Proposal Would Give 102k Federal Employees a Pay Raise in 2016

A proposed rule would create 13 new locality pay areas for some federal employees. That is good news for those employees, but there could also be a negative impact of this action on 2016 pay for federal employees currently under the locality pay system.

As we noted last week, there is good news for some federal employees with regard to their pay as there was an indication from the Office of Management and Budget that 13 new locality pay areas were going to be approved. (See AFGE Says New Locality Pay Areas Approved for 2016)

Also see New Locality Pay Areas? Not in 2015 for more information on the proposed new locality pay areas.

A proposed rule has now been announced by the Office of Personnel Management in a Federal Register notice. Under the proposal, “The President’s Pay Agent has agreed to issue proposed regulations in response to the Federal Salary Council’s recommendation to establish the 13 new locality pay areas. Locality pay rates for the new locality pay areas would be set by the President after the new locality pay areas would be established by regulation.”

The proposal to establish 13 new locality pay areas would impact about 102,000 General Schedule employees.

Locality pay rates for the new locality pay areas would be set by the President after the new locality pay areas are established by regulation.

There would also be an impact on employees that are currently in a locality pay area. As noted in the proposed regulation, “Implementing higher locality pay rates in the 13 new locality pay areas could … result in relatively lower pay increases for employees in existing locality pay areas than they would otherwise receive.” (emphasis added)

For more information on the new areas and the changes to existing ones, be sure to see our blog post Who Would Be Impacted by New and Expanded Locality Pay Areas?.

Here is the reason for this possible impact. When locality pay percentages are increased, the past practice of the government has been to allocate a percentage of the total General Schedule payroll for locality raises and to have the overall dollar cost for such pay raises be the same—regardless of the number of locality pay areas. If a percent of the total GS payroll is allocated for locality pay increases, the addition of new areas results in a smaller amount to allocate for locality pay increases in existing areas.

Also under this proposed rule, in addition to adding the new locality pay areas, locations that would otherwise move to a lower-paying locality pay area due to use of updated metropolitan area definitions in the locality pay program would remain in their current locality pay area. This proposal would not modify the current commuting and GS employment criteria used in the locality pay program to evaluate, for possible inclusion in a locality pay area, locations adjacent to the metropolitan area comprising the basic locality pay area.

Also, moving a number of counties now covered by ‘‘Rest of U.S.’’ locality pay to higher paying locality pay areas would impact about 6,300 General Schedule employees.

For more detailed information, the Federal Register proposal is included at the end of this article. Comments on the proposed rule are due by July 1, 2015.

Adding New Locality Pay Areas

About the Author

Ralph Smith has several decades of experience working with federal human resources issues. He has written extensively on a full range of human resources topics in books and newsletters and is a co-founder of two companies and several newsletters on federal human resources. Follow Ralph on Twitter: @RalphSmith47