The Biweekly Pay Cap

Suppose you got a promotion but then found out that the new salary you were promised, you won’t get?

Or, for your law enforcement officers, suppose you took a promotion and then after the fact found out that you were not going to get your 25% availability pay?

You would raise a ruckus, wouldn’t you? I would. I would be louder than the Buc-ee’s brisket station on a holiday weekend!

But you know what? That is exactly what is happening to many of you each and every month.

Chris, what are you talking about??

Whether you realize it or not, for the vast majority of you GS employees, there is a limit to how much you can actually earn each pay period, even if you should earn more. That’s what this article is about. The Biweekly Pay Cap.

Maybe you’ve never even heard of this. No worries. Let’s dive in.

This article is going to work similarly to a few other ones I’ve done recently. Like this:

1. I’m going to explain the rule and how it applies

2. Then I’ll explain the exceptions I know about

3. Then you’ll explain the exceptions that I don’t know about in the comments below

4. And then we’ll all learn something

THE RULE

General Schedule (GS) employees have a limit, or cap, on how much they can earn in a 2-week period, including premium pay, overtime, Law Enforcement Availability Pay, locality pay, and other things. Not surprisingly, this is governed by federal statute. Specifically, 5 USC 5547(a).

I’ll let you dig into the weeds if you want. The short version is this: GS employees cannot make more than the GS 15-10 salary shown on the OPM Pay Tables for their particular locality.

Enter Myth #1: The Pay Cap is the same for every locality. Wrong. Sacramento California is $183,500 a year. Charlotte, NC is $181,232 a year. Paducah, KY (aka: Rest of the US) is $177,978 per year.

In fact, OPM makes it easy on you and shows you what your specific biweekly pay cap is by creating a table listing each locality HERE. I’ll list a few:

Charlotte, NC $6,947.20

Dallas, TX $7,034.40

Indianapolis, IN $6,884.80

Kansas City, MO $6,920.80

Virginia Beach, Va $6,906.40

What those numbers represent is the most you can actually earn in one of those cities each pay period. Even if you worked overtime, or you should be getting paid more, you can’t actually gross more than those biweekly amounts.

Let’s do a little example using the high cost of living area of Houston, TX.

Let’s assume an FBI agent in Houston is a 13-10. With their LEO availability pay (LEAP), their salary should be $184,741. Divide that by 26 pay periods, and their biweekly pay should be $7,105. However, their biweekly pay cap is only $7,034.40. Meaning, they get paid $71 less each pay period than they would if they were able to get their full salary. In other words, they “lose” $71. Or they work for free for the equivalent of $71 worth of time each pay period. However you want to look at it.

“Chris, that doesn’t seem right. But it’s really only $71 a pay period. Is it that big of a deal?”

Let’s talk about some management positions then. That might be a little different.

Let’s say that we are talking about a 15-10 in Houston now, instead of a 13-10. With LEAP, that LEO should be making approximately $229,000 a year, or $8,808 a pay period. But they can’t. They have the same $7,034 limit the 13-10 does. But the shortage is a little different. Each pay period, the 15-10 is losing $1,773 a pay period, not $71. That’s quite a bit. In fact, it’s over $45,000 a year that the 15-10 is NOT getting of his supposed salary.

Taking it a step further, we can say that the GS 15-10 in Houston has completely lost all of his LEAP pay (the 25%). He simply is not getting it anymore from a practical standpoint if you do the math. (He’s losing more than 25% in other words).

And, yes, you are correct if you’ve come to that conclusion, a GS 13-10 LEO makes the same as a GS 15-10 LEO in Houston, TX. And in San Francisco, New York, and other places. That bears repeating: Once you reach GS 13-10 status in those cities, no matter what step you get for GS 14 or GS 15, you will get no extra money, if you are receiving LEAP.

So what happens to that extra money each pay period that’s lost? The $71 or the $1,773 or $500 or whatever it is? It vanishes. It completely disappears.

“That can’t be right, Chris. The employee has to get some sort of credit for it.”

You would think. But they don’t. It’s a contribution to the cause. Without so much as a by-your-leave, sir.

For those of you who get paid through the National Finance Center (NFC), they kindly remind you of how much you are losing each paycheck. It’s at the bottom of your Earnings and Leave Statement. You don’t even have to calculate it. It’s the dollar amount that follows those 3 little words “OVR EARN LIMIT”. This allows you to quickly calculate how much time you are losing, and therefore how much LWOP you can take.

For those of you that get paid by DFAS or other payroll processors, they don’t bring this loss to your attention every pay period. You have to calculate your screwing yourself.

Here’s something even a bit worse. If you live in a city that has the maximum cap of $183,500, you don’t actually even get to make $183,500! In reality, you are limited to $182,894. Why is that? Because technically the $183,500 is your salary rounded up. Take a look at the OPM calculations right HERE. They explain it to you under the “COMPUTATION” section. This works for the same in other cities as well. So everyone is technically getting paid LESS than what is shown on the pay table for GS 15-10. OPM shows you the math, but it’s basically the $183,500 divided by 2,087 hours. Then multiply that by 80 hours. Then multiply that by 26 pay periods. Complicated? Sure is. But you can just look at the table OPM creates for you so you don’t have to do the math. But I include the link because I’ve learned there’s some number nerds out there.

Over time, this amount of “working for free” can really add up. But don’t worry—it gets worse.

If the biweekly kick in the….er, pants, is not enough loss, let’s explore how bad it truly is. Because you’re losing in more ways than every paycheck.

Additionally:

High-3. Your High-3 is based on the cap amount, not what your salary really should be. Example time again.

DEA Supervisory Special Agent’s High-3 should be $200,000, but because of the cap, it’s say, $180,000. A $20,000 difference. Now, let’s assume he did a standard 25 year career. That would be 39% of his High-3 under the Special Category Employee provisions.

39% of $20,000 is $7,800. That means his pension is $7,800 less than it should be if he got full credit for his salary. ($20,000 x 39% = $7,800). That’s $650 less a month in retirement. And that’s EVERY. SINGLE. YEAR.

Except it isn’t every single year, is it? His pension is not fixed in retirement. It grows every year in the form of Cost of Living Adjustments (COLAs) each January. So the $7,800 would actually grow over the rest of his lifetime, wouldn’t it? Let’s assume he lives to be 80 years old (standard life expectancy). That’s 30 years of retirement. Let’s assume on average a 2% COLA per year for those 30 years.

That $7,800 would increase by 2% per year for 30 years. If we do that math, what do we get? About $316,000 total over those 30 years. That’s a lot. An awful lot.

Because of the biweekly cap, he’s not only lost out on money each pay period, but he’s lost out on money for the rest of his life. Serious money. About $316,000 in this example.

Hang on. It gets worse still.

Thrift Savings Plan. Your 5% that the government matches is based on the capped amount, not on the actual amount of your salary you should be making. Let me explain. If you’re that 15-10 LEO in Houston, supposed to receive $229,000, the 5% that your agency is contributing is 5% of the $183k, not the 5% of the $229k. That’s about $2,300 a year in agency matching you’re missing out on.

I won’t further depress you by figuring out what that can turn into over the course of your life if invested in the C Fund, but suffice it to say, it’s in the 5 figures. And that’s for every single year they short you the matching.

Hang on. One more to go.

Lump Sum Annual Leave Payout. “Chris, really?!” When you retire, you get your annual leave balance paid out to you in a lump sum check. It is basically the balance of leave hours multiplied by your hourly rate. If you go by the strict reading of the OPM guidelines (and most HR departments do), you are paid out at your capped hourly rate, not at your real hourly rate. For example, in Oakland, CA, the capped hourly rate is $87.93, even if your real hourly rate should be $109. That means you’re taking a hit on each and every hour of annual leave that you get paid out.

That’s not specifically how OPM words it. Technically, you get paid out your annual leave as if you had continued to work on your job for the amount of leave hours you had. Or if you had stayed on the books but taken that annual leave until it was exhausted. But it basically works out as if you had been paid out at the capped rate, since if you had continued to work, you would have been capped each pay period.

CAVEAT: While this is the chapter and verse for how it should be done, I have seen some retirees get their full hourly rate, even above the cap. I’ve seen this with my own eyes, and verified the calculations with the paperwork they got sent from their agency as well as viewed the deposit in their bank account. So I know that it CAN be done this way. But I also know that the vast majority of people do not get this consideration based on my experience. They get paid out at the capped hourly rate. It’s one of the most common reasons that people tell me, “My annual leave check was WAY less than I thought.”

It seems that agencies will essentially “roll over” the excess, or capped amounts to future pay periods to alleviate the negative consequences. This is not common however.

TO RE-CAP (get it?)

If you are at the cap, you are losing the following ways:

1. Missing out on money each pay period, i.e., working for free

2. Having your pension permanently reduced because of a lower High-3

3. Having your TSP permanently reduced because 5% matching is on the capped salary

4. Lower lump sum annual leave payout (probably)

“Why do we even have this cap? “

Enter Myth #2. You can’t make more than a junior congressman. I’ve heard this my whole career. Like literally repeated hundreds of times over my career. But, it is simply not true. The cap is not tied to salaries of Congressmen or Senators. Don’t believe me? Many of you are already making more than those that are making the laws. Their salary is $174,000 a year. The army of GS 13-10 field agents in all of the law enforcement agencies in Washington will make more than Congress this year.

EXCEPTIONS

These are exceptions I know about. If there are others, feel free to post them in the comments below. Or clarify my understanding of the exceptions I’ve listed.

1. Not being a GS employee. If you aren’t a GS employee, these caps don’t apply to you. If you are an SES, then you’re no longer on the GS scale. If your job position has nothing to do with the GS scale, then this biweekly cap doesn’t apply either. Here’s the most extreme example: Before Dr. Fauci left his 5-decade career for Uncle Sam, he was famously making $480,000 a year. The highest paid federal employee out of the 2 million federal employees. Clearly far above any cap, which didn’t apply to him and the other doctors he works with anyway, because they are not GS employees. (Interestingly enough, his pension will be over $300,000 a year! I’ve read it is the highest government pension ever. Which certainly seems correct. He also gets extraordinary benefits. For reasons that completely escape me, he is protected in retirement by my former agency, the U.S. Marshals Service. A headscratcher for sure.)

2. United States Secret Service. Some USSS agents out there can feel free to correct/clarify what I’m about to say. It is my understanding that they have special provisions that allow them to make a certain amount of overtime, over and above the biweekly cap, up to a limit (some have called this the “Super Cap”. This amount is calculated for the year and then paid to them in the beginning of the following year.

3. Certain law enforcement agencies have special provisions for a higher than normal cap. These would be special agents that work for the Securities and Exchange Commission (SEC), the Federal Reserve Board (FRB), and possibly some others. You guys feel free to comment/correct.

4. The biweekly cap can be lifted under extenuating circumstances. I’ve been part of this from time to time. Due to national security concerns, or during times of national emergencies, the Attorney General, or others have the ability to suspend the biweekly cap. This is not standard practice. But it can, and has, happened.

5. AUO. I’m a little fuzzy on this one. Maybe someone can clarify it. For those LEO’s that don’t get LEAP/AVP, they may get AUO—Administratively Uncontrollable Overtime. Several people have reported to me that in their jobs, the AUO is not subject to the biweekly cap. Meaning they can make additional money in AUO over and above the biweekly cap. Anyone wanting to expand on that in the comments below with specifics, feel free. It has been my experience that AUO is treated the same as AVP/LEAP. But some of you have reported your AUO not being subject to the cap, so I’m interested in hearing more about this.

6. Perhaps others I don’t know. That’s the purpose of the comments. To broaden everyone’s horizon, mine included.

What can be done about this?

I know of two main strategies to mitigate this loss of income. The first one is obvious. Don’t take a job/promotion where you’ll lose a bunch of money every pay period for years on end. That used to be easy. Just don’t take a promotion. However, even 13’s max out now, which is journeymen level in most agencies these days, i.e. non-supervisory/non-promotional.

The second strategy is a little more complicated. And to some, controversial. It involves taking Leave Without Pay (LWOP) each pay period. This gets confusing sometimes so bear with me.

Let’s say you are a GS employee maxing out and losing $400 a pay period. This is extremely common. You are, in essence, working for free for about 4 hours a pay period. Meaning, the last Friday of each pay period, you stop getting paid around noon. You may continue to work until 5pm that day, but you’re not getting paid for that time. You’ve hit the biweekly cap by noon. So any work after that is just you working for free.

You may decide that you don’t want to work for free. So you go into WebTA (or whatever your agency uses), and you put in for leave for that Friday afternoon. But instead of annual leave or sick leave, you put in for LWOP. Meaning, you will take 4 hours of leave, but unlike annual leave or sick leave, you aren’t getting paid for this leave. But here’s the deal: You aren’t getting paid for that Friday afternoon anyway!

So taking LWOP isn’t affecting your paycheck one single bit. Because you were losing the same 4 hours whether you’re working them or whether you take LWOP and don’t work them. The paycheck is the same. In fact, if you take annual leave or sick leave for those 4 hours, you STILL aren’t getting paid for those 4 hours. You’re just wasting annual leave or sick leave at that point.

So you see the LWOP doesn’t get you any more money; it just allows you to not have to work for free for those 4 hours. You get more time off, not more money, in other words.

Some 15-10’s I know were losing two full days. They hit the cap about Wednesday at 5pm of the 2nd week of the pay period. Thursday and Friday they were working for free. What did they do? Take every Friday off LWOP, and only worked 4-day weeks. Did it get them any more money? No. We’ve shown that. But it did prevent them from working 2 days a week completely for free.

“Whoa, Chris, is this legal?”

Of course. LWOP is taken by people across the country every pay period for any number of reasons. They may be out of annual leave, they may be using it in conjunction with some medical leave, they may be doing the strategy above, or there may be some other reason. If it weren’t allowed, it wouldn’t be an option in WebTA. There also wouldn’t be laws and regulations governing it’s use. Here’s the catch though: Your manager does NOT have to approve LWOP (see exception below). And some won’t. Some take the selfish approach and say, “If I have to be here working for free, YOU have to be here working for free.” Others are bit more rational.

I have had some pretty antagonistic managers write me over the years when I have mentioned this strategy. They have told me it’s unethical or immoral. For the life of me I don’t understand that. To me it is no more unethical or immoral to make a person work for free, than for a person to claim pay for hours they didn’t work. It’s two sides of the same coin.

Some managers would gladly go after a person for not working on Fridays but putting down that they did each pay period, and get paid for it. That’s an issue. You’re cheating the government. People get fired and even prosecuted for that fairly routinely. But reverse the roles, and have the person come in every Friday and work but not get paid, and somehow that’s completely fair? I don’t understand that one bit. They are both equally unethical in my mind. However, I’m not trying to get someone to go against their own principles. If you believe that it is morally superior for you to work for free for the government, by all means, put the hours in.

I can’t agree more with Dan Jamison’s statement, “Not sure what’s so “appropriate” about coming to work for 10 days and only being paid for 9 days.” (FERSGUIDE 2023, Special Category Employees, p 17.)

“But if I take LWOP, will that count against me? Will I have to delay my retirement?”

No. An individual can take up to 6 months LWOP in a year and still have that year count for retirement purposes. And none of you are losing anywhere near 6 months. Even in the extreme cases, where you are losing 1 day a week, that is only 52 days a year, or roughly 2 months. And those are the extreme high end.

There is one negative consequence you need to be aware of, though. Once you accumulate 80 hours of LWOP, you have essentially not worked for 1 pay period that year. So when you hit that limit, you will not receive annual leave or sick leave for that pay period.

For example, let’s say you are taking 8 hours of LWOP each pay period. After 10 pay periods, you will have accumulated 80 hours of LWOP (8 hours x 10 pay periods). So for that pay period, you will not receive your 8 hours of A/L or your 4 hours of S/L.

Is that a big deal? Not for me it wouldn’t be. I’ve lost 12 hours total of leave, but I’ve gained 80 hours of leave. So I’m really still ahead 68 hours. (80 hours of leave gained - 12 hours of leave lost).

OTHER RESOURCES

If you want to read more on this, please refer to OPM’s Fact Sheet on LWOP. For those of you that have Dan Jamison’s FERSGUIDE book (available on Amazon for $15.95, or for free to any DEA employee that attends one of my retirement seminars), he goes into detail regarding this detail on page 16 of the Regular FERSGUIDE and page 17 of the Special Category Employee FERSGUIDE.

“I don’t know if my management will go for this.”

Understood. Some won’t. I’ve talked with some of them. A lot do though. I know of employees in agencies that worked under one manager that allowed it, but then when they transferred to another unit, the new manager did not. You don’t really have any recourse at that point. This is not a grievable issue from everything I’ve read. Although if anyone out there has an aging parent or family member that needs your care, you can take LWOP-FMLA. As OPM puts it, “Employees, however, have an entitlement (emphasis added) to LWOP in the following situations: FMLA…”

But I also know this is done literally every single pay period across the country in multiple agencies to help give some relief to the individuals that are being hurt financially by this policy.

CONCLUSION

Hopefully this sheds some light on the cap, how it works, the devastating financial impact it could have, and a way to possibly mitigate the consequences.

I want to be clear about something, though. The federal government desperately needs good managers. DESPERATELY! I am not telling the good people out there to never promote because you’re losing money. (I also can’t in good conscience encourage you to promote and work for free either.) But I am saying that if you are one of those people that is a true servant leader, willing to sacrifice for the men and women under you, putting them first, even at personal financial consequence, you are a very special person, and the federal government is extremely lucky to have you. You are the true heroes that make the office stronger, which makes your agency stronger, which makes the government stronger, which makes us all better as a nation.

There are a LOT of bad managers out there. We all know them. We’ve all worked with them. I knew of one manager years ago where the largest retirement party I’ve ever been to was held upon his departure. Only it was held after the manager had left. And he wasn’t invited. It was literally a cause for celebration that he was gone. Representatives from many agencies showed up. Don’t be like that. Be a person that people hate to see go.

I get the calls every week from potential retirees. It’s interesting to listen to. Some are delaying retirement because they have so much respect for their manager, they feel they are letting them down by leaving. That’s a testament to a good manager right there! Others have management so bad, that the employee wants to stay but can’t tolerate any more of the selfishness, micromanaging, and small-mindedness.

You can’t please everyone. We all know that. But it’s a pretty good exercise to look out in the office and see which category of employee is upset. If your slugs are happy and content, and your high performers are frustrated, then that’s a pretty good barometer indicating you suck.

Another strange test I’ve used with substantial accuracy is a bit bewildering but it seems to work. Over the years, I have had some bad managers, and I know of some bad ones right now in different units by reputation. A very, very odd characteristic in my experience is the use of the term “flagship”. I cannot begin to explain this correlation, but every manager I’ve known that touted their office or division as being “the flagship” has had subpar leadership. Sometimes downright awful leadership. I talk to a broad spectrum of employees all over the government. This weird trait continues to hold up, without exception based on my experience. No idea why.

Anyway, back to the task at hand. I’m not trying to dictate your career one way or the other (other than encouraging you to be a good and selfless leader). I’m simply trying to shed some light on the “fine print” down in the bottom of the OPM regulations so you have a truer sense of what things are costing you. That way, whatever your decision is, you go in with eyes wide open.

Please post your experiences in the comments below. Feel free to clarify anything I’ve said incorrectly. This is one of those areas where there is a rule, but also a LOT of exceptions. Some only know the rule and didn’t think there were exceptions. Some have worked so much under the exceptions, they didn’t even know there was a rule. So help us all learn.