# Reporting exceptions to OPM.
**AGENCY:**
Office of Personnel Management.
**ACTION:**
Final rule.
**SUMMARY:**
The Office of Personnel Management is issuing final regulations to implement a change in law that requires the pay of heads of agencies and other designated employees to be calculated and paid on a biweekly basis instead of on a monthly basis. The final regulations also prescribe the circumstances under which an agency may calculate the pay of an employee on a biweekly pay period basis whose pay otherwise would be calculated on a monthly or other basis.
**DATES:**
The regulations are effective June 9, 2005.
**FOR FURTHER INFORMATION CONTACT:**
Jeanne Jacobson by telephone at (202) 606-2858; by FAX at (202) 606-0824; or by e-mail at *[email protected]* .
**SUPPLEMENTARY INFORMATION:**
The Office of Personnel Management (OPM) is issuing final regulations to calculate pay on a biweekly pay period basis for employees whose pay was formerly calculated on a monthly basis. Section 1124 of Public Law 108-136 (November 24, 2003) amended 5 U.S.C. 5504 to require the pay of heads of agencies (including the heads of military departments) to be calculated and paid on a biweekly basis instead of on a monthly basis. This law also amended 5 U.S.C. 5504 to cover members of the Foreign Service, the Senior Foreign Service, and the Federal Bureau of Investigation and Drug Enforcement Administration Senior Executive Service. In addition, 5 U.S.C. 5504(c)(3), as amended, allows an agency to make exceptions and elect to calculate the pay of employees on a biweekly pay period basis whose pay otherwise would be calculated on a monthly or other basis. The law requires OPM to issue regulations providing guidelines for such exceptions.
OPM issued proposed regulations on October 7, 2004, providing guidelines for agencies to use when electing to calculate the pay of employees on a biweekly pay period basis whose pay otherwise would be calculated on a monthly or other basis (69 FR 60097). The comment period for these proposed regulations ended on December 6, 2004. During the comment period, OPM received one comment from a Federal agency. The agency's concern dealt with the discussion in the Supplementary Information section of the *Federal Register* notice for the proposed regulations regarding how an agency head would be paid when he or she worked only a portion of a pay period. The agency thought the information in the “Computation of Pay” paragraph implied that an agency head who separated in the middle of a pay period would be paid for a full pay period of service. This was not the intent. An agency head who works only a portion of a pay period may be paid only for the number of hours worked in that pay period. Under 5 U.S.C. 5504, an agency must calculate the pay for fractional pay periods of work by dividing the agency head's annual salary by 2,087 to determine an hourly rate, and multiplying the hourly rate by the number of hours worked in the pay period.
Since this was the only comment received, the proposed regulations are being adopted as final without any changes.
**Regulatory Flexibility Act**
I certify that these regulations will not have a significant economic impact on a substantial number of small entities because they will affect only Federal agencies and employees.
**E.O. 12866, Regulatory Review**
This rule has been reviewed by the Office of Management and Budget in accordance with Executive Order 12866.
**List of Subjects in 5 CFR 550**
Administrative practice and procedure, Claims, Government employees, Wages.
Office of Personnel Management.
Dan G. Blair,
Acting Director.
**5 CFR Part 550**
Accordingly, OPM is amending part 550 of title 5 of the Code of Federal Regulations as follows:
**PART 550—PAY ADMINISTRATION (GENERAL)**
1. A new subpart F is added to part 550 to read as follows:
**Subpart F—Computation of Pay for Biweekly Pay Periods**
550.601
550.602
550.603
550.604
550.605
550.606
**Authority:**
5 U.S.C. 5504; Public Law 108-136, 117 Stat. 1637.
**Subpart F—Computation of Pay for Biweekly Pay Periods**
§ 550.601
This subpart provides regulations to implement 5 U.S.C. 5504 to compute pay on a biweekly pay period basis for employees in an agency, as defined in § 550.603.
§ 550.602
(a) This subpart applies to—
(1) An employee in or under an agency, except an employee excluded by paragraph (b) of this section;
(2) The head of an agency;
(3) The head of a military department, as defined in 5 U.S.C. 102;
(4) A Foreign Service officer;
(5) A member of the Senior Foreign Service;
(6) A member of the Senior Executive Service; or
(7) A member of the Federal Bureau of Investigation and Drug Enforcement Administration Senior Executive Service.
(b) This subpart does not apply to—
(1) An employee on the Isthmus of Panama in the service of the Panama Canal Commission; or
(2) An employee or individual excluded from the definition of employee in 5 U.S.C. 5541(2), except employees excluded by 5 U.S.C. 5541(2)(ii), (iii), and (xiv) through (xvii) are covered by this subpart.
§ 550.603
In this subpart—
*Agency* means an executive agency, as defined in 5 U.S.C. 105.
*Employee* has the meaning given that term in 5 U.S.C. 2105.
§ 550.604
Agencies must apply the biweekly pay period and computation of pay provisions of 5 U.S.C. 5504 for employees covered by § 550.602(a).
§ 550.605
An agency head or designee may deem that an employee excluded from coverage under § 550.602(b)(2) is covered by 5 U.S.C. 5504 in situations where he or she determines that continuing to calculate the pay of such employees on a monthly or other basis would diminish the level of services provided to the public by the agency. An agency head or designee also may deem that otherwise excluded employees are covered by 5 U.S.C. 5504 when he or she determines that computing the pay of such employees under that provision of law would provide cost savings in agency operations.
§ 550.606
Each agency must notify OPM in writing of any exceptions made under § 550.605.