General Schedule Locality Pay Areas

AGENCY:

U.S. Office of Personnel Management.

ACTION:

Proposed rule with request for comments.

SUMMARY:

The U.S. Office of Personnel Management is issuing proposed regulations on behalf of the President's Pay Agent to link the definitions of General Schedule (GS) locality pay area boundaries to updated metropolitan area definitions established by the Office of Management and Budget in February 2013. Under this proposal, locations that would otherwise move to a lower-paying locality pay area due to use of the updated metropolitan area definitions in the locality pay program would remain in their current locality pay area. This proposal does not modify the current commuting and GS employment criteria used in the locality pay program to evaluate, for possible inclusion in a locality pay area, locations adjacent to the metropolitan area comprising the basic locality pay area. However, regarding calculation of commuting interchange rates used to evaluate such locations, the locality pay area definitions proposed in this document reflect use of the commuting patterns data collected as part of the American Community Survey between 2006 and 2010, as recommended by the Federal Salary Council in January 2014.

Under this proposal, 13 new locality pay areas would also be established. The Federal Salary Council recommended these 13 locality pay areas after reviewing pay levels in all “Rest of U.S.” metropolitan statistical areas and combined statistical areas with 2,500 or more GS employees. The Federal Salary Council found that the percentage difference between GS and non-Federal pay levels for the same levels of work—i.e., the pay disparity—in these 13 locations was substantially greater than the “Rest of U.S.” pay disparity over an extended period. The President's Pay Agent has agreed to issue proposed regulations in response to the Federal Salary Council's recommendation to establish the 13 new locality pay areas. Locality pay rates for the new locality pay areas would be set by the President after the new locality pay areas would be established by regulation.

DATES:

We must receive comments on or before July 1, 2015.

ADDRESSES:

You may submit comments, identified by “RIN 3206-AM88,” by any of the following methods:

Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments.

Email: pay-leave-policy@opm.gov. Include “RIN 3206-AM88” in the subject line of the message.

Fax: (202) 606-0824.

Mail: Brenda L. Roberts, Deputy Associate Director for Pay and Leave, Office of Personnel Management, Room 7H31, 1900 E Street NW., Washington, DC 20415-8200.

FOR FURTHER INFORMATION CONTACT:

Joe Ratcliffe, (202) 606-2838; fax: (202) 606-0824; email: pay-leave-policy@opm.gov.

SUPPLEMENTARY INFORMATION:

Section 5304 of title 5, United States Code (U.S.C.), authorizes locality pay for General Schedule (GS) employees with duty stations in the United States and its territories and possessions. Section 5304(f) of title 5 U.S.C. authorizes the President's Pay Agent (the Secretary of Labor, the Director of the Office of Management and Budget (OMB), and the Director of the Office of Personnel Management (OPM)) 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, 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 Federal Salary Council, which submits annual recommendations to the Pay Agent on the locality pay program. The establishment or modification of locality pay area boundaries must conform with the notice and comment provisions of the Administrative Procedure Act (5 U.S.C. 553).

This proposal provides notice and invites comment on proposed regulations to implement the Pay Agent's plan to link locality pay area definitions to OMB-defined metropolitan areas, to use new commuting patterns data for evaluating locations adjacent to the metropolitan area comprising the basic locality pay area, and to establish 13 new locality pay areas. (Annual Pay Agent reports on locality pay can be found posted on the OPM Web site at http://www.opm.gov/policy-data-oversight/pay-leave/pay-systems/general-schedule/#url=Pay-Agent-Reports. The Pay Agent announced its plan to propose regulations linking locality pay area boundaries to OMB-defined metropolitan areas and using new commuting patterns data in its June 2014 report on locality pay. The Pay Agent announced its plan to establish 12 of the 13 new locality pay areas in its May 2013 report on locality pay. The Federal Salary Council, in its November 2014 recommendations, recommended establishing Kansas City, MO-KS, as a new locality pay area. Because the Federal Salary Council used the same selection criteria as used for the 12 new locality pay areas the Pay Agent tentatively approved, the Pay Agent proposes establishing Kansas City, MO-KS as a new locality pay area.)

Linking Locality Pay Area Boundaries to OMB-Defined Metropolitan Areas

OMB-defined metropolitan areas have been the basis of locality pay area boundaries since locality pay was implemented in 1994. OMB periodically updates its definitions of metropolitan areas, and regulations defining locality pay areas normally allow any minor changes in OMB-defined metropolitan areas to be reflected in locality pay area definitions automatically. However, because we anticipated significant changes to metropolitan area definitions in 2013, in January 2013, we revised the regulations defining locality pay areas so that updates based on OMB's redefinitions would not automatically be reflected in locality pay area definitions. (See Federal Register Vol. 78, No. 16, page 5115, January 24, 2013, and the current definitions of “CSA” and “MSA” in 5 CFR 531.602.) That action provided time for the Federal Salary Council and the Pay Agent to review the updated metropolitan area definitions for suitability for use in the locality pay program. As a result, locality pay area definitions were frozen and are currently based on December 2009 OMB-defined metropolitan areas.

In February 2013, OMB issued new metropolitan area definitions, and in its January 2014 recommendations to the Pay Agent, the Federal Salary Council recommended that the Pay Agent use the February 2013 metropolitan area definitions in the locality pay program. The Pay Agent, in its June 2014 report to the President on locality pay, tentatively approved that recommendation, pending the issuance of revised locality pay regulations. This proposed rule would implement the change by revising the definitions of “CSA” and “MSA” in 5 CFR 531.602, to link the definitions of locality pay areas to the February 2013 OMB-defined metropolitan areas, and by updating the locality pay area definitions in 5 CFR 531.603 accordingly. The proposed revisions to the definitions of “CSA” and “MSA” in 5 CFR 531.602 would provide that any OMB additions to the CSAs and MSAs comprising basic locality pay areas would be reflected in locality pay area definitions automatically. The proposed rule also implements the Pay Agent's plan to retain, in their current locality pay area, any locations that would otherwise move to a lower-paying locality pay area as a result of linking locality pay area definitions to the February 2013 OMB-defined metropolitan areas, as recommended by the Federal Salary Council. Under this proposed rule, any such retained area would no longer be part of the basic locality pay area due to use of the February 2013 OMB-defined metropolitan areas and would be treated as an area of application.

OMB-defined metropolitan areas are called Core-Based Statistical Areas (CBSAs) and are grouped into three categories: Micropolitan Statistical Areas, where the largest included urban area has a population of 10,000 to 49,999; Metropolitan Statistical Areas (MSAs), where the largest included urban area has a population of 50,000 or more; and Combined Statistical Areas (CSAs), which are composed of two or more adjacent CBSAs with an employment interchange measure of at least 15 percent. (The employment interchange measure is the sum of the percentage of workers living in the smaller entity who work in the larger entity and the percentage of employment in the smaller entity that is accounted for by workers who reside in the larger entity.) CBSA definitions used for the locality pay program under this proposal are contained in OMB Bulletin 13-01 of February 28, 2013, and are available at http://www.whitehouse.gov/sites/default/files/omb/bulletins/2013/b-13-01.pdf.

Criteria for Areas of Application

As explained in the June 2014 Pay Agent report, locality pay areas consist of 1) the main metropolitan area comprising the basic locality pay area and, where criteria recommended by the Federal Salary Council and approved by the Pay Agent are met, 2) areas of application. Areas of application are locations that are adjacent to the basic locality pay area and meet approved criteria for inclusion in the locality pay area.

Current criteria for evaluating locations adjacent to a basic locality pay area for possible inclusion in the locality pay area as areas of application are as follows: For adjacent CSAs and adjacent multi-county MSAs the criteria are 1,500 or more GS employees and a commuting interchange rate of at least 7.5 percent. For adjacent single counties, the criteria are 400 or more GS employees and a commuting interchange rate of at least 7.5 percent. The commuting interchange rate is defined as the sum of the percentage of employed residents of the area under consideration who work in the basic locality pay area and the percentage of the employment in the area under consideration that is accounted for by workers who reside in the basic locality pay area.

The locality pay program also has criteria for evaluating Federal facilities that cross county lines into a separate locality pay area. 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.

New Commuting Patterns Data

As stated in the June 2014 Pay Agent report, new commuting patterns data were collected as part of the American Community Survey from 2006 to 2010, and the Federal Salary Council recommended, in its January 2014 recommendations, using those data for evaluating potential areas of application. The Pay Agent tentatively agreed in its June 2014 report that it would be appropriate to use the new commuting patterns data for evaluating potential areas of application, and the areas of application included in the locality pay area definitions in this proposed rule, at 5 CFR 531.603(b), reflect use of the new commuting patterns data for that purpose.

Locations Almost or Completely Surrounded by Higher-Paying Locality Pay Areas

In its November 2012 recommendations, the Federal Salary Council noted that, if its recommendations for changing pay area boundaries were adopted, some areas currently in the “Rest of U.S.” locality pay area and not meeting the criteria for areas of application would be almost or completely surrounded by higher-paying locality pay areas. The Federal Salary Council recommended that completely surrounded locations be added to the locality pay area with which the surrounded location has the highest level of commuting to and from the basic locality pay area. For locations almost but not completely surrounded by higher-paying locality pay areas, the Federal Salary Council recommended that the Pay Agent evaluate, on a case-by-case basis, any locations almost but not completely surrounded by separate pay areas. The Federal Salary Council reiterated those recommendations in its January 2014 recommendations.

Without criteria to address locations completely surrounded by higher-paying locality pay areas, this proposal's changes to locality pay area boundaries would leave Kent County, MD, and Lancaster County, PA, in the “Rest of U.S.” locality pay area, and both counties could also be completely surrounded by higher-paying locality pay areas. The Pay Agent believes that single-county locations completely surrounded by higher-paying locality pay areas should be included in the locality pay area with the highest commuting interchange rate between the surrounded county and the basic locality pay area. Accordingly, this proposed rule would amend the locality pay area definitions at 5 CFR 531.603(b) to include Kent County, MD, in the Washington-Baltimore-Arlington, DC-MD-VA-WV-PA locality pay area and Lancaster County, PA, in the Harrisburg-York-Lebanon, PA, locality pay area.

The issue of how to address “Rest of U.S.” locations that are almost but not completely surrounded by higher-paying locality pay areas requires careful consideration. The Pay Agent's preliminary view is that partially surrounded locations warranting some action would most likely be single “Rest of U.S.” counties—not multi-county metropolitan areas or large groups of counties—that are bordered by multiple higher-paying locality pay areas or are surrounded by water and isolated as “Rest of U.S.” locations within a reasonable commuting distance of a higher-paying locality pay area. The Pay Agent believes any such “Rest of U.S.” locations considered for inclusion in a separate locality pay area should be evaluated with criteria designed to evaluate such locations. The Pay Agent invites public comment on this issue.

Effect of Changes to Locality Pay Area Boundaries

This proposal would amend 5 CFR 531.603(b) to add the following locations to existing locality pay areas:

Atlanta—Athens-Clarke County—Sandy Springs, GA

Clarke County, GA; Gordon County, GA; Jackson County, GA; Madison County, GA; Morgan County, GA; Oconee County, GA; and Oglethorpe County, GA.

Boston-Worcester-Providence, MA-RI-NH-CT-ME

Androscoggin County, ME; Cumberland County, ME; Sagadahoc County, ME; and all portions of York County, ME, that are currently in the “Rest of U.S.” locality pay area.

Chicago-Naperville, IL-IN-WI

Bureau County, IL; LaSalle County, IL; and Putnam County, IL.

Cincinnati-Wilmington-Maysville, OH-KY-IN

Mason County, KY, and Union County, IN.

Cleveland-Akron-Canton, OH

Carroll County, OH; Erie County, OH; Huron County, OH; Stark County, OH; and Tuscarawas County, OH.

Columbus-Marion-Zanesville, OH

Guernsey County, OH; Hocking County, OH; Logan County, OH; Muskingum County, OH; and Perry County, OH.

Dallas-Fort Worth, TX-OK

Bryan County, OK; Hopkins County, TX; and Navarro County, TX.

Dayton-Springfield-Sidney, OH

Shelby County, OH.

Houston-The Woodlands, TX

Trinity County, TX; Washington County, TX; and Wharton County, TX.

Huntsville-Decatur-Albertville, AL

Marshall County, AL.

Indianapolis-Carmel-Muncie, IN

Decatur County, IN; Delaware County, IN; and Jackson County, IN.

Los Angeles-Long Beach, CA

All portions of Kern County, CA, currently included in the “Rest of U.S.” locality pay area.

Miami-Fort Lauderdale-Port St. Lucie, FL

Indian River County, FL; Martin County, FL; Okeechobee County, FL; and St. Lucie County, FL.

Milwaukee-Racine-Waukesha, WI

Dodge County, WI; Jefferson County, WI; and Walworth County, WI.

Minneapolis-St. Paul, MN-WI

Le Sueur County, MN; Mille Lacs County, MN; and Sibley County, MN.

New York-Newark, NY-NJ-CT-PA

Carbon County, PA; Lehigh County, PA; and Northampton County, PA.

Pittsburgh-New Castle-Weirton, PA-OH-WV

Jefferson County, OH; Indiana County, PA; Brooke County, WV; and Hancock County, WV.

Portland-Vancouver-Salem, OR-WA

Benton County, OR; Linn County, OR; and Cowlitz County, WA.

Raleigh-Durham-Chapel Hill, NC

Lee County, NC; Robeson County, NC; Scotland County, NC; Vance County, NC; and all portions of Granville County, NC, currently included in the “Rest of U.S.” locality pay area.

Seattle-Tacoma, WA

Lewis County, WA.

Washington-Baltimore-Arlington, DC-MD-VA-WV-PA

Dorchester County, MD; Kent County, MD; Talbot County, MD; Franklin County, PA; and Rappahannock County, VA.

Establishing 13 New Locality Pay Areas

Locality pay is set by comparing GS and non-Federal pay rates for the same levels of work in each locality pay area. Non-Federal salary survey data used to set locality pay rates are collected by the Bureau of Labor Statistics (BLS). Over the last several years, BLS has developed a method that permits Occupational Employment Statistics (OES) data to be used for locality pay. OES data are available for all MSAs and CSAs in the country and permit evaluation of salary levels in many more locations than could be covered under the prior National Compensation Survey alone.

The Federal Salary Council reviewed pay comparisons of GS and non-Federal pay in all “Rest of U.S.” MSAs and CSAs with 2,500 or more GS employees as of June 2011. Based on its review, the Federal Salary Council recommended new locality pay areas be established for 12 metropolitan areas with pay gaps averaging more than 10 percentage points above that for the “Rest of U.S.” locality pay area over an extended period. The Federal Salary Council's recommendations are posted on the OPM Web site at http://www.opm.gov/policy-data-oversight/pay-leave/pay-systems/general-schedule/federal-salary-council/recommendation12.pdf. In its November 2014 recommendations, using the same selection methodology, the Federal Salary Council recommended that Kansas City, MO-KS, also be established as a separate locality pay area.

The President's Pay Agent has agreed to issue proposed regulations in response to the Federal Salary Council's recommendation to establish 13 new locality pay areas and proposes to modify 5 CFR 531.603(b) to add the new locality pay areas. The 13 new locality pay areas proposed are Albany-Schenectady, NY; Albuquerque-Santa Fe-Las Vegas, NM; Austin-Round Rock, TX; Charlotte-Concord, NC-SC; Colorado Springs, CO; Davenport-Moline, IA-IL; Harrisburg-York-Lebanon, PA; Laredo, TX; Kansas City-Overland Park-Kansas City, MO-KS; Las Vegas-Henderson, NV-AZ; Palm Bay-Melbourne-Titusville, FL; St. Louis-St. Charles-Farmington, MO-IL; and Tucson-Nogales, AZ. Locality pay rates for the 13 new locality pay areas would be set by the President at a later date after they would be established by regulation.

Adjacent Areas Qualifying as Areas of Application to New Locality Pay Areas

Applying the criteria explained above for evaluating locations adjacent to basic locality pay areas as areas of application, this proposed rule would add the following counties to the new locality pay areas at 5 CFR 531.603(b): Fremont County, CO, and Pueblo County, CO, to the Colorado Springs, CO, locality pay area; Lancaster County, PA, to the Harrisburg-York-Lebanon, PA, locality pay area; Jackson County, KS, Jefferson County, KS, Osage County, KS, Shawnee County, KS, and Wabaunsee County, KS to the Kansas City-Overland Park-Kansas City, MO-KS, locality pay area; and Cochise County, AZ, to the Tucson-Nogales, AZ, locality pay area.

Regarding the criteria explained above for evaluating Federal facilities that cross locality pay area boundaries, the Pay Agent is not aware of any Federal facilities that qualify for inclusion in the new locality pay areas under these criteria.

Impact and Implementation

Using February 2013 CBSA definitions as the basis for locality pay area boundaries and using updated commuting patterns data to evaluate potential areas of application would add a number of counties now covered by “Rest of U.S.” locality pay to higher-paying locality pay areas, which would impact about 6,300 GS employees.

The proposal to establish 13 new locality pay areas would impact about 102,000 GS employees. Implementing that proposal would not automatically change locality pay rates now applicable in those areas because locality pay percentages are established by Executive order under the President's authority in 5 U.S.C. 5304 or 5304a, and the President decides each year whether to increase locality pay percentages. When locality pay percentages are increased, past practice has been to allocate a percent of the total GS payroll for locality raises and to have the overall dollar cost for such pay raises be the same, regardless of the number of locality pay areas. If a percent of the total GS payroll is allocated for locality pay increases, the addition of new areas results in a smaller amount to allocate for locality pay increases in existing areas. Implementing higher locality pay rates in the 13 new locality pay areas could thus result in relatively lower pay increases for employees in existing locality pay areas than they would otherwise receive.

Executive Order 13563 and Executive Order 12866

OMB has reviewed this rule in accordance with E.O. 13563 and E.O. 12866.

Regulatory Flexibility Act

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

List of Subjects in 5 CFR Part 531

• Government employees
• Law enforcement officers
• Wages

Accordingly, OPM is proposing to amend 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, 5305, and 5941(a), 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 § 531.602, the definitions of CSA and MSA are revised to read as follows:

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