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REPORT TO CONGRESS

SALINAS-MONTEREY, CALIFORNIA, FEDERAL WAGE SYSTEM WAGE AREA

VII. Current Pay Flexibilities for Federal Wage System Employees

In almost all cases, the rates of pay provided by FWS wage schedules are sufficient to allow Federal activities to recruit and retain employees. Because the FWS is a prevailing rate system, it is very rare for FWS pay rates to be out of line with private sector rates to the extent that the Federal Government actually experiences recruitment or retention difficulties. In any case, recruitment or retention difficulties within a wage area are not among the criteria OPM considers when defining FWS wage area boundaries. Nevertheless, Federal agencies have considerable discretionary authority to provide additional direct compensation in certain circumstances to support their recruitment, relocation, and retention efforts. The following summarizes some of these compensation flexibilities as they apply to the FWS:

• Special qualifications appointments allow an agency to hire unusually well qualified candidates at higher than the first step of the appropriate grade level.
• The increased minimum hiring rate authority allows the lead agency to establish a step higher than the first step as the minimum step at which a new employee may be hired.
• The special rate authority allows an agency to request OPM approval to establish rates above the regular wage schedule for an occupation or group of occupations.
• The special schedule authority allows an agency to request OPM approval to establish a higher schedule of rates in a manner generally broader in scope than under the special rate authority.
• Recruitment and relocation bonuses allow an agency to pay up to 25 percent of basic pay to fill a position that would otherwise be difficult to fill.
• Retention allowances allow an agency to pay up to 25 percent of basic pay to an employee who would be likely to leave the Federal Government in the absence of a retention allowance.
• The unrestricted rate authority allows an agency to ask OPM to waive the annual statutory cap on FWS pay adjustments for an occupation or group of occupations in a wage area or a part of a wage area.

We believe these pay flexibilities are sufficient for Federal agencies to recruit and retain FWS employees. We strongly encourage Federal agencies to use the existing pay flexibilities to address any recruitment or retention problems that may exist within a local wage area.

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