If you are a federal civilian employee who is a member of the armed forces reserve or the National Guard and are called to active duty on or after the first pay period on or after March 11, 2009, you are eligible for a “reservist differential.” That differential equals the difference between what your basic pay would have been if you hadn’t been called to active duty and what you are receiving through your military pay and allowances. The law applies to all employees and agencies within the federal government – executive, legislative, and judicial – unless specifically excluded by another provision of law.
The differential is paid any time you are absent from your civilian job in order to perform active duty in the uniformed services following a call or order under Title 10, U.S. Code and are entitled to reemployment under the Uniform Employment and Reemployment Rights Act.
Receiving the differential has no effect on your civilian pay and leave status because you are considered to be on leave without pay, unless you use either annual leave or other paid time off. If you do that, you wouldn’t be entitled to the differential during those periods.
It will be your agency responsibility to project the gross amount of your civilian basic pay during the period you’ll be on active duty. You will have to provide your agency with a copy of your monthly military leave and earnings statement for each affected month. Because military pay and allowances are payable on a monthly basis, a daily rate will computed so the two kinds of pay can be accurately compared. Of course, if it turns out that your military pay and allowances exceed your civilian basic pay, no differential will be paid.
The reservist differential isn’t basic pay for any purpose, but it will be considered pay for certain laws governing federal employee compensation–for example, salary offset for debt collection, waiver of overpayments, garnishment, and back pay. On the other hand, it won’t be counted as part of aggregate compensation in applying the aggregate pay limit in 5 U.S. Code 5307.
According to the IRS, your reservist differential will be treated as taxable income for tax purposes and will, likewise, be treated as wages for federal income tax withholding purposes. On the other hand, it won’t be subject to Social Security and Medicare taxes if the differential is paid for periods of active duty that exceed 30 days.
If you are called to active duty, immediately check with your agency to find out if you will be eligible for the reservist differential.