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11. Discussion on Compensation Policy and 2017 Pay Equity report Staff Report Date of Meeting: August 21, 2018 To: City Council From: Neil Soltis, City Administrator Re: Compensation Plan and 2018 Pay Equity Report Background: In 2013 the City Council adopted by resolution a Compensation Plan for City employees. One of the goals of the policy was to create and maintain internal equity between positions compliant with the Minnesota Local Government Pay Equity Act. The policy prescribes actions to be taken annually to review, update, and maintain the plan. The last actions to review and plan were in 2014 in conjunction with the review of the 2015 Budget. A change to the step scale was recommended by staff but not approved by the Council. Since the adoption of the plan, the Public Works employees have joined Teamsters Local 49 and the wages have become a subject of collective bargaining. Under the labor agreement the Public Works employees have a 3-step plan that allows for wage increases based on experience in addition to annual wage increases. For the non-bargaining unit employees there have been no increases beyond those provided in the step scale which is intended to provide similar increases based on experience and length of service with the City. The step schedule currently in place has not been updated since it was approved with the resolution in 2013. All local governments are required to file with the Minnesota Department of Management and Budget every three years a pay equity report. The last report was approved by the Council in January 2015. After the 2018-2020 agreement with Local 49 was executed, no action has been taken to assess the impact of the wage increase on the step plan for non-bargaining unit employees. Based on a review of the current duties performed by staff the pay equity repo rt for 2017 has been prepared and requires approval by the City Council. Information on the 2017 report follows this cover report. In reviewing the work performed by staff and the job descriptions for the positions, there is a need to update the job descriptions which is one of the actions outlined in the Compensation Plan. Further, in the preparation of the 2019 budget no provision has been made to accommodate wage adjustments for non-bargaining unit staff beyond the step increase that would be provided based on satisfactory performance. In advance of the approval of the budget in December, the annual review, and update of the compensation plan will be undertaken and any changes that are recommended to the step schedule as a result of the review will be submitted for City Council approval. In terms of the impact on the budget and the proposed maximum levy, a 1% adjustment to the step schedule would equate to an annual cost of $2,900. Since the step schedule was adopted the consumer price index has increased by 5.2% which is a benchmark for what might be expected when updating the current marke t survey data in accordance with the annual update of the Plan. At this time I am not recommending changing the maximum levy amount to provide for a change to the step schedule. Based on early projections for 2018 revenues and expenditures, there will be an unreserved balance in the General Fund in excess of the maximum provided in the City’s fund balance policy. This could serve as the source of funds for any changes to the step schedule. 145 University Ave. West www.lmc.org 6/19/2018 Saint Paul, MN 55103-2044 (651) 281-1200 or (800) 925-1122 © 2018 All Rights Reserved This material is provided as general information and is not a substitute for legal advice. Consult your attorney for advice concerning specific situations. INFORMATION M EMO Local Government Pay Equity Act: An Overview Learn about Minnesota law requirements to analyze city employee pay structure for evidence of gender inequity. How to use a job evaluation system to determine the comparable work value of each employee class. State requirements for a pay equity implementation report. Maintaining equitable pay relationships; effects of noncompliance. RELEVANT LINKS: I. History Minn. Stat. §§ 471.998 - .999. Minn. Stat. § 471.992 subd. 1. Minn. R. 3920.0200. In 1984 the Minnesota Legislature passed a bill extending pay equity to all local governments in the State. The law requires each local government to analyze its pay structure for evidence of inequities, and to report this information to the Department of Management and Budget (the “Department”) every three years. Most Minnesota cities are also subject to the Equal Pay for Equal Work Law, which is a different law from the Pay Equity Act but also prohibits discrimination in pay based on sex. II. Concept of pay equity Compensation programs have three parts: • Pay level—the level an employer pays in comparison to other employers. • Pay structure—the relationships among jobs in an organization. • Pay method—the set of policies and procedures for paying individual employees. For information on types of pay systems see HR Reference Manual, Chapter 4. Pay equity is designed to address the problem of a wage structure in which there is one pay pattern for jobs performed mostly by men and another pay pattern for jobs performed mostly by women. Pay equity primarily affects pay structure, not pay level or pay method. An employer can still have a pay level that is different than other employers. The city can still pay more to recognize individuals’ seniority and performance. One way to do this is to establish salary ranges for each job class and reward employees for seniority, performance, or both by moving them through the salary range. III. Job evaluation system Minn. R. 3920.0100 subp. 8. Minn. Stat. § 471.994. Every city must use a job evaluation system to determine the comparable work value of the work performed by each class of its employees. System options are: RELEVANT LINKS: League of Minnesota Cities Information Memo: 6/19/2018 Local Government Pay Equity Act: An Overview Page 2 MN Mgmt. & Budget, State Job Match Job Evaluation System. • Use the state job match. • Use or modify systems developed by other public employers. • Design your own system. • Purchase a privately-owned (consultant’s) system. Regardless of what job evaluation system is used, a city should be prepared to explain to the state’s Pay Equity Coordinator the criteria considered within their job evaluation system, how the points are awarded and the objective basis for the system, to ensure there is no inherent bias against female job classes. Minn. Stat. § 471.994. No matter what job evaluation system is used, it must be updated to account for: • New employee classes. • Any changes in factors affecting the comparable work value of existing classes. Minn. Stat. § 471.994. Minn. Stat. § 471.997. In addition, when substantially modifying you r job evaluation system or adopting a new system you must notify the Commissioner of the Department of Management and Budget (the “Commissioner”). Cities should note that the results of any job evaluation system and subsequent reports may be used in any proceeding or action alleging discrimination. IV. Pay equity and bargaining units Pay equity laws directly address some issues where collective bargaining and pay equity laws intersect: Minn. Stat. § 471.994. Minn. Stat. § 471.995. Minn. Stat. § 471.992 subd. 2. Minn. Stat. § 471.9966. • Cities must meet and confer with the exclusive representatives of their employees on the development or selection of a job evaluation system. • A report containing the results of the job evaluation system must be provided to the exclusive representatives of the employees to be used by both parties in contract negotiations. • In interest arbitration (for any class other than balanced) the arbitrator shall consider pay equity, including results of a job evaluation study and any employee objections to said study, together with other standards appropriate to interest arbitration. • The provisions of the Pay Equity Act do not diminish a city’s duty to bargain in good faith. V. Pay equity implementation report Cities with one or more employees must file a pay equity implementation report every three years as required by the Department. RELEVANT LINKS: League of Minnesota Cities Information Memo: 6/19/2018 Local Government Pay Equity Act: An Overview Page 3 Minn. R. 3920.0100 subp. 5. Minn. Stat. § 179A.03 subd. 14. MN Mgmt. & Budget, Local Government Pay Equity. Generally, an employee is one who works in a position a minimum of 67 days per year (100 days in the case of a student) and works an average of at least 14 hours per week during the weeks they are scheduled to work.” Minn. Stat. § 13.03. Minn. R. 3920.0300 subp. 5. The information in the report is public. The form that cities must use is provided by the Department and requires that the following information be submitted: • A list of all job classes in the political subdivision. • The number of employees in each class. • The number of female employees in each class. • An identification of each class as male-dominated, female-dominated, or balanced. • The comparable work value of each class as determined by the job evaluation system. • The minimum and maximum monthly salary for each class and the amount of time in employment required to qualify for the maximum. • Any additional cash compensation. • Whether or not job classes are eligible for benefits, or if the jurisdiction's contribution limit for benefits is different for any male-dominated and female-dominated classes of comparable work value. • Any other information requested by the commissioner. Minn. R. 3920.0400. Based on the pay equity implementation report and any other information requested by the Department, a number of tests are used to analyze the information submitted and determine compliance/noncompliance. VI. Noncompliance Minn. R. 3920.0800 subp.1, 3. If a city is found not in compliance, a notice will be issued to that city. A city in disagreement with such a finding may notify the Commissioner and will be given a defined period of time during which additional information may be submitted for reconsideration of the finding. Minn. R. 3920.0800 subp. 1. and Minn. R. 3920.1000 subp. 3. In the event compliance is not achieved within the defined time period set by the commissioner, the commissioner will notify the city and the commissioner of revenue the city is subject to a five percent reduction in the aid that would otherwise be payable to that city, or to a fine of $100 per day, whichever is greatest. Minn. Stat. § 471.9981 subd. 7. Minn. R. 3920.1200. Cities may appeal the imposition of a penalty by filing a notice of appeal with the commissioner within 30 days of the commissioner’s notification to the city of the penalty. No penalty may be imposed while an appeal is pending. RELEVANT LINKS: League of Minnesota Cities Information Memo: 6/19/2018 Local Government Pay Equity Act: An Overview Page 4 VII. Maintaining pay equity Minn. R. § 3920.1300. Cities must maintain equitable pay relationships and submit additional reports as required by the department, generally every third year. The Department monitors compliance on an ongoing basis and reports to the legislature annually. The procedures for imposing or appealing penalties still apply to those cities found in compliance at one time, but found not in compliance at a future date. VIII. Further assistance Dominique Murray, State Program Administrator- Pay Equity Email: Dominique.Murray@statemn. us 651-259-3805 800.627.3529 800.925.1122 651.281.1200 HRbenefits@lmc.org Cities may contact the Pay Equity Coordinator for specific assistance. The League’s Human Resources and Benefits Department will also discuss with you any additional questions you may have. Compliance Report Jurisdiction: Contact:Phone: Scandia 14727 - 209th Street North Scandia MN 55073 2018 Case: Report Year: 1 - 2017 Data (Shared (Jur and MMB)) Neil Soltis n.soltis@ci.scandia.mn.us(651) 433-2274 E-Mail: The statistical analysis, salary range and exceptional service pay test results are shown below. Part I is general information from your pay equity report data. Parts II, III and IV give you the test results. For more detail on each test, refer to the Guide to Pay Equity Compliance and Computer Reports. I. GENERAL JOB CLASS INFORMATION Male Classes Female Classes Balanced Classes All Job Classes # Job Classes # Employees Avg. Max Monthly Pay per employee II. STATISTICAL ANALYSIS TEST A. Underpayment Ratio = Male Classes Female Classes a. # At or above Predicted Pay b. # Below Predicted Pay c. TOTAL d. % Below Predicted Pay (b divided by c = d) * *(Result is % of male classes below predicted pay divided by % of female classes below predicted pay.) B. T-test Results Degrees of Freedom (DF) = Value of T = a. Avg. diff. in pay from predicted pay for male jobs = b. Avg. diff. in pay from predicted pay for female jobs = III. SALARY RANGE TEST = (Result is A divided by B) A. Avg. # of years to max salary for male jobs = B. Avg. # of years to max salary for female jobs = IV. EXCEPTIONAL SERVICE PAY TEST = (Result is B divided by A) A. % of male classes receiving ESP * B. % of female classes receiving ESP *(If 20% or less, test result will be 0.00) 3 3 0 6 0 0 8 8 - - - 0.00 0 0 0 0 0 0 0.00 0.00 0 0.000 $0 $0 93.33 9.33 10.00 0.00 0.00 0.00 Pay Equity Implementation Report 8/6/2018Print Date: Part A: Jurisdiction Identification Jurisdiction:Jurisdiction Type:CityScandia 14727 - 209th Street North Scandia MN 55073 * DRAFT COPY * Phone:Contact:E-Mail:(651) 433-2274Neil Soltis n.soltis@ci.scandia.mn.us Part B: Official Verification The job evaluation system used measured skill, effort responsibility and working conditions and the same system was used for all classes of employees. 1. The system used was: Description: 2.Health Insurance benefits for male and female classes of comparable value have been evaluated and: Part C: Total Payroll is the annual payroll for the calendar year just ended December 31. 3.An official notice has been posted at: (prominent location) informing employees that the Pay Equity Implementation Report has been filed and is available to employees upon request. A copy of the notice has been sent to each exclusive representative, if any, and also to the public library. The report was approved by: (governing body) (chief elected official) (title) Checking this box indicates the following: Date Submitted: There is no difference and female classes are not at a disadvantage. State Job Match City Hall bulletin board City Council Christine Maefsky Mayor - signature of chief elected official - approval by governing body - all information is complete and accurate, and - all employees over which the jurisdiction has final budgetary authority are included $370,795.57 Job Nbr Class Title Nbr Males Nbr Females Class Type Jobs Points Min Mo Salary Max Mo Salary Yrs to Max Salary Yrs of Service Exceptional Service Pay 2017 DataCase: Scandia Job Class Data Entry Verification List 1466LGID: 6 Office Assistant/Rec Coordinat 0 1 F 150 $2,681.00 $3,352.00 10.00 5.00 11 Treasurer PT 0 1 F 158 $3,591.00 $3,591.00 10.00 21.00 2 Deputy Clerk 0 1 F 189 $3,435.00 $4,294.00 10.00 13.00 3 Maintenance Worker FT 3 0 M 194 $3,644.00 $4,495.00 8.00 10.00 5 Public Works Director 1 0 M 290 $4,868.00 $6,086.00 10.00 1.00 4 City Administrator 1 0 M 460 $6,109.00 $7,636.00 10.00 2.00 6Job Number Count: 1