New Locality Pay Areas in 2021?

December 22, 2020 5:11 PM , Updated December 23, 2020 1:43 PM
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The President’s Pay Agent has issued a report on locality pay areas for federal employees in 2021.

The President’s Pay Agent consists of the Secretary of Labor and the Directors of the Office of Management and Budget and the Office of Personnel Management. 

The Pay Agent considers the recommendations of the Federal Salary Council, defines locality pay areas, and submits an annual report to the President on the locality pay program. The report compares rates of pay under the General Schedule to non-Federal pay, identifies areas in which a pay disparity exists and specifies the size of the disparity and makes recommendations for locality rates, and includes the views of the Federal Salary Council.

Decisions on 2021 Locality Pay Areas

The federal government’s locality pay system is complex and confusing. It is even more confusing for 2021. To make sure this article is accurate, we reached out to the Office of Personnel Management (OPM) for clarification.

According to OPM, there will be a change for federal employees in Des Moines, Iowa and Imperial County, California. A new Des Moines-Ames-West Des Moines, Iowa, locality pay area has been established. In a Federal Register notice on October 15, 2020, a final rule was issued by OPM. It stated that “Establishing a new Des Moines-Ames-West Des Moines, IA, locality pay area will impact about 3,100 GS employees.” The new regulations were reported as being “effective November 16, 2020. The regulations are applicable on the first day of the first pay period beginning on or after January 1, 2021.”

In the same notice, a final rule was issued regarding Imperial County, California. The notice indicated that “Including Imperial County, CA, in the Los Angeles-Long Beach, CA, locality pay area as an area of application will impact about 1,860 GS employees.” The regulation also included “Imperial County, CA, in the Los Angeles-Long Beach, CA, locality pay area as an area of application.”

The President’s Pay Agent did not approve waiving the General Schedule employment criterion for Wayne County, Pennsylvania; Olmsted County, Minnesota; or Pine County, Minnesota. If an exception had been approved, federal employees in these three counties would be in line for a change in their pay status as a result of joining a locality pay area.

What About Des Moines, IA and Imperial County, CA?

In 2018, the Federal Salary Council added Des Moines, Iowa to the list of new locality pay areas. The Salary Council has also recommended Imperial County, CA as an addition to the Los Angeles, California locality pay area.

The President’s Pay Agent approved the recommendation in December 2019. The additions were not approved for inclusion in 2020.

The Pay Agent noted in its annual report that “until appropriate rulemaking procedures are finalized to make those changes, locality pay areas for 2021 will continue to be defined” according to the previous year.

According to OPM, the Federal Register notice regarding the Des Moines, Iowa area and Imperial County, California was finalized in October. However, according to an OPM representative “those regulations are not applicable until the first day of the first pay period in January 2021. Locality rates are set by the President through an annual pay adjustment Executive Order that is typically issued toward the end of each year.”

In effect, despite the statement in the report of the President’s Pay Agent that “locality pay areas for 2021 will continue to be defined” according to the previous year, the final regulation was issued on behalf of the Pay Agent and will be effective “on the first day of the first pay period beginning on or after January 1, 2021.”

Some employees may be surprised when their pay rates are adjusted for their inclusion into a locality pay area. As noted in the Federal Register, “Locality pay rates now applicable in that area will not change automatically because locality pay percentages are established by Executive order…and the President decides each year whether to adjust locality pay percentages.”

In other words, federal employees will not know what their pay rate will be in 2021 until the president issues an Executive Order and OPM publishes the new pay rates. This applies to federal employees in Imperial County, CA and Des Moines, IA. The same Executive Order will implement any pay raise for 2021.

Disagreement on Adding to Existing Pay Areas

Some members of the Federal Salary Council recommended waiving the GS employment criterion for Wayne County, PA; Olmsted County, MN; and Pine County, MN (and establishing Wayne County as an area of application to the New York locality pay area and Olmsted and Pine Counties as areas of application to the Minneapolis locality pay area). Two salary council members did not agree with this recommendation.

The Pay Agent noted that Wayne County, PA could be below the GS employment threshold for adding it to the New York locality pay area because of vacancies that have not been filled. The Pay Agent noted that the vacancies may not be filled so adding Wayne County in this instance would be inconsistent with what has been applied in other areas.

The final result is that for 2021, the locality pay area status for these three counties will not change.

© 2021 Ralph R. Smith. All rights reserved. This article may not be reproduced without express written consent from Ralph R. Smith.


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