Lump Sum Payments
Below is a condensed version of this topic. For complete guidance please refer to the House Ethics Manual, Chapter 7 on staff rights and duties.
House offices have had broad authority to make lump sum payments to employees since 1997. The House Administration Committee has, under authority granted by the lump sum payment statute,67 issued a set of regulations governing the making of such payments. Those regulations are published in both the Members’ Handbook and the Committees’ Handbook.68 While those regulations set out basic rules on the making of lump sum payments, it is the responsibility of the Ethics Committee to determine the manner in which those payments are to be treated for purposes of the House Code of Official Conduct and other ethics laws, rules, and standards. The Ethics Committee has provided the following guidance.
Any lump sum payment must be made in compliance with the provision of the House rules requiring that each employee perform duties for his or her employing office that are commensurate with the compensation paid to that employee (House Rule XXIII, clause 8). Before making any lump sum payment, a Member must be satisfied that the employee has performed services for the congressional office that are commensurate with the amount the employee is to be paid in the lump sum combined with his or her regular salary. Furthermore, an employee may not be compensated from public funds, including by means of a lump sum payment, for the performance of nonofficial, personal, political, or campaign activities on behalf of the Member, the employee, or anyone else.
In addition, the Ethics Committee has determined that, as a general rule, a lump sum payment will not count in the determination whether an employee is being paid at a rate that results in the employee being subject to the requirement to file a Financial Disclosure Statement, the outside earned income limitation and restrictions, and the post-employment restrictions on lobbying. A key factor in this Committee determination is the fact that by and large, the provisions of law involved here look to the employee's “rate of basic pay.”69 In the Committee’s opinion, lump sum payments, when properly used by an employing office, do not constitute part of the recipient’s “rate of basic pay.” Another important factor here is that the Committee has been advised that lump sum payments are not treated as salary for purposes of employment benefits. Thus, according to the information provided to the Committee, those payments do not count in determining the maximum amount an employee can contribute to the Thrift Savings Plan, or the amount of life insurance that the employee may purchase, and likewise they do not count in determining an employee’s “high three” years for purposes of calculating retirement benefits.
The Ethics Committee has cautioned, however, that Members should not use lump sum payments as means of enabling employees to evade the financial disclosure requirements, the outside earned income limitation and restrictions, or the post-employment restrictions. For example, an intent to evade may be inferred when an employee’s regular salary rate is below the applicable thresholds, but that employee is regularly given a lump sum payment in an amount that, if it had been paid in the form of regular salary, would have subjected the employee to one or more of these requirements or restrictions. Receiving a lump sum end-of-the-year bonus or other one time payment recognizing a particular accomplishment is generally permissible. Members and staff are reminded that the House Code of Conduct specifically requires them to adhere not only to the letter but also to the spirit of the House Rules (House Rule XXIII, clause 2). A Member who uses lump sum payments with the intent to enable an employee to evade any of these requirements or restrictions will be subject to disciplinary action by the Committee. In addition, when the Committee finds that lump sum payments were made with such an intention, the Committee reserves the right to determine that those payments should be treated as part of the recipient’s basic rate of pay, thus subjecting that individual to the applicable requirements and restrictions.
67 See 2 U.S.C. § 60o.
68 See note 6, supra.
69 See 5 U.S.C. app. 4 §§ 109(13)(B), 501(a)(1); 18 U.S.C. § 207(e)(6).