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HomeMy WebLinkAbout061405 HR presentationEmployee Pay and Benefits June 14, 2005 Budget Work Session Budge-t-Items Appendix A - Pay and Benefits Appendix B - Benefits Survey Appendix C - Living Wage Appendix D - Housing Wage Supplemental Information — !V�`J� Differentiated Pay ��� v J 1 Covering Tonight • Review of past pay actions Elements in Manager's Recommended Budget Past Pay Actions • Appendix A — Attachments 1 and 2 • In summary: 2004 -05 - 2% COLA 2003 -04 - Phases 2 and 3 Class & Pay 2002 -03 - Phase 1 Class & Pay 2001 -02 - 2.5% COLA, 2.5% In -Range & Meritorious Service Awards 2000 -01 - 2.75% COLA, 2.5% In -Range & Meritorious Service Awards N Current Employees Impacted by Class and Pay Study -:O-f . Of 796 current employees: Phase Date Employees Who Received Employees Who Did Not Receive 1 04/14/03 592 204 2 12/08/03 398 398 3 04/26/04 292 504 ,-Cost of Living Increase Y Recommend 2.5% effective July 1 Cost of living increased 3.3% in 2004* For the first 4 months of 2005, rose at an annual rate of 4.8 %* Led by energy, gasoline, food, housing, medical costs (ft/ Oo *Source: US Bureau of Labor Statistics 3 In -Range Salary Increase • Recommend 2.5% • For work performance that is proficient or higher effective with performance review • Provides a way for employees to progress in the salary range as gain experience and proficiency In -Range Increase (continued) • Salary compression urgent issue Employee salaries concentrated in the lower, hiring area of the range • Creates equity, employee relations, hiring issues Below Midpoint 85% 15% Above Midpoint 11 Meritorious Service Awards - Budget includes funding for $750 for Superior and $1,500 for Exceptional accomplishments Requires Manager's advance approval Tool to recognize top performing employees j 401(k) Plan Improvement • Recommend additional $5 per pay period (from $20 to $25) Helps employees build retirement security and supports recruitment Particularly benefits lower salaried employees Contributions of other area local governments significantly stronger 5 l.� vin ving Wage • Increase from $9.11 to $9.34 an hour effective July 1 • Consistent with Board's policy • Affects about 60 temporary employees Sustainability • Need to retain a stable, qualified, competent and flexible workforce Pay and benefits plan essential infrastructure Maintenance is fundamental business cost 9 Summary • Classification and Pay Study built the necessary foundation Critical to move forward in 2005 -06 to sustain this talented, committed workforce Orange County Personnel Department 208 South Cameron Street Elaine Holmes Post Office Box 8181 Director Hillsborough, NC 27278 June 10, 2005 MEMORANDUM TO: Orange County Board of Commissioners John Link, County Manager FROM: Elaine Holmes, Personnel Directo ` SUBJECT: Differentiated Pay Question Follow Up Information Tel (919) 245 -2550 Fax (919) 644 -3009 www.co.orange.nc.us Following the Manager's Budget Presentation, the Board asked staff to be thinking about differentiated pay for employees. As I understand it, the question relates to providing pay in a way that confers a relatively greater benefit to a lower salaried employee than a higher salaried employee. As the Board is aware, the County in the past has taken a number of pay and benefit actions that benefit lower salaried employees. The Attachment 1 list shows these actions over recent years. As to the broader question of differentiated pay as an element of the pay plan, there is an approach to provide a different percentage increase amount for employees in the lower portion of the assigned salary range than employees in the higher portion of the salary range. Such plans are used to address the in -range element of pay rather than the cost of living. Typically such a plan provides for a higher percentage increase to employees below the midpoint of the salary range and a lower percentage increase to employees whose salaries are at or above the midpoint. For example, if warranted by work performance, employees below the midpoint receive a 3 percent in -range increase and employees at or above the midpoint receive a 2 percent in -range increase. I've provided on Attachment 2 a list of some impacts of such pay increases differentiated by relative position in the salary range. If the Board chose to pursue such a direction, staff would do everything possible to develop a plan and implement it effectively within the time available. Please let me know if you wish me to provide any additional information. An Equal Opportunity /Affirmative Action Employer Past Pay and Benefit Actions with Differentiated Benefit for Lower Salaried Employees 1. Living Wage Attachment 1 Effective July 1, 1998, the Board adopted a Living Wage policy that provides a minimum wage for County employees based on the Federal poverty level for a family of four as adjusted for the Raleigh, Durham, Chapel Hill area cost of living. The Manager's Recommended Budget includes a recommended increase in the Living Wage from $9.11 an hour to $9.34 an hour effective July 1, 2005. 2. Elimination of Lowest Salary Grade in 2002 -03 With final implementation of the County -wide Classification and Pay Study effective April 14, 2003, the consultant eliminated the lowest salary grade from the recommended salary schedule and moved those classes to the next higher grade. This action also increased the minimum salary for a permanent employee. 3. Elimination of Lowest Salary Grade in 2000 -01 and Setting Minimum Salary Effective October 13, 2000, the Board approved eliminating the lowest salary grade for permanent employees and moving the employees at that grade to the next higher grade. At the same time the Board also set $20,798 as the minimum salary for a permanent County employee and increased the salary of any current employee below that salary. 4. Elimination of Lowest Salary Grade in 1997 -98 Effective July 1, 1997, the Board approved eliminating the lowest salary grade for permanent employees and moved those employees to the next higher grade. 5. 401(k) Plan Contribution as a Dollar Amount Orange County's current 401(k) plan contribution for non -sworn law enforcement employees is provided as a flat dollar amount; that is, $20 per pay period. This provides a relatively greater benefit to a lower salaried employee than a higher salaried employee. This is 1.5 percent of salary for an employee making $35,000 a year and .8 percent of salary for an employee making $60,000 a year. 6. Meritorious Service Awards In past years when the County provided Meritorious Service Awards, these awards were given as a lump sum flat dollar amounts that did not become a part of base salary to a limited group of top performing employees. The amounts were $750 for Superior and $1,500 for exceptional accomplishments. For an employee making $35,000 a year, this equated to a 2.1 percent amount and a 4.2 percent amount for Superior and I Exceptional respectively. For an employee making $60,000 a year this equated to a 1.3 percent and 2.5 percent amount for Superior and Exceptional. 7. Subsidy for Dependent Health Insurance For many years, Orange County has provided a subsidy for dependent health insurance coverage. Effective January 1, 2003, the County increased the subsidy from 40 percent of the cost of dependent coverage to 52 percent to offset the impact on employees. This subsidy provides a significantly greater benefit (when considered in relation to salary) for a lower salaried employee than a higher salaried employee. The purpose of the subsidy is to make dependent health coverage more affordable for employees, particularly lower salaried employees who might otherwise not be able to participate in this coverage. As of June 9, 2005 Attachment In -Range Salary Increases With Varying Increase Percentages Based on Place in Salary Range Some Possible Impacts 1. Can be used to provide a relatively greater percentage increase to employees in the lower part of the salary range (such as below the midpoint) than employees in the higher part of the salary range (such as above the midpoint). Through this approach, generally provides greater in -range increases to lower salaried employees. 2. Provides that newer employees move up in the salary range until they reach the midpoint (to the extent the increase amounts facilitate such progression) and keeps these salaries more competitive in the labor market. Also since this is the hiring portion of the salary range helps to move employees to higher salaries than new incoming employees. 3. Provides relatively slower salary progression to employees in the higher part of the salary range who tend to be the longer service employees and may be perceived by these employees as a lesser reward for service given. 4. There will be employee salaries just below or just above the salary range midpoint and controversy may arise from having a cutoff point where one employee receives an increase greater than another. Depending on the increase amounts, it is possible that an employee below the midpoint may even go to a higher salary than an employee slightly above the midpoint, unless there is management discretion available to vary the increase amount. This would need to be addressed in the plan design. 5. Is not a concept presently understood in the Orange County employee group. The maximum communication possible within the time available would be required. 6. Since 85 percent of County employees are below the midpoint, does not have major impact as a cost saving tool. 7. If the Board chooses to pursue such a direction, the plan brought forward will need, of necessity, to be of a simple, straightforward design given the time available.