Pay definitions for our compensation bargaining

These are terms used in compensation negotiations and our comparison charts.

Annual Merit Increase: for definitional purposes, this is a permanent increase in base pay (a component of total salary), thus putting more money in the employee’s pocket every payday for the entire duration of his/her employment, and it is also included as “salary” for retirement calculations. It also has a favorable cumulative, compound effect by increasing the base pay upon which both future merit increases are applied and locality pay rates are applied.

Annual Merit Bonus: for definitional purposes, this is a one-time cash payment that does not increase salary during the duration of an employee’s employment and does not increase the base pay upon which merit increases or locality pay rates are applied. In addition, for most retirement plans, a bonus is not included as compensation for retirement calculations (some limited exceptions apply for some plans depending on the timing of the payment of the bonus prior to retirement).

Locality Rates: for definitional purposes, this is a component of salary for the duration of an employee’s employment, and is included as “salary” for retirement calculations.

Locality pay rates supplement base pay to provide a locally competitive salary.

Annual adjustment to minimum/maximum base pay within each pay band (typically adjusted annually).

Flexible Spending Account (Lifecycle): for everyone (not just for individuals making less than $115,000 as is currently the case).