In 2004 there were several changes to nonbargaining unit employees' pay policy, including pay administration for new hires, promotions, and other actions. Also, a pay-for-performance plan, similar to the PCES model, was implemented for nonbargaining unit employees to support the Postal Service's goal of establishing a performance-based culture.

The salary structure continues the pay reform strategy outlined in the Transformation Plan and reflects the general criteria outlined in the report of the President's Commission on the United States Postal Service.

3. Executive Pay and Benefits

Due to the limit imposed on PCES salaries by the Postal Reorganization Act, pay and benefits for Postal Service officers and many executives do not meet private sector comparability standards.

4. Performance Evaluation System

The Postal Service has expanded its ability to improve accountability through greater use of performance-based pay to recognize individual and team efforts. In 2003 approximately 800 executives participated in a new pay-for-performance program based on a National Performance Assessment system and evaluations of core requirements of positions. In 2004 as a result of successful consultations with the three postal management associations, 78,000 additional nonbargaining employees were placed under the same evaluation system and are participating in pay-for-performance.

An intranet-based Web tool manages the employee's evaluation life cycle using automated workflow. An objective-setting process that includes the approval of individual objectives allows employees to align individual contributions to unit and corporate goals. The system documents evaluators' feedback at the midyear performance review and end-of-year evaluation. This reinforces the Postal Service's commitment to providing specific and tangible feedback on individual performance toward established targets. The new system also calculates end-of-year performance ratings based on individual achievements against targets, as well as unit and corporate results.

5. Retirement Systems

The Civil Service Retirement System (CSRS) and the Federal Employees' Retirement System (FERS) exceed the private sector comparability standard, but are required benefits under the Postal Reorganization Act. Reasons why these plans exceed private sector levels include full benefits being available as early as age 55 and full or nearly full indexing to inflation.

6. Fair Labor Standards Act (FLSA)

In 2004 the Postal Service conducted a comprehensive review of the overtime status of all its exempt personnel under the guidelines of the Fair Labor Standards Act. New regulations issued by the Department of Labor (DOL) required that a review be conducted of over 4000 position descriptions. As a result of this comprehensive review, the Postal Service has determined it is in full compliance with the new regulations.

b. Leave Programs

Postal Service employees are provided both sick and annual leave at the same rates as other federal sector employees. However, Postal Service employees have a higher annual leave carryover limit than their federal sector counterparts. Postal Service employees used an average of 10.36 days of sick leave per career employee during 2004.

Earned annual leave may be donated to other career or transitional Postal Service employees who have exhausted their own leave due to serious health conditions. Postal employees donated more than 148,000 hours of annual leave in 2004 to other postal employees with serious health conditions.

Under the Family and Medical Leave Act eligible employees may take up to 12 weeks off from work for covered conditions. Postal Service employees may use annual leave, sick leave, or leave without pay for covered conditions in accordance with applicable collective bargaining agreements and current leave policies.

The Postal Service allows the use of 80 hours of accrued sick leave for dependent care under a policy available to all career employees.

Postal Service career nonbargaining unit employees and some bargaining unit employees can participate in a leave exchange program. This allows a portion of annual leave that would otherwise be earned in the following year to be exchanged for cash. There were approximately 22,900 bargaining and nonbargaining employees who participated in the 2004 leave exchange program.

c. Health Insurance

During 2004 health care contributions, including Medicare taxes for current employees totaled $4.8 billion, 9.3 percent of the Postal Service's total pay and benefits during 2004.