The Federal Employees Pay Comparability Act of 1990 (FEPCA) established a locality pay system for General Schedule (GS) employees which was implemented in January 1994. It provides for pay adjustments based on survey comparisons with non-Federal rates on a locality basis. Its goal was to narrow the pay gap between Federal and non-Federal salaries over a nine-year period and is payable within each locality determined to have a pay disparity greater than 5 percent.
Locality pay applies to GS employees in the continental United States (CONUS). It does not cover overseas GS employees. Employees entitled to a higher rate of pay than the locality pay rate for their area receive the higher rate.
Adjusting GS salaries on the basis of a comparison with non-Federal rates of pay is not a new idea. However, adjusting them based on a comparison with non-Federal rates on a locality basis, as opposed to a national basis, is new. The intent of the legislation was to make Federal pay more responsive to local labor market conditions.
Since the amount of locality pay will depend on the geographic area where employees work, the amount of locality pay may change if employees change duty locations. Every GS employee is in a pay area, either one of the metropolitan areas or the "Rest of United States (RUS)" pay area.
Pay areas include:
Rest of United States (does not include Alaska, Hawaii, or territories or possessions)