What the 2021 U.S. Budget Means for Public Sector Workers

The $1.4 trillion spending package passed by the House and Senate on Dec. 21, 2020, includes several provisions that directly affect public sector workers and the human resources professionals who serve them. The budget agreement arrived at the same time as a second COVID-19 relief bill, which is summarized here.

Across all federal, state and local sectors, employers will need to develop new plans for granting COVID-related leave. Requirements for emergency FMLA leave and paid sick leave that were created by the Families First Coronavirus Relief Act expired with the turn of the new year. Tax breaks for employer-sponsored leave for workers who must quarantine or take time off to care for children remain in effect until mid-March 2021.

Another concern for all public sector employees is how the IRS will handle deferred payroll taxes. The Trump administration in August gave employers the option to stop deducting Social Security and Medicare contributions from workers’ paychecks. Some federal agencies and the U.S. military implemented this payroll tax holiday for all employees. Other public sector organization allowed workers to make the choice individually.

With the tax holiday expiring on Dec. 31, 2020, workers must make up deferred payments to the federal retirement and disability programs. They will have all of the 2021 calendar year to do so. Originally, full repayment would have been due by the end of April.

Looking only at the federal sector, provisions of the overall budget bill and the more-narrowly focused 2021 National Defense Authorization Act call for

  • A 3 percent pay raise for members of the military,
  • A 1 percent pay raise for federal government employees,
  • No increase in locality pay,
  • Paid parental leave for the roughly 100,000 federal employees who were not already covered by the program introduced in 2020
  • Limiting use-or-lose annual leave for Title 5 employees to 75 percent of the unused balance,
  • Requiring congressional approval of moves such as the relocation of the Department of the Interior headquarters,
  • Hiring initiatives at several departments, and
  • Creating a model EEOC program for reporting problems and preventing retaliation at each federal agency that is independent from the agency’s HR department and general counsel office.

A final major concern for federal employees heading into the new year is the looming implementation of Schedule F under the General Schedule. Members of Congress discussed using the budgeting process to block the plan to reclassify large numbers of senior civil servants as at-will employees who can be fired without going through many of the steps needed to terminate other U.S. government workers.

Highlighting the potential implications, FCW wrote, “Already, the Office of Management and Budget has reclassified 88 percent of its jobs under Schedule F. Agencies are operating under a Jan. 19 deadline to list positions eligible for reclassification, but some are submitting their lists earlier, raising the specter of a purge of the civil service ranks in the waning days of the Trump administration.”

President-elect Joe Biden and his incoming administration officials have been much more supportive of the federal workforce. It is not clear whether eliminating Schedule F will be a priority after January 20, but Government Executive reported that “Biden’s team has focused on the ‘decimation’ of the federal workforce during the Trump years and is committed to finding ways to rebuild it, according to several individuals directly and indirectly involved in the effort. Many experts with institutional knowledge fled federal service, the thinking went, and the incoming administration is looking at various hiring authorities to get them back in the door.”

Find us on social media!

Subscribe to the HR Bulletin