Labor & Employment Law Daily Wrap Up, LABOR NEWS—OPM outlines collective bargaining limits tied to new performance appraisal rule, (Jul 27, 2026)

By Patricia K. Ruiz, J.D.

Conflicting contract provisions remain effective until the agreements expire.

The Office of Personnel Management (OPM) issued guidance to executive departments and agencies on how to implement its recently finalized performance appraisal regulations while complying with federal labor-management relations requirements. The July 24 memorandum explains how agencies should evaluate existing collective bargaining agreements (CBAs), addresses when governmentwide regulations supersede negotiated contract provisions, and identifies performance appraisal topics that OPM says are no longer subject to bargaining. The guidance also discusses pending grievances and arbitrations involving ratings of record and recommends steps agencies should take to prepare for implementation.

Purpose of the memorandum. In the memorandum, OPM Director Scott Kupor said the guidance concerns the interaction between OPM’s final rule amending 5 C.F.R. Parts 351, 430, and 537 and agencies’ obligations under the Federal Service Labor-Management Relations Statute. The memorandum addresses the scope of negotiable subjects after issuance of the final rule, the legal framework governing conflicts between governmentwide regulations and CBAs, and circumstances under which agencies may implement the rule despite conflicting contract language. OPM advised agencies to consult their general counsel offices and labor relations specialists before taking action under the guidance.

Key changes in the final rule. The memorandum summarizes several changes contained in the final rule affecting employees covered by Chapter 43 of Title 5, excluding Senior Executive Service and Senior Professional employees. Among other changes, the rule authorizes OPM to establish and maintain a standardized distribution of some or all rating levels; eliminates summary level patterns that include a Level 2 (“Minimally Successful”) rating and patterns in which Level 4 is the highest summary level; eliminates mandatory higher-level review of Level 1 (“Unacceptable”) ratings of record; prohibits challenges to ratings of record through negotiated grievance procedures; requires a supervisory critical element in covered supervisors’ performance plans; and requires biennial OPM certification of agency appraisal systems.

CBAs and governmentwide regulations. OPM stated that agencies must assess both their bargaining obligations and whether existing CBA provisions conflict with the revised performance appraisal regulations. The memorandum notes that proposals inconsistent with law, governmentwide regulation, or an agency rule supported by a compelling need fall outside the duty to bargain. At the same time, OPM stated that it is an unfair labor practice for an agency to enforce a rule or regulation that conflicts with a CBA provision that was already in effect when the rule or regulation was issued, and that protection remains in place for the duration of the existing agreement.

The guidance directs agencies to identify contract provisions that conflict with the revised regulations, citing as examples provisions that prohibit distribution of summary rating levels or authorize grievances over ratings of record. OPM stated that agencies may not implement portions of the final rule that conflict with specific provisions of an existing CBA. According to the memorandum, once the agreement expires, the conflicting provision no longer insulates the parties from the governmentwide regulation and the regulation applies fully.

Treatment of rolled-over agreements. OPM addressed agreements that continue through rollover provisions. The memorandum states that a rolled-over CBA is considered a new agreement that does not prevent implementation of previously issued governmentwide regulations. In those circumstances, OPM said the regulations take effect by operation of law when the prior agreement’s term ends and the rolled-over agreement becomes effective.

Non-negotiable subjects. Regarding bargaining obligations going forward, OPM stated that several subjects are outside the duty to bargain because they conflict with governmentwide regulations. The memorandum identifies as non-negotiable proposals that would authorize negotiated grievances over ratings of record; allow prohibited summary level patterns; permit broader use of Pattern A pass/fail appraisal systems than authorized by regulation; prohibit or modify standardized rating distributions established by OPM; prohibit comparing, categorizing or ranking employees when such methods are authorized by regulation; or exclude a required supervisory critical element from covered supervisors’ performance plans.

Subjects that remain negotiable. The memorandum lists subjects that generally remain negotiable, subject to applicable law, management rights and the final rule’s requirements. Those subjects include procedures for administering performance appraisal programs, informal reconsideration requests concerning ratings of record, administrative grievance procedures addressing ratings of record where authorized by the agency, communication and feedback procedures during appraisal periods, awards and recognition programs, and procedures governing performance improvement plans and assistance to employees with unacceptable performance.

Pending grievances and arbitrations. OPM further instructed agencies to review pending grievances and arbitrations involving ratings of record. According to the memorandum, matters initiated under agreements that expressly authorized such grievances before issuance of the final rule may continue through grievance-arbitration procedures until the applicable contract expires. After expiration, agencies should assert that the disputes are no longer arbitrable and that arbitrators lack authority to decide them. The memorandum states that agencies may consider converting such matters into administrative grievances where appropriate and consistent with internal agency policies.

Recommended agency actions. To facilitate implementation, OPM recommended that agencies inventory CBAs covering employees subject to the performance appraisal regulations, identify potentially conflicting provisions, track contract expiration dates and coordinate with legal counsel and human resources officials before declining to bargain, declaring proposals non-negotiable or repudiating existing contract provisions.

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