Fiscal Year 2026 Prevailing Rate Pay Adjustments

CPM 2025-20 December 18, 2025 Memorandum for Heads of Executive Departments and Agencies From: Subject: Scott Kupor Director Fiscal Year 2026 Prevailing Rate Pay Adjustments

The Further Consolidated Appropriations Act, 2024, contained provisions affecting the determination of pay adjustments for certain prevailing rate (wage) employees. Division A of the Continuing Appropriations, Agriculture, Legislative Branch, Military Construction and Veterans Affairs, and Extensions Act, 2026 (Public Law (PL) 119-37, November 12, 2025), extends the provisions of the FY 2024 Act through January 30, 2026. As extended, section 737(a) provides that pay increases for certain prevailing rate employees in FY 2026 may not exceed 1.00 percent—the sum of the January 2026 General Schedule (GS) across-the-board percentage adjustment and the difference between the overall average percentage locality payments for GS employees in FY 2025 and FY 2026. Section 737(b) provides that, notwithstanding section 737(a), pay adjustments for certain prevailing rate employees in FY 2026 may not be less than the January 2026 pay adjustments received by GS employees where they work. Section 737(a) applies to wage employees covered by 5 U.S.C. 5342(a)(2) or 5348. Section 737(b) applies to wage employees covered by 5 U.S.C. 5344 or 5348. Sections 737(a) and 737(b) do not apply to wage employees who negotiate their pay under section 9(b) of PL 92392. Lead agencies must establish wage rates for affected prevailing rate employees for FY 2026 by determining the maximum rates applicable under the pay limitation provisions of section 737(a), determining the minimum pay increase applicable under section 737(b), and then applying the higher of the rates to affected prevailing rate wage schedules. In some wage areas, wage schedule adjustments under the minimum increase provisions of section 737(b) will be higher than under the maximum increase provisions of section 737(a). In addition, as a result of section 737(b), certain prevailing rate wage areas will have more than one wage schedule in effect during FY 2026.

Determining Rates Under Section 737(a) Section 737(a) provides that pay increases for wage employees in FY 2026 may not exceed 1.00 percent—the sum of the GS across-the-board percentage adjustment and the difference between the overall average percentage locality payments for GS employees in FY 2025 and FY 2026. If any rate exceeds the rate payable on September 30, 2025, by more than 1.00 percent (after rounding), that rate must be reduced to the highest rate that does not exceed 1.00 percent. If the annual wage survey of private sector rates in a given wage area indicates an adjustment of less than 1.00 percent is warranted under section 737(a), the lower prevailing rate will be payable under that section. The Office of Personnel Management understands that the lead agency was unable to conduct appropriated fund local wage surveys scheduled to begin during the October 1 through November 12, 2025, lapse in appropriations. Appropriated fund wage schedules whose local wage surveys were ordered in October and November will be adjusted by 1.00 percent consistent with appropriations law. This application must also be applied to any other Federal Wage System (FWS) appropriated fund wage schedule whose wage survey was affected by the lapse in appropriations during the months of October and November. Wage schedules issued pursuant to a wage survey under the authority of 5 U.S.C. 5343 are subject to the limitation in section 737(a). The limitation also applies to wage schedules produced by reference to schedules adjusted pursuant to wage surveys and to wage schedules that have been temporarily set aside from certain provisions of the FWS) pending study by the Federal Prevailing Rate Advisory Committee. The adjustment of a wage rate required pursuant to a change in an applicable Federal, State, or local minimum wage rate is not subject to the limitation in section 737(a). Rates established as the result of an adjustment in an applicable Federal, State, or local minimum wage rate will be the basis for determining the limitation on subsequent adjustments indicated by an annual prevailing rate wage survey.

Determining Rates Under Section 737(b) Notwithstanding section 737(a), section 737(b) provides that adjustments in basic pay that take place in FY 2026 under 5 U.S.C. 5344 and 5348 may not be less than the percentage adjustments under 5 U.S.C. 5303 and 5304 received by GS employees in the same location in January 2026. The General Schedule will be adjusted by 1.00 percent in January 2026, and this percentage amount serves as the increase amount for prevailing rate adjustments in FY 2026. 3 The geographic boundaries of appropriated and nonappropriated fund prevailing rate wage areas and of GS locality pay areas are not the same. Consequently, section 737(b) requires that certain prevailing rate wage areas have more than one wage schedule in effect during FY 2026. For example, an FWS wage area may include an individual locality pay area as well as part of the Rest of U.S. (RUS) locality pay area. In each situation where the boundary of a prevailing rate wage area coincides with the boundary of a single GS locality pay area boundary, the lead agency for that wage area must establish one wage schedule applicable in the wage area. In each situation where a prevailing rate wage area coincides with part of more than one GS locality pay area, the lead agency for that wage area must continue to establish more than one prevailing rate wage schedule for that wage area. Prevailing rate employees in overseas locations described in 5 U.S.C. 5343(a)(5) also must receive increases at least equal to the increases received by GS employees in the RUS GS locality pay area. Prevailing rate adjustments under section 737(b) must be rounded upwards when necessary so that such adjustments are not less than the 1.00 percent GS adjustment for January 2026.

Effective Date of Retroactive Pay Adjustments The wage rates on certain FY 2026 wage schedules are effective retroactively to the normal effective date prescribed on the wage schedule by the lead agency. This uniform date is fixed for all agencies using a wage schedule. For example, the wage schedule for the Washington, DC, FWS wage area has a normal effective date in FY 2026 of October 19, 2025. Employees paid from this wage schedule are entitled to pay adjustments retroactive to October 19, 2026. For wage areas with normal effective dates later in the fiscal year, retroactive adjustments will not be required. For example, wage schedules for the Savannah, GA, FWS wage area will have a normal effective date in FY 2026 of July 26, 2026. Employees stationed in this wage area will see their wage schedule adjusted prospectively. Obtaining Wage Schedules Prevailing rate wage schedules will continue to be distributed by lead agencies through normal agency distribution channels. In addition, FWS wage schedules are available from the Wage and Salary Division of the Department of Defense’s Defense Civilian Personnel Advisory Service. 4 For further information, please contact OPM’s Pay Systems, Pay, Leave, and Workforce Flexibilities at (202) 606-2858 or by email at paypolicy@opm.gov. cc: Human Resources Directors Chief Human Capital Officers Deputy CHCOs Attachment Attachment

Pay Adjustments for Special Rate and Special Schedule Prevailing Rate Employees Prevailing rate employees who receive special rates or are paid from special wage schedules are entitled to pay adjustments in FY 2026 on their normal effective dates. In many cases these adjustments must be made retroactively. Floor pay adjustments under section 737(b) for prevailing rate employees in FY 2026 are based on the January 2026 pay adjustment for General Schedule (GS) employees. All prevailing rate employees under 5 U.S.C. 5342 who receive special rates or are paid from special wage schedules are subject to the pay limitation provisions of section 737(a). The floor pay adjustments required by section 737(b) must be determined as follows for special rate and special schedule employees: Pay Authority: 5 CFR 532.251. Description: Special rates. Method: Prevailing rate employees who receive special rates are entitled to a floor pay adjustment equal to the percentage pay adjustment received by GS employees where they work. The relevant GS adjustment amounts include both the across-the-board base GS increase and locality pay amounts. Pay Authority: 5 CFR 532.255. Description: Regular appropriated fund wage schedules in foreign areas. Method: Prevailing rate employees who are paid from appropriated funds in positions in foreign areas are entitled to a floor pay adjustment equal to the percentage pay adjustment received by GS employees in the Rest of U.S. GS locality pay area.

Pay Authority: 5 CFR 532.257. Description: Regular nonappropriated fund wage schedules in foreign areas. Method: Prevailing rate employees who are paid from nonappropriated funds in positions in foreign areas are entitled to a floor pay adjustment equal to the percentage pay adjustment received by GS employees in the Rest of U.S. GS locality pay area. Pay Authority: 5 CFR 532.259. Description: Special appropriated fund wage schedules for U.S. insular areas. Method: Prevailing rate employees who are paid from appropriated funds in positions in U.S. insular areas are entitled to a floor pay adjustment equal to the percentage pay adjustment received by GS employees in the Rest of U.S. GS locality pay area. Pay Authority: 5 CFR 532.261. Description: Special wage schedules for leader and supervisory wage employees in the Puerto Rico wage area. Method: Prevailing rate Wage Leader (WL) and Wage Supervisor (WS) employees who are paid from appropriated funds in positions in Puerto Rico are entitled to a floor pay adjustment equal to the percentage pay adjustment received by GS employees in the Rest of U.S. GS locality pay area. Pay Authority: 5 CFR 532.263. Description: Special wage schedules for production facilitating positions. Method: Prevailing rate production facilitating employees in nonsupervisory (WD) and supervisory (WN) pay plans are paid rates based directly on regular schedule wage supervisor rates (WS). The floor pay adjustment for production facilitating employees is determined by the adjustment to relevant regular schedule wage supervisor rates.

Pay Authority: 5 CFR 532.265. Description: Special wage schedules for apprentices and shop trainees. Method: Prevailing rate apprentices and shop trainees are paid rates equal to a percentage of the regular schedule journey level rate for a position in their wage area. The floor pay adjustment for apprentices and shop trainees is determined by the adjustment to relevant regular schedule rates. The percentage rates received by apprentices and shop trainee employees continue to be based on adjusted regular wage schedule rates. Pay Authority: 5 CFR 532.267. Description: Special wage schedules for aircraft, electronic, and optical instrument overhaul and repair positions in the Puerto Rico wage area. Method: Prevailing rate employees in aircraft, electronic, and optical instrument overhaul and repair positions in Puerto Rico are paid rates based on a special wage survey in Puerto Rico. The floor pay adjustment for these employees is equal to the percentage pay adjustment received by GS employees in the Rest of U.S. GS locality pay area. Pay Authority: 5 CFR 532.269. Description: Special wage schedules for U.S. Army Corps of Engineers navigation lock and dam positions. Method: U.S. Army Corps of Engineer prevailing rate employees who operate lock and dam equipment or repair and maintain navigation lock and dam operating machinery equipment are entitled to floor pay adjustments equal to the percentage pay adjustments received by GS employees in their Army Corps of Engineers District

3 Headquarters location. If all lock and dam operations under a District Headquarters are located within a single wage area, the employees are entitled to floor pay adjustments received by GS employees in that area. If the lock and dam operations under a District Headquarters are located in more than one wage area, the employees are entitled to floor pay adjustments received by GS employees in the location of the Headquarters office. Pay Authority: 5 CFR 532.271. Description: Special wage schedules for National Park Service positions in overlap areas. Method: The Department of the Interior establishes special wage schedules for employees in the National Park Service jurisdictions of Blue Ridge Parkway, Natchez Trace Parkway, and Great Smoky Mountains National Park. These jurisdictions overlap more than one regular prevailing rate wage area. The wage schedule for each jurisdiction is based on the highest average regular wage schedule applicable in any part of the jurisdiction. The floor pay adjustment for these employees is determined by the adjustment to relevant regular schedule rates and the selection of the highest applicable wage schedule. There is no change in the policy of selecting the highest wage schedule applicable in each jurisdiction.

Pay Authority: 5 CFR 532.273. Description: Special wage schedules for United States Information Agency Radio Antenna Rigger positions. Method: The Department of State establishes wage rates for Radio Antenna Riggers at transmitting and relay stations in the U.S. equal to regular schedule rates plus a 25 percent differential. The floor pay adjustment for these employees is determined by the adjustment to relevant regular wage schedule rates. The 25 percent differential continues to be based on the regular schedule rates after they are adjusted. Pay Authority: 5 CFR 532.275. Description: Special wage schedules for ship surveyors in Puerto Rico. Method: Employees in ship surveyor positions in Puerto Rico receive rates of pay equal to a percentage amount above rates on the wage schedule for appropriated fund wage employees in foreign areas. The floor pay adjustment for these employees is equal to the percentage pay adjustment received by GS employees in the Rest of U.S. GS locality pay area. Pay Authority: 5 CFR 532.277. Description: Special wage schedules for U.S. Navy positions in Bridgeport, California. 4 Method: Employees in U.S. Navy prevailing rate positions in Bridgeport, California, receive rates of pay equal to regular schedule rates for the Reno, Nevada, wage area plus a 10 percent differential. Employees are entitled to floor pay adjustments equal to the percentage pay adjustments received by GS employees in the Reno wage area.

Pay Authority: 5 CFR 532.281. Description: Special wage schedules for divers and tenders. Method: Employees in positions with diving duties receive rates during shifts they perform those duties equal to 175 percent of the regular schedule WG-10, step 2, rate for their wage area. Employees in positions with tending duties receive rates during shifts they perform tending duties equal to the regular schedule WG-10, step 2, rate for their wage area. The floor pay adjustment for these employees is determined by the adjustment to relevant regular wage schedule rates for their wage area. The structure of diving and tending rates remains the same as above. Pay Authority: 5 CFR 532.283. Description: Special wage schedules for nonappropriated fund waiter or waitress positions. Method: Prevailing rate employees in waiter or waitress positions must receive percentage pay adjustments equal to the percentage pay adjustments received by GS employees where they work. Pay Authority: 5 CFR 532.285. Description: Special wage schedules for Bureau of Reclamation supervisory positions. Method: Prevailing rate employees in Bureau of Reclamation supervisory positions are entitled to floor pay adjustments equal to the percentage pay adjustments received by GS employees where they work. In certain Bureau of Reclamation wage areas, the Bureau must issue more than one wage schedule for a wage area if the wage area’s area of application coincides with more than one GS locality pay area.

Pay Authority: 5 CFR 532.287. Description: Special wage schedules for nonappropriated fund automotive mechanics. Method: Certain Department of Defense prevailing rate employees in nonappropriated fund automotive mechanics positions are covered by a flat rate pay system. Employees are entitled to floor pay adjustments equal to the percentage pay adjustments received by GS employees where they work. Pay Authority: 5 CFR 532.289. Description: Special wage schedules for U.S. Army Corps of Engineers flood control employees of the Vicksburg District in Mississippi. 5 Method: Prevailing rate employees of the U.S. Army Corps of Engineers who work at flood control dams (also known as reservoir projects) and whose duty station is located in one of the lakes that comprise the Vicksburg District of the Mississippi Valley Division receive rates of pay equal to regular schedule rates for the Memphis, Tennessee, wage area. Employees are entitled to floor pay adjustments equal to the percentage pay adjustments received by GS employees in the Memphis, TN, FWS wage area. Special Pay Provisions Documented Under OPM Operating Manual, Federal Wage System, Appendix V Section A Area Differential Schedules, Alaska Method: In certain remote locations in Alaska, the Department of Defense establishes differential wage schedules for certain wage employees of the Department of Defense, the Department of the Interior, and the General Services Administration. These 4 percent, 8 percent, or 12 percent differential wage schedules are based on the regular wage schedule for the Alaska wage area. The floor pay adjustment for employees under this section is equal to the percentage pay adjustment received by GS employees in the Rest of U.S. GS locality pay area.

Section B U.S. Army Corps of Engineers Floating Plant and Hopper Dredge Schedules Method: The Department of Defense establishes wage schedules for Floating Plant wage employees based on rates identical to the regular Federal Wage System schedule for the wage area in which an U.S. Army Corps of Engineers District Headquarters is located. This pay practice will continue, with one wage schedule applicable for all Floating Plant employees in an U.S. Army Corps of Engineers District. If all Floating Plant operations under a District Headquarters are located within a single wage area, the employees are entitled to floor pay adjustments received by GS employees in that area. If the Floating Plant operations under a District Headquarters are located in more than one wage area, the employees are entitled to floor pay adjustments received by GS employees in the location of the Headquarters office. The Department of Defense establishes wage schedules for Hopper Dredge wage employees. The floor pay adjustment for those employees paid from the Atlantic and Gulf Coast schedule is equal to the percentage pay adjustment received by GS employees in the Philadelphia-Reading-Camden, PA-NJ-DE-MD GS locality pay area. For those employees paid from the West Coast schedule, the floor pay adjustment is equal to the percentage pay adjustment received by GS employees in the PortlandVancouver-Salem, OR-WA locality pay area.

Section D Power Plant Group Method: The Department of the Interior establishes wage schedules for wage employees at the Green Springs Powerplant in Ashland, Oregon, and the Hungry Horse Project in Montana. Prevailing rate employees who work at these facilities are entitled to a floor increase equal to the percentage pay adjustment received by GS employees in the Rest of U.S. locality pay area. Section E Electrical, Electronic, and Communications Group Method: The special schedules documented in section E are for Electronic Equipment Maker, Installer, and Repairer, and Radio Maintenance Employees in Washington, DC; Television System Employees in Washington, DC; Teletype and Crypto Communications Installing and Repairing employees in Washington, DC, and western Maryland; and Radio and Receiving Technicians of the Department of State at relay stations in Greenville, NC; Marathon, FL; Bethany, OH; Dixon, CA; and Delano, CA. Prevailing rate employees under these special schedules are entitled to a floor pay adjustment equal to the percentage pay adjustment received by GS employees where they work.

Section F Construction Schedules Method: Section F documents special wage schedules used by several Departments for employees who perform construction work. Employees on these special wage schedules are paid rates equal to Davis-Bacon Act rates or rates based on local wage survey findings for local construction industry jobs if Davis-Bacon Act rates are not available. Section F also documents special wage schedules called Purchase Hire schedules for Department of the Army and Department of the Air Force employees who perform construction work. The single job rates established for these positions may be higher than regular wage schedule rates. Prevailing rate employees under these special schedules are entitled to a floor pay adjustment equal to the percentage pay adjustment received by GS employees where they work. Section G Special Supervisory Schedules Method: Section G documents several Department of the Interior, Department of Energy, and Department of Transportation special wage schedules applicable to supervisory wage employees at the Grand Coulee Project Powerplant in Washington, the San Carlos Irrigation Project in Arizona, the Colorado River Agency in Arizona, the Yakima Agency and Fort Simcoe Job Corps in Washington, the Yakima Project in 7 Washington, the Western Area Power Administration, and the Saint Lawrence Seaway Development Corporation in New York. Prevailing rate employees under these special schedules are entitled to a floor pay adjustment equal to the percentage pay adjustment received by GS employees where they work.

Section H Special Vessel Schedules Method: Section H documents Department of the Interior special wage schedules for Isle Royale National Park in Michigan, the Great Lakes Fishing Laboratory in Michigan, and the Jordan River National Fish Hatchery in Michigan. Prevailing rate employees under these special schedules are entitled to a floor pay adjustment equal to the percentage pay adjustment received by GS employees where they work. Section I Special Schedules Not Listed Under Other Authorities Method: Section I documents the special wage schedule for wage employees of the Department of the Interior’s Lower Colorado Regional Office in Boulder City, Nevada. Rates of pay for employees on this special wage schedule are based directly on negotiated rates at Hoover Dam. Prevailing rate employees on this special schedule are entitled to a floor pay adjustment equal to the percentage pay adjustment received by GS employees where they work. Special Pay Provisions Documented Under OPM Operating Manual, Federal Wage System Nonappropriated Fund, Appendix V The special schedules documented in sections A, B, and C of Appendix V are established on a commission rate or piece rate basis based on surveys of prevailing practices in local private industry. The Army Air Force Exchange Service, the U.S. Marine Corps, the Navy Exchange Service Command, the U.S. Coast Guard, and the Department of Veterans Affairs Canteen Service are documented as activities using commission rate or piece rate pay practices. Prevailing rate employees under these special schedules are entitled to a floor pay adjustment equal to the percentage pay adjustment received by GS employees where they work.

Pay Adjustments for 5 U.S.C. 5348 Wage Employees Prevailing Rate Maritime Employees of the Department of the Navy are entitled to a floor pay adjustment equal to the percentage pay adjustment received by GS employees in the Virginia Beach-Norfolk, VA-NC GS locality pay area. Ship Pilots areas are entitled to a floor pay adjustment equal to the percentage pay adjustment received by GS employees in the Rest of U.S. GS locality pay area. 8 Prevailing Rate Maritime Employees of agencies other than the Department of the Navy are entitled to floor pay adjustments equal to the percentage pay adjustment received by GS employees where they work.