5.2 ERMUSR 12-12-2017 Elk River
Municipal Utilities UTILITIES COMMISSION MEETING
TO: FROM:
ERMU Commission Wage & Benefits Committee
MEETING DATE: AGENDA ITEM NUMBER:
December 12, 2017 5.2
SUBJECT:
Wage & Benefits Committee Update
ACTION REQUESTED:
Per the recommendation of the Wage & Benefits Committee, approve the following:
• Eliminate the percent criteria of the employer contribution for the 457 deferred
compensation benefit and increase the match cap from $2,000 to $2,500 for all pay
groups
• 2018 cost of living adjustment of 2.5% for all pay plan groups
• Additional 0.5%market adjustment for the Lineworkers Pay Group
• Additional 2.0%market adjustment for the Customer Service Representative position
• Adjustment to the 457 deferred compensation benefit employer contribution for the
Management Pay Group will be a verbal recommendation at meeting
• Unused vacation time to be deposited into Health Care Saving Plan upon retirement in
lieu of being paid out .
• Reclassify of the Lead Bore Rig Operator position from Field Group Pay Grade 8 to Field
Pay Grade 9
DISCUSSION:
On October 10, the W&BC held an open meeting for employees to submit wage and benefit
suggestions for consideration by the Committee. The Committee met on November 3 and 27 to
review and research topics from the open meeting. In addition, the Committee had been tasked to
benchmark the General Manager Position salary and the four pay plan groups. The Committee
also performed market analysis in preparation for making a cost of living adjustment
recommendation to the Commission. The Committee also followed up on other miscellaneous
outstanding issues. The Committee submits the following for Commission consideration:
Employee Open Wage & Benefits Committee Meeting
A number of requests were submitted to the Committee by employees. These requests included
but were not limited to the following topics: "metro average"benchmarking for lineworkers,
"metro average"benchmarking for electric technicians, 457 deferred compensation benefit
changes, and on-call stipend changes.
The Committee discussed and researched these various requests. Of these requests,the
Committee has consensus to propose a change to the 457 deferred compensation benefit. There
was not consensus to propose action on any of the other requests at this time.
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The 457 deferred compensation benefit is currently offered with an employer matching
contribution of 3%with a cap of$2,000. The request was to eliminate the percentage criteria of
the program and to increase the cap of the employer match. After staff research and Committee
discussion,the consensus is to eliminate the percent criteria of the employer match. This would
allow all employees, regardless of pay grade,to reach the employer contribution cap. The
Committee also supports increasing the cap from $2,000 to $2,500.
Benchmarking
The Commission had given direction to the Committee to perform benchmarking on the General
Manager position as an action item from the 2017 performance evaluation. In conjunction this
benchmarking, the Committee also conducted benchmarking for the four pay plan groups:
managers, lineworkers, field, and office. The benchmarking was conducted using both national
and state association data. The comparison pool for the state benchmarking was limited to eight
other comparable municipal utilities, four of them larger and four of them smaller. The
benchmarking was extensive and produced results consistent with expectations. The results are
as follows:
General Manager Salary: 14%below MN municipal market average(utility size)
14%below national municipal market average (utility size)
13%below MN municipal market average(years of experience)
Management Pay Group: 2%below MN municipal market average (including the GM)
2%below national municipal market average(including the GM)
1%above MN municipal market average (excluding the GM)
3%above national municipal market average (excluding the GM)
Lineworker Pay Group: 11%above MN municipal market average
At MN"metro average"
Field Pay Group: At MN municipal market average
Office Pay Group: At MN municipal market average
Related,the second half of the Performance Evaluation of Troy Adams, General Manager,will
be held during a closed meeting.
Cost of Living Adjustments and Market Adjustments
With consideration to the benchmarking study and the consumer price index for the Minneapolis
region,the Committee recommends a cost of living adjustment(COLA)for all pay groups of
2.5%effective January 1, 2018.
Additionally and based on the details of the benchmarking, the Committee recommends the
following market adjustments in addition to the COLA: 0.5%market adjustment for the
lineworker group; and a 2%market adjustment for the Customer Service Representative
position. These two market adjustments are proposed to be effective January 1, 2018.
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The Committee also discussed adjusting the 457 deferred compensation benefit employer
contributions for the management pay group. This was considered as a correction to salary
compression issues. The Committee is still discussing and will make a verbal recommendation at
the commission meeting.
Unused Vacation Time at the Time of Retirement
In light of recent retirements of longtime employees, the request was made to look into the
distribution of unused vacation time paid out upon termination (including retirement), to instead
be deposited into the Health Care Savings Plan(HCSP) upon retirement and paid out upon
termination. The request was made out of consideration of the additional taxes that are withheld
with the current payout distribution upon retirement. Since any changes to the plan have to be
approved by the state, Theresa contacted the MN State Retirement System (MSRS)to verify this
change, and inquired on the appropriate language to use. We were told this change would be
allowed and were provided the appropriate language. This was discussed with the Committee
and agreed upon. The final step is to pass a policy change at our Commission meeting and
forward that onto the MSRS for filing. The policy change requested is attached and identifies
two different areas in our personnel policy that need to be changed: one under Section 36
Vacation, and one under Section 40 Health Care Savings Plan. The changes are highlighted in
red.
Lead Bore Rig Operator Position
In 2014 ERMU created a Bore Rig Operator position. In 2015 a Lead Bore Rig Operator Position
was created and filled through an internal promotion. In 2015, ERMU hired to fill the Bore Rig
Operator position.
The creation of the Lead Bore Rig Operator was done to establish a crew lead allowing for some
independent project management. However, it has become evident to staff that in reality the Lead
Bore Rig Operator position is expected to perform project management in the field beyond the
original expectation and this position's pay grade points. In reality, this position has similar
project and crew management responsibilities of a lead lineworker yet the position pay grade
points do not reflect that.
This issue was reviewed by the Wage &Benefits Committee (W&BC) on November 27. The
committee reviewed the difference in responsibilities from the origin of this position to current
actual practice. This difference has an impact to the pay grade points in one of the multiple
categories that go into the calculation of the position's pay grade points. And upon review, the
Committee had consensus with the need to change the positon pay grade points and gave staff
direction to submit a change in position pay grade points for Commission approval. The
proposed adjustment to job position's points would now reflect the in-field skills requirement
needed to oversee a crew and plan work for a project. This change would reclassify this position
from Field Pay Group 8 to Field Pay Group 9.
ATTACHMENTS:
• Proposed ERMU Policy Change for Health Care Savings Plan Vacation Contribution
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36. VACATION
All regular full-time employees shall accrue vacation according to the following schedule:
Years of Service to Accrual Rate Accrued Per
Utilities Since Most Per Year Pay Period
Recent Date of Hire
0—3 years 10 days 3.08 hours per
pay period
4 years 12 days 3.69 hours per
pay period
5 years 13 days 4.0 hours per
pay period
6-9 years 15 days 4.62 hours per
pay period
10 years 16 days 4.92 hours per
pay period
11 years 17 days 5.23 hours per
pay period
12 years 18 days 5.54 hours per
pay period
13 years 19 days 5.85 hours per
pay period
14-18 years 20 days 6.15 hours per
pay period
19 +years 25 days 7.69 hours per
pay period
Regular part-time employees accrue paid vacation under this schedule on a pro rata basis.
Temporary and seasonal employees are not eligible for paid vacation.
Employees must request time off for vacation as far in advance as feasible. When possible,
employees will be granted vacation time of their choice. However this time is subject to the
operating needs of the Utilities.
PR
Vacation days accrue each pay period as shown in the table above. Paid vacation may be taken
as soon as it is accrued. Accrual rates change, as applicable, on an employee's anniversary date.
Example: If an employee's start date was July 1, 2016, the new accrual rate would start July 1,
2019.
Unused vacation days may be carried over from year-to-year, but only to a limited extent, as
follows. Unused vacation carryover will be limited to the number of hours accrued during the
previous year. Accrued vacation days beyond the carryover limit are lost. For example, if an
employee with 2 years of service has accrued but not used 15 vacation days by the end of the pay
period containing his or her anniversary date, he or she will only be permitted to carryover 10
days to the next year.
Paid vacation may not be used for the purpose of extending an employee's active employment
with the Utilities or for retaining a full-time equivalency percentage that is not based on an
employee's actual planned and scheduled working time.
Employees who voluntarily end their employment and who give the Utilities proper (generally at
least two-weeks) notice shall be paid out for earned but unused vacation time as of the date of
separation, provided they sign and do not rescind an agreement releasing claims arising out of
their employment, in a form prescribed by the Utilities. Employees involuntarily terminated by
the Utilities for any reason other than lack of work shall not be paid out any unused vacation
time.
Employees who retire (immediately eligible to claim their pension) and who give the Utilities
proper (generally at least two-weeks) notice shall have 100% of unused vacation time converted
into cash and deposited into their Post Employment Health Care Savings account, provided they
sign and do not rescind an agreement releasing claims arising out of their employment, in a form
prescribed by the Utilities.
The Electric Superintendent and Assistant Electric Superintendent accrue paid vacation at the
rate set forth above and are generally subject to this Vacation policy; but they each shall also
receive an additional 40 hours of paid vacation per year, the balance of which will be paid out at
their respective then-current base rates of pay if not used by the end of the year. No such balance
may be carried over from year to year.
37. PAID SICK LEAVE
Regular full-time employees accrue sick leave at the rate of 3.69 hours per pay period
(approximately 8 hours per month). Regular part-time employees accrue sick leave pro rata
based on the full-time accrual rate. Temporary and seasonal employees are not eligible for sick
leave.
Sick leave may be used for illness and for visits to a heath care provider (including any visit that
would qualify for reimbursement under IRS Flexible Health Care Spending Accounts guidelines,
which include, for example, medical doctors, dentists and optometrists). Sick leave may be used
to cover illness or visits of the employee or the employee's child or another"covered relative" as
AA
defined below, or for purposes of parenting leave in accordance with Minnesota law. To be a
"covered relative" under this policy an individual must have same residence address as the
employee and must receive substantially all of his or her financial support from the employee.
Documentation from a health care provider may be requested by the Utilities in its sole
discretion. Sick leave is a privilege, and misuse may result in disciplinary action.
In addition, an employee's sick time can also be used for a "safety leave" for covered relatives
for the purpose of providing or receiving assistance due to sexual assault, domestic abuse or
stalking. See also Minnesota Sick Family Member or Safety Leave,No 48, below.
Sick leave may not be used for the purpose of extending an employee's active employment with
the Utilities or for retaining a full-time equivalency percentage that is not based on an
employee's actual planned and scheduled working time.
Employees are required to notify their immediate supervisor at least thirty (30) minutes prior to
the start of their regular working hours if they intend to be absent from work. If an emergency
prevents the employee from notifying his/her supervisor at such time, the employee is expected
to call as soon as possible during the work day. Employees are also required to keep their
supervisors informed of their condition and anticipated return to work.
An employee attempting to use sick time for reasons other than those explicitly permitted in this
policy will be subject to disciplinary action up to and including termination.
A doctor's certification of the need for sick leave in accordance with this policy shall be required
if an employee is absent more than four (4) days or if abuse of sick leave is suspected by the
employee's immediate supervisor, a Utilities manager, or the Human Resources Representative.
In some circumstances, an employee may be requested to submit to a medical examination by an
appropriate health care provider to confirm whether the employee is fit for duty. In such a
circumstance, the Utilities may select the health care provider to conduct the examination.
Unused sick leave will not be paid out in wages upon termination of employment, but in some
circumstances is subject to limited conversion under the Health Care Savings Plan policy found
elsewhere in this Handbook.
40. HEALTH CARE SAVINGS PLAN
Utilities' employees participate in the Minnesota Post Employment Health Care Savings Plan
(HCSP) established under Minn. Stat. § 352.98 and as outlined in the Minnesota State
Retirement System's Trust and Plan Documents. All funds collected by the employer on the
behalf of the employee will be deposited into the employee's Post Employment Health Care
Savings Plan account. General participation rules are outlined below, for a complete guide
regarding benefits, use, and eligibility see the plan's documents.
1. Employees are required to contribute to the Post Employment Health Care Savings
Plan. These funds will be deposited after each pay period. The contribution shall
be based on the following structure:
101)
There will be four groups, concurrent with the pay plan. The four groups are
Office, Field Workers, Line Workers, and Management. All groups shall participate
in contributions as follows:
a. Employees with fewer than 10 years of service are required to contribute 1%
of their gross wages.
b. Employees with fewer than 20 years of service and at least 10 years of service
are required to contribute 2% of their gross wages.
c. Employees with at least 20 years of service are required to contribute 3% of
their gross wages.
2. Employees who have accrued over 960 hours of sick time will have 50% of those
hours converted to cash and deposited in their Post Employment Health Care
Savings account. The conversion will take place once a year at the end of
December.
3. Employees who voluntarily end their employment and who give the Utilities proper
(generally at least two-weeks) notice, and employees whose employment ends
involuntarily because of lack of work, will have 50% of unused sick leave, up to a
maximum of 120 days, converted into cash and deposited into their Post
Employment Health Care Savings account provided they sign and do not rescind an
agreement releasing claims arising out of their employment, in a form prescribed
by the Utilities. Employees involuntarily terminated by the Utilities for any reason
other than lack of work shall not be eligible to receive such conversion. No
contributions will be accepted by the Plan on behalf of an employee after the death
of the employee.
4. Employees who retire (immediately eligible to claim their pension) and who give
the Utilities proper (generally at least two-weeks) notice, will have 100%of unused
vacation leave, converted into cash and deposited into their Post Employment
Health Care Savings account provided they sign and do not rescind an agreement
releasing claims arising out of their employment, in a form prescribed by the
Utilities.
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