OPM Issues Memo on Impact of State, Local Minimum Wage Hikes for Federal Employees
Given decisions by state and local governments to increase the minimum wage above the federal minimum wage, the Office of Personal Management (OPM) has issued a memo to human resource (HR) departments clarifying how to handle competing wage minimums. The memo reminds HR departments that the federal minimum wage standards supersede state and local hikes.
OPM Associate Director of Employee Services, Mark Reinhold, explains in the memo published last Wednesday that OPM has received inquiries regarding the applicability of minimum wages established by state and local government to federal employees working in impacted locations, hence the necessity of the guidance.
Reinhold explains that federal employees are covered by the Fair Labor Standards Act (FLSA). Under this law and OPM’s FLSA minimum wage regulation 5 CFR 551.301, the federal minimum wage is $7.25 (except in American Samoa, where it is $5.21). The FLSA outlines exceptions to this minimum wage as well.
When determining the applicability of state and local minimum wage laws, the memo explains, “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 (e.g., GS employees) and when Federal agencies are given discretion in setting rates of pay under Federal law.”
The memo continues to explain that in the case of federal employee pay systems such as the GS pay system, pay is determined by statute. Thus, a statutory change would be necessary to allow payment to match a state or local minimum wage.
In the case of an employee pay system by which the employing federal agency has discretion in setting rates of pay, the agency may choose to apply state and local minimum wages to employees as a matter of agency policy or through a collective bargaining agreement. However, the memo explains that employees should know that they are not actually covered by the state or local minimum wage, just by agency policy which happens to match those laws.
Reinhold also notes that the lowest hourly GS rate (GS-1, step 1) is currently paid at $9.13 and the lowest hourly locality rate in the U.S. is currently $10.56. This means GS employees generally are already paid in excess of the FLSA minimum requirements.
Currently, 29 states and D.C. have a minimum wage higher than the federal minimum wage.
