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NAVREF discourages NPCs from hiring VA employees to perform NPC-paid work. Doing so requires an NPC to take special precautions to guard against the possibility of dual compensation by ensuring that the NPC-paid work is distinct from the employees' VA responsibilities and conducted outside their VA duty hours. It also puts an organization and the employee responsible for payroll at risk for incurring significant fines and penalties for violations of federal supplementation of pay statutes.  Additionally, an NPC hiring VA employees must pay close attention to exempt/non-exempt status overtime considerations.

Recommendation

Rather than hiring a VA employee (putting them on the NPC payroll), NAVREF strongly encourages NPCs to establish an MOU with the VAMC that allows the NPC to reimburse the VA for salary and fringe benefits for a VA employee's time spent on NPC-administered studies. This is likely to involve VA adding additional hours to the employee's VA tour of duty for which the NPC then reimburses the VA.  This practice allows qualified personnel who are already familiar with VA workplace practices to work on NPC programs without risking dual compensation.  This also eliminates concerns about dual compensation because all of the employee's pay will be coming from VA.  In effect, the NPC is making a gift to VA to help pay a VA employee's research salary.  VA is responsible for managing all HR functions including compensation, the employee's performance and for providing supervision.

Prior to initiating such an MOU, the NPC must determine whether the VA employee is exempt or non-exempt from the Fair Labor Standards Act overtime regulations.  One way to determine this is to ask VA, "If this employee were to work for VA more than 40 hours in a single week, would VA pay him/her at their overtime rate for the additional hours?"  Below is a matrix of scenarios.  A more detailed matrix is linked below.

VA Employment

NPC Reimbursement to VA
Full time/Non-exempt Reimburse VA for additional hours at the employee's overtime rate plus fringes.
Part time/Non-exempt Reimburse VA for additional hours at the employee's regular rate of pay up to a total of 40 hours; reimburse at the employee's overtime rate for hours worked above 40.
Part time/Exempt Reimburse VA for additional hours at the employee's regular rate up to the equivalent of what that employee would be paid if he/she were a full time VA employee.
Full time/Exempt Reimbursement to VA is not possible - employee is already paid the maximum allowed.

 

If an NPC decides not to follow the recommendation detailed above and puts a VA employee on the NPC payroll, the NPC should take particular note of the following: 

  • Dual Compensation/Supplementation of Pay
  • Segregation of Duties
  • Time Sheets for VA-Paid Employees
  • “Joint Employment” Overtime Considerations for VA-NPC Employees
     

Additionally, NPCs considering hiring a VA employee are encouraged to seek a VA Regional Counsel opinion to verify that work contemplated for NPC pay is different work from the individual's VA-paid duties.  However, even when the RC conclusion is that the work is "different," such opinions generally include cautions about potential violations of federal ethics rules.  NPCs should be aware that the burden is on the employee and the NPC to ensure that no violations occur.  This requires careful documentation of the work the employee performs and the hours worked.

Dual Compensation and Supplementation of Pay

The receipt by VA employees of compensation from a private source, such as an NPC, for performing VA duties is a violation of Federal law 18 U.S.C. § 209.  Willful engagement of conduct constituting an offense is punishable with imprisonment for up to five years and/or $50,000 for each violation.  Both the payer and the payee may be subject to these penalties.

VA employees who perform work that is outside the scope of their VA duties may receive income from an NPC provided the work is 1) performed outside Government duty time (see note below); and 2) the work is entirely different from the employee’s official VA responsibilities.

Work done for NPC pay must be clearly distinguishable from the work the VA employee performs during his/her normal VA tour of duty.  Any research project funded by the VA research appropriation cannot be administered by the NPC. Consequently, any work done on those projects, no matter when the work is done, is by definition VA work.  Only VA can pay for work on VA-funded projects.

Similarly, if a principal investigator or a VA-paid employee works on a project funded by a drug company or any other non-VA source during his/her VA tour of duty, or if such work is part of his or her official VA duties (within the scope of his/her government work), regardless of when the work is done, that research activity is part of his/her VAMC employment. Consequently, an NPC is prohibited from providing any compensation for work on that project, even if some of the work is done on the investigator's or employee’s own time.

In order to be eligible for hiring by an NPC, the NPC must document that the VA employee will perform work for the NPC that is entirely different from their VA-paid work. One way to accomplish this is to obtain the position description (PD) for the employee's VA job and compare that to the job description for their anticipated NPC-paid job.  If they are similar, it is unlikely that they may be hired by the NPC. 

For example, a VA nurse who is paid by VA to be a study coordinator may not be hired by an NPC to also perform as a study coordinator for NPC-administered studies.  However, the NPC could hire that nurse to manage the research office computer system.  Generally, if the VA employee will have the same VA supervisor for both the VA- and NPC-paid work, it is unlikely that the work performed for VA and the NPC is sufficiently different to allow NPC pay.

Consult a local VA Regional Counsel attorney or ethics official to resolve fact-specific questions about segregation of duties and dual compensation.

NPCs may not give VA employees cash bonuses or gifts for doing their VA job.  VA personnel in fiscal, human resource management, building maintenance, etc., often go above and beyond to support the VA research program and it is natural to want to express appreciation for their efforts. However, every time NAVREF has been asked, or has asked the Office of General Counsel, about NPCs providing cash gifts or bonuses to VA employees, or giving funds to a VAMC to use for bonuses or gifts, we have concluded that this would be a violation of the dual compensation statute and/or the federal ethics regulations at 5 CFR 2635.

Helpful References

  • Federal Regulation: 18USC209– Salary of Government officials and employees payable only by United States.
  • VA Regulation: VA Handbook 5007, Part VIII, Chapter 5: Dual Compensation

Segregation of Duties

To avoid the appearance of dual compensation, VA employees must be extremely careful about segregation of duties while performing work for an NPC.  Time cards signed by supervisors must reflect that VA employees perform NPC work only during non-VA duty hours.  VA employees that use an “indefinite" or  "irregular” designation during their VA tour of duty should make every effort to maintain a reasonable log of duties and time worked for both VA and NPC positions.

Time Sheets for VA-Paid NPC Employees

NPCs should be particularly vigilant with regard to time sheets for jointly appointed VA/NPC employees to ensure that there is no overlap between VA and NPC duties and hours worked.  Time sheets submitted to the NPC must reflect the exact hours worked outside the VA employee’s VA tour of duty.  When there is doubt, obtain a VA attorney opinion that NPC-paid work is outside the scope of the individual’s VA-paid work.

NPCs may want to color code timesheets for VA-paid NPC employees to flag them for careful examination of hours worked for VA and hours worked for the NPC.  Also, NPCs may want to use a time sheet that reflects both VA-duty hours and NPC-paid hours as well as the work performed for both VA and the NPC to prevent any overlap in pay.

“Joint Employment” Overtime Considerations for VA/NPC Employees

Private labor attorneys have concluded that employment by VA and an NPC may constitute “joint employment” for purposes of federal labor law.  NPCs and their affiliated VAMC may be considered joint employers as defined in 29 CFR 791.2 (a)

(a). . . the employee is employed jointly by two or more employers, i.e., that employment by one employer is not completely disassociated from employment by the other employer(s), all of the employee’s work for all the joint employers during the workweek is considered as one employment for purposes of the Act.  In this event, all joint employers are responsible, both individually and jointly, for compliance with all of the applicable provisions of the act, including the overtime provisions, with respect to the entire employment for the particular workweek . . .

and

(b) where the employee performs work which simultaneously benefits two or more employers, or works for two or more employers at different times during the workweek, a joint employer relationship generally will be considered to exist in situations such as:

(1)  Where there is an arrangement between the employers to share the employee’s services, as, for example, to interchange employees; or

(2) Where one employer is acting directly or indirectly in the interest of the other employer (or employers) in relation to the employee; or

(3) Where the employers are not completely disassociated with respect to the employment of a particular employee and may be deemed to share control of the employee, directly or indirectly, by reason of the fact that one employer controls, is controlled by, or is under common control with the other employer.

As joint employers, pay for VA employees who are working for the NPC may be subject to the overtime requirements of the Fair Labor Standards Act (FLSA) even if the VA employee works less than 40 hours for the NPC.

To establish whether a VA employee must be paid by the NPC at an overtime rate, it is incumbent on the NPC to determine whether the VA employee is exempt or non-exempt from the overtime requirements of the FLSA for purposes of both the VA and NPC position.  To ensure that NPCs are properly compensating VA employees who also work for the NPC, a matrix is linked below with types of appointments (i.e., exempt or non-exempt) for both the VA and the NPC.

Note:  Some states have labor laws regarding overtime that are different from the federal laws.  Consult a local labor attorney or your state Department of Labor to ensure compliance with state requirements.

Matrix of Examples for Overtime Pay

Following is a link to a matrix of examples for overtime pay.  Since NPCs and their affiliated VAMCs may be considered joint employers, special care must be given to paying individuals who are employed by both organizations.

Matrix of Examples for Overtime Pay

Other Helpful Links

 

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