General Schedule Locality Pay Areas

AGENCY:

U.S. Office of Personnel Management.

ACTION:

Interim rule with request for comments.

SUMMARY:

On behalf of the President's Pay Agent, the U.S. Office of Personnel Management is issuing interim regulations on the locality pay program for General Schedule employees. The interim regulations establish separate locality pay areas for the States of Alaska and Hawaii and extend coverage of the Rest of U.S. locality pay area to include American Samoa, the Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana Islands, the Territory of Guam, the U.S. Virgin Islands, and all other U.S. possessions listed in 5 CFR 591.205, applicable on the first day of the first pay period beginning on or after January 1, 2011.

DATES:

Effective Date: The regulations are effective November 1, 2010.

Applicability Date: The regulations apply on the first day of the first pay period beginning on or after January 1, 2011.

Comment Date: We must receive comments on or before November 29, 2010.

ADDRESSES:

Send or deliver comments to Jerome D. Mikowicz, Deputy Associate Director for Pay and Leave, Office of Personnel Management, Room 7H31, 1900 E Street, NW., Washington, DC 20415-8200; FAX: (202) 606-4264; or e-mail: pay-performance-policy@opm.gov.

FOR FURTHER INFORMATION CONTACT:

Allan Hearne, (202) 606-2838; FAX: (202) 606-4264; e-mail: pay-performance-policy@opm.gov.

SUPPLEMENTARY INFORMATION:

Section 5304 of title 5, United States Code, authorizes locality pay for General Schedule (GS) employees with duty stations in the United States and its territories and possessions. The Non-Foreign Area Retirement Equity Assurance Act of 2009 (NAREA), Public Law 111-84, title XIX, subtitle B (October 28, 2009), extended locality pay to the States of Alaska and Hawaii and the U.S. territories and possessions effective in January 2010. While the statute included a sense of Congress that one locality pay area cover the entire State of Alaska and one cover the entire State of Hawaii, it did not actually establish any new locality pay areas.

Section 5304(f) of title 5, United States Code, authorizes the President's Pay Agent (the Secretary of Labor, the Director of the Office of Management and Budget, and the Director of the Office of Personnel Management) to determine locality pay areas. The boundaries of locality pay areas must be based on appropriate factors, which may include local labor market patterns, commuting patterns, and the practices of other employers. The Pay Agent must give thorough consideration to the views and recommendations of the Federal Salary Council (Council), a body composed of experts in the fields of labor relations and pay policy and representatives of Federal employee organizations. The President appoints the members of the Council, which submits annual recommendations to the Pay Agent about the locality pay program.

The Federal Salary Council has been unable to meet to consider what locality pay areas should be established for the States of Alaska and Hawaii and the U.S. territories and possessions. Since establishing locality pay areas by regulation takes a substantial amount of time, we are publishing this interim rule now, even though the Council has not yet met, to insure these new locality pay areas are established in time for the January 2011 pay adjustments. We are hopeful the Council will be able to meet during the comment period for these regulations to formulate and submit recommendations.

In the absence of Council recommendations, the Pay Agent has concluded that separate locality pay areas should be established for the States of Alaska and Hawaii. We have non-Federal salary survey data collected under the National Compensation Survey (NCS) that can be used to set and adjust locality pay rates for these locations. This is the same survey source currently used in the other locality pay areas. In fact, the Council's recommendation letter of November 4, 2009, included a pay disparity for Alaska (based on a survey of Anchorage) of 54.98 percent and a pay disparity for Hawaii (based on a survey of Honolulu) of 38.41 percent. These measures were generated using the methodology adopted by the Council and the Pay Agent and salary surveys conducted by the Bureau of Labor Statistics (BLS) and both are well above the Rest of U.S. locality pay area pay disparity of 27.81 percent included in our 2009 annual report to the President. Establishing single pay areas for all of Alaska and all of Hawaii also coincides with a sense of Congress provision that these locations each be covered by a single separate locality pay area. Since it is not feasible for BLS to conduct salary surveys using the current survey methods at current budget levels in additional locations in Alaska, Hawaii, or the U.S. territories and possessions, the Pay Agent concludes Alaska and Hawaii should become whole-State locality pay areas and the other locations should be part of the Rest of U.S. (RUS) locality pay area. This decision may be revisited if the Federal Salary Council makes a different recommendation when it next convenes.

Impact and Implementation

This rule will affect rates of pay for about 44,100 civilian white-collar employees in the States of Alaska and Hawaii, the Commonwealths of Puerto Rico and the Northern Mariana Islands, Guam, the U.S. Virgin Islands, and other U.S. possessions. Under the rule, approved locality pay rates would likely be higher than in the RUS locality pay area for employees in Alaska and Hawaii. Federal civilian white-collar employees in the U.S. territories and possessions will be covered by the RUS locality pay rate.

Waiver of Notice of Proposed Rulemaking

Pursuant to 5 U.S.C. 553(b)(3)(B), I find that good cause exists for waiving the general notice of proposed rulemaking. Notice is being waived to comply with the intent of Congress that employees affected by the NAREA in Alaska and Hawaii have separate locality pay areas established for January 2011 pay adjustments. In addition, notice is being waived to ensure that employees in the U.S. territories and possessions who are affected by the NAREA are included in the RUS locality pay area in time for the January 2011 pay adjustments. I find that provision of the general notice of proposed regulations is both impracticable and unnecessary in this instance because Congress has indicated its intent that these changes be effected in time for the January 2011 pay adjustments, and because the process of promulgating proposed and final rules to establish these changes would introduce unnecessary delay resulting in effecting these changes beyond the date on which the January 2011 pay adjustments take effect. In addition, since the latest available data indicates that, for Alaska and Hawaii, the locality pay rates will be higher than that for the RUS locality pay area, the process of promulgating proposed and final rules would be contrary to the public interest in that it would cause unnecessary delay in applying the higher locality pay rates in these areas in time for the January 2011 pay adjustments.

E.O. 12866, Regulatory Review

The Office of Management and Budget has reviewed this rule in accordance with E.O. 12866.

Paperwork Reduction Act

This document does not contain proposed information collection requirements subject to the Paperwork Reduction Act of 1995, Public Law 104-13.

Regulatory Flexibility Act

I certify that these regulations will not have a significant economic impact on a substantial number of small entities because they will apply only to Federal agencies and employees.

List of Subjects in 5 CFR Part 531

• Government employees
• Law enforcement officers
• Wages

Accordingly, OPM amends 5 CFR part 531 as follows:

PART 531—PAY UNDER THE GENERAL SCHEDULE

1. The authority citation for part 531 continues to read as follows:

Authority: 5 U.S.C. 5115, 5307, and 5338; sec. 4 of Pub. L. 103-89, 107 Stat. 981; and E.O. 12748, 56 FR 4521, 3 CFR, 1991 Comp., p. 316; Subpart B also issued under 5 U.S.C. 5303(g), 5305, 5333, 5334(a) and (b), and 7701(b)(2); Subpart D also issued under 5 U.S.C. 5335 and 7701(b)(2); Subpart E also issued under 5 U.S.C. 5336; Subpart F also issued under 5 U.S.C. 5304 and 5305; E.O. 12883, 58 FR 63281, 3 CFR, 1993 Comp., p. 682; and E.O. 13106, 63 FR 68151, 3 CFR, 1998 Comp., p. 224.

Subpart F—Locality-Based Comparability Payments

2. In § 531.603, paragraph (b) is revised to read as follows: