Office of Civilian Human Resources

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 a two-part annual pay adjustment for General Schedule workers: an across-the-board pay adjustment and a locality pay adjustment that varies by pay locality. FEPCA also provides 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 35 locality pay areas, including Rest of U.S. area, Alaska, Hawaii, and other Nonforeign Areas Defined in 5 CFR Part 591. Employees entitled to a higher rate of basic pay than the locality rate for their area receive the higher rate (e.g., employees receiving a special salary rate higher than the locality rate of pay).
  • 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 as well as retirement and benefits.