Critical Position Pay: OPM Drops the 'Rare Circumstances' Test, Clears the Way for $400,000 Salaries and Bars Appeals

Bottom line

In 2025, nine agencies reported paying critical position pay to 25 people ^[1]. A presidential memorandum signed May 29 approves up to 400 more positions, at rates as high as $400,000 ^[3]. OPM’s final rule, published and effective today, rewrites the regulations to match: level I of the Executive Schedule becomes the default ceiling, the OPM Director can approve more, and anyone whose critical pay is later cut or ended has no grievance or appeal ^[1].

For nearly everyone reading this, the rule changes nothing about your paycheck. For a few hundred specialists, and for the agencies that want to hire them, it changes a great deal.

What happened

The authority. Critical position pay comes from 5 U.S.C. 5377, enacted in the Federal Employees Pay Comparability Act of 1990 ^[1]. It lets an agency head fix basic pay above the normal rate for a position that needs “expertise of an extremely high level” in a scientific, technical, professional or administrative field and is critical to an important mission ^[1]. OPM grants the authority after consulting OMB ^[1]. The statute caps it at 800 positions governmentwide at any time, no more than 30 of them under the Executive Schedule ^[1].

The old tiers. Since 2008, OPM’s regulations set three ceilings: level II of the Executive Schedule in most cases, level I in “exceptional circumstances,” and above level I in “rare circumstances” with the written approval of the President ^{[1, 2]}. FEDweek’s report on the 2008 rule put level I at $191,300 at the time ^[5]. Neither “exceptional” nor “rare” was ever defined ^[1]. OPM said in April that no agency had ever asked for a rate above level I since the provision was written ^[2].

The delegation nobody used. In December 2006, Executive Order 13415 assigned the President’s functions under section 5377 to the OPM Director ^[4]. OPM’s 2008 regulations used that delegation for one purpose but kept presidential sign-off for rates above level I ^[1]. The final rule calls that “inconsistent with the delegation framework” and moves the approval to the OPM Director, in consultation with OMB ^[1].

What the rule does. OPM proposed the changes on April 24, received one substantive comment, and adopted them without change ^{[1, 2]}. The rule:

• makes level I the default maximum and drops the level II tier ^[1];
• lets the Director approve a higher rate “based on information and data that justify the higher rate” ^[1];
• gives the agency head “sole and exclusive discretion” over whether and how to use the authority ^[1];
• removes the requirement that multi-position requests be ranked in priority order ^[1];
• lets agencies, or OPM as a condition of approval, require a written service agreement covering duties, expected performance and the factors for continuing or ending the pay ^[1];
• adds 5 CFR 535.103(f): “An employee has no right to grieve or appeal a decision to reduce, not increase, or terminate a critical position pay rate” ^[1];
• adds 5 CFR 752.401(b)(18), which excludes those reductions from chapter 75 adverse action coverage when the employee was told up front that the rate was time-limited ^[1].

The money. In April, OPM’s illustrative estimate was $20 million to $40 million a year if half the 800 slots went above level I ^[2]. The final rule replaces that with a figure built on the May 29 memorandum: each position filled at $400,000 costs about $146,900 a year more than level I, for a total of about $44.1 million if 300 positions are filled and $58.8 million if all 400 are ^[1]. OPM says costs could fall outside that range and expects any other above-level-I approvals to add a “modest” amount ^[1].

The single commenter supported the change but warned that agencies could hit the 800-position cap faster and urged “rigorous oversight” ^[1]. OPM agreed with the concern and changed nothing, pointing to the statutory standard, the OMB consultation and its annual report to Congress ^[1].

What it means for you

Most GS, wage-grade and SES employees. No change. Critical pay is set position by position and capped by statute ^[1]. It is not a general pay adjustment.

Specialists in hard-to-fill fields. The rule cites OPM’s December 2025 memos on AI, IT and cyber hiring as the reason for skipping the usual 30-day delay ^[1]. If your agency has struggled to hire in those fields, the authority is now easier to request. The statutory test still applies: pay may be set only as far as needed to recruit or retain an exceptionally well-qualified person, and requests must include market pay data and the candidate’s qualifications ^[1].

Candidates for the 400 national security investment positions. The memorandum names “investment, engineering, financial, and legal professionals” working on critical minerals, advanced materials and supply chains ^[3]. OPM will allocate the slots among agencies and set conditions ^{[1, 3]}. Those 400 count against the 800 cap ^[1].

Current and future critical pay recipients. Read the paperwork. Your appeal rights now depend on what your agency tells you at the start. If the notice says the rate is time-limited, reviewed each year and may be ended, a later cut is not an adverse action and goes to no grievance or appeal ^[1]. The rule keeps “any right or remedy provided by another applicable law,” without saying which ones it has in mind ^[1]. Readers of the August 3 and August 4 memos will recognize the direction: OPM’s RIF and probationary rules also narrowed where employees can take a dispute.

Annual increases are allowed each January, alongside Executive Schedule adjustments, but only with at least a Fully Successful rating and based on labor market factors and individual contributions ^[1].

If critical pay ends and you return to a GS rate. The rule says a critical pay rate is not a GS rate of basic pay for GS pay administration, such as the two-step promotion rule ^{[1, 2]}. One exception survives: under the maximum payable rate rule, your agency may set your GS pay at a step, up to step 10, based on the former critical rate, if that beats normal pay-setting ^[1].

Contractors. The rule covers federal positions only ^[1]. It says nothing about contract support for the same programs.

One loose end. The May 29 memorandum invokes 5 CFR 535.103(a)(3) and 535.104(c), the provisions requiring presidential approval above level I ^[3]. Today’s rule rewrites both ^[1]. OPM’s rule treats the memorandum as in force and builds its cost estimate on it, but does not discuss whether the cited provisions matter ^[1].

Questions you’re probably asking

What is the maximum critical position pay rate under OPM’s new rule?

Level I of the Executive Schedule is now the default ceiling ^[1]. A higher rate is possible with written approval from the OPM Director, in consultation with OMB, backed by data that justify it ^[1].

Is critical position pay a raise for federal employees generally?

No. The law caps the authority at 800 positions governmentwide at any one time, and it may be used only as far as needed to recruit or retain an exceptionally well-qualified individual ^[1]. In 2025 nine agencies reported 25 people receiving it ^[1].

Can I appeal if my agency cuts or ends my critical position pay?

Not through a grievance or an appeal under the new 5 CFR 535.103(f) ^[1]. A cut or termination is also not a chapter 75 adverse action if you were told the rate was time-limited, reviewed each year and could end ^[1].

Which jobs can get the $400,000 critical pay rate?

The May 29 memorandum approved up to 400 positions supporting national security investment programs, citing investment, engineering, financial and legal professionals for critical minerals and supply chains ^[3]. OPM will allocate those positions among agencies ^{[1, 3]}.

When does the critical position pay rule take effect?

August 26, 2026, the day it was published ^[1]. OPM waived the usual 30-day delay on the ground that the rule relieves restrictions ^[1].

What I’m watching

• No date set: OPM’s allocation of the 400 national security investment positions among agencies ^{[1, 3]}.
• January 2027: the first window for annual critical pay adjustments under the revised 5 CFR 535.105(c), tied to Executive Schedule changes ^[1].
• OPM’s next annual report to Congress under 5 U.S.C. 5377(h), the first measure of whether usage moves from 25 people toward the cap ^[1].