OPM's reduction-in-force rule puts performance first and takes probationers out of competition

An Office of Personnel Management final rule published on 3 August 2026 took effect on 2 September, revising the reduction-in-force regulations “to make the RIF regulations more streamlined, efficient, and merit-based by prioritizing performance over tenure and length of service when determining which employees will be retained in a RIF and by modifying the types of employees who are excluded from RIF competition.”¹ It amends 5 CFR parts 316, 330, 351, 353, 359, 362 and 430.¹ An agency that issued a RIF notice before the effective date “must process the RIF under the regulations in effect when the RIF notice was issued.”¹ A companion rule of the same date moves appeals from the Merit Systems Protection Board to OPM (see OPM replaces the MSPB on reduction-in-force appeals and bars judicial review).²

1. The statute lists four retention factors without ranking them and states two military-preference entitlements separately. Section 3502 of title 5 is captioned “Order of retention.” Its first subsection directs that OPM “shall prescribe regulations for the release of competing employees in a reduction in force which give due effect to — (1) tenure of employment; (2) military preference, subject to section 3501(a)(3) of this title; (3) length of service; and (4) efficiency or performance ratings.”³ The instruction there is to give the four “due effect,” not to rank them, and OPM states that “[t]he statute does not prescribe the current regulatory order of retention” and does not “require OPM to rank tenure, veterans’ preference, length of service, and performance in the precise order reflected in current 5 CFR part 351.”¹³ Subsections (b) and (c) are not silent in the same way. A preference eligible with a compensable service-connected disability of 30 percent or more whose performance “has not been rated unacceptable” is “entitled to be retained in preference to other preference eligibles,” and an employee entitled to retention preference on the same performance condition is “entitled to be retained in preference to other competing employees.”³ Part of OPM’s answer is its own history: the current regulations “subordinate veterans’ preference to another factor, namely tenure,” so that “a veteran in tenure group II is ranked below a non-veteran in tenure group I in retention standing.”¹ The reordering of the four is therefore measured against the prior regulation, which did rank them, rather than against subsection (a), which does not — but subsections (b) and (c) bind whatever ordering OPM adopts.¹³

2. Retention now turns on a point score. Agencies “will maintain separate retention registers for competitive service and excepted service employees; within each group, employees will be ranked by performance credit, augmented by veterans’ preference, with tenure subgroup and length of service used as tie-breakers.”¹ Performance credit uses “the three most recent ratings of record from the relevant four-year period, assigning 7 points for Level 5, 5 points for Level 4, 3 points for Level 3, and 0 points for Level 1 or Level 2 ratings.”¹ Veterans’ preference is then added: those with “a compensable service-connected disability of 30 percent or more receive 5 additional points; other preference eligibles receive 3 additional points; non-preference eligibles receive no additional points.”¹ Tenure operates in two places rather than one — it splits the registers before performance is computed, and its subgroup then resolves ties — and the rule consolidates “current tenure groups I, II, and III into a ‘competitive service tenure group’ and an ‘excepted service tenure group,’ with two subgroups in each.”¹ OPM answers the veterans’ preference objection under a heading of its own. “Many commenters (for example, 0005, 0660, 0672, 0680, and 0157) criticized OPM’s proposal because, in their view, the proposal undermines veterans’ preference,” and veterans’ groups were among the 721 who wrote in.¹ OPM records that commenters 0660 and 0680 read subsections (b) and (c) “to mean that a preference eligible whose performance is not unacceptable must always be retained ahead of every non-preference eligible, regardless of comparative performance,” and that commenter 0157 contended preference would be “largely illusory” under these revised regulations.¹ OPM answers that the subsections “create an entitlement to a meaningful retention preference, not a categorical right to be retained ahead of every non-veteran regardless of performance,” and that Congress “did not intend to create a rigid structure under which disabled veterans or veterans must always appear at the top of the retention register,” contrasting the RIF statute’s general “entitled to be retained in preference to” with the specific ordering Congress wrote into 5 U.S.C. 3313 for hiring registers and with the bar in 38 U.S.C. 4316(c) on discharging a reemployed veteran “except for cause.”¹⁴⁵ OPM offers two worked examples, in both of which preference prevails: a 30-percent-disabled preference eligible rated 4/4/4 scores 20 against 19 for a non-preference employee rated 5/5/4, and another preference eligible rated 4/4/4 scores 18 against 17 for a non-preference employee rated 5/4/4.¹ It also discloses how tightly the scale is spaced: “the difference between a Level 5 rating and a Level 4 rating is only 2 points, and the difference between a Level 4 rating and a Level 3 rating is also only 2 points,” so that “a +3 veterans’ preference credit is larger than one ordinary one-level rating difference, and a +5 credit is larger than two ordinary one-level rating differences.”¹ Neither worked example reaches the case the commenters put — a preference eligible whose performance is not unacceptable ranked below a higher-scoring non-veteran. Two illustrative retention registers elsewhere in the rule do, though OPM offers them to show that tenure now breaks ties rather than controlling the order. In the first, a non-preference employee rated 5/5/4 scores 19 and ranks first, ahead of a 30-percent-disabled preference eligible rated 4/4/3 who scores 18; in the second, a non-preference employee rated 5/5/5 scores 21 and ranks first, ahead of two 30-percent-disabled preference eligibles rated 5/4/3 who score 20.¹

3. A class of employees leaves the competition entirely. “Employees serving initial probationary periods, trial periods, temporary or time-limited appointments of one year or less, and Schedule C and Schedule G employees are not ‘competing employees’ for RIF purposes and can be retained, furloughed, separated, demoted, or reassigned without using RIF procedures.”¹ For those employees an agency may act “without determining the employee’s retention standing under subparts D and E, applying the order-of-release provisions in subpart F, or providing assignment rights under subpart G, provided the action is otherwise consistent with the terms of the employee’s appointment and applicable law.”¹ The final rule narrowed the proposal here, revising § 351.202(d) “from a broad statement that certain employees are excluded from part 351 altogether to a more precise statement that they are not ‘competing employees’ for RIF purposes,” and it preserved a notice duty: where such an employee is furloughed more than 30 days, separated, demoted or reassigned for a reason in § 351.201(a)(2), and the action “is not merely the expiration of a temporary or time-limited appointment according to its terms,” the agency must give “a modified written notice that includes the action to be taken, the reasons for the action, and its effective date; a link to 5 CFR part 351 and access to the agency’s records pertinent to the reduction in force being taken; information on reemployment rights; and any appeal rights.”¹ The change places the exclusion alongside the reclassification of positions into Schedule Policy/Career (see EO implements Schedule Policy/Career for ~8,000 positions and OPM finalises Schedule Policy/Career rule).¹

4. The displacement mechanics change with the ranking. The rule replaces “‘bump and retreat’ concepts with assignment rights to a position held by an employee with a lower-retention-standing”: a released competitive-service employee “will receive assignment rights to a qualifying position held by another employee with lower retention standing in the same tenure group, generally within three grades below the released employee’s position, or five grades for certain 30-percent-or-more disabled veterans.”¹ Two further changes bear on who is in the pool. Agencies must “assess whether employees or RPL candidates have the capacity, adaptability, and skills needed for the position” through skills-based assessments, which the rule ties to the Chance to Compete Act of 2024.¹ And the unit within which competition happens is drawn more loosely: “competitive areas may be based on official organizational units or combinations of units,” with certain geographic locations definable as separate competitive areas.¹ The rule also revises the reemployment priority list, the career transition assistance programme, the interagency programme and transfers of function.¹