Office of Personnel Management. 5 CFR Part 532 RIN 3206-AM63. Prevailing Rate Systems; Special Wage Schedules for Nonappropriated Fund
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1 This document is scheduled to be published in the Federal Register on 04/24/2014 and available online at and on FDsys.gov P Office of Personnel Management 5 CFR Part 532 RIN 3206-AM63 Prevailing Rate Systems; Special Wage Schedules for Nonappropriated Fund Automotive Mechanics AGENCY: U.S. Office of Personnel Management. ACTION: Final rule. SUMMARY: The U.S. Office of Personnel Management is issuing a final rule to establish special wage schedules for the Department of Defense s (DOD s) nonappropriated fund (NAF) automotive mechanics. These special wage schedules will replace the current commission pay practice covering DOD s NAF automotive mechanics with a flat rate pay system. Implementation of a flat rate pay system will better align the pay practice for compensating NAF automotive mechanics with current prevailing pay practices in the private sector. DATES: Effective date: This regulation is effective on [INSERT DATE OF PUBLICATION IN THE FEDERAL REGISTER]. Applicability date: This change applies on the first day of the first applicable pay period beginning on or after [INSERT DATE 60 DAYS AFTER DATE OF PUBLICATION IN THE FEDERAL REGISTER]. FOR FURTHER INFORMATION CONTACT: Madeline Gonzalez, by telephone at (202) or by at pay-leave-policy@opm.gov. SUPPLEMENTARY INFORMATION: On June 12, 2012, the U.S. Office of Personnel Management (OPM) issued a proposed rule (77 FR 34854) to establish special wage schedules for the Department of Defense s (DOD s) approximately 80 nonappropriated fund (NAF) 1
2 automotive mechanics. These special wage schedules will replace the current commission pay practice covering DOD s NAF automotive mechanics with a flat rate pay system. The 60-day comment period ended on August 13, OPM received comments from local management at an auto repair service station. Local management at the auto repair service station objected to the replacement of the current commission pay practice with a flat rate pay system because they believe that under the flat rate pay system there would be a significant negative effect on the productivity and profitability of their auto repair business. The reason local management believes the flat rate pay system would have a negative effect on productivity and profitability is because automotive mechanics paid under the current commission pay practice are paid more for taking on additional work, while pay under the proposed flat rate pay system is the same regardless of how much work is done. OPM does not find a compelling reason to continue the commission pay practice currently in effect. Under the current commission pay practice, automotive mechanics are compensated on the basis of a percentage of sales. Management controls the shop labor rate and determines the commission percentage. The automotive mechanic s pay is directly linked to sales generated. Any fluctuation up or down in the shop labor rate impacts the automotive mechanic s earnings. Different from the commission pay practice, the proposed flat rate pay plan would not be linked to shop labor rates, but would instead take into account local prevailing rates, the mechanic s skill level, and the standard number of hours required to complete a particular job. Since the change would de-link shop labor rates from employee pay rates, it would permit NAF automotive businesses to adjust retail rates as needed without having to adjust employee pay 2
3 rates. The Federal Wage System (FWS) is designed to provide common policies and practices and ensure employees are paid at prevailing wage levels. The current commission pay plan for automotive mechanics is no longer the prevailing automotive industry pay practice. Since the implementation of a flat rate pay system will better align the pay practice for compensating NAF automotive mechanics with current prevailing pay practices in the private sector, we have not made any changes in the final regulations based on the comments received. Therefore, OPM is adopting the proposed rule as final. We note that this final rule also uses the 2012 North American Industry Classification System (NAICS) codes published by the Office of Management and Budget. The Federal Prevailing Rate Advisory Committee (FPRAC), the national labormanagement committee responsible for advising OPM on matters concerning the pay of FWS employees, reviewed and recommended that we adopt these changes by majority vote. These changes would apply on the first day of the first applicable pay period beginning on or after 60 days following publication of the final regulations. The impact of the automotive mechanics flat rate pay plan on recruitment, retention, and workers earnings will be re-evaluated by FPRAC every 3 years, beginning 3 years after issuance of these final regulations. 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. Executive Order and Executive Order
4 This rule has been reviewed by the Office of Management and Budget in accordance with Executive Order and Executive Order List of Subjects in 5 CFR Part 532 Administrative practice and procedure, Freedom of information, Government employees, Reporting and recordkeeping requirements, Wages. U.S. Office of Personnel Management. follows: Katherine Archuleta, Director. Accordingly, the U.S. Office of Personnel Management amends 5 CFR part 532 as PART 532--PREVAILING RATE SYSTEMS 1. The authority citation for part 532 continues to read as follows: Authority: 5 U.S.C. 5343, 5346; also issued under 5 U.S.C Add to subpart B to read as follows: Special wage schedules for nonappropriated fund automotive mechanics. (a) The Department of Defense (DOD) will establish a flat rate pay system for nonappropriated fund (NAF) automotive mechanics. This flat rate pay system will take into account local prevailing rates, the mechanic s skill level, and the standard number of hours required to complete a particular job. (b) DOD will issue special wage schedules for NAF automotive mechanics who are covered by the flat rate pay system. These special schedules will provide rates of pay for nonsupervisory, leader, and supervisory employees. These special schedule positions will be 4
5 identified by pay plan codes XW (nonsupervisory), XY (leader), and XZ (supervisory), grades 8-10, and will use the Federal Wage System occupational code (c) DOD will issue special wage schedules for NAF automotive mechanics based on annual special flat rate surveys of similar jobs conducted in each special schedule wage area. (1) The survey area for these special surveys will include the same counties as the regular NAF survey area. (2) The survey jobs used will be Automotive Worker and Automotive Mechanic. (3) The special surveys will include data on automotive mechanics that are paid under private industry flat rate pay plans as well as those paid by commission. (4) In addition to all standard North American Industry Classification System (NAICS) codes currently used on the regular surveys, the industries surveyed will include 2012 NAICS codes 2012 NAICS industry titles New car dealers Automotive parts and accessory stores General automotive repair Automotive oil change and lubrication shops (5) The surveys will cover establishments with a total employment of eight or more. (6) The special schedules for NAF automotive mechanics will be effective on the same dates as the regular wage schedules in the NAF FWS wage area. (d) New employees will be hired at step 1 of the position under the flat rate pay system. Current employees will be moved to these special wage schedules on a step-by-step basis. Pay retention will apply to any employee whose rate of basic pay would otherwise be reduced as a result of placement in these new special schedules. BILLING CODE: P 5
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