Relocation Pay Changes

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Federal employees who are relocated on temporary assignments can prevent headaches for themselves and save money for their agencies under new pay and expense options issued by the General Services Administration and the Office of Personnel Management.

IRS auditors, Department of Energy inspectors and Justice Department attorneys are among the many federal employees who are assigned to temporary duty away from home for extended periods of time. Under old regulations, agencies had two options when sending employees on temporary assignments of six to 30 months:

  • Designate the temporary workplace as the employee's permanent station and pay the employee for all the costs of relocating. The employee would have to completely move out of his or her permanent residence and into a new one at the temporary workplace--and then repeat the process when moving back to the permanent station.
  • Consider the temporary assignment a long-term business trip and pay the employee a per diem. This option is costly for agencies. If an employee received per diems of $60 every day for a year, the agency would dish out more than $20,000, in addition to the employee's normal salary. The employee would also get hit--after a year, he or she would be required to pay income tax on the per diem allowance.

The new options allow an agency to pay an employee for limited relocation costs--including house-hunting trips, transporting belongings and in some cases the transportation of the employee's car. The agency may also pay for property management services if the employee wants to keep his or her permanent residence. When the employee returns to the permanent station, the agency pays for the return home.

Agencies can also pay an employee the locality pay of the temporary assignment's area while the employee is stationed there and then return the employee to his or her normal pay rate upon returning home. So an employee from Huntsville, Ala., on temporary assignment in Washington, D.C. would receive the higher locality pay of the D.C. area while stationed there. Conversely, an employee from Washington on temporary assignment in Huntsville would receive its lower locality pay while there.

The new options stem from travel reinvention proposals drafted by the Joint Financial Management Improvement Program, which were enacted into law as part of the Federal Employee Travel Reform Act of 1996. Another piece of legislation currently under consideration, H.R. 930, would reimburse federal employees for taxes incurred on per diem allowances.

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