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Pay & Leave Pay Administration

Fact Sheet: Aggregate Limitation on Pay

Description

A limit under title 5, United States Code, on the total amount of allowances, differentials, bonuses, awards, or other similar payments an employee may receive in a calendar year, when combined with the employee's basic pay. Payments in excess of the aggregate limitation on pay (other than basic pay) must be deferred and are generally paid as a lump-sum payment at the beginning of the following calendar year.

The aggregate limitation on pay for members of the Senior Executive Service and employees in senior-level or scientific or professional positions covered by a certified performance appraisal system is the total annual compensation payable to the Vice President under 3 U.S.C. 104 on the last day of the calendar year.

The aggregate limitation on pay for other covered employees is the rate for level I of the Executive Schedule on the last day of the calendar year.

Covered Employees

The aggregate limitation on pay applies to all executive branch employees, General Schedule (GS) employees in the legislative branch, and GS employees in the judicial branch (excluding those paid under 28 U.S.C. 332(f), 603, and 604). Note: Certain executive branch employees may be excluded from the aggregate limitation on pay under 5 U.S.C. 5307 by other laws, such as employees in the Federal Aviation Administration or Transportation Security Administration. Although such employees are not covered by the guidance in this fact sheet, they may be subject to similar aggregate limitation provisions administered by their agencies.

Estimated Aggregate Compensation

At the beginning of each calendar year, agencies should estimate whether an employee's aggregate compensation will exceed the applicable aggregate limitation on pay at the end of that calendar year. This involves adding the amount of any lump-sum payment of excess amounts carried over from a previous calendar year to the total amount of basic pay and allowances, differentials, bonuses, awards, and other cash payments the employee is projected to receive in that calendar year based upon known factors.

Deferring Payments

Discretionary Payments

When an agency authorizes a discretionary payment for an employee, the agency must defer any portion of the payment that, when added to the employee's estimated aggregate compensation, would cause it to exceed the applicable aggregate limitation. Discretionary payments are optional. Payments that are authorized to be made to an employee under a service agreement or preauthorized to be made to an employee at a regular fixed rate each pay period are not discretionary payments.

Nondiscretionary Payments

After deferring discretionary payments, an agency must defer all nondiscretionary payments (other than basic pay) at the time when otherwise continuing to pay them would cause an employee's estimated aggregate compensation for that calendar year to exceed the applicable aggregate limitation.

An agency may not-

  • Defer nondiscretionary payments to make discretionary payments; or
  • Defer or discontinue basic pay under any circumstances.

Corrective Actions

Agencies must take corrective action if they overestimated or underestimated an employee's aggregate compensation, or the aggregate limitation applicable to the employee is reduced during the calendar year (5 CFR 530.203(g) and (h)).

Payment of Excess Amounts

An agency must pay the amounts that were deferred because they were in excess of the applicable aggregate limitation as a lump-sum payment at the beginning of the following calendar year, except-

  • If a lump-sum payment causes an employee's estimated aggregate compensation to exceed the applicable aggregate limitation for the current calendar year. In this case, an agency must consider only the employee's basic pay expected to be paid to determine the extent of the lump-sum payment that may be paid. An agency must defer all other payments in order to pay as much of the lump-sum amount as possible. Any deferred payments, including any portion of the lump-sum excess amount that was not payable, are payable at the beginning of the next calendar year.
  • If an employee transfers to another agency, the gaining agency is responsible for making any lump-sum payment to the employee. The previous employing agency must provide a fund transfer to the gaining agency equal to the cost of the lump-sum payment.

Under the following conditions an agency must pay any amount that was deferred because it was in excess of the applicable aggregate limitation, regardless of the calendar year limitation-

  • If an employee dies, the agency must pay the entire excess amount as part of the settlement of accounts.
  • If an employee separates from the Federal service, the employing agency must pay the entire excess amount following a 30-day break in service.

Records

An agency must maintain appropriate records and must transfer such records to any agency that may later employ the employee during the same calendar year.

Aggregate Compensation

Aggregate compensation means the total of-

  • Basic pay received as an executive branch employee or as a General Schedule employee in the legislative or judicial branch;
  • Continuation of pay under 5 U.S.C. 8118;
  • Danger pay allowances under 5 U.S.C. 5928;
  • Extended assignment incentives under 5 U.S.C. 5757;
  • Incentive awards and performance-based cash awards under 5 U.S.C. chapters 45 and 53;
  • Lump-sum payments in excess of the aggregate limitation of pay as required by 5 CFR 530.204;
  • Physicians' comparability allowances under 5 U.S.C. 5948;
  • Post differentials under 5 U.S.C. 5925;
  • Post differentials based on environmental conditions for employees stationed in nonforeign areas under 5 U.S.C. 5941(a)(2);
  • Premium pay under 5 U.S.C. chapter 53, subchapter IV;
  • Premium pay under 5 U.S.C. chapter 55, subchapter V;
  • Recruitment and relocation incentives under 5 U.S.C. 5753 and retention incentives under 5 U.S.C. 5754;
  • Supervisory differentials under 5 U.S.C. 5755; and
  • Similar payments authorized under title 5, United States Code, excluding-
    • Back pay awarded to an employee under 5 U.S.C. 5596 because of an unjustified personnel action;
    • Lump-sum payments for accumulated and accrued leave under 5 U.S.C. 5551 or 5552;
    • Nonforeign area cost-of-living allowances under 5 U.S.C. 5941(a)(1);
    • Overtime pay under the Fair Labor Standards Act of 1938, as amended, and 5 CFR part 551;
    • Severance pay under 5 U.S.C. 5595; and
    • Student loan repayments under 5 U.S.C. 5379.

Basic Pay

Basic pay means-

The total amount of pay received at a rate fixed by law or administrative action for the position held by an employee, including any special rate under 5 CFR part 530, subpart B, or any locality-based comparability payment under 5 CFR part 531, subpart F, or other similar payment under other legal authority, before any deductions. Basic pay includes night and environmental differentials for prevailing rate employees under 5 U.S.C. 5343(f) and 5 CFR 532.511. Basic pay excludes additional pay of any other kind.

References

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