Fedweek

In similar situations in the past, the wait for specifics on raise amounts took a month or longer — and the wait for the actual payout afterward went well beyond that.

Now nearly two weeks since President Trump signed into law a retroactive federal employee pay raise averaging 1.9 percent, many employees are growing increasingly impatient to know exactly how much they are to receive and when.

As of Monday – March 4 – Trump still had not issued an executive order to carry out the raise in the budget measure he signed February 15, nor had OPM issued implementing instructions or posted the new pay rates by locality. That has left some employees and their organizations frustrated with the delay—the NTEU union, for example, already has written to OPM urging it to speed up the process.

However, the wait for specifics on raise amounts was longer in past similar situations—and the wait for the actual payout afterward went well beyond that.

Past Precedent

In both 2003 and 2004 Congress and the White House similarly had not settled the budget until past the start of the new year. In contrast to this year when President Trump’s proposal for a salary rate freeze took effect at first, in those cases a pay raise that had been paid by default was overtaken by a larger one. As with the recent law containing an average 1.9 percent raise to replace the freeze, those increases were retroactive to the first full pay period of the year—in this case, January 6.

In 2003, the law authorizing a larger raise was signed February 20, but the executive order did not come out until March 21 and OPM issued its instructions March 24. In 2004, the law was signed January 23 but the order didn’t come out until March 3 and OPM issued its instructions the next day.

While the executive order precedes the OPM instructions, it has to await OPM’s calculations of new GS pay tables, since those tables are included with it. That involves dividing the 0.5 percentage points of the raise designated for locality pay among GS localities—now 50 city areas plus Alaska, Hawaii and the catchall “rest of the U.S.” elsewhere—based on local pay data reported last fall by the Federal Salary Council. The raises likely will range about 1.7 to 2.3 percent.

Wage grade employees again are to receive generally the same increases paid to GS employees in their areas, although there are complications that the OPM will have to address. The raise also will boost the pay cap applying in the SES and other senior pay systems and a separate cap that affects employees in the high steps of GS-15 in some localities.

Complications

The new guidance almost certainly will follow the past practice, in which the retroactive pay was considered regular basic pay, subject to the same tax and other policies typically applying to basic pay. That guidance also required agency personnel offices to process retroactive payments back to the effective date of the raise, a process that carries numerous complications.

For example, agencies had to review each employee’s work schedule and make any necessary pay adjustments to reflect the new pay rates for overtime, night, Sunday, and holiday pay the employee worked. A similar adjustment must be made for those who retired or otherwise separated from the government around the turn of the year, since the lump-sum payment of unused annual leave is calculated as if the person had continued working for that many days.

That information is passed on to the payroll providers that agencies use. In many cases in 2003 and 2004 the back pay was paid separately as of a certain date and the new salary rate took effect with the next regular pay distribution. But that process, too, took time—in both cases, generally several pay periods later but some of the payments were not made until about three months after the law was signed.

Under past policy, employees are not entitled to interest on retroactive pay.