Federal Executive Agencies: Selected Pay Flexibilities for COVID-19 Response

Federal Executive Agencies: Selected Pay Flexibilities for COVID-19 Response

April 3, 2020
Federal Executive Agencies: Selected Pay Flexibilities for
COVID-19 Response
On January 31, 2020, Secretary of Health and Human
This provision of additional flexibility is effective as if
Services Alex Azar declared a public health emergency for
enacted on January 1, 2020, and applies to any premium
the United States in response to Coronavirus Disease 2019
pay that is funded, either directly or through
(COVID-19). To assist the federal government in
reimbursement, by the Federal Emergency Management
responding to the emergency, Congress passed legislation
Agency (FEMA). For the exemption to be applied, the
that provides exemptions from certain pay limitations for
agency head must determine that services performed by an
employees in certain executive departments. In addition, the
employee during FY2020 are related primarily to
U.S. Office of Personnel Management (OPM) notified
preparation, prevention, or response to coronavirus. In
executive agency heads about the procedures for requesting
addition, any overtime that is funded by FEMA for such
a salary offset (dual compensation) waiver for the
services, either directly or through reimbursement, is to be
reemployment of individuals in emergencies or other
exempted from any annual limitation on the amount of
unusual circumstances without reduction or termination of
overtime that is payable in a calendar year or fiscal year.
annuity. OPM also reiterated long-standing guidance on
executive agency pay flexibilities that are codified in Title 5
In addition to providing exemptions from certain pay
of the United States Code and Title 5 of the Code of
limitations, the CARES Act increases caps set for annual
Federal Regulations.
pay earned by DHS employees. In determining whether an
employee’s pay exceeds the applicable limitation on the
Exemptions from Pay Limitations
annual rate of basic pay payable under Title 5, Section
Generally, federal agencies must abide by limitations on the
5307, of the U.S. Code, the agency head is not to include
dollar amount employees may receive in compensation for
pay exempted under Section 16003. Pay exempted from the
work performed during a pay period or on an annual basis.
otherwise applicable limitations on basic and premium pay
Under Title 5, Section 5547(a), of the U.S. Code, the
shall not cause the aggregate pay earned for the calendar
combination of an employee’s basic pay and premium pay
year in which the exempted pay is earned to exceed the rate
for any pay period cannot exceed the rate of basic pay for
of basic pay payable for Level II of the Executive Schedule
GS-15, step 10 (including any locality pay, special pay, or
(currently $197,300).
similar pay rate) or the rate for Level V of the Executive
Schedule (currently, $160,100), whichever is greater. OPM
Division B, Title VIII of P.L. 116-136 involves the
regulations codified at Title 5, Section 550.103, of the Code
activities of the Departments of Labor, Health and Human
of Federal Regulations define premium pay as the dollar
Services, and Education. Section 18110 of that title
value of earned hours of compensatory time off (i.e., comp
provides the same exemptions from the pay limitations as
time) and additional pay authorized by Title 5, Chapter 55,
Section 16003 (but does not include the stipulation related
Subchapter V, of the U.S. Code and Title 5, Part 550,
to FEMA funding). The law provides that:
Subpart A, of the Code of Federal Regulations for
overtime, night, Sunday, or holiday work or for standby
If services performed by an employee during fiscal
duty, administratively uncontrollable overtime work, or
year 2020 are determined by the head of the agency
availability duty. Overtime pay is pay for hours of work
to be primarily related to preparation, prevention, or
officially ordered or approved in excess of eight hours in a
response to coronavirus, any premium pay for such
day or 40 hours in an administrative workweek. Premium
services shall be disregarded in calculating the
pay does not include overtime pay under the Fair Labor
aggregate of such employee’s basic pay and
Standards Act and compensatory time off earned in lieu of
premium pay for purposes of a limitation under
such overtime pay.
section 5547(a) of title 5, United States Code, or
under any other provision of law, whether such
Under recent legislation enacted in response to COVID-19,
employee’s pay is paid on a biweekly or calendar
additional pay flexibilities were provided to the Department
year basis.
of Homeland Security (DHS). Division B, Title VI of P.L.
116-136, the Coronavirus Aid, Relief, and Economic
If application of the section results in the payment of
Security (CARES) Act, as enacted on March 27, 2020,
additional premium pay to an employee of a type that is
applies to the activities of DHS. Section 16003 in that title
normally creditable as basic pay for retirement or any other
provides an exemption from the limitation on the
purpose, the additional pay is not to be considered basic pay
combination of basic and premium pay that is codified at
for any purpose or be used in computing a lump-sum
Title 5, Section 5547(a), of the U.S. Code and any other
payment for accumulated and accrued annual leave under
provision of law limiting the aggregate amount of premium
Title 5, Sections 5551 or 5552, of the U.S. Code. The
pay that is payable on a biweekly or calendar year basis.
provision took effect as if enacted on February 2, 2020.
https://crsreports.congress.gov

Federal Executive Agencies: Selected Pay Flexibilities for COVID-19 Response
Salary Offset (Dual Compensation) Waiver
bonus exceed 100% of the employee’s annual rate of basic
OPM regulations that are codified at Title 5, Section
pay. A bonus is not part of an employee’s basic pay.
553.202, of the Code of Federal Regulations provide for the
reemployment of individuals in emergencies or other
Relocation Bonus (5 U.S.C. §5753; 5 C.F.R. Part 575,
unusual circumstances without reduction or termination of
Subpart B). OPM may authorize an agency head to pay a
annuity. On March 20, 2020, OPM issued a memorandum
relocation bonus to a current employee who moves to a new
to executive agency heads inviting them to request a
position in the same geographic area or who must relocate
delegation of authority to waive salary offset (dual
to accept a position in a different geographic area if the
compensation) to reemploy individuals because of a hiring
agency head determines that it would be difficult to fill a
need resulting from COVID-19. Under the delegation, an
position without such a bonus. Establishing and maintaining
agency would be granted authority to approve individual
residency and a written service agreement of up to four
exceptions on a case-by-case basis in specific
years are required. A bonus cannot exceed 25% of the
circumstances.
employee’s annual rate of basic pay multiplied by the
number of years in the required service period. Based on
OPM sets out the conditions for use of each delegated
critical agency need, OPM may authorize the agency head
authority in a delegation agreement. The agreement remains
to waive the limitation on the size of the bonus, but in no
in effect without time limit unless OPM specifies a
event can a bonus exceed 100% of the employee’s annual
termination date or withdraws the delegated authority when
rate of basic pay. A bonus is not part of an employee’s
it finds that the circumstances justifying the delegation have
basic pay. Generally, a relocation bonus is approved on a
changed substantially or that the agency has failed to
case-by-case basis.
manage the authority in accordance with law, regulations,
and the agreement. The memorandum advised that OPM’s
Retention Bonus (5 U.S.C. §5754; 5 C.F.R. Part 575,
waiver template should be used to request a delegation. The
Subpart C). OPM may authorize an agency head to pay a
regulations provide that an agency’s request must include:
retention bonus to a current employee if the agency head
determines that the individual’s unusually high or unique
(1) A description of the situation for which the
qualifications, or a special need for the individual’s
authority is requested. The situation must result
services, makes it essential to retain the employee. A bonus
from emergencies posing immediate and direct
cannot exceed 25% of an employee’s basic pay. Based on a
threat to life or property or from other unusual
critical agency need, an agency head may request that OPM
circumstances.
waive the limitation on the size of the bonus and authorize a
bonus of up to 50% of an employee’s basic pay. A group of
(2) An identification of the occupations, grades, and
employees may be authorized to receive bonuses of up to
position locations that might be filled under the
10% of basic pay if there is a high risk that a significant
delegated authority.
portion of the employees would likely leave if the bonuses
were not provided. Generally, a written service agreement
(3) A statement of the expected duration of the
is required. A bonus is not part of an employee’s basic pay.
reemployment to be approved under the requested
authority (5 C.F.R. §553.202(b)).
Premium Pay Limitation for Emergency Work or Mission
OPM guidance further explained the delegation authority.
Critical Work (5 U.S.C. §5547(b); 5 C.F.R. §550.106; 5
C.F.R. §550.107). For an employee’s work in connection
Selected Title 5 Pay Flexibilities
with an emergency involving a direct threat to life or
On February 7, 2020, OPM reiterated long-standing
property, including work performed in the aftermath of
guidance on human resources flexibilities related to
such an emergency, the limitation on premium pay is to be
recruitment, relocation, and retention bonuses. OPM
determined on a calendar year (rather than a pay period)
regulations refer to the bonuses as incentives and provide
basis. For an employee’s work that is critical to an agency’s
detailed information on procedures for their authorization
mission, the agency head may determine that the limitation
and payment. In addition, fact sheets and templates on the
on premium pay should also be determined on a calendar
incentives are available on the agency’s website.
year basis. Under both circumstances, the total of an
employee’s basic pay and premium pay in a calendar year
Recruitment Bonus (5 U.S.C. §5753; 5 C.F.R. Part 575,
cannot exceed the greater of the annual rate of pay for GS-
Subpart A). OPM may authorize an agency head to pay a
15, step 10 (including any locality pay rate or special pay
recruitment bonus to a newly appointed employee if the
rate), or Level V of the Executive Schedule. Certain types
agency head determines that it would be difficult to fill a
of premium pay, such as standby duty pay and
position without such a bonus. A written service agreement
administratively uncontrollable overtime pay, remain
that commits an employee to work for up to four years is
subject to biweekly limitation when other premium pay is
required. A bonus cannot exceed 25% of the employee’s
subject to annual limitation.
annual rate of basic pay multiplied by the number of years
in the required service period. Based on critical agency
Barbara L. Schwemle, Analyst in American National
need, OPM may authorize the agency head to waive the
Government
limitation on the size of the bonus, but in no event can a
IF11489

https://crsreports.congress.gov

Federal Executive Agencies: Selected Pay Flexibilities for COVID-19 Response

Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff to
congressional committees and Members of Congress. It operates solely at the behest of and under the direction of Congress.
Information in a CRS Report should not be relied upon for purposes other than public understanding of information that has
been provided by CRS to Members of Congress in connection with CRS’s institutional role. CRS Reports, as a work of the
United States Government, are not subject to copyright protection in the United States. Any CRS Report may be
reproduced and distributed in its entirety without permission from CRS. However, as a CRS Report may include
copyrighted images or material from a third party, you may need to obtain the permission of the copyright holder if you
wish to copy or otherwise use copyrighted material.

https://crsreports.congress.gov | IF11489 · VERSION 1 · NEW