1. (1) Management shall write and publish incentive award and bonus policies before rewarding any employee with incentive awards or bonuses. Incentive awards and bonuses are discretionary, not an entitlement, and are subject to the availability of funds in the agency.

   1. (a) DHRM shall review agency incentive award policies to ensure that they are consistent with standards established in this rule and the Department of Government Operations, Division of Finance, rules, and procedures.

   2. (b) Management may not grant individual awards greater than $4,000 per pay period and $8,000 in a fiscal year, except when approved by DHRM and the governor.

      1. (i) Management shall include documentation of the work units affected and any cost savings in a request for an exception to Subsection (b) for a retirement incentive award.
      2. (ii) A single payment of up to $8,000 may be granted as a retirement incentive.
   3. (c) Any cash and cash equivalent incentive awards and bonuses shall be subject to payroll taxes.

2. (2) Performance Based Incentive Awards.

   1. (a) Cash Incentive Awards.

      1. (i) Management may grant a cash incentive award to an employee or group of employees that demonstrates exceptional effort or accomplishment beyond what is normally expected on the job for a unique event or over a sustained period.

      2. (ii) To implement a Pay for Performance cash incentive awards program, management shall include the program in the agency's incentive awards policy pursuant to Section R477-10-1.

         1. (A) The policy shall include information supporting the following:
3. (1) sustainability of the funding for the cash incentive program;
4. (2) the positions eligible to participate in the Pay for Performance program;
5. (3) goals of the program;
6. (4) type of work to be incentivized; and

7. (5) ability to track the effectiveness of the program.

   1. (iii) The agency head or designee shall approve any cash awards and ensure that documentation relating to the award is maintained.

   2. (b) Noncash Incentive Awards.

      1. (i) Management may recognize an employee or group of employees with noncash incentive awards.
      2. (ii) Individual noncash incentive awards may not exceed the limits in Finance Policy 05-03.06.
      3. (iii) Noncash incentive awards may include cash equivalents such as gift certificates or tickets for admission. Cash equivalent incentive awards shall be subject to payroll taxes and shall follow standards and procedures established by the Department of Government Operations, Division of Finance.

8. (3) Cost Savings Bonus.

   1. (a) Management may establish a bonus policy to increase productivity, generate savings within the agency, or reward an employee who submits a cost savings proposal.

      1. (i) Management shall document the cost savings involved.

9. (4) Market Based Bonuses.

   1. (a) When requesting market based awards, management shall submit documentation specifying how the agency will benefit by granting the bonus based on:

      1. (i) budget;
      2. (ii) recruitment difficulties;
      3. (iii) a mission critical need to attract or retain unique or hard to find skills in the market; or
      4. (iv) other market based reasons.

   2. (b) Eligible reason types for market based bonuses include:

      1. (i) Retention Bonus.

         Management may award a bonus to an employee who has unusually high or unique qualifications that are essential for the agency to retain.

      2. (ii) Recruitment or Signing Bonus.

         Management may award a bonus to a qualified job candidate to incentivize the candidate to work for the state.

      3. (iii) Scarce Skills Bonus.

         Management may award a bonus to a qualified job candidate that has the scarce skills required for the job.

      4. (iv) Relocation Bonus.

         Management may award a bonus to a current employee who is required to relocate to accept a position in a different commuting area.

      5. (v) Referral Bonus.

         Management may award a bonus to a current employee who refers a job applicant who is subsequently selected.

      6. (vi) Geographic Job Market Bonus.

         Management may award a bonus to incentivize an employee to accept or continue an assignment in a specific geographic area.

   Management may award a cash bonus as an incentive to acquire or retain an employee with job skills that are critical to the state and difficult to recruit in the market. Any market based bonuses shall be approved by the DHRM Division Director or designee.

KEY: wages, employee benefit plans, insurance, personnel management

Date of Last Change: May 7, 2026

Notice of Continuation: March 9, 2022

Authorizing, and Implemented or Interpreted Law: 63A-16-105; 63A-17-106; 63A-17-302(4); 63A-17-307; 63A-17-803