The Office of Personnel Management (OPM) announced that it is issuing a final rule in the Federal Register to ban the use of non-federal salary history in setting pay for employment offers to federal employees.
Under the final rule, federal agencies will not be allowed to use non-federal salary history to set pay for individuals joining the federal government for the first time or for former federal employees who are rehired after a lapse in federal service. In the latter case, agencies will be required to have policies regarding setting pay based on a previous federal salary for employees who have previous civilian service in the federal government.
The prohibition will apply to federal agencies when setting pay for new federal employees in the General Schedule, Prevailing Rate, Administrative Appeals Judge, Administrative Law Judge, Senior Executive Service, and senior-level and scientific or professional pay systems.
Federal agencies will also be prohibited from considering the salary in a candidate’s competing job offer(s) when determining pay.
Agencies must fully comply with the new regulations no later than October 1, 2024, the beginning of the 2025 fiscal year.
OPM cites an issue brief from the Labor Department as evidence for why the rule is needed. That brief states:
Due to these longstanding inequities in pay for men and women in the labor force, reliance on an employee’s prior salary to set current pay, in conjunction with other employer policies and practices, can exacerbate pay disparities for any worker who has faced discrimination in the labor market by anchoring pay to past wages. Studies indicate that this practice is prevalent in the hiring process. For instance, in a survey of U.S. workers, about half reported that their employers had learned about their past pay before making the offer that led to their current job.
OPM says that the rule change will help position the federal government as a model employer for the rest of the country. By being a model, this presumably means that the federal government wants private sector companies to follow its example and adopt the same standard.
“The federal government has been, and continues to be, a national leader in pay equity,” said OPM Director Kiran Ahuja. “Relying on a candidate’s previous salary history can exacerbate preexisting inequality and disproportionally impact women and workers of color. With this regulation, the Biden-Harris Administration sets a new standard and demonstrates to the nation that we mean business when it comes to equality, fairness, and attracting the best talent.”
What is the Difference Between Equality and Equity?
When the government refers to “equity,” what exactly does that mean? How is it different from equality?
In short, equality means everyone has the same opportunities and chances at success or failure, but equity ensures everyone will achieve the same outcome as dictated by their circumstances.
The Marin County (CA) Department of Health and Human Services explains it this way:
While the terms equity and equality may sound similar, the implementation of one versus the other can lead to dramatically different outcomes for marginalized people. Equality means each individual or group of people is given the same resources or opportunities. Equity recognizes that each person has different circumstances and allocates the exact resources and opportunities needed to reach an equal outcome.
Impact of the Federal Government’s Equity Efforts on Salary and Racial Composition
The new OPM regulation is part of the Biden administration’s push to advance diversity, equity, and inclusion within the federal workforce.
In 2021, President Biden issued an executive order formalizing this effort. He also issued an executive order last year directing federal agencies to advance racial equity.
Are these efforts working?
A look at historical salary data for federal employees indicates the administration’s efforts to achieve equitable outcomes for pay based on race and gender are having the desired effect within the federal workforce.
FedSmith author Ralph Smith analyzed salary data from 2018-2022 and found that salaries for women and minorities had increased more over that period than for men and whites. However, the average salaries for men were still slightly higher than for women, and the average salaries for whites were still higher overall than for blacks and Hispanics.
In a separate analysis, Smith found that between fiscal years 2020 and 2022, the total number of male federal employees had shrunk while the total number of female federal employees grew. The same was true for white federal employees.
