DHHS Salary Cap Guidance

Updated: January 21st, 2016

Overview

Departments are responsible for ensuring compliance with any salary limitations imposed by sponsors. None of the grant, cooperative agreements, or contract funds may be used to pay the salary of an individual at a rate in excess of the applicable salary cap on any project funded by Health and Human Services agencies. This page serves as guidance to assist departments in complying with these requirements.

The restriction to cap the amount of salary that can be paid to an individual from an HHS award is due to a legislatively mandated provision for the limitation of salary costs. Links to the notices providing detailed information about the limitation and a list of rates is available on the NIH Salary Cap Summary page. Please refer to this page to determine what rate is in effect for an award at a specific time.

The dollar amount of the award payment is irrelevant, as any value has cap implications if the employee’s salary rate is above the applicable cap. Every dollar of effort is comprised of an allowable salary payment directly charged to the award and the required salary cap cost share.

Effort = Award Payment + Required Salary Cap Cost Share

The consistent message from auditors and the NIH Policy Office is that the corresponding salary cap cost sharing must be available in the same pay period that the salary payment is directly charged and must be paid from institutional funds. It is not permissible to cross over to different pay periods to fulfill the salary cap cost sharing requirement to stay in compliance. Since the University of Wisconsin-Madison pays faculty and staff on a monthly basis, monitoring of the cap must also occur monthly to ensure a sufficient amount of salary is being paid from non-sponsored sources.

Ultimately, the effort certification is the means to confirm that the salary cap cost share portion has been adequately linked to the award. The amount certified over the payroll figure is treated as implied cap cost share.