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1. What is the purpose of this section?
2. Does this directive cancel an existing Federal Highway Administration (FHWA) directive?
3. What references were used when writing this section?
4. What are the key definitions used in this section?
5. What are the delegations of authority that apply to overtime pay, compensatory time, and premium pay?
6. What is the FHWA policy on overtime pay?
7. What is the FHWA policy on compensatory time?
8. What is the FHWA policy on other premium pay provisions, such as for night work, Sunday work, and holiday work?
9. What are the reporting requirements regarding overtime pay and compensatory time?

1. What is the purpose of this section? The purpose of this section is to set forth the rules and procedures governing the use and reporting of overtime, compensatory time, and other premium pay provisions for employees of the Federal Highway Administration (FHWA).

2. Does this directive cancel an existing Federal Highway Administration (FHWA) directive? Yes. This directive cancels FHWA Personnel Management Manual (PMM) Part 1, Chapter 6, Section 2, Overtime, Compensatory Time and Premium Pay , dated June 28, 1996.

3. What references were used when writing this section?

   1. Title 5, United States Code (U.S.C.), Chapters 53, 55, and 61.

   2. Fair Labor Standards Act of 1974 (Public Law (P.L.) 93-59).

   3. Title 5, Code of Federal Regulations (CFR), Parts 550, 551, and 610.

   4. (Interim) Title 5, CFR, Part 550, Subpart N, Compensatory Time Off for Travel.

   5. Workforce Flexibility Act of 2004 (P.L. 108-411, Section 203).

   6. Federal Employees Pay Comparability Act of 1990, Section 210, as amended January 14, 1993.

   7. Departmental Personnel Manual (DPM) Chapter 550, Pay Administration (General), DPM 550-7, dated April 12, 1985.

   8. DPM Letter 550-1, Agency Responsibility of Work Scheduling and Premium Pay Entitlement, dated September 22, 1983.

   9. DPM Letter 550-2, Payment of Overtime for Travel, dated May 17, 1985.

   10. DPM Bulletin 550-32, Sunday Premium Pay for Periods of Paid Leave and Excused Absence, dated September 27, 1993.

   11. DPM Letter 551-1, Changes in Overtime Pay under the Fair Labor Standards Act, dated May 20, 1988.

   12. DPM Bulletin 551-3, Pay Administration Under the Fair Labor Standards Act (FLSA); Overtime Pay Provisions, dated June 5, 1991

4. What are the key definitions used in this section?

   1. Administrative workweek. A period of 7 consecutive days designated in advance by the head of a Federal agency. Within this period, Federal agencies must establish a basic 40-hour workweek.

   2. Basic workweek. The established 40-hour workweek for full-time employees. Although employees are generally paid the straight-time pay rate, in cases where the basic 40-hour workweek includes Sunday, or where employees work four 10-hour days, they are entitled to appropriate premium pay. In the specific case where employees have a compressed work schedule, the extra hours worked on a given day are credited for the basic 40-hour work week and do not result in entitlement to premium pay.

   3. Call-back overtime work. Irregular or occasional overtime work performed by an employee on a day when work was not scheduled for him/her, or for which the employee is required to return to his/her place of employment. If an employee is called back to work, any unscheduled overtime work he/she performs will be considered overtime. The employee must be compensated for at least 2 hours of work for overtime pay purposes.

   4. Compensatory time. A form of payment for irregular or occasional overtime performed by an employee. This grants an employee time off from his/her scheduled tour of duty instead of payment for an equal amount of time spent in irregular or occasional overtime work. (This option is not available to prevailing rate employees who must be paid for any overtime that is earned, except for compensatory time off accumulated for religious observances.)

   5. Compensatory time off for travel. A form of compensatory time off that may be earned by an employee for time spent in a travel status away from the employee's official duty station when such time is not otherwise compensable.

   6. Exempt employee. An employee not covered by the provisions of the Fair Labor Standards Act (FLSA), i.e., an executive, administrative, or professional employee. The FLSA designation is indicated on the employee's position description. Employees in the "exempt" category have entitlement to overtime compensation under provisions of Title 5, U.S.C.

   7. Fair Labor Standards Act. A law applying to certain employees of both private enterprise and the Federal government that governs compensation for overtime work. The FLSA establishes a minimum standard to which nonexempt employees are entitled. Under FLSA, management cannot accept the benefits of a nonexempt employee's work without compensating the employee for that work.

   8. First 40-tour of duty. The basic workweek without the requirement for specific days and hours within the administrative workweek. When it is impracticable to prescribe a regular schedule of definite hours of duty for each workday of a regularly scheduled administrative workweek, the head of a Federal agency may establish the first 40 hours of duty performed within a period of not more than 6 days of the administrative workweek as the basic workweek. All work performed by an employee within the first 40 hours is considered regularly scheduled work for premium pay and hours of duty purposes. Any additional hours of officially ordered or approved work within the administrative workweek are overtime work.

   9. Holiday work. Non-overtime work performed by an employee during a regularly scheduled daily tour of duty on a designated Federal holiday.

   10. Hours worked. Includes all the time an employee is required to be on duty or on the Agency's premises or at a prescribed workplace and all of the time he/she is "suffered or permitted" to work for the Agency.

   11. Irregular or occasional overtime work. Overtime work that is not part of an employee's regularly scheduled administrative workweek.

   12. Night work. Work performed by an employee between the hours of 6:00 p.m. and 6:00 a.m. that must be scheduled as part of the employee's regularly scheduled administrative workweek to be compensable at night premium rates. An employee who performs night work in accordance with the above is entitled to pay for that work at his/her rate of basic pay in addition to a night pay differential amounting to 10 percent of his/her rate of basic pay.

   13. Nonexempt employee. An employee covered by the FLSA pay provisions as well as Title 5, U.S.C., regulations. A nonexempt employee becomes entitled to overtime compensation (for hours worked in excess of 40 hours a week) for all work management "suffers or permits" to be performed.

   14. Official duty station. The geographic area surrounding an employee's regular work site and the area the employing Agency designates when determining whether travel time is compensable for overtime pay.

   15. Postshift activity. A concluding activity that an employee performs after the completion of his/her principal activities.

   16. Premium pay. Additional pay for overtime, night, holiday, or Sunday work and for standby duty or administratively uncontrollable work.

   17. Preshift activity. A preparatory activity that an employee performs prior to the commencement of his/her principal activities.

   18. Principal activities. Activities that an employee performs during his/her regularly scheduled administrative workweek (including regular overtime work) and activities performed by an employee during periods of irregular or occasional overtime work.

   19. Rate of basic pay. The rate of pay fixed by law or administrative action for the position held by an employee before any deductions and exclusive of additional pay of any kind.

   20. Regular overtime work. Overtime work that is scheduled prior to the start of an employee's regularly scheduled administrative workweek.

   21. Regular rate of pay. The computed rate of pay to which the FLSA overtime rate is added.

   22. Regularly scheduled administrative workweek. The officially prescribed days and hours within an administrative workweek during which the employee is regularly scheduled to work.

   23. Regularly scheduled work. Work that is scheduled in advance of the administrative workweek in accordance with 5 U.S.C. 6101.

   24. Regular working hours. The days and hours of an employee's regularly scheduled administrative workweek.

   25. Sunday work. Non-overtime work performed by an employee during a regularly scheduled daily tour of duty when any part of that daily tour of duty is on a Sunday.

   26. Tour of duty. The hours of a day (a daily tour of duty) and the days of an administrative workweek (a weekly tour of duty) that constitute an employee's regularly scheduled administrative workweek.

   1. aa. Travel status. The time actually spent traveling between the official duty station and a temporary duty station, or between two temporary duty stations, and the usual waiting time that precedes or interrupts such travel.

   2. bb. Workday. The period from the commencement of the principal activities that an employee is engaged to perform on a given day, to the cessation of the principal activities for that day.

5. What are the delegations of authority that apply to overtime pay, compensatory time, and premium pay? Unit managers are delegated, and may redelegate, the authority to authorize overtime work in accordance with the FHWA Delegations and Organization Manual, Part I, Chapter 4, Section 1, Personnel Administration. For the purposes of this section, a unit manager is the senior management official in each of the significant organizational components of the FHWA to and through whom human resources authorities are delegated. Unit managers include the Administrator, Deputy Administrator, Executive Director, Associate Administrators, Chief Counsel, Chief Financial Officer, Directors of Field Services, Resource Center Director and Operations Manager, Division Administrators, and Federal Lands Division Engineers.

6. What is the FHWA policy on overtime pay?

   1. Overtime pay (general). Both non-exempt and exempt employees are eligible for and/or entitled to overtime pay under certain conditions. The entitlement is determined under the FLSA for non-exempt employees, and under Title 5, U.S.C., Part 55 for exempt employees. Specific requirements may differ for non-exempt and exempt employees in certain circumstances, but the following general overtime pay provisions apply for the most part to both non-exempt and exempt employees:

      1. Overtime pay generally is paid to full-time, part-time, and intermittent employees for work in excess of 8 hours in a day or 40 hours in a week that are officially ordered or approved. (However, certain employees who work on an approved alternative work schedule, or for whom the first 40 hours of duty in an administrative workweek is the basic workweek, may not be eligible for overtime if they work in excess of 8 hours in a day.) Overtime work may be regularly scheduled overtime which is scheduled prior to the start of the regularly scheduled workweek, or it may be irregularly scheduled overtime which is approved when needed. All other overtime is considered irregularly scheduled.

      2. Overtime should be kept to a minimum using prudent management practices, and it should be restricted to cases where paid overtime is the only feasible way of accomplishing the objective. Authorizing officials should develop a program for the approval and monitoring of overtime. Special attention should be given to employees who are working overtime hours at a rate that will cause them to exceed 300 hours of overtime in a given year. Consideration should also be given to the use of details from other parts of the organization and/or the use of compensatory time arrangements.

      3. Overtime should be requested and approved in advance. Unless it is scheduled prior to the start of the regularly scheduled workweek, overtime pay should not be paid unless the work is directed or consented to, and it has been approved and documented by an authorizing official. In case of operational emergencies precluding prior written authorization, overtime may be orally authorized provided it is subsequently confirmed in writing before submission of the time and attendance report authorizing the payment.

      4. Work schedules must correspond to the actual work requirements. Assignments to tours of duty, including overtime, should be outlined in specific days and hours and made in advance of the administrative workweek. When is it known prior to the onset of the workweek that a change in a work schedule is necessary, the employee must be informed as soon as possible and the tour of duty change must be adequately documented on the employee's time and attendance card.

      5. Absence on annual or sick leave, absence on legal holidays, non-workdays established by executive or administrative order, or absence on compensatory time during the basic workweek does not reduce the amount of overtime pay to which an employee may be entitled during an administrative workweek.

      6. The performance of irregular or occasional overtime work at night that was not scheduled in advance of the administrative workweek does not entitle the employee to night pay in addition to overtime pay for the same hours.

   2. Crediting overtime. All regularly scheduled overtime must be compensated by paid overtime. Both regular and irregular overtime are credited and paid according to the following procedures.

      1. Crediting fractional hours of work

         1. An employee shall be compensated for every minute of overtime work.

         2. Pre-shift (preparatory) or post-shift (concluding) activities not closely related to the performance of the principal activities are not computed in "hours of work", unless it is determined that a pre-shift or post-shift activity is indispensable to the performance of the principal activities. In this case, the time spent in the qualifying pre-shift or post-shift activity must exceed 10 minutes per daily tour of duty to receive credit for the total time spent in the activity as hours of work.

      2. Overtime rates of pay. The overtime rate of pay for employees is determined as follows:

         1.  Under Title 5, U.S.C., for all employees (regardless of pay plan) whose basic rate is greater than the minimum rate for grade General Schedule (GS)-10, the overtime hourly rate is the greater of (1) one and one-half times the hourly rate of basic pay at the minimum rate for grade GS-10, or (2) the employee's own hourly rate of basic pay.

         2.  Under the FLSA, overtime pay for nonexempt employees whose basic pay does not exceed the minimum rate for grade GS-10, is one and one-half times his/her basic rate.

         3. In instances where the FLSA and other non-Title 5 statutes are not consistent in regard to overtime provisions, calculations under both laws will be made and employees will receive overtime pay under whichever authority provides the greater benefit within a given workweek.

         4. Under the FLSA, employees are entitled to overtime on the basis of actual hours worked, including work within the workweek which may not be ordered or approved but is "suffered or permitted" to be performed; a workday begins with the commencement of the employee's principal activities and ends with the conclusion of the employee's principal activities for that day.

         5. Supervisors are responsible for assuring that nonexempt employees do not perform work during non-work periods unless overtime payment is intended.

         6. Under the provisions of the FLSA, overtime is payable for all hours of work performed in excess of 8 hours daily (or in excess of the specified hours of the day for employees on compressed work schedules). Overtime work "suffered or permitted" will be payable in excess of 40 hours in a workweek. Employees engaged in professional or technical engineering activities must follow a 40 hours of duty standard as a basis for overtime.

         7. The nature of the overtime (e.g., "regularly scheduled" or irregular or occasional) must be documented. When computing entitlement for overtime, paid leave and other non-work hours in pay status are treated as hours worked in making the calculation, but hours covered by other types of premium pay, except night pay, are not.

         8. The FLSA considers meal periods as hours worked if the meal periods are frequently interrupted by calls to duty and the employee would not be considered relieved of all duties. Under those circumstances, the meal periods must be considered as "hours worked." However, if an employee's meal periods are uninterrupted, except for rare and infrequent calls, the meal periods can be excluded from "hours worked."

   3. Overtime pay during travel status. Both under Title 5, U.S.C., and the FLSA, time spent traveling away from the official duty station during regular hours of work is considered "hours of work."

      1. The FLSA requires the payment of compensation to non-exempt employees under certain conditions for authorized travel time spent traveling on non-workdays or outside of official duty hours.

      2. Each request for overtime while in a travel status should be considered on a case-by-case basis for payment of overtime. 5 CFR 551.422 or subsequently issued interpretations and guidance should be consulted prior to final determination on overtime eligibility.

      3. An employee covered by the FLSA in the circumstance described below would be entitled to have these hours counted as hours of work and receive overtime pay for any hours that exceed 40 in a single workweek:

         1. Any time and for any reason an employee drives a Federal government vehicle or his/her personally-owned vehicle during a regularly scheduled workday or on a non-workday to a temporary duty location outside the official duty station limits (i.e., if the employee were directed or permitted to drive from home to a motel at a temporary duty location on Sunday to begin work on Monday), the entire time spent driving would be countable as hours of work;

         2. Any time an employee is a passenger in a vehicle driven by another employee or travels on a commercial carrier, then the time spent riding and waiting for rides which correspond to the employee's regular work hours would be counted as hours of work (i.e., if the trip were on a Sunday from 12:00 p.m. to 8:00 p.m. and the employee's regular hours were 8:30 a.m. to 5:00 p.m. on weekdays, the employee would have 5 hours, 12:00 p.m. to 5:00 p.m., counted as hours of work);

         3. Any time an employee is directed to fly to a temporary duty site on Sunday, but chooses to drive, he/she would be entitled to count as work hours only the lesser of the actual time traveled (the driving time) or the flying time;

         4. Any time an employee performs work while driving, even if commuting (i.e., by being required to pick up passengers or make business stops), would be counted as hours of work, and;

         5. Whenever an employee attends an event that could not be scheduled or controlled administratively, travel time to the event and the return from such event to his or her official duty station would be counted as hours of work.

   4. Travel – compensable hours of work under Title 5, U.S.C. and CFR. Under 5 U.S.C. 5542(b)(2) and 5 CFR 550.112(g), official travel away from an employee's official duty station is hours of work if the travel is:

      1. within the days and hours of the employee's regularly scheduled administrative workweek, including regularly scheduled overtime hours, or

      2. outside the hours of the employee's regularly scheduled administrative workweek, is ordered or approved, and meets one of the following four conditions:

         1. involves the performance of work while traveling (such as driving a loaded truck);

         2. is incident to travel that involves the performance of work while traveling (such as driving an empty truck back to the point of origin);

         3. is carried out under arduous and unusual conditions (e.g., travel on rough terrain or under extremely severe weather conditions); or

         4. results from an event that could not be scheduled or controlled administratively by any individual or agency in the executive branch of Federal government (such as training scheduled solely by a private firm or a job-related court appearance required by a court subpoena).

7. What is the FHWA policy on compensatory time?

   1. Compensatory time under Title 5, U.S.C. All GS/GM employees may be granted compensatory time off.

      1. Employees whose rate of basic pay exceeds the maximum rate for GS-10 may be required to take compensatory time off in lieu of overtime for irregular or occasional overtime work.

      2. There is no authority to grant compensatory time off for regularly scheduled overtime; employees must be paid for such overtime.

   2. Compensatory time under the FLSA. The FLSA does not amend or rescind a non-exempt employee's entitlement to compensatory time nor does it grant any additional right to compensatory time. Under the FLSA, the employee must be paid overtime unless the employee requests compensatory time prior to the end of the scheduled weekly tour of duty.

      1. Non-exempt employees, with rates of pay up to and including the maximum rate for GS-10, may request compensatory time in lieu of overtime pay only for irregular or occasional overtime work.

      2. Compensatory time may be granted only if it is selected by the employee in advance by signing a statement to be submitted with the time and attendance card.

   3. Maximum accumulation of compensatory time earned as a compensation for overtime. Maximum accumulation of compensatory time is limited to 160 hours. Compensatory time should be used as soon as possible after it is earned to avoid large accumulations and the need to convert to paid overtime. Accumulations beyond 160 hours will be converted automatically and compensated as paid overtime.

   4. Compensatory time for religious observance

      1. An employee may elect to accrue compensatory time for the purpose of taking time off without charge to leave when personal religious beliefs require that the employee abstain from work during certain periods of the workday or workweek.

      2. Any employee who elects to accrue compensatory time for this purpose shall be granted (in lieu of overtime pay) an equal amount of compensatory time off (hour for hour) from his or her scheduled tour of duty. (There are recordkeeping requirements for such compensatory time for religious observances as specified in 5 CFR 550.1001.)

   5. Use of compensatory time. Compensatory time will be used before annual leave except when annual leave would thereby be forfeited.

   6. Conversion to paid overtime. All unused accumulated compensatory time not earned as a result of being credited for time in a travel status as described in paragraph 7g will be converted to paid overtime when an employee is separated for one of the following reasons: death, involuntary retirement, disability separation, or entry into military service.

   7. Compensatory time off for travel. Compensatory time off for travel is a form of compensatory time, that was established by the Workforce Flexibility Act of 2004. The Act allows an employee to earn compensatory time off for time spent in a travel status away from the employee's official duty station when such time is not otherwise compensable under Title 5, U.S.C., or FLSA provisions. Separate records for accumulation and use of compensatory time off for travel must be maintained. This compensatory time must be used by the end of the 26th pay period after the pay period in which it was approved. Members of the Senior Executive Service are not eligible to earn compensatory time for time spent in a travel status. The Office of Personnel Management (OPM) interim regulations must be consulted for guidance when using this new provision. The FHWA will follow OPM's interim regulations and update this Chapter when the regulations are finalized.

8. What is the FHWA policy on other premium pay provisions, such as for night work, Sunday work and holiday work?

   1. Night work

      1. The law authorizes a night differential of 10 percent of the employee's basic pay in addition to his/her basic pay, to be paid for any regularly scheduled work between 6:00 p.m. and 6:00 a.m.

      2. Any night work, including overtime during night hours, that has been scheduled in advance of the administrative workweek (regularly scheduled work) is compensable at night rates.

      3. The only exception to the requirement that night work be regularly scheduled is when night pay is authorized because the employee, as a result of the temporary change in the daily tour of duty, actually performs night work as part of his/her regularly scheduled administrative workweek. For example, an employee whose daily tour of duty is 8:30 a.m. to 5:00 p.m., Monday through Friday, reports to work on Monday and is informed that his/her work schedule for Tuesday through Friday will be from 3:30 p.m. until 12:00 a.m. The employee only works 40 hours during the week and is not entitled to overtime pay, but is entitled to night differential for 24 hours.

      4. Under Title 5, U.S.C., night pay differential is in addition to overtime, Sunday, or holiday pay and is not included in the rate of basic pay used to compute the overtime, Sunday, or holiday pay.

      5. Payment of night differential continues for regularly scheduled night hours when an employee is in a paid leave status, providing the total amount of leave in a pay period is less than 8 hours or the employee is absent due to a holiday or other non-workday or is in an official travel status.

   2. Sunday work

      1. If an employee performs work on Sunday as part of his/her regularly scheduled workweek, he/she is entitled to Sunday pay for the Sunday hours worked; if hours are in excess of a basic 40-hour workweek, he/she is entitled to overtime pay for such work.

      2. Sunday pay entitlement includes basic pay plus premium pay at a rate equal to 25 percent of the rate of basic pay for each hour of regularly scheduled Sunday work.

   3. Holiday work

      1. An employee who performs work on a Federal holiday as part of his/her regularly scheduled workweek is entitled to premium pay at a rate equal to the regular rate of basic pay in addition to regular pay for the holiday. In no case will an employee required to perform any work be entitled to less than 2 hours of holiday pay.

      2. An employee who is assigned overtime work on a Federal holiday is paid in the same manner as for overtime work performed on other days.

      3. Under Title 5, U.S.C., premium pay for holiday work is in addition to overtime pay or night pay differential or premium pay for Sunday work, and it is not included in the rate of basic pay used to compute the overtime pay, night pay differential, or premium pay for Sunday work.

9. What are the reporting requirements regarding overtime pay and compensatory time?

   1. Documentation. It is important for supervisors to determine and document, especially for nonexempt employees, whether overtime work is regularly or irregularly scheduled.

   2. Approval. Overtime should be authorized in advance on Form FHWA-21, Authorization for Paid Overtime and/or Holiday Work, and for Compensatory Overtime. Authorized officials may elect to project overtime needs, by grade levels and hours, and prepare this form on a pay period basis. The original signed and dated Form FHWA-21 should be retained by each office to verify the overtime paid as reported in the Federal Personnel and Payroll System's (FPPS) DataMart Overtime Reports. Each office may access these reports in DataMart. Retention requirements for time and attendance records are in the General Records Schedule 2.

   3. Monitoring. Overtime reports, available in either the DataMart reporting system housed in the FPPS or the Consolidated Automated System for Time and Labor Entry (CASTLE), will be used to provide supervisors with information on cumulative overtime hours for each employee.

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1. What is the purpose of this section?
2. Does this directive cancel an existing Federal Highway Administration (FHWA) directive?
3. What references were used when writing this section?
4. How are travel and transportation expenses authorized?
5. Who may authorize travel and transportation expenses?
6. Must the FHWA maintain records on the use of this authority?

1. What is the purpose of this section? This section describes procedures for authorizing travel expenses for preemployment interviews, and for authorizing a new appointee's travel and transportation expenses from his or her residence to the first duty station within the United States, or first post of duty outside the United States.

2. Does this directive cancel an existing Federal Highway Administration (FHWA) directive? Yes. This directive cancels FHWA Personnel Management Manual (PMM), Part 1, Chapter 6, Section 3, dated June 28, 1996.

3. What references were used when writing this section?

   1. Title 5, United States Code (U.S.C.), Section 5706b.

   2. Title 5, U.S.C, Section 5723.

   3. Title 5, Code of Federal Regulations (CFR), Part 572, Travel and Transportation Expenses, New Appointees and Interviews.

   4. Title 41, CFR, Subtitle F, Federal Travel Regulation (FTR) System.

   5. General Records Schedule 9, Travel and Transportation Records.

   6. FHWA Order 1500.8, FHWA Travel Policy Supplement.

4. How are travel and transportation expenses authorized?

   1. Preemployment interview expenses. Preemployment interview expenses related to any appointment may be authorized when it is determined that an interview is essential to assess the qualifications of candidates, and the potential candidate(s) have requested travel expense reimbursement. See FHWA Order 1500.8 for additional guidance.

   2. Travel and transportation expenses to the first post of duty. The authority to pay an employee's travel and transportation expenses to the first duty station or first post of duty is discretionary. This authority should be exercised consistently to avoid the appearance of favoritism or unfairness. Refer to the FTR for appropriate entitlements.

5. Who may authorize travel and transportation expenses?

   1. Preemployment interview expenses. Associate Administrators, the Chief Counsel, Directors of Field Services, Resource Center Managers, Division Administrators, Federal Lands Highway Division Engineers, and the Director, Office of Human Resources, may authorize preemployment interview expenses.

   2. Travel and transportation (relocation) expenses to the first duty station or first post of duty. Associate Administrators, the Chief Counsel, Directors of Field Services, Resource Center Managers, Division Administrators, and Federal Lands Highway Division Engineers, as the hiring officials, may recommend payment of travel and transportation expenses for new appointees. The Associate Administrator for Administration or his/her designee authorizes all relocation allowances. Such decisions should be coordinated with the Office of Budget and Finance to ensure the availability of funds and that eligibility requirements are met.

6. Must the FHWA maintain records on the use of this authority? Yes. The FHWA must maintain written records whenever preemployment interview expenses and travel and transportation expenses to the first duty station or first post of duty are authorized. These records are to be made available to the Office of Personnel Management as they are requested. See General Records Schedule 9, Travel and Transportation Records, for further guidance or maintaining these records.

Par.

1. What is the purpose of this directive?
2. Does this directive cancel an existing FHWA directive?
3. What is the background concerning this directive?
4. What are the pertinent references?
5. What are the Federal agency requirements for using the bonus authorities?
6. What is a recruitment bonus and when is it authorized?
7. What is a relocation bonus and when is it authorized?
8. What is a retention bonus and when is it authorized?
9. What is the approval process for bonus nominations?
10. What are reporting requirements?
11. What type of documentation is required?

1. What is the purpose of this directive? This directive provides guidance for determining and awarding recruitment, relocation, and retention bonuses in the Federal Highway Administration (FHWA).

2. Does this directive cancel an existing FHWA directive? Yes. This directive cancels the outdated FHWA Personnel Management Manual (PMM), Part 1, Chapter 6, Section 4, dated July 28, 2001.

3. What is the background concerning this directive? This directive reflects changes in Office of Personnel Management (OPM) regulations that 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.

4. What are the pertinent references?

   1. 5 U.S. Code (U.S.C.) 5753 and 5754.

   2. 5 Code of Federal Regulations (CFR) 575, subparts A, B, and C, dated January 1, 2000.

   3. 5 U.S.C. 5333, Minimum rate for new appointments.

5. What are the Federal agency requirements for using the bonus authorities? Federal agencies are required to establish criteria to be met or considered in authorizing bonuses, including criteria for determining the amount of bonuses. Federal agencies must also implement procedures for paying bonuses and designate officials with authority to review and approve the payment of bonuses. Documentation and record-keeping requirements must also be established.

6. What is a recruitment bonus and when is it authorized? A recruitment bonus is a lump-sum payment of up to 25 percent of basic pay that a Federal 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.

   1. 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 the OPM. By regulation, the 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). Federal agencies may not pay a recruitment bonus to the head of a Federal agency. The OPM may approve other categories upon written request from the head of the employing Federal agency.

   2. 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, and 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.

   3. Continued service agreement. Before receiving a recruitment bonus, an employee must sign a service agreement to complete a specified period of employment with the 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.

   4. Criteria for approval. Each bonus must be based on a written determination that, in the absence of such a bonus, the FHWA would have difficulty in filling the position. In determining whether a bonus should be paid, officials should consider the following factors:

      1. (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. (2) Recent turnover in similar positions;

      3. (3) Labor-market factors that may affect the ability of the agency to recruit candidates for similar positions now or in the future;

      4. (4) Special qualifications needed in the position; and

      5. (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.

   5. Group coverage. The 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 it 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, the 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.

   6. Payment. A recruitment bonus must be calculated as a percentage of the employee's starting annual rate of basic pay (excluding locality pay, but including special rates) at the time of appointment, not to exceed 25 percent. The bonus is paid in a lump sum.

      1. (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. (2) A recruitment bonus is not considered part of an employee's rate of basic pay for any purpose.

      3. (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. (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.

   7. Bonus amount criteria. For assistance in determining the appropriate amount for a particular bonus, refer to the guidance in Attachment 2, Bonus Amount Criteria.

   8. Approval level. A Federal agency official who is at a higher level than the official who recommended the bonus must approve a recruitment bonus. Within the FHWA, Associate Administrators, Chief Counsel, and the Directors of Field Services may approve recruitment bonuses within established ranges for subordinate positions. The Executive Director retains approval authority for all other positions. Bonuses must have concurrence from the servicing human resource office.

   9. 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.

7. 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.

   1. 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 the OPM. By regulation, the OPM has approved coverage of certain positions, including SL/ST, SES, and Executive Schedule positions (except agency heads). The OPM approves other categories upon written request from the head of the employing Federal agency.

   2. Employee coverage. Only current Federal employees (from within the FHWA or from a different Federal agency) serving in covered positions may receive a relocation bonus. Newly appointed employees are not eligible.

   3. 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.

   4. Service agreement. Before receiving a relocation bonus, an employee must sign a written agreement to complete a specified period of employment with the FHWA in the agreed upon location. The recommending official may determine the length of the service period.

   5. Criteria for approval. Before the employee enters on duty in the position to which he/she is relocated, the 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. (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. (2) Recent turnover in similar positions;

      3. (3) Labor-market factors that may affect the ability of the FHWA to recruit candidates for similar positions now or in the future;

      4. (4) Special qualifications needed in the position; and

      5. (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.

   6. 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 (1) 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 (2) to use a group-targeted approach in identifying candidates for bonuses.

   7. Group coverage. Under certain conditions, the 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).

   8. 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 a 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. (1) Basic pay. A relocation bonus is not considered part of an employee's rate of basic pay for any purpose.

      2. (2) Relocation bonuses and relocation expenses. Relocation bonuses have no effect on an employee's entitlement to reimbursement for relocation expenses under the General Service Administration’s (GSA's) Federal Travel Regulations and should not be paid in lieu of reimbursing the employee for such expenses.

      3. (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)).

   9. 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 the FHWA, Associate Administrators, Chief Counsel, and the Directors of Field Services may approve relocation bonuses within established ranges for subordinate positions. The Executive Director retains approval authority for all other positions. In situations where a recommended bonus exceeds a recommended amount, the Executive Director approval is required. Bonuses must have concurrence from the servicing human resource office prior to notifying the candidate.

   10. 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.

8. What is a retention bonus and when 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 Federal agency must determine that the unusually high or unique qualifications of the employee or a special need of the Federal agency for the employee's services make it essential to retain the employee, and the employee would be likely to leave the Federal government in the absence of a retention bonus.

   1. 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). The OPM approves other categories upon written request from the head of the employing agency.

   2. Criteria for approval. Before paying a retention bonus, the FHWA must determine that the unusually high or unique qualifications of the employee or a special need for the employee's services make it essential to retain the employee, and the employee would be likely to leave the Federal service (for any purpose) in the absence of the retention bonus. The FHWA must document the basis for this determination in writing. It must address the extent to which the employee's departure would affect the FHWA's ability to carry out an activity or perform a function that is essential to the FHWA'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.

   3. Group coverage. The 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 FHWA has a special need for the employees' services that makes it essential to retain the employees in that category. The FHWA 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, the FHWA may not pay a retention bonus to an employee in the covered group who is fulfilling a recruitment or relocation bonus service agreement.

   4. Payment

      1. (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. (2) The FHWA 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. (3) A retention bonus may continue for as long as the conditions that prompted the original determination to pay the bonus still exist. A retention bonus may be reduced or terminated when it is determined that:

         1. (a) A lesser amount (or none at all) would be sufficient to retain the employee;

         2. (b) Labor market factors have changed so that it is easier to recruit for people with qualifications similar to those of the employee. Subsequently, the FHWA's need for the employee's services is reduced or no longer exists; or

         3. (c) Budgetary considerations make it impossible to continue retention bonus payments.

      4. (4) A retention bonus may be paid to an employee who is likely to retire.

      5. (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. (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 Federal agency.

   5. Annual review. The FHWA must review each retention bonus authorization at least annually to determine whether payment is still warranted. The Human Resources Director must certify this annual determination in writing. The Human Resources Director 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.

   6. Approval level. Within the FHWA, retention bonuses must be approved at the Executive Director level.

   7. Reduction or termination of a retention bonus. See paragraph 8.d.(3) above.

   8. 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.

   9. Aggregate pay limitation. The 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. The 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.

9. What is the approval process for bonus nominations?

   1. Unit managers initiate the approval process by nominating employees, or job applicants, for bonus eligibility approval.

   2. The servicing human resources office reviews nominations to ensure that all regulatory and procedural requirements are met, and it recommends approval or disapproval of the nomination and bonus amount. (This review becomes part of the nomination package).

   3. The approving official approves, adjusts, or denies all or part of the request from the nominating office.

   4. The servicing human resources office and the approving official coordinate with the Washington Headquarters Office of Human Resources (HAHR) to ensure that funds are available for the bonus and that appropriate documentation of the personnel action to initiate payment of the bonus is promulgated. Unusual cases requiring clarification of the bonus amount criteria or the approval process may be referred to the Director, HAHR, for further guidance.

10. What are the reporting requirements? When requested by the Department of Transportation (DOT) Office of the Secretary (OST), the Washington Headquarters HAHR Services Group submits a report to OST on the use of bonus provisions.

11. What type of documentation is required? A copy of all background information related to bonus nominations is maintained by the servicing human resources office. 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.

    1. A copy of the employee's classified position description with position number, title, series, grade, duty location;

    2. A justification documenting how the employee meets the applicable criteria for a bonus;

    3. The resume or application for Federal Employment Standard Form (SF)-171 or Optional Form (OF)-612 of the employee;

    4. The percentage of the employee's rate of basic pay that is recommended for the bonus;

    5. A copy of the service agreement, if required; and

    6. Any reviews of bonus nominations that assure proper application of the delegated authority and support whether or not the bonus is still needed.

ATTACHMENT 1 PMM
Chapter 6, Section 4

SERVICE AGREEMENT

Executing this agreement is required as a prerequisite of paying a recruitment or relocation bonus.

The Federal Highway Administration (FHWA), an agency of the U.S. Department of
Transportation, under the provisions of the Federal Employees Pay Comparability Act of 1990, and with the approval of the Secretary of Transportation, dated June 8, 1992, authorizes the payment of a _________________ bonus, to be paid to the undersigned employee under the conditions and term of this agreement.

In consideration of this payment by the Government in the amount of ________________, which represents _______percent of base pay, I agree to remain in the employment of the United States Government, Department of Transportation, Federal Highway Administration for ________ months/years following the effective date of my employment or entrance on duty at the new official duty station, unless separated or relocated for reasons beyond my control and acceptable to the Department or agency in which I am employed.

I understand that in case of violation of this agreement, any moneys expended by the United States may be recovered. Amounts to be recovered will be determined on a pro rata basis, providing credit for each full month of employment completed under this agreement.

Name of Employee: (typed or printed) ____________________________________________
Signature of Employee: __________________________________ Date:________________

Name of Witness:(typed or printed)_______________________________________________
Signature of Witness: ____________________________________ Date:________________

ATTACHMENT 2 PMM
Chapter 6, Section 4

Bonus Amount Criteria

Under current regulations, recruitment, relocation, and retention bonuses are calculated as a percentage of the employee's annual rate of basic pay, not including locality pay. In most cases, the amount of any bonus may not exceed 25 percent of the employee's annual rate of basic pay, and the bonus amount is not considered part of the employee's rate of basic pay for any purpose.

In determining the appropriate amount for a particular bonus, the recommending official needs to consider the nature and extent of the recruitment problems that have been encountered in trying to fill the position, as well as the unique qualifications of a particular candidate or employee. For example, a larger bonus, i.e., one that is at or near 25 percent, should be reserved for filling positions that present the most difficult recruitment problems, or for retaining an employee who is uniquely qualified to retain in a certain position. Paying too much to fill a position that is not as difficult to fill could set an unwarranted expectation or precedent for other candidates and could adversely affect the morale of current employees who did not receive a bonus.

When the amount of a bonus is based on the special qualifications of a particular applicant, the highest bonuses should be reserved for the most highly qualified individuals. For example, if an applicant has qualifications, which far surpass those of other candidates, and if the applicant has a high degree of expertise and experience in his/her field, then a bonus at or near 25 percent may be appropriate.

The following guidelines may be used to help to set bonus amounts in specific cases:

(1) 5 to 10 percent

Bonuses in this range are appropriate in situations where it is routinely difficult to recruit qualified candidates for particular positions. A bonus in this range is appropriate in situations where a well-qualified candidate may be available, but may not accept the position in the absence of the bonus. Example: Recruitment bonuses for Professional Development Program (PDP) new hires are authorized at this level.

(2) 11 to 15 percent

Bonuses in this range are appropriate for positions which are difficult to fill, and where labor market factors are likely to negatively affect the ability of FHWA to recruit qualified applicants now or the future. In addition, there should be a demonstrated need to fill the position or to retain a particular individual in order to accomplish important program work or maintain customary levels of service. Example: Candidates for bonuses in this range should be well-qualified, and have experience, which is directly applicable to the position. Also, the position being filled should have the characteristics described in this paragraph.

(3) 16 to 20 percent

Bonuses in this range are appropriate for positions which have proven difficult to fill, for example, because of the location of the position, and/or because competition with other employers for candidates in a particular field is especially intense. In addition, there is a critical need at the operational level for this type of position to be filled quickly, or to remain filled. Example: Bonuses at this level are appropriate for candidates for the type of positions described in this paragraph who bring an exceptional level of expertise and/or training, when compared with that offered by other applicants, to a critical job vacancy.

(4) 20 to 25 percent

Bonuses in this range are appropriate for positions which present the most difficult recruitment problems, such as those which are located in metropolitan areas with the highest cost-of-living rates and the tightest labor market conditions. This includes positions which may have been advertised several times in the past, and for which there have been very few highly qualified applicants. These should be positions for which there is an extremely critical and compelling need at the agency level to fill the position with a uniquely qualified candidate, or to retain a uniquely qualified candidate. Example: A bonus in this range is appropriate for candidates who possess a very high degree of expertise in their field, are unique experts in their field, or who possess technical skills that are clearly superior to those of other candidates and applicable to the job being filled. Also, there is an extremely critical and compelling agency need to fill the position with a candidate of this caliber.

Vacancy Announcements

When initiating the recruitment process for a position which has proven difficult to fill in the past, a unit manager may want to indicate in the vacancy announcement that a recruitment or relocation bonus may be available to a selected candidate who meets applicable criteria specified in 5 CFR Part 575. This should only be done with the prior approval of the official with delegated authority to approve bonus payments. The language in the announcement should not create an undue expectation for a bonus or of a bonus in a specific amount.

Sample language may be a note in the vacancy announcement to this effect:

"A recruitment or relocation bonus may be authorized for a selected candidate who meets the applicable criteria specified in 5 CFR Part 575."

ATTACHMENT 3 PMM
Chapter 6, Section 4