Agencies will soon see a more streamlined process for potentially offering higher-value bonuses to federal employees who are being hired or relocated.

A new final rule from the Office of Personnel Management on Tuesday seeks to reduce “administrative burden” and “increase efficiency” in the process for approving recruitment and relocation incentives. The changes come after OPM first proposed regulations in November 2023.

In practice, OPM’s changes will shift the transactional work of approving waivers for larger bonuses off of OPM’s plate, and instead make it the responsibility of individual agencies. The goal is make the process for offering pay incentives easier, and in theory free up time for OPM to focus on other priorities, according to the final rule.

“This will allow agencies to move more quickly in hiring new employees and relocating those who are moving into positions that are likely to be difficult to fill,” OPM said. “Such efficiency could be especially helpful in emergency or other critical situations in which recruiting new employees or relocating current employees rapidly is necessary.”

Despite the process change, it’s still up to agencies to determine when providing pay incentives is appropriate. OPM said it “does not know” how agencies may change — or not change — their policies as a result of the new final rule. The agency emphasized that the amount employees can receive as a bonus will not change, and that the incentives still need to abide by other regulations, such as being reserved for hard-to-fill federal positions.

“It is possible that agencies will approve more recruitment and relocation incentive waivers now that they are not required to go through the process of submitting a waiver request to OPM,” the agency said. “However, the criteria for approval has not changed, so agencies will still need to determine that the situation meets the critical need and other requirements for approving a waiver.”

The new final rule also removes a requirement that federal employees must be in their jobs for six months before qualifying for a pay incentive. OPM said the change could help fill short-term positions, and support early-career recruitment.

“For example, this allows an agency to determine that a summer internship position is likely to be difficult to fill and authorize a recruitment incentive for an intern with a three-month service agreement,” OPM said.

But the use of pay incentives may also be limited by agency budgets, OPM said. The agency suggested some alternatives for trying to incentivize federal employees to stay in their jobs, such as training opportunities and flexible work schedules.

“Pay often is not the most important reason cited by employees for being satisfied with their jobs or wanting to continue to work for a particular organization,” OPM said. “[But] we recognize there are times when those strategies are insufficient. At those times, pay flexibilities such as recruitment and relocation incentives may be especially helpful.”

Federal regulations cap relocation and recruitment incentives for federal employees at 25% of their base pay rate. But with a waiver, agencies can approve larger annual bonuses of up to 50% of an employee’s base salary. In either case, the value of the incentive cannot exceed 100% of an employee’s base salary.

Now with the final rule in place, agencies will be able to more quickly approve waivers for larger employee bonuses. Prior to the change, agencies would have to first get sign-off from OPM on the waivers, a step that often slowed down the finalization of larger incentives.

But earlier this year, agencies including the IRS and the Federal Bureau of Prisons canceled many of their pay-based incentives, a change that some employees have said will worsen staffing issues.

The Trump administration’s OPM made relatively few changes to the 2023 proposed regulations, except for removing gender neutral language that it said was “inconsistent with the administration’s policy regarding gender ideology.”

Additionally, the final rule applies only to recruitment and relocation incentives. Due to legal constraints, OPM said it cannot currently make regulatory changes to retention incentives.

The process changes came in response to a suggestion from the National Academy of Public Administration (NAPA) in 2021. Among many recommendations, NAPA said that OPM should adopt a “decentralized approach” to transactional and oversight responsibilities, by delegating more of those authorities to agencies.

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