In New Locality Pay: Move and Get a Raise?, FedSmith raised this question: Can a federal employee increase purchasing power by moving to a remote area and staying assigned to a more generous locality pay area?
As is often the case in the federal government’s human resources program, the issue quickly gets complicated. In this instance, what if an employee is engaging in telework and living in an area that is not in a locality pay area or an area with a lower locality pay?
In other words, does the employee get to live in the lower cost of living area when doing telework while collecting a salary just as if he or she was working in an area with higher wages?
Locality pay is based on an employee’s official worksite. The official worksite is usually the location where an employee usually performs work. If the employee’s work involves recurring travel or the employee’s work location routinely changes, according to OPM, the official worksite is the location where the employee’s “position of record” is based. This decision is made by the employing agency. The official worksite has to be in a locality pay area in which the employee regularly performs work.
Official Worksites for Location-Based Pay Purposes
OPM has now published a list of frequently asked questions regarding telework policies for federal agencies in the post-COVID area. One section of this document appears on page 10 and it is entitled “Official Worksites for Location-Based Pay Purposes”.
The guidance is not straightforward. It addresses various situations that will arise. In the final analysis, it gives considerable leeway to an agency to make a decision on the locality that will be used to determine an employee’s pay.
The question posed in the FAQs is: “How will the employee’s official worksite that is the basis for General Schedule locality pay and other location-based pay be determined?” The first part of the guidance is easy to interpret and apply.
The official worksite for a General Schedule employee covered by a telework agreement is the location of the agency worksite for the employee’s position (i.e., the place where the employee would normally work absent a telework agreement), as long as the employee is scheduled to report physically at least twice each biweekly pay period on a regular and recurring basis to that agency worksite.
That is clear-cut. An agency may ignore it and the employee may be hoping no one will notice someone being out of the office for weeks or months at a time. That is not the main thrust of the guidance though.
Here is a statement from OPM:
In certain temporary situations, an agency may designate the location of the agency worksite for a General Schedule employee’s position (i.e., the place where the employee would normally work absent a telework agreement) as the official worksite for location-based pay purposes even though the employee is not able to report at least twice each biweekly pay period on a regular and recurring basis to the agency worksite….
The current pandemic is an example of an appropriate temporary situation for which an agency may apply this exception to the twice-a-pay-period reporting standard if the telework employee is expected to return to the agency worksite at some point in the future on a regular and recurring basis.
An agency may also apply this exception during the current pandemic to any new or current employee if the employee’s position is based out of an office in a different geographic location and the employee would be working at that office in the absence of the pandemic and the employee signs a telework agreement.
And, by the way, there is no time limit on what is considered a temporary situation. There is a requirement to consider OPM or guidance from the Office of Management and Budget. OPM also suggests an agency “review periodically an employee’s temporary full-time telework arrangement” to ensure the temporary exemption of reporting into the office at least twice during each bi-weekly pay period.
But, if that does not leave enough leeway for the agency to grant paying locality pay to an employee working outside the designated pay area, “It is up to an agency to determine how often an employee reports into the agency worksite.”
How Much Difference Does Locality Pay Make?
The pay differential can be substantial and, obviously, very important to an individual who is impacted by how the agency interprets this OPM guidance on telework.
For example, an employee who is assigned to work in the Washington, DC locality pay area who is a GS- 13/Step 7 has an annual salary of $124,428. The pay for federal employees in Washington is higher than in most other parts of the country because of locality pay.
What if this employee who is technically assigned to an office in Washington, DC is working in a remote location outside of the Washington area as has been defined for locality pay purposes? The employee could be living in West Virginia, Pennsylvania or Southwest Virginia. With decent internet reception, the employee can be “teleworking” and still be paid by Uncle Sam at a Washington pay rate.
The base pay for a GS13/Step 7 is $95,362. The pay rate of $124,428 is due to the locality pay rate in Washington. This is a differential of $29,066. If the employee is working in an area designated as the “Rest of the U.S.”, the annual pay for this grade and step is $110,572—a differential of $13,856.
For those who do not pay attention to how locality pay areas are defined, many are continuing to grow and cover a large geographic area. The Washington, DC locality pay area covers as far west as at least part of four counties in West Virginia, three in Pennsylvania and 20 locations in Virginia. Some of those are a significant distance from Washington, DC and the commutes are terrible. Parts of Hampshire County, WV, for example, are about two hours and 36 minutes each way (on a good day) and it is still in the DC locality pay area.
In other words, a person would probably have to be way outside some of these locality pay areas that have been defined before they would not qualify for the higher pay. But, with such a large workforce, no doubt there are people teleworking, not reporting into the office and outside the pay area where the office is located.
For more information on the new OPM guidance, check out OPM Anticipates More Telework for Federal Employees.