Change to Disputed Federal Comp System Must Come from Congress

February 5, 2008 ( - A federal judge has thrown out a lawsuit by federal employees in Alaska and Hawaii claiming their pension calculation is discriminatory compared to their mainland federal worker counterparts.

Chief U.S. District Judge Philip Pro of the U.S. District Court for the District of Nevada dismissed the suit because he said any changes to the federal system of pay differentials for workers in the two states had to come from Congress, the Honolulu Advertiser reported. While acknowledging the system covering mainland federal workers was different, Pro contended the disparity could have been a deliberate political decision by lawmakers.

He refused to order the system to be revised. “Congress has a legitimate interest in creating and managing compensation packages for its employees to compensate employees adequately, to recruit and retain employees, and to allocate limited resources among employees,” Pro contended. “That Congress may have discharged its legislative responsibilities imperfectly does not give this Court fiat to rewrite the legislation to rectify the current disparity. It suggests strongly instead that Congress should correct the incongruity made so evident by this case.”

Under the system set up by the Federal Employees Pay Comparability Act of 1990 (FEPCA), Alaskan and Hawaiian federal employees get cost of living allowances (COLA) representing up to 25% of their pay. According to the news report, the COLA payments are free from federal income taxes, but they are not included when determining pension calculations. The 2005 lawsuit charges that the system results in federal employees in the two states getting substantially lower pensions than their mainland counterparts.

Congress excluded Alaskan and Hawaiian federal employees from a system of “locality pay” salary hikes based on prevailing private sector waged where they work. While the “locality pay” expenditures are taxed they are also factored into pension calculations.

“When FEPCA was enacted, Congress rationally could have concluded the two pay supplements were roughly parallel, even if it has turned out, in practice, that FEPCA’s exclusion has worked to the disadvantage of Hawaii and Alaska employees with respect to their retirement benefits,” Pro wrote in his opinion.

Pro was brought in to hear the case after Hawaii federal judges disqualified themselves because they come under the disputed compensation system.

The latest ruling is here .