Rafael A. Fantauzzi: Equal Pay for Equal Work? Not For 'Non-Foreign' Federal Employees

In 1948, Congress authorized higher levels of compensation for federal employees in so-called “non-foreign” areas such as Puerto Rico, Hawaii, Alaska and the U.S. Virgin Islands. The additional compensation, known today as COLA (Cost of Living Allowance), was an acknowledgement by the Congress that it costs more to live in these areas.

When COLA was authorized that year, none of the COLA areas had representatives in Washington. Because of this, some Washington bureaucrat wrongly and irresponsibly and without any legal authority to do so, decided to establish a policy that denied the inclusion of COLA pay – an essential element of their regular pay throughout their career – in calculating the retirement pay of non-foreign employees. This policy has drastically and unfairly reduced the income of these retirees during the last years of their lives.

Did Congress assume that once a non-foreign federal employee retired the higher cost of living somehow disappeared? Of course not!  Did Congress authorize what is now OPM to deny allowing these employees to count COLA in calculating their retirement benefits so they would suffer financially in their retirement years? Of course not! There is no rationale, let alone legal authority, to inflict this financial harm on loyal hardworking federal employees once they retire. The cost of living in these areas is just as expensive after an employee retires as it is when the employee is working.

More than 50,000 federal and postal workers and an untold number of retirees in the “non-foreign” areas are the victims of this longstanding and unlawful policy. The largest concentration of them – approximately 15,000 federal and postal employees – reside in Puerto Rico; the next largest is in Hawaii. Some of them received as much as 40 percent less in retirement than their mainland counterparts.

Even though Hawaii, Alaska, Puerto Rico and the U.S. Virgin Islands now have representation in Washington none of their representatives have lifted a finger to help their constituents. While this absurd policy had been in effect for decades it had never been questioned until 2009.

In October 2009, a class action lawsuit was filed on behalf of these employees and retirees by a lawyer who has successfully represented non-foreign federal employees on several occasions during the past three decades. The complaint called upon OPM to stop this unlawful practice and demanded restitution of the amounts that were unlawfully withheld in the past, together with the interest earned by the Retirement Fund on the amounts it should have paid.

Since then the lawyer has submitted document after document to the Justice Department, explaining in great detail that the Congress never authorized OPM to deny non-foreign workers to count their COLA towards their retirement formula.

When the lawsuit was filed and OPM became aware of this issue its director, John Berry, not only had the legal authority to correct it, but also a legal and moral duty to do so. Earlier this year representatives for the class met with Berry to explain to him the extent to which retirees are suffering in their final years because of this policy.

Despite pleas from presidents of the AFGE and NARFE to settle the lawsuit, Berry continues to keep his back turned on his old friends, presumably relying on the advice of old line OPM bureaucrats who have a longstanding history of discriminating against non-foreign federal employees with respect to their COLA benefits.

There is no rationale, let alone legal authority to inflict this financial harm on loyal hardworking federal employees once they retire.

Not only is this longstanding policy being carried out without the authorization of Congress, it is unconstitutional, as it has a disparate impact on racial and ethnic minorities. There can be no doubt that Hispanics are represented among federal employees in Puerto Rico in far greater proportion than among federal employees nationwide.

The same is true for African Americans in the U.S. Virgin Islands, for Polynesians and Asians in Guam and Hawaii, and for aboriginal Natives in Alaska.

It is a national disgrace and a stain on the Obama administration that these employees had to retain a lawyer to protect them from its unlawful policy, which discriminates against non-foreign federal employees and retirees.

Berry has the duty and the authority to stop listening to the bureaucrats he inherited and start doing the job he was appointed to do. He needs to urge the Department of Justice to settle this suit and restore full retirement benefits to non-foreign federal retirees while they are still alive to enjoy that to which they are legally entitled.

Only then will all federal employees truly receive equal pay for equal work.

Rafael A. Fantauzzi is the son of a now deceased Puerto Rican federal employee and the President and Chief Executive Officer of the National Puerto Rican Coalition Inc., a nonpartisan, non-profit organization based in Washington D.C., whose mission is to strengthen the social and economic well-being of the Puerto Rican community on the island and the mainland.

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