OPM Rule Looks to Make Strides Toward Public Sector Pay Equity

The U.S. Office of Personnel Management (OPM) has issued a final regulation that the agency hopes will mark another stride toward pay equity in the federal workforce.

Under the just-released rule, federal agencies are prohibited from considering applicants’ non-federal salary history when setting pay for federal employees in the General Schedule, Prevailing Rate, Administrative Appeals Judge, Administrative Law Judge, Senior Executive Service, and senior-level and scientific or professional pay systems.

According to an OPM statement, the federal gender pay gap is “far smaller” than the national gender pay gap, which remains around 17%. Meanwhile, the gender pay gap among the federal government’s civilian workforce sat at 5.6% in 2022, marking a 3% decrease from 2021, according to OPM, which notes that the federal workforce gender pay gap has shrunk by roughly 20% since 1992.

With the final regulation in place, federal agencies are no longer permitted to set pay based on non-federal salary history of new hires joining the federal government for the first time, or for those who are returning after a break in federal service, according to OPM.

When setting pay, agencies are also prohibited from considering the salary that a candidate received as part of a competing job offer. And, federal government agencies are now required to adopt policies regarding setting pay based on previous federal salaries for employees with previous civilian service experience in the federal government.

Noting that relying on new hires’ salary history to determine current compensation “can exacerbate pay disparities for any worker who has faced discrimination in the labor market, allowing pay disparities to follow a worker from job to job.”

This final rule seeks to help close such pay gaps, and to help the federal government “attract and retain a qualified, effective workforce drawn from the full diversity of America,” according to OPM, which notes that 21 states currently have laws or executive orders addressing employers’ use of salary history in hiring decisions, including directives that forbid relying on job applicants’ salary history in setting pay.

“The federal government has been, and continues to be, a national leader in pay equity,” said OPM Director Kiran Ahuja, in a statement. “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.”