‘Locality Pay Equity Act’ Introduced In Congress

Legislation has been introduced in Congress to ensure that there is only one local wage area within a locality pay area. What impact would this legislation have on federal employees’ pay if it were enacted, and what brought about the introduction of the legislation? The author explains what you need to know.

On 11 September, Matt Cartwright, Democratic Congressman for the 17th District of Pennsylvania, introduced a bill for himself and several colleagues.  The bill proposes to ensure that there is only one local wage area within a locality pay area. The current proposed bill is H.R. 3492, the Locality Pay Equity Act.  A similar bill was introduced in 2013, but was not passed.

So what would be the impact if this bill passed?  Let’s take a look.

What Would the Bill Do?

The bill is designed to accomplish one rather simple task.  It will ensure that there is only one Federal Wage System (FWS) local wage area within a General Schedule (GS) locality pay area.

The Congressman, in a press release made public when he introduced a predecessor bill in 2013, provided a practical example from his own District.

The Tobyhanna Army Depot is located in the Scranton, PA FWS local wage area.  When FWS employees are limited to the same increase as that received by their GS colleagues, the FWS employees at Tobyhanna receive an increase based on the Rest of U.S. (RUS) GS locality pay area.  The GS employees working at Tobyhanna, in contrast, are considered to be part of the New York City GS locality pay area, a pay area that typically receives a larger pay adjustment than does the RUS locality pay area.

The Congressman’s goal is to assure that when FWS employees are limited to the same increase as their GS colleagues, that the FWS employees at Tobyhanna and anywhere else in the U.S. they are employed, will get the same increase as their GS colleagues.  Presumably, the Congressman expects that the Tobyhanna FWS employees will get the larger increase from the New York City locality pay area like their GS colleagues, rather than the smaller increase from the RUS locality pay area.

How Did this Problem Come About?

Starting in 1965, Federal Wage System employees had their wages based on wage surveys carried out in the local geographic area where they were employed. This practice of providing Federal employees involved in trades, crafts and laboring jobs with pay set at wage rates prevailing in the local wage area goes back to the Civil War.

This means that a plumber in Scranton could be making a different wage than his or her counterpart in Boston.  The FWS pay system was established in this manner to ensure that FWS employees working in a particular locale would be paid at wage rates then prevailing in the private sector in the locale in which she or he is working.

Of course, as I noted in my 19 April 2015 article on FedSmith, beginning at least as early as 1989, instead of allowing the FWS pay system to operate as outlined in the applicable statute, Congress annually has passed legislation limiting FWS wage increases to the same percentage as the GS receives each year.  While this may have benefitted some FWS employees, as my earlier article pointed out, it also can hurt the FWS employees who work in locality wage areas where private sector blue collar wages are rising at a faster rate than private sector salaries for white collar employees.

What is the Solution to this Problem?

There may be a number of different solutions.  Certainly the Congressman’s proposal is one possible solution to the problem.  And it is one that the Federal Prevailing Rate Advisory Committee endorsed in a resolution passed by a majority of the Committee on 21 October 2010.  (See the Committee’s annual report (22 September 2015; page 8) that includes the endorsement)

Another possible solution, and one this author believes can be done immediately and would provide a fair pay rate to FWS employees, is to allow the FWS wage setting process to operate as it was designed to do. ( See 5 U.S.C. §§ 5341-5349)  This would ensure that the original goal established by the statute would be fulfilled, i.e., pay FWS employees in accordance with the wage rates prevailing in the private sector in the local area around where their Federal jobs are located.

A third possibility is one that has received much lip service over the years: reform the Federal pay systems to make them more like their private sector counterparts.  Of course, if this option is considered the best one, then whatever new pay system is proposed for FWS employees probably will look very similar to what is currently in the statute because most private sector trade, craft and laboring occupations are paid on a local wage scheme.

In closing, let me note that I do not have a crystal ball on what may happen to the Congressman’s proposed bill.  However, the bill he introduced in 2013 was referred to the House Committee on Oversight and Reform and, apparently, no further action was taken.  The Congressman’s current proposal also was referred to that committee.  All we can do is watch to see what the outcome will be.  You can track the bill’s progress at: https://www.congress.gov/bill/114th-congress/house-bill/3492.

Wayne Coleman is a federal pay expert available to help your agency avoid premium pay claims through on-site training. Contact him for more information.

About the Author

Wayne Coleman is a compensation consultant whose career at various Federal agencies and in private practice spans almost 40 years. During this time he has written about and provided training on overtime and premium pay, on the principles of FLSA coverage and exemption, and on related Federal compensation issues. Wayne is available to help your agency avoid premium pay claims through consulting services and training. You can contact him at wayneslyhouse@comcast.net.