Introduction

Once it has been determined that an employee is entitled to highest previous rate (HPR), the process in the General Schedule (GS) and the Federal Wage System (FWS) used to determine the HPR depends on whether HPR was earned in the FWS or the GS. These two processes are covered separately. 

Voluntary Demotions (GS)

When an employee requests a voluntary demotion, his/her pay can be set using HPR or using another formula, depending on the circumstances surrounding the voluntary demotion.

Programs may choose to establish a policy allowing an employee’s pay to be set using HPR when he/she accepts a voluntary demotion in order to move to a position with greater promotion potential than his/her current position. 

Example: A secretary, GS-7, step 1 ($23,171), who is at the top of his/her career ladder, is selected for a Program Analyst position, GS-5, which has promotion potential to GS-12. Because the employee is accepting the voluntary demotion to move into a position with greater promotion potential than his/her current position, the employee’s pay is set using the HPR rule at GS-5, step 9 ($23,699). 

Note: A demotion taken to enter Career Enhancement and similar programs is not considered a voluntary demotion. See Pay Retention policy for additional information. 

When an employee requests and accepts a voluntary demotion, with prospects of repromotion to the higher grade, for reasons other than to move into a position with greater promotion potential, a rate of pay in the lower grade is selected, which upon repromotion to the higher grade will place the employee in the rate which would have been attained had the employee remained in grade. 

Example: A GS-13, step 2 ($52,396), with a duty station of Washington, D.C., requests a voluntary demotion to GS-12 in order to accept a position in California. Pay is set as follows: a GS-12, if promoted to the GS-13, step 2, would have a rate of pay of GS-12, step 7 ($51,169). Therefore, using the two-step rule, the employee’s pay is set at GS-12, step 5 ($48,326), because upon re-promotion, he/she would be entitled to GS-13, step 2. 

Exception: Management officials with authority to hire, promote, and evaluate employees (typically the first-level supervisor) have full authority to determine when voluntary demotions are in the “best interests of the program” and whether HPR should or should not be granted. In the above example, the management official would probably have determined that the employee’s voluntary demotion was not in the best interest of the program. Management officials will inform the Servicing Personnel Office (SPO), in writing, of their decisions and the reason(s) for granting or not granting HPR.

Best Interest Example

The following example illustrates when a management official would more than likely determine that the voluntary demotion is in the best interest of the program, and thus allow the employee’s pay to be set using HPR. A windfall would occur using HPR in this example. This use of HPR should be rare and carefully considered since it will set precedent. 

Example: A GS-9, step 2, in Colorado requests a voluntary demotion to GS-7 in order to move to a position in Texas. The management official determines that the demotion is in the best interest of the program because there has been a high turnover rate in the Texas position, and the position has been difficult to fill with an experienced person. 

Using the HPR rule, pay is set at GS-7, step 9. Under regulations, the employee could be repromoted back to GS-9 after 90 days. 

Because pay is set at GS-7, step 9, pay would have to be set at GS-9, step 4, upon the employee’s repromotion (using the 2-step promotion rule). The use of HPR in the voluntary demotion will result in the employee receiving an additional pay increase of two steps if the employee is repromoted.

Demotion for Cause (GS)

A demotion for cause is a reduction in grade based on the conduct or unacceptable performance of an employee. An employee demoted for cause has pay set at step 1 of the grade. This rate will be used to determine any future entitlement to HPR. 

Example: A GS-9, step 5 ($32,125) is demoted to GS-7, because of unacceptable performance. Pay is set at GS-7, step 1 ($23,171). GS-9, step 5, cannot be used as the employee’s HPR in future pay-setting actions.

Special Salary Rates (GS)

When an employee voluntarily accepts a reassignment from a special salary rate position to a lower-paid non-special rate position, the special salary rate may be used as the basis for HPR when: 

• The employee is reassigned to a position within USDA,

• The special rate of pay is the employee’s current rate of pay, and

• Management determines that the need for the services of the employee and his/her contribution to the program will be greater in the position to which being reassigned.

For information on when an employee is involuntarily reassigned from a special rate position to a non-special rate position, or when special salary rates are reduced or terminated, see your agency guidance on grade and pay retention or contact your SPO.

The Directors, ABS, Riverdale-Washington Business Site and Minneapolis Business Site have the authority to approve requests to use a special salary rate as HPR. This authority may be redelegated one supervisory level lower.