Overseas Comparability Pay

NEW: In April 2015, Deputy Secretary of State for Management and Resources Heather Higginbottom stated at a Senate Foreign Relations Committee hearing that the Department considers full implementation of OCP a clear priority. In April, former Secretary of State George P. Shultz and 24 retired Ambassadors signed a letter to Senate leaders expressing support for OCP.

Overseas Comparability Pay.  OCP is designed to correct an anomaly in the existing law and place all federal employees posted abroad on an equal footing in terms of salary with those serving in Washington, D.C.

Locality Pay is a pay adjustment intended to raise base salaries of federal employees nearer to the level of salaries paid in the private sector for comparable work in specific labor markets.  It is not a cost-of-living adjustment or incentive payAll federal employees serving in the continental United States receive some level of locality pay based on figures compiled by the CBO. Thirty-one localities have specific levels of comparability payments, ranging from 14.68% for Indianapolis to 35.15% for San Francisco.  All other localities within the continental United States receive a “rest of U.S.” rate of 14.16%.  None of these rates, including the rest of U.S. rate, apply to any locality overseas.

The Federal Pay Comparability Act of 1990 inadvertently excluded some federal employees posted outside the continental United States from receiving locality pay adjustments.  As a result, the majority of Foreign Service personnel, who spend about 60 percent of their careers posted abroad, receive less salary during that time and less of a career total than their Civil Service department or agency colleagues who perform the same or similar functions exclusively within the United States.

Civil Service Employees on Temporary Duty (TDY) overseas do retain the locality pay designated for their place of domestic assignment. Locality pay in such cases is not permanent, even though TDY assignments can run as long as a year or longer, with waivers. Federal employees in that status can also receive differential and cost of living adjustments for the post of assignment and in some cases per diem, as well.  Civil Service employees on long-term or permanent assignment overseas, however, do not receive locality pay.

Post differentials and allowances are not equivalent to OCP.  Most cost-of-living allowances and other differentials, such as hardship and danger pay, were created prior to the Federal Pay Comparability Act of 1990.  At that time, Foreign Service base pay was tied to rank, and remained whether one was assigned to Washington or overseas.  Differentials and allowances are temporary and tied to the place of assignment.  By contrast, Overseas Comparability Pay (OCP) is part of base pay and is not related to specific post of assignment, working conditions or cost of living, but is designed to partially close the gap between public and private employee salaries for comparable level work.