3R Bonuses: Retention

Because the federal government can’t always compete with the private sector on wages, it has some tools at its disposal to ensure that agencies can recruit and retain the best possible candidates. These include relocation, recruitment, and retention bonuses, also known as 3R payments. Here, we focus specifically on retention incentives to help you understand when they are used, whether you might qualify, or whether you might be able to use one.

What are they?

Agencies are authorized to pay retention incentives to individual employees or groups of employees if:

• The employee or group has an unusual or unique skill that is needed by the agency, and without such bonus, the employee would likely leave federal service
• The agency needs an employee for a certain period of time before the completion of an activity, office closure, etc. and without such a bonus, the employee would likely leave his or her current position and seek employment elsewhere in the federal government or with another company

Who is qualified?

Agencies seeking to give a retention incentive must ensure that the employee is in a covered position (this includes those in a General Schedule position, senior-level position, SES, law enforcement officers, FBI and DEA SES, scientific or professional positions, Executive Schedule positions, and prevailing rate positions). Unqualified positions include most presidential appointees, non-career SES employees, those excepted from competitive service, agency heads (or those likely to be appointed as agency heads), SES limited term appointees and some SES emergency appointees. Employees must also be in good standing, or evaluated as “Fully Successful.”

How much can someone receive?

Retention incentives cannot exceed 25% of an employee’s basic pay if the incentive is being paid on an individual level. For retention incentives paid to groups, the amount cannot exceed 10% of each employee’s basic pay. This amount can go up to 50% if the agency receives OPM approval. Retention incentives can be paid in installments (biweekly, monthly, etc.) or following the term of service. Retention incentives cannot be paid upfront, or before the employee completes the service agreement or specific installment for which he or she is being paid.

What is required of the employee and agency?

The agency must document in writing the reason for providing the retention incentive, and must be thorough in explaining the necessity of such a payment. The employee is required to sign a service agreement that states the employee will remain with the agency for a specified amount of time. Each retention incentive is expected to be reviewed annually to determine whether it is still necessary.

When deciding to give a retention incentive, an agency should also be able to prove things like:

• The availability of other qualified candidates is low
• Private sector salaries for similar, hard-to-fill positions, are higher and therefore attract the best candidates
• There has been a high rate of turnover in the specified position
• There are specific employment or labor market trends that affect the agency’s ability to retain the best candidates
• The agency has already attempted other incentives such as recruitment and relocation incentives, training, or flexible work scheduling without success

Didn’t I hear something about this on the news?

You did. Overall, data on 3R bonuses is hard to come by. In 2009, OPM reported that nearly $350 million was paid out at an average of $8,079 per recipient. The VA and Department of Defense were the largest users of the program, while the State Department had the highest average individual payments.

So, it’s not surprising then that back in February, after a rash of high-profile incidents, Congress decided to target the VA on a number of levels, one of which was 3R bonuses. At that time, the House voted unanimously to ban the agency from giving bonuses to senior VA executives for five years. Before resigning, former VA Secretary Eric Shinseki called for the implementation of an executive bonus ban.

But that’s not all: EPA has also come under fire when it came to light that a former official had collected a 25% retention bonus every year beginning in 1991, racking up a total of $500,000 in 3R bonuses (the official pled guilty to scamming the government out of a total of $900,000, which included fraudulent travel expenses). In this instance, the EPA didn’t have any records to prove that the bonus was reviewed each year as required, except once in 2000. Following the incident, the IG launched an investigation into EPA bonuses and reported in May 2014 that nearly $500,000 given to 11 agency employees was unauthorized, and had not been reviewed on an annual basis.