Bonus Spending Cap Increases for Federal Employees

Dec 15, 2016

bonusAfter a six-year freeze on performance awards, FY2017 will see larger bonuses. Agencies can now spend up to 1.5 percent of the aggregate salaries of all non-SES/SL/ST employees for bonuses in FY2017. This change applies to everyone under the General Schedule, wage grade, and other non-senior level workers.

OPM and the Office of Management and Budget sent out a joint memorandum on November 22, 2016, announcing this change. This memorandum states their agencies “recognize that awards programs are valuable tools to help agencies reward employees’ performance excellence and reinforce a high performing culture that will help improve organizational effectiveness. Agencies should also communicate to their managers and supervisors the important role that awards can have in recognizing and rewarding results and exceptional service to American citizens. Agencies should also continue to exercise the authority to provide recognition responsibility.”

The memorandum also removed caps from other awards frozen at FY2010 spending levels. Specifically, group awards, referral bonuses, recruitment, relocation and retention incentives, and quality step increases. The freeze on bonuses and awards for political appointees remains in place.

This spending cap also does not apply to SES members or senior level, senior professional, and scientific employees. In August, OPM and OMB advised agencies to raise their spending limits on performance awards for senior executives. The spending on these bonuses and awards rose nearly three percent.

OPM and OMB want to remind agencies that, “While there is no cap set for other awards and bonus programs falling outside of individual performance and individual contribution awards, agencies should continue to use these other programs judiciously and in compliance with applicable regulations.”

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