439 Territorial Cost–of–Living Allowance

439.1 Eligibility and Pay Factors

439.11 Eligibility

The territorial cost–of–living allowance (TCOLA) is an amount that is payable to postal employees who are working outside of the continental United States according to 39 U.S.C. 1005(b).

439.12 Pay Factors

Applicable pay factors are as follows:

  1. The amount of TCOLA is a percentage of salary. The percentage figure is determined and published periodically by the Office of Personnel Management. Employee Resource Management then issues appropriate instructions to the affected areas. It is payable as follows:
    1. For rural carriers on a 6–day week, TCOLA is payable up to 48 hours per week.
    2. For all other eligible employees, TCOLA is payable up to 40 hours per week.
  2. TCOLA is not paid for any time for which an employee does not receive basic pay.
  3. Payment of TCOLA does not constitute an equivalent increase for step increase purposes.
  4. TCOLA is not included in the basic pay for purposes of computing postal overtime, EAS additional pay, Sunday premium, night differential, holiday–worked pay, and deductions for employee benefits plans such as life insurance and Civil Service retirement. (See special provisions for the calculation of Christmas–worked pay and holiday scheduling premium at 434.53d, out–of–schedule premium at 434.63b, and nonbargaining rescheduling premium at 434.73b).
  5. TCOLA is included in the calculation of the regular rate for overtime under the FLSA and for the purpose of computing leave pay, including annual leave exchange.
  6. TCOLA is not included in the employee’s gross income for federal income tax purposes. However, all overtime and EAS additional pay (including any TCOLA added to basic pay for FLSA overtime) is included in gross income for federal income tax purposes.

439.2 Allowance Categories

Instructions are issued annually to each head of an installation outside the contiguous United States to determine the applicable allowance category of all employees. The installation head should adopt whatever methods are appropriate to obtain from employees the information needed to determine the applicable allowance category and the corresponding allowance to be paid.

The Postal Service has employees only in the Local Retail/Private Housing allowance category. This category includes those federal employees who purchase goods and services only from private retail establishments and who occupy housing units that are privately owned or rented.