[UPDATE: AFSCME has responded. Click here.]

* From a memo sent by the governor’s legal counsel, with all emphasis added…

To: Agency Directors
From: Jason Barclay
Re: UPDATE: Employee Pay Proposal Date: January 6, 2016

As we have discussed in the past, one of the Governor’s priorities is to modernize the employee compensation system. The Governor set several broad goals for how that modernization should occur: (1) despite our significant budget constraints, we will not reduce current employee salaries or wages; (2) for the first time in the State’s history, we will implement a meaningful bonus system that rewards and incentivizes exceptional performance that will be evaluated by fair and objective measures; (3) employees at all levels should be financially rewarded if they identify and help implement taxpayer savings ideas; (4) merit employees, who have not received an across-the-board wage increase since December 2, 2005, must not be treated as a second-class workforce and must be compensated in a way that encourages promotions and reflects management responsibilities; and (5) automatic “step” increases are appropriate but not until the state’s massive budget deficit and financial crisis are solved.

To that end, we have begun implementing this new program for merit employees and the 17 labor unions who signed collective bargaining agreements in 2015. We have put a comprehensive compensation package based on these principles on the table in our negotiations with AFSCME. We believe this is a fair and thoughtful way to better compensate all of our employees, especially those who have never previously been rewarded for going above and beyond the ordinary course of business.

* The memo goes on to discuss employee bonuses…

We have proposed a bonus program to reward and incentivize high-performing individual employees, or an entire work group’s or unit’s performance. Payment will be based on the satisfaction of performance standards to be developed by the State in consultation with AFSCME or other union representatives.

Under the State’s proposal to AFSCME, for instance, for Fiscal Years 2017, 2018, and 2019, the State would set aside an amount equal to two percent of the budgeted base payroll costs for AFSCME bargaining unit employees. Employee bonuses would then be distributed as follows:

1) Every employee would be eligible to share equally in the one-quarter of the Bonus Pool if they accomplish these two basic requirements:

a) Have missed no more than seven (7) of their assigned work days (or no more than 56 of their assigned work hours) in the fiscal year during which a bonus is distributed; and

b) Have committed no work policy violations during the same fiscal year.

2) The remaining three-quarters of the Bonus Pool would be distributed to no fewer than 25% of employees who satisfy performance standards developed by the Employer in consultation with the Union, as well as meeting the criterion set out in subsection (1)(a) above.

As noted above, we have proposed working with the Union to develop specific policies for the program. Once developed, the Union will be given the opportunity to review and comment on the policies prior to implementation. Consistent with our intent, we have proposed to reward employees or groups of employees based on specific objective achievements and to prevent payouts that are influenced by favoritism, politics, or other purely subjective criteria.

Several Teamsters bargaining units have agreed to a similar provision and the State and those unions have held numerous productive discussions on objective criteria, fair to all, which can be used to measure performance. The Teamsters accepted the State’s proposals last summer, and 50% of eligible IDOT Teamster employees will get bonuses next summer, ranging from $1,500-$4,000, with half of all bonuses near the high end of that range.

The five Teamsters bargaining units are not the only unions to agree to wage increases linked to merit and performance. The trades unions ratified their collective bargaining agreements in November of 2015. Employees represented by twelve different trades unions, such as carpenters, plumbers, stationary engineers, painters, electricians, maintenance workers, barbers, etc., will also receive merit incentives following the conclusion of additional discussions between the State’s employee relations team and the leaders of those unions. Those discussions will be scheduled for the first quarter of this calendar year.

* Merit pay…

Furthermore, we are also committed to using merit pay to improve the efficiency of state operations and better align the incentives for the Employer with the workforce. To that end, we have proposed a gainsharing program in which employees or agencies that achieve savings for the State will share in such savings. The savings will be calculated based on achieved savings for the State. Every state employee will be eligible for this program, regardless of their level or job description, and the program will be structured so that employees can receive significant portions of taxpayer gains.

* Signing and attendance bonuses…

As you are aware, we previously offered every AFSMCE represented employee a $1,000 non-pensionable signing bonus if a new collective bargaining agreement was ratified by January 1, 2016. The State offered this to AFSCME at the bargaining table on September 8, 2015 in the first negotiation session following the failed veto override vote on AFSCME’s Bill, Senate Bill 1229.

Our proposal clearly stated that: “In the event a successor agreement is ratified prior to January 1, 2016, all bargaining unit employees who are in active employment status on that date shall receive a one (1) time, non-pensionable bonus of $1,000.”

AFSCME’s leaders had more than 100 days to consider the proposals similar to those already adopted by the Teamsters and Trades unions before the signing bonus offer expired. Even though AFSCME missed the January 1, 2016 deadline, today our negotiators modified this proposal one more time because we are still committed to finding ways to increase employees’ wages in this fiscal year.

Accordingly, the State has offered the following to AFSCME:

All bargaining unit employees who are in active employment status on June 30, 2016 and who have missed fewer than five (5) percent of their assigned work days between the effective date of this Agreement and June 30, 2016 shall receive a one (1) time, non-pensionable bonus of $1,000.

This proposal is designed to help our employees with additional payments, but it is linked to attendance. We have chosen attendance because it is a simple marker that is universally applicable to all employees, regardless of the specific nature of their duties. Moreover, many of our crushing overtime costs are made only worse due to excessive absenteeism. This is made worse when employees “make up” their absences by volunteering for overtime, paid at time-and-a-half.

We consider this attendance bonus a simple hurdle to cross, but one that begins to demonstrate that people can earn more when it is tied to performance, when the performance criteria are objective, and they are clearly understood by the workforce.

To be sure, these attendance policies will be implemented in a manner consistent with federal employment law so as not to detract from employees’ rights to take FMLA leave or military leave. But the message should be clear: people who show up to work and people who do good work for the state will be rewarded for their efforts.

Under our proposals, after July 1, 2016, the merit pay and gainsharing programs discussed above will go into effect for AFSCME represented employees.

* Incentives for non-bargaining unit employees…

Our desire to incentivize and reward employees is not confined to those employees that are represented by a union; we also want to recognize the many outstanding State workers who are not represented by a union. Unfortunately, many of these individuals have not received a raise in many years. In fact, the last across-the-board pay increase to non-union personnel was over a decade ago. To address this injustice and to reward these employees, we will be expanding the performance bonus system to non-union employees and looking to correct base compensation inequities for managers and those who have been promoted into merit positions. It is my hope that the performance bonuses for non-union employees will be the first step in ensuring that the needs of these employees are no longer overlooked.

Your thoughts?