Pay System Causing Turbulence at the FAA

Employees at the Federal Aviation Administration have been operating under a performance-based pay system for the last decade. Some still don't like it.

Tim O'Hara, a 24-year FAA employee, sent a letter last month to Robert A. Sturgell, the agency's acting head, listing his complaints with the pay system. He e-mailed copies to about 1,000 FAA colleagues.

The problems with the pay system, O'Hara wrote, "are both myriad and a significant depressant on the morale of the FAA workforce. Significant corrections need to be made."

The FAA will announce its 2008 pay raise for employees in a few weeks, and O'Hara, a management analyst, acknowledged in an interview that the timing of his letter is no accident. Complaints about the FAA pay system are nothing new -- a group of employees is financing a class-action lawsuit aimed at forcing changes in pay policies, with O'Hara as the designated plaintiff.

The grass-roots campaign at the FAA underscores the challenges that agencies face when they overhaul pay rules and try to explain them to employees. During the past year, employees at the Defense Department and the Government Accountability Office have questioned whether they will be treated fairly by newly adopted pay policies and practices.

Proponents of the compensation changes, including numerous Bush administration officials, contend that linking pay raises to more rigorous employee appraisals will help boost the agencies' performance. But some employees in new pay systems, where management has more discretion over raises, fear that they will fall behind the General Schedule, which covers most federal employees and has a track record of providing annual raises.

FAA pay policies, however, have proved to be a flash point. The issue has prompted numerous FAA employees to join unions, including the American Federation of State, County and Municipal Employees, and has drawn fire from the FAA's largest union, the National Air Traffic Controllers Association.

Because of union contracts, pay practices vary inside the FAA, although the agency has pushed to include job performance standards in collective bargaining agreements and in a performance-based pay program, the Core Compensation System. The core system is supposed to ensure that the agency is competitive in attracting and keeping employees for its headquarters and field offices.

The core system has drawn criticism from some employees at the top of their pay scale, or pay band, for their job category. Because they have hit their pay ceiling, the employees receive their performance-based pay raises as a lump sum rather than as part of their base pay. More than 9,500 employees fall into this category, O'Hara estimated.

Under the system's rules, the lump sum does not count toward retirement, a sore point for many of the employees, including O'Hara. He calculated that he has lost more than $6,500 a year in pension income because of the core system.

In his letter, O'Hara said the agency's pay-setting process needs to be less secretive. The FAA uses market surveys to help set salaries but will not share its methodology for comparing agency jobs to the private sector, O'Hara said.

Hank Price, a FAA spokesman, said the agency sees the aviation and aerospace industries as the primary labor markets for assessing the competitiveness of pay for FAA jobs. The agency also studies technology, health care, government contractors and other federal agencies for pay trends and data, he said.