A bill to amend the Foreign Service Act of 1980 to extend comparability pay adjustments to members of the Foreign Service assigned to posts abroad, and to amend the provision relating to the death gratuity payable to surviving dependents on Foreign Service employees who die as a result of injuries sustained in the performance of duty abroad.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Foreign Service Overseas Pay Equity 
Act of 2008''.

SEC. 2. OVERSEAS COMPARABILITY PAY ADJUSTMENT.

    (a) Overseas Comparability Pay Adjustment.--
            (1) In general.--Chapter 4 of the Foreign Service Act of 
        1980 (22 U.S.C. 3961 et seq.) is amended by adding at the end 
        the following:

``SEC. 415. OVERSEAS COMPARABILITY PAY ADJUSTMENT.

    ``(a) In General.--A member of the Service who is designated class 
1 or below for purposes of section 403 and whose official duty station 
is not in the continental United States or in a nonforeign area shall 
receive, in accordance with the phase-in schedule set forth in 
subsection (c), the same locality-based comparability payment under 
section 5304 of title 5, United States Code (stated as a percentage) as 
would be payable to such member if such member's official duty station 
were in the District of Columbia.
    ``(b) Treatment as Basic Pay.--The amount of any locality-based 
comparability payment which is payable to a member of the Service under 
this section--
            ``(1) shall be considered a part of the basic pay of such 
        member for the purposes described in--
                    ``(A) section 5304(c)(2)(A) of title 5, United 
                States Code; and
                    ``(B) chapter 8 of this Act; and
            ``(2) shall be subject to any limitations on pay applicable 
        to locality-based comparability payments under section 5304 of 
        such title.
    ``(c) Phase-In.--The locality-based comparability payment payable 
to a member of the Service under this section shall be equal to--
            ``(1) 33.33 percent of the payment which would otherwise 
        apply under subsection (a) during the period beginning on the 
        first day of the first pay period beginning on or after the 
        earlier of April 1, 2009, or the date on which appropriations 
        for fiscal year 2009 are made available pursuant to the 
        enactment of  the Department of State, Foreign Operations, and 
        Related Programs Appropriations Act, 2009, and ending on the 
        last day of the last pay period in fiscal year 2009;
            ``(2) 66.67 percent of the payment which would otherwise 
        apply under subsection (a) during the period beginning on the 
        first day of the first pay period in fiscal year 2010 and 
        ending on the last day of the last pay period in fiscal year 
        2010; and
            ``(3) 100 percent of the payment determined under 
        subsection (a), beginning on the first day of the first pay 
        period in fiscal year 2011.
    ``(d) Nonforeign Area Defined.--As used in this section, the term 
`nonforeign area' means 1 of the areas listed in section 591.205 of 
title 5, Code of Federal Regulations.''.
            (2) Conforming amendment.--The table of contents under 
        section 2 of the Foreign Service Act of 1980 is amended by 
        inserting after the item relating to section 414 the following:

``Sec. 415. Overseas comparability pay adjustment.''.
    (b) Conforming Amendments Relating to the Foreign Service 
Retirement Systems.--
            (1) Contributions to the fund.--
                    (A) In general.--Section 805(a) of the Foreign 
                Service Act of 1980 (22 U.S.C. 4045(a)) is amended--
                            (i) in paragraph (1)--
                                    (I) by striking ``7.25 percent'' 
                                and inserting ``7 percent''; and
                                    (II) by striking ``The contribution 
                                by the employing agency'' and all that 
                                follows through ``and shall be made'' 
                                and inserting ``An equal amount shall 
                                be contributed by the employing 
                                agency'';
                            (ii) in paragraph (2)--
                                    (I) in subparagraph (A), by 
                                striking ``, plus an amount equal to 
                                .25 percent of basic pay''; and
                                    (II) in subparagraph (B), by 
                                striking ``, plus an amount equal to 
                                .25 percent of basic pay''; and
                            (iii) in paragraph (3), by striking ``, 
                        plus .25 percent''.
                    (B) Effective date.--The amendments made by 
                subparagraph (A) shall take effect on the first day of 
                the first pay period beginning on or after October 1, 
                2010.
            (2) Computation of annuities.--Section 806(a)(9) of the 
        Foreign Service Act of 1980 (22 U.S.C. 4046(a)(9)) is amended 
        by striking ``is outside the continental United States shall'' 
        and inserting ``was outside the continental United States 
        during the period beginning on December 29, 2002, and ending on 
        the day before the first day of the first pay period beginning 
        on or after October 1, 2010 (or during any portion of such 
        period) shall, to the extent that such computation is based on 
        the basic salary or basic pay of such member for such period 
        (or portion of such period),''.
            (3) Entitlement to annuity.--Section 855(a)(3) of the 
        Foreign Service Act of 1980 (22 U.S.C. 4071d(a)(3)) is 
        amended--
                    (A) by striking ``section 8414'' and inserting 
                ``section 8415''; and
                    (B) by striking ``is outside the continental United 
                States shall'' and inserting ``was outside the 
                continental United States during the period beginning 
                on December 29, 2002, and ending on the day before the 
                first day of the first pay period beginning on or after 
                October 1, 2010 (or during any portion of such period) 
                shall, to the extent that such computation is based on 
                the basic salary or basic pay of such member for such 
                period (or portion of such period),''.
            (4) Deductions and withholdings from pay.--Section 
        856(a)(2) of such Act (22 U.S.C. 4071e(a)(2)) is amended to 
        read as follows:
            ``(2) The applicable percentage under this subsection shall 
        be as follows:

 
   ``Percentage                          Time Period
 
              7.5    Before January 1, 1999.
             7.75   January 1, 1999, to December 31, 1999.
              7.9   January 1, 2000, to December 31, 2000.
             7.55   January 11, 2003, to the day before the first day of
                     the first pay period beginning on or after October
                     1, 2010.
              7.5   Beginning on the first day of the first pay period
                     beginning on or after October 1, 2010.''.
 

    (c) Reporting Requirement.--Not later than October 1, 2010, the 
Secretary of State shall submit a report to the Committee on Foreign 
Relations of the Senate, the Committee on Homeland Security and 
Governmental Affairs of the Senate, the Committee on Foreign Affairs of 
the House of Representatives, and the Committee on Oversight and 
Government Reform of the House of Representatives that includes--
            (1) an assessment of all allowances provided to members of 
        the Foreign Service under the Foreign Service Act of 1980 or 
        under title 5, United States Code; and
            (2) an explanation of how such allowances have been or will 
        be affected by the amendments to the Foreign Service Act of 
        1980 made under this Act.

SEC. 3. DEATH GRATUITY.

    Section 413(a) of the Foreign Service Act of 1980 (22 U.S.C. 
3973(a)) is amended by striking ``at the time of death'' and inserting 
``at level II of the Executive Schedule under section 5313 of title 5, 
United States Code, at the time of death. If the deceased employee was 
compensated under a local compensation plan established under section 
408, the amount of such gratuity shall be equal to the greater of 1 
year's salary at the time of death or 1 year's salary at the highest 
step of the highest grade on the local compensation plan from which the 
employee was being paid at the time of death''.

Summary: Foreign Service Overseas Pay Equity Act of 2008 - Amends the Foreign Service Act of 1980 to: (1) extend comparability pay adjustments to Foreign Service members assigned abroad; and (2) amend the death gratuity computation payable to surviving dependents of Foreign Service employees who die from injuries sustained in the performance of duty abroad.