PHILLIP M. NALL, ET AL.
THE CITY OF OAK RIDGE, ET AL.
July 10, 2014
Appeal from the Chancery Court for Anderson County No. 12CH4747 William E. Lantrip, Chancellor
Charles C. Burks, Jr., Knoxville, Tennessee, for the appellants, Phillip M. Nall and Robert M. Pitts.
John T. Batson, Jr., and Brian R. Bibb, Knoxville, Tennessee, for the appellees, City of Oak Ridge; James T. Akagi, Oak Ridge Police Chief; Tom Beehan, Oak Ridge Mayor; Mark S. Watson, City Manager; and City of Oak Ridge Personnel Advisory Board.
John W. McClarty, J., delivered the opinion of the Court, in which Charles D. Susano, Jr., C.J., and D. Michael Swiney, J., joined.
JOHN W. McCLARTY, JUDGE
This pay dispute began in November 2011 when Sgt. Phillip M. Nall with the Oak Ridge Police Department ("the ORPD"), now retired, forwarded a written pay inquiry to Police Chief James T. Akagi. Sgt. Nall observed that two recently promoted sergeants (Jock Coleman and Ron Boucher) who had previously held the rank of detective would be compensated at a level higher than that of the more senior sergeants in the ORPD.
The City of Oak Ridge ("the City") compensates its employees based on a scaled pay grade compensation system. All positions are assigned a specific pay grade and each grade is given an annual and hourly range for pay. At the time of this dispute, law enforcement officers were compensated at Grade 17, detectives were compensated at Grade 19, and sergeants were compensated at Grade 21. Sgt. Nall's grievance relates to a change in the pay grade classification system that occurred when the separately graded position of detective was added in 2003 after the City Council enacted a new compensation and classification plan. Sgts. Coleman and Boucher thereafter were promoted from police officer to detective and then to sergeant, at each point receiving a ten percent pay increase in accordance with the terms of the Pay Plan of the City's Personnel Plan. When Coleman and Boucher were detectives, they were compensated at or near the top of the pay range provided for the detective position. Thus, when they received their promotion to sergeant, the required minimum ten percent pay increase placed them at or near the top of the pay range for the position of sergeant.
In response to Sgt. Nall's inquiry, Chief Akagi noted there was no fiscal mechanism in place to adjust salaries based on equitable compensation. He directed Sgt. Nall to Personnel Director Penelope Sissom. Sgt. Nall thereafter filed an official grievance. He was joined in his grievance by Sgts. Paul Nance, Cartel Webb, and Robert Pitts (collectively, "the Sergeants"). Each of the Sergeants received the following annual pay: Pitts – $55, 390.40 (currently ___ $56, 222.40); Webb ___ $55, 286.40 (currently ___ $56, 118.40); Nance – $55, 307.20 (currently ___ $56, 139.20); and Nall – $55, 556.80 (at retirement ___$56, 409.60). The newly appointed sergeants received the following salaries: Coleman ___$60, 964.80 (currently ___$61, 235.20. Boucher – $ 60, 819.20 (currently ___ $61, 235.20).
In their grievance, the Sergeants relied upon pertinent provisions in Article V, section 1of the Pay Plan:
c. The City will build its merit system upon high but realistic expectations for employee performance. No employee shall be rewarded for unacceptable performance levels. Heads of departments and supervisors shall use the compensation plan fairly and equitably in influencing their employees to perform to their maximum capability.
d. The compensation plan shall be adjusted from time to time when there is clear evidence that such adjustment is necessary to meet the policies described above. For budgetary purposes, the City Manager shall be authorized to include in his budget any recommendation for adjustment to the pay plan, which he deems advisable, but such adjustment should be based on the prevailing rates in the recruiting area.
They argue subsection (c) requires that compensation within the City be fair and equitable, and that subsection (d) addresses how it can be achieved. The Sergeants assert their pay should be adjusted based on seniority.
After receiving the official grievance, Chief Akagi, citing provisions of the City's Personnel Plan, determined that he lacked the authority to unilaterally adjust salary. He noted the following:
Your argument is internal equity is not served when newly promoted personnel with little or no experience in the new job classification are compensated at a greater rate than personnel already serving in an acceptable manner in that position. Whereas you do not feel this is equitable, I believe Section 5.3(d) provides a numerical formula which clearly defines standard pay grade increases, as opposed to the philosophy of internal equity, which could be construed as subjective at best. If the head of a department were to arbitrarily initiate pay increases based on the philosophy of internal equity, the potential for further grievances and potential litigation would increase exponentially, as anyone could argue ...