[Federal Register: August 21, 2006 (Volume 71, Number 161)]
[Notices]
[Page 48557-48559]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr21au06-74]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF LABOR
Employment and Training Administration
Implementing the Salary and Bonus Limitations in Public Law 109-
234
AGENCY: Employment and Training Administration, Labor.
ACTION: Notice.
-----------------------------------------------------------------------
SUMMARY: This notice provides information regarding implementing salary
and bonus limitations in Public Law 109-234. It is directed to all
Employment and Training Administration (ETA) grantees, contractors and
other recipients of ETA appropriated funds. The purpose of this Notice
is to inform States and other ETA-fund recipients and sub-recipients of
a new limitation on salary and bonus payments that can be made with
funds appropriated to ETA and provide guidance on implementing this new
provision.
SUPPLEMENTARY INFORMATION:
I. References
Public Law 109-234.
II. Background
On June 15, 2006, President Bush signed into law an emergency
supplemental appropriations bill, Public Law 109-234. Section 7013 of
this public law limits salary and bonus compensation for individuals
who are paid by funds appropriated to the Employment and Training
Administration and provided to recipients and sub-recipients.
Specifically, section 7013 states:
None of the funds appropriated in Public Law 109-149 or prior Acts
under the heading ``Employment and Training'' that are available for
expenditure on or after the date of enactment of this section shall
be used by a recipient or subrecipient of such funds to pay the
salary and bonuses of an individual, either as direct costs or
indirect costs, at a rate in excess of Executive Level II, except as
provided for under section 101 of Public Law 109-149. This
limitation shall not apply to vendors providing goods and services
as defined in OMB Circular A-133. Where States are recipients of
such funds, States may establish a lower limit for salaries and
bonuses of those receiving salaries and bonuses from subrecipients
of such funds, taking into account factors including the relative
cost-of-living in the State, the compensation levels for comparable
State or local government employees, and the size of the
organizations that administer Federal programs involved including
Employment and Training Administration programs.
III. Policy Guidance
This policy guidance provides the workforce investment system with
information on programs that are impacted by this provision; the
effective date and cycles of funding that are impacted; covered
individuals and transactions; the application of the limitation;
related grant and contract modifications; action required; and where to
direct inquiries.
IV. Programs Impacted by This Provision
The new salary and bonus limitation applies to all programs and
activities undertaken through grants and contracts funded by an
appropriation to ETA. Therefore, this limitation applies to all
programs administered by ETA, unless the program falls within an
exception outlined below.
The salary and bonus limitation also applies to programs funded by
an ETA appropriation, but administered by another agency. For example,
certain programs funded by ETA appropriations are administered by the
Department of Labor's Veterans Employment and Training Service or the
Department of the Interior. ETA will inform agencies which administer
such programs of this new requirement. Any questions should be directed
to the administering agency.
A recipient or sub-recipient may receive funds from ETA that are a
combination of funds appropriated to ETA and funds that are not
appropriated to ETA. In this situation, the limitations
[[Page 48558]]
of section 7013 as described in this TEGL apply to the portion of the
funding that is appropriated to ETA.
Exceptions: This limitation does not apply to programs funded by H-
1B grant funds. These funds are received from employer paid fees and
are not appropriated. Therefore, the programs they fund are not covered
by the salary and bonus limitation. Examples of such programs include
activities funded through the WIRED Initiative and some High Growth Job
Training Initiative grants.
The limitation also does not apply to the Disaster Unemployment
Assistance (DUA) program. These funds are appropriated to the Federal
Emergency Management Agency (FEMA) and transferred to ETA.
WIA incentive grants financed only through Department of Education
appropriations are not covered by this limitation.
Public Law 109-234 specifically states that it does not change the
limitations that Public Law 109-149 section 101 previously set for
individuals paid through the Job Corps program. These limitations are
still in effect. Questions concerning the applicability of the new
provision to any Job Corps funds should be directed to Job Corps
officials.
Any limitation on payments to individuals contained in grants or
contracts with ETA which are more restrictive than Public Law 109-234
are not changed by Public Law 109-234. For example, any limitation on
consultant fees in grants or contracts are generally more restrictive
than the limitations in Public Law 109-234, when broken down as an
hourly rate, and will continue to apply.
V. Effective Date and Funding Cycles Impacted
The limitation on salaries and bonuses applies to funds
appropriated in Fiscal Year 2006 under Public Law 109-149 and prior
year appropriation funds under the heading ``Employment and Training''
that remain available for expenditure. It applies to funds that are
available for expenditure on or after June 15, 2006. It does not apply
to funds expended before June 15, 2006.
VI. Covered Individuals and Transactions
The provision in Public Law 109-234 limits the use of funds used by
a recipient or sub-recipient to pay for salary and bonuses of an
individual. Examples of recipients include entities and their funded
partners that receive contracts and grants from ETA. Examples of sub-
recipients include sub-contractors or sub-grantees. Any salary or bonus
payments made by a recipient or a sub-recipient to an individual are
covered by this limitation. This limitation applies to such payments
regardless of whether they are paid as a direct or an indirect cost.
However, according to the law this limitation does not apply to
``vendors'' as defined in OMB Circular A-133. A vendor means a dealer,
distributor, merchant, or other seller providing goods or services that
are required for the conduct of a Federal program. Characteristics
indicative of a payment for goods and services received by a vendor are
when the organization: (1) Provides the goods and services within
normal business operations; (2) Provides similar goods or services to
many different purchasers; (3) Operates in a competitive environment;
(4) Provides goods or services that are ancillary to the operation of
the Federal program; and (5) Is not subject to compliance requirements
of the Federal program.
For example, an office supply business that provides ``off the
shelf'' paper, printers, computers, software, etc. to other businesses,
individuals, as well as to grant programs would be a vendor. Also, a
training institution which provides one of its accounting courses/
classes to any interested individual as well as to clients of an ETA
funded grant program is acting as a vendor. However, when that same
training institution develops and delivers a training course
specifically for an ETA funded program it is acting as a sub-recipient
even if others are allowed to attend and pay for the course/class at
the institution's tuition rate.
VII. Application of the Limitation
The law sets the limit on salaries and bonuses at a rate equivalent
to no more than Executive Level II. A salary table providing this rate
is listed on the Federal Office of Personnel Management Web site
(http://www.opm.gov) under Federal Salaries & Wages. These levels are
adjusted annually and the Web site is updated annually. For FY 2006,
the limit is set at $165,200. The Public Law 109-234 limitation does
not apply to benefits that are not salary and bonuses. For example,
fringe benefits, insurance premiums or pension plans paid by a
recipient or sub-recipient are not included in this calculation.
Individuals can receive payments from funds not impacted by section
7013 in addition to funds that are impacted by 7013. For example an
entity may receive funds from other Federal programs, from the State,
from municipalities, or even private funds. In those instances the
total sum of any employee's salary and bonuses may be higher than
Executive Level II. However, in instances where funds impacted by
section 7013 only pay a portion of the salary, the section 7013-
impacted funds may only be charged for the share of the employee's
salary attributable to the work on the section 7013-impacted grant or
contract. That portion cannot exceed the Executive Level II rate. For
example, if 25 percent of an employee's time is attributable to work
performed under grants covered by the provision and the annual
Executive Level II amount is $165,200, no more than $41,300 can be
charged to ETA during the year.
If not already done, all affected recipients or sub-recipients must
implement these requirements retroactively to the date of enactment,
June 15, 2006. This provision means that salary payments will need to
be adjusted back to June 15, 2006.
Bonuses: The restriction applies to both salaries and bonuses. The
sum of all bonuses received over the previous 12-month period when
added to the employee's salary may not at any time exceed the
limitation. For example, an employee paid at a $162,000 may not receive
bonuses in any 12-month period that exceeds $3,200, assuming the
limitation of $165,200.
When States are the recipients of the funds, States can set a limit
below Executive Level II for salaries paid by sub-recipients. However,
States should take the factors listed in section 7013 into account when
re-designating the limit.
VIII. Grant and Contract Modifications
Please be advised ETA will modify appropriate grants and contracts
to conform to the new requirements of Public Law 109-234.
IX. Action Required
All recipients of ETA appropriated funds should become familiar
with the requirements of Public Law 109-234. States shall inform all
staff, sub-recipients (sub-grantees and contractors) and Local
Workforce Investment Boards of the contents of these instructions.
Discretionary grantees should similarly familiarize themselves, their
sub-recipients (sub-grantees and sub-contractors) with this guidance.
If not already done, all affected ETA fund recipients or sub-recipients
must implement these new requirements retroactively to the date of
enactment, June 15, 2006.
[[Page 48559]]
X. Inquiries
States, discretionary grantees and other ETA appropriated fund
recipients should direct all inquiries to their Grant Officer, Contract
Officer or Federal Project Officer.
This information is also released in the form of a Training
Employment Guidance Letter (TEGL) which is available at http://wdr.doleta.gov/directives/
.
(Authority: 20 CFR 661.110)
Signed at Washington, DC, this 15th day of August, 2006.
Emily Stover DeRocco,
Assistant Secretary, Employment and Training Administration, Labor.
[FR Doc. 06-7056 Filed 8-18-06; 8:45 am]
BILLING CODE 4510-30-P