Back to Federal guidance
Salary and bonus limit on ETA grant funds
Summary ETA explains how an appropriations limit applies when recipients or subrecipients use ETA grant funds to pay an individual’s salary or bonus. It says the covered pay rate generally cannot exceed Executive Level II and describes the exceptions and examples in the letter. Recipients must apply the limit through their award’s performance period and inform staff and subrecipients.
Document
Federal guidance
Agency
U.S. Department of Labor, Employment and Training Administration (ETA)
Document number
TEGL No. 10-24
Date issued
January 17, 2025
Status
Active
ETA lists this advisory as active. It prints an expiration date of Continuing and expressly rescinds TEGL 05-06.
Status last verified October 24, 2026
Apply this to your situation
This page explains the general guidance. Ask about your specific situation and see what current federal labor law says, with citations.
About this page: The full text below is the official document from U.S. Department of Labor, Employment and Training Administration (ETA). Ezel adds the plain-English summary and tracks the document's status. The official source linked on this page is authoritative for any reliance.
CLASSIFICATION
EMPLOYMENT AND TRAINING ADMINISTRATION Workforce System
ADVISORY SYSTEM CORRESPONDENCE SYMBOL
U.S. DEPARTMENT OF LABOR OGM
Washington, D.C. 20210 DATE
January 17, 2025
ADVISORY: TRAINING AND EMPLOYMENT GUIDANCE LETTER NO. 10-24
TO: STATE WORKFORCE AGENCIES
STATE WORKFORCE ADMINISTRATORS
STATE WORKFORCE LIAISONS
STATE AND LOCAL WORKFORCE BOARD CHAIRS AND DIRECTORS
ALL ETA FEDERAL ASSISTANCE AWARD RECIPIENTS AND
SUBRECIPIENTS
FROM: JOSÉ JAVIER RODRÍGUEZ
Assistant Secretary
SUBJECT: Salary and Bonus Limitation Imposed by Appropriations Language
1. Purpose. To provide guidance to states and other Employment and Training Administration
(ETA) federal assistance award recipients and subrecipients on the limitation on salary and
bonus payments that can be made using funds appropriated to ETA.
2. Action Requested. All ETA federal assistance award recipients and subrecipients must
comply with the salary and bonus limitation imposed by ETA’s appropriations bills, as
discussed in this guidance, throughout their federal assistance award’s period of
performance, unless one of the exceptions discussed in section 4.b. of this guidance applies.
Additionally, ETA federal assistance award recipients should inform all staff and
subrecipients of this guidance to facilitate and ensure compliance with the salary and bonus
limitation.
3. Summary and Background.
a. Summary – This guidance expands upon the salary and bonus limitation language
contained in the terms and conditions of the recipient’s federal assistance award and
provides examples of how the limitation is applied to covered individuals and
transactions.
b. Background – Since Public Law 109-234 was signed into law on June 15, 2006, ETA’s
appropriation language has carried the salary and bonus limitation forward into each
succeeding Fiscal Year (FY) and this will likely continue for the indefinite future. The
language in ETA’s most recent appropriation, Further Consolidated Appropriations Act,
2024, Public Law 118-47, Division D, Title I, Section 105 states:
RESCISSIONS EXPIRATION DATE
TEGL 05-06 Continuing
SEC. 105. None of the funds made available by this Act under the heading
‘‘Employment and Training Administration’’ 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. This
limitation shall not apply to vendors providing goods and services as defined in
Office of Management and Budget 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.
The Office of Personnel Management (OPM) updates the Executive Level II limitation
annually. As such, ETA federal assistance recipients should review all terms and
conditions in their agreement which reference compensation limitations and follow the
guidance provided by this Training and Employment Guidance Letter. Recipients must
ensure their subrecipients are aware of and comply with the limitation.
4. Applying the Executive Level II Limitation. Recipients and subrecipients should use the
following guidance to ensure compliance with the salary and bonus limitation as follows:
a. Programs Impacted by this Provision. Unless specifically exempted as outlined in
section 4.b, the Executive Level II salary and bonus limitation on compensation applies
to all individuals administering and operating programs and activities undertaken through
ETA appropriations and funding sources, including:
i. Multi-Funded Organizations – When a recipient/subrecipient receives a combination
of ETA and non-ETA funds, the limitation applies to only the portion funded by ETA
appropriations. The ETA portion cannot exceed the proportional Executive Level II
rate applicable for that calendar year. For example, if a staff person’s salary is paid
using 75% ETA funds and 25% non-ETA funds, the proportion limited to be charged
to ETA funds is 75% of the Executive Level II rate for that calendar year.
ii. Multiple ETA Program Organizations – The salary and bonus limitation also applies
to funds appropriated to ETA which are administered through more than one statute
or program. For example, the Senior Community Service Employment Program
(SCSEP) and Workforce Innovation and Opportunity Act (WIOA) programs are
authorized under two separate statutes but are both administered through ETA. If an
individual’s salary and bonus are paid from both of these funding sources, the portion
received from each of the programs cannot exceed the proportional Executive Level
II rate applicable for that calendar year. For example, for a staff person who is
working on ETA programs for a cumulative total of 75% of the calendar year, the
base in which to apply the 75% rate is on the Executive Level II rate and not the
person’s salary. Within that 75% total, if the person spends 50% of the calendar year
working on WIOA programs and 25% working on SCSEP, the two portions of the
person’s salary funded through these programs cannot exceed 50% and 25%,
respectively, of the Executive Level II rate.
b. Exceptions. The salary and bonus limitation does not apply to the following:
i. H-1B Awards – The H-1B program is authorized by the American Competitiveness
and Workforce Improvement Act of 1998 and is funded by resources generated from
employer fees collected under the H-1B program rather than ETA appropriations.
Thus, any grants funded by H-1B resources are not covered by the salary and bonus
limitation.
ii. Disaster Unemployment Assistance (DUA) – Federal awards made under the DUA
program are funded with resources appropriated to the Federal Emergency
Management Agency and are transferred to ETA. Thus, DUA awards are not covered
by the salary and bonus limitation.
iii. Contractors/Vendors – Section 105 of the appropriation provides that the salary and
bonus limitation does not apply to “vendors” as defined in Office of Management and
Budget Circular A-133. This circular was superseded by the Uniform Guidance at
2 CFR part 200. The Uniform Guidance uses the term “contractor” to refer to these
entities. Therefore, contractors of recipients and subrecipients are not subject to the
salary and bonus limitation.
c. Covered Entities/Individuals. Any salary or bonuses paid using ETA appropriations are
covered by this compensation limitation:
i. Recipients/Subrecipients – Entities including states, one-stop partners, and service
providers that receive a federal assistance award from ETA appropriations are subject
to the salary and bonus limitation.
d. Other Considerations.
i. Consultants – Limitations on daily consultant fees in ETA’s federal assistance awards
must continue to be followed.
ii. State Limitations – State determined limitations on salaries and bonuses are generally
more restrictive. When a state has adopted a salary cap consistent with the
requirements of 20 CFR 683.290(d) for Title I of WIOA and Wagner Peyser, the state
limitation would apply rather than the Executive Level II limitation. When setting a
state limitation, the state must consider various 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.
e. Application of the Limitation. The appropriations language sets the limit on salaries
and bonuses at a rate that does not exceed the Executive Level II rate of pay. The
Executive Level II rate is updated annually and can be found in the Rates of Pay for the
Executive Schedule on OPM’s website: https://www.opm.gov/policy-data-oversight/pay-
leave/salaries-wages/ (see Executive & Senior Level Employee Pay Tables). The
following factors must be considered when determining whether an individual’s
compensation complies with the salary and bonus limitation:
i. What is Included/Excluded in the Calculation – The limitation applies only to salary
and bonuses paid during any calendar year; it does not apply to fringe benefits,
insurance premiums, or contributions to pension plans paid by a recipient or
subrecipient.
ii. Measurement Period – Compliance with the salary and bonus limitation is measured
per individual on a calendar year basis.
iii. Full-Time Equivalent – The salary and bonus limitation is calculated on a full-time
equivalent (FTE) basis of 2,080 hours. The salary and bonus limitation needs to be
adjusted, as shown in Example 2 below, if an employer’s full-time hours are not
2,080 hours, or if the employee works on the ETA-funded project on a part-time
basis.
iv. Two or More Positions – If an individual is paid for two or more positions within the
same recipient or subrecipient, the total income earned, and bonus received must not
exceed the salary and bonus limitation. For example, an individual who is an
employee and consultant for the same recipient or subrecipient cannot earn more than
the salary and bonus limitation.
v. Direct/Indirect – Regardless of whether the compensation is charged to the ETA
award as a direct or indirect cost, the totality of compensation must not exceed the
limitation.
f. Examples – The various concepts discussed above are elaborated upon in the following
examples:
Example 1 – Full-Time Salary
Adjusted Is Employee’s
% of Actual
Annual Executive Salary Executive Compensation in
Time Spent
Salary + Level II Charged to Level II Limit Compliance with
on ETA
Bonus Limit ETA Award Based on % Executive Level II
Award
of Time Limit?
A B C D =A* C E=B*C D<E
$200,000 + No - exceeds the
$221,900 100% $225,000 $221,900
$25,000 limit by $3,100
Table 1
Example 1 Explanation: When 100% of an employee’s annual salary and bonus is paid
through one ETA federal assistance award, no adjustment to the salary and bonus limitation
is necessary. However, the combined salary and bonus in this example exceed the Executive
Level II Rate/Limit for rate of pay. The amount that exceeds the Executive Level II
Rate/Limit, $3,100, must be credited back to the ETA federal assistance award in the federal
award recipient’s accounting and payroll systems. Any amount that exceeds the Executive
Level II Rate/Limit must not be paid with any ETA federal assistance awards.
FTE Concept – When a salary is paid using multiple funding sources, the FTE concept is
used to ensure that the rate of pay (in proportion to hours worked) does not exceed the
limitation. The calculation uses the standard 2,080-hour calendar year formula to
determine the percent of time spent on ETA programs and applies any necessary
adjustment to the limitation based upon hours allotted to ETA-funded programs.
Example 2 – Part Time or Multi-Funded Organization
Adjusted Is Employee’s
% of Actual
Annual Executive Salary Executive Compensation in
Time Spent
Salary + Level II Charged to Level II Limit Compliance with
on ETA
Bonus Limit ETA Award Based on % Executive Level II
Award
of Time Limit?
C= D= E=
A B D<E
Hrs./2,080 A*C B*C
No - exceeds the
1,040 hrs. =
$230,000 $221,900 $115,000 $110,950 adjusted limit by
50%
$4,050
Table 2
Example 2 Explanation: When less than 100% of an employee’s annual salary and bonus is
paid through an ETA federal assistance award, an adjustment to the salary and bonus
limitation is necessary. Since the employee only worked 50% of their time on the ETA federal
assistance award, the Executive Level II Rate/Limit must be adjusted accordingly, based on
the employee’s time worked on the ETA federal assistance award. Based on the adjusted limit
and the amount of time the employee worked on the ETA federal assistance award, this
individual’s compensation has exceeded the salary and bonus limitation. The recipient must
use non-ETA funds in the amount of $4,050 to pay the full salary and bonus. If this
calculation was performed after the compensation was paid to the employee, the $4,050 that
exceeds the limitation must be credited back to the ETA federal assistance award in the
recipient’s accounting/payroll systems.
Multiple Funding Sources – Federal and Non-Federal – It is permissible for the
combination of funding sources (ETA funds, state, municipal, or private) when totaled, to
exceed the Executive Level II rate of pay. However, the limitation still applies,
proportionally, to the share of time attributable to work on a single ETA award or
combination of ETA awards.
Example 3 – Working in Multi-Program Organizations
Is Employee’s
Budgeted Adjusted
Executive % of Actual Salary Compensation in
Annual Salary Executive Level
Level II Time Spent on Charged to Compliance with
Charged to II Limit Based
Limit ETA Award ETA Award Executive Level II
Each Program on % of Time
Limit?
C= D= E=
A B D<E
Hrs./2,080 A*C B*C
No - exceeds the
SCSEP: 353.6 hrs. =
$221,900 $42,500 $37,723 adjusted limit by
$158,000 17%
$4,777
No - exceeds the
WIOA Adult: 780 hrs. =
$221,900 $93,750 $83,213 adjusted limit by
$22,000 37.5%
$10,537
No - exceeds the
RESEA: 946.4 hrs. =
$221,900 $113,750 $100,964 adjusted limit by
$70,000 45.5%
$12,786
Total: No - exceeds the
-- 100% $250,000 $221,900
$250,000 limit by $28,100
Table 3
Example 3 Explanation: The annual salary for a project manager (PM) was budgeted across
three ETA programs – SCSEP, the WIOA Adult program, and the Reemployment Services and
Eligibility Assessment (RESEA) grant – based upon projected responsibilities at the beginning
of the year (Column A). The actual time the PM spent on each program is reflected in Column
C. The limit was adjusted based on the hours worked for each program. The adjusted limits
are then compared to the portion of salary charged to each ETA program to determine if the
employee’s pay for each program complies. Each of the three programs/ETA federal
assistance awards will need to be credited back the respective amount that exceeds the
adjusted Executive Level II Rate/Limit, for a total of $28,100, in the federal assistance
award recipient’s accounting/payroll system and the $28,100 must be paid using non-ETA
funds.
Direct and Indirect Expenditures – Any compensation charged to an ETA federal
assistance award, as either a direct cost or through an indirect cost rate, is covered by the
compensation limitation. The allowable amount to charge to each funding stream is
proportionally based on each funding stream and the indirect cost pool’s share of the
employee’s salary and bonus. Ultimately, the proposed salaries must be reconciled to
actual time and the actual amount charged directly to the programs and to the indirect
cost pool.
Example 4 – Proposed Direct and Indirect Costs of One Employee
Is Proposed
Compensation Less
Adjusted
Direct or Annual Salary + Executive than the Total
% of Salary Executive
Indirect Costs Bonus Level II Allowable Cost for
Level II Limit
Limit Salaries Paid with
ETA funds?
C= D=
A B A / $235,000 B*C A<D
$125,000 No - exceeds adjusted
#1 – Indirect
Overhead and $221,900 53.1915% $118,032 limit by $6,968
Cost Pool
Administration
#2 – Direct $50,000 No - exceeds adjusted
YouthBuild $221,900 21.2766% $47,213 limit by $2,787
Cost
#3 – Direct $50,000 WIOA No - exceeds adjusted
Youth $221,900 21.2766% $47,213 limit by $2,787
Cost
#4 – Direct $10,000 REO No - exceeds adjusted
Youth $221,900 4.2553% $9,442 limit by $558
Cost
No - exceeds the limit
Total: $235,000 -- 100% $221,900
by $13,100
Table 4
Example 4 Explanation: An agency charges 100% of their Executive Director’s $235,000
compensation to ETA programs subject to the salary and bonus limitation. Based on the
agency’s Negotiated Indirect Cost Rate Agreement (NICRA), their salary is paid directly from
three ETA awards with the remaining paid through the indirect cost pool of a different ETA
grant. After reconciling the salary dedicated to each ETA program, the amount that exceeds
the adjusted limitations cannot be paid using ETA funds. Instead, the excess $13,100 cannot
be directly allocated or charged to ETA programs and must not be paid using ETA funds.
It should be noted that when preparing NICRA and Cost Allocation Plans (CAP) to
recover indirect costs, recipients and subrecipients must disclose all salary and salary
breakdowns for allocated direct and indirect costs to their Federal cognizant agency
(FCA) or pass-through entity to verify that applicable indirect cost charges are in
compliance with the limitations imposed by ETA and this guidance. If an evaluation of
the salary and bonus limitation identifies excessive compensation, recipients and
subrecipients must make required adjustments to indirect cost proposals to help ensure
that compliant NICRAs and/or CAPs are issued by the FCA or pass-through entity for the
applicable fiscal year periods. Unallowed direct costs associated with excess
compensation due to the salary and bonus limitation must remain as part of the indirect
cost allocation base approved by the FCA or pass-through entity.
For examples of proposed salary breakdowns, please see the Excel file incorporated
herein as Exhibit A, as part of A Guide for Indirect Cost Rate Determination, Section III,
Examples of Exhibits to Support Indirect Cost Proposals in the Cost and Price
Determination Division’s (CPDD) website. In addition to the examples previously
provided, CPDD’s website also provides an Excel file that can be used to determine
unallowable compensation based on the pro-rated share of costs.
Where More Restrictive Limitations Prevail – If a state has established a lower salary and
bonus limitation, that state-established amount is the salary and bonus limitation. The
salary and bonus limitation imposed by the ETA appropriation does not change the state-
established limitation.
Example 5 – State Determined Compensation Limit
Adjusted
Does Employee’s
Annual State Time Spent Salary State
Pay Comply with
Salary + Determined on ETA Charged to Determined
Adjusted State
Bonus Limit Award ETA Award Limit Based
Determined Limit?
on % of Time
C= D= E=
A B D<E
Hrs./2,080 A*C B*C
No - exceeds the
$140,000 1,456 hrs. = $110,600
$145,000 $101,500 adjusted limit by
+ $18,000 70%
$9,100
Table 6
Example 5 Explanation: A municipality aligns its pay rates to the state merit staffing
schedule and an individual cannot be paid more than $145,000 a year. The Board would like
to give the Director a bonus of $18,000, for a total of $158,000 in salary and bonus, but based
on the Director’s actual time spent on the ETA award (70%), the Director’s salary and bonus
would not comply with the adjusted state determined limit, as adopted by the municipality. In
this example, the Director could only be provided a bonus of $5,000 ($145,000 - $140,000)
using ETA funds and comply with the adjusted state determined, locally adopted limit.
5. Inquiries. Recipients of federal assistance awards funded with ETA appropriations should
direct all inquiries to their Federal Project Officer. Alternatively, inquiries may be directed
to the appropriate Regional Office.
For assistance with NICRA and indirect cost rates, recipients and subrecipients may contact
CPDD with any questions. CPDD contact information is located at:
https://www.dol.gov/agencies/oasam/centers-offices/office-of-the-senior-procurement-
executive/cost-price-determination-division/contact.
6. References.
• Pub. Law 109-234, Emergency Supplemental Appropriations Act for Defense, the Global
War on Terror, and Hurricane Recovery, 2006, Section 7013;
• Pub. Law 118-47, Further Consolidated Appropriations Act, 2024;
• American Competitiveness and Workforce Improvement Act of 1998 (29 U.S.C. 3224a);
• Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5121 et
seq.);
• 2 CFR Part 200, Uniform Administrative Requirements, Cost Principles, and Audit
Requirements for Federal Awards;
• 2 CFR Part 2900, DOL Uniform Administrative Requirements, Cost Principles, and
Audit Requirements for Federal Awards;
• 20 CFR 683.290, Are there salary and bonus restrictions in place for the use of title I of
Workforce Innovation and Opportunity Act and Wagner-Peyser Act funds?.
7. Attachment(s). Not applicable.
What does federal law require in your situation?
Ezel checks current federal labor law against your facts and answers with citations.
Opens in Ezel Pro.
- Checks the law as it stands today, not only this page
- Cites every source it relies on, so you can verify it
- Chat, drafting and research in one workspace