What flexibilities do agencies have in assigning a pay rate on hiring?

Initial pay rates on hiring typically are set according to how the position is classified. However, agencies may set the rate of basic pay of a newly appointed employee at a rate above the minimum rate of the appropriate General Schedule grade because of the superior qualifications of the candidate, or a special need of the agency for the candidate’s services. (Note: Where this authority is used, it must be applied in a gender-neutral way, for example so as not to disadvantage anyone who has had a break in their employment history.)

An agency may consider a candidate’s existing pay, recent salary history, or salary in a competing job offer, or other relevant factors. However, agencies are not to put excessive emphasis on past salary, which could disadvantage those whose past salaries were suppressed or who had a break in service.

In addition, agencies may impose their own restrictions, such as a higher management approval level, limits on amounts to be paid, and restrictions on the use of the authority for certain positions or occupations.

The determination cannot be made retroactively.

Also, the “maximum payable rate” rule allows an agency to set pay for a General Schedule 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 can be set up to step 10 of the GS grade that applies. For an individual who has had an extended break in service, an agency may compare the person’s highest previous rate to the applicable rate range in effect at the time and then adjust it to the current applicable rate range.

Agencies also typically have wider authority to set higher initial pay rates in settings where pay banding is used.

Under the Federal Wage System, the increased minimum hiring rate authority allows for setting any scheduled rate above step 1 as the minimum rate at which a new employee can be hired. When there is an increased minimum rate authorization for an occupation and grade at a particular location, all appointments must be made at the authorized increased minimum rate.


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