Issue Briefs

The administration has issued memos explaining how the 2011 pay freeze for federal employees will work under the various laws and rules governing salary setting, in particular addressing some special considerations for certain employees in non-foreign areas, where a special COLA is being phased out in favor of locality pay under a prior law and for blue-collar employees. The memos follow.

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On December 22, 2010, President Obama signed legislation to prohibit statutory pay adjustments for most Federal civilian employees. (See section 147 of the Continuing Appropriations Act, 2011 (Pub. L. 111-242, September 30, 2010), as amended by section 1(a) of the Continuing Appropriations and Surface Transportation Extensions Act, 2011 (Pub. L. 111-322), in Attachment 1.) President Obama also issued a memorandum on December 22, 2010, which stated that agencies should forgo similar increases to pay schedules and rates that are set by administrative discretion. (See Attachment 2.) In addition, the President signed an Executive order dated December 22, 2010, documenting the 2011 pay rates for certain pay systems discussed in this memorandum and establishing the 2011 increased pay rates for the uniformed services.

The Presidential memorandum directed the U.S. Office of Personnel Management (OPM) to issue guidance on implementing the pay freeze. OPM provided information on the Executive order in CPM 2010-20. The information below and in Attachments 3 and 4 of this memorandum provide additional guidance on the pay freeze legislation and Presidential memorandum.

Covered Employees

The pay freeze is expected to apply to approximately 2 million Federal civilian employees in the Executive branch. Employees of the United States Postal Service and the Postal Regulatory Commission are not covered, nor are members of the uniformed services (as defined in 37 U.S.C. 101(3), i.e., Army, Navy, Air Force, Marine Corps, Coast Guard, National Oceanic and Atmospheric Administration, and Public Health Service). Covered employees include employees under the General Schedule, Executive Schedule, Senior Executive Service (SES), Senior Foreign Service (SFS), senior-level and scientific and professional (SL/ST), prevailing rate, and other Executive branch pay systems and schedules. Additional information on employees covered by the pay freeze is provided in Attachment 3.

Covered Pay Adjustments

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The pay freeze statute prohibits "statutory pay adjustments" for Federal civilian employees that would otherwise take effect in 2011 and 2012. These statutory pay adjustments include across-the-board adjustments under 5 U.S.C. 5303, locality pay adjustments under 5 U.S.C. 5304 or 5304a, Executive Schedule adjustments under 5 U.S.C. 5318, prevailing rate adjustments under 5 U.S.C. 5343(a), and any similar pay adjustments required by statute with respect to covered employees in an Executive agency. In addition, the statute prohibits certain additional pay adjustments for SES, SFS, SL/ST, and other senior executive and senior-level employees. The Presidential memorandum further states that agencies should forgo similar pay system and pay schedule adjustments and general increases that could otherwise be granted by an agency to employees through administrative discretion. Additional information on pay adjustments covered by the pay freeze is provided in Attachment 3.

Pay Freeze Exclusions

Given the breadth of the statute and the Presidential memorandum, virtually all pay system and pay schedule adjustments and general increases for covered civilian employees in Executive branch agencies should be covered by the pay freeze. Pay adjustments not covered by the freeze include promotion increases, within-grade step increases, and other similar individually-based pay increases. (See Attachment 3 for additional guidance on exclusions.)

Agency Chief Human Capital Officers and/or Human Resources Directors should contact Jerry Mikowicz, Deputy Associate Director for Pay and Leave in OPM’s Employee Services at (202) 606-2858 or pay-leave-policy@opm.gov  immediately if an agency believes a specific pay system, pay schedule, or employee category is excluded from the pay freeze. Further, if the agency determines to exclude a specific pay system, pay schedule, or employee category from the pay freeze, the agency must report its determination to the Director of OPM by submitting an email detailing the justification for the exclusion to pay-leave-policy@opm.gov.

Effective Date

The statute and Presidential memorandum cover pay adjustments that would otherwise take effect during the period beginning on January 1, 2011, and ending on December 31, 2012.

2011 Pay Schedules

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OPM has posted salary tables and guidance to reflect the pay rates that will be in effect in 2011 at www.opm.gov/oca/11tables/index.asp.

Additional Information

Please review the detailed guidance in Attachment 3 and the Qs and As in Attachment 4 of this memorandum. Agency Chief Human Capital Officers and/or Human Resources Directors should contact OPM’s Employee Services, Pay and Leave, at the number or email address above for additional information. Employees should contact their agency human resources offices for assistance.

 

On December 22, 2010, the President signed an Executive order containing the 2011 pay schedules for certain Federal civilian employees. (See Attachment 1.) This memorandum reviews relevant portions of the Executive order and provides general information on the 2011 pay rates. Pursuant to section 147 of the Continuing Appropriations Act, 2011 (Pub. L. 111-242), as amended by section 1(a) of the Continuing Appropriations and Surface Transportation Extensions Act, 2011 (Pub. L. 111-322, December 22, 2010), the Executive order provides that the 2011 pay rates for the civilian employee pay schedules covered by the order are not adjusted and remain at 2010 levels. The President also issued a separate memorandum on December 22, 2010, asking agencies to forgo increases to pay schedules and rates set by administrative discretion. The U.S. Office of Personnel Management (OPM) will issue more detailed guidance on implementing the pay freeze in the near future.

2011 Salary Tables and Effective Date

We have posted the 2011 salary tables on OPM’s Website at www.opm.gov/oca/11tables/index.asp. The 2011 pay rates will become effective on the first day of the first applicable pay period beginning on or after January 1, 2011 (i.e., January 2, 2011 for most employees).

The General Schedule and Other Statutory Pay Systems

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The President’s Executive order contains the 2011 rates of basic pay for the statutory pay systems–the General Schedule (GS), Foreign Service schedule, and certain schedules of the Veterans Health Administration of the Department of Veterans Affairs. The rates of basic pay for these systems will not be increased in 2011 and remain at 2010 levels. This includes the special base rates for GS law enforcement officers (GL) at GS grades 3 through 10.

Executive Schedule

The 2011 Executive Schedule (EX) rates of pay remain at the 2010 levels. The EX salary table is available on OPM’s Website at www.opm.gov/oca/11tables/indexSES.asp.

Senior Executive Service

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The minimum rate of basic pay for the Senior Executive Service (SES) rate range under 5 U.S.C. 5382 will remain at $119,554 in 2011. The applicable maximum rate of basic pay for the SES will continue to be $179,700 (EX-II) for SES members covered by a certified SES performance appraisal system and $165,300 (EX-III) for SES members covered by an SES performance appraisal system that has not been certified.

Senior-Level and Scientific and Professional Positions

The minimum rate of basic pay for senior-level (SL) and scientific and professional (ST) positions under 5 U.S.C. 5376 will remain at $119,554 in 2011. The applicable maximum rate of basic pay will continue to be $179,700 (EX-II) for SL and ST employees covered by a certified SL/ST performance appraisal system and $165,300 (EX-III) for SL and ST employees covered by an SL/ST performance appraisal system that has not been certified.

Administrative Law Judges

The rates of basic pay for administrative law judges (ALJs) under 5 U.S.C. 5372 will not increase in 2011. The rate of basic pay for AL-1 will remain at $155,500 (equivalent to the rate for EX-IV). The rate of basic pay for AL-2 will remain at $151,800. The rates of basic pay for AL-3/A through 3/F will continue to range from $103,900 to $143,700. The ALJ salary table is available on OPM’s Website at www.opm.gov/oca/11tables/indexSES.asp.

Administrative Appeals Judges

The rates of basic pay for administrative appeals judges (AAJs) under 5 U.S.C. 5372b will not increase in 2011. The rates of basic pay for AAJ positions must be set at a rate not less than the minimum rate of basic pay for level AL-3 and not more than the maximum rate of basic pay for level AL-3 of the ALJ pay system. The AAJ pay system includes six rates of basic pay—AA-1, 2, 3, 4, 5, and 6. These rates correspond to the rates of basic pay for AL-3/A, B, C, D, E, and F of the ALJ pay system. The AAJ salary table is available on OPM’s Website at www.opm.gov/oca/11tables/indexSES.asp.

Locality Payments

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The Executive order also contains the amounts of the GS locality payments under 5 U.S.C. 5304 for 2011, as reflected in the President’s alternative plan issued on November 30, 2010. (See www.opm.gov/oca/2011_alt_plan_opm_version_of_wh.pdf.) Except for employees in nonforeign areas, the 2011 locality payments are the same as the payments that applied in 2010. Attachment 2 provides a table showing the 2011 locality pay percentages.

Cost-of-Living Allowance Rates for Nonforeign Areas

As provided under the Nonforeign Area Retirement Equity Assurance Act of 2009 (NAREAA) (subtitle B of title XIX of the National Defense Authorization Act for Fiscal Year 2010 (Public Law 111-84, October 28, 2009)), the locality rate for each nonforeign area will be set at two-thirds of the applicable locality rate in January 2011 and the full applicable locality rate in January 2012. Employees in nonforeign areas have corresponding reductions in their cost-of-living allowances (COLAs) when locality rates increase. The nonforeign areas are identified in 5 CFR 591.205. The COLA areas within those nonforeign areas are defined in 5 CFR 591.207. The locality rates and COLA rates for 2011 in each COLA area are provided in the table below:

COLA Areas 2011 Locality Rates (%) 2011 COLA Rates (%)

Anchorage, Alaska 16.46% 10.56%

Fairbanks, Alaska 16.46 10.56

Juneau, Alaska 16.46 10.56

Other Alaska 16.46 12.28

City and County of Honolulu, Hawaii 11.01 16.07

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County of Hawaii, Hawaii 11.01 9.76

County of Kauai, Hawaii 11.01 16.07

County of Maui (including Kalawao County), Hawaii 11.01 16.07

Puerto Rico 9.44 7.18

U.S. Virgin Islands 9.44 17.23

Guam & Commonwealth of the Northern Mariana Islands 9.44 17.23

Other Possessions 9.44 0

For additional information on NAREAA, including its application to SES, SL, and ST employees, see CPM 2009-27.

Locality Pay Extensions

On December 13, 2010, the Director of OPM issued a memorandum on behalf of the President’s Pay Agent (the Secretary of Labor and the Directors of the Office of Management and Budget (OMB) and OPM) that extends GS locality payments to ALJs and certain other non-GS employee categories again in 2011. By law, EX officials, SES members, employees in SL/ST positions, and employees in certain other equivalent pay systems are not authorized to receive locality payments. (Note: An exception applies to SES, SL, and ST employees stationed in a nonforeign area on January 2, 2010.) Except for employees in nonforeign areas, the locality payments for non-GS employees approved for a locality pay extension have not been increased in 2011.

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Locality Pay Areas in 2011

We do not anticipate any changes in existing locality pay areas effective on the first day of the first applicable pay period beginning on or after January 1, 2011 (January 2, 2011). Locality pay area definitions are posted at www.opm.gov/oca/11tables/locdef.asp.

Note that locality pay area definitions are tied to Metropolitan Statistical Areas (MSAs) and Combined Statistical Areas (CSAs) identified by OMB and are subject to change if OMB adds locations to MSAs or CSAs. If OMB adds locations to MSAs or CSAs affecting locality pay areas, the changes go into effect with the first pay period beginning on or after January 1 of the next calendar year. OPM will post any revisions to locality pay areas as a result of OMB actions as soon as possible after we are notified of the changes by OMB.

2010 Annual Review of Special Rates

We are issuing a separate memorandum announcing the results of the 2010 annual review of special rates.

Aggregate Limitation on Pay

Because the Executive Schedule will not be adjusted in 2011, the aggregate limitation on pay under 5 U.S.C. 5307 will also remain at the 2010 level. The aggregate limitation on pay for calendar year 2011 will continue to be $199,700 (equivalent to the rate for EX-I). SES members and employees in SL/ST positions who are covered by a certified performance appraisal system are subject to a higher aggregate limitation on pay of the Vice President’s salary ($230,700 in 2011, the same level as in 2010). (See 5 U.S.C. 5307 and 5 CFR part 530, subpart B.) Information on obtaining certification of performance appraisal systems is available at www.opm.gov/ses/performance/certification.asp.

2011 Premium Pay Caps

Under 5 U.S.C. 5547(a) and 5 CFR 550.105, GS and other covered employees may receive certain types of premium pay in a biweekly pay period only to the extent that the sum of basic pay and such premium pay for the pay period does not exceed the greater of the biweekly rate payable for (1) GS-15, step 10 (including any applicable locality payment or special rate supplement), or (2) the rate payable for EX-V ($145,700 in 2011, the same as in 2010). In certain emergency or mission-critical situations, an agency may apply an annual premium pay cap instead of a biweekly premium pay cap, subject to the conditions prescribed in law and regulation. (See 5 U.S.C. 5547(b) and 5 CFR 550.106–550.107.) The biweekly premium pay caps for 2011 will remain at the 2010 levels, except the cap will increase for employees in Alaska where the GS-15, step 10, locality rate has been increased in 2011 to a rate greater than EX-V. We have posted the biweekly premium pay caps on OPM’s Website at www.opm.gov/oca/pay/html/11GSCap.asp.

Section 1106 of the National Defense Authorization Act for Fiscal Year 2010 (Public Law 111-84, October 28, 2009), as amended by section 1(a) of the Continuing Appropriations and Surface Transportation Extensions Act, 2011 (Pub. L. 111-322, December 22, 2010), provides for the head of an agency to waive the premium pay cap provisions under 5 U.S.C. 5547 for certain civilian employees who perform work while in an overseas location that (1) is in the area of responsibility of the United States Central Command (CENTCOM) or (2) was formerly in the CENTCOM area of responsibility but has been moved to the area of responsibility of the Commander of the United States Africa Command (AFRICOM). The waiver authority has been extended through the earlier of March 4, 2011, or the date of enactment of the National Defense Authorization Act for Fiscal Year 2011. Section 1106 also provides that the aggregate limitation on pay under 5 U.S.C. 5307 will not apply to an employee if the employee is granted a waiver of the normally applicable premium pay limitations.

Post Employment Restrictions

Agencies are required to notify SES members, SL and ST employees, and other individuals who are paid at a rate of basic pay equal to or greater than 86.5 percent of the rate for EX-II ($155,441 in 2011) that they are subject to certain post-employment restrictions in 18 U.S.C. 207(c). (See 18 U.S.C. 207(c)(2)(A)(ii).) This salary threshold will not increase in 2011. OPM’s regulations requiring notification of post-employment restrictions are available at 5 CFR part 730. Agencies may continue to use the sample notice OPM provided in its memorandum of January 6, 2004 (CPM 2004-01), to notify an SES member, SL and ST employees, or other individual that he or she is subject to the post-employment restrictions in 18 U.S.C. 207(c). (Agencies will need to update the pay system, salary threshold, and effective date in the sample notice, as appropriate.) The sample notice is available at www.opm.gov/oca/compmemo/2004/2004-01_attach1.asp.

Questions

For additional information, agency Chief Human Capital Officers and/or Human Resources Directors should contact OPM’s Employee Services at (202) 606-2858 or pay-performance-policy@opm.gov. Employees should contact their agency human resources offices for assistance.

Attachment 1

Attachment 2

cc: Chief Human Capital Officers

Human Resources Directors


This memorandum provides special rules for adjusting retained rates for certain employees in nonforeign areas (including Alaska and Hawaii) as part of implementation of the Non-Foreign Area Retirement Equity Assurance Act of 2009 (Public Law 111-84, October 28, 2009) (hereafter referred to as "the Act"). I previously provided rules and guidance on implementing that Act via a memorandum to you dated December 30, 2009 (CPM 2009-27).

In implementing the Act, U.S. Office of Personnel Management (OPM) staff became aware of an unintended consequence for employees receiving a retained rate in a nonforeign area during the January 2010-January 2012 transition period. This unintended consequence is the result of nonforeign area cost-of-living allowances (COLAs) being reduced in conjunction with the phase-in of locality pay and the fact that, by operation of law, retained rates do not receive the full benefit of phased-in locality pay. This means that the increase in pay resulting from a retained rate adjustment may be less than the loss in pay resulting from the COLA reduction.

I have determined that I have authority under section 1918(a)(2) of the Act to address the above-described problem by establishing special rules on adjusting retained rates for nonforeign area employees during the January 2010-January 2012 transition period. The attachment sets forth those rules for employees receiving a retained rate under 5 U.S.C. 5363.

Under section 1918(b) of the Act, administrators of pay systems not administered by OPM must carry out the provisions of the Act consistent with OPM rules, subject to the concurrence of OPM. Thus, if there are nonforeign area employees in such a pay system who are covered by section 1914 of the Act and who are receiving a retained rate similar to a retained rate under 5 U.S.C. 5363 (e.g., no locality pay paid on top of the retained rate, 50 percent adjustment tied to applicable range maximum), then the pay system administrator should prescribe rules consistent with OPM’s special rules described in the attachment.

Additional Information

For additional information, agency Chief Human Capital Officers and/or Human Resources Directors should contact Robbins Byrne in OPM’s Pay and Leave office at (202) 606-2858 or email to pay-performance-policy@opm.gov. Employees should contact their agency human resources offices for assistance.

Attachment

cc: Chief Human Capital Officers

Human Resources Directors

________________________________________

Attachment

Special Rules on Adjusting Retained Rates for Employees in Nonforeign Areas During the January 2010-January 2012 Transition Period

Authority: Section 1918(a)(2) of the Non-Foreign Area Retirement Equity Assurance Act of 2009 (Public Law 111-84, October 28, 2009).

Covered Employees: Employees who are receiving a cost-of-living allowance (COLA) under 5 U.S.C. 5941 (based on having an official worksite located in a nonforeign area, as defined in 5 CFR 591.205) and who are receiving a retained rate under 5 U.S.C. 5363. (Note: Covered employees are primarily in the General Schedule (GS), and these rules are designed for GS employees. If there are covered employees in certain demonstration project pay systems, agencies must follow parallel rules.)

Covered Time Period: The transition period beginning on the first day of the first pay period beginning on or after January 1, 2010, and ending on the first day of the first pay period beginning on or after January 1, 2012.

Background:

Employees who receive a retained rate under 5 U.S.C. 5363 do not receive locality pay; instead, the retained rate is established and managed in relation to the applicable adjusted basic rate range (including locality pay). The retained rate is increased at the time of January general pay increases by 50 percent of the dollar increase in the maximum adjusted rate (including locality pay) for the employee’s grade.

During the transition period, employees in nonforeign areas are receiving large increases in locality pay as locality pay phases in (one-third of applicable locality rate in January 2010, two-thirds in January 2011, and 100 percent in January 2012). Most covered employees in nonforeign areas receive the full benefit of these large increases in locality pay. Locality pay increases are accompanied by corresponding COLA reductions, and the COLA reduction formula is based on the presumption that employees are receiving the full benefit of the large increases in locality pay. However, retained rate employees do not receive a pay increase commensurate with the increase in the locality pay percentage. As explained above, they receive 50 percent of the dollar increase in the maximum adjusted rate (including locality pay) for the employee’s grade. This means that retained rate employees may experience a reduction in gross pay during the transition period.

Application of Section 1918(a)(2) Authority:

Under section 1918(a)(2), the Director of the U.S. Office of Personnel Management (OPM) may prescribe "rules for adjusting rates of basic pay for employees in pay systems administered by the Office of Personnel Management when such employees are not entitled to locality-based comparability payments under section 5304 of title 5, United States Code, without regard to otherwise applicable statutory pay limitations during the transition period described in section 1914 ending on the first day of the first pay period beginning on or after January 1, 2012."

We have determined OPM may apply the section 1918(a)(2) authority to retained rate employees. The employees who are receiving a retained rate under 5 U.S.C. 5363 in a nonforeign area are in the General Schedule, a pay system administered by OPM. Retained rate employees are not entitled to locality pay. Thus, OPM has authority to adopt special rules for adjusting retained rates (which are rates of basic pay) that go beyond what is allowed under 5 U.S.C. 5363—but only during the transition period ending in January 2012. Since this authority may be applied "during the transition period," we have determined that we can adopt these special rules retroactive to January 2010.

Special Rules on Adjusting Retained Rates:

Accordingly, under the authority of section 1918(a)(2) of the Act, OPM is adopting the following special rules for adjusting retained rates during the January 2010-January 2012 transition period:

1. For General Schedule (GS) employees receiving a cost-of-living allowance under 5 U.S.C. 5941 and a retained rate under 5 U.S.C. 5363 of that title, agencies must—

a. calculate the adjustment under 5 U.S.C. 5363(b)(2)(B) based on the applicable maximum rate of basic pay, excluding any locality payment or special rate supplement; and

b. provide an additional adjustment in the retained rate reflecting the full increase in the locality payment (as effected under section 1914 of the Act) that would apply to the employee but for receipt of a retained rate.

2. The adjustment described in paragraph 1(a) is computed by multiplying 50 percent times the dollar increase in the applicable GS step 10 base rate (excluding any locality payment or special rate supplement) for the employee’s grade.

50% x (new GS step 10 base rate – old GS step 10 base rate) = Adjustment A

3. The adjustment described in paragraph 1(b) is computed by—

a. Subtracting the previous payable locality pay percentage from the new payable locality pay percentage to derive the difference in percentage points;

(new locality pay % – old locality pay %) = locality pay difference

b. Multiplying the result from paragraph 3(a) by the old GS step 10 base rate (excluding any locality payment or special rate supplement) for the employee’s grade;

(locality pay difference) x (old GS step 10 base rate)

c. Multiplying the new locality pay percentage times the difference between the new GS step 10 base rate and the old GS step 10 base rate;

(new locality pay %) x (new GS step 10 base rate – old GS step 10 base rate)

d. Adding the results of paragraphs 3(b) and 3(c).

[(new locality pay % – old locality pay %) x (old GS step 10 base rate)]

+ [(new locality pay %) x (new GS step 10 base rate – old GS step 10 base rate)]

= Adjustment B

e. Add the results of paragraphs 2 and 3 to derive the total adjustment (increase) in the retained rate.

Adjustment A + Adjustment B = total increase in retained rate

Notes:

• Follow normally applicable rounding rules at each stage. Round pay rates and rate adjustments to the nearest whole dollar.

• The Executive Schedule level IV cap on retained rates under 5 CFR 536.306(a) does not apply to a retained rate adjusted under this special authority.

• If the locality rate for a GS step 10 employee at the same grade as the retained rate employee is capped at EX-IV (or EX-IV plus 5 percent for certain former NSPS employees), contact OPM for special instructions on computing the retained rate adjustment.

Example:

GS-11 employee with retained rate. Stationed in Fairbanks, Alaska. Position not in a special rate category.

Immediately before the January 2010 pay increase (i.e., 2009 rates):

Retained rate = $70,843

GS-11, step 10 base rate = $64,403

Locality pay = 0%

COLA = 23%

COLA-adjusted retained rate = $87,137 ($70,843 x 1.23)

January 2010 changes:

Locality pay = 4.72%

COLA = 19.03%

General increase = 1.5%

GS-11, step 10 base rate = $65,371

GS-11, step 10 locality rate = $68,457 ($65,371 x 1.0472)

January 2010 retained rate adjustment (under retroactively applied rules in this attachment):

Adjustment A = 50% x (new GS step 10 base rate – old GS step 10 base rate)

Adjustment A = 50% x ($65,371 – $64,403)

= 50% x $968

= $484

Adjustment B = [(new locality pay % – old locality pay %) x (old GS step 10 base rate)]

+ [(new locality pay %) x (new GS step 10 base rate – old GS step 10 base rate)]

Adjustment B = [(4.72% – 0%) x $64,403] + [4.72% x ($65,371 – $64,403)]

= $3,040 + $46

= $3,086

Adjustment A + Adjustment B = total increase in retained rate

$484 + $3,086 = $3,570 = total increase in retained rate

Note: The normal increase in a retained rate would be $2,027, which is ($68,457 – $64,403) x 50%.

New retained rate = $70,843 + $3,570 = $74,413

(which still exceeds the GS-11/10 locality rate of $68,457)

COLA-adjusted retained rate = $74,413 x 1.1903 = $88,574

January 2011 changes:

Locality pay = 16.46%

COLA = 10.56%

General increase = 0%

GS-11, step 10 base rate = $65,371

GS-11, step 10 locality rate = $76,131 ($65,371 x 1.1646)

January 2011 retained rate adjustment (under rules in this attachment):

Adjustment A = 50% x (new GS step 10 base rate – old GS step 10 base rate)

Adjustment A = 50% x ($65,371 – $65,371)

= 50% x $0

= $0

Adjustment B = [(new locality pay % – old locality pay %) x (old GS step 10 base rate)]

+ [(new locality pay %) x (new GS step 10 base rate – old GS step 10 base rate)]

Adjustment B = [(16.46% – 4.72%) x $65,371] + [16.46% x ($65,371 – $65,371)]

= $7,675 + $0

= $7,675

Adjustment A + Adjustment B = total increase in retained rate

$0 + $7,675 = $7,675 = total increase in retained rate

Note: The normal increase in a retained rate would be $3,837, which is ($76,131 – $68,457) x 50%.

New retained rate = $74,413 + $7,675 = $82,088

(which still exceeds the GS-11/10 locality rate of $76,131)

COLA-adjusted retained rate = $82,088 x 1.1056 = $90,756

Summary:

Employee stationed in Fairbanks, Alaska.

2009 2010 2011

Locality pay 0% 4.72% 16.46%

COLA 23% 19.03% 10.56%

GS-11/10 base rate $64,403 $65,371 $65,371

GS-11/10 locality rate na $68,457 $76,131

Retained rate $70,843 $74,413 $82,088

COLA-adj retained rate $87,137 $88,574 $90,756

Note: See CPM 2010-20 for table showing 2011 locality rates and COLA rates for all COLA areas.

 

Section 147 of the Continuing Appropriations Act, 2011 (Pub. L. 111-242), as amended by section 1(a) of the Continuing Appropriations and Surface Transportation Extensions Act, 2011 (Pub. L. 111-322, December 22, 2010) (the FY 2011 Act), provides that notwithstanding any other provision of law, no statutory pay adjustment which (but for this subsection) would otherwise take effect during the period beginning on January 1, 2011, and ending on December 31, 2012, will be made. Under this section, no statutory pay adjustment will be made under section 5343(a) of title 5, United States Code, or similar authority.

The Consolidated Appropriations Act, 2010 (Public Law 111-117, December 16, 2009) (the FY 2010 Act), contained two provisions that continue to affect the determination of pay adjustments for certain prevailing rate (wage) employees in FY 2011. The FY 2011 Act extends into FY 2011 the pay limitation provision of section 710 of the FY 2010 Act and the floor pay adjustment provision under section 744.

This means that, as extended, section 710 provides that pay increases for certain prevailing rate employees in FY 2011 may not exceed 0 percent—the sum of the January 2011 General Schedule (GS) across-the-board percentage adjustment and the difference between the overall average percentage locality payments for GS employees in FY 2010 and FY 2011. Section 744 provides that, notwithstanding section 710, pay adjustments for certain prevailing rate employees in FY 2011 may not be less than the January 2011 pay adjustments received by GS employees where they work. Since GS employees are not entitled to an increase in pay in January 2011, the adjustment under section 744 is equal to 0 percent. Section 710 applies to wage employees covered by 5 U.S.C. 5342(a)(2) or 5348. Section 744 applies to wage employees covered by 5 U.S.C. 5344 or 5348. Sections 710 and 744 do not apply to wage employees who negotiate their pay under section 9(b) of Public Law 92-392.

In previous years, lead agencies have established wage rates for affected prevailing rate employees for FY 2011 by determining the maximum rates applicable under the pay limitation provisions of section 710, determining the minimum pay increase applicable under section 744, and then applying the higher of the rates to affected prevailing rate wage schedules. In some wage areas, wage schedule adjustments under the minimum increase provisions of section 744 have been higher than under the maximum increase provisions of section 710. In addition, as a result of section 744, certain prevailing rate wage areas will continue to have more than one wage schedule in effect during FY 2011.

The FY 2011 Act establishes a narrow exception allowing locality pay increases for certain employees in nonforeign areas (including Alaska and Hawaii) covered by the Non-Foreign Area Retirement Equity Assurance Act of 2009 (NAREAA), under which employees receive locality pay increases to offset reductions in cost-of-living allowances. Prevailing rate employees at duty stations in the nonforeign areas are covered by the pay freeze and are not eligible to receive locality adjustments that apply to those employees who are covered by the NAREAA.

Changes in Minimum Wage Levels

Any adjustment of a wage schedule rate for prevailing rate employees otherwise required by OPM regulations pursuant to a change in an applicable State or local minimum wage rate is prohibited by the FY 2011 Act.

Obtaining Wage Schedules

Prevailing rate wage schedules will continue to be distributed by lead agencies through normal agency distribution channels. In addition, Federal Wage System wage schedules are accessible via the Internet through the Wage and Salary Division of the Department of Defense Civilian Personnel Management Service (Internet address http://www.cpms.osd.mil/wage).

For further information, please contact OPM’s Pay Systems, Pay and Leave, at (202) 606-2838 or by email at pay-performance-policy@opm.gov.


On July 28, 2010, the U.S. Office of Personnel Management (OPM) announced in a memorandum for Chief Human Capital Officers the 2010 annual review of special rates authorized under 5 U.S.C. 5305 and 5 CFR part 530, subpart C. As explained in that memorandum, OPM conducts an annual review of special rates to determine the amount by which special rate schedules should be adjusted at the time of the annual General Schedule (GS) pay adjustment that would take effect under 5 U.S.C 5303. Based on the results of an annual review, special rate tables can be discontinued, decreased, or increased. Except for special rates covering employees in nonforeign areas, special rates will not be increased in January 2011 for the reasons discussed in this memorandum.

Results of 2010 Annual Review

We have completed the 2010 annual review of special rates. In conducting the annual review, we relied on the reviews agencies conducted in response to our July 28, 2010, memorandum. In the memorandum, we asked agencies to respond if they wished to request 1) an adjustment in special rates greater or less than the January 2011 GS annual pay adjustment under 5 U.S.C. 5303 or 2) the reduction or termination of a special rate schedule. As of October 8, 2010, the deadline for agency responses—

o No agency had asked for an adjustment different from the January 2011 GS annual pay adjustment, and

o No special rate table needed to be terminated based on agency requests for termination of coverage.

January 2011 Special Rates

Except for special rate tables applicable in nonforeign areas, special rate schedules under 5 U.S.C. 5305 will not be increased in January 2011 because—

o Section 147 of the Continuing Appropriations Act, 2011 (Pub. L. 111-242), as amended by section 1(a) of the Continuing Appropriations and Surface Transportation Extensions Act, 2011 (Pub. L. 111-322, December 22, 2010), freezes statutory pay adjustments for most Federal civilian employees in 2011 and 2012, including adjustments to GS pay rates under 5 U.S.C. 5303.

o President Obama provided that agencies should suspend increases to pay schedules and forgo general increases in 2011 and 2012 with respect to rates that are set by administrative discretion, such as special rates established and adjusted by the Director of OPM, in a memorandum issued on December 22, 2010.

In addition, based on the President’s memorandum, OPM will not exercise its discretionary authority under 5 U.S.C. 5305 to increase existing special rates or approve new special rates between January 1, 2011, and December 31, 2012, except in extraordinary circumstances. However, agencies may request special rates be discontinued or reduced based on staffing considerations.

Special Rates in Nonforeign Areas

The title 5 special rate tables listed in Attachment 1 are applicable in nonforeign areas. Employees who are paid from these pay tables are affected by subtitle B of title XIX of the National Defense Authorization Act (NDAA) for Fiscal Year 2010 (Public Law 111-84, October 28, 2009), the Non-Foreign Area Retirement Equity Assurance Act of 2009 (NAREAA). The NAREAA provides—

o A 3-year phase-in of locality pay under 5 U.S.C. 5304 for employees in nonforeign areas identified in 5 CFR 591.205, and

o During the locality pay phase-in period, a minimum increase in special rates linked to the increase in locality pay.

Section 147(e) of the pay freeze legislation provides for continued application of the NAREAA to employees in nonforeign areas. As part of the continuing implementation of the NAREAA, effective with the first pay period in January 2011, GS non-special rate employees in the nonforeign areas will receive two-thirds of the applicable locality pay rate for their locality pay area, along with a corresponding reduction in their cost-of-living allowance. The two-thirds payable locality pay rates are 16.46 percent in Alaska, 11.01 percent in Hawaii, and 9.44 percent in other nonforeign areas (as identified in 5 CFR 591.205(b)(3)-(16)) that are part of the "Rest of U.S." locality pay area.

OPM is computing the special rates for employees in nonforeign areas by adding an additional increase at each grade and step equal to the dollar increase in locality pay for a non-special rate employee at the same grade and step. (These additional increases or supplements are shown in Attachment 2.)

Terminated Special Rates

Special rates are terminated based on OPM’s annual review of special rates when—

o Covered agencies report to OPM that the special rates are no longer necessary, or

o All covered employees are entitled to higher GS locality rates of pay.

Since 1) no special rate table had all covered agencies request discontinuation of coverage and 2) no 2011 special pay rate will be exceeded by the 2011 GS locality pay rate at the same grade and step, no special rates will be terminated as a result of the 2010 annual review of special rates. (The pay freeze legislation prohibits adjustments to locality payments under 5 U.S.C. 5304 so the 2011 locality rates will remain at 2010 levels, except those that apply in nonforeign areas.)

Capped Special Rates

Under 5 U.S.C. 5305(a)(1), the maximum special rate is the rate payable for level IV of the Executive Schedule ($155,500 in 2011). As a result, some GS-15 special pay rates for 2011 are capped. Capped special rate tables are listed in Attachment 3. (The pay freeze legislation prohibits adjustments to the Executive Schedule under 5 U.S.C. 5318 so the 2011 Executive Schedule rates will remain at 2010 levels.)

Special Rate Coverage in 2011

In January 2011, 254 special rate tables will be posted on the OPM website at http://apps.opm.gov/SpecialRates/index.html. These special rate tables will cover approximately 39,800 employees.