The Department of Defense (DoD) has come under fire again for its management of offsite work, with a new Inspector General (IG) report revealing massive discrepancies in how remote employees are tracked and paid. As reported by FEDweek, the audit exposes a system in disarray, where the number of reported remote workers spiked by 245% in a single year—not because of a policy shift, but largely due to “unreliable data.”
For federal employees, this isn’t just a bureaucratic embarrassing headline; it is a financial warning flare. The report confirms that “tracking failures” are leading directly to pay errors, creating a scenario where thousands of employees may be unknowingly accumulating debt to the government or receiving less than they are owed.
📉 The Numbers: A System “Blind” to its Workforce
The IG report paints a picture of an agency that lost track of its personnel roster during the transition to hybrid work.
- The Data Gap: In FY 2023, the DoD reported approximately 17,500 employees in remote work status. By FY 2024, that number exploded to over 60,300.
- The Cause: The IG attributes this massive jump not to a hiring surge, but to a lack of “documented control over the reporting process.” Components created unique guidance that ignored OPM rules, and employees often used incorrect timesheet codes that didn’t match their actual work status.
- The Consequence: Because the DoD “did not know how many employees were working remotely,” it could not verify if those employees were receiving the correct locality pay.
Sound Data: The 12% Error Rate The most alarming finding for employees is the error rate in paychecks. The IG audited a sample of 794 remote work records and found:
- 12% Improper Payments: 93 employees were receiving the wrong pay rate, totaling $128,068 in improper payments.
- 32% Questioned Costs: Another 255 employees had payments totaling $537,174 flagged as “questioned costs” due to insufficient documentation.
- The Scale: If this 12% error rate holds true across the entire population of ~60,000 reported remote workers, roughly 7,200 DoD employees could currently be receiving incorrect paychecks.
⚠️ The “Locality Pay” Trap
The core of the issue is Locality Pay. If you are coded as working in the “Washington-Baltimore” area (high locality pay) but are actually working remotely from “Rest of U.S.” (lower locality pay), you are being overpaid.
- The Debt Letter Risk: When the DoD corrects these errors, they do not just lower your future pay; they issue a Notice of Indebtedness to claw back the overpayment. This can amount to tens of thousands of dollars that must be repaid immediately.
- The “High-3” Impact: For those nearing retirement, an overpayment error is catastrophic. If your “High-3” average salary is artificially inflated by incorrect locality pay, OPM will eventually recalculate your pension, reduce your monthly annuity, and demand repayment of the difference—sometimes years after you retire.
🛡️ Don’t Wait for the Audit—Audit Yourself
The IG has recommended a “centralized system of records” to fix this, which means a wave of audits is coming. You need to verify your own records before the Defense Finance and Accounting Service (DFAS) does it for you.
This is where Internal Benefit Advisors provides the protection you need. We help you ensure your personnel file matches your paycheck.
How We Help You Avoid the “Pay Error” Debt:
- Locality Pay Audit: We review your SF-50s and Leave and Earnings Statements (LES) to ensure your locality code matches your actual telework agreement. If we find a discrepancy, we help you self-report it before it becomes a massive debt.
- Debt Waiver Assistance: If you have already received a debt letter due to agency error, we guide you through the waiver process, helping you prove that the overpayment was the agency’s fault and that repayment would be against equity and good conscience.
- Retirement “Clean Up”: For employees within 5 years of retirement, we scrub your service history to ensure your High-3 calculation is “audit-proof,” preventing unexpected pension reductions later.
The DoD admits they lost track. Make sure you don’t lose money as a result.
Contact Internal Benefit Advisors today for a payroll and benefits record review.
References
- FEDweek. “Another Report Criticizes DoD Oversight of Offsite Work through 2024.” January 20, 2026.
- Department of Defense Office of Inspector General. Audit of the DoD’s Procedures to Ensure the Accuracy of the Pay to Remote Work Employees (Report No. DODIG-2026-044). January 15, 2026.
- Government Accountability Office (GAO). Federal Remote Work: OPM Guidance Could Help Relevant Agencies Evaluate Effects on Agency Performance.
- Internal Benefit Advisors. Retrieved from https://internalbenefitadvisors.com
