Pay & Benefits

State and local minimum pay ruled out for feds

Increases to the minimum wage in individual states and localities will not be legally binding on federal government employees, the Office of Personnel Management told federal human resource directors Nov. 27, making it possible for such employees to earn less per hour than their home state allows.

The federal minimum wage is set at $7.25 per hour, but many states have raised that minimum much higher, often in an effort to gradually reach a $15-per-hour minimum. Washington, D.C., for example, has the current highest minimum wage at $14 per hour.

But pay for federal employees is set by the Fair Labor Standards Act, which makes those systems a federal law that takes precedent over state and local regulations.

“State and local government minimum wage laws are not binding on the federal government and its component agencies since, under the preemption doctrine which originates from the Supremacy Clause of the Constitution, federal law supersedes conflicting state law. This is the case when federal employee pay rates are specifically fixed under federal law and when federal agencies are given discretion in setting rates of pay under federal law,” OPM Associate Director for Employee Services Mark Reinhold wrote in the Nov. 27 memo.

“In the case of a federal employee pay system such as the GS pay system in which pay rates are fixed by statute, a statutory change would be needed to allow payment of a state or local minimum wage. There is no administrative authority under which OPM could allow state or local minimum wages to supersede GS statutory rates.”

Federal employees on the GS scale already automatically make above the federal minimum wage, as the base rate for a GS-1, step 1 employee is $9.13 per hour, but that amount does not exceed the minimum for some states.

According to OPM employment data, the federal government currently employs fewer than 1,000 GS-1 workers, most of whom are at the Departments of Agriculture and Transportation.

But employees as high as GS-5 may fall under the $15-per-hour target minimum wage for many states, if they are on a low step of that scale.

For employees not on the GS scale, the employing agency may have the discretion to set pay above the local minimum wage as part of policy or a collective bargaining agreement, but that choice is not classified as compliance with the individual minimum wage laws, but rather a policy choice made by the agency.

Employees working under the Federal Wage System also receive salaries above their local minimum wage as part of an administration policy decision.

“Under this regulation, the highest state or local minimum wage in effect in the local wage area is applied in setting wage schedule rates unless there is a higher FLSA minimum wage under federal law,” Reinhold wrote.

“In other words, if there are multiple state or local minimum wages in effect in different jurisdictions encompassed within the same local wage area, the highest minimum wage will be used in setting wage schedule rates for the entire local wage area, if that minimum wage rate exceeds the FLSA minimum wage rate.“

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