No. 27904 (Amendment): R477-6. Compensation

DAR File No.: 27904
Filed: 05/13/2005, 04:50
Received by: NL

 

RULE ANALYSIS

Purpose of the rule or reason for the change:

The purpose of this amendment is to add clarity that will aid agencies in the administration of the state compensation system and provide a legal basis for the distribution of employee pay raises authorized by the 2005 legislature, provide incentives for employees converting to career service exempt status as provided in H.B. 109, 2005 General Legislative Session, provide schedule AT employees with the same benefits as other career service exempt employees and make nonsubstantive changes. (DAR NOTE: H.B. 109 is found at UT L 2005 Ch 169, and will be effective 07/01/2005.)

 

Summary of the rule or change:

In Subsection R477-6-4(1), the amendments clarify which noncareer service (Schedule A) employees are eligible for merit step increases when appropriated by the Legislature. Schedule AM and AS are no longer listed because the Department of Human Resource Management (DHRM) has no control over salary increases for these employees. In Subsection R477-6-4(7), this amendment clarifies management discretion to assign an appropriate salary to an employee who voluntarily transfers to another position. This discretion is provided in other parts of the DHRM rules and is allowed under provisions the Long Term Disability and Americans with Disability laws but is also included here for clarification and the benefit of agency management. Management is limited by the parameters governing assignment of salary contained in the same section. Subsection R477-6-4(12) is a new subsection which is added to provide the legal basis for the distribution of market comparability step increases appropriated by the 2005 legislature. This subsection is necessary this year because of the lack of specific intent language in the appropriation act that provides the needed details and direction to DHRM. In Subsection R477-6-5(1), the provision for an incentive award to be paid as a contribution to a 401(k) plan is deleted because it proved to be administratively difficult and few employees chose this option. The exception language inserted at Subsection R477-6-5(1)(b) is moved here from Subsection R477-6-5(3)(b) so that it applies to all types of incentive awards and not just awards for cost savings. Section R477-6-7 is amended to make employees on schedule AT eligible for benefits as an incentive to convert to career service service exempt status as provided in H.B. 109, 2005 General Legislative Session. In Section R477-6-8, this amendment provides the same life insurance benefits to schedule AT employees as received by other career service exempt employees. In Subsection R477-6-9(1), this amendment provides the severance benefit to employees who are on schedule AT as provided in H.B. 109. This rule is also clarified and cleaned up with these amendments. It is made clear that eligibility for severance is based on years of service in the executive branch only. The employee will only receive the health care portion of the benefit if eligible under the Consolidated Omnibus Budget Reconciliation Act (COBRA); this is required by the COBRA. The provision for payment of the health care premium in one lump sum is deleted because it is difficult to administer.

 

State statutory or constitutional authorization for this rule:

Sections 63F-1-106, 67-19-6, and 67-19-12; and Subsection 67-19-15.1(4)

 

Anticipated cost or savings to:

the state budget:

There are costs associated with three provisions in this filing. The most obvious is with the new Subsection R477-6-4(12) concerning implementation of market comparability increases. Although the legislature has appropriated the monies for these increases, this is based on a best educated guess of the actual cost. Things will surely change in the time between the appropriation and the actual implementation of the increases in July 2005. In some cases, agencies will have to use funding from other portions of their budgets to pay for these increases. This has always been the case with salary increases and this situation is not unique to this year or this rule. There is also a potential cost associated with the exception language in the incentive award Subsection R477-6-5(1). Agencies may now request exceptions to the whole variety of incentive awards which may increase costs for the agency but this a discretionary act and is not mandated by this rule. All other changes associated with this rule are clarifications only with no budgetary impact. The third cost will accrue with the granting of the same benefits for schedule AT employees as those received by other career service exempt employees. The immediate cost will be for the life insurance benefit which DHRM estimates to be less than $50,000 in the first year.

 

local governments:

This rule only affects the executive branch of state government and has no impact on local governments.

 

other persons:

This rule only affects the executive branch of state government and has no impact on other persons.

 

Compliance costs for affected persons:

No additional resources or procedures will be needed by agencies to implement this rule.

 

Comments by the department head on the fiscal impact the rule may have on businesses:

Rules published by DHRM have no direct effect on businesses or any entity outside state government. DHRM has authority to write rules only to the extent allowed by the Utah Personnel Management Act, Title 67, Chapter 19. Section 67-19-15 limits the provisions of career service and these rules to employees of the executive branch of state government. The only possible impact may be a very slight, indirect effect if an agency passes costs or saving on to businesses through fees. However, the costs associated with these amendments can easily be absorbed by agency budgets and no impact on businesses is anticipated. Jeff Herring, Executive Director

 

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Human Resource Management
Administration
Room 2120 STATE OFFICE BLDG
450 N MAIN ST
SALT LAKE CITY UT 84114-1201

 

Direct questions regarding this rule to:

Conroy Whipple or May Vang at the above address, by phone at 801-538-3067 or 801-537-3081, by FAX at 801-538-3081 or 801-538-3377, or by Internet E-mail at [e-mail] or [e-mail]

 

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

07/01/2005

 

This rule may become effective on:

7/2/5005

 

Authorized by:

Jeff Herring, Executive Director

 

 

RULE TEXT

R477. Human Resource Management, Administration.

R477-6. Compensation.

R477-6-4. Salary.

(1) Merit increases. The following are applicable if merit increases are authorized and funded by the legislature:

(a) Employees[,] who are not on a longevity step and who are not at the maximum step of their salary range, who receive a successful or higher rating on their performance evaluations and who have been in a paid status by the state for at least six months shall receive a merit increase of one or more salary steps at the beginning of the new fiscal year.

(b) Employees designated as schedule AE, AI and AL who are receiving benefits are eligible for merit step increases.

([b]c) Employees designated as schedule AJ are not eligible for [a ]merit step [increase]increases.[ Merit increases for employees in schedule AL, AM, or AS are not mandatory unless they are receiving benefits, and the increase is approved in agency policy.]

(2) Highest Level Performer.

(a) Employees designated by the agency as a highest level performer consistent with subsection R477-10-1(2) shall receive, as determined by the agency head, either:

(i) a salary step increase; or

(ii) a bonus; or

(iii) administrative leave; or

(iv) other appropriate recognition as determined by the agency.

(b) An employee who is on a longevity step or at the maximum step of the salary range is not eligible for a salary step increase but may receive a bonus, administrative leave or other appropriate recognition as determined by the agency.

(3) Promotions and Reclassifications.

(a) An employee promoted or reclassified to a job with a salary range exceeding the employee's current salary range maximum by one salary step shall receive a salary increase of a minimum of one salary step and a maximum of four salary steps. An employee who is promoted or reclassified to a job with a salary range exceeding the employee's current salary range maximum by two or more salary steps shall receive a salary increase of a minimum of two salary steps and a maximum of four salary steps.

(i) An employee may not be placed higher than the maximum salary step or lower than the minimum salary step in the new salary range. Placement of an employee in longevity shall be consistent with subsection R477-6-4(4).

(ii) An employee who remains in longevity status after a promotion or reclassification shall retain the same salary by being placed on the corresponding longevity step.

(b) To be eligible for a promotion, an employee shall:

(i) meet the job requirements and skills specified in the job description and position specific criteria as determined by the agency for the position unless the promotion is to a career service exempt position.

(c) An employee whose position is reclassified or changed by administrative adjustment to a job with a lower salary range shall retain the current salary. The employee shall be placed on the corresponding longevity step if the salary exceeds the maximum of the new salary range.

(4) Longevity.

(a) An employee shall receive a longevity increase of 2.75 percent when:

(i) the employee has been in state service for eight years or more. The employee may accrue years of service in more than one agency and such service is not required to be continuous; and

(ii) the employee has been at the maximum salary step in the current salary range for at least one year and received a performance appraisal rating of successful or higher within the 12-month period preceding the longevity increase.

(b) An employee on a longevity step shall be eligible for the same across the board pay plan adjustments authorized for all other employee pay plans.

(c) An employee on a longevity step shall only be eligible for additional step increases every three years. To be eligible, an employee must receive a performance appraisal rating of successful or higher within the 12-month period preceding the longevity increase.

(d) An employee on a longevity step who is reclassified to a lower salary range shall retain the current salary.

(e) An employee on a longevity step who is promoted or reclassified to a higher salary range shall only receive an increase if the current salary step is less than the highest salary step of the new range.

(f) Agency heads or time limited exempt employees identified in R477-4-11 are not eligible for the longevity program.

(5) Administrative Adjustment.

(a) An employee whose position has been allocated by DHRM from one job to another job or salary range for administrative purposes, shall not receive an adjustment in salary.

(b) Implementation of new job descriptions as an administrative adjustment shall not result in a salary increase unless the employee is below the minimum step of the new range.

(6) Reassignment.

When permitted by federal or state law, including but not limited to the Americans with Disabilities Act, management may lower the salary of an employee one or more steps when the employee is reassigned to a [job or ]position with a salary range having a lower maximum step.

(7) Transfer.

[An employee who transfers from one job or position to another job or position may be offered a salary increase effective the same date as the transfer.]Management may increase or decrease the salary of an employee who initiates a transfer to another position consistent with R477-6-4.

(8) Demotion.

An employee demoted consistent with R477-11-2 shall receive a salary reduction of one or more salary steps as determined by the agency head or designee. The agency head or designee may move an employee to a position with a lower salary range concurrent with the salary reduction.

(9) Productivity step adjustment.

Agency management may establish policies to reward an employee who assumes additional workloads which result from the elimination of a position for at least one year with a salary increase of up to four salary steps. An employee at the maximum step of the salary range or in longevity shall be given a one time lump sum bonus award of 2.75% of their annual salary.

(a) To implement this program, agencies shall apply the following criteria:

(i) either the employee or management can make the suggestion;

(ii) the employee and management agree;

(iii) the agency head approves;

(iv) a written program policy achieves increased productivity through labor[/] and management collaboration;

(v) the agency human resource representative approves;

(vi) the position will be abolished from the position authorization plan for a minimum of one year;

(vii) staff receive additional duties which are substantially above a normal full workload;

(viii) the same or higher level of service or productivity is achieved without accruing additional overtime hours;

(ix) the total dollar increase, including benefits, awarded to the workgroup as a result of the additional salary steps does not exceed 50 percent of the savings generated by eliminating the position.

(10) Administrative Salary Increase.

The agency head authorizes and approves administrative salary increases under the following parameters:

(a) An employee shall receive one or more steps up to the maximum of the salary range.

(b) Administrative salary increases shall only be granted when the agency has sufficient funding within their annualized base budgets for the fiscal year in which the adjustment is given.

(c) Justifications for Administrative Salary Increases shall be:

(i) in writing;

(ii) approved by the agency head;

(iii) supported by issues such as: special agency conditions or problems or other unique situations or considerations in the agency.

(d) The agency head is the final authority for salary actions authorized within these guidelines. The agency head or designee shall answer any challenge or grievance resulting from an administrative salary increase.

(e) Administrative salary increases may be given during the probationary period. These increases alone do not constitute successful completion of probation or the granting of career service status.

(f) An employee at the maximum step of the range or on a longevity step may not be granted administrative salary increases.

(11) Administrative Salary Decrease.

The agency head authorizes and approves administrative salary decreases for nondisciplinary reasons according to the following:

(a) An employee shall receive a one or more step decrease not to exceed the minimum of the salary range.

(b) Justification for administrative salary decreases shall be:

(i) in writing;

(ii) approved by the agency head; and

(iii) supported by issues such as previous written agreements between the agency and employees to include career mobility; reasonable accommodation, special agency conditions or problems, or other unique situations or considerations in the agency.

(c) The agency head is the final authority for salary actions within these guidelines. The agency head or designee shall answer any challenge or grievance resulting from an administrative salary decrease.

(12) Market comparability adjustments shall be given on July 2, 2005 to all career service employees who qualify. Non career service employees who receive benefits and whose job title is assigned to a benchmark job shall also receive this increase.

(a) A one step increase shall be given to employees whose benchmark job is determined to be 15 percent to 30 percent below the market based on actual average pay.

(b) A two step increase shall be given to employees whose benchmark job is determined to be 30.1 percent or more below the market based on actual average pay.

(c) Employees on the top of the established pay range or in longevity are not eligible for this increase.

 

R477-6-5. Incentive Awards.

(1) Only agencies with written and published incentive award and bonus policies may reward employees with incentive awards or bonuses. Incentive awards and bonuses are discretionary, not an entitlement, and are subject to the availability of funds in the agency.

(a) Policies shall be approved annually by DHRM and be consistent with standards established in these rules and the Department of Administrative Services, Division of Finance, rules and procedures.[

(b) Policies may provide for payments to a 401(k) program approved by the Utah Retirement System.]

([c]b) Individual awards shall not exceed $4,000 per occurrence and $8,000 in a fiscal year. In exceptional circumstances, an award may exceed these limits upon application to DHRM and approval by the Governor.

([d]c) All cash incentive awards and bonuses shall be subject to payroll taxes.

(2) Performance Based Incentive Awards.

(a) Cash Incentive Awards

(i) Agencies may grant a cash incentive award to an employee or group of employees who:

(A) demonstrate exceptional effort or accomplishment beyond what is normally expected on the job for a unique event or over a sustained period of time.

(ii) All cash awards must be approved by the agency head or designee. They must be documented and a copy shall be maintained in the agency's individual employee file.

(b) Noncash Incentive Awards

(i) Agency heads may recognize an employee or group of employees with noncash incentive awards.

(ii) Individual noncash incentive awards shall not exceed a value of $50 per occurrence and $200 for each fiscal year.

(iii) Noncash incentive awards may not include cash equivalents such as gift certificates or tickets for admission.

(3) Cost Savings Bonus

(a) An agency may establish a bonus policy to increase productivity, generate savings within the agency, or reward an employee who submits a cost savings proposal.

(i) The agency shall document the cost savings involved.[

(b) Amounts awarded are subject to the cost limits of R477-6-5(1)(c). In exceptional circumstances, an award may exceed these limits upon application to DHRM and approval by the Governor.]

(4) Market Based Bonuses

Agencies may give a cash bonus to an employee as an incentive to acquire or retain an employee with job skills that are critical to the state and difficult to recruit in the market.

(a) Retention Bonus

An agency may pay a bonus to an employee who has unusually high or unique qualifications that are essential for the agency to retain.

(b) Recruitment or Signing Bonus

An agency may pay a bonus to a qualified job candidate to convince the candidate to work for the state.

(c) Scarce Skills Bonus

An agency may pay a bonus to a qualified job candidate that has the scarce skills required for the job.

(d) Relocation Bonus

An agency may pay a bonus to a current employee who must relocate to accept a position in a different commuting area.

(e) Referral Bonus

An agency may pay a bonus to a current employee who refers a job applicant who is subsequently selected and is successfully employed for at least six months.

 

R477-6-7. Employee Converting from Career Service to Schedule AD, AR, or AS.

(1) A career service employee in a position meeting the criteria for career service exempt Schedule AD, AR, [or ]AS or AT shall have 60 days to elect to convert from career service to career service exempt. As an incentive to convert, an employee shall be provided the following:

(a) a base salary increase of one to three salary steps, as determined by the agency head. An employee at the maximum of the current salary range or on longevity shall receive, in lieu of the salary step adjustment, a one time bonus of 2.75 percent, 5.5 percent or 8.25 percent to be determined by the agency head;

(b) state paid term life insurance coverage if determined eligible by the Group Insurance Office to participate in the Term Life Program, Public Employees Health Plan:

(i) Salaries less than $50,000 shall receive $125,000 of term life insurance;

(ii) Salaries between $50,000 and $60,000 shall receive $150,000 of term life insurance;

(iii) Salaries more than $60,000 shall receive $200,000 of term life insurance.

(2) An employee electing to convert to career service exempt after the 60 day election period shall not be eligible for the salary increase, but shall be entitled to apply for the insurance coverage through the Group Insurance Office.

(3) An employee electing not to convert to career service exemption shall retain career service status even though the position shall be designated as Schedule AD, AR or AS. When these career service employees vacate these positions, subsequent appointments shall be career service exempt.

(4) An agency head may reorganize so that a current career service exempt position no longer meets the criteria for exemption. In this case, the employee shall be designated as career service if he had previously earned career service. However, the employee shall not be eligible for the severance package or the life insurance. In this situation, the agency and employee shall make arrangements through the Group Insurance Office to discontinue the coverage.

(5) A career service exempt employee without prior career service status shall remain exempt. When the employee leaves the position, subsequent appointments shall be consistent with R477-4.

(6) Agencies shall communicate to all impacted and future eligible employees the conditions and limitations of this incentive program.

 

R477-6-8. State Paid Life Insurance.

(1) A benefits eligible career service exempt employee on schedule AA, AB, AD, [and ]AR and AT shall be provided the following benefits if the employee is approved through underwriting:

(a) State paid term life insurance coverage if determined eligible by the Group Insurance Office to participate in the Term Life Program Public Employees Health Plan:

(i) Salaries less than $50,000 shall receive $125,000 of term life insurance;

(ii) Salaries between $50,000 and $60,000 shall receive $150,000 of term life insurance;

(iii) Salaries more than $60,000 shall receive $200,000 of term life insurance.

(2) An employee on schedule AC, AK, AM and AS may be provided these benefits at the discretion of the appointing authority.

 

R477-6-9. Severance Benefit.

(1) A benefits eligible career service exempt employee on schedule AB, AD, [or ]AR or AT who is separated from state service through an action initiated by management, to include resignation in lieu of termination, shall receive at the time of severance a benefit equal to:

(a) one week of pay, up to a maximum of 12 weeks, for each year of consecutive exempt service in the executive branch; and

(b) if eligible for COBRA,one month of health insurance coverage, up to a maximum of six months, for each year of consecutive exempt service, at the level of coverage the employee has at the time of severance, to be paid in a lump sum payment to the state's health care provider.

(2) A severance benefit shall not be paid to an employee:

(a) whose statutory term has expired without reappointment;

(b) who is retiring from state service; or

(c) who is discharged for cause.

(3) A benefits eligible career service exempt employee on schedule AB, AD or AR who accepts reassignment to a position with a lower salary range, without a break in service, shall receive a severance benefit equal to the difference between the current hourly rate of pay and the new hourly rate of pay multiplied by the number of accrued annual leave, converted sick leave, and excess hours on the date of reassignment.

(4) An employee on schedule AC, AK, AM or AS may be provided these same severance benefits at the discretion of the appointing authority.

 

KEY: salaries, employee benefit plans, insurance, personnel management

[July 2, 2004]July 2, 2005

Notice of Continuation June 11, 2002

63F-1-106

67-19-6

67-19-12

67-19-12.5

67-19-15.1(4)