Since late 1997, House offices have had broad authority to make "lump sum" payments to employees. The House Administration Committee has, under authority granted by the lump sum payment statute¹, issued a set of regulations governing the making of lump sum payments. Those regulations appear in both the Members' Congressional Handbook and the Committees' Congressional Handbook issued by that committee.

While those regulations set out basic rules on the making of lump sum payments, it is the responsibility of the Committee on Standards of Official Conduct 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. This memorandum sets out determinations made by the Standards Committee on two key points regarding lump sum payments, as follows.

First, to reiterate one of the points made in the House Administration regulations, 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.²  Thus before making a lump sum payment to an employee, 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 non-official, personal, political or campaign activities on behalf of the Member, the employee, or anyone else.

Second, there are three provisions of law that apply only to House employees whose rate of pay is at or above a specific dollar amount -

• the requirement to file a Financial Disclosure Statement ³  , for which the threshold pay rate in 1999 is $89,728,
• the outside earned income limitation and restrictions⁴  , for which the threshold pay rate in 1999 is also $89,728, and
• the post-employment restrictions on lobbying⁵  , for which the threshold pay rate in 1999 is $102,525.⁶ 

The Standards Committee has determined that as a general rule, a lump sum payment will not count in determining whether an employee is being paid at a rate that results in the employee being subject to these requirements and restrictions. This is an important point, because an employee becomes subject to the financial disclosure requirement and post-employment restrictions by being paid at the applicable rate for only two months in a year, and becomes subject to the outside earned income limitation and restrictions by being paid at the applicable rate for more than three months in a calendar year.

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." ⁷  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.

However, the Committee wishes to make it very clear that Members are not to use lump sum payments as a means of enabling employees to evade the financial disclosure requirement, the outside earned income limitation and restrictions, or the post-employment restrictions. In this regard, Members and staff are reminded that the House Code of Official Conduct specifically requires them to adhere not only to the letter, but also to the spirit, of the Rules of the House.⁸ 

For example, an intent to evade may be inferred where 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 instead, would have subjected the employee to one or more of these requirements or restrictions. 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, where 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.

Any questions on this memorandum should be directed to the Committee's Office of Advice and Education at extension 5-7103. Questions regarding any other aspects of lump sum payments should be directed to the House Administration Committee at extensions 5-8281 (Majority) or 5-2061 (Minority).