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LOCALITY PAY AREAS

BASIS FOR LOCALITY PAY AREA DEFINITIONS

The law does not specify detailed requirements for defining General Schedule (GS) locality pay areas. In implementing the locality pay program in 1994, the Federal Salary Council considered how to define locality pay areas. After developing many alternatives, the Council recommended that the existing Metropolitan Statistical Areas (MSAs) established by the Office of Management and Budget (OMB) were suitable as the basis for defining locality pay areas. The President's Pay Agent accepted the Council's recommendation and directed the U.S. Office of Personnel Management (OPM) to define locality pay areas on the basis of OMB's definitions of metropolitan areas. Since then, the Council and Pay Agent have continued to use OMB-defined metropolitan areas as the basis for locality pay area definitions. The OMB-defined metropolitan areas now include Combined Statistical Areas (CSAs) as well as MSAs.

33 AREAS AND “REST OF U.S”

Locality pay is set by comparing GS and non-Federal pay in each locality pay area, based on salary surveys conducted by the Bureau of Labor Statistics (BLS). BLS is unable to survey all the many areas where Federal employees work, and we currently have 33 separate metropolitan locality pay areas. All other employees in the contiguous 48 States are included in the "Rest of U.S." (RUS) locality pay area. BLS conducts a number of small-scale surveys in the RUS area and combines the results for setting the RUS locality pay rate.

AREAS OF APPLICATION

In its efforts to recommend appropriate locality pay area boundaries, the Federal Salary Council was mindful that some locations in the large RUS locality pay area would be adjacent to metropolitan areas that are the basis for higher-paying locality pay areas, and that in some cases it might make sense to include such RUS locations in the higher-paying locality pay area. Over time, the Council recommended and the Pay Agent approved criteria for evaluating such locations in a consistent and equitable fashion. These locations are called “areas of application.” The current criteria for establishing areas of application are:

• For adjacent MSAs and CSAs: To be included in an adjacent locality pay area, an adjacent MSA or CSA currently in the RUS locality pay area must have at least 1,500 GS employees and an employment interchange measure of at least 7.5 percent.
• For adjacent counties that are not part of a multi-county MSA or CSA: To be included in an adjacent locality pay area, an adjacent county that is currently in the RUS locality pay area must have at least 400 GS employees and an employment interchange measure of at least 7.5 percent.
• For Federal facilities that cross locality pay area boundaries: To be included in an adjacent locality pay area, the whole facility must have at least 500 GS employees, with the majority of those employees in the higher-paying locality pay area, or that portion of a Federal facility outside of a higher-paying locality pay area must have at least 750 GS employees, the duty stations of the majority of those employees must be within 10 miles of the separate locality pay area, and a significant number of those employees must commute to work from the higher-paying locality pay area.

PROPOSING CHANGES

Individuals and groups interested in proposing changes to current GS locality pay area boundaries may contact the Federal Salary Council—

• By email at Pay-Leave-Policy@opm.gov or
• By writing to the Council at
  ATTN: Federal Salary Council
  U.S. Office of Personnel Management
  1900 E Street, NW., Room 7H31
  Washington, DC 20415-8200

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