Sponsors, mostly federal but also some non-federal, impose a salary cap or salary limitation as a requirement in proposing and when accepting an award. A salary rate cap or limitation of salary imposed by a sponsor may be due to one of the following:

• The Consolidated Appropriations Action, 2014 (H.R. 3547/Public Law 113-76) the Department of Health and Human Services’ (DHHS) agencies with the exception of the FDA (funded under the USDA appropriations bill) and the Indian Health Service (funded under the Department of Interior appropriations bill) are required to:
  • Impose a salary rate cap applicable to grants, cooperative agreements and contracts (with the exception of those that are clearly defined to be exempt from the cap) for all DHHS agencies (i.e. HHS, NIH, AHRQ, CDC, HRSA, SAMHSA, etc.).
  • Sets the salary rate cap at the Executive Level II of the Federal Pay schedule.
• Sponsors (federal and non-federal) other than the sponsors identified above may have a salary reimbursement request limitation as a matter of policy (Ex. NIH K awards and NSF Awards); and
• Sponsors (federal or non-federal, including subawards or pass-thru awards) may have a salary rate cap that may be program specific limiting the recovery of salary.

For more information:

http://www.hhs.gov/grants/contracts/contract-policies-regulations/salary-rate-limitation/index.html
NOT-OD-22-076
http://grants.nih.gov/grants/policy/salcap_summary.htm