Merit Pay Update: Transparency Concerns Remain Unaddressed


9/21/07: The SEC has yet to provide aggregate merit pay distribution information, broken down by office, division and type of employee. Nor has the SEC provided the preliminary recommendations on ratings that employees’ supervisors provided to the compensation committees (the so-called transmittal sheets), so that employees will be able to see management’s initial recommendations and the rationale for any changes made by the committees.

Providing information of this kind to SEC employees in a timely fashion when merit pay distributions occur would represent an important step by the agency towards achieving a fair pay for performance system. Indeed, this is particularly the case in light of the recent determination by a federal arbitrator that the SEC’s “subjective and discretionary” program for awarding merit pay increases violated both Title VII and the Age Discrimination in Employment Act. The arbitrator found that African-American employees above grade 8 as well as employees age 40 and older (at all grades) received significantly fewer pay increases than would be expected given their representation in the pool of eligible employees. Increasing transparency would help to prevent this type of outcome in the merit pay system. It would also demonstrate to SEC employees that senior management stands by its process for awarding step increases, and expects it to be fair and equitable.

As previously reported by Chapter 293, providing distribution information to employees was required by the Federal Service Impasses Panel in its decision on the SEC’s compensation package a year ago. It also was recommended by the Governmental Accountability Office (GAO) in a recent report on pay for performance systems that was highly critical of the SEC’s merit pay process. The union will continue to press for this information through appropriate process, if it is necessary to do so.

NTEU leaders will be meeting with management officials soon to engage in further discussions regarding the performance management process at the SEC. Check Chapter 293's website regularly for updates regarding these issues.