A new OPM regulation prohibits civilian agencies from using non-federal salary histories to determine employee compensation. Witthaya Prasongsin / Getty Images
OPM: Federal salaries won't be tied to private sector pay histories
Agencies can’t use non-federal salaries to help set pay for new or returning federal employees, under a new rule from the Office of Personnel Management.
The Office of Personnel Management issued a final rule Monday limiting the criteria on which federal agencies can set salaries for new or returning federal civilian employees.
Under the regulation, agencies may not use non-federal salary histories when establishing pay for employees in General Schedule, prevailing rate, Administrative Appeals Judge, Administrative Law Judge, Senior Executive Service and senior-level and scientific or professional pay systems.
The new regulation follows efforts by the Biden administration to address pay inequity and promote equal pay, starting with the June 2021 executive order that tasked OPM with prohibiting an applicant’s salary history when setting pay for federal employees. That was followed by a March 2022 executive order that teased the proposed rule from OPM.
Monday’s regulation notes that “salary history is not necessarily a good indicator of worker value, experience and expertise, and it also may contain or exacerbate biases,” and contribute to the pay gap between men and women in the workspace.
OPM Director Kiran Ahuja said in a statement that the new regulation will help federal agencies better ensure fair compensation for their employees, as salary histories may vary widely, depending on the employee.
“The federal government has been, and continues to be, a national leader in pay equity,” she said. “Relying on a candidate’s previous salary history can exacerbate preexisting inequality and disproportionally impact women and workers of color. With this regulation, the Biden-Harris administration sets a new standard and demonstrates to the nation that we mean business when it comes to equality, fairness and attracting the best talent.”
OPM officials said in a statement that the gender pay gap for the federal government’s civilian workforce in 2022 was 5.6%, which was down from 24.5% in 1992.
The rule also prohibits agencies from considering an applicant’s competing job offer when setting pay levels. For former federal employees returning to the public sector, agencies will put in place policies that will set pay based on their previous federal salary.
Agencies may still apply pay adjustments above the minimum rate of the applicable rate range for pay systems named in the regulation, but those adjustments must be based on factors like pay levels of employees with similar qualifications or position levels.
OPM debuted the rule in May 2023, ultimately receiving 63 submissions representing 512 commenters that it considered before drafting its final rule.
Agencies will have to be in compliance with the rule by Oct. 1