Back Pay Fairness Act Would Reimburse Federal Workers With Interest

Senator Doug Jones with coffee.
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Senator Doug Jones (D-Alabama) has introduced legislation that would ensure federal workers affected by government shutdowns receive appropriate interest payments in addition to back pay, NBC reports.

The Back Pay Fairness Act comes in time for the end of the longest partial shutdown in U.S. government history, which resolved at least temporarily on Friday after an estimated 800,000 government workers went more than a month without pay.

“If the federal government can charge you interest for being late on your taxes, then it should be paying interest on late paychecks,” Jones said. “The more than 5,500 federal workers in Alabama didn’t ask for a shutdown and shouldn’t be punished for it.”

Jones, in a largely symbolic gesture, also asked that his own paycheck be withheld for the duration of the budget impasse. Funding for congressional salaries had previously been secured prior to the beginning of the shutdown, meaning that congressional leaders were paid even as federal workers were not.

“Federal workers are experiencing serious financial hardship from the shutdown,” said David Cox, president of the American Federation of Government Employees. “When it ends, employees will not only have to pay more than a month’s worth of overdue bills, but they will also have to pay late fees and penalties, overdraft fees and interest charges.”

Federal law already dutifully accounts for interest when it comes to delayed payments, but only when it benefits the Treasury. Interest is indeed applied to taxes paid after the due date. That interest rate, which is now set at 3.625 percent, is called the “Prompt Payment” rate and applies to money owed after tax deadlines.

The Back Pay Fairness Act would simply apply the same rate to the government itself in the event of a shutdown or other delay in the usual payment of federal workers.

While an interest provision is widely regarded as a common sense measure, technically speaking, until this year’s passing of the Government Employee Fair Treatment Act of 2019, government workers were not even guaranteed back pay at all. To-date, back pay has been separately negotiated and implemented following shutdowns, but there was no legal requirement that Congress does so.

The bill proposed by Jones would simply supplement the certainty of back pay with a standard interest provision.

Immediate co-sponsors of the Back Pay Fairness Act are Senators Tammy Baldwin (D-Wisconsin), Ben Cardin (D-Maryland), Mazie Hirono (D-Hawaii), Chris Van Hollen (D-Maryland), Tim Kaine (D-Virginia), Amy Klobuchar (D-Minnesota), Jeanne Shaheen (D-New Hampshire), Mark Warner (D-Virginia), and Ron Wyden (D-Oregon.)