granted to the covered plan or practice unit and (2) does not increase the aggregate amount of compensation that would have otherwise been granted (whether or not currently) a plan or practice unit under the plan or practice replaced.

(b) Modification or revision of existing plans or practices. Except for a change described in § 201.77(b), an employer may, without the approval of the Pay Board, modify or revise an incentive compensation or sales, commission, or production incentive plan or practice which was either in existence before November 14, 1971, was approved by the Pay Board pursuant to the provisions of paragraph (c) of this section, or was reported to the Pay Board pursuant to the provisions of § 201.79 (a) or (b) only when such modified or revised plan or practice does not increase the aggregate amount of compensation that would have otherwise been granted (whether or not currently) a plan or practice unit under the plan or practice without taking such modification or revision into account. Any other modification or revision of a plan or practice shall be submitted to the Pay Board for prior approval.

(c) Adoption of new plans. An employer may adopt a new incentive compensation or sales, commission, or production incentive plan or practice where one did not exist before November 14, 1971, only upon the prior approval of the Pay Board.

(d) Rules with respect to plans or practices described in paragraphs (a), (b), or (c) of this section. A new plan or practice adopted pursuant to paragraph (a) or (c) of this section or a plan modified or revised pursuant to paragraph (b) of this section shall comply with other relevant sections of this subpart applicable to plans or practices in existence prior to Novmeber 14, 1971.

port form with the Pay Board. The report filed shall demonstrate that the establishment of the entity and such plans or practices, were not for the purpose of circumventing the intent of the wage and salary stabilization program and are not unreasonably inconsistent with the intent and purposes of the wage and salary stabilization program or the policies of the Pay Board.

(b) Changes in organization form. If an employer doing business in a particular organizational form on November 13, 1971, thereafter reorganizes and conducts its business in a different organizational form or merges with another business and, after and on account of such reorganization or merger, establishes new executive compensation or sales, commission, or production incentive plans or practices, it shall, within the later of 90 days after such reorganization or merger, or 90 days after February 15, 1972, file in report form all such plans or practices with the Pay Board. The report filed shall demonstrate that the reorganization or merger and establishment of such plans or practices, were not for the purpose of circumventing the intent of the wage and salary stabilization program, and are not unreasonably inconsistent with the intent and purposes of the wage and stabilization program or policies of the Pay Board.

(c) Changes in method or formula. After a plan or practice has been reported pursuant to paragraph (a) or (b) of this section, any change in the method or formula for calculating employee earnings in a plan or practice unit after such report must be submitted to the Pay Board for prior approval pursuant to the provisions of § 201.78 (c) (with respect to new or revised plans or practices) whether or not the aggregate amount of compensation paid to the covered plan or practice unit will be increased, unless the plan or practice is excepted pursuant to the provisions of § 201.80 (with respect to employee productivity plans or practices).

(d) Carryover of attributes. For purposes of this subpart, a change in organizational form described in paragraph (b) of this section shall not affect the applicable attributes of the employer, such as appropriate employee units, plan or practice units, or wage years. Such attributes shall be carried over by the employer undertaking such a change in

form, unless otherwise clearly required by the organizational change.

§ 201.80

Employee productivity incentive plans or practices.

An employer seeking to establish an employee productivity incentive plan or practice which is designed to reflect directly increases in employee productivity shall, prior to such establishment, submit such plan or practice to the Pay Board for review and furnish proof that payments or awards made pursuant to such plan or practice will directly reflect increased employee productivity. An employer seeking to revise or modify an employee productivity incentive plan or practice which was established and in effect before November 14, 1971, shall, prior to such revision or modification, submit such revised or modified plan or practice to the Pay Board for review, unless such revision or modification results in, or will result in, no increase in the aggregate amount of compensation for the plan or practice unit, or unless the increase in the aggregate amount of compensation for the plan or practice unit which results, or which will result, from such revision or modification will be offset by increased productivity. Appendix A-Policies Governing Pay Adjustments Adopted By the Pay Board November 8, 1971

1. Millions of workers in the Nation are looking to the Pay Board for guidance with respect to permissible changes in wages, salaries, various benefits and all other forms of employee total compensation. It is imperative to have a simple standard with as broad a coverage as possible at as early a date as possible. There is probably a need for exceptions and for individual consideration of special situations as soon as practical, and guidance to the millions whose pay relations are relatively simple is an early essential.

2. This general pay standard is intended, in conjunction with other needed measures, to meet the objectives which led to the establishment of this Board.

3. The general pay standard should be applicable to:

(1) Changes that need approval before becoming effective;

(2) Changes that must be reported when they become effective; and

(3) All other changes requiring compliance but not requiring specific approval or reporting.

4. (a) Effective November 14, 1971, the general pay standard shall be applicable to new labor agreements and, where no labor agreement is in effect, to existing pay practices. The general pay standard would provide:

On and after November 14, 1971, permissible annual aggregate increases would be those normally considered supportable by productivity improvement and cost of living trends. Initially, the general pay standard is established as 5.5 percent. The appropriateness of this figure will be reviewed periodically by the Board, taking into account such factors as the long-term productivity trend of 3 percent, cost of living trends, and the objective of reducing inflation.

In reviewing new contracts and pay practices, the Pay Board shall consider ongoing collective bargaining and pay practices and the equitable position of the employees involved, including the impact of recent changes, in the cost of living upon the employees' compensation.

(b) Existing contracts and pay practices previously set forth will be allowed to operate according to their terms except that specific contracts or pay practices are subject to review, when challenged by a party at interest or by five or more members of the Board, to determine whether any increase is unreasonably inconsistent with the criteria established by this Board. In reviewing existing contracts and pay practices, the Pay Board shall consider ongoing collective bargaining and pay practices and the equitable position of the employees involved, including the impact of recent changes in the cost of living upon the employees' compensation.

(c) Scheduled increases in payment for services rendered during the "freeze” of August 16 through November 13, 1971, may be made only if approved by the Board in specific cases. The Board may approve such payments in cases which are shown to meet any of the following criteria:

(i) Prices were raised in anticipation of wage increases scheduled to occur during the "freeze."

(ii) A wage agreement made after August 15, 1971 succeeded an agreement that had expired prior to August 16, 1971, and retroactivity was an established practice or had been agreed to by the parties.

(iii) Such other criteria as the Board may hereafter establish to remedy severe inequities.

5. Following approval of special procedures by the Pay Board with respect to hearing "prior approval” cases and other special situations, application may be made for an exception to the general pay standard and for a hearing on such matters as inequities and sub-standard conditions.

6. No retroactive downward adjustment of rates now being paid will be required by operation of the general pay standard unless the rates were raised in violation of the freeze or of the general pay standard.

7. Provisions may be considered for vacation plans, in-plant adjustments of wages and salaries, in-grade and length of service increases, payments under compensation plans, transfers and the like.

[36 F.R. 21791, Nov. 18, 1971, as amended at 36 F.R. 21952, Nov. 17, 1971]

Appendix B-Interpretive Decisions Adopted by the Pay Board

(1) Longevity and Related Wage Increases (Adopted November 12, 1971). Allow without regard to the 5.5 percent standard the resumption of longevity increases and automatic progression within a rate range according to the terms of plans or established practices in existence prior to November 14, 1971.

(2) Existing Contracts (Adopted November 12, 1971).

Existing regulations of the Pay Board provide that:

"Existing contracts and pay practices previously set forth will be allowed to operate according to their terms except that specific contracts or pay practices are subject to review, when challenged by a party at interest or by five or more members of the Board, to determine whether any increase is unreasonably inconsistent with the criteria established by this Board."

This means that, effective November 14, 1971, all the terms of such contracts and pay practices are fully operative. In the event of a challenge, these terms shall remain in effect unless and until the Pay Board rules otherwise.

The prenotification reporting requirements with respect to such contracts or pay practices are waived for all pay increases thereunder prior to January 1, 1972. However, reports will have to be filed by January 1, 1972, on forms to be developed as to any pay increases in the above categories which are placed in effect prior to January 1, 1972. Such reports are required only in bargaining or pay practice situations involving 1,000 or more employees.

Wage increases under existing or future agreements in the construction industry, however, require prenotification and approval by the Construction Industry Stabilization Committee before they can be put into effect. (3)—(5) [Reserved]

(6) Merit and salary administration plans (Adopted November 22, 1971). Existing contract provisions providing for merit increases within established rate ranges may be continued in new agreements which become effective after November 13, 1971. Any increases applied to a rate range shall be considered a raise in wages or salaries under the regulations adopted by the Pay Board, However, individual increases within the rate range under such plans shall not be considered a wage or salary increase under such regulations.

Where no labor agreement exists, aggregate individual pay increases under a merit plan and/or salary administration plan shall be considered pay increases subject to the general pay standard. However, individual increases may be made under an initial labor agreement or established pay practice which incorporates a well-defined plan: Provided, That the plan is administered in good faith and in accordance with previous policies and practices, and provided that such individual

increases are made within minimum and maximum levels of rate ranges which are subject to the general wage and salary standard. [36 F.R. 21952, Nov. 17, 1971, as amended at 36 F.R. 22581, Nov. 25, 1971; 36 F.R. 23220, Dec. 7, 1971]

Appendix C-Definitional Decisions Adopted by the Pay Board

(1) [Reserved]

(2) Base Date (Adopted November 12, 1971). The base date from which general pay standard increases shall be measured is November 13, 1971.

[36 F.R. 21953, Nov. 17, 1971, as amended at 36 F.R. 22581, Nov. 25, 1971; 36 F.R. 23220, Dec. 7, 1971; 36 F.R. 25429, Dec. 31, 1971] Appendix D-Procedural Decisions Adopted by the Pay Board

(1) Challenges (Adopted November 22, 1971). Pursuant to paragraph (f) of Pay Board Order No. 1 (36 F.R. 21798), the Internal Revenue Service shall process challenges by parties at interest, make an investigation, and report the positions of all parties at interest, including the forwarding of supporting documents, to the Pay Board for determination.

(2) Retroactivity under § 201.13; rulings (Adopted November 22, 1971). Pursuant to paragraph (c) of Pay Board Order No. 1 (36 F.R. 21798), the Internal Revenue Service may rule on requests for retroactivity under § 201.13 (a) and (b), and on requests for retroactivity with respect to tandem relationships. (See item (3) of Appendix B— Interpretive Decisions Adopted by the Pay Board and item (3) of Appendix C-Definitional Decisions Adopted by the Pay Board). In the event of an adverse ruling by the Internal Revenue Service an appeal may be made to the Pay Board.

[36 F.R. 22581, Nov. 25, 1971, as amended at 36 F.R. 23220, Dec. 7, 1971]

AUTHORITY: The provisions of this Part 202 issued under Economic Stabilization Act of 1970, as amended (Public Law 91-879, 84 Stat. 799; Public Law 91-588, 84 Stat. 1468; Public Law 92-8, 85 Stat. 13; Public Law 92-15, 85 Stat. 38; Public Law 92-210, 85 Stat. 743), Executive Order No. 11627 (36 F.R. 20139, October 16, 1971), as amended, and Cost of Living Council Order No. 8 (36 F.R. 20202, October 16, 1971).

SOURCE: The provisions of this Part 202 appear at 36 F.R. 25429, Dec. 31, 1971, unless otherwise noted.

The purpose of the regulations in this part is to establish rules for prenotification and reporting with respect to wage and salary payments made (or proposed to be made) to employees on or after November 14, 1971. These rules are designed to provide an orderly system for compliance with the objectives of the Pay Board and the Cost of Living Council in stabilizing wages and salaries. All persons are required by law to comply with the provisions of the Economic Stabilization Act of 1970, as amended, and all Executive orders, regulations (including this regulation), circulars, and orders issued thereunder, and all persons are expected to comply voluntarily with such law, orders, and regulations. The interpretation of the regulations in this part is to be consistent with the policy of the Act.

(a) For purposes of the regulations in this chapter

(1) Category I. A category I pay adjustment means a pay adjustment which applies to or affects 5,000 or more employees.

(2) Category II. A category II pay adjustment means a pay adjustment which applies to or affects from 1,000 to 5,000 employees.

(3) Category III. A category III pay adjustment means a pay adjustment which applies to or affects less than 1,000 employees.

(b) Reclassification of pay adjustments. For provisions with respect to reclassifications of pay adjustments, see § 101.27 of this title.

"Pay adjustment" means a change in wages and salaries as defined in § 201.3 of this chapter.

"Prenotification" means notice submitted to the Pay Board, relating to a proposed pay adjustment, on forms and pursuant to instructions prescribed by the Board.

"Reporting" means notice to the Pay Board, relating to a pay adjustment put into effect, on forms and pursuant to instructions prescribed by the Board.

Subpart B-Prenotification

§ 202.10 Category I pay adjustments; prenotification requirements.

Subject to the regulations in Part 201 of this chapter, on or after November 14, 1971, a category I pay adjustment shall not be put into effect unless prenotification of such proposed pay adjustment has been submitted to the Pay Board and the Board has approved such proposed pay adjustment. After the Pay Board has approved such proposed pay adjustment and it has been put into effect, such pay adjustment shall be subject to monitoring and spot checks.

§ 202.11 Prenotification exclusions.

Pay adjustments classified as category II or category III pay adjustments pursuant to the regulations in this chapter shall not be required to prenotify in accordance with the provisions of § 202.10. See, however, the provisions in Subparts C and D of this part, respectively, for rules applicable to categories II and III.

Subpart C-Reporting

§ 202.20 Category II pay adjustments; reporting requirements.

Subject to the regulations in Part 201 of this chapter, on or after November 14, 1971, category II pay adjustments may be put into effect without prior approval by the Pay Board. However, category II pay adjustments are required to be reported to the Pay Board when they are put into effect. Category II pay adjustments shall be subject to monitoring and spot checks after being put into effect. § 202.21

Reporting exclusions.

Pay adjustments classified as category I or category III pay adjustments pursuant to the regulations in this chapter shall not be required to report in accordance with the provisions of § 202.20. See, however, the provisions in Subparts B

and D of this part, respectively, for rules applicable to categories I and III.

Subpart D-Monitoring

§ 202.30 Category III pay adjustments. Subject to the regulations in Part 201 of this chapter, on or after November 14, 1971, category III pay adjustments may be put into effect without prior approval of the Pay Board. Moreover, category III pay adjustments are not required to be prenotified or reported to the Pay Board when they are put into effect. However, such pay adjustments shall be subject to monitoring and spot checks after being put into effect.

AUTHORITY: The provisions of this Part 205 are issued under the Economic Stabilization Act of 1970, as amended, Public Law 91-379, 84 Stat. 799; Public Law 91-558; 84 Stat. 1468; Public Law 92-8, 85 Stat. 13, Public Law 92-15, 85 Stat. 38; Public Law 92210, 85 Stat. 743; Executive Order 11627 (36 F.R. 20139, October 16, 1971), as amended, Cost of Living Council Order No. 3 (36 F.R. 20202, October 16, 1971).

SOURCE: The provisions of this Part 205 appear at 37 F.R. 1004, Jan. 21, 1972, unless otherwise noted.

(a) This part establishes procedures for

(1) Appeals from adverse actions by the Internal Revenue Service;

(2) Initial action on requests for exceptions or pay challenges and reconsideration of denials of such requests or challenges, in whole or in part;

(3) Petitions and comments on rule making; and

(4) Formal hearings on certain wage and salary increases.

(b) Pursuant to section 214(b) (3) of the Economic Stabilization Act of 1970, as amended, if any small business enterprise files a request, challenge, application, or appeal under the provisions of this part, such request, challenge, application, or appeal will be accorded expeditious handling by affording it priority on the dockets maintained by the Board for the orderly conduct of its business.

For purposes of this part

“Act” means the Economic Stabilization Act of 1970, as amended.

"Adverse action" means an action by the Board or IRS denying a requested action in whole or in part, or an interpretation or ruling issued by IRS which is contrary to the position asserted by the person seeking the interpretation or ruling.

"Board" means the Pay Board as established pursuant to Executive Order No. 11627 (3 CFR, 1971 Comp., 36 F.R. 20139), as amended, or its delegate.