March 3, 1995
DO-95-011
MEMORANDUM
TO: Designated Agency Ethics Officials
FROM: Stephen D. Potts
Director
SUBJECT: Honoraria
On February 22, 1995, the Supreme Court decided United
States v. National Treasury Employees Union, a class action case
that had challenged the honoraria ban in the Ethics in Government
Act, at 5 U.S.C. app. § 501(b). The Court held that the honoraria
ban in the Ethics in Government Act violates the First Amendment
rights of the persons on whose behalf the case was brought. The
receipt of compensation for work-related outside activities by the
persons on whose behalf the case was brought and other executive
branch employees remains restricted by various provisions other
than 5 U.S.C. app. § 501(b).
The Court's decision is being made available on The Ethics
Bulletin Board System (TEBBS) for your convenience.
The Court's Decision
The Court affirmed a court of appeals decision, insofar as
that decision had upheld a district court decision to enjoin
enforcement of the honoraria ban against the persons on whose
behalf the case was brought. However, the Court reversed the court
of appeals decision insofar as the court of appeals decision had
let stand the district court decision to enjoin enforcement of the
honoraria ban against persons who were not among those on whose
behalf the case was brought. During the course of this litigation,
there was a stipulation that the persons on whose behalf the case
was being brought included every "employee," as defined at 5 C.F.R.
§ 2636.102(c) and (d), "below grade GS-16," who -- but for 5 U.S.C.
app. § 501(b) -- would receive "honoraria," as defined in 5 U.S.C.
app. § 505(3).
There is some question as to how the description of employees
"below grade GS-16" should be applied to employees who are not in
General Schedule (GS) positions at GS-15 or below, or who were not
among the respondents in United States v. National Treasury
Employees Union. A substantial number of executive branch
employees are paid under a variety of pay systems other than the
General Schedule. Moreover, grade GS-16 was abolished by the
Federal Employees Pay Comparability Act of 1990, Pub. L. 101-509.
We are working with the Department of Justice to resolve the
question of how to interpret "below grade GS-16." In addition, the
Department of Justice is reviewing the enforcement policy set forth
in the memorandum dated February 1, 1994, from the Assistant
Attorney General for the Civil Division to this Office. In that
memorandum, the Department of Justice advised that it would "not
request remedies under 5 U.S.C. App. 504 . . . with respect to
executive branch employees who receive honoraria between
September 28, 1993, and the date on which the Supreme Court issues
its decision in this case [i.e., United States v. National Treasury
Employees Union]." (A copy of that memorandum was attached to the
DAEOgram dated February 2, 1994, regarding honoraria). We will let
you know as soon as we have additional information regarding these
matters.
Other Restrictions on Honoraria
All officers and employees continue to be subject to other
statutory and regulatory provisions that restrict their ability to
accept honoraria under certain circumstances. For example, the
Standards of Ethical Conduct issued under the authority of
Executive Order 12674 (as modified by Executive Order 12731)
prohibit all executive branch officers and employees from receiving
compensation, including travel expenses, for teaching, speaking or
writing that "relates to the employee's official duties." 5 C.F.R.
§ 2635.807(a). For most employees, teaching, speaking or writing
is considered related to duties if the subject of the activity
"deals in significant part with:
(1) Any matter to which the employee presently is
assigned or to which the employee had been assigned
during the previous one-year period; [or]
(2) Any ongoing or announced policy, program or
operation of the agency . . . ."
5 C.F.R. § 2635.807(a)(2)(i)(E). Teaching, speaking or writing is
also deemed related to duties if the invitation to engage in the
activity or the offer of compensation was extended by a person or
entity substantially affected by the performance of the invited
employee's official duties, or if the invitation was extended to
the employee primarily because of his official position rather than
his expertise in the subject. 5 C.F.R. § 2635.807(a)(2)(i)(B) and
(C). In addition, an officer or employee may not accept
compensation from an outside source for teaching, speaking or
writing based substantially on nonpublic information or when the
activity is undertaken as part of the employee's official duties.
5 C.F.R. § 2635.807(a)(2)(i)(A) and (D). The receipt of
compensation in the last of these circumstances is also prohibited
by the supplementation of salary bar in 18 U.S.C. § 209.
Noncareer officers and employees who occupy positions above
GS-15 of the General Schedule or, in the case of positions not
under the General Schedule, for which the rate of basic pay is
equal to or greater than 120 percent of the minimum rate of basic
pay payable for GS-15 of the General Schedule, are subject to a
15 percent limitation on outside earned income. "Outside earned
income" is defined in 5 C.F.R. § 2636.303(b) to mean "wages,
salaries, honoraria, commissions, professional fees and any other
form of compensation for services other than salary, benefits and
allowances paid by the United States Government." As described in
5 C.F.R. § 2636.304(a), an employee subject to the limitation "may
not, in any calendar year, receive outside earned income attribut-
able to that calendar year which exceeds 15 percent of the annual
rate of basic pay for level II of the Executive Schedule . . . ."
The annual rate of basic pay for level II of the Executive Schedule
is currently $133,600. Regardless of when paid, outside earned
income is attributable to the calendar year in which the services
for which it was paid were provided. Section 102 of Executive
Order 12674, as modified by Executive Order 12731, prohibits
certain Presidential appointees, including all Executive Schedule
officials, from receiving any outside earned income -- including
honoraria -- for any outside activity performed during their
appointments. See 5 C.F.R. § 2635.804(a).