Editorial: Wise move on longevity bonus
photo by: Journal-World Photo Illustration
The Lawrence City Commission was right to begin the process of moving the city away from paying employees longevity bonuses.
On Tuesday, commissioners voted to adopt a new policy that tiers and caps longevity bonuses paid to qualifying employees beginning in 2019. The policy eliminates the payments for employees hired after Jan. 1, 2019. City staff said the change should save $64,000 and recommended that money be used for wage increases and merit pay bumps.
Current policy pays $48 per year of service for all employees who have worked for the city more than five years. Under the new policy, eligible employees not covered by a union contract will fall into one of four tiers, with the maximum payment capped at $1,000. Longevity payments will be $250 for five to nine years of service, $500 for 10 to 14 years, $750 for 15 to 19 years and $1,000 for 20 or more years of service.
The longevity bonuses, paid each year in December, total approximately $7.5 million over the past 20 years, the city reported. This year’s longevity payments, which are not affected by the policy adopted Tuesday, will cost the city about $473,000.
The bonuses, which were technically discretionary, had become so standard that employees began to regard them as part of their income. Indeed, the city’s Employee Relations Council and the local firefighters union, Local 1596, opposed the new policy and asked that the payments be continued for current and future employees. Several city employees said they rely on the bonuses and that the payments help retain employees.
The impetus for the change came from the city’s negotiations with its police officers union. McGrath Human Resources Group, a consultant the city used as part of the police negotiations, provided a report noting that longevity payments are not effective and such funds would be better spent ensuring fair market compensation for all employees.
Indeed, the city has fallen behind on providing competitive wages and merit increases, in part because of the longevity bonuses. “The taxpayers are relying on us to deploy the resources that they entrust us as effectively as we can,” Mayor Stuart Boley said. “And I’m concerned about the fact that we haven’t been funding the merit pools and we haven’t been dealing with market adjustments in the (nonunion contract) area of our employment.”
The city of Lawrence should absolutely work to ensure wages and benefits for nonunion employees are competitive enough to recruit and retain a great staff. But paying year-end bonuses based purely on seniority — at the expense of merit increases — is the wrong strategy, and the city is right to begin phasing out such bonuses.