7/25/07: Late last week, Chapter 293 and the SEC entered into a memorandum of understanding regarding two compensation issues that will affect hundreds of employees. The SEC agreed that all employees in grades with 31-step pay ranges will now be eligible to progress to the top of the pay range for their grade, without continuing to impose a ceiling at Step 27. In addition, Chapter 293 and the agency also reached agreement on an outstanding issue related to the October order of the Federal Service Impasses Panel (“FSIP”) – the SEC has agreed that all so-called “securities industry specialist” employees who were hired before October 19, 2006 will not be subject to a new 6% cap on their salary increases when they move up in grade on their career ladder.

The SEC originally created the Step 27 ceiling when it implemented Pay Parity in 2002. At that time, the agency imposed a Step 27 maximum upon employees who were not attorneys, accountants or examiners and did not have the “securities industry specialist” designation – even though their grade went up to Step 31. Over the past few months, Chapter 293 has negotiated with the SEC regarding the elimination of this distinction, which serves no rational purpose. The agency’s recent agreement to eliminate the Step 27 ceiling will benefit approximately 450 bargaining unit employees, most of whom are providing various forms of support functions at the SEC.

The second issue, involving the 6% cap, will affect a different group of employees comprised of over three hundred attorneys, attorney advisers, compliance examiners and staff accountants who have not yet reached the highest grade on their career ladders. Since Pay Parity commenced in 2002, these employees have always commenced at step 14 when they have been promoted to a new grade. During last year’s compensation negotiations, the SEC insisted upon imposing a 6% cap on all pay raises when an employee advances to a new grade. It would have been unfair to apply this cap to preexisting employees who, when they accepted their positions, were led to believe that they would advance to Step 14 when they received a grade promotion. To deal with NTEU’s objections, the SEC agreed to “grandfather” those employees who had the “securities industry specialist” designation as of the date of the compensation order issued by the Federal Service Impasses Panel (“FSIP”).

After FSIP issued its compensation order on October 19, 2006, some issues needed to be resolved regarding to whom this “grandfather” clause should apply. For example, some attorneys, accountants and examiners did not have the “securities industry specialist” designation, either because they were hired after Pay Parity or because the designation had been removed from their records. Furthermore, there was a question regarding whether the “grandfather” clause should apply to compliance examiners when they advance to Grade 14 after earning the required accounting credits for such a promotion. Chapter 293 was able to reach an agreement with the agency applying the “grandfather” clause to all attorneys, accountants and examiners who were hired prior to October 19, 2006, but who have not yet reached the highest grade on their career ladder – including examiners who advance to Grade 14 after earning the requisite accounting credits.

Elimination of the Step 27 ceiling will give hundreds of employees the chance to advance to the top of their pay grades over the course of their careers, affording greater opportunities to recognize their valuable contributions to the agency’s mission while simultaneously increasing their potential “high three” salaries for retirement calculation purposes. Similarly, the broad application of the 6% cap “grandfather” clause will allow the agency to keep its promises to a large number of SEC professionals. “I am pleased that SEC management adopted a reasonable approach to these two important compensation matters which will affect roughly a third of the bargaining unit,” noted Chapter 293 President Greg Gilman, “and we will continue to work hard to identify opportunities to improve the compensation and benefits of all employees at the SEC.”