The Marine Corps eliminated cost-of-living pay for new non-appropriated fund local hires this month, and other military employers could do the same after the Department of Defense dropped the requirement.

All DOD agencies, including the Army and Air Force Exchange Service, may now decide whether to pay post allowance to U.S. workers hired abroad since May 6, the Office of the Under Secretary of Defense for Personnel and Readiness said in May.

The Marine Corps stopped paying the benefit to new hires on Aug. 10. Officials with AAFES, the Army and the Air Force said Friday that decisions were not yet made on the post allowance pay.

U.S. citizens hired as NAF employees in Europe and the Pacific could lose out on thousands of dollars in annual pay if post allowance is abandoned — money co-workers recruited from the United States will continue to receive.

It is an abrupt reversal by the DOD, which last year ordered the military to pay all locally hired, full-time NAF workers the allowance — plus tens of millions of dollars in back pay — which had been withheld by some services for about a decade.

Under the new policy’s grandfather clause, all NAF employees hired locally before May 6 will continue to receive post allowance. But it effectively cancels the guarantee for all those hired since.

The Marine Corps discontinued the pay for those hired after Aug. 10, said Carlos Saldana, chief human resources officer for Marine Corps Community Services in Okinawa.

“Those who were currently receiving [post allowance] up to Aug. 10 will continue to receive it until they resign or terminate their employment,” he said.

For now, AAFES is still paying the post allowance while it considers the policy change, Chris Ward, an AAFES spokesman at the agency’s headquarters in Dallas, wrote in an e-mail to Stars and Stripes.

The undersecretary’s office mentioned the agency specifically in the policy change and gave it the power — in consultation with the Army and Air Force — to handle the post allowances.

The agency was among five military employers ordered by Personnel and Readiness to pay the allowance to all local NAF hires in 2008. AAFES estimates it has repaid about $30 million in post allowance to employees over the past year and still owes about $300,000.

Ward said the AAFES back pay reimbursements, which date to 2001, are “ongoing.”

The agency worried the burden could gouge its budget, and last summer its staff recommended that the DOD eliminate post allowance for about 967 AAFES local hires.

The Air Force at Yokota Air Base in Japan said it is withholding the benefit while formal changes are considered.

“All new hires from May 6 on will not receive a post allowance until the Air Force makes a final decision on the application of the changes to policy,” Maj. Chris Watt wrote in an e-mail to Stars and Stripes. “If the Air Force decides to allow the post allowance, new hires will be retroactively paid as appropriate.”

Yokota’s actions seem to contradict overall Air Force policy. Capt. Christina Hoggatt, an Air Force spokeswoman at the Pentagon, said in an e-mail Friday that the Air Force “continues to operate under existing rules which prescribe that post allowance shall be paid to eligible (non appropriated fund) employees.”

Hoggatt said the Air Force is currently evaluating the new DOD policy and will issue a revised policy, should it be necessary.

Air Force officials in Europe also said Friday that it will continue to compensate full-time local hire employees unless directed otherwise by Air Force headquarters.

The Army has always provided the benefit to local NAF hires. So far, it has not decided on any changes under the new policy, said Bruce Anderson, U.S. Army in Europe spokesman.

The Navy in Japan could not say on Friday how it will handle the policy change.

Before Personnel and Readiness intervened in March 2008, military employers had no uniform policy on post allowance for local hires.

The Marine Corps paid it to some and the Navy paid it to a “very small number” of local hires, according to the DOD Civilian Personnel Management Service.

All others were not paid an overseas allowance, the agency said.

By April 2008, post allowance was extended to all local NAF hires, Civilian and Personnel Management reported.

Gerald Weir, a housekeeping supervisor at Spangdahlem Air Base, Germany, said he hasn’t heard any discussion at his workplace on how the Air Force will handle post allowance for new local hires. He stumbled across the DOD policy change by accident while looking at the Office of Personnel Management’s Web site.

A local hire himself, Weir expects to continue to receive post allowance under the policy’s grandfather clause. He has already collected post allowance back pay determined to be owed to him retroactive to January 2007, he said. He has mixed feelings about the new DOD policy.

“We’re talking about a lot of money here,” he said. “When post allowance was at 60 percent, I was getting $700 every two weeks. That’s a lot of money for one employee.”

At the same time, he said, with the dollar’s decline against the euro, “a lot of people were hurting” prior to receiving post allowance.

Stars and Stripes reporters Jennifer Svan in Europe and Charlie Reed in the Pacific contributed to this story.

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