For most federal employees, a within-grade increase (WGI) — also called a step increase — is an expected milestone: a modest but meaningful acknowledgment that you’ve continued to perform your job well. But when that raise is suddenly denied, it’s not just about money. It can signal management bias, retaliation, or flawed performance documentation that may threaten your career.

At National Security Law Firm (NSLF), our federal employment lawyers help employees nationwide fight unfair or retaliatory WGI denials. Below, we explain exactly how step increases work, what the law requires, how new OPM and MSPB guidance affects you, and what to do if your raise is blocked.

Understanding Within-Grade Increases

Each General Schedule (GS) grade has 10 steps, and each step is worth about 3% of base pay. Step increases are governed by 5 U.S.C. § 5335 and 5 C.F.R. Part 531, Subpart D.

To earn a WGI, three statutory conditions must be met:

  1. Acceptable Level of Competence.
    Your most recent rating of record must be at least Level 3 (“Fully Successful”) or equivalent.

  2. Completion of the Waiting Period.
    You must complete the time-in-step required for advancement:

    Step Waiting Period
    1 → 2 52 weeks
    2 → 3 52 weeks
    3 → 4 52 weeks
    4 → 5 104 weeks
    5 → 6 104 weeks
    6 → 7 104 weeks
    7 → 8 156 weeks
    8 → 9 156 weeks
    9 → 10 156 weeks

  3. No “Equivalent Increase.”
    You can’t receive another increase in basic pay (such as a promotion or QSI) during the waiting period.

WGIs apply only to permanent positions, defined as appointments not limited to one year or less, including temporary promotions lasting at least one year.

What “Acceptable Level of Competence” Really Means

According to the U.S. Merit Systems Protection Board (MSPB), an “acceptable level of competence” means performance the agency finds acceptable for granting a WGI — but any rating below “Fully Successful” cannot qualify.

If the existing rating of record doesn’t align with a WGI decision, the agency must prepare a new rating of record explaining the determination.

The MSPB found that all surveyed agencies use “Fully Successful” as the WGI standard, consistent with OPM’s regulations.

Why WGI Denials Are So Rare — and Why That Matters

Despite widespread discussion of performance accountability, denials are exceedingly rare. MSPB data show:

  • Supervisors estimate that roughly 1 in 40 employees underperform.

  • But government-wide, only about 1 in 1,000 WGIs are actually denied.

That gap means two things:

  1. Most employees do, in fact, meet expectations.

  2. When a denial does occur, it’s a red flag that management has singled out your case — and may have mishandled the process or misused performance tools for retaliation.

Factors That Influence Step Denials

MSPB research identified several patterns behind WGI decisions:

1. Agency Rating System

Employees in agencies that use a Level 2 rating (between “Unacceptable” and “Fully Successful,” often called “Minimally Successful”) are four times more likely to be denied a WGI than employees in systems without that level.

Agencies without a Level 2 option often skip denials entirely because the choice is binary — Fully Successful (grant) or Unacceptable (remove).

Implication: whether you’re at risk for denial may depend on your agency’s appraisal pattern, not just your performance.

Read: Determining an Acceptable Level of Competence for Step Increases

2. Nature of the Work

Jobs with quantifiable metrics — like claims examiners, auditors, and passport adjudicators — have the highest denial rates because performance is easier to measure objectively.

3. Agency Culture

Components with structured, documentation-heavy performance systems (clear metrics, multi-level awards, and detailed WGI memos) show higher denial rates.
Agencies that lack those structures often default to granting WGIs automatically.

Causes of “Unacceptable Level of Competence”

When agencies or supervisors were asked what drives substandard performance, the top reasons were:

  1. The employee isn’t well-suited for the job.

  2. The employee isn’t motivated to succeed.

  3. The employee struggles to keep up with changes in technology or process.

  4. Personal distractions or lack of clarity in expectations.

These findings mirror what employees often tell us: denials frequently reflect management issues, unclear goals, or poor communication — not genuine incompetence.

How the Denial Process Works

When an agency believes your performance isn’t acceptable, it must:

  1. Issue a written notice explaining the reasons for denial.

  2. Give you a chance to request reconsideration (usually within 15 days).

  3. Issue a final determination within 30 days.

You may then:

  • Request reconsideration under 5 C.F.R. § 531.410; and

  • Appeal to the MSPB if the denial is affirmed.

Agencies must also review your performance every 52 weeks after a denial and may approve the WGI once performance improves.

In short: a denial is not permanent, and you have clear procedural rights.

What To Do When Your Raise Is Blocked

  1. Get Documentation Immediately.
    Request your performance plan, rating sheets, and any notes used in the denial. These are critical for your reconsideration and appeal.

  2. Submit a Detailed Reconsideration Request.
    Cite specific evidence — awards, metrics, completed projects, or praise — contradicting the alleged deficiencies.

  3. Look for Retaliatory Timing.
    If your denial followed protected activity (EEO, OSC complaint, or whistleblowing), you may have additional claims under the Whistleblower Protection Act or Title VII.

  4. File an MSPB Appeal if Needed.
    The Board reviews whether the agency followed proper procedure and whether the denial is supported by substantial evidence. If not, MSPB can order back pay with interest under the Back Pay Act (5 U.S.C. § 5596).

  5. Protect Your Record.
    A single “below Fully Successful” can derail promotions, bonuses, and even clearance renewals. Acting early preserves both your pay and your reputation.

Remedies if You Win

  • Retroactive Step Increase with full back pay and interest.

  • Corrected Rating to “Fully Successful” or higher.

  • Attorney’s fees and costs for MSPB cases.

  • Removal of retaliatory language from personnel files.

Our attorneys often secure settlements that restore pay and clear records quietly — without public hearings or career damage.

Why WGI Denials Are Increasing Under New OPM Standards

The 2025 OPM performance-management reforms now require supervisors to certify that an employee “is qualifying” before approving any WGI and to document justifications for all high ratings. Supervisors are also rated on how well they “hold employees accountable.”

These pressures create more denials — and more potential misuse. Step denials are fast becoming a new frontline of retaliation in federal employment disputes.

How NSLF Can Help

Our team of former federal agency counsel knows exactly how agencies justify WGI denials — and how to dismantle those justifications.

We assist clients with:

  • Drafting persuasive reconsideration requests.

  • Filing retaliation or discrimination complaints with OSC or EEO offices.

  • Appealing denials to the MSPB.

  • Negotiating clean SF-50 settlements with retroactive pay.

Why Choose NSLF

  • 4.9-star Google rating from federal employees nationwide.

  • Washington, D.C. headquarters — the center of MSPB, OSC, and OPM activity.

  • Nationwide representation in all federal employment forums.

  • Attorney Review Board collaboration on every case.

  • Veteran-founded, mission-driven firm with decades of inside-agency experience.

Our senior attorneys — Jeff Velasco, Danielle Moora, and Karen Hickey — spent years at DHS, TSA, and CBP overseeing federal performance systems. Now they use that insider knowledge to fight for you.

Explore the Federal Employment Defense Resource Hub

Visit our Federal Employment Defense Hub for more insider guides on:

  • Step increases and pay appeals

  • Performance-based removals and PIPs

  • Retaliation and whistleblower protections

  • Strategies to maximize case value and protect your record

Also see: Finding the Best Federal Employment Lawyer — Why Local Isn’t Always Better.

Book a Free Consultation

If your within-grade increase or step raise was denied, don’t wait. The law gives you strong procedural rights — but deadlines are short.

Our consultations are free, confidential, and pressure-free.

Book your free consultation today.

National Security Law Firm: It’s Our Turn to Fight for You.