OPM Caps Top Two Performance Ratings at 40 Percent

The Office of Personnel Management (OPM) set performance ratings caps for the fiscal year 2026 performance ratings cycle, which ends September 30, 2026.

In a new memo, OPM said that a maximum of 40 percent of employees can be rated a Level 4 (exceeds fully successful) or Level 5 (outstanding), the top two ratings levels. That cap applies to General Schedule (GS) employees as well as career Senior Executive Service (SES) and Senior Professional (SP) employees.

OPM called 40 percent the “ceiling, not a target” adding that agencies are expected to continue calibrating ratings based on “genuine performance differentiation.”

There are no comparable limits on how many employees can receive lower ratings.

The changes come after OPM removed the long-standing prohibition on the forced distribution of ratings. An employee’s performance rating could impact everything from performance awards to who stays and who goes in the event of reductions in force (RIFs). 

Awards Changes

With the changes, OPM stated that fewer top-rated employees means more money for those who receive the top ratings.

“Award amounts available to those top performers will increase substantially and, consequently, incentivize higher levels of performance from the workforce,” stated OPM, which said at least 60 percent of the bonus pool should go only to employees rated at levels 4 and 5. 

In its memo, OPM said a Level 5 employee should receive a minimum seven percent bonus, while a Level 4 employee should receive a minimum bonus of four percent. 

As for employees who receive a Level 3 rating, they are still eligible for awards, but agencies “must ensure a clear and significant distinction between any Level 3 awards and the awards reserved for Level 4 and Level 5 performers.” In fact, Level 3 monetary awards are capped at no more than three percent.

In addition, agencies with budget constraints were told to prioritize large monetary awards to Level 4 and Level 5 performers and may instead leverage non-monetary awards like time off for Level 3 performers.

Agencies are also authorized to grant awards of up to $25,000 to high-performing employees without OPM approval.  

Legal Challenges Pending

The new performance rating system has critics, including federal labor unions and other groups.

A coalition of such groups sued the Trump administration, alleging that the new ratings system violates the Civil Service Reform Act.