Maximum Payable Rate Rule

The maximum payable rate rule is a special rule that allows an agency to set pay for a General Schedule (GS) employee at a rate above the rate that would be established using normal rules, based on a higher rate of pay the employee previously received in another Federal job. The pay set under the maximum payable rate rule may not exceed the rate for step 10 of the GS grade or be less than the rate to which the employee would be entitled under normal pay-setting rules. The maximum payable rate rule may be used in various pay actions, including reemployment, transfer, reassignment, promotion, demotion, change in type of appointment, termination of a critical position pay authority under 5 CFR part 535, movement from a non-GS pay system, or termination of grade or pay retention under 5 CFR part 536.

Maximum Payable Rate (MPR) Policy

By October 1, 2024, each agency must establish a policy regarding the use of the MPR rule that includes—

• Designation of officials with the authority to approve and set pay under the MPR rule;
• Any situations in which the agency must use the MPR rule;
• Any situations in which the agency may exercise its discretion in using the MPR rule;
• Consideration of the step at which pay has been set for employees performing similar work in the organization (based upon occupational series, grade level, types of duties, or other job relevant factors);
• Any other factors the designated officials may or must consider in determining the step at which to set the employee’s pay between the employee’s entitlement under any other applicable pay-setting rule and the employee’s MPR; and
• Documentation and recordkeeping requirements sufficient to allow reconstruction of the action.

An agency may not set pay under the MPR rule retroactively unless a retroactive action is required to comply with a nondiscretionary agency policy.

Rates of pay that may be used as the highest previous rate (HPR)

The highest previous rate is-

• The highest rate of basic pay previously received by an individual while employed in a civilian position in any part of the Federal Government (including service with the government of the District of Columbia for employees first employed by that government before October 1, 1987), without regard to whether that position was under the GS pay system; or
• The highest rate of basic pay in effect when a GS employee held his or her highest GS grade and highest step within that grade.

The highest previous rate must be a rate of basic pay received by an employee while serving-

• 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 is a GS locality rate, the underlying GS rate or an LEO special base rate associated with that locality rate must be used as the highest previous rate in applying the maximum payable rate rule.

An agency may use a GS employee's special rate established under 5 U.S.C. 5305 and 5 CFR part 530, subpart C, or 38 U.S.C. 7455 as the highest previous rate when all of the following conditions apply:

• The employee is reassigned to another position in the same agency at the same grade level;
• The special rate is the employee's rate of basic pay immediately before the reassignment; and
• An authorized agency official finds that the need for the services of the employee, and the employee's contribution to the program of the agency, will be greater in the position to which reassigned. An agency must make such determinations on a case-by-case basis. In each case, the agency must document the determination to use the special rate as an employee's highest previous rate in writing.

Any rate that does not meet the definition of General Schedule or GS in 5 CFR 531.203 is a rate from a non-GS pay system. If an employee's highest previous rate is a non-GS hourly rate of pay, the agency must convert the hourly rate of pay to an annual rate of pay by multiplying the hourly rate of pay by 2,087.

Pay rates that must be treated as if they were rates under a non-GS pay system:

• A critical position pay rate under 5 CFR part 535, and
• An adjusted GS rate that includes market pay under 38 U.S.C. 7431(c).

Rates of basic pay that may not be used as the HPR

The highest previous rate may not be based on certain types of rates, including the following:

• Erroneous rates;
• A rate received during a temporary promotion lasting less than 1 year, except (1) upon permanent placement at the same or higher grade or (2) when a temporary promotion is extended so that the total time equals or exceeds 1 year;
• A special rate established under 5 U.S.C. 5305, except in a reassignment within the same agency when the special rate is the employee's current rate and the agency has a need for the employee's services. (See 5 CFR 531.222(c) for use of a special rate as the HPR.) When a special rate is not used, the employee's underlying GS rate is the HPR.;
• A rate received as a member of the uniformed services; or
• A retained rate under 5 U.S.C. 5363 or a similar rate under another legal authority.

If a temporary promotion of less than 1 year is extended so that the total time of the temporary promotion equals or exceeds 1 year, the HPR may be based on the rate received during the temporary promotion once the total time of the temporary promotion equals or exceeds 1 year.

Determining the maximum payable rate (MPR)

When HPR is based on a GS rate:

When an employee's HPR is based on a GS rate, determine the MPR as follows:

Step A: Compare the employee's highest previous rate with the GS rates for the grade in which pay is currently being set using the schedule of GS rates (excluding any locality payment or additional pay of any kind) in effect at the time the highest previous rate was earned.

Step B: Identify the lowest step in the grade at which the GS rate was equal to or greater than the employee's highest previous rate. If the employee's highest previous rate was greater than the maximum GS rate for the grade, identify the step 10 rate.

Step C: Identify the rate on the currently applicable GS rate range for the employee's current position of record and grade that corresponds to the step identified in step B. This rate is the maximum payable GS rate the agency may pay the employee.

Step D: After setting the employee's GS rate within the rate range for the grade (not to exceed the MPR identified in step C), determine the employee's payable rate of basic pay (i.e., locality rate or special rate).

When HPR is based on an LEO special base rate, see 5 CFR 531.221(b) for special MPR rules.

When HPR is based on the special rate of an employee who is reassigned to a position in the same agency as provided by 5 CFR 531.222(c), see 5 CFR 531.221(c) for special MPR rules.

When HPR is based on a rate under a non-GS pay system:

When a GS employee's HPR is based on a non-GS rate, determine the MPR as follows:

Step A: Compare the highest previous rate to the highest applicable rate range (including a locality rate or special rate range) in effect at the time and place where the highest previous rate was earned. The highest applicable rate range is determined as if the employee held the current GS position of record (including the grade in which pay is being set) at that time and place.

Step B: Identify the lowest step rate in that range that was equal to or higher than the highest previous rate (or the step 10 rate if the highest previous rate exceeded the range maximum).

Step C: Convert the step rate identified in step B to a corresponding rate (same step) on the current highest applicable rate range for the employee's current GS position of record and official worksite. That step rate is the employee's maximum payable rate of basic pay.

Step D: After setting the employee's rate of basic pay in the current highest applicable rate range (not to exceed the MPR identified in step C), determine any underlying rate of basic pay to which the employee is entitled at the determined step rate.

Key Terms

GS rate means a rate of basic pay within the General Schedule, excluding any LEO special base rate and additional pay of any kind such as locality payments or special rate supplements. A rate payable to a GM employee is considered a GS rate even though the rate may fall between GS step rates.

Highest applicable rate range means the rate range applicable to a GS employee, based on a given position of record and official worksite that provides the highest rates of basic pay, excluding any retained rates. For example, a rate range of special rates may exceed an applicable locality rate range. In certain circumstances, the highest applicable rate range may consist of two types of pay rates from different pay schedules-e.g., a range where special rates (based on a fixed dollar supplement) are higher in the lower portion of the range and locality rates are higher in the higher portion of the range.

Locality rate means a GS rate or an LEO special base rate, if applicable, plus any applicable locality payment.

Position of record means an employee's official position (defined by grade, occupational series, employing agency, LEO status, and any other condition that determines coverage under a pay schedule (other than official worksite)), as documented on the employee's most recent Notification of Personnel Action (Standard Form 50 or equivalent) and current position description. A position to which an employee is temporarily detailed is not documented as a position of record.

Rate of basic pay means the rate of pay fixed by law or administrative action for the position held by a GS employee before any deductions, including a GS rate, an LEO special base rate, a special rate, a locality rate, and a retained rate, but exclusive of additional pay of any other kind. For the purpose of applying the maximum payable rate rules in §§ 531.216 and 531.221 using a rate under a non-GS pay system as an employee's highest previous rate, rate of basic pay means a rate of pay under other legal authority which is equivalent to a rate of basic pay for GS employees, as described in this definition, excluding a rate under § 531.223.

References

• 5 CFR 531.221-223
• 5 CFR 531.247 for GM employees
• 5 CFR 531.216 for an employee moving to a GS position from a Department of Defense and Coast Guard nonappropriated fund instrumentality (NAFI) position