White House Increases Bonus Spending Cap to 1.5 Percent For Federal Employees

Federal agencies will be able to give their employees slightly larger bonuses in fiscal 2017 after a six-year freeze on performance awards, according to new guidance from the Obama administration.

The aggregate spending cap on agency performance and individual contribution awards for non-Senior Executive Service and non-senior level employees will increase from about 1 percent – the level it has been at since 2010 – to 1.5 percent for bonuses paid in fiscal 2017. Agencies will be able to spend up to 1.5 percent of the aggregate (fiscal 2016) salaries of all non-SES/SL/ST employees for these bonuses in fiscal 2017. The change applies to employees in the General Schedule, wage grade, and other non-senior level workers.

Shaun Donovan, Office of Management and Budget Director and Beth Cobert, acting director of the Office of Personnel Management, said their agencies “recognize that awards programs are valuable tools to help agencies reward employee performance excellence and reinforce a high-performing culture that will help improve organizational effectiveness,” in a Nov. 18 joint memorandum to agencies announcing the change. “Agencies should 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 responsibly,” they wrote.

The Nov. 18 directive also removed the caps for other awards frozen at fiscal 2010 spending levels including group awards; referral bonuses; recruitment, relocation and retention incentives; and quality step increases.

The administration also has raised the spending cap on senior executive and other senior-level bonuses in fiscal 2017, from 4.8 percent to 7.5 percent. The increase was part of President Obama’s December 2015 executive order aimed at streamlining SES hiring, improving the corps’ development and making adjustments to pay to help recruit and retain talented leaders.

The freeze on bonuses and awards for political appointees remains in place.

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