Non-Foreign Area Federal Employees Subject to ‘Pattern’ of Pay Discrimination, Class Action Says

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A proposed class action claims Congress and the U.S. government have systematically issued lower pay raises and retirement benefits to federal employees and retirees in “non-foreign areas” in comparison to their counterparts in the contiguous 48 states.

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The 16-page lawsuit alleges the government has violated affected employees’ right to due process by creating an “equal pay gap” between U.S.-based workers and those employed in Alaska, Hawaii, and territories Guam and Puerto Rico. The suit alleges that the “federal pay discrimination” against non-foreign area workers and retirees “has become extreme” over the last few decades, not least because the cost of living in these regions is much higher than in the lower 48 United States.

“[Non-foreign area federal employees] are on the front lines of our nation’s defenses against foreign threats of all kinds,” the case stresses. “They deserve equal pay, not discounted pay.”

Since 1994, when non-foreign area employees were omitted from legislation that raised federal workers’ pay in the contiguous United States by 3.95 percent, the equal pay gap has continued to widen with every subsequent increase in U.S.-based pay rates, reaching a 16.55 percent disparity by 2009, the complaint states.

Non-foreign area employees have been limited to pay increases under the so-called “General Schedule” since 2009—pay increases which are “not enough to keep up with inflation, much less to reward increases in productivity,” the filing charges.

Per the lawsuit, the history of lower pay raises in non-foreign areas has also severely impacted the retirement benefits of former employees.

“Underpayment of retirement annuities, following upon years of underpayment of salaries and other benefits … has led inevitably to steady declines in the living standards of the oldest Class members, as compared with their counterparts in the contiguous U.S.,” the suit contends.

Though the Non-Foreign AREA Act of 2009 granted employees retiring in 2010, 2011, or 2012 larger retirement annuities, this allowance did not benefit earlier retirees who were “in far greater need of relief,” the case relays.

Although cost of living in non-foreign areas can be up to 25 percent higher than even the Washington, D.C. area, the retirement benefits of pre-2010 retirees are “barely more than one-half” of the annuities paid to equivalent U.S.-based retirees, the complaint points out.

In addition, while the retirement benefits of post-2009 retirees were marginally improved by the Non-Foreign AREA Act, “they are still less than required by law,” the filing claims.

“This pattern of discrimination is having untold and tragic consequences – for Class members, their dependents, and their communities – that no amount of back pay can ever repair,” the lawsuit scathes.

The plaintiffs in the suit are all current or retired federal employees who spent their careers living and working in Hawaii or Puerto Rico, according to the complaint.

The lawsuit looks to represent:

(a) The class certified by the court in Caraballo v. U.S., including:

• “[A]ll persons employed by the United States or an agency, establishment, or instrumentality thereof, or by a corporation owned by the United States, including the United States Postal Service, the Administrative Office of the United States Courts, the General Accounting Office, and Non-Appropriated Fund agencies, who are or were entitled to receive, or did receive, a non-foreign (territorial) cost-of-living allowance, or a like payment as part of or in addition to basic pay … at any time on or after October 1, 1990;” and

(b) “[A]ll persons who received additional compensation for living costs substantially higher than in the District of Columbia … at any time on or after April 20, 1948; (c) the surviving spouses of persons described in (a) or (b); and (d) the estates and heirs of persons described in (a), (b), or (c).”

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