scale salary, or the standard GS scale salary plus a locality adjustment (see below), whichever is higher. Locality adjustment The second component of the GS salary, the locality pay adjustment, was introduced in 1994 as part of the Federal Employees Pay Comparability Act of 1990 (FEPCA). Prior to FEPCA, all GS employees received the same salary regardless of location, which failed to reflect both the disparity between public sector and private sector pay as well as differences in cost of living in major metropolitan areas. As noted earlier, an employee in a position with a special GS scale does not receive a locality adjustment unless the pay under the special scale is lower than using the locality pay adjustment. Under FEPCA, the United States (excluding territories and overseas employees) are divided into locality areas for purposes of determining pay. As of 2023, there are 54 designated areas consisting of 51 specified areas (generally following either Metropolitan statistical areas (MSA's) or Combined statistical areas (CSA's) but frequently including bordering counties that are not included within the MSA/CSA), two additional designated areas for the states of Alaska and Hawaii, and a "Rest of U.S." which consists of areas within the United States not designed as a separate locality area. The areas other than "Rest of U.S." are designated to receive pay adjustments in addition to the general adjustment provided to all GS employees, while "Rest of U.S." receives only the general adjustment provided to all GS employees. Salary adjustments in other U.S. Territories and for overseas employees are separate from this adjustment. The total pay with locality is calculated as follows (the result of both equations is the same): FEPCA places a cap on the total salary of highly paid employees (mainly those at the higher GS-15 Grade steps) – the total base pay plus locality adjustment cannot exceed the salary for employees under Level IV of the Executive Schedule. The locality pay adjustment is counted as part of the "high-3" salary in calculating Federal Employees Retirement System (FERS) and Civil Service Retirement System (CSRS) annuities, as well as the baseline for individuals having a percentage of salary deducted for deposit into the Thrift Savings Plan. Personnel outside the United States Personnel based outside the United States (e.g. U.S. territories, foreign overseas areas) receive a lower locality adjustment (4.76% for 2010). However, they may also receive certain non-taxable allowances such as cost-of-living