Pay structure changes are on the horizon
Iowa State's pay structure may be expanding, vice president for university human resources Julie Nuter reported at the May 26 Professional and Scientific Council meeting. A review and potential overhaul is tied, in part, to federal law changes that go into effect Dec. 1.
For the first time since 2004, a mandated change in the Fair Labor Standards Act (FLSA) will raise the salary threshold for individuals who qualify for overtime pay, from about $23,000 to $47,476. Nuter said this, coupled with Iowa State's P&S classification and compensation system that hasn't changed since 1993, precipitated a comprehensive review.
"We're not going to look at just this new regulation change," Nuter said. "We really need to look at the entire professional and scientific classification and compensation system. This is a once in a lifetime opportunity. The regulations have gotten into the 21st century -- the P&S pay system is going to get into the 21st century."
Nuter hinted at the addition of a third tier to what she called the current "binary" pay structure that offers two choices -- P&S or merit positions.
"That [two-tier system] is not sufficient for moving forward," Nuter said. "The jobs that have been defined as professional and scientific do not fit with the merit classification. So, what we need to do, as a result of this new regulation, is create that new structure to support this -- which really means creating a nonexempt structure that fits in between these two."
She said a "consulting partner" and steering committee will help with the review and development process -- taking a look at how ISU defines, organizes and categorizes its jobs, and examining the policies and procedures that support pay administration. She said a new structure would be market-based for competitiveness, focus on performance and ensure equity across campus.
Emma Mallarino Houghton, director of UHR classification and compensation, said the FLSA determination of overtime eligibility is not based strictly on salary. An analysis of duties (something that ISU already does) also is used to determine exemptions.
"We are currently reviewing the new regulations in as much detail as we can to really understand, not only from a salary standpoint, but also for certain classes of employees -- postdocs, residents and interns, graduate students, academic advisers," Mallarino Houghton said. "The Department of Labor has addressed all of these groups, but we're hoping they come out with more details as we move closer to Dec. 1."
Nuter said the impact of the FLSA change at Iowa State still is being determined.
"We have what I would say is a 'fuzzy' number at this time," Nuter said. "If we looked purely at the salary threshold, and the number of P&S employees, it's about 700 employees who are in these positions. If we ran a calculation on what the variance is between the current salary and this new threshold, it comes out to about $4.5 million, almost $5 million. So, just adjusting pay for positions is not reasonable or feasible, given the funding situation. But the reality is that we need to look at all of our P&S positions through this process."
Nuter also shared the FY17 salary parameters, which were sent to budget planners last week. The recommendation is, on average, a 3.5 percent increase for P&S employees and faculty. Employees with a satisfactory review will receive a minimum increase of 1 percent, and salary bumps over 5 percent would require approval from senior vice presidents. Employees with unsatisfactory reviews receive no increase.
Senior vice president and provost Jonathan Wickert said that salary increases could, and should, vary.
"The supervisor has the appropriate responsibility and authority to give raises at different percentages," Wickert said. "I encourage it. I expect to see differentiation, based on performance."
He added that salary increases are important in this year's budget planning process.
"The president made it very clear back in the fall, in his annual address, that compensation for employees was his No. 1 priority for the university," Wickert said. "It's very exciting for the president to make that happen."
Council compensation recommendations
Council members approved a compensation recommendation introduced by the group's compensation and benefits committee. The FY17 recommendation encourages "the greatest salary increase feasible" for employees with satisfactory or better performance reviews, citing an average increase of just 1.4 percent annually over the last five years.
The supporting document includes recommendations to enhance three priorities:
- Competitive compensation (align increases with peers and private sector; increases should not be lower than salary matrix adjustments)
- Performance-based compensation (recognize superior performance with differential increases; develop a performance form with subjective and objective measurements; require performance management training for supervisors)
- Improved classification system (include additional classifications and clearer position responsibilities)
- The council approved three appointments to fill vacant seats: Megan Fink (ISU Dining) and Timothy Tesar (admissions) as representatives for student affairs and Jake Cummings (equal opportunity) as a representative for the president's units