At one time this was true, but it is no longer the case. Now as a government employee you can keep any miles you earn for personal use.
Originally Posted by dliesse
Add the US Government to the list, sort of. Government employees can put all their miles in one FF account, but are responsible for keeping separate track of what miles are personal and which are on the government's dime. If they can't show good records, then all miles are assumed to be accumulated on government travel. "Government" miles may only be used for the benefit of the government and not for the individual.