This Directive was canceled July 25, 2005.

U.S. Department of Transportation
Federal Highway Administration

June 28, 1996

Chapter 6: Pay, Allowances and Other Payments
Section 1: Determining Rate of Basic Pay

Par.

1. Purpose

2. References

3. Definitions

4. Initial Federal Employment

5. Initial SES Appointment

6. Changes in SES Basic Pay Rate

7. Reemployment after a Break in Service

8. Other Actions

9. Determining Pay Based on Highest Previous Rate

1. PURPOSE. To set forth the procedures for determining the rate of basic compensation paid to employees in General Schedule (GS/GM) positions and to executives in the Senior Executive Service (SES). In FHWA, pay setting practices will be applied consistently and equitably. To this end, employees shall be paid salaries based on guidelines contained in this section.

2. REFERENCES.

   1. Title 5, United States Code, Sections 5301, 5303, and 5331-5338,

   2. Department of Transportation (DOT) Order 3530.1, Pay Rate Determination in the Department of Transportation Senior Executive Service (SES) dated January 16, 1981, and

   3. Public Law 95-454, dated October 13, 1978 (Civil Service Reform Act of 1978).

3. DEFINITIONS.

   1. Demotion - a change of an employee from one GS/GM grade to a lower GS/GM grade, with or without a reduction in pay; or from a higher non-GS/GM rate to a lower rate of pay within a GS/GM grade.

   2. Highest Previous Rate - the rate of pay (before any deductions and exclusive of additional pay of any kind, such as overtime, night or Sunday differentials, etc.) previously paid to an individual while employed in a position in the Federal Government. Employment must have been for a continuous period of not less than 90 days.

   3. New Appointment - the first appointment, regardless of tenure, as an employee of the Federal Government or the Government of the District of Columbia.

   4. Promotion - a change of an employee from a lower GS/GM grade to a higher GS/GM grade, or from a lower non-GS/GM rate to a higher GS/GM rate. Promotions involving the GM pay system are made in accordance with the guidance provided in Personnel Management Manual (PMM) Chapter 7, Section 5, Merit Pay and Cash Awards Systems.

   5. Reassignment - a change of an employee, while serving continuously in the same agency, from one position to another without promotion or demotion.

   6. Reemployment - any employment, including reinstatement or another type of appointment, after a break in service of at least one full workday.

   7. Transfer - a change of a Federal Government employee, without a break in service of one fullworkday, from one branch in the Federal Government to another or from one Federal agency to another.

4. INITIAL FEDERAL EMPLOYMENT.

   1. Except for cases described in paragraphs 4b and 4c below, a new appointment is made at the first step of the grade for GS employees.

   2. Special rates for recruitment and retention are periodically established for certain groups of positions. These higher rates may be authorized by the office of Personnel Management (OPM) when the pay rates in private enterprise exceed the normal pay rates for the positions concerned to such a degree as to handicap significantly the Government's recruitment or retention of well-qualified persons.

   3. Superior qualifications appointments, made under specific limited conditions, may be requested in accordance with guidance set forth in PMM Chapter 6, Section 1, Subsection 1, Advanced-In-Hiring Rates Based on Superior Qualifications when filling positions at a rate above the first step. This authority is designed to attract superior candidates to the Federal Government who otherwise would probably not accept federal employment due to salary considerations.

5. INITIAL SES APPOINTMENT.

   1. Individuals selected from GS or GM positions will be placed at the ES-1 pay rate or, as appropriate, in an ES pay rate which is 6-9 percent higher than the pay the individual has been receiving.

   2. Individuals entering from the non-Federal sector will be placed in an ES rate recognizing the level of the position and the qualifications of the individual. The total compensation should be analyzed to equate it as closely as possible to the Federal Pay System in determining the pay rate to be offered.

   3. The actual salary established under either paragraphs 5a or 5b should not exceed 9 percent above the level of pay the individual has been receiving nor should the pay rate exceed the maximum pay rate established for the organizational level of the position. Exceptions to the preceding are submitted for decision by the Secretary in accordance with guidance set forth in DOT Order 3530.1.

6. CHANGES IN SES BASIC PAY RATE. An executive may be considered for an increase in pay rate on the basis of performance in current position as evidenced by the annual performance appraisal or, at any time, the executive assumes a more responsible position. The pay rate which can be changed no more frequently than once each year is established in accordance with guidance set forth in DOT Order 3530.1.

7. REEMPLOYMENT AFTER A BREAK IN SERVICE. A person who is reemployed after a break in service is paid a salary based on the currently authorized rate for the grade and step last held prior to separation unless another rate is established under the FHWA highest previous rate guidelines.

8. OTHER ACTIONS. For other pay actions such as transfers, promotions, reassignments, demotions, restoration after military service, changes between pay systems and pay adjustments for supervisors of wage grade employees, the personnel officer will assure the rate of pay for GS employees is based on OPM regulations and FHWA highest previous rate guidance of paragraph 9.

9. DETERMINING PAY BASED ON HIGHEST PREVIOUS RATE.

   1. The highest previous rate is based on a regular tour of duty under an appointment not limited to 90 days or less, or for a continuous period of not less than 90 days under one or more appointments without a break in service. If the highest previous rate was earned in a GS position and the rates have since been increased by subsequent amendments, the present GS rate for the appropriate grade and step will be the highest previous rate. If the highest previous rate falls between two steps of the grade, the employee may be paid at the higher step.

   2. A determination will be made in each case as to whether the highest previous rate is warranted based on the circumstances. Circumstances such as the following would warrant less than the highest previous rate:

      (1) An employee received a rate in a position so different from the position to which the employee will be appointed that there is a question of the experience/qualifications relatedness, e.g., from Computer Specialist to Personnel Management Specialist.

      (2) The use of the full highest previous rate would result in poor pay alignment with other FHWA employees assigned similar or identical work within the same duty station or poor pay alignment with supervisory and management positions.

   3. The highest previous rate should not be paid under the following circumstances:

      (1) An employee was demoted at his/her own request with the prospect of repromotion back to the former grade within the foreseeable future under merit promotion rules. In such a case, a rate should be selected in the lower grade which upon promotion back will place the employee in the rate in the higher grade which he or she would have attained had he or she remained in that grade. However, a demotion to enter a formal employee development program generally utilized FHWA-wide (e.g., Upward Mobility, Apprenticeship, or Career Intern Programs) is not considered to be "at the employee's request" regardless of whether merit promotion procedures were utilized. Such an employee shall be paid at the highest previous rate because the demotionis considered to be initiated by management to further the FHWA's mission.

      (2) An employee received a rate in a position from which he or she had been removed for inefficiency or disciplinary reasons by reassignment, reduction in grade, or separation. This rate should not be used to determine the highest previous rate.

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