UPDATE ON JANUARY 2004 PAY ADJUSTMENTS

Consolidated Appropriations Act, 2004

On January 23, 2004, the President signed the Consolidated Appropriations Act, 2004, into law (Public Law 108-199). The Act provides a 4.1 percent overall average pay increase for most white-collar civilian Federal employees, which becomes effective on the first day of the first applicable pay period beginning on after January 1, 2004 (January 11, 2004, for most employees). However, new salary tables cannot be issued until the President signs an Executive order allocating this pay adjustment between an across-the-board pay increase and locality pay increases.

General Schedule

The President is authorized to determine how the retroactive 4.1 percent overall average pay increase will be allocated between an across-the-board General Schedule (GS) pay increase and increases in GS locality payments. The President's decision in this regard will be reflected in an Executive order implementing the retroactive pay adjustment.

Special Salary Rates

If the President's Executive order provides for a retroactive increase in the GS scheduled rates of basic pay, the 2004 special rate schedules will be updated to reflect any such increase, and the updated special rate schedules will be retroactive to the first day of the first applicable pay period beginning on or after January 1, 2004 (January 11, 2004, for most special rate employees). Once the Executive order has been signed, the retroactive special salary rate tables will be posted on the OPM Web site at http://apps.opm.gov/ssr/tables/index.cfm. Because a special rate employee receives the greater of the applicable special rate or the locality rate for his or her grade and step, agencies must compare each employee's special rate with the applicable locality pay rate to ensure he is she is paid from the appropriate pay schedule.

Federal Wage System

Under the Consolidated Appropriations Act, 2004, blue-collar Federal employees are entitled to receive pay adjustments in FY 2004 at least equal to the pay adjustments received by GS employees in the same location. The issuance of certain wage schedules will be delayed until OPM issues guidance to agencies on implementing this change in law. Delayed FY 2004 wage schedules will be retroactive to their normal effective dates. FY 2003 wage schedules are available on the Department of Defense Web site at http://www.cpms.osd.mil/wage.

Senior Executive Service

Section 1125 of the National Defense Authorization Act for Fiscal Year 2004 (Public Law 108-136, November 24, 2003) established a new performance-based pay system for the Senior Executive Service (SES), which became effective on the first day of the first applicable pay period beginning on or after January 1, 2004 (January 11, 2004, for most SES members). The new SES pay range has a minimum rate of basic pay equal to 120 percent of the rate for GS-15, step 1, and a maximum rate of basic pay equal to the rate for level III of the Executive Schedule. However, for any agency certified under 5 U.S.C. 5307(d) as having a performance appraisal system which, as designed and applied, makes meaningful distinctions based on relative performance, the maximum rate of basic pay is the rate for level II of the Executive Schedule. On January 9, 2004, OPM issued interim regulations and guidance to implement the new SES pay system. (See CPM-2004-03.)

The minimum rate of the SES pay range will be adjusted retroactively if the GS scheduled rates of basic pay are adjusted by the Executive order implementing the retroactive pay adjustment. The maximum rate of the SES pay range will be adjusted retroactively if the Executive Schedule is adjusted by the Executive order. No SES member will be entitled to an automatic pay increase as the result of any increase in the maximum rate of the SES pay range. The rules governing discretionary SES pay increases that may be authorized in this situation are found in the interim SES pay regulations at 5 CFR 534.406(c)(2).

Administrative Law Judges

Within certain limits specified by law, the President is authorized to determine the amount of any annual across-the-board pay increase for administrative law judges (ALJs). The President's decision in this regard will be reflected in the Executive order implementing the retroactive pay adjustment, and any such increases will be retroactive to the first day of the first applicable pay period beginning on or after January 1, 2004 (January 11, 2004, for most ALJs).

Senior-Level and Scientific or Professional Positions

The minimum rate of the pay range for employees in senior-level and scientific or professional (SL/ST) positions will be adjusted retroactively if the GS scheduled rates of basic pay are adjusted by the Executive order implementing the retroactive pay adjustment. The maximum rate of the SL/ST pay range, which is set by law at the rate for level IV of the Executive Schedule, will be adjusted retroactively if the Executive Schedule is adjusted by the Executive order.

Extension of Locality Payments to Other Employees

In December 2003, the President's Pay Agent (the Secretary of Labor and the Directors of the Office of Management and Budget and OPM) extended locality payments to ALJs, employees in SL/ST positions, and certain other non-GS categories of employees again in 2004. Any retroactive locality pay increase for GS employees will apply to all categories of employees who receive locality payments. (Note: SES members no longer receive locality payments.)

Executive Schedule

The amount of any retroactive pay increase for Executive Schedule officials will depend on the manner in which the President exercises his discretionary authority to allocate the retroactive overall average 4.1 percent pay increase between an across-the-board GS pay increase and increases in GS locality payments. The Executive order to implement the retroactive pay adjustment will reflect any retroactive pay increase authorized for Executive Schedule officials.

Under legislation that became effective on November 24, 2003 (section 1124 of Public Law 108-136), the effective date of any retroactive pay adjustment authorized for heads of agencies paid under the Executive Schedule will be the first day of the first applicable biweekly pay period beginning on or after January 1, 2004 (January 11, 2004, in most cases).