Merit Pay Improvement Act

Merit Pay Improvement Act - Revises the merit pay system. Renames the system the performance management and recognition system.

Allows the President to exclude any class of employees within any agency unit from such system under specified conditions. Excludes employees of the Office of the Architect of the Capitol, the Library of Congress, the Botanic Garden, and the Administrative Office of the Courts from such system.

Declares that such system shall provide for comparability pay increases, periodic step increases, and performance awards based on an employee's performance as measured on a five-level scale consisting of one fully successful level, two levels below fully successful, and two levels above fully successful.

Requires that any employee whose performance is rated at: (1) the second level below fully successful receive no comparability increase; (2) the first level below fully successful receive one half of the comparability increase; and (3) the fully successful level or above receive the full comparability increase.

Authorizes annual step increases to take effect on the first applicable pay period beginning on or after October 1 of each year. Sets the amount of a single increase at three percent of an employee's basic pay. Provides for the award of a full step increase or a fraction thereof based on the employee's level of performance and the employee's basic pay rate within his or her pay grade. Denies step increases to employees who perform below the fully successful level. Limits any step increase to the amount that would raise the employee's basic pay rate to the maximum rate for his or her pay grade.

Requires the payment of a performance award in an amount not less than three percent and not more than 20 percent of an employee's basic pay to any employee whose performance is rated at the second level above fully successful. Authorizes the payment of a performance award not exceeding 20 percent of an employee's basic pay to any employee whose performance is rated at the first level above fully successful. Limits the funds available to an agency for performance awards to a specified percentage of the agency funds payable for the basic pay of employees under the performance management and recognition system.

Prohibits a reduction in the pay of an employee brought under such system so long as the employee continues to occupy the same position. Allows an employee under such system to be paid less than the minimum rate of basic for the grade of the employee's position as a result of the employee failing to qualify for a full comparability increase.

Continues the cash award program (currently provided under the merit pay system) under the performance management and recognition system.

Directs the Office of Personnel Management (OPM) to report to the President and Congress annually on the effectiveness of such system. Terminates the system, with the exception of the cash award program, five years after the effective date of this Act.

Requires agencies to develop separate performance appraisal procedures for employees covered by such system. Requires such performance appraisal procedures to require the joint participation of the supervising official and the employee in establishing performance standards. Directs OPM to prescribe regulations requiring that such procedures assure accurate evaluation of job performance, communication with employees regarding performance standards at the beginning of each appraisal period, evaluation of employees based upon such standards, assistance to employees performing below the fully successful level, and the reassignment, reduction in grade, or removal to a civil service position outside such system of any employee who continues to perform below the fully successful level after being afforded reasonable opportunity to improve his or her performance. Directs each agency to establish one or more boards to review and certify the agency's performance standards. Lists factors to be considered in performance appraisals, including organizational accomplishment. Requires an employee's performance appraisal to be reconsidered by a superior of the original appraiser at the request of the employee, except where the original appraiser was the agency head. Prohibits OPM or any agency from prescribing any particular distribution of levels of performance ratings or any specific performance standard or element.

Prohibits any reduction in the basic pay rate of an individual serving in a position which is under the merit pay system before the effective date of this Act solely because such position does not become covered by the performance management and recognition system.