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1. Overview
   1. UMGC has adopted a market-based pay program for its Exempt positions. The program covers executive, administrative, professional, outside sales and computer employees who are categorized as Exempt under the Federal Fair Labors Standards Act (FLSA).  Additionally, the program covers overseas regular and contingent III staff.
   2. The Pay Program is market-based and supports UMGC’s competitive position in recruiting and retaining high caliber employees through flexible salary administration policies and procedures.
2. Definitions
   1. Acting Assignments - When, in order to meet urgent business needs, it is necessary to appoint an exempt employee to an acting capacity assignment. When appointing an exempt employee to an acting assignment, the following must be adhered to:
      1. Designating an employee to an acting capacity status is justified only when time or circumstances do not permit the immediate selection of a permanent appointment under the established selection and appointment procedures for exempt staff.
      2. An employee in an acting capacity shall meet the minimum academic and professional qualifications for the position to which s/he will be assigned.
      3. Management may recommend a salary increase if the acting assignment is at a higher level than the current role. The amount of any increase will be determined using the job’s market analysis and internal equity analysis and must bring the employee’s salary to at least the minimum of the appropriate pay grade.
   2. Acting assignments should be at least 1 month and not exceed 12 months in duration. At the conclusion of the acting assignment, the employee’s position and salary will be adjusted in accordance with VII-9.50-GC – UMGC Policy on Temporary Assignments and Acting Appointments.
   3. Lateral Transfers - When an employee is reassigned to or applies for and receives a position that is in the same pay grade as his/her current position. In this situation, there is rarely a change in salary.
   4. In-Line Adjustments - Addresses specific cases of salary inequity, incorrect slotting, or other salary equity problems identified by management.
   5. Merit Adjustments - Changes to an employee's base pay rate based on performance. Merit adjustments are usually determined during the annual salary adjustment process based on overall guidelines established by the USM and/or by the UMGC President.
   6. Promotional Increases - Changes to an employee's base pay rate to recognize assignment of the employee to a higher level of responsibility and/or a different type of work which results in a change to a higher pay grade. Promotional increases shall be market based and will, at minimum, bring the employee’s salary to the minimum pay of the appropriate pay grade.

   7. Reclassifications - When significant and substantial changes in a position’s primary duties have either evolved, occurred through a structured change crucial to the mission and/or organizational effectiveness of a department, or are the result of a job and market evaluation. A reclassification may cause the pay grade assignment of a position to be reduced, elevated, or remain at the same level. Individuals should have performed these additional tasks for approximately six (6) months before reclassification is considered. A position may or may not have an incumbent at the time of the reclassification.

      Adjustments to an employee’s base pay rate may occur as the result of a position reclassification without competitive recruitment. Reclassification pay changes shall be determined using the market analysis in combination with an internal equity analysis and must bring the employee’s salary to at least the minimum pay of the appropriate pay grade.

   8. Reductions in Pay as the Result of Demotion - When an employee is assigned to a job which is in a pay grade lower than the one to which the employee's current job is assigned. Demotions may result in a lower rate of pay.
3. Assignment of Jobs into the Staff Pay Structure
   1. Jobs shall be placed into a pay grade based on a review of each job’s essential duties and responsibilities, required credentials, defined market value and its relative position within the institution’s organizational structure.
   2. The Pay Structure may be periodically adjusted to reflect market variances, as necessary.

4. The Role of the Manager

   In making salary decisions, the responsible manager, in consultation with the Office of Human Resources, has a responsibility to determine a fair and competitive salary that recognizes both the forces of the external labor market as well as internal equity, as appropriate. This procedure is subject to applicable legislation.

5. Pay Grades

   Each job is assigned to a specific pay grade in the Pay Structure. The Pay Grade represents a target Pay Range for the job, i.e. where we would expect to see salaries cluster for the job within the range.
   1. Compa Ratio
      1. The relationship of an employee's salary to the midpoint of the respective pay grade.
      2. The compa ratio, expressed as a percentile, is calculated by dividing the employee's salary by the midpoint of the respective pay grade.
   2. Pay Grade Minimum
      1. The lowest rate UMGC would pay for a particular job.
      2. Salaries assigned to individuals who are new to the field in which they are hired and/or who have minimal experience in the field in which they are hired would typically fall between the minimum and the 25% point of the pay grade.
      3. Salaries assigned to experienced hires would typically fall between the 25% and 50% point.

   3. Pay Grade Midpoint

      Also known as the 50^th percentile, it generally reflects the typical or average current external market rate for representative jobs in the salary category.

   4. Pay Grade Maximum
      1. The highest rate UMGC would pay for jobs assigned to the pay grade.
      2. Salaries assigned to experienced hires with extensive position-related experience and/or experienced hires with highly specialized skills would typically fall between the midpoint and maximum.
6. Administering Pay
   1. Exempt and Overseas Employee Salary Upon Employment
      
      1. Newly hired Exempt and Overseas Employees are assigned a pay rate at least equal to the minimum of the applicable pay grade to which their jobs are assigned. Individual rates paid to new hires are determined by:
         
         1. work the individual will perform;
         2. pay rates being paid for similarly qualified employees doing similar work throughout UMGC;
         3. applicable external market rates; and
         4. value of the individual's specific credentials to UMGC
      2. In making salary decisions, the hiring administrator, in consultation with the Office of Human Resources, has an obligation to offer a fair salary that recognizes both the forces of the external labor market as well as internal equity.
      3. The salary offered to a new Exempt or Overseas Employee shall generally be within the minimum and the midpoint of the pay grade to which the position is assigned.
      4. Procedures for Establishing Salary Upon Employment
         1. Prior to posting or advertising a position, the hiring administrator shall consult with the Chief Human Resources Officer (CHRO) or designee for an assignment of an appropriate pay grade.
         2. Once a decision to hire is made, and prior to any offer of employment being extended, the hiring administrator shall consult with their Talent Acquisition Specialist to determine the appropriate starting salary for the selected candidate.
         3. When a selection decision involves an internal candidate or when the starting salary exceeds the midpoint of the respective pay grade, the Talent Acquisition Specialist shall consult with the CHRO or designee to review the candidate’s specific credentials in relationship to internal equity and external market data to arrive at an appropriate final salary offer.
   2. Pay Rate Adjustments for Exempt and Overseas Staff

      1. Merit Adjustments

         Merit adjustments are changes to an employee's base pay rate based on performance. Merit adjustments are usually determined during the annual salary adjustment process based on overall guidelines established by the President.  Factors considered in determining merit-based wage adjustments include:

         1. The employee’s performance meets or exceeds expectations based on the most recent annual performance appraisal review;
         2. The employee's Compa Ratio (salary as a percentage of midpoint of the pay grade);
         3. Other salary increases the employee may have received during the performance cycle; and
         4. Overall budget available for merit increases.

      2. Annual Merit

         Merit-based wage and salary adjustments shall not be based on length of service or general wage inflation. Merit adjustments are usually determined during the annual salary adjustment process based on overall guidelines established by the President.

      3. Promotional Increases

         Promotional increases are changes to an employee's base pay rate to recognize assignment of the employee to a higher level of responsibility and/or a different type of work which results in a change to a higher pay grade. Promotional increases shall be determined using the market analysis in combination with an internal equity analysis, as applicable, and must bring the employee’s salary to at least the minimum pay of the appropriate pay grade.

      4. Reclassification
         1. Occurs when significant and substantial changes in a position’s primary duties have either evolved, occurred through a structured change crucial to the mission and/or organizational effectiveness of a department, or are the result of a job and market evaluation.  A reclassification may cause the pay grade assignment of a position to be reduced, elevated, or remain at the same level.  In general, individuals should have performed these additional tasks for approximately six (6) months before reclassification is considered. A position may or may not have an incumbent at the time of the reclassification.
         2. Adjustments to an employee’s base pay rate may occur as the result of a position reclassification without competitive recruitment.  Reclassification pay changes shall be determined using the market analysis in combination with an internal equity analysis and must bring the employee’s salary to at least the minimum pay of the appropriate pay grade.

      5. Reductions in Pay as the Result of Demotion

         A demotion occurs when an employee is assigned to a job which is in a pay grade lower than the one to which the employee's current job is assigned. Demotions may result in a lower rate of pay. In consultation with the Office of Human Resources, the specific pay rate shall be determined using the market analysis in combination with an internal equity analysis and must bring the employee’s salary to at least the minimum pay of the appropriate pay grade.

      6. In-Line Adjustments

         An adjustment may be initiated at any time to address specific cases of salary inequity, incorrect slotting, or other salary equity problems identified by management. In-Line adjustments shall be approved by the department administrator, the Vice President and Chief Human Resources Officer (CHRO) or designee.

      7. Lateral Transfer

         A lateral transfer occurs when an employee is reassigned to or applies for and receives a position that is in the same pay grade as his/her current position. When such a situation occurs, there is rarely a change in salary; however, an analysis will be performed to consider external market pay and internal equity, as applicable, within a department.

   3. Acting Appointment
      1. In order to meet urgent business needs, it may be necessary to appoint an employee to an acting capacity assignment.
      2.  Designating an employee to an acting capacity status is justified only when time or circumstances do not permit the immediate selection of a permanent appointment under the established selection and appointment procedures for staff.
      3. Additional provisions governing Acting Assignments is located in VII-9.50-GC-UMGC Policy on Temporary Assignments and Acting Appointments.
      4. Management may recommend a salary increase if the acting assignment is at a higher level than the current role. The amount of any increase will be determined using the job’s market analysis and internal equity analysis and must bring the employee’s salary to at least the minimum of the appropriate pay grade.
   4. At the conclusion of the acting assignment, the employee’s position and salary will be adjusted in accordance with VII-9.50-GC – UMGC Policy on Temporary Assignments and Acting Appointments.

   5. Temporary Assignment

      Provisions governing Temporary Assignments is located in VII-9.50-GC-UMGC Policy on Temporary Assignments and Acting Appointments.

   6. Reassignment
      1. Movement by a staff member from a position to another similar or comparable position. This action may not result in a change in compensation. A change in work schedule or location shall require a minimum of two weeks’ notice.
      2. Additional provisions governing Reassignment is located in VII-9.51-GC -– UMGC Policy on Reassignment of Exempt and Overseas Staff Employees
      3. Sequence of Simultaneous Adjustments
         When more than one salary adjustment is scheduled to occur with the same effective date, the sequence of adjustments shall be as follows: adjustment to pay grade minimum, cost of living adjustment (COLA), merit increase, promotion increase, and equity adjustment.
      4. Procedures for Pay Rate Adjustments
         1. The department manager or designee shall submit the employee change request to the Office of Human Resources for the employee’s respective Division. All requests involving pay rates must have a President’s Cabinet Member/VP approval on the submission.
         2. The department manager will be responsible for ensuring that there are sufficient funds available in the budget to cover the cost associated with any increase.
         3. Salary changes will be reviewed and approved by the CHRO or designee.
         4. Increases outside of guidelines or involving use of investment funds will require additional levels of approval.
         5. Salary actions will be effective within one to two pay periods after the appropriate approvals.
         6. If there is a delay in processing a salary action, the supervisor shall submit a request for retroactive adjustment along with a justification for the delay in action to the CHRO or designee.  Retroactive adjustments may only be approved by the CHRO or designee for extenuating circumstances.
   7. Overseas Allowances
      1. Overseas Regular and Contingent III Employees and Overseas Collegiate Faculty in the Asia and Europe Divisions, except Downrange employees who are located at locations under the CENTCOM contract, will be provided with a monthly currency adjustment benefit (CAX) to assist with the cost of foreign goods.
      2. Downrange employees will be provided a monthly geographic differential on a year-to -year basis, which is intended to assist with being an ex-patriot living in an overseas environment and to assist with the costs of foreign goods.
      3. For Asia and Europe divisions, base salary and CAX are considered as total cash compensation.
      4. For Downrange employees, base salary plus geographic differential are considered as total cash compensation.
7. Records
   1. The signed original document initiating any job classification or salary-related action becomes part of the employee's personnel file.
   2. Written notification of the job classification or salary-related action shall be provided to the employee.

8. Responsibilities and Authority

   The CHRO or designee is responsible for the content and communication of this policy and associated Guidelines. The CHRO or designee is responsible for ensuring equitable administration of salaries within the requirements of this policy. Managers and supervisors are responsible for administering salaries consistent with applicable direction, policies, procedures, and/or guidelines received from the CHRO or President.

Replacement for:

UMGC Policy 420.10 – Exempt Staff Salary upon Employment

UMGC Policy 420.15 – Pay Rate Adjustments for Exempt Staff, Administrative Guidelines for the Stateside Exempt and Overseas Regular and Contingent III Staff Pay Program in Support of Policy 420.15 UMGC