Prevailing Rate Systems; Special Wage Schedules for Nonappropriated Fund Automotive Mechanics

Katherine Archuleta
Office of Personnel Management
April 24, 2014

[Federal Register Volume 79, Number 79 (Thursday, April 24, 2014)]
[Rules and Regulations]
[Pages 22765-22766]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-09338]



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Federal Register / Vol. 79, No. 79 / Thursday, April 24, 2014 / Rules 
and Regulations

[[Page 22765]]



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 April 24, 2014. 
Applicability date: This change applies on the first day of the first 
applicable pay period beginning on or after June 23, 2014.

FOR FURTHER INFORMATION CONTACT: Madeline Gonzalez, by telephone at 
(202) 606-2838 or by email 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) 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, 
2012. 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 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 labor-management 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 13563 and Executive Order 12866

    This rule has been reviewed by the Office of Management and Budget 
in accordance with Executive Order 13563 and Executive Order 12866.

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.
Katherine Archuleta,
Director.

    Accordingly, the U.S. Office of Personnel Management amends 5 CFR 
part 532 as follows:

PART 532--PREVAILING RATE SYSTEMS

0
1. The authority citation for part 532 continues to read as follows:

    Authority: 5 U.S.C. 5343, 5346; Sec.  532.707 also issued under 
5 U.S.C. 552.


0
2. Add Sec.  532.287 to subpart B to read as follows:

[[Page 22766]]

Sec.  532.287  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 
identified by pay plan codes XW (nonsupervisory), XY (leader), and XZ 
(supervisory), grades 8-10, and will use the Federal Wage System 
occupational code 5823.
    (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
------------------------------------------------------------------------
441110....................................  New car dealers.
441310....................................  Automotive parts and
                                             accessory stores.
811111....................................  General automotive repair.
811191....................................  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.

[FR Doc. 2014-09338 Filed 4-23-14; 8:45 am]
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