The Federal Employees Pay Comparability Act of 1990 (FEPCA) replaced the nationwide General Schedule (GS) with a method for setting pay for white-collar employees that uses a combination of across-the-board and locality pay adjustments. The policy for setting General Schedule pay contained in 5 U.S.C. 5301 is that—
(1) there be equal pay for substantially equal work within each local pay area;
(2) within each local pay area, pay distinctions be maintained in keeping with work and performance distinctions;
(3) Federal pay rates be comparable with non-Federal pay rates for the same levels of work within the same local pay area; and
(4) any existing pay disparities between Federal and non-Federal employees should be completely eliminated.
The across-the-board pay adjustment provides the same percentage increase to the statutory pay systems (as defined in 5 U.S.C. 5302(1)) in all locations. This adjustment is linked to changes in the wage and salary component, private industry workers, of the Employment Cost Index (ECI), minus 0.5 percentage points. Locality-based comparability payments for GS employees, which are in addition to the across-the-board increase, are mandated for each locality having a pay disparity between Federal and non-Federal pay of greater than 5 percent.
As part of the annual locality pay adjustment process, the Pay Agent prepares and submits a report to the President which—
(1) compares rates of pay under the General Schedule with rates of pay for non-Federal workers for the same levels of work within each locality pay area, based on surveys conducted by the Bureau of Labor Statistics;
(2) identifies each locality in which a pay disparity exists and specifies the size of each pay disparity;
(3) recommends appropriate comparability payments; and
(4) includes the views and recommendations of the Federal Salary Council (FSC), individual members of the FSC, and employee organizations.
The President's Pay Agent consists of the Secretary of Labor and the Directors of the Office of Management and Budget (OMB) and the Office of Personnel Management (OPM). This report fulfills the Agent's responsibility under 5 U.S.C. 5304(d), as amended. It recommends locality pay adjustments for 2008 if such adjustments were made under 5 U.S.C. 5304.