
From the U.S. Code Online via GPO Access
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[Laws in effect as of January 2, 2001]
[Document affected by Public Law 107-108 Section 404]
[CITE: 5USC5941]

 
             TITLE 5--GOVERNMENT ORGANIZATION AND EMPLOYEES
 
                           PART III--EMPLOYEES
 
                      Subpart D--Pay and Allowances
 
                         CHAPTER 59--ALLOWANCES
 
                 SUBCHAPTER IV--MISCELLANEOUS ALLOWANCES
 
Sec. 5941. Allowances based on living costs and conditions of 
        environment; employees stationed outside continental United 
        States or in Alaska
        
    (a) Appropriations or funds available to an Executive agency, except 
a Government controlled corporation, for pay of employees stationed 
outside the continental United States or in Alaska whose rates of basic 
pay are fixed by statute, are available for allowances to these 
employees. The allowance is based on--
        (1) living costs substantially higher than in the District of 
    Columbia;
        (2) conditions of environment which differ substantially from 
    conditions of environment in the continental United States and 
    warrant an allowance as a recruitment incentive; or
        (3) both of these factors.

The allowance may not exceed 25 percent of the rate of basic pay. Except 
as otherwise specifically authorized by statute, the allowance is paid 
only in accordance with regulations prescribed by the President 
establishing the rates and defining the area, groups of positions, and 
classes of employees to which each rate applies.
    (b) An employee entitled to a cost-of-living allowance under section 
5924 of this title may not be paid an allowance under subsection (a) of 
this section based on living costs substantially higher than in the 
District of Columbia.

(Pub. L. 89-554, Sept. 6, 1966, 80 Stat. 512.)

                      Historical and Revision Notes
------------------------------------------------------------------------
                                                    Revised Statutes and
     Derivation                U.S. Code             Statutes at Large
------------------------------------------------------------------------
                     5 U.S.C. 118h.                Apr. 20, 1948, ch.
                                                    219, Sec.  207, 62
                                                    Stat. 194.
                     ............................  June 30, 1948, ch.
                                                    775, Sec.  104, 62
                                                    Stat. 1205.
------------------------------------------------------------------------

    The section is reorganized and restated for clarity and conciseness.
    The word ``allowances'' is substituted for ``additional 
compensation'' as a more apt term and for consistency.
    In subsection (a), the words ``Executive agency'' are substituted 
for ``executive departments, independent establishments, and wholly 
owned Government corporations'' in view of the definition of ``Executive 
agency'' in section 105. The exception of a ``Government controlled 
corporation'' is added to preserve the application to ``wholly owned 
Government corporation''.
    Subsection (b) is based on the second proviso of former section 118h 
and is restated to reflect the provisions of sections 511(b), (c)(7) and 
521 of the Act of Sept. 6, 1960, Pub. L. 86-707, 74 Stat. 800-802. The 
reference to section 204 of the Act of Apr. 20, 1948, is omitted as 
obsolete, since the section was applicable only to fiscal year 1949.
    The last proviso of former section 118h which provided the effective 
date of the section is omitted as executed.
    Standard changes are made to conform with the definitions applicable 
and the style of this title as outlined in the preface to the report.


  Prohibition of Reduction of Allowance; Study and Report on Adjusting 
                    Calculation of Geographic Factors

    Pub. L. 102-141, title IV, Sec. 1, Oct. 28, 1991, 105 Stat. 861, as 
amended by Pub. L. 103-329, title V, Sec. 532, Sept. 30, 1994, 108 Stat. 
2413; Pub. L. 104-52, title IV, Sec. 5, Nov. 19, 1995, 109 Stat. 490; 
Pub. L. 105-61, title V, Sec. 515, Oct. 10, 1997, 111 Stat. 1306, 
provided that: ``The allowances provided to employees at rates set under 
section 5941 of title 5, United States Code, and Executive Order 
Numbered 10000 [set out below] as in effect on the date of the enactment 
of this Act [Oct. 28, 1991] may not be reduced during the period 
beginning on the date of the enactment of this Act through December 31, 
2000: Provided, That no later than March 1, 2000, the Office of 
Personnel Management shall conduct a study and submit a report to the 
Congress proposing appropriate changes in the method of fixing 
compensation for affected employees, including any necessary legislative 
changes. Such study shall include--
        ``(1) an examination of the pay practices of other employers in 
    the affected areas;
        ``(2) a consideration of alternative approaches to dealing with 
    the unusual and unique circumstances of the affected areas, 
    including modifications to the current methodology for calculating 
    allowances to take into account all cost of living in the geographic 
    areas of the affected employee; and
        ``(3) an evaluation of the likely impact of the different 
    approaches on the Government's ability to recruit and retain a well-
    qualified workforce.
For the purpose of conducting such study and preparing such report, the 
Office may accept and utilize (without regard to any restriction on 
unanticipated travel expenses imposed in an Appropriations Act) funds 
made available to the Office pursuant to court approval.''

 Ex. Ord. No. 10000. Regulations Governing Additional Compensation and 
  Credit Granted Certain Federal Employees Serving Outside the United 
                                 States

    Ex. Ord. No. 10000, Sept. 16, 1948, 13 F.R. 5453, as amended by Ex. 
Ord. No. 10636, Sept. 16, 1955, 20 F.R. 7025; Ex. Ord. No. 11938, Sept. 
29, 1976, 41 F.R. 43383; Ex. Ord. No. 12107, Dec. 28, 1978, 44 F.R. 
1055; Ex. Ord. No. 12510, Apr. 17, 1985, 50 F.R. 15535, provided:
    By virtue of the authority vested in me by section 207 of the 
Independent Offices Appropriation Act, 1949, approved April 20, 1948 
(Public Law 491, 80th Congress), as amended by section 104 of the 
Supplemental Independent Offices Appropriation Act, 1949, approved June 
30, 1948 (Public Law 862, 80th Congress), and by sections 303, 443, and 
853 of the Foreign Service Act of 1946 (60 Stat. 1002, 1006, 1024), and 
as President of the United States, I hereby prescribe the following 
regulations (1) governing the payment of additional compensation to 
personnel of the United States employed outside the continental United 
States or in Alaska, under the provisions of the said section 207, as 
amended, (2) governing the payment of salary differentials to Foreign 
Service staff officers and employees serving at certain posts, pursuant 
to the said section 443, and (3) relating to unhealthful foreign posts, 
pursuant to the said section 853:

            Part I--Additional Compensation in Foreign Areas

    Section 101. Definitions. As used in this Part, (a) the words 
``foreign areas'' mean all areas exclusive of (1) the forty-eight states 
of the United States, (2) the District of Columbia, and (3) non-foreign 
areas as defined in section 201 of this order, and (b) the words 
``section 207 of the Act'' mean section 207 of the Independent Offices 
Appropriation Act, 1949, approved April 20, 1948, Public Law 491, 80th 
Congress, as amended by section 104 of the Supplemental Independent 
Offices Appropriation Act, 1949, approved June 30, 1948, Public Law 862, 
80th Congress.
    Sec. 102. Additional Compensation by Reason of Environment. The 
Secretary of State shall from time to time, subject to applicable law, 
(a) designate places in foreign areas having conditions of environment 
which differ substantially from conditions of environment in the United 
States and warrant additional compensation as a recruitment incentive, 
(b) fix for each such place the additional rate or rates of compensation 
to be paid by reason of such environment pursuant to section 207 of the 
Act, after giving due consideration to the degree of environmental 
difference, and (c) prescribe such further regulations, governing such 
compensation, as may be necessary. Additional compensation so fixed is 
hereafter in this Part referred to as ``foreign post differential.''
    Sec. 103. Basis for Foreign Post Differential. The Secretary of 
State may establish a foreign post differential for any place when, and 
only when, the place involves any one or more of the following: (a) 
extraordinarily difficult living conditions, (b) excessive physical 
hardship, or (c) notably unhealthful conditions.
    Sec. 104. Agencies Covered. Subject to the provisions of section 207 
of the Act and of this Part, every executive department, independent 
establishment, and wholly owned Government corporation shall pay a 
foreign post differential fixed under section 102 hereof to each of its 
employees whose basic compensation is fixed by statute and who is 
located at the post for which that differential has been fixed.
    Sec. 105. Persons Eligible to Receive Foreign Post Differential. (a) 
In order that an employee be eligible to receive a foreign post 
differential under this Part, (1) he shall be a citizen or national of 
the United States, (2) his residence in the place to which the foreign 
post differential applies, at the time of receipt thereof, shall be 
fairly attributable to his employment by the United States, and (3) his 
residence at such place over an appropriate prior period of time must 
not be fairly attributable to reasons other than employment by the 
United States or by United States firms, interests, or organizations.
    (b) Subject to the provisions of section 105(a) hereof, the classes 
of persons eligible to receive the foreign post differentials fixed 
pursuant to section 102 hereof shall include:
    (1) Persons recruited or transferred from the United States.
    (2) Persons employed locally but (a) who were originally recruited 
from the United States and have been in substantially continuous 
employment by other Federal agencies, United States firms, interests, or 
organizations, international organizations in which the United States 
Government participates, or foreign governments, and whose conditions of 
employment provide for their return transportation to the United States, 
or (b) who were at the time of employment temporarily absent from the 
United States for purposes of travel or formal study and maintained 
residence in the United States during such temporary absence. When used 
in a geographical sense in section 105(b) hereof, ``United States'' 
includes the areas included within the definition of non-foreign areas 
as set forth in section 201 hereof.
    (3) Persons who are not normally residents of the area concerned and 
who are discharged from the military service of the United States in 
such area to accept employment therein with an agency of the Federal 
Government.
    Sec. 106. Payment of Foreign Post Differentials.
    (a) The following regulations shall govern the payment of foreign 
post differentials under this Part:
    (1) Payments shall begin as of the date of arrival at the post on 
assignment or transfer and shall end as of the date of departure from 
the post for separation or transfer, except that in case of local 
recruitment such payments shall begin and end as of the beginning and 
the end of employment, respectively.
    (2) Payments for periods of leave and of detail shall begin and end 
as determined in regulations prescribed under section 102(c) hereof.
    (3) Payments to persons serving on a part-time basis shall be pro-
rated to cover only those periods of time for which such persons receive 
basic compensation.
    (4) Payment shall not be made for any time for which an employee 
does not receive basic compensation.
    Sec. 107. Persons Serving Under Contract. Any other provision of 
this Part notwithstanding, any person who would otherwise be eligible to 
receive a foreign post differential under this Part shall, if he is 
serving under contract, be compensated according to the terms of such 
contract for the period thereof and shall, during such period, be 
ineligible to receive a foreign post differential.
    Sec. 108. Periodic Review. The Secretary of State shall 
periodically, but at least annually, review the places designated, the 
rates fixed, and the regulations prescribed pursuant to section 102 
hereof, with a view to making such changes therein as will insure that 
the payment of additional compensation under the provisions of this Part 
shall continue only during the continuance of conditions justifying such 
payment and shall not in any instance exceed the amount justified.
    Sec. 109. Additional Living Cost Compensation. No executive 
department, independent establishment, or wholly owned Government 
corporation shall pay, pursuant to section 207 of the Act, additional 
compensation to any employee located in any foreign area by reason of 
living costs which are substantially higher than those in the District 
of Columbia: Provided, That this section shall not be construed to 
prevent any payment, under section 204 of said Independent Offices 
Appropriation Act, 1949, or under other appropriate authority.

          Part II--Additional Compensation in Non-Foreign Areas

    Sec. 201. Definition. As used in this Part, (a) the term ``non-
foreign areas'' includes Alaska, Hawaii, the territories and possessions 
of the United States, the Trust Territory of the Pacific Islands, and 
such additional areas located outside the continental United States as 
the Secretary of State shall designate as being within the scope of the 
provisions of this Part, and (b) the words ``section 207 of the Act'' 
have the meaning set forth in section 101 hereof.
    Sec. 202. Additional Compensation by Reason of Environment. The 
Office of Personnel Management shall from time to time, subject to 
applicable law, (a) designate places in non-foreign areas having 
conditions of environment which differ substantially from conditions of 
environment in the United States and warrant additional compensation as 
a recruitment incentive, (b) fix for each such place the additional rate 
or rates of compensation to be paid by reason of such environment 
pursuant to section 207 of the Act, after giving due consideration to 
the degree of environmental difference, and (c) prescribe such further 
regulations, governing such compensation, as may be necessary. 
Additional compensation so fixed is hereafter in this Part referred to 
as ``non-foreign area post differential.''
    Sec. 203. Basis for Non-Foreign Area Post Differential. The Office 
of Personnel Management may establish a non-foreign area post 
differential for any place in the non-foreign areas when, and only when, 
the place involves any one or more of the following: (a) extraordinarily 
difficult living conditions, (b) excessive physical hardship, or (c) 
notably unhealthful conditions.
    Sec. 204. Persons Eligible to Receive Non-Foreign Area Post 
Differential. (a) In order that an employee be eligible to receive a 
non-foreign area post differential under this Part, (1) he shall be a 
citizen or national of the United States, (2) his residence in the place 
to which the non-foreign area post differential applies, at the time of 
receipt thereof, shall be fairly attributable to his employment by the 
United States, and (3) his residence at such place over an appropriate 
prior period of time must not be fairly attributable to reasons other 
than employment by the United States or by United States firms, 
interests, or organizations.
    (b) Subject to the provisions of section 204(a) hereof, the classes 
of persons eligible to receive the non-foreign area post differentials 
fixed pursuant to section 202 hereof shall include:
    (1) Persons recruited or transferred from outside the area 
concerned.
    (2) Persons employed in the area concerned but (a) who were 
originally recruited from outside such area and have been in 
substantially continuous employment by other Federal agencies, 
contractors of Federal agencies, or international organizations in which 
the U. S. Government participates, and whose conditions of employment 
provide for their return transportation to places outside the area 
concerned, or (b) who were at the time of employment temporarily present 
in the area concerned for purposes of travel or formal study and 
maintained residence outside such area during the period so present.
    (3) Persons who are not normally residents of the area concerned and 
who are discharged from the military service of the United States in 
such area to accept employment therein with an agency of the Federal 
Government.
    Sec. 205. Additional Living Cost Compensation. (a) The Office of 
Personnel Management shall from time to time, subject to applicable law, 
(1) designate places in non-foreign areas eligible to receive additional 
compensation by virtue of living costs that are substantially higher 
than in the Washington, D.C., area, (2) fix for each place so designated 
an additional rate or rates of compensation by reason of such higher 
living costs, and (3) prescribe by regulation such additional policies 
or procedures as may be necessary to administer such compensation. 
Additional compensation under this section is referred to as a ``non-
foreign area cost-of-living allowance''.
    (b) In fixing the non-foreign area cost-of-living allowances, the 
Office of Personnel Management shall make appropriate deductions when 
quarters or subsistence, or commissary or other purchasing privileges 
are furnished as a result of Federal civilian employment at a cost 
substantially lower than the prevailing costs in the allowance area 
concerned.
    Sec. 206. Coordination. The Office of Personnel Management shall 
define the extent to which and the conditions under which an employee 
serving within the non-foreign areas may receive both a non-foreign area 
post differential and a non-foreign area cost-of-living allowance, 
pursuant to section 207 of the Act. In carrying out its functions under 
this Part the Office may take due notice if any special allowances, 
other than under section 207 of the act, granted to personnel employed 
by the United States in non-foreign areas.
    Sec. 207. Agencies Covered. Subject to the provisions of section 207 
of the Act and of this Part, every Executive department, independent 
establishment, and wholly owned Government corporation shall pay (a) a 
non-foreign area post differential fixed under section 202 hereof to 
each of its employees whose basic compensation is fixed by statute and 
who is located at the post for which that differential has been fixed, 
and (b) a non-foreign area cost-of-living allowance fixed under section 
205 hereof to each of its employees whose basic compensation is fixed by 
statute and who is located at the post for which that allowance has been 
fixed.
    Sec. 208. Payment of Non-Foreign Area Post Differentials and Cost-
of-Living Allowances.
    (a) The following regulations shall govern the payment of non-
foreign area post differentials and non-foreign area cost-of-living 
allowances under this Part:
    (1) Payments shall begin as of the date of arrival at the post on 
assignment or transfer and shall end as of the date of departure from 
the post for separation or transfer, except that in case of local 
recruitment such payments shall begin and end as of the beginning and 
end of employment, respectively.
    (2) Payments for periods of leave and of detail shall begin and end 
as determined in regulations prescribed under section 202(c) hereof.
    (3) Payments to persons serving on a part-time basis shall be 
prorated to cover only those periods of time for which such persons 
receive basic compensation.
    (4) Payment shall not be made for any time for which an employee 
does not receive basic compensation.
    Sec. 209. Persons Serving Under Contract. Any other provision of 
this Part notwithstanding, any person who would otherwise be eligible to 
receive a non-foreign area post differential or a non-foreign area cost-
of-living allowance under this Part shall, if he is serving under a 
contract, be compensated according to the terms of such contract for the 
period thereof and shall, during such period, be ineligible to receive 
said differential and allowance.
    Sec. 210. Periodic Review. The Office of Personnel Management shall 
periodically, but at least annually, review the places designated, the 
rates fixed, and the regulations prescribed pursuant to this Part, with 
a view to making such changes therein as will insure that payment of 
additional compensation under the provisions of this Part shall continue 
only during the continuance of conditions justifying such payment and 
shall not in any instance exceed the amount justified: Provided, That if 
program or methodology revisions would substantially reduce an 
established differential or allowance rate, then the rate of such 
additional compensation may be reduced gradually.

                     Part III--Interim Arrangements

    Sec. 301. Temporary Regulations. During the period commencing with 
the date of this order or the effective date of section 207 of the Act 
(as defined in section 101 hereof), whichever shall occur earlier, and 
ending on a date or dates fixed by the Secretary of State and the Office 
of Personnel Management, respectively, as the effective dates of the 
designation of places and of the fixing of additional rates of 
compensation, under Parts I and II of this order, but in no event later 
than January 1, 1949, and notwithstanding the provisions of Parts I and 
II of this order, the payment of salaries and compensation (including 
the payment of additional compensation) of persons subject to the 
provisions of said section 207 shall be governed by the regulations and 
practices in effect in the respective Executive departments, independent 
establishments, and wholly owned government corporations immediately 
prior to April 20, 1948. Executive Order No. 9962 of May 24, 1948 is 
hereby revoked.

              Part IV--Foreign Service Salary Differentials

    [Part IV relating to Foreign Service salary differentials terminated 
June 30, 1951, pursuant to section 404 of this Executive Order.]

                        Part V--Unhealthful Posts

    [Part V relating to Unhealthful Posts terminated June 30, 1951, 
pursuant to section 503 of this Executive Order.]

                       Part VI--General Provisions

    Sec. 601. Publication. This order, and the places designated, the 
rates fixed, and the regulations prescribed by the Secretary of State 
and the Office of Personnel Management pursuant to Parts I and II of 
this order, shall be published in the Federal Register.

                        Executive Order No. 12070

    Ex. Ord. No. 12070, June 30, 1978, 43 F.R. 28977, as amended by Ex. 
Ord. No. 12107, Dec. 28, 1978, 44 F.R. 1055, which related to suspension 
of certain requirements in determination of cost of living allowance 
rates, was superseded by Ex. Ord. No. 12510, Apr. 17, 1985, 50 F.R. 
15535.

                  Section Referred to in Other Sections

    This section is referred to in sections 5307, 5545b of this title; 
title 10 section 1603; title 20 section 906; title 22 section 2506; 
title 39 section 1005.
