave-flexibilities-for-recruitment-and-retention/">https://www.opm.gov/policy-data-oversight/pay-leave/pay-and-leave-flexibilities-for-recruitment-and-retention/</a>.
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In most situations, agencies cannot simultaneously pay multiple
incentives. However, under 5 CFR 575.205(e), an agency may commence a
relocation incentive service agreement during a period of employment
established under a service agreement for a previously authorized
retention incentive or for which an employee is receiving previously
authorized retention incentive payments without a service agreement.
This information also is available in the FAQs on OPM's website.
Finally, agencies may consider the use of other pay or other non-
pay flexibilities when determining the recruitment or relocation
incentive payment amount.

Oversight

We received multiple comments regarding oversight of agencies' use
of recruitment and relocation incentives. Comments 08, 10, 13. For
example, one organization expressed concerns about hiring managers
using their pay-setting discretion to ``effectuate pay
discrimination.'' Comment 13. Another commenter wrote, ``The rule does
not require agencies to report or document the use of the waivers, nor
does it establish any review or audit mechanism to ensure compliance
and accountability.'' Comment 08. Also, an agency stated, ``Currently,
OPM provides the check and balance for agencies but with the proposed
new rule this would no longer be applicable.'' Comment 10. In addition,
the agency requested clarification on what is subject to OPM review and
oversight.
In administering the recruitment and relocation incentives program,
OPM and agencies have certain oversight and accountability
responsibilities. These include adhering to the provisions in the
applicable statute and regulations, the requirements governing OPM's
delegation authority of personnel management in 5 U.S.C. 1104 and 5 CFR
part 250, subpart A, and the applicable workforce reporting
requirements in 5 CFR 9.2.
These oversight and accountability controls include the
requirements for agencies to designate the officials with authority to
waive the recruitment and relocation incentive payment limitation in
their recruitment and relocation incentive plans. (See 5 CFR 575.107(a)
and 575.207(a).) Also, agencies are required to monitor the use of
recruitment incentives under 5 CFR 575.112(a) and monitor the use of
relocation incentives under 5 CFR 575.212(a) to ensure that the
agency's recruitment and relocation incentive plans and the payment of
those incentives are consistent with the statute and regulations.
Further, as provided by 5 CFR 575.112(b) and 5 CFR 575.212(b), if
OPM finds that an agency is not paying these incentives consistent with
the agency's recruitment and relocation incentive plans and the
criteria established under 5 U.S.C. 5753 and

[[Page 57872]]

OPM's regulations or otherwise determines that the agency is not using
these authorities selectively and judiciously, OPM may--
(1) Direct the agency to revoke or suspend the authority granted to
any organizational component in the agency and, with respect to any
category or categories of employees, require that the component obtain
approval from the agency's headquarters level before paying an
incentive to such employees; or
(2) Revoke or suspend the authority granted to the agency under
OPM's regulations for all or any part of the agency and, with respect
to any category or categories of employees, require that the agency
obtain OPM's approval before paying an incentive to such employees.
In addition, if OPM finds that a prohibited personnel action may
have occurred with respect to authorizing a recruitment or relocation
incentive, OPM will refer the matter to the Office of Special Counsel
for investigation.
We note that 5 CFR 575.112 and 575.212 address oversight and
accountability. In addition, OPM has posted a fact sheet that provides
guidance on this topic.\22\ Also, agencies must report information to
the Enterprise Human Resources Integration system on recruitment and
relocation incentives when they authorize them, in accordance with
chapter 29 of the Guide to Processing Personnel Actions (GPPA).\23\
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\22\ Office of Personnel Management. ``Fact Sheet: Oversight and
Accountability.'' <a href="https://www.opm.gov/policy-data-oversight/pay-leave/recruitment-relocation-retention-incentives/fact-sheets/oversight-and-accountability/">https://www.opm.gov/policy-data-oversight/pay-leave/recruitment-relocation-retention-incentives/fact-sheets/oversight-and-accountability/</a>.
\23\ Office of Personnel Management. ``Chapter 29: Bonuses,
Awards and Other Incentives.'' <a href="https://www.opm.gov/policy-data-oversight/data-analysis-documentation/personnel-documentation/processing-personnel-actions/gppa29.pdf">https://www.opm.gov/policy-data-oversight/data-analysis-documentation/personnel-documentation/processing-personnel-actions/gppa29.pdf</a>.
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One agency asked in response to OPM's proposed revision to 5 CFR
575.106(a)(4) what is now subject to OPM review and oversight under 5
CFR 575.106(a). Comment 10. OPM's oversight authority for agencies' use
of recruitment incentives is found in 5 CFR 575.112(b). As provided by
5 CFR 575.106(a), this includes OPM oversight of an agency's
determination that a position is likely to be difficult to fill under 5
CFR 575.106(b), approval of a recruitment incentive under 5 CFR
575.105, establishment of criteria for determining the amount of
recruitment incentive under 5 CFR 575.109(a) and the length of a
service period under 5 CFR 575.110(a), waiver of the limitation of the
maximum amount of a recruitment incentive under 5 CFR 575.109(c), and
establishment of the criteria for terminating a service agreement under
5 CFR 575.111. OPM's revision to 5 CFR 575.106(a)(4) was limited to
removing language regarding requesting a waiver from OPM, which will no
longer be required under this final rule.

Service Agreement

An association expressed opposition to requiring a service
agreement for employees who receive a recruitment or relocation
incentive. Comment 13. Specifically, the association commented,
``Applicants should not be restricted to just working at their single
hiring agency (rather than remaining in federal service in general),
nor should they be financially burdened if forced out by their
employing agency prior to a minimum service term.''
We note that the service agreement requirement is established by
law. Under 5 U.S.C. 5753(c), payment of a recruitment or relocation
incentive is ``contingent upon the employee entering into a written
service agreement to complete a period of employment with the agency.''
The statute authorizes OPM to, by regulation, prescribe a minimum
service period.
However, this final rule does provide agencies with the ability to
set the length of the required service period for recruitment
incentives to a period of less than 6 months, which aligns the service
requirements for recruitment incentives with those for relocation
incentives and provides agencies with additional flexibility in taking
advantage of this incentive as a recruitment tool. Agencies now will be
able to establish service periods of up to 4 years (the maximum length
by law at 5 U.S.C. 5753(c)(1)). OPM's regulations also specify that, if
a recruitment or relocation incentive service agreement is terminated
based on the management needs of the agency, the affected employee is
entitled to all incentive payments attributable to completed service
and to retain any portion of incentives received attributable to
uncompleted service. (See 5 CFR 575.111(a) and (e) and 575.211(a) and
(e).)
An agency recommended keeping the 6-month minimum service
requirement ``because less time than that is not sufficient to monitor
performance and may not be the most effective use of government monies
if the individual resigns quickly after the payment(s).'' Comment 10.
As stated in the SUPPLEMENTARY INFORMATION of the proposed rule,
OPM believes agencies are in the best position to decide the
appropriate length for a recruitment incentive service agreement.
Agencies may establish longer minimum periods (up to 4 years) in their
recruitment incentives plan. Further, we note that, if an employee
resigns from Federal service before completing the required service
period and has received recruitment incentive payments in excess of the
amount that would be attributable to the completed portion of the
service period, the employee must repay the excess amount, except when
an authorized agency official waives the requirement to repay the
excess amount. (See 5 CFR 575.111.)

Impact on Other Agencies or Positions

One commenter expressed concern that the proposed rule did not
address the potential impact on the recruitment and retention of
employees in other agencies or in positions that do not receive
waivers. Comment 08. The commenter stated, ``The higher payment limits
could create an imbalance in the supply and demand of talent across the
Federal Government, and affect the morale and motivation of employees
who do not receive the incentives.''
We note that the additional flexibility provided to agencies in
this final rule does not change the fact that agencies must determine
to what extent they will use recruitment and relocation incentives, as
well as other existing pay flexibilities. As always, agencies must make
determinations about whether they have funds available in their budgets
to provide waivers of the normal payment limitations. The use of
discretionary pay flexibilities such as recruitment and relocation
incentives may be limited by agency budgets.
Further, we expect a limited impact on other agencies because
relocation incentives generally must be approved on a case-by-case
basis and OPM has not received nor approved many recruitment and
relocation incentive waiver requests. Since the waiver authority became
effective on May 13, 2005, OPM has received and approved 15 recruitment
incentive waivers for 6 agencies and 11 relocation incentive waivers
for 4 agencies.

Definition of Basic Pay

Two commenters expressed concern regarding the definition of
``basic pay'' for purposes of recruitment and relocation incentives.
Comments 08, 10. Specifically, one commenter wrote, ``The proposed rule
does not specify whether the basic pay refers to the base salary or the
base salary plus the locality pay.'' Comment 08.
For the purpose of calculating a recruitment or relocation
incentive, an

[[Page 57873]]

employee's rate of basic pay means the rate of pay fixed by law or
administrative action for the position to which an employee is or will
be appointed before deductions and including any special rate under 5
CFR part 530, subpart C, or similar payment under other legal
authority, and any locality-based comparability payment under 5 CFR
part 531, subpart F, (commonly referred to as ``locality pay'') or
similar payment under other legal authority, but excluding additional
pay of any other kind. For example, a rate of basic pay does not
include additional pay such as night shift differentials under 5 U.S.C.
5343(f) or environmental differentials under 5 U.S.C. 5343(c)(4). (See
5 CFR 575.102 and 575.202.) OPM has provided additional guidance in a
fact sheet on calculating maximum recruitment and relocation
incentives.\24\
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\24\ Office of Personnel Management. ``Fact Sheet: Calculating
Maximum Recruitment and Relocation Incentives for Service Periods of
Various Lengths.'' <a href="https://www.opm.gov/policy-data-oversight/pay-leave/recruitment-relocation-retention-incentives/fact-sheets/calculating-maximum-recruitment-and-relocation-incentives-for-service-periods-of-various-lengths/">https://www.opm.gov/policy-data-oversight/pay-leave/recruitment-relocation-retention-incentives/fact-sheets/calculating-maximum-recruitment-and-relocation-incentives-for-service-periods-of-various-lengths/</a>.
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Pre-Established Range for Recruitment Incentives

One agency requested additional guidance regarding how ``an
authorized agency official may authorize an official, not lower than
the candidate's supervisor to offer a recruitment incentive to a
candidate without further review or approval in any amount within a
pre-established range up to the normal payment limitation or higher cap
if the agency has an approved waiver.'' Comment 10.
As stated in the proposed rule, we are revising 5 CFR 575.107(b)(2)
to state that, when necessary to make a timely offer of employment, an
authorized agency official may authorize an official who is not lower
than a candidate's supervisor to offer a recruitment incentive to a
candidate without further review or approval in any amount within a
pre-established range up to the normal payment limitation in 5 CFR
575.109(b) or a higher cap if the agency has approved a waiver to the
normal payment limitation under 5 CFR 575.109(c). An agency must
designate the officials with this authority in its recruitment
incentive plan. An agency also must designate the circumstances under
which an official has the authority to approve payment without higher-
level approval under 5 CFR 575.107(b)(2) in its recruitment incentive
plan. OPM delegates to agencies the authority to designate the
officials and determine the circumstances. For example, an agency could
permit an official who is not lower than a candidate's supervisor to
offer a recruitment incentive of up to 10 percent without further
review or approval. Under 5 CFR 575.107(b)(2), an authorized agency
official must establish criteria in advance for making such recruitment
incentive offers. These determinations are at the discretion of the
employing agency, subject to internal recruitment and relocation
incentive policies.
Before paying a recruitment incentive, an agency must establish a
recruitment incentive plan. (See 5 CFR 575.107.) Amongst other things,
the plan must include the designation of officials with authority to
review and approve the payment of recruitment incentives and the
designation of officials with authority to waive the repayment of a
recruitment incentive. Unless the head of the agency determines
otherwise, an agency recruitment incentive plan must apply uniformly
across the agency.

Frequency of Relocation Incentive Waivers

An agency asked about the frequency of relocation incentive waivers
granted by agencies under the amended regulations. Comment 10.
Specifically, the agency said, ``Does OPM expect these to be very rare,
on a case-by-case basis, for truly extenuating circumstances?''
A waiver of the normal payment limitations must be based on a
critical agency need. The authorized agency official must determine
that the competencies required for the position(s) are critical to the
successful accomplishment of an important agency mission, project, or
initiative (e.g., programs or projects related to a national emergency
or implementing a new law or critical management initiative). OPM
expects agencies to use these authorities selectively and judiciously.
(See 5 CFR 575.212(b).)
Further, agency determinations to pay a relocation incentive must
generally be made on a case-by-case basis. (See 5 CFR 575.208.)
However, the case-by-case determination may be waived under the limited
conditions in 5 CFR 575.208(b).

OPM Review of Agency Waivers

One organization asked how often OPM would be reviewing agency
recruitment and relocation incentives waivers. Comment 11. OPM does not
evaluate the use of compensation incentives on a fixed basis. The use
of compensation incentives is evaluated routinely by OPM's Office of
Merit Systems Accountability and Compliance as an element of a human
capital management evaluation of an agency's Talent Management System
and may be a limited-focus evaluation. Evaluations are targeted based
on several factors, including data that reflects routine and/or on-
going usage or changes in usage.

OPM Report

One organization asked if OPM would publish a regularly scheduled
report regarding agencies' use of recruitment, relocation, and
retention incentives. Comment 11. Section 101(c) of the Federal
Workforce Flexibility Act of 2004 (Pub. L. 108-411, October 30, 2004)
required OPM to submit an annual report to specified committees of the
United States Senate and the United States House of Representatives on
agencies' use of the recruitment, relocation, and retention incentive
authorities in 5 U.S.C. 5753 and 5754 during calendar years 2005-2009.
The reports provided data on and described each agency's use of the
incentives during the calendar year. The reports are available on the
OPM website.\25\
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\25\ Office of Personnel Management. ``Memos & Reports.''
<a href="https://www.opm.gov/policy-data-oversight/pay-leave/recruitment-relocation-retention-incentives/#url=Memos-Reports">https://www.opm.gov/policy-data-oversight/pay-leave/recruitment-relocation-retention-incentives/#url=Memos-Reports</a>.
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OPM does not currently intend to publish additional reports
detailing Federal agencies' use of recruitment, relocation, and
retention incentives. However, OPM, through its Merit Systems
Accountability and Compliance Office, will oversee the effectiveness of
recruitment, relocation and retention incentives as an element of its
human capital management evaluations, and may publish such reports in
the future.

Authorized Agency Official

An agency asked, ``In 575.107(b)(1), will there be a standard that
OPM identifies so that there will be consistency of how an authorized
official is identified, such as a written delegation of authority?''
Comment 10. OPM's regulations on agency recruitment incentive plans and
approval levels are located at 5 CFR 575.107. As described in 5 CFR
575.107(a)(1), agencies must designate officials with authority to
review and approve payment of recruitment incentives in their
recruitment incentive plan.

Meaning of ``Timely''

In the proposed rule, we proposed revising 5 CFR 575.107(b)(2) to
state that, when necessary to make a timely offer of employment, an
authorized agency official may authorize an official who is not lower
than a candidate's supervisor to offer a recruitment

[[Page 57874]]

incentive to a candidate without further review or approval in any
amount within a pre-established range up to the normal payment
limitation in 5 CFR 575.109(b) or a higher cap if the agency has
approved a waiver to the normal payment limitation under 5 CFR
575.109(c). An agency asked, ``In 575.107(b)(2), when the proposed rule
mentions timely, will there be a standard or suggestion of what is
defined as timely?'' Comment 10. OPM is not specifying a specific time
period that would be considered ``timely'' for the purpose of the
regulations, but agencies should follow OPM's applicable guidance
regarding the timeframes we typically expect for certain hiring
actions. We note that the Merit Hiring Plan issued pursuant to
Executive Order 14170 seeks to decrease the government-wide time-to-
hire to under 80 days.\26\
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\26\ See 90 FR 8621 (January 20, 2025); White House Domestic
Policy Council & OPM, Merit Hiring Plan, at pp.10-11 (May 29, 2025).
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Suggestions for Being a Model Employer

In our proposed rule, we asked for input on additional ways that
the Federal Government can be a model employer with respect to
recruitment and relocation incentives and how the Federal Government
can use recruitment and relocation incentives more effectively and
efficiently. An agency responded that ``the private sector has [the]
ability to be more creative with `sign-on' offers; not only is money
given but also non-monetary items such as iPads, tool allowances,
trips, etc.'' Comment 10. The agency also expressed the view that the
general Federal benefits are not highlighted sufficiently.
We appreciate these comments. Non-monetary incentives are beyond
the scope of this rulemaking; however, OPM has developed guidance \27\
addressing the various aspects of the Federal employee compensation
package, which should help highlight general Federal benefits.
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\27\ Office of Personnel Management. ``Federal Employee
Compensation Package.'' <a href="https://www.opm.gov/policy-data-oversight/pay-leave/pay-administration/fact-sheets/federal-employee-compensation-package/">https://www.opm.gov/policy-data-oversight/pay-leave/pay-administration/fact-sheets/federal-employee-compensation-package/</a>.
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Agency Data Reporting

An organization asked what data should be reported by agencies to
OPM's central personnel data system. Comment 11. As noted in the
Supplementary Information of the proposed rule and earlier in this
final rule Supplementary Information, agencies are required to report
to OPM's central data system when they authorize a waiver of the normal
recruitment or relocation incentive payment limitations using legal
authority code VPO. Also see the data elements that agencies must
report when authorizing a recruitment incentive (nature of action code
815) or relocation incentive (nature of action code 816) on page 3-18
of the Guide to Human Resources Reporting. Also, see the Dynamics data
element requirements of the Guide to Human Resources Reporting at
Chapter 3: HR Data Feed \28\ and Chapter 4: Payroll Data Feed.\29\
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\28\ Office of Personnel Management. ``Chapter 3: HR Data
Feed.'' <a href="https://www.opm.gov/policy-data-oversight/data-analysis-documentation/data-policy-guidance/hr-reporting/ghrr4-4_ch3.pdf">https://www.opm.gov/policy-data-oversight/data-analysis-documentation/data-policy-guidance/hr-reporting/ghrr4-4_ch3.pdf</a>.
\29\ Office of Personnel Management. ``Chapter 4: Payroll Data
Feed.'' <a href="https://www.opm.gov/policy-data-oversight/data-analysis-documentation/data-policy-guidance/hr-reporting/ghrr4-4_ch4_payroll.pdf">https://www.opm.gov/policy-data-oversight/data-analysis-documentation/data-policy-guidance/hr-reporting/ghrr4-4_ch4_payroll.pdf</a>.
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OPM Guidance

An organization asked if OPM intends to provide guidance to
agencies on this authority. Comment 11. In addition to this final rule,
OPM will update its posted guidance to incorporate the expanded
authority. We note that OPM has waiver request templates \30\ that will
be modified to address the expanded agency waiver authority.
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\30\ Office of Personnel Management. ``Fact Sheets.'' <a href="https://www.opm.gov/policy-data-oversight/pay-leave/recruitment-relocation-retention-incentives/#url=Fact-Sheets">https://www.opm.gov/policy-data-oversight/pay-leave/recruitment-relocation-retention-incentives/#url=Fact-Sheets</a>.
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Best Practices

An organization asked if OPM will provide information on best
practices for preventing waste, fraud, and abuse with regard to
recruitment and relocation incentive payments. Comment 11. OPM, through
its Merit Systems Accountability and Compliance Office, plans to
actively oversee the effectiveness of recruitment and relocation
payments as an element of its human capital management evaluations,
and, in the course of this oversight of these programs, may provide
such best practices for preventing waste, fraud, and abuse in agency
recruitment or relocation incentive programs. We do not intend to
provide additional information regarding oversight and accountability
for recruitment and relocation incentives at this time, but may do so
in the future.

Suggestions

One agency suggested that there be a minimum required service
period when a recruitment or relocation incentive is approved at a rate
of 50 percent of the employee's annual pay rate. Comment 10.
Under 5 U.S.C. 5753(d), a recruitment or relocation incentive may
not exceed 25 percent of the employee's annual rate of basic pay in
effect at the beginning of the service period, multiplied by the number
of years (including fractions of a year) in the service period (not to
exceed 4 years). With a waiver provided under 5 U.S.C. 5753(e), this
cap may be increased to up to 50 percent, based on a critical agency
need, as long as the total incentive does not exceed 100 percent of the
employee's annual rate of basic pay. Therefore, in response to the
specific comment above, the minimum service period for a 50 percent
incentive under a waiver is 1 year.
An organization provided numerous recommendations for improving the
use of recruitment and relocation incentives. Comment 11. OPM will
consider these suggestions as we develop any implementation guidance.
Various recommendations from the organization are listed below.
<bullet> ``OPM should analyze the effect of current federal pay
caps and study the viability of occupation-based payments for further
Congressional consideration.'' This is outside the scope of this
rulemaking since it is suggesting actions in support of legislative
changes.
<bullet> OPM should provide implementation guidance to agency Chief
Human Capital Officers to facilitate agency streamlining of the
initiation and approval process for recruitment and relocation
incentives.
<bullet> OPM should supply additional training to agencies on
approving waivers based on OPM's experience reviewing and approving
agency waiver requests.
<bullet> OPM should collect data on recruitment and relocation
incentives to determine what payment amounts and lengths of service
yield quality hires. Analysis of this data would allow agency human
resource officers to make a business case to agency leaders on the
further use of recruitment and relocation incentives as part of agency
human capital plans.
<bullet> Agencies should budget for the use of recruitment and
relocation incentives so they can be authorized more quickly. Although
agency budgets are tight and differ in size, ``failure to provide
access to funds for the use of these incentives will ultimately cause
agencies to lose out on talent for positions where an incentive is
justified.''
<bullet> ``OPM should update and provide training on the proper use
of recruitment and relocation incentives for agency officials.''
<bullet> ``Federal agencies should analyze existing procedures and
update them to

[[Page 57875]]

promote internal equity and prevent bias and abuse.''

Expected Impact of This Final Rule

A. Statement of Need

OPM serves as the chief human resources agency and personnel policy
manager for the Federal Government. OPM provides human resources
leadership and support to Federal agencies and helps the Federal
workforce achieve their goals as they serve the American people. OPM
oversees merit-based and inclusive hiring into the civil service,
directs human resources and employee management services, administers
retirement benefits, manages health insurance and other insurance
programs, and manages personnel vetting policies and processes.
In its March 2021 report,\31\ the National Academy of Public
Administration (NAPA) recommended that OPM adopt a more decentralized
and risk-based approach to executing its transactional approval and
oversight responsibilities. Specifically, NAPA recommended that OPM
delegate, to the maximum extent possible, decision-making authorities
to agencies, and conduct cyclical reviews to verify that appropriate
actions were taken.
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\31\ National Academy of Public Administration. ``Elevating
Human Capital: Reframing the U.S. Office of Personnel Management's
Leadership Imperative.'' <a href="https://www.volckeralliance.org/sites/default/files/attachments/OPM-Final-Report-National-Academy-of-Public-Administration.pdf">https://www.volckeralliance.org/sites/default/files/attachments/OPM-Final-Report-National-Academy-of-Public-Administration.pdf</a>.
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Permitting agencies to review and approve payment limit waivers at
the agency level will reduce administrative burden on agencies and
increase the efficiency of using recruitment and relocation incentives.
This will allow agencies to move more quickly in hiring new employees
and relocating those who are moving into positions that are likely to
be difficult to fill. Such efficiency could be especially helpful in
emergency or other critical situations in which recruiting new
employees or relocating current employees rapidly is necessary. E.O.
14170 states, ``American citizens deserve an excellent and efficient
Federal workforce that attracts the highest caliber of civil servants
committed to achieving the freedom, prosperity, and democratic rule
that our Constitution promotes.'' Using recruitment incentives can be a
useful tool in achieving this goal.

B. Impact

It is important to understand that waivers to the normal payment
limitations do not alter the maximum total amount of a recruitment or
relocation incentive that may be paid to an individual employee.
Agencies have the authority to approve a recruitment or relocation
incentive for payments of up to 25 percent of an employee's annual rate
of basic pay times the number of years in a service agreement, not to
exceed 4 years or 100 percent of annual basic pay. With a waiver,
agencies can approve a recruitment or relocation incentive of up to 50
percent of an employee's annual rate of basic pay times the number of
years in a service agreement, but still not to exceed 100 percent of
annual basic pay. Therefore, the total incentive paid under a waiver
continues to be limited to 100 percent of the employee's annual basic
pay, but the incentive may be paid over 2 years rather than 4 years.
Section 101(a) of the Federal Workforce Flexibility Act of 2004
(Pub. L. 108-411, October 30, 2004) established significantly enhanced
recruitment, relocation, and retention incentive authorities that
provided Federal agencies with the flexibility to use such incentives
in more strategic ways to help the Federal Government improve its
competitiveness in recruiting and maintaining a high quality workforce.
The enhancements provided by the Act included the authority to waive
the normal cap on recruitment and relocation incentives because of a
critical agency need and provided authority to pay higher amounts over
shorter periods of time (not to exceed a total of 100 percent of the
employee's starting salary). The implementing regulations \32\ required
OPM approval to waive the recruitment and relocation incentive limits.
---------------------------------------------------------------------------

\32\ 70 FR 25732, May 13, 2005.
---------------------------------------------------------------------------

Although this waiver authority was effective upon publication of
the implementing regulations on May 13, 2005, OPM did not receive any
agency requests for recruitment or relocation waivers until 2008. Since
that time, OPM approved 15 recruitment incentive waivers for 6 agencies
and 11 relocation incentive waivers for 4 agencies. OPM approved
waivers for healthcare, cybersecurity, and other mission-critical
occupations. OPM-approved waivers provided agencies the discretionary
authority to use a higher recruitment or relocation incentive payment
limit for the covered position(s) and employee(s). An agency with an
OPM-approved incentive waiver was responsible for documenting in
writing the justification for paying each incentive authorized for an
employee under the waiver and obtaining approval from the appropriate
authorized agency official.
OPM does not know how agencies will use the additional flexibility
provided by this change. It is possible that agencies will approve more
recruitment and relocation incentive waivers now that they are not
required to go through the process of submitting a waiver request to
OPM. However, the criteria for approval has not changed, so agencies
will still need to determine that the situation meets the critical need
and other requirements for approving a waiver. In other words, approval
of a waiver is not automatic and agencies will need to use discretion
in granting waiver requests. In addition, agencies will need to make
determinations about whether they have funds available in their budgets
to provide waivers. The use of discretionary pay flexibilities such as
recruitment and relocation incentives may be limited by agency budgets.
As with the waiver authority, OPM does not know how agencies will
use the additional flexibility of utilizing recruitment incentive
service agreements of less than 6 months. Agencies do not report data
to OPM on the length of the service agreements they authorize. Since
the amount of the maximum recruitment incentive is based on the length
of the service period, an agency will be limited in how much of an
incentive they could authorize. For example, under the normal payment
limitations, the maximum recruitment incentive that could be paid for a
3-month service period is 6.25 percent (.25 (25 percent) x .25 (3
months or \1/4\ of 1 year) = 6.25 percent) of the employee's annual
rate of basic pay at the beginning of the service period. Under a
waiver, the maximum recruitment incentive that could be paid for a 3-
month service period is 12.5 percent (.50 (50 percent) x .25 (3 months
or \1/4\ of 1 year) = 12.5 percent) of the employee's annual rate of
basic pay at the beginning of the service period.

C. Regulatory Alternatives

An alternative to this final rule would have been to continue to
require agencies to request approval from OPM when seeking a waiver of
the normal recruitment and relocation payment limitations. OPM would
have continued to review agency requests and grant waivers if the
regulatory criteria were met. However, this slows down the approval
process for agencies that have a critical need to recruit or relocate
employees and want to act quickly.
Another alternative would have been to expand the authority to
waive the normal recruitment and relocation payment limitations, but
require higher

[[Page 57876]]

approval levels within the agency. However, OPM believes agencies are
in the best position to decide at what level to delegate this authority
within their agency.
Also, OPM could have expanded the agency waiver authority, but
required additional approval criteria. Agencies may include additional
approval criteria in their agency plan. OPM does not believe it is
necessary to require agencies to use additional approval criteria.
In addition, OPM could have expanded the agency waiver authority
but also instituted special reporting requirements for the use of the
new waiver authority. Agencies are required to report to OPM's central
data system when they authorize a waiver of the normal recruitment or
relocation incentive payment limitations using legal authority code
VPO. OPM does not believe additional reporting requirements are
necessary because OPM already collects many different data elements
each time an agency authorizes a recruitment incentive or relocation
incentive.
Regarding the amendment of the service agreement requirement for
recruitment incentives, possible alternatives included maintaining the
current 6-month minimum service agreement or reducing it to a lesser
amount (e.g., 3 months). However, OPM believes agencies are in the best
position to decide the appropriate length for a recruitment incentive
service agreement based on the needs for specific positions.
Finally, one commenter expressed concern that ``the proposed rule
does not consider the possible alternatives or trade-offs to the higher
payment limits, such as improving the working conditions, providing
training and development opportunities, or enhancing the recognition
and feedback mechanisms for employees.'' Comment 08. The commenter
continued, ``These factors could also influence the attraction and
retention of qualified employees, and may be more cost-effective and
sustainable than the higher payment limits.''
We agree that there are numerous alternatives to providing
recruitment or relocation incentives. As noted in the OPM Publication,
``Human Resources Authorities and Flexibilities in the Federal
Government,'' \33\ pay often is not the most important reason cited by
employees for being satisfied with their jobs or wanting to continue to
work for a particular organization. When applying human resources
flexibilities, agencies should also assess (including how successfully
they were used and how important they turned out to be) the use of non-
monetary strategies and factors, such as the following:
---------------------------------------------------------------------------

\33\ Office of Personnel Management. ``Human Resources
Authorities and Flexibilities in the Federal Government.'' <a href="https://www.opm.gov/policy-data-oversight/pay-leave/reference-materials/handbooks/humanresourcesflexibilitiesauthorities.pdf">https://www.opm.gov/policy-data-oversight/pay-leave/reference-materials/handbooks/humanresourcesflexibilitiesauthorities.pdf</a>.
---------------------------------------------------------------------------

<bullet> Merit-based career and skill growth opportunities,
including through formal training, on-the-job learning and development,
and mentoring;
<bullet> Performance management systems that support agency
missions, goals, and priorities and hold employees accountable for
their performance by providing employees clear, timely, constructive
feedback and appropriate rewards;
<bullet> Alternative work schedules (flexible work hours/days) and
flexible leave options; and
<bullet> Additional non-monetary benefits.
While agencies should consider non-monetary strategies to recruit
employees, we recognize there are times when those strategies are
insufficient. At those times, pay flexibilities such as recruitment and
relocation incentives may be especially helpful. This rule does not
impact the availability of any of those options; it only expands the
availability of an existing recruitment tool.

D. Costs

This final rule will affect the operations of more than 80 Federal
agencies--ranging from cabinet-level departments to small independent
agencies--that have employees covered by the recruitment and relocation
incentive regulations. If agencies choose to make use of the new
flexibilities, OPM estimates that this rule will require individuals
employed by these agencies to spend time updating agency policies and
procedures as a result of the final regulations. For this cost
analysis, the assumed average salary rate of Federal employees
performing this work is the 2025 rate for GS-14, step 5, from the
Washington, DC, locality pay table ($161,486 annual locality rate and
$77.38 hourly locality rate). OPM assumes the total dollar value of
labor, which includes wages, benefits, and overhead, is equal to 200
percent of the wage rate, resulting in an assumed labor cost of $154.76
per hour.
To comply with the regulatory changes in the final rule, affected
agencies will need to review the rule and update their policies and
procedures. OPM estimates that, in the first year following publication
of this final rule, this will require an average of 160 hours of work
by employees with an average hourly cost of $154.76 per hour. This
results in estimated costs in the first year of implementation of about
$24,762 per agency, and about $2 million Governmentwide. There are
costs associated with administering recruitment and relocation
incentives but not necessarily an increase in administrative costs for
agencies that are already using these pay flexibilities.
OPM does not know how agencies will use the additional flexibility
provided by this change. Therefore, we do not know what impact this
final rule will have on the total amount of recruitment and relocation
incentives paid. As noted previously, it is important to understand
that waivers to the normal payment limitations do not alter the maximum
total amount of a recruitment or relocation incentive that may be paid
to an individual employee. Agencies have the authority to approve a
recruitment or relocation incentive for payments of up to 25 percent of
an employee's annual rate of basic pay times the number of years in a
service agreement, not to exceed 4 years or 100 percent of annual basic
pay. With a waiver, agencies can approve a recruitment or relocation
incentive of up to 50 percent of an employee's annual rate of basic pay
times the number of years in a service agreement, but still not to
exceed 100 percent of annual basic pay. Therefore, the total incentive
paid under a waiver continues to be limited to 100 percent of the
employee's annual basic pay, but the incentive may be paid over 2 years
rather than 4 years.

E. Benefits

Permitting agencies to review and approve waivers at the agency
level will reduce administrative burden on agencies and increase the
efficiency of using recruitment and relocation incentives. This will
allow agencies to move more quickly in approving incentives when hiring
new employees and relocating those who are moving into positions that
are likely to be difficult to fill. Such efficiency could be especially
helpful in emergencies or other urgent situations in which recruiting
new employees or relocating current employees rapidly is necessary.
Also, with increases in the number of retirement-eligible employees,
recruiting early career and experienced talent to the Federal workforce
is a high priority. Providing agencies with more flexibility in
implementing recruitment incentives by permitting greater latitude in
determining service agreement lengths and payment limits can be a
useful tool in achieving this goal.

[[Page 57877]]

Regulatory Flexibility Act

The Director of OPM certifies that these regulations will not have
a significant economic impact on a substantial number of small entities
because they will apply only to Federal agencies and employees.

Regulatory Review

The Office of Information and Regulatory Affairs in the Office of
Management and Budget has designated this as a significant regulatory
action under E.O. 12866 section 3(f). Accordingly, OPM has examined the
impact of this rule as required by Executive Orders 12866 and 13563,
which direct agencies to assess all costs and benefits of available
regulatory alternatives and, if regulation is necessary, to select
regulatory approaches that maximize net benefits (including potential
economic, environmental, public, health, and safety effects,
distributive impacts, and equity). A regulatory impact analysis must be
prepared for rules that have an annual effect on the economy of $100
million or more or adversely affect in a material way the economy, a
sector of the economy, productivity, competition, jobs, the
environment, public health or safety, or State, local, or tribal
governments or communities. This rule is not a significant regulatory
action under E.O. 12866. Therefore, this rule is not an E.O. 14192
regulatory action because it is not significant under E.O. 12866.

E.O. 13132, Federalism

This regulation will not have substantial direct effects on the
States, on the relationship between the National Government and the
States, or on distribution of power and responsibilities among the
various levels of government. Therefore, in accordance with Executive
Order 13132, the Director of OPM certifies that this proposed rule does
not have sufficient federalism implications to warrant preparation of a
Federalism Assessment.

E.O. 12988, Civil Justice Reform

This regulation meets the applicable standards set forth in section
3(a) and (b)(2) of Executive Order 12988.

Unfunded Mandates Reform Act of 1995

Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA)
requires that agencies assess anticipated costs and benefits before
issuing any rule that would impose spending costs on State, local, or
tribal governments in the aggregate, or on the private sector, in any 1
year of $100 million in 1995 dollars, updated annually for inflation.
That threshold is currently approximately $206 million. This rulemaking
will not result in the expenditure by State, local, or tribal
governments, in the aggregate, or by the private sector, in excess of
the threshold. Thus, no written assessment of unfunded mandates is
required.

Congressional Review Act

OMB's Office of Information and Regulatory Affairs has determined
this is not a major rule as defined by the Congressional Review Act (5
U.S.C. 804(2)).

Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35)

This regulatory action will not impose any reporting or
recordkeeping requirements under the Paperwork Reduction Act.

List of Subjects in 5 CFR Part 575

Government employees, Wages.

The Director of OPM, Scott Kupor, reviewed and approved this
document and has authorized the undersigned to electronically sign and
submit this document to the Office of the Federal Register for
publication.

Dated: December 10, 2025.

Office of Personnel Management.
Jerson Matias,
Federal Register Liaison.

For the reasons stated in the preamble, OPM amends 5 CFR part 575
as follows:

PART 575--RECRUITMENT, RELOCATION, AND RETENTION INCENTIVES;
SUPERVISORY DIFFERENTIALS; AND EXTENDED ASSIGNMENT INCENTIVES

0
1. The authority citation for part 575 is revised to read as follows:

Authority: 5 U.S.C. 1104(a)(2), 5307. Subparts A and B also
issued under 5 U.S.C. 5753. Subpart C also issued under 5 U.S.C.
5754. Subpart D also issued under 5 U.S.C. 5755. Subpart E also
issued under 5 U.S.C. 5757; sec. 207, Pub. L. 107-273, 116 Stat.
1780 (5 U.S.C. 5307 note).

Subpart A--Recruitment Incentives

0
2. In Sec. 575.106, revise paragraph (a)(4) to read as follows:

Sec. 575.106 Authorizing a recruitment incentive.

(a) * * *
(4) Waive the limitation on the maximum amount of a recruitment
incentive under Sec. 575.109(c); and
* * * * *

0
3. In Sec. 575.107, revise paragraphs (a)(1) and (b) to read as
follows:

Sec. 575.107 Agency recruitment incentive plan and approval levels.

(a) * * *
(1) The designation of officials with authority to--
(i) Review and approve payment of recruitment incentives (subject
to paragraph (b) of this section), including the circumstances under
which an official has the authority to approve payment without higher-
level approval under paragraph (b)(2) of this section;
(ii) Waive the recruitment incentive payment limitation under Sec.
575.109(c) (subject to the approval requirements in paragraph (b) of
this section); and
(iii) Waive the repayment of a recruitment incentive under Sec.
575.111(h);
* * * * *
(b)(1) Except as provided in paragraph (b)(2) of this section, an
authorized agency official who is at least one level higher than the
employee's supervisor must review and approve each determination to pay
a recruitment incentive to a newly appointed employee, unless there is
no official at a higher level in the agency. If a determination
includes a waiver of the payment limitation in Sec. 575.109(c), the
official who is designated in the agency's plan under paragraph (a) of
this section to approve waivers must approve the determination. The
authorized agency official must review and approve the recruitment
incentive determination before the agency may pay the incentive to the
employee.
(2) When necessary to make a timely offer of employment, an
authorized agency official may establish criteria in advance for
offering recruitment incentives to newly-appointed employees and may
authorize an official who is not lower than a candidate's supervisor to
use these criteria to offer a recruitment incentive to a candidate
without further review or approval in any amount within a pre-
established range up to--
(i) The normal payment limitation in Sec. 575.109(b); or
(ii) A higher cap if the agency has approved a waiver to the normal
payment limitation under Sec. 575.109(c).
* * * * *

0
4. In Sec. 575.109, revise paragraph (c) to read as follows:

Sec. 575.109 Payment of recruitment incentives.

* * * * *
(c)(1) An authorized agency official may waive the limitation in
paragraph (b)(1) of this section for an employee or

[[Page 57878]]

group of employees based on a critical agency need. The authorized
agency official must determine that the competencies required for the
position(s) are critical to the successful accomplishment of an
important agency mission, project, or initiative (e.g., programs or
projects related to a national emergency or implementing a new law or
critical management initiative). Under such a waiver, the total amount
of recruitment incentive payments paid to an employee in a service
period may not exceed 50 percent of the employee's annual rate of basic
pay at the beginning of the service period multiplied by the number of
years (including fractions of a year) in the service period. However,
in no event may a waiver provide total recruitment incentive payments
exceeding 100 percent of the employee's annual rate of basic pay at the
beginning of the service period.
(2) Waiver determinations must be made in writing and include--
(i) A description of the critical agency need the recruitment
incentive would address;
(ii) The documentation required by Sec. 575.108; and
(iii) Any other information pertinent to the case at hand.
* * * * *

0
5. In Sec. 575.110, revise paragraph (a) to read as follows:

Sec. 575.110 Service agreement requirements.

(a) Before paying a recruitment incentive, an agency must require
the employee to sign a written service agreement to complete a
specified period of employment with the agency (or successor agency in
the event of a transfer of function). An authorized agency official
must establish the criteria for determining the length of a service
period. The service period may not exceed 4 years.
* * * * *

Subpart B--Relocation Incentives

0
6. In Sec. 575.206, revise paragraph (a)(4) to read as follows:

Sec. 575.206 Authorizing a relocation incentive.

(a) * * *
(4) Waive the limitation on the maximum amount of a relocation
incentive under Sec. 575.209(c); and
* * * * *

0
7. In Sec. 575.207, revise paragraphs (a)(1) and (b)(1) to read as
follows:

Sec. 575.207 Agency relocation incentive plan and approval levels.

(a) * * *
(1) The designation of officials with authority to--
(i) Review and approve payment of relocation incentives (subject to
paragraph (b) of this section);
(ii) Waive the relocation incentive payment limitation under Sec.
575.209(c) (subject to the approval requirements in paragraph (b) of
this section); and
(iii) Waive the repayment of a relocation incentive under Sec.
575.211(h);
* * * * *
(b)(1) Except as provided in paragraph (b)(2) of this section, an
authorized agency official who is at least one level higher than the
employee's supervisor must review and approve each determination to pay
a relocation incentive, unless there is no official at a higher level
in the agency. If a determination includes a waiver of the payment
limitation in Sec. 575.209(c), the official who is designated in the
agency's plan under paragraph (a) of this section to approve waivers
must approve the determination. The authorized agency official must
review and approve the relocation incentive determination before the
agency pays the incentive to the employee.
* * * * *

0
8. In Sec. 575.209, revise paragraph (c) to read as follows:

Sec. 575.209 Payment of relocation incentives.

* * * * *
(c)(1) An authorized agency official may waive the limitation in
paragraph (b)(1) of this section for an employee (or group of
employees, if the case-by-case determination is waived under the
conditions in Sec. 575.208(b)) based on a critical agency need. The
authorized agency official must determine that the competencies
required for the position are critical to the successful accomplishment
of an important agency mission, project, or initiative (e.g., programs
or projects related to a national emergency or implementing a new law
or critical management initiative). Under such a waiver, the total
amount of relocation incentive payments paid to an employee in a
service period may not exceed 50 percent of the annual rate of basic
pay of the employee at the beginning of the service period multiplied
by the number of years (including fractions of a year) in the service
period. However, in no event may a waiver provide total relocation
incentive payments exceeding 100 percent of the employee's annual rate
of basic pay at the beginning of the service period.
(2) Waiver determinations must be in writing and include--
(i) A description of the critical agency need the relocation
incentive would address;
(ii) The documentation required by Sec. 575.208; and
(iii) Any other information pertinent to the case at hand.
* * * * *
[FR Doc. 2025-22738 Filed 12-12-25; 8:45 am]
BILLING CODE 6325-39-P

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