Locality Pay

Implemented in January 1994, the Federal Employees Pay Comparability Act of 1990 (FEPCA) established locality pay for General Schedule (GS) employees. FEPCA provides for pay adjustments based on survey comparisons with non-Federal rates on a locality basis to narrow the pay gap between Federal and non-Federal salaries and to make Federal pay more responsive to local labor market conditions.

Locality adjustments are paid within each area determined to have a Federal - non-Federal pay disparity greater than 5%. There currently are 32 locality pay areas, including a Rest of U.S. area. It applies to GS employees in the continental United States (CONUS) only. It does not cover employees overseas.

Employees entitled to a higher rate of basic pay than the locality rate for their area receive the higher rate. For example, special salary rates may apply to occupations for which the Army has a difficult time recruiting candidates and retaining employees, and the Government pays these employees a higher rate than is paid to other GS employees at their grade and step.

Locality pay is considered in applying various pay-setting rules (including maximum payable rate, promotion, transfer, and pay retention) and in computing hiring and retention incentives and rating-based awards expressed as a percentage of pay.

Content last reviewed: 5/30/2006-RJM

Return to: PERMISS Homepage | Employee Benefits Information & Advice

This page was last revised: 12/5/2011