Interest is included in all payments made to individuals pursuant to the special rates settlement. The rules for determining how much interest an individual is to receive are set forth in the court-approved Settlement Distribution Plan (Section X). Here is a summary:

1. Starting point

Interest begins to accrue at the time the Class Member was first shortchanged by the OPM regulation that the court deemed invalid in this lawsuit. For example, some Class Members began getting shortchanged (i.e., receiving less pay than they should have) as early as 1983. Interest has been accruing for those in this group since that time.

2. Ending Point

Interest stops accruing on one of two dates.

Interest calculated through initial distribution

Interest accrues through October 27, 2003, the deadline for submitting a claim in order to be paid at the initial distribution, for individuals in the following categories:

1. Class Members who submitted their yellow Claim Forms after October 27, 2003.
2. Survivor Annuitants or other Successors of deceased Class Members who submitted a green Claim Form or pink Potential Successor in Interest Form after October 27, 2003.
3. Individuals who submitted an unsuccessful challenge.

Interest calculated through the final distribution

Interest accrues through the final distribution for individuals in the following categories:

1. Class Members who submitted a yellow Claim Form before October 27, 2003.
2. Survivor Annuitants and other Successors of deceased Class Members who submitted a pink Potential Successor in Interest Form or green Survivor Annuitant Claim Form before October 27, 2003.
3. Individuals who submitted a successful challenge to the Employee Status Information upon which the payment calculation was based (Class Members submitted a purple Challenge Form; Survivor Annuitants and other Successors of deceased Class Members submitted a blue Challenge Form). A "successful challenge" is one for which the Settlement Adjudicator determined that an item of Employee Status Information was incorrect, regardless of the impact on the amount owed the individual, or one in which the Settlement Administrator determined that the amount owed the individual would not change even if the challenge were granted.
4. Individuals not in the database of Class Members who submitted a successful orange Claim for Class Membership.

3. Interest Rates

Interest on individual award amounts that accrues up until October 27, 2003, is calculated using the rates applicable under the Back Pay Act, 5 U.S.C. § 5596. These change quarterly and have varied greatly over the 22-year history of this case. Interest from October 27, 2003 through the final distribution, is tied to the rate of return earned by the Special Rates Settlement Trust during that period, which was about 3%.

BULLETIN RE: THE REASONS SOME CLASS MEMBERS ARE OWED NO BACK PAY

Some class members have requested further explanation as to how they could have been paid special rates during the years covered by the lawsuit and yet not be entitled to any back pay. The reason is that these class members received other special rate pay increases that were at least as much as they would be entitled to receive under the settlement. Accordingly, and pursuant to the underlying court decision, they were never shortchanged by the OPM regulation that was the subject of this lawsuit.

Please keep in mind that the court did not hold that special rate employees were entitled to the same comparability adjustments (often referred to as COLA increases) that regular rate General Schedule (GS) employees received. Instead, it held that special rate employees were entitled only to the increases resulting from aligning their salaries to the closest step on the same grade of the GS pay scale not resulting in a decrease. These "alignment" increases are often very small (sometimes less than 1% of salary).

During the years covered by the lawsuit, OPM granted pay increases to special rate employees that were separate and apart from any pay increases given regular rate employees. These increases could be much higher (sometimes as much as 5% of salary) than the alignment increases triggered by GS increases. As a result, class members who received these independent special rates increases often received salaries that were greater than they would have received under the alignment rule. In those cases, the class members were never harmed by the OPM regulation challenged in the lawsuit.

While it is not feasible for us to describe in detail the countless back pay calculations performed for the more than 212,000 class members, we have developed the following example to further illustrate how the court-ordered alignment rule applies to a real job. This example is representative of how the rule was applied to every member of the class. Please refer to it and the remedial methodology if you have questions about the details of your back pay calculation.

General Engineers employed throughout the government at grades 5 through 11 were paid special salary rates throughout the years covered by the lawsuit. Special rates were authorized for grade 12 General Engineers beginning with the payment period starting in January 1986. Nonetheless, back pay is only owed to General Engineers who were paid at grades 5 through 11 for the payment period running from January 1984 through September of 1984. The reason is that during the years covered by the lawsuit, OPM regularly authorized special rate pay increases, independent of any regular rate GS increases, for all General Engineers who were receiving special rates. These increases were at least as much as the General Engineers would have been entitled to recover under the court-ordered alignment rule. The following timeline illustrates this point:

October 1982: General Engineers paid special rates received the same 4% pay increase that regular rate GS employees received. Their salaries, therefore, were aligned with the regular rate GS salaries, and no back pay is owed.

October 1983: No pay increases occurred for either regular rate or special rate employees.

January 1984: The regular rate GS pay scale was increased by 4%. General Engineers paid special rates received no pay increase. This knocked their salaries out of alignment with the salaries of the regular rate GS employees.


For example, prior to January 1984, General Engineers at grade 11, step 1 were paid $26,959, which was equivalent to the regular rate at grade 11, step 4.

After the January 1984 GS pay increase of 4%, the special rate at grade 11, step 1 was still $26,959 (because no special rate increase occurred). This salary fell between the step 2 salary ($26,339) and step 3 salary ($27,189) on the new regular GS pay scale.

Because the regular rate at step 3 ($27,189) was the salary at the closest step on the same grade as the special rate salary not resulting in a decrease, that is the salary that a General Engineer at grade 11, step 1 in January 1984 should have received under the alignment rule. That salary is higher than the salary that grade 11, step 1 General Engineers actually received, so back pay is owed for that payment period. (The precise amount of back pay owed is determined by applying the rules and assumptions of the court-approved remedial methodology, such as the assumption that all class members were at step 5 and the rules dealing with class members who enter or leave their grade or job at some point during the payment period).

October 1984: General Engineers paid special rates received a 4% pay increase.

January 1985: General Engineers paid special rates at grades 5 and 7 received the same 3.5% pay increase that regular rate GS employees received. General Engineers paid special salary rates at grades 9 and 11 received no pay increase. Yet, they are not owed any back pay because the 4% pay increase they received in October 1984 was more than they would have received under the alignment rule.

As mentioned above, prior to October 1984, a grade 11, step 1 General Engineer paid special rates earned a salary of $26,959. Following the January 1985 GS increase, this salary fell between the step 1 ($26,381) and step 2 ($27,260) rates at grade 11 on the GS pay scale. Thus, applying the alignment rule yields a rate of $27,260 (equivalent to the GS grade 11, step 2 rate, which is the closest step on the same grade of the GS pay scale not resulting in a decrease) to which a grade 11, step 1 General Engineer would have been entitled.

Due to the October 1984 special rates pay increase, however, a grade 11, step 1 General Engineer actually received a salary of $28,039, which is higher than the salary he or she would have been owed under the alignment rule. Thus, no harm occurred and no back pay is owed.

January 1986: Neither regular rate GS employees nor special rate General Engineers at grades 5 and 7 received a pay increase. Special rate General Engineers at grades 9 and 11 received a 3.5% pay increase. Also at this time, special rates were first authorized for General Engineers at grade 12. Because no regular rate GS increase occurred, no alignment adjustment occurred.

October 1986: General Engineers paid special rates at grades 9, 11, and 12 received a 5% pay increase. No other pay increases were authorized.

January 1987: General Engineers paid special rates at grades 5 and 7 received the same 3% pay increase that regular rate GS employees received. General Engineers paid special rates at grades 9, 11, and 12 received no pay increase, but are owed no back pay.

Recall that General Engineers at grades 9, 11, and 12 received a 5% increase in October 1986. Prior to that increase, a grade 11, step 1 General Engineer earned $29,018. This salary fell between the step 3 ($28,984) and step 4 ($29,890) salaries on the regular GS pay scale, as adjusted to account for the January 1987 3% increase. Thus, under the alignment rule, grade 11, step 1 General Engineers were entitled to receive a salary of $29,890 (equivalent to the closest step on the same grade of the GS pay scale not resulting in a decrease).

Due to the October 1986 5% special rate increase, grade 11, step 1 General Engineers actually received a salary of $30,469. Thus, the salary they received was higher than that to which they were entitled under the alignment rule, and they are owed no back pay.

October 1987: General Engineers paid special rates at grades 9, 11, and 12 received a 3% pay increase. No other pay increases were authorized.

January 1988: General Engineers paid special rates at grades 5 and 7 received the same 2% pay increase that regular rate GS employees received. General Engineers paid special rates at grades 9, 11, and 12 received no pay increase, but are owed no back pay.

Recall that General Engineers paid at grades 9, 11, and 12 received a 3% increase in October 1987. Prior to that increase, a grade 11, step 1 General Engineer earned $30,469. This salary fell between the step 3 ($29,564) and step 4 ($30,488) salaries on the regular GS pay scale, as adjusted to account for the January 1988 2% increase. Thus, under the alignment rule, grade 11, step 1 General Engineers were entitled to receive a salary of $30,488 (equivalent to the closest step on the same grade of the GS pay scale not resulting in a decrease).

Due to the October 1987 3% special rate increase, grade 11, step 1 General Engineers actually received a salary of $31,383. Thus, the salary they received was higher than that to which they were entitled under the alignment rule, and they are owed no back pay.

January 1989, January 1990, January 1991: All General Engineers and all regular rate GS employees received the same pay increases (4.1%, 3.6%, and 4.1%, respectively). Thus, no back pay is owed for any of these payment periods.

As the timeline shows, only General Engineers paid special rates at grades 5 through 11 between January and September of 1984 are entitled to back pay. Thus, in accordance with the court's decision, the following General Engineers are not entitled to any back pay for their time spent working as General Engineers:

• General Engineers who were not paid at grades 5 through 11 at some time between January 1, 1984 and September 30, 1984
• General Engineers who left their position prior to January 1, 1984
• General Engineers who first obtained their position after October 1, 1984

This example is provided to assist you in understanding how your payment amount was derived through application of the court-ordered alignment rule. The alignment rule was applied to each class member in this fashion to determine whether any back pay is owed. Please consult this bulletin and the court-approved remedial methodology to help you understand how your payment amount was determined. It is not feasible for us to provide detailed information of this sort for every class member.

The court imposed the alignment rule and approved the remedial methodology. Those decisions are not subject to challenge. As explained in your distribution packages, the only thing that can be challenged at this stage is erroneous Employee Status Information, which can be found on the purple Challenge form (blue for Survivor Annuitants of deceased class members).