A proposed rule from the Office of Personnel Management (OPM) and the Merit Systems Protection Board (MSPB) could, if finalized, significantly reshape how federal agencies address employee misconduct and poor performance while simultaneously changing how the MSPB reviews disciplinary actions on appeal.

OPM and MSPB jointly issued the proposed rule, titled “Promoting Employee Accountability,” on July 2, 2026. Among its most notable features is a proposal to replace the longstanding Douglas Factors framework that has guided federal disciplinary decisions and MSPB penalty reviews for more than four decades. The proposal also seeks to shorten performance improvement periods, increase management training requirements, and limit settlement agreements that remove documentation of misconduct or poor performance from employee records.

For federal employees, supervisors, human resources professionals, and labor and employment practitioners, the proposed rule could significantly alter both disciplinary decision-making and the likelihood of success on appeal. If finalized as proposed, it may represent one of the most significant changes to federal employee discipline and adverse-action practice since the MSPB’s landmark 1981 decision in Douglas v. Veterans Administration.

What Are Douglas Factors?

Since the MSPB’s 1981 decision in Douglas v. Veterans Administration, federal agencies have been expected to consider up to 12 factors when determining an appropriate penalty for employee misconduct. These factors include the seriousness of the offense, the employee’s disciplinary and work history, consistency of penalties, rehabilitation potential, mitigating circumstances, and the effectiveness of alternative sanctions, according to the MSPB.

Over time, the Douglas Factors became deeply embedded in federal personnel practice. Agencies commonly document their analysis through detailed Douglas Factors worksheets, and MSPB administrative judges frequently examine whether deciding officials adequately considered relevant factors when selecting a penalty.

As a result, disciplinary appeals often focus not only on whether misconduct occurred, but also on whether the agency properly documented and weighed the relevant Douglas Factors.

What the Proposed Rule Would Change

The proposed rule would move MSPB penalty review away from a structured Douglas Factors analysis and toward a broader “totality of the circumstances” standard. According to the proposed rule, MSPB seeks to refocus its review on the overall reasonableness of the penalty rather than a rigid application of prescribed factors.

OPM has argued that the current framework has become overly burdensome and has led to agencies losing otherwise valid disciplinary cases based on technical deficiencies in documentation rather than the merits of the decision itself.

Potential Impact on Federal Employee Appeals

Although federal employees would retain statutory rights to appeal adverse actions to the MSPB, the grounds for successful appeals may change substantially.

Under the current system, employees frequently challenge penalties by arguing that agencies failed to adequately consider mitigating circumstances, rehabilitation potential, prior service, consistency of discipline, or other Douglas Factors. In some instances, MSPB has sustained the underlying misconduct charge while mitigating the penalty because of shortcomings in the agency’s Douglas analysis.

If the proposed rule becomes final, those procedural and documentation-based arguments may become less effective. MSPB would likely afford agencies greater discretion in selecting penalties so long as the overall decision is reasonable under the circumstances.

Consequently, future appeals may focus more heavily on substantive defenses, including:

• whether the alleged misconduct actually occurred;
• whether the agency met its burden of proof;
• whether the employee received constitutional and statutory due process;
• whether the action was motivated by retaliation, whistleblower reprisal, discrimination, or other prohibited practices; and
• whether the selected penalty is objectively unreasonable.

This shift also could make it more difficult for employees to overturn disciplinary actions based solely on technical flaws in penalty documentation.

Changes to Performance Improvement Plans

The proposal also includes significant changes to performance-based actions under Chapter 43 of Title 5 of the U.S. Code, which governs performance-based actions against federal employees. Specifically, it allows agencies to remove or demote an employee for unacceptable performance.

Most notably, OPM proposes a default 30-day Performance Improvement Plan (PIP) and the elimination of informal “pre-PIP” processes that some agencies currently use before initiating formal performance action. OPM believes these measures unnecessarily delay accountability efforts and contribute to prolonged performance-management timelines.

For employees, a shorter PIP period may mean less time to demonstrate improvement before removal proceedings begin. For agencies, the proposal could reduce administrative delays and provide supervisors with a more streamlined process for addressing unacceptable performance.

Increased Supervisor Training Requirements

Recognizing that supervisors are often reluctant to initiate disciplinary actions, the proposal would also require more frequent accountability-related training. The rule would move supervisory, managerial, and executive training requirements from a three-year cycle to an annual requirement, with a focus on addressing misconduct, managing poor performance, and utilizing available personnel tools effectively.

By increasing management training, OPM aims to create more consistent accountability practices across the federal workforce.

Restrictions on Settlement Agreements

Another noteworthy feature of the proposal would limit agencies’ ability to enter settlement agreements that eliminate documentation of employee misconduct or poor performance from official records. OPM contends that preserving these records promotes transparency and accountability throughout the federal personnel system.

If adopted, this change could substantially affect litigation and settlement strategies in MSPB appeals and negotiated disciplinary resolutions.

Potential Legal Challenges to the Proposed Rule

Although the proposal has been framed as an effort to improve accountability and streamline disciplinary procedures, it is also likely to face legal scrutiny if finalized. Several aspects of the rule could become the subject of litigation by federal employee organizations, labor unions, or individual employees affected by disciplinary actions taken under the new framework.

Challenges to Replacing the Douglas Factors

The most significant legal issue may involve MSPB’s proposal to move away from the traditional Douglas Factors and adopt a broader “totality of the circumstances” approach when reviewing penalties. Because the Douglas framework originated in MSPB case law rather than statutory text, MSPB is likely to argue that it possesses authority to revise or replace the standard. However, opponents may contend that the Douglas Factors have become deeply embedded in federal employment law through decades of MSPB and Federal Circuit decisions and therefore should not be abandoned without a compelling justification.

Administrative Procedure Act Challenges

Any final rule will likely be evaluated under the Administrative Procedure Act (APA), which generally requires agencies to provide a reasoned explanation when departing from longstanding policy. Critics may argue that OPM and MSPB have not adequately justified replacing a disciplinary framework that has governed federal employment disputes for more than forty-five years. They may also contend that the agencies failed to sufficiently address reliance interests, employee protections, and the potential effect on consistency in disciplinary outcomes across the federal government.

Due-Process Considerations

Some opponents may also raise due process concerns. While the proposal does not eliminate employees’ rights to receive notice, respond to proposed disciplinary actions, appeal to MSPB, or seek judicial review, critics may argue that reducing the emphasis on mitigating factors and rehabilitation potential could increase the risk of arbitrary disciplinary outcomes. Nevertheless, because the proposal preserves many of the procedural protections historically associated with federal employment, constitutional challenges may face significant hurdles.

Performance Improvement Plan Challenges

The proposed default 30-day Performance Improvement Plan (PIP) may also generate litigation. Critics may argue that certain positions—particularly technical, scientific, or specialized occupations—require longer periods to meaningfully demonstrate improvement. Whether such challenges succeed will likely depend on the final regulatory language and the facts of individual cases.

Judicial Review Remains an Open Question

Importantly, even if MSPB ultimately adopts a new penalty-review standard, Federal Circuit review of MSPB decisions will remain available. How reviewing courts reconcile decades of Douglas-related precedent with any new MSPB framework remains uncertain. As a result, the ultimate legal impact of the proposal may not be fully determined until courts have an opportunity to interpret and apply any final rule.

Key Takeaways

The proposed “Promoting Employee Accountability” rule represents one of the most consequential federal workforce reform efforts in decades. If finalized, it would replace the traditional Douglas Factors framework with a totality-of-the-circumstances review, shorten Performance Improvement Plans, expand supervisor training requirements, and limit certain settlement agreements that remove records of misconduct or poor performance. Collectively, these changes signal a substantial shift toward greater management discretion and expedited accountability processes.

If finalized in its current form, the proposal would likely make disciplinary actions easier for agencies to defend before MSPB and could reduce the effectiveness of appeals based primarily on procedural deficiencies in Douglas Factors analyses. At the same time, employees would continue to retain important protections, including the ability to challenge unsupported charges, violations of due process, retaliation, whistleblower reprisal, discrimination, and other prohibited personnel practices. Whether courts ultimately uphold the new framework and how MSPB and the Federal Circuit apply it in future cases remain open questions that practitioners should monitor closely.

Federal employees, agency leaders, and practitioners should closely monitor the rulemaking process, as the final version could significantly reshape federal discipline and appeals practice for years to come.

The comment period on the proposed rule ends 30 days after its publication in the Federal Register.

If you are an employee in the federal workplace, consulting with an experienced Tully Rinckey attorney can make all the difference when issues arise. A skilled attorney can fight to get you the best possible outcome in your case. Call 8885294543 or contact us online today for a consultation and get an advocate who will fight for your rights and help secure your career and your future.

Michael C. Fallings focuses his practice on federal sector labor and employment law. Michael has extensive experience litigating cases on behalf of employees at the U.S. Merit Systems Protection Board (MSPB), Equal Employment Opportunity Commission (EEOC), and in both state and federal courts. He also has experience negotiating settlement agreements on behalf of federal employees. Michael has received numerous awards, including the 2026 Lawdragon 500 Leading Litigators in America, LawDragon 500 the Next Generation (2024-25), Lawdragon 500 Leading Civil Rights & Plaintiff Employment Lawyers (2025), National Black Lawyers Top 40 under 40, and Super Lawyers Rising Star (2023).