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Regulation and Compliance > Federal Regulation

Federal Employee Pay Freeze Expanded, but Leaves Gaps

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President Obama’s two-year pay freeze for federal employees, now law, applies not just to those on the General Schedule (GS) pay scale, but following his signature last week of an executive order, also to federal agency employees whose pay is set under the Administratively Determined (AD) pay scale, which is not legislated by Congress but instead ruled by those agencies to which it applies. Among those agencies is the Securities and Exchange Commission (SEC).

According to the Washington Post, AD government employees make up about 30% of the two million people who are federal employees. They are also among some of the more highly paid positions; the AD pay scale allows more leeway in setting salaries as a way for the federal government to compete with the private sector. In addition to the SEC’s staff, other staffers included in this group are public health doctors and nurses, medical personnel in the Veterans Affairs system, administrative law judges and attorneys and auditors.

Another more highly paid group subject to the freeze is the Senior Executive Service (SES); its small number of members are managers who exceed the top of the GS scale, and their pay is usually performance based.

Active-duty military personnel are exempt from the freeze.

Although the pay freeze stops cost-of-living allowances (COLA) for two years, it does not, according to the Federal Times, affect normal step increases or bonuses for those in the system. The 1.4 million federal employees on the GS scale are still eligible for increases of 2.6% to 3.3% that will automatically take place and by law kick in every one, two or three years, depending on an employee's time in grade. Some wage grade employees will also get step increases, and employees who receive promotions will also receive increases. Also, senior employees who do not receive increases may still receive bonuses for good performance.

The freeze also does not have any effect on employees of government contractors, because they are hired by private companies and not the government.

There is also some doubt about whether the pay freeze will halt pay increases for such staff as federal air traffic controllers, whose pay is set by collective bargaining.

The president issued a Dec. 22 executive order that specifies which groups are included in the freeze. According to the Federal Daily, the president also issued a memorandum that directed agency heads to freeze any non-statutory pay adjustments made through “administrative discretion.”


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