WASHINGTON (AP) - The government has agreed to pay $232.5 million to as many as 70,000 present and former federal employees to resolve a long-standing dispute over annual cost-of-living raises.
Federal workers in Alaska, Hawaii, Puerto Rico, the Virgin Islands and Guam will be entitled to a share of the money, the Justice Department said Friday.
All federal employees get yearly cost-of-living raises - known as COLAs - which are meant to ensure their pay keeps up with inflation. The COLAs vary for workers living in different areas, taking into account local price differences.
However, federal workers in the states and territories outside the lower 48 states had sued the government, saying the COLAs have not adequately taken into account special factors related to their remote locations, such as higher travel costs.
In the settlement, the government agreed to retroactively increase the COLAs those workers have received since October 1990.
Also, the government agreed to use a new formula to calculate future COLAs for workers outside the 48 contiguous states. By agreeing to the settlement, those workers will forfeit the right to future court challenges to that formula.
The settlement is subject to final approval by a federal court in the Virgin Islands, the Justice Department said.