[Federal Register Volume 71, Number 161 (Monday, August 21, 2006)]
[Notices]
[Pages 48557-48559]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-7056]


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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.

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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