Two recently introduced bills could represent pay cuts for most federal employees. This legislation, introduced by Senator Bill Cassidy (R-Louisiana), targets telework and local wages for workers.
The two bills that would reduce federal employees’ pay
The first of the two bills that would reduce pay is the “Federal Employees Return to Work Act.” This regulation would exclude certain workers who perform their work activities from home at least one day a week from raises. It also would not allow them to receive higher local pay because of their office location in a high-cost-of-living area despite working from home. Also, such employees would receive local pay area rate pay from the rest of the workforce under the General Schedule.
On the other hand, there is the “Federal Employees Local Responsibility for Retirement Act”. This would exclude locality pay in calculating retirement pensions for these workers enrolled in the Federal Employees Retirement System (FERS). This is a measure that would have the net effect of reducing federal retirement annuities because the locality payment is included in the calculation of the 3 highest tiers.
Recall that an employee’s basic annuity in this sector is calculated based on their seniority and their highest three years of average salary. This includes locality pay for three consecutive years of Federal service. Therefore, if locality pay were excluded from the calculation, it could have a significant impact on monthly annuity payments received during retirement.
Cassidy’s statements on these initiatives
Bill Cassidy said in a statement that federal employees are paid more for working in higher cost cities. In that regard, he questioned, “What if they don’t show up for work, why should they be charged?” To him, if they don’t show up for work, they shouldn’t be paid the same for telecommuting. That’s why he launched these bills to balance things out and thus lower the pay of federal employees.
The Republican cited a Government Accountability Office (GAO) report, which found that 17 of 24 federal agencies reviewed by the GAO were using 25% or less of their core building capacity by early 2023. This document indicated that each of the agencies were using less than 50% of their available office space. The State Department had the highest occupancy rate at 49%, while the lowest was the Social Security Administration (SSA) and the Department of Housing and Urban Development, both at 7%.
Telework and local wage abuse
Sen. Joni Ernst, R-Iowa, who released this report on which the two bills in question are based, highlighted other problems stemming from telework by federal employees. For example, she discussed a labor agreement the Defense Health Agency made with a union representing 38,000 workers in Washington D.C . That agreement contained no requirement to verify whether those individuals were working at their appropriate locations despite being on permanent telework.
Indeed, he was concerned that there was nothing to prevent these federal employees from living in an area with a lower local pay rate and receiving a higher wage. He assumed that they work in a different local pay area with a higher rate.
Other research, which led Cassidy to introduce these two bills, said that 80% of the 28 remote federal employees identified in one study had the wrong work location and received a higher local pay rate than the rest.
