The debate over compensation and benefits for public employees of the Federal Administration has taken a new turn following the recent introduction of two legislative bills that could alter the remuneration of millions of workers. The measures, introduced by Senator Bill Cassidy (Republican from Louisiana), are presented by him as a response to what he considers abuses in the telework system and locality pay adjustments. However, the consequences would go far beyond addressing the fraud their proponents claim and would affect the majority of public employees, including those who meet their requirements.
The context of the proposals: why now?
In recent years, telework has become a normalized decision-making practice within the federal government itself. However, a report by the Government Accountability Office (GAO) revealed that, as of early 2023, 17 of the 24 federal agencies analyzed were using 25% or less of their central office space. This data was highlighted by Senator Joni Ernst (Republican from Iowa), who argued that the underutilization of office spaces indicates not only inefficiency but also potential inequities in locality pay for teleworkers.
What do the laws propose?
- Federal Employees Return to Work Act (S. 4834): This law seeks to limit locality pay adjustments for employees who telework at least one day a week. According to the bill, these workers would receive the national U.S. pay rate, even if they are based in high-cost-of-living cities like Washington, D.C., or San Francisco.
- Federal Employees Local Accountability for Retirement Act (S. 4833): This initiative aims to exclude locality adjustments in the pension calculations under the Federal Employees Retirement System (FERS). Currently, pensions are calculated based on the average of the highest three years of salaries, which include locality pay adjustments. Removing this adjustment could lead to substantial reductions in retirees’ annuities.
Senator Cassidy’s perspective
“Telework should not be an excuse for inflated salaries,” Cassidy stated. According to the senator, these laws aim to ensure that compensation aligns with employees’ actual work realities. “If they don’t physically work in expensive cities, they shouldn’t receive extra pay justified solely by their office locations,” he added.
The implications of locality pay
Since 2015, the number of federal government locality pay areas has increased from 34 to 58, a 71% rise that has enabled a larger number of employees to benefit from locality pay adjustments based on cost of living. According to data from the Office of Personnel Management (OPM), by 2023, 68.7% of federal employees benefited from locality pay adjustments, representing 1.5 million workers reliant on this form of salary adjustment.
Ralph Smith, an analyst for FedSmith, noted that locality pay adjustments can amount to thousands of additional dollars annually for employees in areas like San Jose, California, and Washington, D.C. Over an eight-year period, salary increases in these locations were over 4% higher compared to the rest of the country.
Identified cases of abuse
Supporters of these laws point to specific examples of system abuse. An investigation by the Architect of the Capitol found that 80% of the employees studied had incorrect workplace location records and were receiving inflated salaries. Additionally, a Department of Commerce report revealed that one in four employees had moved to lower-cost-of-living areas without updating their workplace locations, maintaining higher salaries.
These issues are compounded by a lack of administrative controls. According to the Inspector General’s report, some employees took up to a year to correct their records, resulting in overpayments totaling $42,985 in certain cases. Agencies, in turn, face difficulties recovering these payments due to deficient processes.
Impact on the Federal Workforce
Although the laws aim to address abuse, their effects could be widespread. Workers who telework from authorized locations or who plan their retirement based on the current system would be the most affected. Essentially, these measures could penalize the majority of employees for the errors of a minority.
For instance, a teleworker who legitimately resides in a high-cost area but does not work daily in their office could see their monthly income reduced, impacting their quality of life. Similarly, retirees who have planned their finances around locality pay adjustments in their pensions could face unexpected reductions in their income. Is it fair to sacrifice the benefits of the majority to correct the abuses of a few? That is the central question Congress must address when evaluating these laws.
