U.S. Department of Transportation
Federal Highway Administration
1200 New Jersey Avenue, SE
Washington, DC 20590
202-366-4000
This Directive was canceled August 5, 2004.
Order |
Subject |
Personnel Management Manual: Part 1, Chapter 6: Pay, Allowances and Other Payments, Section 4: Recruitment, Relocation and
Retention Incentives |
Classification Code |
Date |
|
M3000.1B |
June 28, 1996 |
|
- What is the purpose of this directive? This directive provides guidance
for determining and awarding recruitment, relocation, and retention bonuses
in FHWA.
- Does this directive cancel an existing FHWA directive? Yes. This
directive cancels the outdated FHWA Personnel Management Manual Chapter 6,
Section 4, dated June 28, 1996.
- What is the background concerning this directive? This directive
reflects changes in Office of Personnel Management (OPM) regulations designed
to 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.
- What are the pertinent references?
- 5 U.S.C. 5753 and 5754
- 5 CFR 575, subparts A, B, and C, dated January 1, 2000
-
What are the agency requirements for using the bonus authorities?
Agencies are required to establish criteria to be met or considered in authorizing
bonuses, including criteria for determining the amount of bonuses. Agencies
must also implement procedures for paying bonuses, and designate officials
with authority to review and approve payment of bonuses. Documentation and
record-keeping requirements must also be specified.
- What is a recruitment bonus and under what conditions is it authorized?
A recruitment bonus is a lump-sum payment of up to 25 percent of basic pay
that an 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.
- 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
OPM. By regulation, 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).
Agencies may not pay a recruitment bonus to the head of an agency. OPM
may approve other categories upon written request from the head of the
employing agency.
- 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, or 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.
- Continued service agreement. Before receiving a recruitment
bonus, an employee must sign a written agreement to complete a
specified period of employment with 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.
- Criteria for approval. Each bonus must be based on a written
determination that, in the absence of such a bonus, FHWA would have difficulty
in filling the position. In determining whether a bonus should be paid,
officials should consider the following factors:
(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) Recent turnover in similar positions;
(3) Labor-market factors that may affect the ability of the agency
to recruit candidates for similar positions now or in the future;
(4) Special qualifications needed in the position; and
(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.
- Group coverage. 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 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, 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.
- Payment. A recruitment bonus must be calculated as a percentage
of the employee's starting annual rate of basic pay (excludes locality
pay, but includes special rates) at the time of appointment, not to exceed
25 percent. The bonus is paid in a lump sum.
(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) A recruitment bonus is not considered part of an employee's rate
of basic pay for any purpose.
(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) 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.
- Bonus amount criteria. For assistance in determining the appropriate
amount for a particular bonus, refer to the guidance in Attachment 2,
Bonus Amount Criteria.
- Approval level. An agency official who is at a higher level than
the official who recommended the bonus must approve a recruitment bonus.
Within FHWA, Core Business Unit Program Managers, Service Business Unit
Directors, and Directors of Field Services may approve recruitment bonuses
within established ranges for subordinate positions. The Administrator
(or his/her designee) retains approval authority for all other positions.
In situations where a recommended bonus exceeds a recommended amount,
the Administrator's approval is required.
- 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).
- 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.
- 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 OPM. By regulation, OPM
has approved coverage of certain positions, including SL/ST, SES, and
Executive Schedule positions (except agency heads). OPM approves other
categories upon written request from the head of the employing agency.
- Employee coverage. Only current Federal employees (from within
FHWA or from a different Federal agency) serving in covered positions
may receive a relocation bonus. Newly appointed employees are not eligible.
- 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.
- Service agreement. Before receiving a relocation bonus, an employee
must sign a written agreement to complete a specified period of employment
with FHWA in the agreed upon location. The recommending official may determine
the length of the service period.
- Criteria for approval. Before the employee enters on duty in
the position to which relocated, 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) 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) Recent turnover in similar positions;
(3) Labor-market factors that may affect the ability of the agency
to recruit candidates for similar positions now or in the future;
(4) Special qualifications needed in the position; and
(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.
- 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 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 to
use a group-targeted approach in identifying candidates for bonuses.
- Group coverage. Under certain conditions, 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).
- 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 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) Basic pay. A relocation bonus is not considered part of an employee's
rate of basic pay for any purpose.
(2) Relocation bonuses and relocation expenses. Relocation bonuses
have no effect on an employee's entitlement to reimbursement for relocation
expenses under GSA's Federal Travel Regulations and should not be
paid in lieu of reimbursing the employee for such expenses.
(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).).
- 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 FHWA, Core Business Unit Program Managers, Service Business
Unit Directors, and Directors of Field Services may approve relocation
bonuses within established ranges for subordinate positions. The Administrator
(or his/her designee) retains approval authority for all other positions.
In situations where a recommended bonus exceeds a recommended amount,
the Administrator's approval is required.
- 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.
-
What is a retention bonus and under what conditions 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 agency
must determine that the unusually high or unique qualifications of the employee
or a special need of the agency for the employee's services makes it essential
to retain the employee, and the employee would be likely to leave the Federal
Government in the absence of a retention bonus.
- 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). OPM approves other categories
upon written request from the head of the employing agency.
- Criteria for approval. Before paying a retention bonus, FHWA
must determine that the unusually high or unique qualifications of the
employee or a special need for the employee's services makes it essential
to retain the employee, and the employee would be likely to leave the
Federal service (for any purpose) in absence of the retention bonus. FHWA
must document the basis for this determination in writing. It must address
the extent to which the employee's departure would affect the agency's
ability to carry out an activity or perform a function that is essential
to the agency'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.
- Group coverage. 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 it has a special need for the employees'
services that makes it essential to retain the employees in that category.
The agency 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, FHWA may not pay a retention bonus to an employee
in the covered group who is fulfilling a recruitment or relocation bonus
service agreement.
- Payment.
(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) An agency 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) A retention bonus may continue for as long
as the conditions giving rise to the original determination to pay
the bonus still exist. A retention bonus may be reduced or terminated
when it is determined that:
(a) A lesser amount (or none at all) would be sufficient to retain
the employee;
(b) Labor market factors have changed so that it is easier to recruit
for people with qualifications similar to those of the employee.
Subsequently, FHWA's need for the employee's services is reduced
or no longer exist; or
(c) Budgetary considerations make it impossible to continue retention
bonus payments.
(4) A retention bonus may be paid to an employee who is likely to
leave because of retirement.
(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) 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 agency.
- Annual review. FHWA must review each retention bonus authorization
at least annually to determine whether payment is still warranted. The
responsible official must certify this annual determination in writing.
Officials 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.
- Approval level. Within FHWA, retention bonuses must be approved
at the Administrator's level.
- Reduction or termination of a retention bonus. See paragraph
8.d.(3) above.
- 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.
- Aggregate pay limitation. 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. 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.
-
What is the approval process for bonus nominations?
- Unit Managers initiate the process by nominating employees, or job
applicants, for bonus eligibility approval.
- The servicing human resources office reviews nominations to ensure
that all regulatory and procedural requirements are met, and recommends
approval or disapproval of the nomination and bonus amount. (This review
becomes part of the nomination package).
- The approving official approves, adjusts, or denies all or part of
the request from the nominating office.
- The servicing human resources office and the approving official coordinate
with the Headquarters Office of Human Resources (OHR) to ensure that funds
are available for the bonus and that appropriate documentation of the
personnel action to initiate payment of the bonus is effected. Unusual
cases requiring clarification of the bonus amount criteria or the approval
process may be referred to the Director, OHR for further guidance.
-
What are the reporting requirements? A copy of all background information
related to bonus nominations is maintained by the servicing human resources
office. When requested by the DOT Office of the Secretary (OST), the Headquarters
OHR Services Group submits a report to OST on the use of bonus provisions.
-
What type of documentation is required? 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.
- A copy of the employee's classified position description with position
number, title, series, grade, duty location;
- A justification documenting how the employee meets the applicable criteria
for a bonus;
- The resume or application for Federal Employment (SF-171 or OF-612)
of the employee;
- The percentage of the employee's rate of basic pay that is recommended
for the bonus;
- A copy of the service agreement, if required; and
- Bonus nominations should be reviewed periodically to assure proper
application of the delegated authority and to decide whether or not the
bonus is still needed.
Michael J. Vecchietti
Director of Administration
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