12 CIR 248 (1997). Affirmed. 253 Neb. 837, 572 N.W.2d 369 (1998). (Other cites include 12 CIR 211, 12 CIR 221 (1996) and 12 CIR 309 (1997)).

NEBRASKA COMMISSION OF INDUSTRIAL RELATIONS


LINCOLN FIREFIGHTERS|CASE NO. 901
ASSOCIATION LOCAL 644,|
|
Petitioner,|
|FINDINGS AND ORDER
v.|(Phase II)
|
OF LINCOLN, NEBRASKA,|
|
Respondent.|

Appearances:

For the Petitioner:

For the Respondent:

Before: Judges Moore, McFarland, Cullan, DeLay, and Anderson. (EN BANC).
Moore dissenting in part.

MOORE, J:

NATURE OF PROCEEDINGS

A petition was filed by the Lincoln Firefighters Association Local 644 seeking to have the Commission resolve an industrial dispute pursuant to § 48-818 for the contract period of September 1, 1995 through August 31, 1996 for the job classifications of Firefighter I, II and III, Firefighter/Paramedic, Fire Apparatus Operator, Fire Captain, Fire Prevention Inspector I and II, Fire Equipment Mechanic, and Drillmaster, and the Respondent added the job position of Chauffeur. This case was bifurcated whereby the issue of the array was heard prior to and separate from the determination of wages and terms and conditions of employment. A trial was held on the issue of the array (phase I) and the Commission issued its decision on February 5, 1996. The Commission selected as its array, the fire departments in the cities of Topeka (KS), Davenport (IA), Des Moines (IA), Cedar Rapids (IA), Sioux Falls (SD), Peoria (IL) and Minneapolis (MN).

The remaining issues tried, which are the subject of this Findings and Order, were the comparable wages and other terms and conditions of employment based on the Commission's array. Other issues identified by the parties: (1) application of the offset procedure established in Otoe County, 12 CIR 177 (1996), (2) consideration of economic variables, and (3) the initial placement of employees on the new pay line.

The Commission, on its own motion, will consider this case en banc.

WAGE ISSUES

The hourly wages for the job classifications involved in this proceeding are set forth on Tables 1 - 7. The Commission finds that the prevalent wages are the midpoint figures at minimum and maximum as identified on these tables. A table was not provided for the job classification of Firefighter/Paramedic. This position matched with a similar position at only one of the seven array cities. The parties have agreed to use the Firefighter rate of pay on Table 1 for the Firefighter/Paramedic position.

Annual Hours Used For Calculating the Base Hourly Rate

An issue related to the employees' wages is the Annual Hours Used For Calculating the Base Hourly Rate. The annual hours used to determine the hourly rate of pay for fire suppression employees in Lincoln is based upon 2912 hours per year. The annual hours used by the array employers ranges from 2729 to 2912 hours per year. The hourly rates of pay are based upon the annual number of hours used by each array employer. If the comparable wages had been determined on an annual basis, then it may have been necessary to determine a comparable figure for annual hours upon which to base the annual rate of pay. Since the comparable wages were determined in this case based upon the hourly rates of pay at each array employer, it is not necessary for the Commission to adjust the Annual Hours Used For Calculating the Base Hourly Rate.

Economic Variables

The issue of adjusting the prevalent wage figures due to economic dissimilarities that exist between the array cities and the disputed employer has been before the Nebraska Supreme Court several times. The first case is Lincoln Firefighters Ass'n, Local 644 v. City of Lincoln, 198 Neb. 174 (1977). The supreme court found that the factors of manufacturing, unionization and median income established that the array cities were economically dissimilar to the City of Lincoln and that, therefore, the Commission was in error to directly utilize the mean wage rate of the array cities. The supreme court held that "in determining prevalent wage rates for comparable services in reasonably similar labor markets, the Court of Industrial Relations is required to weigh, compare, and adjust for any economic dissimilarities shown to exist which have a bearing on prevalent wage rates." Id. at 180. The supreme court did not, however, provide any guidance as to a method or formula to be used in making such an adjustment.

The second case is Lincoln County Sheriffs' Employees Ass'n Local No. 546 v. County of Lincoln, 216 Neb. 274 (1984). The supreme court affirmed the Commission's finding that the economic dissimilarities were not shown to have a bearing on prevalent wage rates where the array counties with higher per capita income were found to have some lower wages, the exhibits on employment distribution did not include employees working for the government, and the figures did not show a direct relationship between wages earned in the public sector and wages earned in the private sector.

The final supreme court case is Douglas County Health Dep't Employees Ass'n v. County of Douglas, 229 Neb. 301 (1988). The supreme court pointed out that "[w]here it is alleged that economic dissimilarities exist which have a bearing on prevalent wage rates, the burden is on the party making that allegation to establish the bearing of any such economic dissimilarities on prevalent wage rates." Id. at 319. The supreme court affirmed the Commission's rejection of the economic dissimilarities where no discernible cause and effect was shown between higher degrees of unionization and manufacturing, and the wages paid to the health department employees included in the array.

In the case at bar, the Respondent argues that the prevalent wage figures should be adjusted downward due to the economic dissimilarities that exist between the array cities and the city of Lincoln. The Respondent's witness, an expert in labor economics, analyzed the factors of manufacturing establishments, the degree of private and public unionization, the median household income and the per capita personal income. In its analysis, the Respondent's expert used the statistical package referred to as BMDP, which he asserts is a widely-used and recognized computer statistical software package.

The Respondent's expert found that the seven cities in the array have a higher degree of public and private unionization, a higher number of manufacturing establishments, and a higher per capita personal income than does the city of Lincoln. The city of Lincoln, on the other hand, has a higher median household income. A correlation value was used to measure the relationship between these economic variables and the wage rates. A correlation was performed on each economic variable compared to the minimum and maximum wage rates. The correlation values indicated that the array cities with a higher percentage of unionization in the public and private sector, and the array cities with higher numbers of manufacturing establishments, tended to have higher minimum and maximum wages. The correlation values further indicated that the array cities with higher numbers of manufacturing establishments have a higher percentage of union membership in the public and private sector.

The Respondent's expert next attempted to determine if the relationship between the economic variables and wages could be statistically established or whether it was occurring by chance. The Mann-Whitney test was applied to the two economic variables with the highest correlation with maximum wage rates, the percentage of unionization in the public sector and private sector. The Respondent's expert also analyzed data from 51 cities in the United States to determine if this same relationship between wage levels and unionization existed throughout the United States.

Using BMDP's regression analysis and the two variables of percent unionization in the public sector and private sector, the Respondent's expert concluded that the comparable maximum wage rates of the seven array cities were skewed to a higher wage, and suggested a reduction in wages accordingly, due to the unionization percentage differences.

The value of the Respondent's analysis is dependent upon the validity of the economic variable figures used in that analysis. The Respondent's two key economic variables which were found to have the strongest correlation with wage rates are the percent unionization in the public sector and the percent unionization in the private sector. However, many of the unionization figures used are state-wide figures, rather than city figures. These figures were used to represent the degree of unionization for a city, but the figures actually represent the degree of unionization for the entire state in which the city is located. For the cities of Sioux Falls, Topeka, Cedar Rapids, and Lincoln, the Respondent used figures which represent the degree of public and private unionization for the states of South Dakota, Kansas, Iowa and Nebraska. No credible evidence was presented that the state-wide figures accurately represent the degree of unionization in the cities of Sioux Falls, Topeka, Cedar Rapids and Lincoln. In addition, for the cities of Minneapolis, Des Moines, Peoria and Davenport, the Respondent used figures which represent the degree of public and private unionization for the metropolitan statistical areas (MSA) of Minneapolis/St. Paul, Des Moines, Peoria and Davenport/Rock Island/Moline. With the use of state-wide figures and MSA figures, there is no uniformity in what is being compared.

The Respondent cites to Omaha Association of Firefighters, Local 385 v. City of Omaha, 2 CIR No. 117 (1975) for its position that it is appropriate to use statewide figures of economic variables when comparing cities. Although economic variables was not an issue on appeal to the Nebraska Supreme Court in Omaha Firefighters, the Commission did make adjustments to wages, taking into consideration evidence of economic dissimilarities. In that case, several cities in the states of Ohio and Minnesota were propounded by the Union as comparable markets. The City's expert testified that wage levels in Ohio and Minnesota were significantly higher than those in Nebraska, attributing the difference to the factors of unionization and concentration of heavy manufacturing. The Commission noted various weaknesses in said expert's testimony, particularly the fact that in many instances he was required to make state-by-state comparisons rather than comparing communities. The Commission further noted that the evidence in the case demonstrated that the presence of higher levels of unionization or higher wages in one state than in another do not directly lead to higher wages for firemen in cities in the higher state over those paid firemen in cities in the lower state. Id. at 117-13. The Commission determined that the evidence demonstrated that Omaha firemen were entitled to a substantial wage increase. It further found that the array of cities offered by the union was skewed upward from the prevalent because of economic factors which probably did not operate in Omaha. Id. at 117-14. The Commission resolved the matter by selecting a percentage of increase within the ranges provided by the parties. In sum, the Commission in Omaha Firefighters did not adopt the type of economic variable offset propounded by the Respondent in the instant case, in part, because of the same type of weaknesses in the evidence that we are faced with in the case at bar.

The Commission finds that Omaha Firefighters does not require accepting the use of statewide figures in support of adjusting for economic variables. There was no evidence presented in the case at hand to indicate that statewide numbers in any way correlate to the wage rates in the particular cities in question.

In addition to the weakness of the input data in the present case, doubt is cast upon the value of some of the figures arrived at with the Mann-Whitney test. Specifically, the Respondent found that there is a 90.80% probability that the minimum wage rates paid to the job classifications in dispute and the percent of unionization in the public and private sector is not due to chance. Conversely, this means that there is a 9.20% probability that there is no relationship between the minimum wage rates and the percent unionization in the public sector and private sector. In other words, there is a 9.20% chance that it is wrong to conclude that higher unionization means higher wage rates. The Petitioner's expert witness, an expert in regression analysis, testified that a 5% cutoff level of error is an acceptable level within the social sciences, and that 5% is about as high as she has seen in applied settings as well as in research. The Commission finds that the Respondent's test had a probability of error which exceeds the acceptable cutoff level of error. Therefore, it is not appropriate to conclude, even with the appropriate input data, that there is a relationship between unionization and minimum wage rates.

The Commission finds that the Respondent did not meet its burden of proof because of the weakness of the input data and the failure to meet the acceptable cutoff level of error for some of the figures arrived at with the Mann-Whitney test.
Step Pay Plans

The step pay plans for the job classifications in dispute are set forth on Tables 8 - 14, which plans have been agreed to by both parties. Again, a table was not provided for the Firefighter/ Paramedic classification since there was only one job match. The parties have agreed to use the Firefighter pay plan for the Firefighter/Paramedic classification. The Commission finds that the prevalent number of steps and years to reach the maximum step are the midpoint figures as identified on these tables. The Commission further finds that the prevalent method of advancement on the pay plans is by job performance for all classifications except the Fire Apparatus Operator. For Fire Apparatus Operator, there is an even split among the array regarding the method of advancement, with three cities advancing by seniority and three by job performance. In the interest of uniformity and administrative consistency, the position of Fire Apparatus Operator shall advance on its pay plan by job performance. In addition, both parties agree that it is appropriate to advance the Fire Apparatus Operator by job performance.

Placement of Employees on the Pay Plans

Since these are newly established pay lines, it is necessary to determine where to place each employee on the new pay line. The parties disagree over placement of the employees on the new pay lines. The Petitioner argues that each employee should be placed on his or her pay line based upon their years of service in their particular classification as of September 1, 1995, the beginning of the contract year in dispute, as long as the employee has not received an unsatisfactory job performance evaluation while in that classification. The Respondent contends, on the other hand, that initial placement of employees on the pay line is a management prerogative and cites to Rodeo Telephone, Inc. Employees Ass'n v. Rodeo Telephone, Inc., 9 CIR 118, 129 (1987) and State Law Enforcement Bargaining Council v. State of Nebraska, 12 CIR 32 (1993). In the alternative, the Respondent contends that employees should be placed on the next highest step of the new pay plan above their current wage.

The Commission finds that the cases cited by the Respondent do not support the proposition that placement of employees on a pay line is a management prerogative. No pay lines were established in Rodeo Telephone. Instead, the Commission set a minimum and maximum wage for each job classification and then acknowledged that each employee would be paid a different wage, somewhere within the pay range, based upon their longevity and experience. It was determined that placement of the employees within their pay range, based upon the criteria of longevity and experience, was best accomplished by the management at Rodeo Telephone, since both objective and subjective factors had been used in the past for determining the salary of each employee.

State Law Enforcement is also not authoritative on this issue. The Commission was not asked to place employees on pay lines. The Commission's role in determining comparability was different in State Law Enforcement because it was an appeal from a special master decision pursuant to the State Employees Collective Bargaining Act (§ 81-1369 to § 81-1390). The Commission was limited to choosing one of the two final offers. One final offer did not contain a pay plan. Although the other final offer contained a pay plan, there was no proposed placement of the employees on the pay plan, nor was there a mode of progression through the plan.

In connection with the issue of initial placement of bargaining unit employees on the pay lines established by the Commission's order, Respondent argues that it has no way of determining past performance for progression. Respondent argues that although job performance evaluations have been performed in the past they are not adequate for use in determining such placements since past evaluations were used for job retention and discipline purposes and not for advancement on a pay line. Petitioner argues that the past job evaluations are appropriate for use in making initial placements on pay lines.

A stipulation of the parties and other evidence establishes that the job performance of bargaining unit members has been evaluated in past years. These evaluations and evaluations of city employees in two other collective bargaining units (Lincoln Police and a bargaining unit of civilian employees represented by NAGE) were conducted in the same manner. The same evaluation instruments were used, the evaluation procedures were the same and the same grading and scoring system was used. All of these evaluations were conducted under the same standards set by Respondent's Personnel Department. Employees charged with evaluation responsibilities were provided with a booklet detailing such grading and scoring standards and process. A score of 71 or better on a scale of 100 was considered to indicate satisfactory job performance while a score of 70 or below indicated an unsatisfactory job performance.

In the fire department these evaluations have not been used for advancement on a pay line because there was no step pay plan for the bargaining unit. For the police and the civilian employees represented by NAGE, where step systems have been in place, these same evaluations were used for such purposes.

It is not credible to argue that past job performance evaluations do not provide an adequate basis for determining satisfactory job performance for initial placement of bargaining unit members on pay lines in this case when Respondent deems them valid for job retention and disciplinary purposes as well as for advancement of police and civilian bargaining unit members along their pay lines.

The purpose of each job evaluation has been to determine whether the employee's job performance was satisfactory. A score of 71 or higher indicates satisfactory job performance. A score of 70 or below indicates unsatisfactory job performance. This information can be put to any purpose desired. It has been, and is being, used to advance police and civilian collective bargaining unit members along the pay lines in their respective pay plans. There is no valid reason to consider this information inadequate for use in making advancement decisions concerning the bargaining unit members before the Commission.

The Respondent has established testing requirements for advancement in certain positions. There is no dispute between the parties concerning the appropriateness of such requirements or of the tests being given. Petitioner has voiced no objection to continuation of this requirement or proposed any changes. Respondent has indicated no desire or intention to eliminate or modify such requirements. The Commission will not disturb the established testing requirements.
Respondent shall place each bargaining unit member on his or her appropriate pay line. Such placement shall not result in a decrease in pay for the employee. Advancement on the pay line shall require satisfaction of established testing requirements, where applicable, in addition to satisfactory job performance for each year of service in the bargaining unit member's current job classification. Determination of satisfactory job performance shall be governed by the employee's applicable job performance evaluations.

FRINGE BENEFITS

The parties disagree over how to calculate the mean, median and midpoint of the numerical value of the fringe benefits. Specifically, in calculating the midpoint of a fringe benefit that is prevalent within the array, the parties disagree over what should be done with the cities that do not offer this particular benefit. The Petitioner argues that these cities should be eliminated from the calculations and the midpoint should be arrived at using only the cities that provide the fringe benefit. The Respondent argues, on the other hand, that all of the array cities should be used in the calculations and that a zero should be used for the cities not providing the fringe benefit.

In determining comparability of a fringe benefit, the Commission shall first determine whether the particular benefit is prevalent, and then determine comparability among those who offer the prevalent benefit. This is based upon a number of reasons. First, the definition of "prevalent" and the language of § 48-818 supports elimination of the array employers which are not among the prevalent. "Prevalent" is defined as "[w]idely existing; generally practiced, occurring or accepted." Valentine Educ. Ass'n v. School Dist. No. 6, 8 CIR 271, 277 (1986). Section 48-818 states that the Commission shall establish conditions of employment which are comparable to the prevalent. "[T]he Commission of Industrial Relations shall establish rates of pay and conditions of employment which are comparable to the prevalent wage rates paid and conditions of employment maintained for the same or similar work of workers exhibiting like or similar skills under the same or similar working conditions." Neb. Rev. Stat. § 48-818 (1993). This indicates that the Commission should first determine what is widely existing or generally practiced among the array of compared-to employers and then determine what is comparable among the prevalent practice.

Second, in the interest of fairness, comparability should be determined by eliminating the array employers which are not among the prevalent. If a particular fringe benefit is not offered by a majority of the array of compared-to employers, then that benefit is eliminated. No value is given for the fact that a minority of the array employers provide this benefit. Conversely, when a majority of the array employers provide a benefit, no value should be given for the minority of array employers which do not provide the benefit. The majority rules, whether it is prevalent to provide a benefit or not prevalent to provide the benefit.

The Commission has frequently calculated fringe benefits in this manner. See Omaha Police Union Local 101 v. City of Omaha, 11 CIR 114 (1991); Nebraska Pub. Employees Local Union 251 v. County of Douglas, 11 CIR 189 (1992); Neligh-Oakdale Educ. Ass'n v. Antelope County School Dist. 0009, 12 CIR 21 (1993); General Drivers & Helpers Local Union No. 554 v. Robertson, 12 CIR 120 (1995).

Thus, the Commission shall first determine whether a fringe benefit is prevalent among the array of compared-to employers and then determine comparability among those providing the prevalent benefit.

Moot Fringe Benefits

The following fringe benefits are moot because the year in dispute is over. See Nebraska Pub. Employees Local Union 251 v. Otoe County, 12 CIR 177, 194 (1996).

Conditions of Employment That Are Management Prerogative

The following conditions of employment are management prerogative and, therefore, comparability will not be determined:

Longevity Pay

The longevity pay for the job classifications involved in this proceeding are set forth on Tables 15 - 21. These tables show the annual amount of longevity pay that is prevalent after specified years of employment. The Respondent shall increase its longevity pay to the midpoint figures on Tables 15 - 21.

Working Out of Class Pay

The policies of the array cities for working out of class pay are on Table 22. It is not prevalent to provide an automatic chain reaction "bump up" of the shift and the Respondent shall eliminate this policy. It is prevalent to require bureau employees to work 7 consecutive hours, and suppression employees 9 consecutive hours, in the higher classification before receiving the higher classification pay. The Respondent shall adjust its working out of class pay to reflect these prevalent figures.

Higher Education Pay

Table 23 indicates that higher education pay is not prevalent. The Respondent shall eliminate its policy of providing higher education pay.

Shift Differential Pay

None of the seven array cities provide shift differential pay and the Respondent also does not provide shift differential pay. Therefore, no table was prepared for this benefit and no change is necessary.

Court Pay

Table 24 lists the court pay policies of the array cities. The Respondent is above prevalent since it pays its employees a minimum of 2 hours pay for court duty. It is prevalent to pay employees for the actual hours of their court duty at 1½ their rate of pay. The Respondent shall adjust its policy to reflect the prevalent court pay policy.

Call Back/In Pay

Table 25 lists the call back/in pay policies of the array cities. It is prevalent to pay an employee called back to work a minimum of 4 hours at straight time pay. The Respondent pays a minimum of 3 hours at straight time pay and is, therefore, below prevalent. The Respondent shall increase its call back/in pay policy to 4 hours minimum at straight time pay.

Injured On Duty Pay

The array city policies for injured on duty pay are provided on Table 26. Injured on duty pay occurs when an employee is off of work due to a work related injury. It is the amount an employer pays to the injured employee, in addition to that employee's worker's compensation pay. A majority of the array employers pay 100% of the difference between worker's compensation pay and the injured employee's regular rate of pay.

There is a disagreement between the parties, however, regarding the length of time some of the array employers provide injured on duty pay. Specifically, the cities of Cedar Rapids, Davenport and Topeka indicated, in response to inquiries by the Respondent, that they review the injured employee's status at 3, 6, and 12 month periods to determine if the employee is able to return to work, with 12 months being the maximum period. The Respondent, in calculating the time period for these particular array employers, averaged these review intervals. The Petitioner did not include a computation for these cities, taking the position that the benefit was provided for an undetermined amount of time.

In further examining the evidence presented on this issue, it appears that the review periods are not intended as limits on the benefit but rather are intended as periodic evaluations of the employee's ability to return to work. The Commission finds that the injured on duty pay practice is comparable and should remain unchanged.

Stand By Pay

Table 27 identifies the stand by pay policies of the array cities. Lincoln provides stand by pay for its inspectors and drillmasters. Although the parties disagree over whether Topeka provides stand by pay, it doesn't make a difference for purposes of this case. Assuming that Topeka provides stand by pay, it is still not prevalent to provide this benefit for any one job classification. Based upon this array, stand by pay is most often provided for inspectors. Assuming that Topeka provides stand by pay, only three out of the seven array employers give their inspectors stand by pay. The Commission finds that it is not prevalent to provide stand by pay and the Respondent shall eliminate its stand by pay policy for inspectors and drillmasters.

Specialty Pay

The specialty pay items involved in this proceeding are:
EMT-D and EMT-AED training pay, specialty pay for firefighter/ paramedic, bomb squad or EMT, specialty pay for EMT-D or hazardous materials, and exceptional service pay. The specialty pay benefits are set forth on Tables 28 - 31. Table 28 indicates that it is prevalent for the employer to pay for EMT-D and EMT-AED training. The Respondent is comparable in that it provides pay for EMT-D and EMT-AED training, so no change is necessary. Table 29 indicates that the prevalent practice is to not provide specialty pay for firefighter/paramedic, bomb squad or EMT. The Respondent provides specialty pay for firefighter/paramedic, but not for bomb squad or EMT. The Respondent shall eliminate its policy of providing specialty pay for firefighter/paramedic. Table 30 indicates that the prevalent practice is to not provide specialty pay for EMT-D or hazardous materials. The Respondent provided specialty pay for EMT-D for four months of the year in dispute and continues to provide specialty pay for hazardous materials. The Respondent shall eliminate its policy of providing hazardous materials specialty pay. Table 31 indicates that it is not prevalent to provide exceptional service pay. The Respondent shall eliminate its exceptional service pay.

Sick Leave

Many of the sick leave issues raised by the parties are moot. The maximum accumulation rate of sick leave is set out on Table 32. The Respondent allows its employees to accumulate 250 hours, while the prevalent practice is to provide unlimited accumulation. The Respondent shall provide unlimited maximum accumulation of sick leave. Table 33 shows that it is not prevalent to allow conversion of sick leave earnings to cash. The Respondent is prevalent in that it does not allow conversion of sick leave earnings to cash.

Vacation

Many of the vacation leave issues raised by the parties are moot, although carry over of unused vacation is not moot. Table 34 indicates that it is prevalent to provide carry over of unused vacation for bureau employees, but not for suppression employees. The Respondent currently allows both bureau and suppression employees to carry over unused vacation. The Respondent shall increase its vacation carry over from 96 hours to 245 hours for bureau employees and shall eliminate its policy of allowing suppression employees to carry over unused vacation.

Mileage For Reassignment During Shift

Table 35 sets forth the policies of the array employers on whether they pay mileage for reassignment during a shift. It is not prevalent to provide such mileage. The Respondent shall eliminate its policy of providing mileage for reassignment during a shift.

Uniform Provision and Replacement of Personal Items

Table 36 shows that it is prevalent to provide a cash clothing allowance to uniformed personnel, but that it is not prevalent to provide a cleaning allowance. The Respondent shall provide an annual clothing allowance of $409 per year to uniformed personnel. The Respondent does not provide a cleaning allowance, so no change is necessary regarding this benefit.

Whether the employer pays for replacement of watches, eye glasses or hearing aids is set out on Table 37. The Respondent is above prevalent in paying for replacement of all three items. It is prevalent to pay for replacement of eye glasses only. The Respondent shall eliminate its policy of paying for replacement of watches and hearing aids and shall pay the full cost for replacement of eye glasses.

Education Reimbursement

The educational reimbursement policies of the array employers is set forth on Table 38. The Respondent does not reimburse its employees for educational courses. It is prevalent to provide 100% reimbursement for tuition, up to $770 per year. It is not prevalent to provide reimbursement for books or fees. The Respondent shall pay 100% reimbursement for tuition, up to a maximum of $770 per year.

Physical Exams

Table 39 indicates that it is prevalent to pay for the fitness for duty physicals, but it is not prevalent to pay for any other annual physicals. The Respondent currently pays for both types of physicals. The Respondent shall continue to pay for fitness for duty physicals, and shall not pay for any other annual physicals.

Paid Leave Counted as Time Worked For Overtime Calculations

Table 40 indicates that the Respondent is below prevalent. It is prevalent to count vacation, sick leave and holidays as time worked for purposes of calculating overtime pay. The Respondent counts only holidays. The Respondent shall count vacation, sick leave and holidays as time worked for purposes of calculating overtime pay.

Employer Provided Drivers For Deputy Chiefs

The Respondent provided an exhibit indicating that it was not comparable for an employer to provide drivers for its deputy chiefs. The Commission declines to order comparability on this particular benefit because the job classification of deputy chief is not part of the bargaining unit in this case.

Employer Paid Union Business

Table 41 indicates that it is prevalent for the employer to provide paid leave for the following union business: negotiations, labor-management, safety committee, conferences/seminars, and grievance process. The Respondent is comparable in all of these categories, so no change is necessary.

Health Insurance and the Otoe County Offset Issue

The parties disagree over how to determine comparability of health insurance. Petitioner contends that the first step is to determine whether the benefits provided by the health insurance plans in the array are comparable, and if so, then the next step is to calculate the midpoint of the percentage of the health insurance premium paid by the employer and the employee.

The Respondent determined comparability by calculating the midpoint of the array employers' monthly costs of providing health insurance for single, 2/4 (employee and spouse, or employee with children) and family coverage. The Respondent then arrived at a composite cost per month, which is a weighted average based upon the number of employees enrolled in the three types of health insurance plans. This same process was performed for dental and life insurance. The Respondent contends that the dollar amount paid for health insurance premiums should be compared because the percentage paid for health insurance provides no assistance to the Commission in applying the offset mandated by Nebraska Public Employees Local Union 251 v. Otoe County, 12 CIR 177 (1996).

The Commission's decision in Otoe County did not require a change in the way comparability is determined for insurance or any other fringe benefit. Health and dental insurance were issues in Otoe County and comparability was determined for those fringe benefits by looking at the percentage of the premium paid by the employer. The Commission still must evaluate each fringe benefit so that it is comparable as defined by the array. During the year in dispute, the parties are still operating under the wages and fringe benefits they agreed to for the previous contract year. The offset issue arises when the Commission's decision orders a change in wages and/or fringe benefits which has an effective date prior to the date of our decision.

The Commission in Otoe County ordered that any money owed by the employer to an employee would be retroactive to the beginning of the year in dispute. Furthermore, any money owed by an employee to the employer would be prospective only and would take effect from the date of the Commission's decision, with one exception. Any money owed by an employee would be retroactive to the beginning of the year in dispute to the extent that this money is offset against any money the employer owes this particular employee. The amount an employee owes the employer is not to exceed the amount the employer owes the employee. See Otoe County, 12 CIR at 188.

Each party's health insurance expert has stated that the benefits provided by the health insurance plans in the array are comparable to the benefits provided by the health insurance plans provided by the Respondent. The Commission shall continue to determine comparability of the health insurance by comparing the percent of the premium to be paid by the employer and employee. See General Drivers & Helpers Local Union No. 554 v. Robertson, 12 CIR 120, 125 (1995); International Ass'n of Firefighters, Local No. 1575 v. City of Columbus, 11 CIR 267, 273 (1992); Nebraska Pub. Employees Local Union 251 v. County of Douglas, 11 CIR 189, 195 (1992); FOP Lodge No. 23 v. City of Holdrege, 9 CIR 257, 263 (1988). The next step is to calculate the midpoint of the percentage of the health insurance premium paid by the employer.

Firefighters for the City of Lincoln have three health insurance plans from which to choose. One is a PPO plan (preferred provider organization) and two are HMO plans (health maintenance organization). Under a PPO plan, health care can be obtained through the PPO network at a higher level of benefits or outside the network at a lower level of reimbursement. Under an HMO plan, health care is received through a primary care physician who directs the health care. The Commission shall determine comparability of health insurance by arriving at two midpoint figures, one for PPO coverage and the other for HMO coverage. Where an array employer has more than one PPO or HMO plan, the figures will be averaged and the result will be used for purposes of the midpoint calculation. Tables 42 and 43 indicate that the Respondent is above comparable in the percentage of the health insurance premium it pays for single or family coverage under both PPO and HMO health insurance plans. For employees enrolled in the PPO plan, the Respondent shall pay 98.5% of the premium for single coverage and 84% of the premium for family coverage. For employees enrolled in either of the HMO plans, the Respondent shall pay 89.5% of the premium for single coverage and 87.5% of the premium for family coverage.

Dental Insurance

The dental insurance premiums are set out on Table 44. The Respondent is below comparable in the percentage of the dental insurance premium it pays for single, 2/4, or family coverage. The Respondent shall pay 97.5% of the premium cost of single dental insurance and 85.5% of the premium cost of 2/4 or family dental insurance.

Health Insurance For Retirees

The Petitioner presented an exhibit on the issue of health insurance for retirees. The Commission declines to consider comparability of this fringe benefit because retirees are not part of the bargaining unit in this case.

Pension

Comparing pension plans can be difficult when, as in this case, the plans being compared are defined benefit plans. Defined benefit plans are retirement plans that define or set the amount of monthly retirement income payable at retirement age for the member's lifetime or the joint lifetime of the member and his or her spouse. The ultimate cost of providing this benefit is dependent on the amount of the benefits actually paid, the investment earnings and the expenses incurred in administering the pension plan. In contrast, a defined contribution plan is where the employer and employee each contribute a fixed amount. The retirement benefit is the value of the member's account at his or her retirement date or separation from service.

Both parties presented testimony from their expert witness on their respective positions concerning the appropriate methodology for comparing pension plans. The Petitioner's expert compared the pension plans of the Lincoln Fire Department and those of the array employers by taking the census data of each bargaining unit employee, which consisted of each employee's date of birth, date of hire, salary and sex, and applying it to the benefits of the pension plans provided by the array employers. The purpose was to compare the value of the benefits received by employees of the Lincoln Fire Department with the benefits they would receive if they were covered under the retirement systems of the array employers. In its comparison, the Petitioner's expert also used a weighted average of the two pension plans (plan A and B) provided by the Lincoln Fire Department based on the number of employees in each plan, and the actuarial assumptions contained in the City of Lincoln 1995 actuarial report. The Petitioner's expert used two additional actuarial assumptions based upon her experience with police and fire retirement systems; that 70% of all pre-retirement deaths, and 90% of all disabilities, were service related.

The plans were then compared using the entry age normal cost method ("normal cost"), which is the theoretical cost of the benefits that are allocated to the current year's service. The normal cost is developed as a level percent of pay, so that the cost for an individual participant, if that percent of payroll was contributed every single year that they worked, would be sufficient to provide the funding for the benefits they would receive after they retire. The Petitioner's comparison indicated that the retirement system benefits of the Lincoln Fire Department are slightly more valuable, but comparable, to the retirement systems of the array employers. The Petitioner arrived at an employer contribution rate of 12.06% of payroll for the Lincoln Fire Department and an employer contribution rate of 11.99% of payroll for the midpoint of the array. In other words, the Petitioner found that the pension benefits of the Lincoln Fire Department were seven one-hundredths of a percent greater than the benefits of the array employers.

The Respondent's expert also focused his comparison on the pension benefits instead of the employer contributions because, for defined benefit plans, the employer contribution is not necessarily related to the cost of the benefits. The Respondent's expert, however, used a different methodology to compare the pension plans and ended up with a different result as to the comparability of the pension benefits provided by the Lincoln Fire Department. Instead of using the census data for each employee, the Respondent's expert used this data to determine the demographic characteristics of an average employee of the Lincoln Fire Department, which was a person who is 41 years old with 17 years of service and an average salary of $34,700.

Instead of using a weighted average of the two pension plans provided by the Lincoln Fire Department, the Respondent's expert used only plan A. Plan A is the newest of the two plans and became effective approximately a year ago. Newly hired employees will be placed in plan A since new members are no longer allowed in plan B. At this time, however, most of the employees (93%) are in plan B. The Respondent argues that it made no difference whether it used plan A, plan B, or a weighted average of the two plans because the comparison made by the Respondent's expert was based on the level entry age employer normal cost, which is the same for both plans. The Respondent's expert participated in the development of plan A and plan A was developed so that the employer normal cost didn't change.

The Respondent's expert took the Present Value of Future Salary (PVFS) and subtracted the Present Value of Employee Contributions (PVEC) to get the Net PVFS. The PVFS takes into account the salary a pension member receives from entry age to retirement and discounts it back to today's dollar. The PVEC is similar, but is the amount of employee contributions from entry age to retirement. The Net PVFS was adjusted upward since the contributions are tax deferred and then was added to the Present Value of Future Benefits (PVFB) to arrive at the total compensation that the Respondent would pay pension members over their entire life. This evaluation was based on a retirement age of 50 because the City of Lincoln's intent, with the implementation of plan A, was to encourage its uniformed employees to retire at age 50.

Comparing the total compensation figure for the Lincoln Fire Department with the midpoint total compensation figure of the array indicated that the retirement system benefits of the Lincoln Fire Department are more valuable than the retirement system benefits of the array employers. The Respondent's comparison indicated that the retirement system of the Lincoln Fire Department is almost 4% above comparable from the midpoint of the retirement systems of the array employers. Specifically, for an average Lincoln firefighter, the Respondent found that every $1 paid in compensation by the midpoint is equivalent to $1.04 in compensation in the Lincoln Fire Department due to the differences in the pension benefits.

The Commission realizes that comparison of defined benefit retirement plans is a difficult and less than perfect process. Of the two retirement studies presented, the Commission finds the Petitioner's study to be more credible. Of major concern to the Commission is the Respondent's use of a retirement age of 50 as the underlying basis for it's evaluation. The Respondent's pension expert acknowledged that the inequality between the retirement benefits of the Lincoln Fire Department and the array midpoint becomes less significant as retirement is delayed, and could even reverse if retirement is delayed long enough. The City of Lincoln's actuarial report assumes that only 25% of the employees will retire at age 50. In addition, members of plan B were offered the option to transfer to plan A, which has a normal retirement age of 50, and 93% chose to stay in plan B, which has a normal retirement age of 53.

Also of concern to the Commission was the Respondent's use of the Cost of Living Adjustment (COLA) as a pension benefit for employees of the Lincoln Fire Department. Receipt of the COLA is not guaranteed, but is dependent upon a rate of return above seven percent. Pension fund earnings above seven percent are placed in a pool and retirees receive the COLA from whatever funds are in this pool. The COLA pool, with two million dollars in it at the present time, is sufficient to fund the COLA for current retirees, but without additional funds, it would be insufficient to fund the COLA for the active employees.

A final concern is the Respondent's adjustment for differing tax treatment of salary and retirement benefits. The Respondent's expert increased the Present Value of Future Benefits by 12.74% because the pension benefits are tax deferred, whereas if the dollar value of this benefit were paid to the employees in the form of salary, it would be subject to income tax. The Petitioner's expert, on the other hand, did not make an adjustment for the differing tax treatment. The Petitioner's reasoning is that the retirement benefits are not tax exempt, but tax deferred, and it is unknown whether the future tax rates will be better or worse than they are now. The Commission believes it is not appopriate to adjust for differing tax treatment since the benefits are tax deferred.

The Commission finds that the pension benefits of the Lincoln Fire Department are comparable to the pension benefits of the array employers and, therefore, no credit is due to the Respondent for an offset against any payments the Respondent owes to the employees.

CALCULATION OF THE EMPLOYEE OFFSET

The Respondent has proposed a couple of different methods for offsetting any money owed by the employees to the Respondent, due to the Commission's order reducing some wages or fringe benefits already paid to the employees. The first method is to lump together all the money owed by the employees in each job classification, arrive at an hourly figure, and deduct this amount from the step pay plan for that job classification. The offset would not be calculated on an individual employee basis, but all employees in a particular job classification would share in the amount of money owed to the employer by receiving a lower hourly rate of pay.

The second method proposed by the Respondent is to calculate the offset on an individual employee basis by subtracting it from the employee's hourly wage figure. Wages and fringe benefits which the Respondent overpaid to an employee would be reduced to an hourly figure and this figure would be deducted from the employee's hourly rate of pay.

The Commission declines to adopt either method for calculating the amount the employees owe the Respondent. The offset shall be calculated on an individual employee basis, but shall not be deducted from each employee's hourly rate of pay. The Respondent shall determine the lump sum amount of overpayment received by each employee and this figure shall be deducted or offset from the lump sum amount of compensation due to that employee. The wage and fringe benefit items included in this calculation are identified in the Order section, paragraph 31. The employee reimbursement shall not exceed the amount of compensation owed to the employee from the Respondent.

The pay lines adjusted by the amount of money the employees owe the employer shall not be used. The appropriate pay lines shall be those set forth in exhibits 254 through 261. Both parties have agreed that these pay lines may be used and these pay lines reflect the comparables wages set forth in Tables 1 - 7 and the comparable number of steps and years to reach maximum as indicated in Tables 8 - 14.

IT IS THEREFORE ORDERED THAT:

  1. The pay line for the job classification of Firefighter shall be as follows:

    Year(s)
    on Step
    1 Yr
    1 Yr
    1 Yr
    1.5 Yr
    1.5 Yr
    1.5 Yr
    Step Number 1 2 3 4 5 6 7
    Hourly Rate of Pay
    9.48
    9.94
    10.40
    10.86
    11.33
    11.79
    12.25

  2. The pay line for the job classification of Firefighter/Paramedic shall be as follows:

    Year(s)
    on Step
    1 Yr
    1 Yr
    1 Yr
    1.5 Yr
    1.5 Yr
    1.5 Yr
    Step Number 1 2 3 4 5 6 7
    Hourly Rate of Pay
    9.48
    9.94
    10.40
    10.86
    11.33
    11.79
    12.25

  3. The pay line for the job classification of Fire Apparatus Operator shall be as follows:

    Year(s)
    on Step
    1 Yr
    1 Yr
    1 Yr
    1 Yr
    1 Yr
    Step Number 1 2 3 4 5 6
    Hourly Rate of Pay 11.79 12.08 12.37 12.67 12.96 13.25

  4. The pay line for the job classification of Fire Captain shall be as follows:

    Year(s)
    on Step
    1 Yr
    1 Yr
    1.5 Yr
    1.5 Yr
    Step Number 1 2 3 4 5
    Hourly Rate of Pay
    13.30
    13.86
    14.42
    14.98
    15.54

  5. The pay line for the job classification of Fire Equipment Mechanic shall be as follows:

    Years on Step 2 Years 2 Years
    Step Number 1 2 3
    Hourly Rate of Pay 13.77 15.39 17.01

  6. The pay line for the job classification of Fire Prevention Inspector I shall be as follows:

    Year(s)
    on Step
    1 Yr
    1 Yr
    1.5 Yr
    1.5 Yr
    Step Number 1 2 3 4 5
    Hourly Rate of Pay
    15.69
    16.46
    17.23
    17.99
    18.76

  7. The pay line for the job classification of Fire Prevention Inspector II shall be as follows:

    Year(s)
    on Step
    1 Yr
    1 Yr
    1.5 Yr
    1.5 Yr
    Step Number 1 2 3 4 5
    Hourly Rate of Pay
    17.33
    18.18
    19.03
    19.87
    20.72

  8. The pay line for the job classification of Drillmaster shall be as follows:

    Year(s)
    on Step
    1 Yr
    1 Yr
    1.5 Yr
    1.5 Yr
    Step Number 1 2 3 4 5
    Hourly Rate of Pay
    18.45
    19.01
    19.58
    20.14
    20.70

  9. Respondent shall place each bargaining unit member on the appropriate pay line set forth herein. Such initial placement shall credit an employee with his or her years of service in their current job classification for each year the employee has received a satisfactory job performance evaluation (71 or above) in the classification. No credit for such years of service shall be given for any year the employee has received an unsatisfactory job performance evaluation (70 or below) in that classification. To be eligible for such credit an employee must have also satisfied previously established testing requirements, where applicable.

  10. All employees shall advance from their initial placement on their pay line by satisfactory job performance, and, where applicable, by satisfaction of any previously established testing requirements.

  11. In the event a Firefighter is promoted to Fire Apparatus Operator (FAO), the individual in question shall be placed on the FAO pay line on the next higher step above their pay for Firefighter.

  12. The longevity pay shall be the midpoint figures on Tables 15 - 21.

  13. Bureau employees shall work 7 consecutive hours, and suppression employees shall work 9 consecutive hours, in a higher classification before receiving the higher classification rate of pay. The Respondent shall eliminate its policy of an automatic chain reaction "bump up" of the shift.

  14. The Respondent shall not provide higher education pay.

  15. Employees shall be paid for actual hours worked at 1½ their rate of pay for court duty.

  16. Employees called back to work shall receive a minimum of 4 hours of pay at straight time.

  17. The Respondent shall not provide stand by pay.

  18. The Respondent shall eliminate its policy of providing specialty pay for the position of Firefighter/Paramedic.

  19. The Respondent shall eliminate the specialty pay for hazardous materials.

  20. The Respondent shall not provide exceptional service pay.

  21. The maximum accumulation of sick leave shall be unlimited.

  22. Bureau employees shall have 245 hours of vacation carry over. Suppression employees shall have no vacation carry over.

  23. Mileage for reassignment during a shift shall not be provided.

  24. Uniformed personnel shall receive an annual clothing allowance of $409 per year.

  25. The Respondent shall eliminate its policy of paying for replacement of watches and hearing aids and shall pay the full cost for replacement of eye glasses.

  26. Employees shall receive 100% reimbursement of their tuition for educational courses, up to a maximum of $770 per year.

  27. The Respondent shall continue to pay for fitness for duty physicals, and shall not pay for any other annual physical.

  28. Vacation, sick leave and holidays shall be counted as time worked for purposes of calculating overtime pay.

  29. For employees enrolled in the PPO plan, the Respondent shall pay 98.5% of the premium for single coverage and 84% of the premium for family coverage. For employees enrolled in either of the HMO plans, the Respondent shall pay 89.5% of the premium for single coverage and 87.5% of the premium for family coverage.

  30. The Respondent shall pay 97.5% of the premium cost of single dental insurance and 85.5% of the premium cost of 2/4 or family dental insurance.

  31. Any additional compensation due to an employee shall be offset by all overpayments received by that employee during the year in dispute for wages, working out of class pay, higher education pay, court pay, stand by pay, specialty pay, mileage paid for reassignment during shift, replacement of watches and hearing aids, annual physicals and health insurance premiums. The Respondent shall calculate the offset on an individual employee basis. The employee reimbursement shall not exceed the amount of compensation owed to the employee from the Respondent.
Entered January 24, 1997.

Frankie J. Moore, Dissenting:

I respectfully dissent from the majority opinion concerning the issue of placement of employees on the pay line. While I agree that placement of employees on a pay line is not clearly a matter of management prerogative, it is my opinion that in the case at bar, placement of employees on the new pay line would best be accomplished by the Respondent.

While the testimony of John Cripe and the Stipulation entered into between the parties concerning the annual evaluations performed for all bargaining unit employees of the Lincoln Fire Department reveal that there have been past performance evaluations, these evaluations were not completed for the purpose of determining advancement on a pay line. Rather, the evidence indicates that the evaluations were used by the Lincoln Fire Department for the purpose of determining job retention and discipline.

I believe a more appropriate result would be to leave the initial placement of the employees on the new pay line to the determination of the employer, with directions to place the employees on the next highest step, to determine appropriate standards for performance evaluation and advancement, to establish eligibility dates for each individual employee, and to advance each employee one step at their next eligibility date provided said employee meets the established evaluation standards. I do not believe it is an appropriate role for the Commission to dictate to the employer how employees should be evaluated for purposes of placement on a new pay line, and require the employer to use a past evaluation form which was not completed for said purpose.

In all other respects, I concur with the majority opinion.