As you may have heard or read, management recently introduced some changes to the Short-Term Incentive Plan (“STIP”) that not only violate our CBA, but also change the STIP award in the following ways:
- For 2023, some members will receive a smaller amount of STIP because Management unilaterally changed some of the ranges;
- For 2024, active employees are now required to be in a STIP eligible position on the STIP payout date while in the past they only had to be in a STIP eligible position at the end of the award year;
- For 2024, wage replacement income will no longer be considered when calculating the STIP so members who take military leave, paid family leave, or are on short-term disability will see smaller awards.
The Union will not accept management’s attempts to reduce the STIP awards members have worked hard to earn. The following is a detailed explanation of these changes and the Union’s plans to address them.
Background
Our ESC collective bargaining agreement (CBA) sets pay and working conditions for hourly and monthly (salaried/exempt) employees. Under applicable law and the CBA, hourly employees are paid by the hour and receive additional pay for working overtime at a time and a half or double time. Monthly members are classified as “exempt/salaried,” and under applicable law, they are not legally entitled to receive additional pay when they work overtime. Thanks to our CBA, monthly members receive additional pay for working additional hours. In our CBA, monthly employees generally only receive straight-time pay for additional hours worked and qualify for another incentive pay under the Short Term Incentive Plan (“STIP”).
| Schedule | Compensation rate for working overtime | Bidding | Bonuses | |
| Hourly | Regular set hours | 1.5x or 2.0x hourly rate | Seniority-based | R&R |
| Monthly | Employee works until the job is completed | Straight time pay | Competitive | R&R & STIP |
STIP is calculated for most ESC monthly members by multiplying the four components below:
| Eligible Earnings | Participation rate | Individual performance Modifier (IPM) | Company Score |
| Base pay | 10% | See the nine-box grid | The company score is 1.186 for 2023 |
For example, an engineer with an annual salary of $150,000 (on December 31st) placed in the middle box would be:
$150,000 (salary) X .1 (participation rate) X .98 (IPM for the middlebox for 2023) X 1.186 (company score) = $17,434.20 (minus applicable taxes)
A member’s performance evaluation determines where they fall in the nine-box grid. The CBA requires the employer to give “notice of specific performance issues and an opportunity to improve” before giving a rating that places a member on the lower left corner of the Goal Ratings grid. In addition, the performance goals a member is evaluated for shall be from the job duties of their classification and must be reasonable, attainable, and measurable (see page ix of the CBA cover letter).
2022 STIP Guidelines
This year, the Company has unilaterally published new ranges for the nine-box grid. The new guidelines for STIP 2022 were below the ranges that were bargained for in the upper L. This change violates our contract because STIP payments in the upper L are less than the negotiated ranges. Upon learning of these violations, the Union formally requested a resolution that those placed in the upper L would have their STIPs increased within the negotiated ranges.
Ranges in our CBA:
| Below Target | Target | Exceeds Target | |
| Role Model | 65% – 90% | 110% – 120% | 120% – 150% |
| Successful | 50% – 75% | 90% – 110% | 110% – 129% |
| Developing | 0% | 50% – 75% | 75% – 90% |
New ranges unilaterally promulgated by management:
| Below Target | Target | Exceeds Target | |
| Role Model | 75% – 90% | 100% – 110% | 100% – 120% |
| Successful | 50% – 75% | 90% – 100% | 100% – 110% |
| Developing | 0% | 50% – 75% | 75% – 90% |
Historical average of ESC Individual Performance Modifiers (IPMs) from 2012-2021:
| Below Target | Target | Exceeds Target | |
| Role Model | * | 110% | 120% |
| Successful | 62% | 98.6% | 110% |
| Developing | 0% | 60% | * |
As you can see, in previous years the STIP was significantly better. Note that the lower right-hand corner, Developing/Exceeds target, is statistically irrelevant because less than five individuals received ratings in that range over the last nine years and are, therefore, deemed de minimus.
2023 IPM for STIP earned in 2022 (as reported to the Union by members)
| Below Target | Target | Exceeds Target | |
| Role Model | * | 105% | 110% |
| Successful | ?% | 98% | 105% |
| Developing | 0% | ?% | * |
Note: “?” indicates that the Union has not received reports of the IPM for these boxes
As evident from the above grid, management’s unilateral implementation of ranges resulted in decreased compensation in 2023 – compensation less than the negotiated ranges and significantly less than historical performance in the upper L. The reported results in the other boxes are within the negotiated ranges, even if the results are less than historical averages. This change will reduce pay for members who received ratings in the upper L by roughly 1% of base pay for members who receive exceeds/role model ratings and by 0.5% for members who receive target/role model and exceed/successful ratings.
The Union is filing a business manager’s grievance challenging Management’s unilateral change to the ranges and will demand STIP award adjustments for those placed in the upper L.
2023 STIP Issues
Management announced two additional unilateral changes to STIP for 2023 on March 28th. First, active employees must now be in a STIP eligible position on the date of the STIP payment to receive a STIP payment. Whereas in previous years, eligible employees were STIP eligible if employed in a STIP position at the end of the award year. Second, management has announced it is now excluding wage replacement income from eligible earnings, including military leave, paid family leave, short-term disability, and other leaves from STIP-eligible time.
These changes will reduce the STIP award for many members. Members who take a non-STIP eligible job within PG&E between the end of the year and March 15th of their retirement year will now lose their STIP award. If a member is forced to go on short-term disability, takes paid family leave to care for a loved one, or serves to protect our country, PG&E will now reduce their STIP award. Feeling the love?
The Union believes all these changes violate the CBA and intends to file a grievance to make our members whole. Stay tuned for updates on this issue!
If you believe your placement in the nine-box grid violates management’s obligations outlined in the CBA and summarized above, please contact your union representative as soon as possible.
THE DEADLINE TO FILE A GRIEVANCE IF YOU HAVE EXPERIENCED STIP PLACEMENT ISSUES IS APRIL 15TH!
(Find your rep button)
If your concern is regarding a reduction of your STIP award due to the unilateral changes that have reduced the upper L STIPs, you are covered by the Union’s Business Manager’s Grievance and you do not need to file an individual grievance.
