PART 535—CRITICAL POSITION PAY AUTHORITY Authority: 5 U.S.C. 5377. E.O. 13415, 71 FR 70641, 3 CFR, 2006 Comp., p. 250. Source: 73 FR 50181, Aug. 26, 2008, unless otherwise noted. § 535.101 Purpose. The purpose of this part is to provide a regulatory framework for the critical position pay authority authorized by 5 U.S.C. 5377. The Office of Personnel Management (OPM), in consultation with the Office of Management and Budget (OMB), may grant authority to the head of an agency to fix the rate of basic pay for one or more positions under this part. § 535.102 Definitions. Agency Critical position Critical position pay authority Critical position pay rate Employee Head of an agency § 535.103 Authority. (a) Subject to a grant of authority from OPM in consultation with OMB and all other requirements in this part, the head of an agency may, in his or her sole and exclusive discretion, fix the rate of basic pay for a critical position at a rate not less than the rate of basic pay that would otherwise be payable for the position and not greater than— (1) The rate payable for level I of the Executive Schedule; or (2) A rate in excess of the rate for level I of the Executive Schedule based on information and data that justify the higher rate, with the written approval of the Director of OPM. (b) The head of an agency may exercise his or her critical position pay authority only— (1) When such a position requires expertise of an extremely high level in a scientific, technical, professional, or administrative field and is critical to the agency's successful accomplishment of an important mission; and (2) To the extent necessary to recruit or retain an individual exceptionally well-qualified for the critical position. (c) If critical position pay authority is granted for a position, the head of an agency may determine whether it is appropriate to exercise the authority with respect to any proposed appointee or incumbent of the position. (d) An agency granted critical position pay authority may continue to use the authority for an authorized position as long as needed. OPM will monitor the use of critical position pay authorities annually, through the agency's required reports under § 535.107, and will terminate the authority associated with a given position after notifying the agency if, in OPM's judgment in consultation with OMB, the authority is no longer needed. (e) An agency may require an employee to sign a written service agreement with the agency that governs future payments of critical position pay. As part of a determination to grant (or not withdraw) an agency authority to provide a position or positions with critical position pay, OPM may require the agency to establish written service agreement or notice requirements for employees receiving critical pay. OPM may specify the matters such a service agreement or notice must address such as the position the employee will hold and the duties the employee is expected to perform; the level of performance and accomplishments expected; and the factors that an agency must consider in determining whether to continue, increase, reduce, or terminate the employee's critical position pay rate. (f) An employee has no right to grieve or appeal a decision to reduce, not increase, or terminate a critical position pay rate. Nothing in this paragraph limits any right or remedy provided by another applicable law. [73 FR 50181, Aug. 26, 2008, as amended at 91 FR 54940, Aug. 26, 2026] § 535.104 Requests for and granting critical position pay authority. (a) An agency may request critical position pay authority only after determining that the position in question cannot be filled with an exceptionally well-qualified individual through the use of other available human resources flexibilities and pay authorities. OPM, in consultation with OMB, will review agency requests. OPM will advise the requesting agency as to whether the request is approved and when the agency's critical position pay authority becomes effective. (b) A request for critical position pay authority (or authorities) must be signed by the head of an agency and submitted to OPM. Requests covering multiple positions must include a list of the positions in priority order. The head of an agency may request coverage of positions of a type not listed in 5 U.S.C. 5377(a)(2), as authorized by 5 U.S.C. 5377(i)(2) and Executive Order 13415. (c) Requests for critical position pay authority must include information and data required by OPM to justify the higher pay, including, as appropriate, market-based justification, evidence of recruitment and retention needs, and the qualifications of the individual. The head of an agency must submit such requests to OPM with the information required in paragraph (d) of this section. If OPM, in consultation with OMB, concurs with a request to set pay above the rate payable for level I of the Executive Schedule, the Director of OPM must provide written approval and may establish a maximum limitation on the critical position pay rate. (d) Requests for critical position pay authority must include: (1) Position title; (2) Position appointment authority (for Senior Executive Service positions, appointment authority for any incumbent); (3) Pay plan and grade/level; (4) Occupational series of the position; (5) Geographic location of the position; (6) Current salary of the position or incumbent; (7) Name of incumbent (or “Vacant”); (8) Length of time the incumbent has been in the position or length of time the position has been vacant; (9) A written evaluation of the need to designate the position as critical. Such an evaluation must include— (i) The kinds of work required by the position and the context within which it operates; (ii) The range of positions and qualification requirements that characterize the occupational field, including those that require extremely high levels of expertise; (iii) The rates of pay reasonably and generally required in the public and private sectors for similar positions; and (iv) The availability of individuals who possess the qualifications to do the work required by the position; (10) Any additional information the agency may deem appropriate to demonstrate that higher pay is needed to recruit or retain an employee for a critical position; (11) Unless the position is an Executive Schedule position, a copy of the position description for the critical position; and (12) The desired rate of basic pay for requests to set pay above the rate for level I of the Executive Schedule and justification, including, as appropriate, market-based justification, evidence of recruitment and retention needs, and qualifications of the individual to show that such a rate is necessary to recruit and retain an individual exceptionally well-qualified for the critical position. [73 FR 50181, Aug. 26, 2008, as amended at 91 FR 54940, Aug. 26, 2026] § 535.105 Setting and adjusting rates of basic pay. (a) The rate of basic pay for a critical position may not be less than the rate of basic pay, including any locality-based comparability payments established under 5 U.S.C. 5304 or special rate supplement under 5 U.S.C. 5305 (or other similar payment or supplement under other legal authority) that would otherwise be payable for the position. (b) If critical position pay authority is granted for a position, the head of an agency may initially set pay at an amount up to the rate payable for level I of the Executive Schedule or other maximum rate below level I of the Executive Schedule that is approved by OPM in consultation with OMB. A rate in excess of the rate payable for level I of the Executive Schedule may be established only with the written approval of the Director of OPM under § 535.104(c). (c) The head of an agency may make subsequent adjustments in the rate of basic pay for a critical position each January at the same time general pay adjustments are authorized for Executive Schedule employees under 5 U.S.C. 5318. Such adjusted rates may not exceed the new rate payable for level I of the Executive Schedule or other maximum rate approved for the critical position under § 535.104(c). However, the employee must have at least a rating of Fully Successful or equivalent, and subsequent adjustments must be based on labor market factors, recruitment and retention needs, and individual accomplishments and contributions to the agency's mission. Any adjustment in the rate of basic pay under this paragraph is also subject to service agreement and notice requirements established under § 535.103(e), if applicable. (d) Employees receiving critical position pay are not entitled to locality-based comparability payments established under 5 U.S.C. 5304, special rate supplements under 5 U.S.C. 5305, or other similar payments or supplements under other legal authority. (e) If an agency discontinues critical position pay for a given position (on its own initiative or because OPM, in consultation with OMB, terminates the authority under § 535.103(d)), the employee's rate of basic pay will be set at the rate to which the employee would be entitled had he or she not received critical pay, as determined by the head of the agency, unless the employee is eligible for a higher payable rate under the General Schedule maximum payable rate rule in § 531.221 and the agency chooses to apply that rule. [73 FR 50181, Aug. 26, 2008, as amended at 91 FR 54940, Aug. 26, 2026] § 535.106 Treatment as rate of basic pay. A critical position pay rate is considered a rate of basic pay for all purposes, including any applicable premium pay, except— (a) Application of any saved pay or pay retention provisions (e.g., 5 U.S.C. 5363); (b) Application of any adverse action provisions (e.g., 5 U.S.C. 7512); or (c) Application of the General Schedule (GS) pay administration rules in 5 CFR part 531, subpart B; however, a critical position pay rate is treated as a non-GS rate of basic pay in applying the maximum payable rate rule in §§ 531.221 through 531.223 of this chapter, as provided in § 531.221(a)(4). [73 FR 50181, Aug. 26, 2008, as amended at 91 FR 54941, Aug. 26, 2026] § 535.107 Annual reporting requirements. (a) OPM must submit an annual report to Congress on the use of the critical position pay authority. Agencies must submit the following information to OPM by January 31 of each year on their use of critical position pay authority for the previous calendar year: (1) The name, title, pay plan, and grade/level of each employee receiving a higher rate of basic pay under this subpart; (2) The annual rate or rates of basic pay paid in the preceding calendar year to each employee in a critical position; (3) The beginning and ending dates of such rate(s) of basic pay, as applicable; (4) The rate or rates of basic pay that would have been paid but for the grant of critical position pay. This includes what the rate or rates of basic pay were, or would have been, without critical position pay at the time critical position pay is initially exercised and any subsequent adjustments to basic pay that would have been made if critical position pay authority had not been exercised; and (5) Whether the authority is still needed for the critical position(s).