4/30/08: The SEC sent out an announcement yesterday concerning a change to the agency’s pay schedules. Unfortunately, this announcement was unclear and consequently it has generated a great deal of unnecessary confusion among agency employees.

In short, the SEC is eliminating “steps” and is shifting to the use of “ranges” in its pay schedules. This change, which the SEC sought during compensation negotiations with NTEU in 2006, was ordered by the Federal Service Impasses Panel in October, 2006.

As a result of this change, each grade on the pay schedules will no longer have “steps.” Instead, each grade will have a minimum and a maximum salary. SEC employees’ current salary levels will not be decreased. The maximum salary level for each grade will not change. The locality pay percentage for each office will not change.

How will this impact employees? When a new performance appraisal system has finally been agreed upon by the SEC and NTEU, employees will no longer receive “step increases” for their merit pay awards. Instead, they will receive “shares” that are assigned to the rating level that they receive.

In 2006, the Federal Service Impasses Panel granted authority to the SEC to unilaterally determine the pay increase that would be associated with each performance rating level. NTEU strongly disagreed with any exercise of this authority which would have been unfair. As an extreme example, the SEC might have opted to give $20,000 pay raises to a handful of employees at one rating level, while giving $10 pay raises to employees at another lower rating level. Importantly, NTEU and the SEC have already reached agreement on a “fair share” approach, under which employees who receive performance-based pay under any new system will receive either one share, two shares, or three shares, with the value of a single share being equal. The value of a “share” will depend upon the number of employees at each rating level in a particular year, and the overall budget for performance-based pay increases for that year.

The SEC and NTEU have not yet reached an agreement on the new performance appraisal system itself, although the parties are working towards that goal. For this rating year, as you already know, all employees who receive an “acceptable” rating will receive an equivalent percentage merit increase, based on the total amount funded for merit increases at the agency. Due to the elimination of steps, employees will receive a percentage raise that is equal to the overall percentage funded for merit pay, rather than receiving an amount equal to the closest "step" amount.

NTEU will keep you informed regarding new developments with respect to these issues.