The Defense Department is working on a plan to dole out millions of dollars in back pay to thousands of overseas employees who were erroneously underpaid for more than a decade, according to a department spokesman.

But, "It will likely be several weeks before the back pay guidance is ready for release," the spokesman, Lt. Col. Les’ Melnyk, wrote in an e-mail Thursday.

From 1995 until about a month ago, five of the department’s six major nonappropriated fund employers were not paying a mandatory cost-of-living allowance to Americans hired overseas for regular full-time jobs. The allowance, known officially as post allowance, is meant to offset some of the expense of living in high-cost areas.

In March, the department ordered wayward employers — the Army and Air Force Exchange Service, the Navy Exchange Service Command, Navy Installations Command, Air Force Services and the U.S. Marine Corps — to begin payments immediately.

An estimated 2,850 additional employees across DOD are now eligible for the allowance, according to Melnyk. Payments going forward will cost roughly $21.5 million a year based on estimated costs for 2008, he said.

DOD and NAF employers have also been working on a plan to make back payments of post allowance to affected employees.

Though details of that plan aren’t ready, both current and former employees will be allowed to file claims for back payments.

Because of a six-year statute of limitations for claims against the U.S. government, employees can only reclaim benefits going back to Dec. 1, 2001, according to the DOD.

How much those back payments will cost is not yet known. In April the department approximated the cost at $68 million, but, "The $68 million figure was a very rough ballpark estimate; we haven’t refined it to the extent where we’re comfortable updating that figure yet," Melnyk wrote.

A major reason for that is because of an Air Force decision in early May to expand its definition of full time. Since the service completed a review of employee records May 16, 392 more employees in U.S. Air Forces in Europe became eligible for post allowance, bringing the total number of eligible local hires to 450. Employees hired in the United States for overseas jobs were already getting the allowance.

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