Commentary: Law, equity affect public sector compensation

Public sector employee compensation has become a topic for discussion with the local media. According to Minnesota Statute 13 Government Data Practices, certain data pertaining to a public sector employee is public.

According to Minnesota Statutes, a public employee is defined as any person appointed or employed by a public employer with a few exceptions as listed in the statutes. Without going further into the legal definition of an employee or all the different facets and definitions of compensation, for the purpose of this article we are discussing the basic premise of compensation or an employee’s wage rate per hour.

Public sector compensation is affected by several things including negotiations with bargaining units, job description evaluations, Minnesota pay equity legislation, Minnesota Merit System, arbitration decisions, the labor market, neighboring jurisdictions wage rates, and the list goes on.

While Goodhue County actively negotiates wage rates, some compensation decisions are set through the bargaining process. Approximately 54 percent of the employees working for Goodhue County belong to a bargaining unit. Those employees are governed by the Minnesota Public Employer Labor Relations Act or MPELRA. Within MPELRA, there are two types of employees, essential and non-essential.

For simplicity sake, through statute, essential employees are not given the ability to strike but have other means to settle negotiation disputes. When these unions and the county are unable to reach a settlement through negotiations, the parties participate in mediation and binding arbitration.

Through the process, the county is required to negotiate terms and conditions of employment including compensation. If the parties are unable to negotiate a settlement which includes wages, the rate of pay would then be decided upon by an arbitrator.

When arbitrators make a wage decision during arbitration, there are several things they consider. An arbitrator listens to the positions from the county’s perspective and the union’s perspective and also reviews wages from comparative employers.

In Goodhue County’s case, the arbitrator reviews wages from all 10 counties in economic region. They include Dodge, Fillmore, Freeborn, Goodhue, Houston, Mower, Olmsted, Rice, Steele, Wabasha and Winona. Since the arbitration process is binding, Goodhue County has little control over the arbitrator’s decision.

As stated above, Goodhue County wages rates are also affected by Minnesota law. Since 1984, the Local Government Pay Equity Act has required local public sector employers to review their pay structure every three years. The review process requires local government employers to send documentation to the state proving an equitable compensation structure.

If the county is found to be out of compliance with the pay equity process, the county must make compensation changes or face decreased state aid and possible fines.

On a side note, you may find it interesting that the pay equity laws apply to local branches of government but does not apply to state employees.

Periodically, the county also goes through an assessment process where we evaluate at all position descriptions for accuracy and update them as necessary. We have found that due to new regulations, local law changes and other factors, employees job duties are constantly evolving. Because of this, it is essential to monitor job descriptions to ensure essential job functions are being completed.

If there are significant changes to a job description, the rate of pay for the position would be evaluated and could increase.

The labor market also plays a key role in determining wage rates. Because of education and experience requirements, some positions are difficult to fill with new employees. In rare cases when faced with these employment challenges, sometimes market pay adjustments are necessary.

As you can see, setting wages for public sector employees is a complicated process that is influenced by many different external parties. Regulation and law requirements often dictate how an employee is compensated.

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