5 U.S.C. § 5404 — Human capital performance payments

Page 632 TITLE 5—GOVERNMENT ORGANIZATION AND EMPLOYEES § 5402 most valuable employees. This Fund will offer Federal managers a new tool to recognize em- ployee performance that is critical to the achievement of agency missions. (Added Pub. L. 108–136, div. A, title XI, § 1129(a), Nov. 24, 2003, 117 Stat. 1642.) Editorial Notes PRIOR PROVISIONS A prior section 5401, added Pub. L. 95–454, title V, § 501, Oct. 13, 1978, 92 Stat. 1180; amended Pub. L. 97–346, § 2, Oct. 15, 1982, 96 Stat. 1647; Pub. L. 98–615, title II, § 201(a), Nov. 8, 1984, 98 Stat. 3208; Pub. L. 102–378, § 2(37), Oct. 2, 1992, 106 Stat. 1351, stated purpose of chapter to provide a performance management and recognition system, prior to repeal by Pub. L. 103–89, § 3(a)(1), (c), Sept. 30, 1993, 107 Stat. 981, 983, eff. Nov. 1, 1993. § 5402. Definitions For the purpose of this chapter— (1) ‘‘agency’’ means an Executive agency under section 105, but does not include the Government Accountability Office; (2) ‘‘employee’’ includes— (A) an individual paid under a statutory pay system defined in section 5302(1); (B) a prevailing rate employee, as defined in section 5342(a)(2); and (C) a category of employees included by the Office of Personnel Management fol- lowing the review of an agency plan under section 5403(b)(1); but does not include— (i) an individual paid at an annual rate of basic pay for a level of the Executive Sched- ule, under subchapter II of chapter 53, or at a rate provided for one of those levels under another provision of law; (ii) a member of the Senior Executive Service paid under subchapter VIII of chap- ter 53, or an equivalent system; (iii) an administrative law judge paid under section 5372; (iv) a contract appeals board member paid under section 5372a; (v) an administrative appeals judge paid under section 5372b; and (vi) an individual in a position which is ex- cepted from the competitive service because of its confidential, policy-determining, pol- icy-making, or policy-advocating character; and (3) ‘‘Office’’ means the Office of Personnel Management. (Added Pub. L. 108–136, div. A, title XI, § 1129(a), Nov. 24, 2003, 117 Stat. 1642; amended Pub. L. 108–271, § 8(b), July 7, 2004, 118 Stat. 814.) Editorial Notes PRIOR PROVISIONS A prior section 5402, added Pub. L. 95–454, title V, § 501, Oct. 13, 1978, 92 Stat. 1181; amended Pub. L. 98–615, title II, § 201(a), Nov. 8, 1984, 98 Stat. 3208, related to ap- plicability of chapter, prior to repeal by Pub. L. 103–89, § 3(a)(1), (c), Sept. 30, 1993, 107 Stat. 981, 983, eff. Nov. 1, 1993. AMENDMENTS 2004—Par. (1). Pub. L. 108–271 substituted ‘‘Govern- ment Accountability Office’’ for ‘‘General Accounting Office’’. § 5403. Human Capital Performance Fund (a) There is hereby established the Human Capital Performance Fund, to be administered by the Office for the purpose of this chapter. (b)(1)(A) An agency shall submit a plan as de- scribed in section 5406 to be eligible for consider- ation by the Office for an allocation under this section. An allocation shall be made only upon approval by the Office of an agency’s plan. (B)(i) After the reduction for training required under section 5408, ninety percent of the remain- ing amount appropriated to the Fund may be al- located by the Office to the agencies. Of the amount to be allocated, an agency’s pro rata distribution may not exceed its pro rata share of Executive branch payroll. (ii) If the Office does not allocate an agency’s full pro rata share, the undistributed amount re- maining from that share will become available for distribution to other agencies, as provided in subparagraph (C). (C)(i) After the reduction for training under section 5408, ten percent of the remaining amount appropriated to the Fund, as well as the amount of the pro rata share not distributed be- cause of an agency’s failure to submit a satisfac- tory plan, shall be allocated among agencies with exceptionally high-quality plans. (ii) An agency with an exceptionally high- quality plan is eligible to receive an additional distribution in addition to its full pro rata dis- tribution. (2) Each agency is required to provide to the Office such payroll information as the Office specifies necessary to determine the Executive branch payroll. (Added Pub. L. 108–136, div. A, title XI, § 1129(a), Nov. 24, 2003, 117 Stat. 1642.) Editorial Notes PRIOR PROVISIONS A prior section 5403, added Pub. L. 95–454, title V, § 501, Oct. 13, 1978, 92 Stat. 1182; amended Pub. L. 98–615, title II, § 201(a), Nov. 8, 1984, 98 Stat. 3209; Pub. L. 101–509, title V, § 529 [title I, § 101(b)(4)(C)], Nov. 5, 1990, 104 Stat. 1427, 1439; Pub. L. 102–378, § 2(38), Oct. 2, 1992, 106 Stat. 1351, related to general pay increases, prior to repeal by Pub. L. 103–89, § 3(a)(1), (c), Sept. 30, 1993, 107 Stat. 981, 983, eff. Nov. 1, 1993. § 5404. Human capital performance payments (a)(1) Notwithstanding any other provision of law, the Office may authorize an agency to pro- vide human capital performance payments to in- dividual employees based on exceptional per- formance contributing to the achievement of the agency mission. (2) The number of employees in an agency re- ceiving payments from the Fund, in any year, shall not be more than the number equal to 15 percent of the agency’s average total civilian full- and part-time permanent employment for the previous fiscal year. (b)(1) A human capital performance payment provided to an individual employee from the Fund, in any year, shall not exceed 10 percent of the employee’s rate of basic pay. (2) The aggregate of an employee’s rate of basic pay, adjusted by any locality-based com- parability payments, and human capital per- Page 633 TITLE 5—GOVERNMENT ORGANIZATION AND EMPLOYEES § 5406 formance pay, as defined by regulation, may not exceed the rate of basic pay for Executive Level IV in any year. (3) Any human capital performance payment provided to an employee from the Fund is in ad- dition to any annual pay adjustment (under sec- tion 5303 or any similar provision of law) and any locality-based comparability payment that may apply. (c) No monies from the Human Capital Per- formance Fund may be used to pay for a new po- sition, for other performance-related payments, or for recruitment or retention incentives paid under sections 5753 and 5754. (d)(1) An agency may finance initial human capital performance payments using monies from the Human Capital Performance Fund, as available. (2) In subsequent years, continuation of pre- viously awarded human capital performance payments shall be financed from other agency funds available for salaries and expenses. (Added Pub. L. 108–136, div. A, title XI, § 1129(a), Nov. 24, 2003, 117 Stat. 1643.) Editorial Notes REFERENCES IN TEXT Executive Level IV, referred to in subsec. (b)(2), is set out in section 5315 of this title. PRIOR PROVISIONS A prior section 5404, added Pub. L. 95–454, title V, § 501, Oct. 13, 1978, 92 Stat. 1183; amended Pub. L. 98–615, title II, § 201(a), Nov. 8, 1984, 98 Stat. 3210; Pub. L. 101–103, § 3(a), Sept. 30, 1989, 103 Stat. 670, related to merit increases, prior to repeal by Pub. L. 103–89, § 3(a)(1), (c), Sept. 30, 1993, 107 Stat. 981, 983, eff. Nov. 1, 1993. § 5405. Regulations The Office shall issue such regulations as it determines to be necessary for the administra- tion of this chapter, including the administra- tion of the Fund. The Office’s regulations shall include criteria governing— (1) an agency plan under section 5406; (2) the allocation of monies from the Fund to agencies; (3) the nature, extent, duration, and adjust- ment of, and approval processes for, payments to individual employees under this chapter; (4) the relationship to this chapter of agency performance management systems; (5) training of supervisors, managers, and other individuals involved in the process of making performance distinctions; and (6) the circumstances under which funds may be allocated by the Office to an agency in amounts below or in excess of the agency’s pro rata share. (Added Pub. L. 108–136, div. A, title XI, § 1129(a), Nov. 24, 2003, 117 Stat. 1643.) Editorial Notes PRIOR PROVISIONS A prior section 5405, added Pub. L. 95–454, title V, § 501, Oct. 13, 1978, 92 Stat. 1183; amended Pub. L. 98–615, title II, § 201(a), Nov. 8, 1984, 98 Stat. 3211; Pub. L. 101–509, title V, § 529 [title I, § 101(b)(3)(C)], Nov. 5, 1990, 104 Stat. 1427, 1439, related to pay administration, prior to repeal by Pub. L. 103–89, § 3(a)(1), (c), Sept. 30, 1993, 107 Stat. 981, 983, eff. Nov. 1, 1993. § 5406. Agency plan (a) To be eligible for consideration by the Of- fice for an allocation under this section, an agency shall— (1) develop a plan that incorporates the fol- lowing elements: (A) adherence to merit principles set forth in section 2301; (B) a fair, credible, and transparent em- ployee performance appraisal system; (C) a link between the pay-for-performance system, the employee performance appraisal system, and the agency’s strategic plan; (D) a means for ensuring employee in- volvement in the design and implementation of the system; (E) adequate training and retraining for supervisors, managers, and employees in the implementation and operation of the pay- for-performance system; (F) a process for ensuring ongoing per- formance feedback and dialogue between su- pervisors, managers, and employees throughout the appraisal period, and setting timetables for review; (G) effective safeguards to ensure that the management of the system is fair and equi- table and based on employee performance; and (H) a means for ensuring that adequate agency resources are allocated for the de- sign, implementation, and administration of the pay-for-performance system; (2) upon approval, receive an allocation of funding from the Office; (3) make payments to individual employees in accordance with the agency’s approved plan; and (4) provide such information to the Office re- garding payments made and use of funds re- ceived under this section as the Office may specify. (b) The Office, in consultation with the Chief Human Capital Officers Council, shall review and approve an agency’s plan before the agency is eligible to receive an allocation of funding from the Office. (c) The Chief Human Capital Officers Council shall include in its annual report to Congress under section 1303(d) of the Homeland Security Act of 2002 an evaluation of the formulation and implementation of agency performance manage- ment systems. (Added Pub. L. 108–136, div. A, title XI, § 1129(a), Nov. 24, 2003, 117 Stat. 1644.) Editorial Notes REFERENCES IN TEXT Section 1303(d) of the Homeland Security Act of 2002, referred to in subsec. (c), is section 1303(d) of Pub. L. 107–296, which is set out as a note under section 1401 of this title. PRIOR PROVISIONS A prior section 5406, added Pub. L. 98–615, title II, § 201(a), Nov. 8, 1984, 98 Stat. 3211; amended Pub. L.