Issue Briefs

Following is a series of four memos OPM has issued explaining the impact of President Trump’s raise order.


January 2021 Pay Adjustments

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The President has signed an Executive order to implement the January 2021 pay adjustments. (See Attachment.) Pursuant to the President’s alternative plan issued under 5 U.S.C. 5303(b) and 5304a on February 10, 2020, the Executive order authorizes a 1.0 percent across-the-board increase for statutory pay systems and provides that locality percentages will remain at 2020 levels. This memorandum reviews relevant portions of the Executive order.

The pay adjustment guidance in this memorandum does not apply to senior political officials that have been covered by a pay freeze. We will issue separate guidance regarding whether this pay freeze will be continued or terminated.

New 2021 Salary Tables and Effective Date
We have posted the new 2021 salary tables on OPM’s website at https://www.opm.gov/policy-data-oversight/pay-leave/salaries-wages/. The 2021 pay schedules are effective the first day of the first applicable pay period beginning on or after January 1, 2021 (January 3, 2021, based on the standard biweekly payroll cycle).

The General Schedule and Other Statutory Pay Systems
The Executive order provides an across-the-board increase of 1.0 percent in the rates of basic pay for the statutory pay systems––the General Schedule (GS), the Foreign Service schedule, and certain schedules for the Veterans Health Administration of the U.S. Department of Veterans Affairs. Special base rates for law enforcement officers at GS grades 3 through 10 are also increased by 1.0 percent. (These law enforcement officers are assigned the “GL” pay plan code.)

Executive Schedule
Under 5 U.S.C. 5318, the official Executive Schedule (EX) rates of pay are increased by
1.0 percent (rounded to the nearest $100). The official EX salary table is available on OPM’s website at https://www.opm.gov/policy-data-oversight/pay-leave/salaries-wages/2021/executive-senior-level/. The official EX rates of pay are used in establishing pay limitations for employees and pay systems unaffected by any pay freeze for certain senior political officials.

Senior Executive Service
Under 5 U.S.C. 5382, the minimum rate of basic pay for the Senior Executive Service (SES) rate range is adjusted to be consistent with the increase in the minimum rate of basic pay for senior-level positions under 5 U.S.C. 5376 ($132,552 in 2021). The applicable maximum rate of basic pay for the SES is $199,300 (EX-II) for SES members covered by an SES performance appraisal system certified pursuant to 5 U.S.C. 5307(d) and $183,300 (EX-III) for SES members covered by an SES performance appraisal system that has not been certified. An SES member with a pay rate below the minimum rate of the new SES rate range must receive a pay increase effective January 3, 2021, that brings the SES member’s rate to at least the new minimum rate because an SES member may not receive less than the minimum rate of the SES rate range.

Other SES pay adjustments must generally be made based on individual performance, contribution to the agency’s performance, or both, as determined under a rigorous performance management system, pursuant to 5 U.S.C. 5382. An agency’s determination to adjust the rate of basic pay for an SES member that is approved by the end of the first pay period in January 2021 (January 16, 2021) may be made effective as of the first day of that first pay period (January 3, 2021). Determinations to adjust SES pay that are approved after January 16, 2021, will become effective at the beginning of the next pay period following the approval. OPM’s regulations for setting and adjusting SES pay are available at 5 CFR part 534, subpart D.

Senior-Level and Scientific and Professional Positions
The minimum rate of basic pay for the senior-level (SL) and scientific and professional (ST) rate range is increased by 1.0 percent, which is the amount of the base GS increase, and is $132,552 in 2021. An SL or ST employee with a pay rate below the minimum rate of the new SL/ST rate range must receive a pay increase effective January 3, 2021, that brings the employee’s rate to at least the new minimum rate because an SL or ST employee may not receive less than the minimum rate of the SL/ST rate range. The applicable maximum rate of basic pay is $199,300 (EX-II) for SL or ST employees covered by a certified SL/ST performance appraisal system and $183,300 (EX-III) for SL or ST employees covered by an SL/ST performance appraisal system that has not been certified.

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As provided in 5 U.S.C. 5376(b)(2) and 5 CFR 534.507(a)(1), effective at the beginning of the first applicable pay period commencing on or after the first day of the month in which an adjustment takes effect under 5 U.S.C. 5303 in the rates of basic pay under the General Schedule, the head of an agency must adjust an SL/ST employee’s rate of basic pay by an amount he or she considers appropriate (including a zero adjustment), subject to the regulations in 5 CFR 534.507, and the agency’s written procedures. Therefore, each agency must make an appropriate adjustment in each SL/ST employee’s rate of basic pay because the General Schedule is being adjusted the first day of the first pay period beginning on or after January 1, 2021. The adjustment of an SL/ST employee’s pay rate under 5 CFR 534.507(a)(1) must be made effective on the first day of the first pay period beginning on or after January 1, 2021 (January 3, 2021, based on the standard biweekly payroll cycle).

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 ($199,300 x 86.5 percent = $172,395 in 2021) that they are subject to certain post-employment restrictions in 18 U.S.C. 207(c)(2)(A)(ii). 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, an SL or ST employee, 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, as appropriate.) The sample notice is available at http://archive.opm.gov/oca/compmemo/2004/2004-01_attach1.asp.

Aggregate Limitation on Pay
The aggregate limitation on pay for calendar year 2021 is $221,400 (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 ($255,800 in 2021). (See 5 U.S.C. 5307 and 5 CFR part 530, subpart B.)

Administrative Law Judges
The Executive order reflects a decision by the President to increase the rates of basic pay for administrative law judges (ALJs) by 1.0 percent, rounded to the nearest $100. The rate of basic pay for AL-1 is $172,500 (equivalent to the rate for EX-IV). The rate of basic pay for AL-2 is $168,200. The rates of basic pay for AL-3/A through 3/F range from $115,100 to $159,400. The new ALJ salary table is available on OPM’s website at https://www.opm.gov/policy-data-oversight/pay-leave/salaries-wages/2021/executive-senior-level/.

Administrative Appeals Judges
Under 5 U.S.C. 5372b, the rates of basic pay for administrative appeals judge (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 established under 5 U.S.C. 5372. At 5 CFR 534.603, OPM’s regulations link the structure of the AAJ pay system directly to the structure 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 new AAJ salary table is available on OPM’s website at https://www.opm.gov/policy-data-oversight/pay-leave/salaries-wages/2021/executive-senior-level/.

Locality Pay Areas
On October 15, 2020, OPM published a final rule in the Federal Register on behalf of the President’s Pay Agent establishing a new Des Moines-Ames-West Des Moines, IA, locality pay area and to include Imperial County, CA, in the Los Angeles-Long Beach, CA, locality pay area as an area of application. The changes are applicable the first day of the first applicable pay period beginning on or after January 1, 2021 (January 3, 2021, based on the standard biweekly payroll cycle). The final rule can be found at https://www.federalregister.gov/documents/2020/10/15/2020-22320/general-schedule-locality-pay-areas. Locality pay area definitions are available at https://www.opm.gov/policy-data-oversight/pay-leave/salaries-wages/2021/locality-pay-area-definitions/.

Locality Payments
The Executive order reflects the amounts of the 2021 locality payments implemented by the President under his alternative pay plan authority. The applicable locality payments are unchanged from 2020 levels for 2021. The “Rest of U.S.” locality pay percentage, which will remain the same in 2021 as in 2020, will apply in 2021 for the new Des Moines-Ames-West Des Moines, IA, locality pay area. The Los Angeles-Long Beach, CA, locality pay percentage, which will remain the same in 2021 as in 2020, will apply in 2021 for Imperial County, CA. The 2021 locality pay tables for the General Schedule are available at https://www.opm.gov/policy-data-oversight/pay-leave/salaries-wages/2021/general-schedule/.

Locality Pay Extensions
On November 27, 2020, OPM issued a memorandum on behalf of the President’s Pay Agent (the Secretary of Labor and the Directors of the U.S. Office of Management and Budget and OPM) that continues GS locality payments for ALJs and certain other non-GS employee categories in 2021. The memo is available at https://www.opm.gov/policy-data-oversight/pay-leave/salaries-wages/2020/extension-of-locality-pay-memo-for-non-gs-employees-2021.pdf.

Cost-of-Living Allowance Rates for Nonforeign Areas
The cost-of-living allowances (COLAs) and locality percentages for employees in nonforeign areas will remain at 2020 levels in 2021. The locality and COLA rates in each COLA area are available at https://www.opm.gov/policy-data-oversight/pay-leave/pay-systems/nonforeign-areas/.

Special Rates
We are issuing a separate memorandum announcing the results of OPM’s annual review of special rates and the 2021 special rate adjustments.

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Prevailing Rate Pay Adjustments
We are issuing a separate memorandum on pay adjustments for certain prevailing rate (wage) employees.

2021 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 ($161,700 in 2021). 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.) We have posted the 2021 biweekly premium pay caps fact sheet on OPM’s website at https://www.opm.gov/policy-data-oversight/pay-leave/pay-administration/#url=Biweekly-Pay-Caps.

We will notify agencies separately about any reauthorization of the premium pay cap that may be applied to certain civilian employees working in certain overseas locations. See CPM 2020-06 for information regarding this authority for calendar year 2020.

Adjusting Retained Rates
Certain employees are entitled to retained rates above the applicable rate range under
5 U.S.C. 5363 and 5 CFR part 536. As provided in 5 U.S.C. 5363(b)(2)(B) and 5 CFR 536.305,when the maximum rate of the highest applicable rate range for an employee’s position of record is increased while the employee is receiving a retained rate, the employee is entitled to 50 percent of the amount of the increase in that maximum rate. An example of adjusting a retained rate in can be found in the fact sheet at https://www.opm.gov/policy-data-oversight/pay-leave/pay-administration/fact-sheets/January-2021-pay-examples.

Pay Administration
We have updated examples of pay computations to reflect the pay adjustment for GS employees:

Examples of January 2021 Pay Computations – See https://www.opm.gov/policy-data-oversight/pay-leave/pay-administration/fact-sheets/January-2021-pay-examples/.

How to Compute Rates of Pay  – See:
https://www.opm.gov/policy-data-oversight/pay-leave/pay-administration/fact-sheets/how-to-compute-rates-of-pay/.

How to Compute Fair Labor Standards Act Overtime Pay – See:
https://www.opm.gov/policy-data-oversight/pay-leave/pay-administration/fact-sheets/how-to-compute-flsa-overtime-pay/.

Fiscal Year 2021 Prevailing Rate Pay Adjustments
The Continuing Appropriations Act, 2021, contains provisions affecting the determination of pay adjustments for certain prevailing rate (wage) employees in Fiscal Year (FY) 2021. Section 737(a) provides that pay increases for certain prevailing rate employees in FY 2021 may not exceed 1 percent—the sum of the January 2021 General Schedule (GS) across-the-board percentage adjustment and the difference between the overall average percentage locality payments for GS employees in FY 2020 and FY 2021. Section 737(b) provides that, notwithstanding section 737(a), annual pay adjustments for certain prevailing rate employees in FY 2021 may not be less than the January 2021 pay adjustment received by GS employees where they work. Section 737(a) applies to wage employees covered by 5 U.S.C. 5342(a)(2) or 5348. Section 737(b) applies to wage employees covered by 5 U.S.C. 5344 or 5348. Section 737 does not apply to wage employees who negotiate their pay under section 9(b) of Public Law 92-392.

Lead agencies must establish wage rates for affected prevailing rate employees for FY 2021 by determining the maximum rates applicable under the pay limitation provisions of section 737(a), determining the minimum pay increase applicable under section 737(b), and then applying the higher of the rates to affected prevailing rate wage schedules. As a result of section 737(b), certain prevailing rate wage areas will continue to have more than one wage schedule in effect during FY 2021.

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Determining Rates under Section 737(a)
Section 737(a) provides that pay increases for wage employees in FY 2021 may not exceed 1 percent—the sum of the GS across-the-board percentage adjustment and the difference between the overall average percentage locality payments for GS employees in FY 2020 and FY 2021.

If any rate exceeds the rate payable on September 30, 2020, by more than 1 percent, or if any rate exceeds the rate payable on September 30, 2020, by more than 1 percent due to rounding, that rate must be reduced to the highest rate that does not exceed 1 percent. If the annual wage survey of private sector rates in a given wage area indicates an adjustment of less than 1 percent is warranted under section 737(a), the lower prevailing rate will be payable under section 737(a).

Wage schedules issued pursuant to a wage survey under the authority of 5 U.S.C. 5343 are subject to the limitation in section 737(a). The limitation also applies to wage schedules produced by reference to schedules adjusted pursuant to wage surveys and to wage schedules that have been temporarily set aside from certain provisions of the Federal Wage System (FWS) pending study by the Federal Prevailing Rate Advisory Committee. The adjustment of a wage rate required pursuant to a change in an applicable Federal, State, or local minimum wage rate is not subject to the limitation in section 737(a). Rates established as the result of an adjustment in an applicable minimum wage rate will be the basis for determining the limitation on subsequent adjustments indicated by an annual prevailing rate wage survey.

Determining Rates under Section 737(b)
Notwithstanding section 737(a), section 737(b) provides that adjustments in basic pay that take place in FY 2021 under 5 U.S.C. 5344 and 5348 may not be less than the percentage adjustments under 5 U.S.C. 5303 and 5304 received by GS employees in the same location in January 2021. The General Schedule was adjusted by 1 percent in January 2021, and this percentage amount serves as the increase amount for prevailing rate adjustments in FY 2021.

The geographic boundaries of appropriated and nonappropriated fund prevailing rate wage areas and of GS locality pay areas are not the same. Consequently, section 737(b) requires that certain prevailing rate wage areas continue to have more than one wage schedule in effect during FY 2021. Although a majority of prevailing rate wage areas coincide only with part of the Rest of U.S. (RUS) GS locality pay area, many prevailing rate wage areas coincide with parts of more than one GS locality pay area. In each situation where a prevailing rate wage area’s boundary coincides with a single GS locality pay area boundary, the lead agency for that wage area must establish one wage schedule applicable in the wage area. In each situation where a prevailing rate wage area coincides with part of more than one GS locality pay area, the lead agency for that wage area must continue to establish more than one prevailing rate wage schedule for that wage area.

Prevailing rate employees in overseas locations described in 5 U.S.C. 5343(a)(5) also must receive increases at least equal to the increase received by GS employees in the RUS GS locality pay area.
Prevailing rate adjustments under section 737(b) must be rounded upwards when necessary so that such adjustments are not less than the 1 percent GS adjustment for January 2021.

Effective Date of Retroactive Pay Adjustments
The wage rates on certain FY 2021 wage schedules are effective retroactively to the normal effective date prescribed on the wage schedule by the lead agency. This uniform date is fixed for all agencies using a wage schedule.

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 available from the Wage and Salary Branch of the Department of Defense’s Defense Civilian Personnel Advisory Service (https://www.dcpas.osd.mil/BWN/WageIndex).

Continued Pay Freeze for Certain Senior Political Officials
Section 748 of division E of the Consolidated Appropriations Act, 2021, contains a provision that continues the pay freeze on the payable pay rates for the Vice President and certain senior political appointees at the rates of pay and applicable limitations on payable rates of pay in effect on December 31, 2020, by operation of section 749 of division C of Public Law 116-93 (December 20, 2019). The section 748 pay freeze is scheduled to end on the last day of the last pay period that begins in calendar year 2021 (i.e., January 1, 2022, for those on the standard biweekly pay period cycle). Future Congressional action will determine whether the pay freeze continues beyond that date.

The pay freeze applies to the payable rates for covered senior political officials. The freeze does not affect the official rates for the Vice President and the Executive Schedule, which are adjusted under normally applicable law without regard to the pay freeze. While not payable to freeze-covered officials, those official rates continue to be used in establishing pay limitations for employees not covered by the pay freeze. In January 2021, the official rates for the Vice President and the Executive Schedule will be increased by 1.0 percent.

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The detailed guidance attached to this memorandum provides information on the employees covered by the pay freeze, the rates of pay affected, and exceptions to the pay freeze.

2020 Annual Review of Special Rates (Results)
The U.S. Office of Personnel Management (OPM) conducts an annual review of special rates established under 5 U.S.C. 5305 to determine the disposition of special rate schedules when General Schedule (GS) pay is adjusted under 5 U.S.C. 5303. Based on OPM’s annual review, special rate tables may be terminated, decreased, or increased. (See OPM’s September 17, 2020, data call memorandum (CPM 2020-13) for further information.)

Agencies were informed in the September 2020 data call memorandum that the default January 2021 adjustment for special rates would be equal to the January 2021 across-the-board adjustment for GS base rates. That memorandum also noted that the across-the-board adjustment for GS base rates would be 1.0 percent, as specified in the President’s alternative plan for January 2021 pay adjustments, which is posted at https://www.whitehouse.gov/briefings-statements/message-congress-2021-alternative-plan-pay-adjustments/.

Further, pursuant to OPM’s instructions, each agency conducted a review of its special rate schedules. No agency requested a January 2021 adjustment for special rates different from the default amount. Accordingly, based on the 2020 annual review of special rates, I have determined that the January 2021 adjustment for existing special rates will be 1.0 percent. The effective date for January 2021 pay adjustments is the first day of the first applicable pay period beginning after January 1, 2021 (January 3, 2021, based on the standard biweekly payroll cycle).

Please note that agencies having existing or likely staffing problems can submit special rate requests any time throughout a calendar year. Information on how agencies can make special rate requests is posted on the OPM website at https://apps.opm.gov/SpecialRates/srsrequest.aspx. Additional information regarding the 2020 annual review and January 2021 special rates is provided below.

Special Rates in Nonforeign Areas

For the 2020 Annual Review, we reminded agencies of the results of our analysis of special rates in nonforeign areas during the 2012 annual review, and that special rates in nonforeign areas would be reexamined yearly as part of our overall annual review of special rates. During the 2020 Annual Review, no agencies requested termination of special rates or a pay adjustment different from the base GS increase for positions in nonforeign areas. Accordingly, special rates in nonforeign areas will receive the 1.0-percent increase. Also, special rate tables currently receiving Nonforeign Area Retirement Equity Assurance Act of 2009 (NAREAA) additional adjustments will receive the NAREAA additional adjustments shown in Attachment 1.

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 (EX-IV), which is $172,500 in 2021. Some special rates for 2021 are capped at that EX-IV rate. Attachment 2 lists capped special rates by table, grade, and step.

Terminated Special Rates

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Special rates are terminated based on OPM’s annual review of special rates when covered agencies report to OPM that applicable special rates are no longer necessary or when GS locality rates of pay exceed special rates at the same grade and step due to increases in locality pay. (Under 5 U.S.C. 5305(h), an employee’s entitlement to a special rate ends if the employee is entitled to a higher rate of basic pay, such as a locality rate of pay under 5 U.S.C. 5304.) No agencies reported to OPM in response to the annual review that any special rate tables would no longer be necessary in 2021, and but for one exception discussed below no special rates authorized in 2020 will be exceeded by higher locality pay in January 2021.

On October 15, 2020, OPM published a final rule in the Federal Register on behalf of the President’s Pay Agent establishing a new Des Moines-Ames-West Des Moines, IA, locality pay area and including Imperial County, CA, in the Los Angeles-Long Beach, CA, locality pay area as an area of application. Establishment of the new Des Moines locality pay area will not impact special rate tables because none of the locations comprising that new locality pay area will have 2021 GS locality rates of pay exceeding applicable 2021 special rates at the same grade and step.

Including Imperial County, CA, in the Los Angeles locality pay area will affect Table 983P because among the locations that table covers is El Centro, CA, which is in Imperial County, CA. In 2021, applicable locality pay for that county will increase from “Rest of U.S.” locality pay to Los Angeles locality pay, and for El Centro applicable locality pay rates will exceed Table 983P pay rates at all grades and steps. Accordingly, El Centro will be removed from Table 983P and affected employees will receive the higher Los Angeles locality rate for their grade and step.

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