A proposed federal rule released in July 2026 could reshape how quickly agencies can remove employees for performance or misconduct reasons. However, no changes have taken effect yet, and the proposal remains open for public comment. Therefore, understanding what is actually being proposed, separate from the headlines, matters before drawing any conclusions. For federal employees in Puerto Rico, this proposal also raises a quieter question. How should a household’s financial plan respond to this kind of uncertainty, regardless of whether the rule is ultimately adopted?
What OPM and MSPB Are Actually Proposing
The Office of Personnel Management and the Merit Systems Protection Board announced the proposed rule on July 1, 2026. It was formally published in the Federal Register on July 2, and public comments must be submitted by August 3, 2026. The proposal is not a final regulation, and its provisions could change before any final rule is issued. OPM Director Scott Kupor described the goal as reducing a lengthy process. Currently, that process can take six, twelve, or even eighteen months to complete.
Three of the proposal’s most prominent changes involve manager training, performance-improvement periods, and MSPB’s review of penalties. Consequently, understanding each one individually helps separate what is actually changing from what commentary and speculation have added around it.
The Three Proposed Changes in Detail
The proposal includes several changes, but three provisions have received the most attention. Each one affects a different part of the employee discipline and removal process, from manager preparation to performance review and penalty decisions.
More Frequent Manager Training
First, the proposal increases how often supervisors, managers, and executives receive training on handling performance and misconduct issues. Specifically, training would move from once every three years to annually. Additionally, the proposed rule adds new required topics. These include how to properly use probationary periods and how to address hostile work environment or retaliation complaints.
A General 30-Day Performance Improvement Period
Second, the proposal limits Performance Improvement Plans, commonly called PIPs, to 30 calendar days. Currently, no firm time limit exists, which often extends the process considerably. Furthermore, the proposal would eliminate informal pre-PIP periods that agencies sometimes use before a formal PIP even begins. Managers would also generally need to issue a decision within 30 days after the employee’s opportunity to respond has concluded.
The proposal would generally cap the period at 30 calendar days, although an agency could extend it when circumstances warrant additional time to evaluate performance.
Replacing the Douglas Factors
Third, and most notably, MSPB is proposing to stop applying the twelve so-called Douglas factors that have guided adverse action review since 1981:
- A rigid, checklist-style application of all twelve factors would no longer be required in every case
- MSPB would instead apply a broader “totality of the circumstances” test when reviewing a proposed penalty
- Supporters argue this reduces overly mechanical reviews that penalize agencies for documentation gaps rather than substance
- Critics argue the change removes a well-established, uniformly applied standard without clear evidence that it was actually broken
This particular change has drawn the most attention from federal employee advocates. The Douglas factors, after all, have functioned as a shared reference point across agencies, MSPB, and the courts for over four decades.
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How This Differs From a Reduction in Force
This proposal specifically addresses performance and misconduct-based removals, not agency-wide staffing reductions. Consequently, it operates under entirely different rules than a reduction in force, commonly called a RIF, which follows separate procedures based on factors like tenure, veterans’ preference, and position classification. Understanding this distinction matters, since the financial planning response to each scenario differs meaningfully.
A RIF generally involves formal advance-notice procedures and may result in reassignment, downgrade, or separation. Employees who are separated may qualify for severance pay, but eligibility and the amount depend on the applicable rules and the employee’s circumstances. A performance or misconduct-based removal, by contrast, generally does not carry the same severance structure. Therefore, an employee’s actual risk profile depends heavily on which process might apply to their specific situation, not on assuming either scenario automatically applies to everyone.
Why This Proposal Is Genuinely Controversial
Reasonable people disagree sharply about this proposal, and both sides raise points worth understanding. OPM’s stated position is that the current process discourages managers from addressing genuine underperformance. Ultimately, this hurts high performers who work alongside employees who are not held accountable. Kupor has framed the changes as an effort to build a higher-performing, more accountable federal workforce.
On the other side, AFGE National President Everett Kelley has raised a different concern. He has stated that the proposal risks opening the door to politically or personally motivated removals, undermining a nonpartisan civil service built over decades. Separately, a former MSPB vice chairman raised a structural concern. OPM and MSPB issuing this rule jointly, rather than MSPB reviewing OPM’s policy independently, may represent an unusual departure from how these two bodies have historically operated. Both perspectives deserve consideration, and the outcome likely depends heavily on how any final rule gets written and implemented. Neither viewpoint is unreasonable on its face, which is precisely why this proposal has generated substantive debate rather than being dismissed outright by either side.
What Happens Next
The proposed rule remains subject to a 30-day public comment period before anything becomes final. Consequently, the specific provisions described here could change meaningfully before adoption, or the rule could ultimately be withdrawn altogether. Legal challenges are also considered likely if the rule proceeds largely unchanged, particularly regarding the Douglas factors provision. Therefore, treating any of this as settled policy today would be premature.
Why This Matters for Your Financial Plan Either Way
Regardless of how this specific proposal resolves, it highlights something worth remembering. Career and income uncertainty is a real planning variable for federal employees in Puerto Rico, not just a policy debate. A sound financial plan accounts for this possibility without assuming the worst or ignoring it entirely.
Building a Stronger Emergency Reserve
Certainly, an emergency fund matters for every household. It matters even more during periods of genuine employment policy uncertainty. Generally, three to six months of essential expenses provides a reasonable starting target. Households with a single income earner or significant fixed obligations, however, may benefit from leaning toward the higher end of that range.
Understanding Your Own Separation Options
Federal employees benefit from knowing their own specific options well before ever needing them. This is not about assuming the worst; it is about removing uncertainty from a decision that would otherwise need to happen quickly and under stress.
A few specific questions are worth answering in advance:
- Whether current service and age would qualify for an immediate, reduced, or deferred annuity if separation occurred
- How a deferred annuity differs from an immediate one, and the meaningful gap in monthly income between them
- What happens to TSP contributions, loans, and vesting if employment ends earlier than planned
- Whether FEHB and FEGLI coverage could be affected, and under what specific circumstances
None of this requires assuming separation is likely. Instead, it simply means understanding the mechanics in advance, the same way a household benefits from knowing its home insurance coverage before a storm arrives, not during one.
TSP and Beneficiary Housekeeping
Naturally, periods of workplace uncertainty are a good prompt to confirm that beneficiary designations on TSP, FEGLI, and retirement accounts actually reflect current wishes. Surprisingly, many federal employees never revisit these designations after they are first set. In practice, this oversight is one of the easiest to fix. Therefore, a brief review now, unrelated to any specific concern about this proposal, is simply good practice.
How to Actually Track This Proposal’s Progress
Instead of relying on secondhand summaries or social media reactions, federal employees can follow this proposal directly through official channels. Indeed, the Federal Register publishes the full text of proposed rules, along with the official comment period and any updates. Additionally, agency human resources offices typically issue guidance once a rule is finalized, which is the point at which any actual changes to procedure would take effect.
Checking official sources periodically keeps a household informed without creating unnecessary stress. This approach is far better than reacting to every news cycle, especially for a proposal that may still change substantially before adoption.
A Practical Action Checklist
A few concrete steps help a household stay prepared without overreacting to any single piece of news:
- Confirm the current size of the household emergency fund against actual monthly essential expenses
- Request an official annuity estimate to understand exact numbers under different separation scenarios
- Review TSP fund allocation and contribution rate as part of a regular annual check-in
- Update beneficiary designations across every account if they have not been reviewed recently
Working through this list takes an afternoon, yet it meaningfully reduces the anxiety that comes with policy headlines like this one.
Read Also: What Happens to Your Federal Pension If You Move Back to PR?
Common Mistakes to Avoid Right Now
A handful of reactions tend to do more harm than good when news like this breaks:
- Making a major TSP allocation change based on a headline rather than an actual financial plan
- Assuming a proposed rule is already final and making irreversible decisions around it prematurely
- Neglecting to confirm personal separation numbers simply because the topic feels uncomfortable
- Ignoring the emergency fund conversation until an actual employment change forces the issue
Avoiding these reactions keeps a financial plan grounded in facts rather than headlines, which tends to produce better outcomes regardless of how this specific proposal is ultimately resolved.
Why Local Guidance Matters
A generic mainland article rarely accounts for how federal employment uncertainty interacts with Puerto Rico’s cost of living, local job market, and island-specific financial considerations. A coordinated financial planning process that treats career uncertainty as one input among many, rather than an isolated crisis, produces a far more resilient plan. Sound risk management means preparing for a range of outcomes without assuming the worst case is the only case.
Working with risk management services and a financial advisor in Puerto Rico who understands federal employment can help translate policy developments into a practical personal plan. A search for financial planning near me may produce generic advice, but federal employees may benefit from guidance that considers both their federal benefits and the financial realities of living in Puerto Rico.
Conclusion
The proposed changes to federal removal procedures remain exactly that: proposed, not final, and still open for public comment. Whether the rule advances as written, gets revised significantly, or gets withdrawn entirely, the underlying lesson for federal employees in Puerto Rico stays the same. Career and income certainty is never guaranteed, and a resilient financial plan accounts for that reality without requiring alarm. Confirming a genuine emergency reserve, understanding personal separation and annuity options, and keeping beneficiary designations current are steps worth taking regardless of how this specific proposal resolves. Acting on facts, rather than headlines, is what actually protects a household through whatever comes next. That approach holds true whether this particular rule advances unchanged, gets substantially revised, or never takes effect at all.
Disclaimer: This article is provided for general educational purposes only and does not constitute legal, employment, retirement, investment, tax, or financial advice. The proposal discussed is not final and may change. Federal employees should consult their agency’s human resources office and appropriately qualified professionals before making employment or financial decisions.
