Fiscal year 2017 (FY 2017) started on 1 October 2016, and calendar year 2017 started on 1 January 2017. This difference, by itself, can cause some confusion about when pay increases will occur for prevailing rate employees, and how much they will be.
The confusion can be increased for prevailing rate employees because the news media typically picks up on the increases going to General Schedule (GS) employees, but not necessarily for the prevailing rate employees.
This article will discuss the process for wage increases for prevailing rate employees that is described in the memo issued by the U.S. Office of Personnel Management (OPM) on 27 December 2016.
Under the statute at 5 U.S.C. § 5342(a)(2) there are three groups of prevailing rates employees: those covered by the Federal Wage System (FWS); those who perform similar trade, craft and laboring work for non-appropriated (NAF) organizations; and those who perform such work for the Veteran’s Canteen Service. The guidance we’ll discuss also applies to Federal employees who crew maritime vessels. This guidance does not apply to employees who negotiate their pay under Section 9(b) of P.L. 92-392, 19 August 1972, e.g., certain employees of the Bureau of Reclamation.
To many people it seems like the process to determine the wage increase for prevailing rate employees should not be complicated. After all, FWS wage adjustments, by statute, are to be based on the results of annual wage surveys carried out in the respective wage areas. The finding of the wage surveys are to be used to calculate an appropriate adjustment to ensure Federal prevailing rate employees earn comparable wages with non-Federal employees doing similar work in the immediate wage area.
For many years, however, the annual budgets passed by Congress and signed by the President have been superseding the data collected in the annual wage surveys. This year the process is affected by two statutes: Division E of the Consolidated Appropriations Act, 2016; and the Further Continuing and Security Assistance Appropriations Act, 2017, which extends into FY 2017 the two provisions of the FY 2016 Act.
The two statutes establish two guidelines for agencies adjusting wages for prevailing rate employees. First, wage increases in FY 2017 for prevailing rate employees may not exceed 2.43 percent, which is the overall average pay increase given to all GS employees nationwide. Second, the wage increases in FY 2017 for prevailing rate employees in a particular wage area may not be less than the increase received by GS employees in that area.
This creates an interesting dilemma in a few cases because GS locality pay areas and FWS wage areas are not identical in the geographic areas that they cover. Thus, FWS employees in one wage area may be paid at different rates depending on where their official duty stations are located.
The guidelines established by the two statutes tell us that prevailing rate employees will get a wage adjustment.
The next issue is when will that adjustment occur? FWS and other prevailing rate employees know that not all annual wage adjustments occur at one time. While GS employees all get their annual adjustment in the first pay period that begins on or after 1 January, FWS employees in the various wage areas spread across the United States get their annual adjustments once each year but on a variety of dates.
For example, the latest wage schedule for the Baltimore, Maryland, wage area was effective on 28 December 2016, while the latest wage schedule for the Spokane, Washington, wage area was effective on 13 September 2016. As a result, the date of the annual adjustment for an FWS employee will vary depending on the wage area in which she or he works, but the effective date will be about one year after the effective date of the last annual adjustment to the wage schedule in each wage area. Employees in wage areas where FY 2017 wage schedules were established prior to the publication of this guidance may receive pay adjustments back to the effective date of the wage schedule once this guidance has been applied to each schedule.
In summary, prevailing rate employees (including FWS employees) will see an adjustment to their wage schedules in Fiscal 2017, and that adjustment should become effective about 12 months after the date the last annual adjustment was made. Based on the budget passed recently by Congress, the increase may not exceed 2.43 percent.