Q: In the previous County Line Ask Rich article, you said that counties can’t give their employees bonuses but can financially reward them for doing exceptional work. As my employees are a reflection of their leader, does this mean I can recognize all my employees for being exceptional?
A: While you may have the best workforce in county government, it’s unlikely that all your employees are as exceptional as you and worthy of financial recognition. As discussed in the last issue, if every employee gets a financial reward, it is going to look like a bonus. However, for employees who demonstrate exceptional service, local governments can set up programs to reward those employees and not run afoul of the Kentucky Constitution.
How do we know that incentive/recognition programs pass constitutional muster? We know that these programs pass constitutional muster because the Commonwealth of Kentucky uses these types of programs to incentivize their employees. The Commonwealth of Kentucky instituted its first employee incentive/recognition award program more than 20 years ago. These programs now include:
- Employee Suggestion System — 101 KAR 2:120(1);
- Educational Achievement Award — 101 KAR 3:045(5);
- Employee Recognition Award (ERA) — 101 KAR 3:045(9); and
- Achievement in Excellence Award (ACE) — 101 KAR 3:045(10).
Each of these regulatory adopted programs sets out various eligibility requirements, such as minimum years of service, time period restrictions and program specific requirements. In the first program, an employee who submits a suggestion that results in significant cost savings or improved services may receive an Employee Suggestion System award. Employees who receive an Educational Achievement Award get the award for earning a high school diploma, GED, college degree or other specialized training benefitting their agency.
Based upon inquiries received, the ERA and ACE awards may be the most relevant to public officials when trying to craft programs that reward employees for exceptional service. The ERA is a one-time lump sum payment, while the ACE is awarded as a salary adjustment. The program-specific requirements for both awards are similar.
To be ERA award eligible, the employee’s actions must have:
- Resulted in significant cost savings or improvements in services;
- Exhibited distinguished performance during participation in special projects; or
- Demonstrated a sustained level of exceptional job performance.
To be ACE award eligible, the employee must have:
- Demonstrated a sustained level of exceptional job performance;
- Assumed a significant level of additional responsibilities or duties and performed them in an exceptional manner; or
- Acquired professional or technical skills or knowledge through attainment of a job related licensure, certification or formal training that will substantially improve job performance.
Common threads with these programs include their discretionary and subjective nature. While an employee may think that his or her job performance is exceptional, the employer is the ultimate judge of employee performance. Even when the performance is exceptional, awards do not have to be made. During fiscally tight times, the number of awards, and the amount of those awards, can be reduced or even suspended.
These programs can be easily adjusted to fit a local government’s needs. Basic requirements for any successful incentive/recognition award program should include:
- An adopted order or ordinance setting out the eligibility requirements; and
- Written documentation detailing the reasons for granting the award. This documentation or award letter should be placed in the employee’s personnel file. In addition to serving as recognition of exceptional service, this letter serves as proper documentation protecting the local government if the award is ever challenged as a bonus.
An additional consideration is whether to set a cap on the maximum number of awards to be granted per year. Putting a cap in place makes awards easier to budget while also assuring that the level of excellence required to earn an award doesn’t get watered down.
To make certain that an incentive/recognition award program is constitutionally permissible, the focus should be on recognizing only those employees who are going above and beyond their job duty requirements to provide exceptional service and potential cost savings to your local government.
Using the commonwealth’s long-established incentive/recognition programs as a basis for developing similar programs at the local level provides a level of assurance that the locally adopted program is constitutionally permissible.
Let me know if I can be of assistance in helping your local government develop a program that rewards your employees for exceptional service.
If you have questions regarding this or other matters important to you and your county, give me a call (800-264-5226) or email (rich.ornstein@kaco.org). I’d be happy to help. And if you have suggestions for other items you’d like me to cover in County Line, let me know.
Published in County Line Magazine – February/March 2021
