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OMB warns agencies to limit employee incentives during sequestration

As sequestration continues, the Office of Management and Budget (OMB) issued instructions to federal agencies to limit incentive awards for employees and warned them to not attempt to shift money within their budgets to "soften the impact of sequestration."

The memo expands on a previous memo that had ordered agencies to limit their hiring, travel and other related spending. It instructed them to not issue "discretionary monetary awards" which it specified as including, annual performance awards and other awards. Agencies will need to be sensitive to how they handle these issues, to prevent employees from filing Merit Systems Protection Board (MSPB) actions. It notes agencies "should not" issue monetary awards unless "legally required." Collective bargaining agreements that govern some awards are included in this legally required group.

This new memo also warns that a wide variety of other incentives should be used "only on a highly limited basis" and where they are "necessary and critical" for the agency's mission. This includes items like quality step raises, some travel incentives, student loan repayments, recruitment, retention and relocation incentives and time-off awards.

OMBs instructions emphasize that agencies should "to minimize the negative impact of sequestration on core mission priorities." For employees, one potential concern is that managers can us this discretion in ways that could have a disparate impact on some workers, while using the cover of sequestration as the justification for their decision.

Agencies that are authorized to use some of their reserve funds are cautioned to not compromise long-term operations. Given the broad impact of sequestration on all federal agencies, we are currently in uncharted waters and if you have questions or concerns regarding activities within your agency, contact an attorney familiar with federal employment law.

Source: The Washington Post, "OMB clamps down on federal employee awards," Eric Yoder, April 5, 2013

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