Limitations on Outside Income
February 21, 2016
Specified political appointees are subject to an outside earned income limitation or to an outside earned income ban, and some political appointees are covered by both restrictions. "Outside earned income" means wages, salaries, honoraria, commissions, professional fees, and any other form of compensation (but excludes salary, benefits, and allowances paid by the United States Government).
Note: Neither the limitation nor the ban applies to special Government employees.
15 Percent Outside Earned Income Limitation
Under 5 U.S.C. app. 4 § 501, certain political appointees are subject to an outside earned income limitation. As defined in 5 C.F.R. § 2636.303, a "covered noncareer employee" is a political appointee who occupies a position that meets a grade or pay threshold. The term includes noncareer members of the Senior Executive Service or other SES-type systems, and also includes employees serving in Schedule C or other noncareer executive assignments who are paid at or above the triggering grade or rate. The definition excludes positions within the uniformed services and most positions in the foreign service (even though filled by Presidential appointment).
Under the limitation, a covered noncareer employee may not receive, in any calendar year, outside earned income attributable to that year which exceeds 15 percent of a specified dollar threshold. There is a proration formula for determining the amount of the outside earned income limitation in the case of any employee who becomes a covered noncareer employee during the calendar year. Regardless of when it is paid, outside earned income is attributable to the calendar year in which the services for which it is paid were provided.
Outside Earned Income Ban
Under Executive Order 12674 (as modified by Executive Order 12731), and implemented in 5 C.F.R. § 2635.804, a "Presidential appointee to a full-time noncareer position" is subject to an outside earned income ban. The ban does not apply to an employee appointed to a position within the uniformed services or to a position in which a member of the foreign service is serving that does not require the advice and consent of the Senate. It also does not apply to positions in the White House that are not normally subject to change as a result of a Presidential transition, nor to positions in the White House for which the rate of pay is less than that for GS-9, step 1, of the General Schedule.
The information on this page is not a substitute for individual advice. Agency ethics officials should be consulted about specific situations.