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This directive was canceled on June 8, 2012.

Order
Subject
FHWA Personnel Management Manual; Part 1: Personnel Systems & Procedures, Chapter 6: Pay, Allowances, and Other Payments, Section 4: Recruitment, Relocation and Retention Incentives
Classification Code Date
M3000.1C August 5, 2004  

Par.

  1. What is the purpose of this directive?
  2. Does this directive cancel an existing FHWA directive?
  3. What is the background concerning this directive?
  4. What are the pertinent references?
  5. What are the Federal agency requirements for using the bonus authorities?
  6. What is a recruitment bonus and when is it authorized?
  7. What is a relocation bonus and when is it authorized?
  8. What is a retention bonus and when is it authorized?
  9. What is the approval process for bonus nominations?
  10. What are reporting requirements?
  11. What type of documentation is required?
  1. What is the purpose of this directive? This directive provides guidance for determining and awarding recruitment, relocation, and retention bonuses in the Federal Highway Administration (FHWA).

  2. Does this directive cancel an existing FHWA directive? Yes. This directive cancels the outdated FHWA Personnel Management Manual (PMM), Part 1, Chapter 6, Section 4, dated July 28, 2001.

  3. What is the background concerning this directive? This directive reflects changes in Office of Personnel Management (OPM) regulations that provide agencies with greater flexibility in paying recruitment, relocation, and retention bonuses to recruit and retain high-quality employees. This directive also reflects the delegation of authority within FHWA for approving or rejecting bonus award nominations.

  4. What are the pertinent references?

    1. 5 U.S. Code (U.S.C.) 5753 and 5754.

    2. 5 Code of Federal Regulations (CFR) 575, subparts A, B, and C, dated January 1, 2000.

    3. 5 U.S.C. 5333, Minimum rate for new appointments.

  5. What are the Federal agency requirements for using the bonus authorities? Federal agencies are required to establish criteria to be met or considered in authorizing bonuses, including criteria for determining the amount of bonuses. Federal agencies must also implement procedures for paying bonuses and designate officials with authority to review and approve the payment of bonuses. Documentation and record-keeping requirements must also be established.

  6. What is a recruitment bonus and when is it authorized? A recruitment bonus is a lump-sum payment of up to 25 percent of basic pay that a Federal agency may pay to a new employee in a difficult-to-fill position. A recruitment bonus may be paid to an employee who (1) has not yet entered on duty, (2) has accepted a written offer of employment, and (3) has signed a service agreement to fulfill a specific period of service, not less than 6 months.

    1. Covered positions. Recruitment bonuses may be paid to eligible individuals who are appointed to a General Schedule (GS) position or to another type of position for which such payments have been approved by the OPM. By regulation, the OPM has approved coverage of certain positions, including senior-level and scientific or professional (SL/ST), Senior Executive Service (SES), and Executive Schedule positions (except agency heads). Federal agencies may not pay a recruitment bonus to the head of a Federal agency. The OPM may approve other categories upon written request from the head of the employing Federal agency.

    2. Qualifying appointments. Recruitment bonuses may be paid to an employee who is "newly appointed" to the Federal government, including an employee reappointed with a 90-day break in service. Temporary, seasonal, and part-time employees are eligible, provided all other requirements are met. For example, an individual who receives a temporary appointment is eligible as long as the temporary appointment lasts at least 6 months.

    3. Continued service agreement. Before receiving a recruitment bonus, an employee must sign a service agreement to complete a specified period of employment with the FHWA. The minimum required service agreement period for a recruitment bonus is 6 months, but any amount of time beyond that may be appropriate depending on the demands of the job, the difficulty of recruiting, and the amount of the bonus. The general objective is to establish as long a required service agreement period as feasible without detracting from the incentive value of the bonus. For example, if a high bonus percentage is offered, then a longer service agreement period should be required.

    4. Criteria for approval. Each bonus must be based on a written determination that, in the absence of such a bonus, the FHWA would have difficulty in filling the position. In determining whether a bonus should be paid, officials should consider the following factors:

      1. (1) The success of recent efforts to recruit candidates for similar positions, including a review of indicators such as declination and acceptance rates, and the length of time required to fill similar positions;

      2. (2) Recent turnover in similar positions;

      3. (3) Labor-market factors that may affect the ability of the agency to recruit candidates for similar positions now or in the future;

      4. (4) Special qualifications needed in the position; and

      5. (5) The practicality of using the superior qualifications appointment authority, provided by 5 U.S.C. 5333 and 5 CFR 531.203(b), alone or in combination with a recruitment bonus.

    5. Group coverage. The FHWA may target groups of positions that have been difficult to fill in the past or that may be difficult to fill in the future, and it may make the required written determination to offer a recruitment bonus on a group basis. All requirements must be met in order to pay a recruitment bonus to an individual employee in a designated group. For example, the FHWA may authorize a recruitment bonus of up to 25 percent of basic pay, and the employee must be newly appointed in the Federal government and must sign a service agreement of at least 6 months.

    6. Payment. A recruitment bonus must be calculated as a percentage of the employee's starting annual rate of basic pay (excluding locality pay, but including special rates) at the time of appointment, not to exceed 25 percent. The bonus is paid in a lump sum.

      1. (1) A bonus may be paid to an individual not yet employed who has received a written offer of employment and signed a written service agreement.

      2. (2) A recruitment bonus is not considered part of an employee's rate of basic pay for any purpose.

      3. (3) Payment of the bonus and the service period generally would begin when the employment in the new position begins, but the effective date could be delayed in accordance with OPM regulations, such as when the new position includes a period of formal training.

      4. (4) A recruitment bonus may be paid to a newly appointed employee whose pay has been set above the minimum step in accordance with superior qualifications appointment authority as allowed by 5 U.S.C. 5333.

    7. Bonus amount criteria. For assistance in determining the appropriate amount for a particular bonus, refer to the guidance in Attachment 2, Bonus Amount Criteria.

    8. Approval level. A Federal agency official who is at a higher level than the official who recommended the bonus must approve a recruitment bonus. Within the FHWA, Associate Administrators, Chief Counsel, and the Directors of Field Services may approve recruitment bonuses within established ranges for subordinate positions. The Executive Director retains approval authority for all other positions. Bonuses must have concurrence from the servicing human resource office.

    9. Repayment. If an employee fails to complete the agreed-upon service period, the employee must repay the portion of the bonus attributable to the uncompleted period. Exception: No repayment is required when the employee is involuntarily separated for reasons other than misconduct or delinquency.

  7. What is a relocation bonus and when is it authorized? A relocation bonus is a lump-sum payment of up to 25 percent of basic pay that an agency may pay to a current Federal employee who is relocating to a difficult-to-fill position in a different commuting area.

    1. Covered positions. Relocation bonuses may be paid to eligible employees who are serving in a GS position or in another type of position for which such payments have been approved by the OPM. By regulation, the OPM has approved coverage of certain positions, including SL/ST, SES, and Executive Schedule positions (except agency heads). The OPM approves other categories upon written request from the head of the employing Federal agency.

    2. Employee coverage. Only current Federal employees (from within the FHWA or from a different Federal agency) serving in covered positions may receive a relocation bonus. Newly appointed employees are not eligible.

    3. Temporary appointments. A relocation bonus may be paid to an employee who is appointed without a break in service to a position in a different commuting area or whose duty station has changed permanently or temporarily to a different commuting area, assuming all other conditions are met.

    4. Service agreement. Before receiving a relocation bonus, an employee must sign a written agreement to complete a specified period of employment with the FHWA in the agreed upon location. The recommending official may determine the length of the service period.

    5. Criteria for approval. Before the employee enters on duty in the position to which he/she is relocated, the FHWA must determine in writing that, in the absence of the bonus, it would have a difficult time filling the position. In determining whether a bonus should be paid, officials should consider the following factors:

      1. (1) The success of recent efforts to recruit candidates for similar positions, including a review of indicators such as declination and acceptance rates, and the length of time required to fill similar positions;

      2. (2) Recent turnover in similar positions;

      3. (3) Labor-market factors that may affect the ability of the FHWA to recruit candidates for similar positions now or in the future;

      4. (4) Special qualifications needed in the position; and

      5. (5) The practicality of using the superior qualifications appointment authority, provided by 5 U.S.C. 5333 and 5 CFR 531.203(b), alone or in combination with a location bonus.

    6. Case-by-case determinations. FHWA determinations to pay a relocation bonus normally must be made on a case-by-case basis. However, it may be appropriate (1) to identify groups of positions that have been difficult to fill in the past or that may be difficult to fill in the future and (2) to use a group-targeted approach in identifying candidates for bonuses.

    7. Group coverage. Under certain conditions, the FHWA may waive the case-by-case approval requirement for employees with a rating of at least "Meets or Exceeds Requirements" or the equivalent: for example, when these employees are part of a major organizational unit that is being relocated to a different commuting area. (Note: these groups must be approved using the same criteria that apply to individuals).

    8. Payment. A relocation bonus must be calculated as a percentage of the initial annual rate of basic pay (excluding locality pay) for the employee's new position, not to exceed 25 percent. The bonus is paid in a lump sum. The agency may not pay the relocation bonus until the employee establishes a residence in the new commuting area. An agency may pay relocation bonuses to employees receiving a special rate or a retained rate. By law, agencies must compute a relocation bonus as a percentage of an employee's annual rate of basic pay. Special rates and retained rates are considered basic pay for this purpose.

      1. (1) Basic pay. A relocation bonus is not considered part of an employee's rate of basic pay for any purpose.

      2. (2) Relocation bonuses and relocation expenses. Relocation bonuses have no effect on an employee's entitlement to reimbursement for relocation expenses under the General Service Administration’s (GSA's) Federal Travel Regulations and should not be paid in lieu of reimbursing the employee for such expenses.

      3. (3) Relocation bonus and retention bonus. A relocation bonus may be paid to an employee who is already receiving a retention bonus. (See 5 CFR 575.304 (a)).

    9. Approval level. An official of the agency who is at a higher level than the official who recommended the bonus must approve a relocation bonus. Within the FHWA, Associate Administrators, Chief Counsel, and the Directors of Field Services may approve relocation bonuses within established ranges for subordinate positions. The Executive Director retains approval authority for all other positions. In situations where a recommended bonus exceeds a recommended amount, the Executive Director approval is required. Bonuses must have concurrence from the servicing human resource office prior to notifying the candidate.

    10. Repayment. If an employee fails to complete the agreed-upon service period, the employee must repay the portion of the relocation bonus attributable to the period of service that is not completed. Exception: No repayment is required when the employee is involuntarily separated (for reasons other than misconduct or delinquency) or if the employee is involuntarily relocated to a different commuting area.

  8. What is a retention bonus and when is it authorized? A retention bonus is a continuing payment (i.e., biweekly) of up to 25 percent of basic pay that an agency may pay to help retain an employee. The Federal agency must determine that the unusually high or unique qualifications of the employee or a special need of the Federal agency for the employee's services make it essential to retain the employee, and the employee would be likely to leave the Federal government in the absence of a retention bonus.

    1. Position coverage. A retention bonus may be paid to a current Federal employee holding a GS position or another type of position for which such payments have been approved by OPM. By regulation, OPM has approved coverage of certain positions, including SL/ST, SES, and Executive Schedule positions (except agency heads). The OPM approves other categories upon written request from the head of the employing agency.

    2. Criteria for approval. Before paying a retention bonus, the FHWA must determine that the unusually high or unique qualifications of the employee or a special need for the employee's services make it essential to retain the employee, and the employee would be likely to leave the Federal service (for any purpose) in the absence of the retention bonus. The FHWA must document the basis for this determination in writing. It must address the extent to which the employee's departure would affect the FHWA's ability to carry out an activity or perform a function that is essential to the FHWA's mission. It should also address the difficulty of recent efforts to recruit candidates with similar qualifications and the availability of candidates in the labor market, as applicable.

    3. Group coverage. The FHWA may pay a retention bonus of up to 10 percent of basic pay (or up to 25 percent with OPM approval) to a group or category of employees. It must determine that the employees have unusually high or unique qualifications, or that FHWA has a special need for the employees' services that makes it essential to retain the employees in that category. The FHWA must also determine whether it is reasonable to presume that there is a high risk that a significant number of employees in the targeted group are likely to leave Federal service in the absence of a bonus. This determination may be based on evidence of extreme labor market conditions, high demand in the private sector for the knowledge and skills possessed by the employees, significant disparities between Federal and non-Federal salaries, or other similar conditions. All requirements in the regulations must be met to pay a retention bonus to an individual employee in a covered group. For example, the FHWA may not pay a retention bonus to an employee in the covered group who is fulfilling a recruitment or relocation bonus service agreement.

    4. Payment

      1. (1) A retention bonus is calculated as a percentage of the employee's rate of basic pay (excluding any locality payment), not to exceed 25 percent. It is paid at the same time as the employee's regular paycheck (usually biweekly).

      2. (2) The FHWA may not begin paying a retention bonus during the service period established by an employee's recruitment or relocation bonus service agreement. (However, a relocation bonus may be paid to an employee already receiving a retention bonus).

      3. (3) A retention bonus may continue for as long as the conditions that prompted the original determination to pay the bonus still exist. A retention bonus may be reduced or terminated when it is determined that:

        1. (a) A lesser amount (or none at all) would be sufficient to retain the employee;

        2. (b) Labor market factors have changed so that it is easier to recruit for people with qualifications similar to those of the employee. Subsequently, the FHWA's need for the employee's services is reduced or no longer exists; or

        3. (c) Budgetary considerations make it impossible to continue retention bonus payments.

      4. (4) A retention bonus may be paid to an employee who is likely to retire.

      5. (5) A retention bonus may be paid to employees receiving a special rate or retained rate. Agencies must compute a retention bonus as a percentage of an employee's rate of basic pay. Special rates and retained rates are considered basic pay for this purpose.

      6. (6) A retention bonus may not be offered to an individual before the individual's employment with the agency. For example, a retention bonus cannot be offered to a person as a means of recruiting that person from another Federal agency.

    5. Annual review. The FHWA must review each retention bonus authorization at least annually to determine whether payment is still warranted. The Human Resources Director must certify this annual determination in writing. The Human Resources Director should also review the appropriateness of a retention bonus payment whenever the conditions that originally prompted the payment of the bonus change significantly. For example, a significant increase in an employee's rate of basic pay as a result of a promotion may make it unlikely that the employee would opt to leave Federal service if the bonus were cut. Similarly, if an employee completes work on a special project, there may no longer be a justification for continuing to pay a retention bonus to that employee.

    6. Approval level. Within the FHWA, retention bonuses must be approved at the Executive Director level.

    7. Reduction or termination of a retention bonus. See paragraph 8.d.(3) above.

    8. Basic pay. A retention bonus is not considered part of an employee's rate of basic pay for any purpose, including severance pay, retirement, or for lump-sum annual leave payments.

    9. Aggregate pay limitation. The FHWA may not authorize or continue a retention bonus if the bonus would cause the employee's projected aggregate compensation in a calendar year to exceed the rate for level one of the Executive Schedule. The FHWA must reduce or terminate a retention bonus before deferring any other type of payment under the deferral provision in the aggregate pay limitation regulations.

  9. What is the approval process for bonus nominations?

    1. Unit managers initiate the approval process by nominating employees, or job applicants, for bonus eligibility approval.

    2. The servicing human resources office reviews nominations to ensure that all regulatory and procedural requirements are met, and it recommends approval or disapproval of the nomination and bonus amount. (This review becomes part of the nomination package).

    3. The approving official approves, adjusts, or denies all or part of the request from the nominating office.

    4. The servicing human resources office and the approving official coordinate with the Washington Headquarters Office of Human Resources (HAHR) to ensure that funds are available for the bonus and that appropriate documentation of the personnel action to initiate payment of the bonus is promulgated. Unusual cases requiring clarification of the bonus amount criteria or the approval process may be referred to the Director, HAHR, for further guidance.

  10. What are the reporting requirements? When requested by the Department of Transportation (DOT) Office of the Secretary (OST), the Washington Headquarters HAHR Services Group submits a report to OST on the use of bonus provisions.

  11. What type of documentation is required? A copy of all background information related to bonus nominations is maintained by the servicing human resources office. The servicing human resources office should keep a written record of each nomination made under the above criteria, including the information listed below. See Attachment 3, Bonus Summary Chart, for a summary of information required for each type of bonus.

    1. A copy of the employee's classified position description with position number, title, series, grade, duty location;

    2. A justification documenting how the employee meets the applicable criteria for a bonus;

    3. The resume or application for Federal Employment Standard Form (SF)-171 or Optional Form (OF)-612 of the employee;

    4. The percentage of the employee's rate of basic pay that is recommended for the bonus;

    5. A copy of the service agreement, if required; and

    6. Any reviews of bonus nominations that assure proper application of the delegated authority and support whether or not the bonus is still needed.



ATTACHMENT 1 PMM
Chapter 6, Section 4

SERVICE AGREEMENT

Executing this agreement is required as a prerequisite of paying a recruitment or relocation bonus.

The Federal Highway Administration (FHWA), an agency of the U.S. Department of
Transportation, under the provisions of the Federal Employees Pay Comparability Act of 1990, and with the approval of the Secretary of Transportation, dated June 8, 1992, authorizes the payment of a _________________ bonus, to be paid to the undersigned employee under the conditions and term of this agreement.

In consideration of this payment by the Government in the amount of ________________, which represents _______percent of base pay, I agree to remain in the employment of the United States Government, Department of Transportation, Federal Highway Administration for ________ months/years following the effective date of my employment or entrance on duty at the new official duty station, unless separated or relocated for reasons beyond my control and acceptable to the Department or agency in which I am employed.

I understand that in case of violation of this agreement, any moneys expended by the United States may be recovered. Amounts to be recovered will be determined on a pro rata basis, providing credit for each full month of employment completed under this agreement.

Name of Employee: (typed or printed) ____________________________________________
Signature of Employee: __________________________________ Date:________________

Name of Witness:(typed or printed)_______________________________________________
Signature of Witness: ____________________________________ Date:________________


ATTACHMENT 2 PMM
Chapter 6, Section 4

Bonus Amount Criteria

Under current regulations, recruitment, relocation, and retention bonuses are calculated as a percentage of the employee's annual rate of basic pay, not including locality pay. In most cases, the amount of any bonus may not exceed 25 percent of the employee's annual rate of basic pay, and the bonus amount is not considered part of the employee's rate of basic pay for any purpose.

In determining the appropriate amount for a particular bonus, the recommending official needs to consider the nature and extent of the recruitment problems that have been encountered in trying to fill the position, as well as the unique qualifications of a particular candidate or employee. For example, a larger bonus, i.e., one that is at or near 25 percent, should be reserved for filling positions that present the most difficult recruitment problems, or for retaining an employee who is uniquely qualified to retain in a certain position. Paying too much to fill a position that is not as difficult to fill could set an unwarranted expectation or precedent for other candidates and could adversely affect the morale of current employees who did not receive a bonus.

When the amount of a bonus is based on the special qualifications of a particular applicant, the highest bonuses should be reserved for the most highly qualified individuals. For example, if an applicant has qualifications, which far surpass those of other candidates, and if the applicant has a high degree of expertise and experience in his/her field, then a bonus at or near 25 percent may be appropriate.

The following guidelines may be used to help to set bonus amounts in specific cases:

(1) 5 to 10 percent

Bonuses in this range are appropriate in situations where it is routinely difficult to recruit qualified candidates for particular positions. A bonus in this range is appropriate in situations where a well-qualified candidate may be available, but may not accept the position in the absence of the bonus. Example: Recruitment bonuses for Professional Development Program (PDP) new hires are authorized at this level.

(2) 11 to 15 percent

Bonuses in this range are appropriate for positions which are difficult to fill, and where labor market factors are likely to negatively affect the ability of FHWA to recruit qualified applicants now or the future. In addition, there should be a demonstrated need to fill the position or to retain a particular individual in order to accomplish important program work or maintain customary levels of service. Example: Candidates for bonuses in this range should be well-qualified, and have experience, which is directly applicable to the position. Also, the position being filled should have the characteristics described in this paragraph.

(3) 16 to 20 percent

Bonuses in this range are appropriate for positions which have proven difficult to fill, for example, because of the location of the position, and/or because competition with other employers for candidates in a particular field is especially intense. In addition, there is a critical need at the operational level for this type of position to be filled quickly, or to remain filled. Example: Bonuses at this level are appropriate for candidates for the type of positions described in this paragraph who bring an exceptional level of expertise and/or training, when compared with that offered by other applicants, to a critical job vacancy.

(4) 20 to 25 percent

Bonuses in this range are appropriate for positions which present the most difficult recruitment problems, such as those which are located in metropolitan areas with the highest cost-of-living rates and the tightest labor market conditions. This includes positions which may have been advertised several times in the past, and for which there have been very few highly qualified applicants. These should be positions for which there is an extremely critical and compelling need at the agency level to fill the position with a uniquely qualified candidate, or to retain a uniquely qualified candidate. Example: A bonus in this range is appropriate for candidates who possess a very high degree of expertise in their field, are unique experts in their field, or who possess technical skills that are clearly superior to those of other candidates and applicable to the job being filled. Also, there is an extremely critical and compelling agency need to fill the position with a candidate of this caliber.

Vacancy Announcements

When initiating the recruitment process for a position which has proven difficult to fill in the past, a unit manager may want to indicate in the vacancy announcement that a recruitment or relocation bonus may be available to a selected candidate who meets applicable criteria specified in 5 CFR Part 575. This should only be done with the prior approval of the official with delegated authority to approve bonus payments. The language in the announcement should not create an undue expectation for a bonus or of a bonus in a specific amount.

Sample language may be a note in the vacancy announcement to this effect:

"A recruitment or relocation bonus may be authorized for a selected candidate who meets the applicable criteria specified in 5 CFR Part 575."


ATTACHMENT 3 PMM
Chapter 6, Section 4

BONUS SUMMARY CHART
 

RECRUITMENT

RELOCATION

RETENTION

AMOUNT

Up to 25% of base pay. Lump-sum payment. Excludes locality pay. Includes special rates.

Up to 25% of base pay. Lump-sum payment.

Up to 25% of base pay made in bi-weekly payments (as part of normal paycheck).

ELIGIBILITY

Newly appointed (in receipt of a written offer of employment) in the GS, GM, SES or Exec. schedule.

Current Federal employee moving to a position in a different locale in the GS, GM, SES, or Exec. schedule.

Current agency employee in a GS, GM, SES, or Executive schedule position likely
to leave for non-Federal employment.

DURATION OF SERVICE AGREEMENT

Minimum of 6 months

Approving official determines the minimum period.

No agreement required. Bonus can be reduced or terminated at any time.

OPERATING POLICY

Must prove recruiting difficulties will occur in the absence of the bonus.

Must prove inability to attract agency-critical expertise in a locale in the absence of the bonus.

Must prove essential or special agency need for unique qualifications of the individual and
that in the absence of the bonus, the individual would leave the agency (for any reason).

INDICATORS

Recruiting difficulties not addressed by other pay provisions.

Locale disparities, e.g., the inability to fill jobs in local competitive area.

Agency hardship created by loss of employee services. Inability to replace needed skills.

CRITERIA

1. Success of recent recruitment efforts to hire quality candidates.

2. Turnover in similar positions.

3. Labor market factors.

4. Special qualifications needed.

5. Review of other options.

1. Success of recent recruitment efforts to hire quality candidates.

2. Turnover in similar positions.

3. Labor market factors.

4. Special qualifications needed.

5. Review of other options.

1. Success of recent efforts to recruit candidates with similar qualifications.

2. Availability in the labor market of candidates who could perform the full range of duties and responsibilities with minimal training or disruption of service to the public.

3. Employee will likely leave the Federal government without bonus.

GROUP COVERAGE

Written documentation required at the outset. Each group member must meet criteria individually.

Each group member must meet criteria and meet or exceed all performance ratings.

 

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