WERC Issues Emergency Rules on Calculation of Total Base Wages

On February 14, 2012, the Wisconsin Employment Relations Commission (WERC) forwarded to Governor Walker’s office a set of draft emergency administrative rules for calculating the maximum increases in base wages that may be negotiated with general municipal employee bargaining units. The rules do not require employers to agree to provide the maximum increase (or any increase, for that matter). The rules simply set forth the procedure for calculating a maximum amount which cannot be exceeded unless the employer obtains voter approval through a referendum.

CPI. The rules clarify that the CPI increase to be used in calculating the above-referenced “total base wage increase” will be provided by the Wisconsin Department of Revenue based upon specific contract durations. The WERC recently announced the CPI increases to be used for collective bargaining agreements with terms beginning on January 1, 2011 (.97%), July 1, 2011 (1.64%) and January 1, 2012 (2.01%).

TOTAL BASE WAGES. With respect to the appropriate method to be used in calculating the “total base wages” to which the CPI increase is to be applied, the rules give some guidance for initial collective bargaining agreements entered into on or after June 29, 2011. For successor agreements, however, the rules are less clear.

  • Initial Agreements. For initial collective bargaining agreements entered into on or after June 29, 2011, the rules require identification of all “authorized positions” (i.e., positions in the bargaining unit) that existed 180 days prior to the effective date of the new contract. The “total base wage” is then calculated by adding the annual wages or salary (excluding overtime and pay for extra duties) to be received by the individuals holding these positions in the one-year period prior to the commencement of the new collective bargaining agreement. This dollar amount is then multiplied by the appropriate CPI percentage to determine “the maximum amount subject to collective bargaining” (the “total base wages increase”). Because the rules reference the annual wages or salary received “by the individuals holding the authorized positions,” it seems that in situations where there is a salary schedule or other automatic pay progression system, it is the employee’s actual annualized wage or salary (excluding overtime and pay for extra duties) that is used, rather than the beginning pay rate
    for that employee’s job classification. For example, under a wage grid containing pay rates of $10/hour for new hires and $15/hour for employees with 5 years of experience, a municipal employer with 10 fulltime employees, one having 4 years of experience and 9 having more than 5 years of experience, would calculate total base wages as follows:1 employee x $10/hour x 2080 hours = $ 20,800
    9 employees x $15/hour x 2080 hours = $ 280,800
    Total base wages = $ 301,600The appropriate CPI percentage increase would then be applied to the $301,600 figure to determine the “maximum amount subject to collective bargaining” for the term of the agreement. Again, the rules do not require employers to agree to this – or any – amount. The rules simply provide a framework for calculating an amount which cannot be exceeded without approval from the voters.
  • Successor Agreements. For successor collective bargaining agreements, the rules are less clear. In fact, for the most part, the rules merely reiterate the statutory language. As does the statute, the rules state that total base wages excludes any other form of compensation, including overtime, premium pay, merit pay, performance pay, supplemental compensation, pay schedules, and automatic pay progressions. If the employer in the above example retains the existing wage grid, should the 4-year employee’s advancement to the 5-year pay rate be part of the employee’s base wage, the employee’s base wage increase, or neither of the above? Because the base wage calculation excludes “pay schedules” and “automatic pay progressions,” an argument could be made that such wage advancement should be excluded from the calculation. If so, the rules would result in complicated and confusing total base wage calculations. Similarly, the question of whether municipal employers are actually required to disburse the negotiated amount remains unanswered. For example, if the negotiated total base wage increase is $50,000 but the employer has laid off two of the 10 employees, one has retired, and a new employee is hired, is the employer still required to pay out the total base wage increase to the new (and reduced) workforce?The WERC’s draft emergency rules are available at
    http://werc.wi.gov/proposed_emergency_rules_for_calculation_of_maximum_base_wage_increase_for_general_municipal_employees.pdf . These will not become final until they are approved by the Governor.

    The labor and employment law attorneys at Weld, Riley, Prenn & Ricci, S.C., will continue to monitor developments pertaining to this and other related issues.