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5.6 ERMUSR 11-13-2018Elk River'�W� Municipal Utilities UTILITIES COMMISSION MEETING TO: FROM: ERMU Commission Wage & Benefits Committee MEETING DATE: AGENDA ITEM NUMBER: November 13, 2018 5.6 SUBJECT: Wage & Benefits Committee Update ACTION REQUESTED: Per the recommendation of the Wage & Benefits Committee, approve the following effective January 1, 2019: * 2.85%'4metro average" adjustment for lineworker pay group 0 3% cost of living adjustment for field, office, and management pay groups 0 Purchased Vacation Time Policy allowing the purchase of 40 hours of vacation per year 0 Employee funded vision insurance plan 0 Employer contributions to health savings account of $650 for single and $1985 for family. DISCUSSION: On October 9, 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 2 to review and research topics from the open meeting. 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 012en Wage & Benefits Committee Meeting A number of requests were submitted to the committee by employees. The following items were requested by field staff. "metro average" benchmarking for Lineworker position, create a 1�comp" time off policy, and increase on -call stipend. And the following items were requested by office staff. additional vacation time, work day ending at 4:00 p.m., more frequent casual dress days, and team building exercises during office meetings when time allows. I . Metro Average - The metro average cost of living adjustment used for benchmarking lineworker market pay compares base compensation of four metro municipals and three metro cooperatives with ERMU. The comparison utilities are: The City of Anoka, The City of Chaska, The City of North St. Paul, Shakopee Public Utilities, Connexus Energy, Great River Energy, and Wright -Hennepin Cooperative Electric Association. The projected 2019 metro average for base compensation would result in a 2.85% cost of living increase for the ERMU lineworker pay group. This benchmarking system for this group has produced stability in ERMU's market competitiveness for this pay group. The Page I of 4 I.-V committee recommends awarding the metro average increase for the lineworker pay group as requested. 2. Compensatory time off policy— The committee reviewed the comp time off policy that the city uses in addition to exploring other comp time policies. The committee discussed benefits and disadvantages of implementing a similar policy. First, it was noted that a comp time policy would not benefit all employees as not every position has equal opportunity to work overtime to cam comp time. Second, implementation of a comp time policy would be complicated in our payroll system. The tracking would not be automated and required some manual processes. Third, a comp time policy works well to help balance peaks in work flow allowing employees to earn comp time when it is busy and then allowing the employees to use comp time when work flow is slower. At ERMU there is not a slow time in work flow, especially for those positions which would have the greatest opportunity to work overtime to earn comp, time. And for the foreseeable future, ERMU will be very busy with electric service territory transfer rebuild and new construction. Because of the workload, the implementation of a comp time policy would likely result in additional overtime to offset loss of productivity due to comp time. Because of these three reasons, the committee does not recommend the adoption of a compensatory time off policy. 3. On -Call Stipend — The committee reviewed the on -call policies for lineworkers at utilities that are part of the metro average benchmarking group. It was noted that utilities that receive a higher on -call stipend have a lower base rate of pay. And conversely, it was noted that utilities that receive a lower on -call stipend have a higher base rate of pay. The on -call stipend was analyzed across the metro seven utilities with the frequency that ERMU lineworkers are typically on call. The result of the analysis was that ERMU falls at the average of the metro seven when including the added benefit of the on -call stipend to the base rate of pay. The committee does not recommend any change to the current on - call stipend. 4. Additional Vacation Time — The current ERMU vacation accrual benefits have been determined to be at market or better. However, the request for additional time off from the field staff asking for comp time and the office staff asking for additional vacation time has been noted. The committee reviewed a purchased vacation time benefit offered by one of the utilities within the metro seven. The policy allows for employees to elect to purchase additional vacation during benefit open enrolment. The purchase is then deducted over the year through the payroll system. This option works better in our payroll software than does comp time. And, this option would be accessible to all employees as opposed to comp time which would likely only benefit a limited group of employees. Additionally, overtime is not guaranteed. The challenge of work load still exists. The committee discussed and concluded that this benefit likely appeals to employees with fewer years of service with ERMU. The Page 2 of 4 M implementation of this policy would have an impact on work load, but likely less impact than a comp time policy. And a purchase vacation time benefit would be an additional new employee recruitment tool. Weighing all of those concerns, the committee feels that a purchased vacation time policy provides company benefit that exceeds the work load concerns. The committee recommends the commission adopt a purchased vacation time policy, compliant with Internal Revenue Service rules, allowing employees to purchase up to 40 hours of additional vacation each year. Attached is the proposed Purchase Vacation Time (PVT) language to be included in the Employee Handbook. Work dU ending at 4:001)m — The committee agreed that this is not a wage or benefit consideration; rather, this is an issues to be explored through management and the commission. 6. More frequent casual days — The committee agreed that this is also not a wage or benefit consideration for this committee; rather, this is a management opportunity. Team building exercises during office meeting when time allows - The committee agreed that this is also not a wage or benefit consideration for this committee; rather, this is a management opportunity. Cost of Living Adjustment (COLA) As previously noted, the committee recommends increasing the lineworker pay group to be consistent with the metro average. For the field, office, and management pay groups, the committee recommends a COLA of 3% for 2019. Benchmarking One of the remaining action items from last year's comprehensive benchmarking work was to look more closely at the Water Operator position. The benchmarking done for the field, office, and manager pay groups was conducted using available salary/wage data through Minnesota Municipal Utilities Association (MMUA) for municipals having both water and electric utilities. From that available MMUA data, the comparison pool was set to include the four municipals immediately larger than ERMU and the four that are immediately smaller. That pool includes: Marshall Municipal Utilities, Hutchinson Utilities, The City of Anoka, Willmar Municipal Utilities, Austin Utilities, The City of Chaska, Shakopee Public Utilities, and Moorhead Public Service. The results of the benchmarking conducted for the Water Operator position was the wage is in line with the comparable market, especially when considering the Utilities Performance Metrics Incentive Compensation (UPMIC) potential and the current on -call stipend and on -call frequency for the position. The committee does not recommend any changes to the Water Operator wage. Health and Vision Insurance As previously communicated to the commission, the 2019 renewal for our health insurance policy was 5%. This was the lowest increase possible through our insurance pool. The committee recommends keeping the employer contribution to the employee's health care accounts (HSAs) at the same levels as 2018. These funding levels were $650 for single and $1985 for family. Page 3 of 4 RM The committee reviewed multiple options for a new employee funded vision insurance benefit and recommends the commission approve the offering of an employee funded vision insurance plan. Attached is the proposed Vision Insurance language to be included in the Employee Handbook. Also attached is proposed Paycheck Deduction revision language to include PVT and Vision Insurance. ATTACHMENTS: • Proposed Purchase Vacation Time (PVT) language to be included in the Employee Handbook • Purchased Vacation Time Form — for reference only • Proposed Vision Insurance language to be included in the Employee Handbook • Proposed Paycheck Deduction revision language to include PVT and Vision Insurance Page 4 of 4 �W XX. PURCHASED VACATION TIME (PVT) During the annual open enrollment period and when hired, an employee may purchase up to 40 hours of additional vacation time. If an employee decides to purchase vacation time, the employee pays for the hours on a pre-tax basis. The purchased vacation time will be deducted equally from each paycheck over the course of the year and paid out at the rate in effect when paid out. Vacation is purchased in one -hour increments with a minimum purchase of eight hours and a maximum purchase of 40 hours. Per IRS regulations, the purchased vacation time can only be used once the employee's entire accrued vacation time has been exhausted. Purchased vacation hours must be used in the calendar year in which they are bought. Any purchased vacation hours that have not been used before the second to last pay period end date of the calendar year will automatically be paid out at the supplemental tax rate in the last pay check of the calendar year in which the vacation time was purchased. Therefore, purchased vacation time will not be available for use after mid -December. Any unused purchased vacation time will be reimbursed at the rate in effect when paid out. Upon termination if purchased vacation time used exceeds time deducted for, the employee must pay the difference back to ERMU. However, if the employee has remaining purchased vacation time that has not been used, it will be paid out to the employee. New employees are allowed to buy purchased vacation time based on their benefit eligibility date, as listed in the chart below. Benefit Eligibility Date Maximum PVT Hours Eligible for Purchase January — March 40 Hours April — May 32 Hours June — July 24 Hours August — September 16 Hours October — November 8 Hours December 0 Hours 0 ElkRiyer'\A� Municipal Utilities Purchased Vacation Time Form By signing below I acknowledge I have read and understood the Utilities' policy on Purchasing Vacation Time, including the information on this Purchased Vacation Time Form, and I accept and agree to all its terms. I hereby request to purchase — to deduct the balance equally over Signature of Employee: Department: hours of vacation time and authorize the Utilities pay periods in the course of the year on a pretax basis. Date: Vacation is purchased in one -hour increments with a minimum purchase of eight hours and a maximum purchase of 40 hours. Per IRS regulations, the purchased vacation time can only be used once the employee's entire accrued vacation time has been exhausted. The purchased vacation time will be deducted equally from each paycheck over the course of the year and paid out at the rate in effect when paid out. Purchased vacation hours must be used in the calendar year in which they are bought. Any purchased vacation hours that have not been used before the second to last pay period end date of the calendar year will automatically be paid out at the supplemental tax rate in the last pay check of the calendar year in which the vacation time was purchased. Therefore, purchased vacation time will not be available for use after mid -December. Any unused purchased vacation time will be reimbursed at the rate in effect when paid out. Upon termination if purchased vacation time used exceeds time deducted for, the employee must pay the difference back to ERMU. However, if the employee has remaining purchased vacation time that has not been used, it will be paid out to the employee. EN XX. VISION INSURANCE Vision Insurance is available to employees, at the employee's election and expense, upon application. Employees should consult the Summary Plan Description for details regarding coverage and eligibility. A copy of this description will be provided to employees and is available upon request. go]