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REQUEST FOR COUNCIL ACTION Date: 1/29/2024 Item No.: 10.f. Department Approval City Manager Approval Item Description: Approve submission of the city's pay equity report 1 2 Background 3 The City is required once every three years under the 1984 Local Government Pay Equity Act M. S. 4 471.991-471.999 and the Minnesota Rules, Chapter 3920 to provide a pay equity report of its 5 employees. Under the pay equity act employers must test their internal pay systems and report on the 6 principle that men and women should be compensated equally for work requiring comparable skills, 7 responsibilities, and effort. Thus, we test our compensation structures and class valuations internally to 8 assure and prove compliance as required. Adjusting male-dominated classes in a different fashion than 9 female-dominated classes can alter compliance within a class and compensation structure. Non- 10 compliance results in substantial fines until the non-compliance is resolved. 11 12 The regulations for the reporting require the data to be reviewed by the City Council and approved by 13 signature of the Mayor. In order to meet the statutory delivery requirement, this report must be signed 14 and electronically delivered to the Minnesota Department of Management and Budget no later than 15 1/31/24. 16 17 There are four tests that a city must comply with: 18 1. Completeness & Accuracy Test 19 2. Statistical Analysis Test 20 3. Salary Range Test 21 4. Exceptional Service Pay Test 22 23 Each section on the Compliance Report (Attachment A) gives a summary of the test results. 24 1. The Completeness and Accuracy Test will be concluded when the report is submitted. 25 2. The Statistical Analysis Test (section II of the Compliance Report) compares salary data to 26 determine if female classes are paid consistently below male classes of comparable work value 27(job points). The minimum requirement to pass the statistical analysis test is an underpayment 28 ratio of 80%. Jurisdictions below that ratio can improve their score by increasing salaries for 29 females classes to at-or-above predicted pay. Our ratio is in compliance at 80.11%. It should be 30 noted that the Pay Equity Report being submitted reflects compensation which was in place on 31 December 31, of the previous year. The City recently underwent a classification and 32 compensation study, in part, due to the declining Underpayment Ratio over the years. The city's 33 underpayment ratio for the last few reports is below. With the implementation of the new 34 classification and compensation system, a test report that was conducted as part of this study 35 reflected that with the new classification and compensation system the city would recieve an 36 Underpayment Ratio of 91.83%. Page 1 of 3 Qbhf!256!pg!367