OPM Proposes Replacing Seniority with Performance Ratings in Federal Layoffs

The Office of Personnel Management published a proposed rule on March 5 that would fundamentally restructure how federal agencies conduct layoffs, replacing seniority-based retention with a system weighted heavily toward performance ratings. Public comments are due by May 4, 2026.

The rule arrives alongside OPM's separate finalization of Schedule Policy/Career — the renamed Schedule F — which already reclassifies an estimated 50,000 federal employees, including some in grant-making roles, as at-will workers. Together, the two policies represent the most sweeping changes to the federal civil service in decades.

How the New System Would Work

Under current regulations, agencies conducting a reduction in force (RIF) prioritize employees based on tenure and length of service, with performance considered only as a tiebreaker. OPM's proposal inverts that hierarchy. An employee's three most recent performance ratings would generate a "performance credit" score that serves as the primary retention factor. Tenure and service dates would break ties.

The rule also expands the pool of workers excluded from RIF protections entirely. Currently limited to Senior Executive Service members and Senate-confirmed appointees, the exclusion would extend to all career probationary employees, temporary appointees, and political appointees in schedules C and G.

Agencies would also gain authority to downgrade employees to lower-paying positions without formal RIF procedures if their job duties have been "eroded" — a subjective standard that critics say invites abuse.

What Grant-Making Agencies Should Expect

The implications for research funding agencies are significant. NIH, NSF, and DOE employ thousands of program officers and grant reviewers whose institutional knowledge directly shapes which projects receive billions in federal research dollars. A workforce reduction driven by performance scores — rather than deep subject-matter expertise and tenure — could alter the composition of review panels and the continuity of multi-year grant programs.

AFGE President Everett Kelley warned that OPM is "making it easier to conduct politically motivated layoffs dressed up as 'performance-based decisions.'" The union notes that a companion OPM rule would cap how many employees can receive top ratings, creating what critics call a rigged system.

How to Respond Before the Deadline

Grant seekers and research institutions concerned about the stability of federal program staff can submit comments through the Federal Register before May 4. Organizations tracking federal workforce policy on grantedai.com will find ongoing coverage of how these rules interact with the broader FY2026 funding landscape.