5.2 ERMUSR 07-13-2021______________________________________________________________________________
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UTILITIES COMMISSION MEETING
TO:
ERMU Commission
FROM:
Theresa Slominski - General Manager
MEETING DATE:
July 13, 2021
AGENDA ITEM NUMBER:
5.2
SUBJECT:
Wage & Benefits Committee Update
ACTION REQUESTED:
Approve all action items as outlined below to be effective January 1, 2022.
DISCUSSION:
On October 13, 2020, the Wage & Benefits Committee (WBC) held an open meeting for
employees to submit wage and benefit suggestions for consideration by the Committee. A
representative group of employees presented several suggestions focused on the retention of
employees. Several items were implemented in 2021 and two were held over for discussion and
possible implementation in 2022: Longevity Pay, and additional Vacation Days. The Committee
met on May 26, 2021, to review the research from these two items. The Committee submits
the following for Commission consideration:
1. Longevity Pay – There were two ideas presented from the employees for
consideration of awarding Longevity Pay, based on percentages of pay, which ranged
from $1,000 at 5 years of service to $7,000 at 20 years of service. The Committee
reviewed these ideas and reviewed a 2016 survey from Minnesota Municipal Utilities
Association (MMUA) regarding benefits among municipal utilities that had information
on peers’ implementation of Longevity Pay. The survey results were varied and seemed
to be less than either of the ideas presented. The Committee was favorable to
implementing Longevity Pay, however as additional information was needed, the
Committee requested human resources staff to do some more research and provide an
update.
Through MMUA, 33 utilities were surveyed in the state of Minnesota and 9 respondents
currently offer a longevity pay incentive to employees who reach specified years-of-
service milestones at their organization. Some awarded incentives at 8 years, however
most started at 10 years and increased in increments of 5 years through 30 years of
service. The incentive varied in dollar amounts, some awarding a percentage of pay and
some flat dollar amounts. Depending on the rate of pay, the incentives ranged from
$500 to $1,000 at 8-10 years, with a maximum of approximately $2,500 to $5,000 at 20-
30 years. There was a single utility that awarded one longevity incentive of 1% at 20
years of service (so approximately $500 to $1,000 depending on rate of pay.)
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The Committee favored a longevity incentive that is the same dollar amount awarded to
all employees, and not dependent on rate of pay. The Committee also considered that
we have current long-term employees that we did not want to be negatively affected in
implementing a plan now that would have no reward available for them. To minimize
this the Committee chose to extend the program beyond 25 years. We reviewed
multiple scenarios specific to our employee population and are recommending a
longevity plan starting at 8 years of service, increasing in four-year increments, through
32 years of service. The Committee is recommending one-time payments starting at
$1,200 with a gradual increase in dollar amounts as the tenure increases, with a
maximum of $4,000 at 32 years of service. The dollar amounts would be awarded
monthly by handing out a physical check to the employee at the Commission Meeting,
with the opportunity for Management and Commissioners to thank the employee for
their service. The longevity plan proposed is below:
8 years $1,200
12 years $1,400
16 years $1,600
20 years $2,000
24 years $2,400
28 years $3,500
32 years $4,000
2. Vacation – Currently, the vacation maximum is 25 days, which is reached after 19
years of service. It was requested to change the schedule so that staff earns 26 days in
year 20, 27 days in year 22, and 28 days in year 24 (increasing the maximum by 3 days).
The Committee reviewed data from the 33 utilities surveyed and was open to increasing
the vacation accrual as requested.
Additionally, the Committee discussed the recent change to the City of Elk River’s
vacation schedule to be more competitive in attracting and retaining talent. That change
was 15 days of vacation at the start of employment, through year 5. Utility employees
receive 10 days in years 1-3, 12 days in year 4, 13 days in year five, and 15 days in years
6-9. The Committee is proposing to start employees at 12 days of vacation in years 1-4,
with years 5-9 remaining the same accrual (15 days). The vacation changes proposed are
below:
0-4 years 12 days
20-21 years 26 days
22-23 years 27 days
24+ years 28 days
ACTION REQUESTED:
The Committee recommends the Commission take the following actions:
• Approve Longevity Pay per proposed schedule and amounts.
• Approve additional vacation accruals beyond 25 days and change the beginning accrual
as proposed.
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HANDOUT AT MEETING - LETTER TO ERMU COMMISSION July 13th, 2021
Dear ERMU Commission,
We narrowly missed this in the agenda for tonight's meeting & our busy schedules did not allow much time to ask questions on the
Agenda Item 5.2. First off, we want to say that we are very thankful for the move forward with longevity pay&vacation
alterations. The direction of change will help with new employees. In our brief conversations this week, but also within past
conversations of nearly seven plus years, we have a few concerns or suggestions that we hope you may consider prior to finalizing
the Longevity 5.2 Items.
1. Longevity Pay—
a. Dollar Increments Over Percentage-Since last years' meeting with the Wage & Benefit Committee, several of us
were also hopeful that a future longevity plan would be a fixed dollar amount instead of a wage percentage, so
thank you for that in the proposal.
b. Retro Longevity Pay—There is a big concern with not considering Retro Longevity Pay. For the last seven or more
years many have seriously been talking about the hope of longevity pay and how it could help retain employees. In
those last several years of discussions one big item that many wanted to convey to the commission is how much a
retro pay would benefit the company. To give a little perspective, there are 14 current employees of the total 44
employees that are within the proposed longevity timeline. We have lost over 20 employees in just over ten years,
by their own accord (not including retirement/health/termination). Of the 14 currently within the longevity scale,
they have been with ERMU for as many as 28 years of service, but most are within the first tier. We ran some
numbers and had some ideas for a Retro Longevity Plan to make it a little easier to see data on the fly. ERMU
would incur less than a $50,000 plus (including employer taxes) cash outlay; with the intention to invest in the very
individuals that have been here putting in daily work (plus some). The very teammates that are the trainers of the
up & comers, time and time and time again. They have overcome some big obstacles & have come out stronger
for it. The several that have been here with ERMU continually help to facilitate ERMU in growth of not only
territory, but in the ERMU workplace culture and the ideals of workmanship. These 14 employees strive to be
effective leaders, no matter their title. These individuals promote workplace buy-in, which in turn feeds into ERMU
longevity for the newer employees & strengthens the steadfast commitment to the community mentality that
ERMU thrives from.
Full Potential of Other Employees w/Years
Retro(Jan 1,2022) Missed in Longevity
Idea#3 Idea#2 Idea#1
Past Most Current Per Person 1 1 Tier Total Previous Tier•1/2 of Other Tiers Previous Tier.1/2 of Other Per Person Full
of Employees Longevity Tier Tier Retro Investment Per Person Tiers Total Investment Retro Investment Full Retro Investment
6 8,ears 51,200.00 57,200.00 51.200.00 57,200.00 51,200.00 $7,200.00
2 12"ears 51 400.00 52,800.00 52,000.00 54,000.00 52,600.00 $5,200.00
3 16 years 51,600.00 54,800.00 52,900.00 $8,700.00 54.200.00 512,600.00
2 2:years 52,000.00 54,000.00 54,100.00 58,200.00 $6,200.00 512,400.00
1 28',ears 53,500.00 $3,500.00 $7,800.00 $7,800.00 512,100.00 $12,100.00
14 out ar 44 E rrp oyees Qua;fy 522,300.E 535.900.00
549,500.00
2021
Current Status
Years Active Count Actual-Breakdown Ideal
2-2 yeas 16 36.4% 5%or ess
3-5 yeas 11 25.2% 15%
6-1C yeas S 22.5% 25%
11-22 yeas 6 13.6% 3C%
22-years 2 4.5% 25%
Average of 6.79 Years of longevity in our current workforce
c. Starting Tier—Many have voiced the concern that the 8-year starting point may be a little too late in the timeline
of employment to incentivize some that are neutral to their ERMU employment. The thought of five or six years
has been the consensus of suggestion, as it may be a better fit for our advancement timeline with typical
succession. Overall, the six-year mark may be better, as it will cost the company less than five years & maybe by
year six, those that planned to leave, would have already moved on, but the six-year mark would be an incentive
worth shooting for if they planned to stay long-term with ERMU. To not cost the company as much, we thought
that the 28-Year& 32-Year tiers could be reduced in payout. 28 Years at$3,200 and 32 Years at $3,500. It would
change it by$800. We think that may be a great value to place at Year 6. We know that may cost a little more but
think it would be money well spent to give the taste of incentive just a touch earlier. As employees reach their
sixth year, they have also gained the necessary skills to move up the ladder which increases their wage potential.
Pair that with the thought of wanting to move up in title, or not being fully vested with ERMU, they take the
chance and jump companies to gain a higher title and wage/benefit. Retention of employees is important for not
only expense of business, but even more for workplace culture. Morale can often slip; remaining employees are
left to pick up the slack and it becomes draining. So, therefore we find these finer details to be crucial to consider
for this proposal.
With all sincerity, we do not, as they say, "want to look a gift horse in the mouth". We want this implementation to be successful
& we believe it is so close to being a slam dunk, for every single employee. We truly appreciate the effort&thought that was put
into the process.Thank you for your time & consideration on this matter.
Sincerely,
Various ERMU Employees