When we think of train crews taking advantage of overtime on the LIRR, we primarily think of passenger crews getting shifted around and falling out of place during service disruptions or during severe weather, but some of the worst offenders on the railroad are not passenger crews, rather they are yard crews. Passenger crews are train crews that operate revenue or equipment trains, on a set schedule as laid out in a book called the Crew Book. Yard crews are train crews that work within the confines of a particular yard. They typically have the same qualifications as passenger crews, but they don't stray outside the confines of a yard.
Right from the get-go, the Inspector General's report goes right after the yard crews, and the questionable practices the LIRR often employs:
"LIRR has a policy to keep yard crews on overtime after their shifts end to supplement staffing in the yards. We found, however, that there are no records that document the work activity in the yards. Consequently, many crews assigned to the yards are receiving 4 hours of overtime each day without any record of the trains they moved, if any, while on overtime. LIRR managers explained that these crews are kept on assignment to provide coverage in the event there is an equipment problem that requires an extra crew and that providing back up coverage is critical to maintaining service. LIRR does not know if this is the most cost-effective way to provide coverage because there are no records indicating how often these crews are actually needed or for how long they are needed."If a passenger crew falls out of place, the LIRR can sometimes pull a yard crew out of the yard to operate a train. This is a double-whammy often times, as these crews are frequently on overtime, and yard crews working passenger trains outside their schedule is a violation of yet another work rule, and that nets them even more penalty payments.
As we get into the main section of the report, the Inspector General's office gives some background:
"Largely because of the work rules cited above, LIRR’s engineers and conductors are among the highest paid represented workers in the MTA. During 2004, the railroad’s 355 engineers earned an average of $97,408 and its 976 conductors earned an average of $79,408.1 The average overtime earned by all 1,331 engineers and conductors was $18,798. On an aggregate basis, as shown in Table 1, their total earnings included 21 percent in overtime as well as an additional 5 percent in penalty payments. These penalties, which are payments of up to an additional day’s pay for violations of highly technical work rules, provided 9 percent of all earnings for engineers."And overtime payments on the LIRR are not always what they seem. When most people think of overtime, they think of a regularly scheduled shift of eight hours, but at the end of their shift when they would normally go home, something comes up and they are asked to stay, on overtime. Then for every hour after that, they earn overtime pay.
However, due to the complexities of scheduling hundreds of trains per day to all different parts of Long Island, crew shifts are rarely exactly eight hours long. Sometimes they are scheduled to run short, and the crews wait around until its time to punch-out, but often times train crews are scheduled to work longer than eight hours, thus guaranteeing them a certain number of overtime hours everyday, just for holding that job. This is called "crew book overtime," which is overtime that is planned into crews schedules in the crew book:
"Approximately $11 million of overtime earned by engineers and conductors in 2004 was planned, that is, it was built into the crew schedule or was paid out at time and one-half for working on a holiday. Another $13 million of overtime in 2004 was essentially unplanned, that is, it was spent paying engineers and conductors to work on their days off, for unplanned assignments, or for hours that exceeded their normal work day."The latter form of overtime, ("essentially unplanned" overtime) is what many commonly think of when they think of overtime, but almost 45% of the LIRR's overtime payments in 2004 were of the intentional variety.
Crew book overtime is unfortunately often unavoidable and can sometimes be quite significant, especially in diesel territory where the headways are long. The crew book planner can either have a crew run three round-trips and work for 9 hours and 10 minutes per day, thus guaranteeing them an hour and 10 minutes of overtime per day, or they can only run two-round trips per day, which would only take them 6 hours and 30 minutes, and then just water the plants for the rest of their shift. This wouldn't guarantee the crew overtime like the former scenario would, but not only do you have a crew standing around watching the grass grow in Port Jefferson for 90 minutes, you now need to get another crew to run that third round-trip. So, for this 90 minutes the railroad is paying two crews instead of paying one crew the overtime for when they go over eight hours.
It would be impossible to find a way to efficiently schedule each and every one of the LIRR's crews to get exactly 8 hours from punch-in to punch-out, and sometimes letting the crew stray past the eight hour mark can be cheaper than benching them for the last round-trip and getting another crew to run the train in its place. But then again, there are occasions where it could very well be cheaper to let the crew water the plants for the last round-trip and send another crew out instead. It's a complex balancing act that has to be evaluated on a case-by-case basis. Hopefully the LIRR is paying close attention to this with each timetable revision. As service gets added a couple trains at a time here and there, the crews are haphazardly thrown in to the mix to run those trains. Making sure that these inefficiencies are kept to a minimum is critical. It is uncertain weather this is happening actively or not, as the above mentioned indifference about not managing penalty payments adds an element of doubt.
Now the Federal Railroad Administration actively regulates crew work hours and rest cycles under its Hours of Service Regulations, so none of this can get too out of hand and none of these crews can become too overworked, intentionally or unintentionally. The FRA's Hours of Service regulations are very effective, and they were recently tightened for many railroads, so this is pretty much a manner of the financials and its impact, and not really the impact of this on the safe operation trains.
The report then turns into the hidden cost of overtime. While awarding a crews overtime pay is painful enough, there are a number of lesser-thought of impacts these penalty payments have on the financial well-being of the railroad. Again, an importance of on-time performance over many other things is noted by the Inspector General:
"Penalties and overtime also present significant costs in terms of managerial time and effort expended to verify and approve claims. Management should be aware of the external cost impacts and should consider the total costs, not solely the direct costs to the Transportation Department, when establishing crew book assignments and longer term overtime and penalty claim arrangements."Later on in the report, the Investigator General's report shifts back to overtime, and the fact that much of the Transportation Department's overtime is built into the LIRR's operating structure. I discussed this in some detail just above, and I have plans to discuss this in even greater detail in another post in the coming weeks. Crew book overtime (intentional overtime) is second only to relief overtime in terms of cost to the railroad in 2004.
As per collective bargaining agreements, work by an employee that exceeds 8 hours in a day must be paid at time and a half. For engineers and conductors, there are six major categories of overtime: crew book, extra assignment, pure, relief, short swing, and holiday overtime. The types and the approximate cost to LIRR in 2004 were defined in the Inspector General's report:
Crew Book Overtime (Cost $6.1 million in 2004)
Crew Book overtime is the built-in overtime included in the daily crew schedules that the LIRR has set up so it can meet its service requirements. The LIRR’s labor agreements with the BLE and UTU do not allow the use of split shifts with compensated rest time between them as does MTA Metro-North’s (MNR) labor agreements. As a result, one crew cannot be used to fully cover both the morning and afternoon rush hours. Because the LIRR never obtained from the UTU and BLE the same agreement that MNR has, LIRR has set up 273 passenger and yard crews in its crew book withtours that range from 5 hours and 2 minutes to 11 hours and 24 minutes. Crews working above 8 hours are paid at time and one-half, which is considered crew book overtime. Crews working under 8 hours, however, are not paid a pro rata share of 8 hours. They are paid for a full day despite not working a full 8 hour day.
Extra Assignment Overtime (Cost: $1.9 million in 2004)
Extra Assignment Overtime is scheduled for any of the various daily extra assignments that are not in the crew book. It includes the payment for any hours scheduled into an extra assignment beyond 8 hours.
Pure Overtime (Cost: $5.4 million in 2004)
Pure overtime is the unplanned overtime, paid at time and one-half, that occurs each day as a result of train delays, emergencies, accidents, and other unscheduled events that will occur on a railroad.
Relief Overtime (Cost $6.8 million in 2004)
Relief overtime is the pay at time and one-half that engineers and conductors earn when they work on their assigned days off. Transportation officials told us that relief overtime costs were driven primarily by a shortage of engineers. This shortage occurred because of an unanticipated surge in retirements in the years 2000 to 2003. Relief overtime also includes $1.4 million in flagging overtime by conductors.
Short Swing Overtime (Cost $1.2 million in 2004)
Per the BLE Work Agreement, engineers are paid at time and one-half rate for all tours started within 22.5 hours of the beginning of a previous tour. These tours are referred to as Short Swing tours. Conductors are paid at time and one-half for the second tour they start in a day.
Holiday Overtime (Cost $3.1 million in 2004)
Holiday overtime is the pay for all hours worked by engineers and conductors on a holiday at the time and one-half rate.
The report finishes this section by noting that this is overtime, and independent from penalty payments:
"While overtime costs certainly need to be controlled, it should be understood that all overtime costs are not in the same category as penalty payments. Some overtime, like crew book overtime, is essentially a cost containment measure to reduce the total number of engineers needed by the LIRR. In short, it is less costly to extend the tour of one crew and pay a few hours of overtime each day rather than hire another crew--with all the added fringe benefits--to work a tour that may be only a few hours long. Holiday overtime also is fixed by labor agreements and would be difficult to reduce other than by eliminating some train service on holidays. The overtime that can be controlled through better management appears to be pure overtime and some types of relief overtime."Furthermore, overtime has a hidden cost that is beyond the day where the crew worked over eight hours, just like penalty payments. In 2004, the LIRR paid over $30 million in overtime and penalty payments to engineers and conductors, but not included in that figure is the adjustments to the payments that the LIRR has to make into train crew retirement funds, as these penalty payments are considered when calculating the crew member's final average salary:
"LIRR employees hired before January 1, 1988 are members of the LIRR Pension Plan and Plan for Additional Pensions. This plan is a relatively generous pension plan that allows employees to retire at age 50 with 20 years of service. Under the plan, all overtime and penalty payments earned in the 5 years prior to retirement, as well as vacation buyouts, are included in the calculation of the employee’s final average salary. The employee’s pension benefit is calculated using the final average salary multiplied by a percent based on years of service.The report continues by mentioning that overtime payments also impact payments for vacations and to the BLE Welfare Fund. For many LIRR train crews, the amount they are paid when they are on vacation amounts to 1/52nd of their prior year's total earnings. So every dollar of overtime and penalty payments, the crew member gets paid about two cents more while they are on vacation the following week. And this does not only affect only the next year, as the increase is carried over for many more years afterwards:
"We found that penalty and overtime payments to engineers and conductors retiring under the plan boosted pensions to levels higher than base salary for many of these employees. Specifically, 76 engineers and conductors retired in 2004, at an average age of 52, with an average annual pension of $61,603... 13 of the 76 retirees left with a pension greater than $75,000 including one with a pension of $99,872 earned by a conductor with a base pay of $64,092. In addition, the 13 received an average vacation and sick leave buyout of $62,176 each when they retired.
"These annual pension benefits--that are well in excess of the retirees’ base salaries--are largely the result of a seniority-based crew assignment system that enables senior engineers and conductors to select assignments that generate the largest amount of overtime and penalty payments in the five years before they retire--the base period that is used to establish pension benefits."
"...[F]or every $239 penalty payment received in 2004, an engineer with 15 years of service and entitled to 26 vacation days a year (25 vacation days + 1 birthday holiday), will also receive an additional $23.93 in vacation pay in 2005, another $2.39 in 2006, and $ .24 in 2007--a total of $26.57. This rule enabled one engineer to receive almost $20,000 in vacation pay in 2004 whereas he would have received only $6,000 in vacation pay if he was paid at his base salary rate--the vacation benefit received by all other LIRR represented and non-represented employees. The engineer actually received $798 for each vacation day taken in 2004 (instead of his base $239) because he earned $201,490 in 2003 that included $51,656 in overtime payments and $65,699 in penalty payments."And all of this overtime has a big impact on vacation costs:
"As indicated previously, the added vacation costs in the next three years due to the penalty will be $27 and, finally the LIRR will have to contribute another $14 to the BLE welfare fund. Thus, every time a penalty is paid to a worker within five years of retirement, the true cost of the penalty is about $566 consisting of $239 for the penalty, $286 for additional pension costs, $27 for added vacation costs, and $14 for the BLE Welfare Fund. Similarly, the cost for an hour of overtime is about $45, but when the overtime is earned by a retirement eligible engineer or conductor its real cost is $106."Once you calculate in these hidden costs, the $25,020,522 the LIRR paid out in 2004 ended up costing the railroad $37,281,608 in real costs.
Many of the points discussed in yesterday's post about late equipment trains and swaps in Penn Station also often apply to the shaky overtime practices often employed by the LIRR.
Following this, the report turns its focus back to yard crews, and how that overtime is not adequately justified and controlled:
"The LIRR has established 36 yard crew assignments to facilitate the movement of trains at its train yards that include the West Side yard outside Penn Station, the Jamaica terminal yard, the Flatbush yard in Brooklyn, the Hillside and Holban yards, the Morris Park yard, the Long Island City yard, and the Babylon yard. All but one are staffed 5 to 7 days each week by engineers and/or conductors. During 2004, these yard crews earned $1.8 million in overtime. Of this amount, $1.2 million or 65 percent was earned by engineers and conductors assigned to 11 specific yard crew assignments. These 11 assignments, usually “picked” by the more senior engineers andconductors, enabled 36 engineers and conductors to earn $851,000 or 46 percent of all yard overtime. Each earned between $11,000 and $41,000 in overtime during 2004."On most days, many of the crews working 11 of these assignments were given 2 to 4 hours of overtime (4 hours being the maximum allowed under FRA Hours of Service regulations). When the Office of the Inspector General asked about the often excessive overtime with yard crews, LIRR management maintained that yard crew overtime is needed to ensure adequate coverage:
"LIRR Transportation officials told us that yard overtime is assigned each day essentially to “protect” and provide coverage for the yards. In effect, a second crew on overtime is held in the yard in case a train needs to be moved while the scheduled crew is busy. They explained that if a move needs to be made while the scheduled crew is busy and an overtime crew is not available, the Yardmaster would have to use a passenger crew to perform the move. This would require a penalty payment of a day’s pay to the passenger crew which would be more expensive than providing overtime to the yard crew. LIRR management maintains that no documentation of the overtime crew’s activity is needed because they are not held on overtime to work continuously. In fact, it is LIRR management’s hope that they will not have to make any moves during overtime hours, since that would mean that the railroad is operating smoothly. However, the LIRR did not provide us with any analysis or documentation that supports the level of investment in extra coverage indicating how often the crews are actually used to operate trains and why they are usually assigned 4 hours per day rather than two or three hours."The report also calls into question the lack of checks and controls for these yard crews. These yard crews are often just given overtime and, at the time, there was little documentation justifying why these yard crews needed to be kept around and paid overtime. The report cites that several improvements were made from the time of the OIG's investigation to the time the report was published, but it notes that there is still more that can be done.
If the LIRR had been keeping up many of the things the Inspector General's report mentioned, they should have been able to bring the overtime down in recent years.
For the last main section of the report, the Office of the Inspector General focuses on the antiquated and time-consuming claims process:
"The system that the Transportation Department uses to verify penalty and overtime claims submitted by its engineers and conductors has been in place for many years. It is a labor intensive, paper system that relies on exception time cards as the primary source of data for the penalty payments and overtime earned by train crews."In 2004, the process by which an employee could claim overtime involved the employee preparing a time card which is approved and then deposited in a box located at a terminal. Each day approximately 350 time cards are submitted to the Crew Management office:
"[The time cards] are processed by the department’s seven payroll coordinators, who review the time cards for proper authorization and to verify that the penalties and overtime reported by the employee are accurate and in accord with the engineer and conductor labor agreements. The verification of these claims is done by ensuring properapproval and/or by checking individual claims against various reports and logs that are forwarded each day to crew management. If overtime is claimed, the actual amount of time claimed is manually calculated by the payroll coordinator. The reports and logs submitted include the Engine Service Markup sheet, Penn Station swap sheets, the Morris Park Hostler Work Report, the Transportation Crew Board Report, the Terminal Minutes Report, as well as several other records. This voluminous supporting formation is maintained by crew management to support the payments they authorize each day."The time cards require a supervisor's signature to ensure that the information reported on the cars is accurate. However, a decent chunk of timecards are submitted without supervisor's signatures. In certain cases, the payroll office considers a time card approved if the claim can be substantiated by one of the various logs that are forwarded to the payroll coordinator. Other times, the payroll coordinator can go back after the supervisor to verify the time card.
The Office of the Inspector General reviewed all second class of service claims paid to engineers in December 2004. Of the 306 claims, 178 (58%) were appropriately signed and approved by a supervisor, 29 (9%) were not signed, but were verified by logged data submitted to the Crew Management office, 53 (17%) were not signed, but were later approved by a supervisor after they were contacted by the Payroll Management office, and 46 claims (15%) were considered to be "valid" by the Director of Crew Management after review of documentation in these cases either did not support the claims or data was not maintained in the files for these incidents.
The last group of claims, 15% of the 306 in December 2004, are questionable since there was otherwise insufficient data to verify a claim. The LIRR should have the ability to maintain data to verify each and every one of these claims as they are submitted. Furthermore:
"In addition to the lack of documentation, we are also concerned that operations managers and supervisors are required to spend an inordinate amount of time responding to verification requests from payroll coordinators. Each month payroll coordinators contact various managers and supervisors to verify overtime, commingling, outside normal assignment and 2nd class of service claims. For example, payroll coordinators e-mailed Penn Station managers 74 times in January 2005 regarding overtime and outside normal assignment claims. In Jamaica, two lead managers review and approve all claims generated by crews assigned to Jamaica area yards. If they cannot verify a claim based on their own knowledge or see the claim on a log or assignment sheet, they will check with the field personnel who ordered the move. The excessive time consuming nature of such interaction is compounded by the questionable approach of asking managers to verify a series of events that happened days or weeks before."And as if the lack of documentation to support nearly 15% of the claims made wasn't bad enough, the Office of the Inspector General calls into question the veracity of some of the records the railroad does keep:
"We also found that the new Assignment Sheets instituted were neither accurate nor complete. OIG examined the December 2004 “Yard Crew Assignment Sheets” for the West Side and Brooklyn yards that were intended to record all overtime and penalty payments at the yards."The examination of those new assignment sheets showed that 59 engineer and conductor penalty overtime claims were not fully substantiated by them. In some cases, the amount of hours claimed by the crew and the amount of hours on the assignment sheet differed, but the exact number could not be verified because the assignment sheets did not detail the exact release time. Furthermore, five second class of service claims (each a full day's pay) was paid to West Side Yard and Brooklyn crews in December 2004 while the Assignment Sheet log showed no authorization for those claims.
There were also documented cases where "Work Exception Sheets" for the Jamaica Storage Yard were missing for an entire day or a certain hour. In other cases, the exception sheet listed one penalty, but the employee claimed and received two.
A total of 206 penalties were paid to Jamaica Storage Yard crews during January 2005 for Second Class of Service violations, Sheridan Shop, and Comingling claims. Of these, 53 claims were not listed on the exception sheets, and on 14 days in January 2005, at least one tour did not turn in an exception sheet.
"In our opinion, the new logs initiated in 2004 are not accurate and are not adequately providing management with the required backup to verify employee claims."The report indicates that an automated system to monitor and control assignments is needed:
"We believe that the penalty payment and overtime claim processing system needs to be automated. Managers should be electronically recording and authorizing these claims when they make the decisions to incur the costs. Control and accountability for the payments would clearly be enhanced by restructuring the system in this way. Engineers and conductors should continue to have the capability to initiate a claim if they believe one has been overlooked, but this should be the exception and not the rule. Ironically, Transportation was heading in this direction a few years ago when they commissioned a new crew management and payroll processing system. Unfortunately, as will be described below, a decision was made not to implement all of the system components. Certain features of the system would have likely gone a long way to addressing the problems described in this report."In 1999, the LIRR's Information Services awarded a $1.4 million contract to PS Technology, Inc. for the design and development of a new crew management and payroll processing system (RCPS):
"...The contract specified that RPCS would provide Transportation with the capability to track, analyze, and manage the assignment of train crews and to know where its trains and crews are at all times. RPCS was designed to replace LIRR’s existing Crew Dispatching System, the Train and Engine Exception Payroll system, and Transportation’s Manpower Department Absence Control System..."The system was under development, but the Inspector General's report indicates that the LIRR halted the installation of certain components of this system bases solely on the cost of the system. It's uncertain if the system has been fully implemented in the eight years since this report came out.
The report finishes out by saying that the LIRR's Transportation Department has not developed a "Payroll Manual:"
"The BLE and UTU Work Agreements contain provisions and work rules that cover all aspects of employment including how, when, and why overtime and penalty payments are earned. The rules vary based on location, time off in between assignments, class of service of the work, and various other conditions. It was not surprising then when the Director of Crew Management told us that each day payroll coordinators set aside 10-20 questionable claims for review by the Director and union representatives to determine if work rules were interpreted properly on the claims. What was surprising was that given these constraints, the Transportation Department has not developed a manual for its payroll coordinators that clearly describes and interprets the myriad work rules that generate penalty and overtime claims. We found that payroll coordinators in the Crew Management Department did an effective job of processing claims without the benefit of a manual. While that claims approval process was inconsistent and not always properly documented, we found no claims that, clearly, should not have been paid.The report finally comes to an end after 30 pages of rough news for the railroad:
Nevertheless, sound internal controls systems have a policy and procedures manual for payroll functions. If Transportation does fully automate their payroll system as we are recommending, it seems practical to prepare a manual at the same time. The manual would describe the varied circumstances when penalties and overtime are earned, and would be beneficial not only to the payroll coordinators--especially any new payroll coordinators--but also to the Transportation managers who would be approving penalty and overtime payments."
"Overtime and penalty claims are very costly, in terms of compensation to the train crews as well as the administrative costs of processing the claims. LIRR management has reduced these costs when made aware of the reasons and conditions that lead to the claims. Commingling has been reduced and equipment trains schedules have been adjusted to reduce Outside Normal Assignment penalties. However, more savings could be achieved if management had the data and information to understand the causes of other overtime and penalty claims. An automated claim authorization system would allow management to immediately see where, why, and how overtime and penalty payments are occurring. With this information, management could more fully recognize the costs of actions that generate penalties and look for ways to avoid them. Finally, an automated system will provide top management with much needed control and accountability tools so that managers, supervisors, and employees from all departments can more readily be held accountable for the extra payments."The Office of the Inspector General finishes withe eight recommendations for the LIRR as a result of the investigation's findings:
- LIRR should implement a fully electronic payroll system for engineers and conductors that provide controls and accountability for penalty payments and overtime and eliminates much of the time consuming daily payroll verification.
- The system should collect data on the specific reasons for each penalty payment or overtime assignment.
- The data collected must be routinely reviewed and analyzed for ways to identify and reduce wherever possible causes of penalty payments and overtime.
- Once an electronic system has been implemented, the LIRR should pursue additional savings through reductions in the payroll processing positions, made possible by limiting the need to personally verify large numbers of claims.
- Given the fact that the real cost of overtime and penalty payments is at least doubled for employees eligible for or near retirement, management should consider these extra costs when evaluating crew needs and crew book assignments.
- Given the fact that the real costs of overtime and penalty payments is at least doubled for employees eligible for or near retirement, management should consider these extra costs to help establish the optimum number of engineers and conductors that are needed by the LIRR. In addition, they should be considered when setting up longer term crew assignments such as the need for regular yard overtime each day and the routine assignment of penalty payments to the same crew.
- LIRR should maintain records of work being performed by yard crews while on overtime to analyze how much overtime is in fact necessary on any given day.
- Equipment train performance reports should be generated by TIMACS, using the time needed by an arriving crew to make its next assigned train, as performance measurement criteria.
In its response to recommendation 7, the LIRR said that because yard crews are assigned for "inter-departmental support and protection of operations," it is not necessary to maintain records of exact work being performed (I don't see why not, though). Finally, in response to Recommendation 8, the LIRR says that creating a relationship between the lateness of any equipment train, and the crew's availability to make their next scheduled train cannot be accomplished within the existing TIMACS framework, since TIMACS does not have crew information as part of its design. I would imagine it would not be that difficult to get something in Excel going to give you a general idea of what is happening (I will see if I can quantify some rough figures, but from what I see during my travels, equipment trains still arrive late pretty frequently today).
The LIRR's way of doing things is antiquated in so many ways. From letting archaic work rules ruin their financials, to keeping track of overtime claims on paper timecards that are subject to errors, to dozens of other out-of-date things in normal everyday operations, the LIRR needs to overhaul they way it does much of its work.
Luckily, with East Side Access coming up, the LIRR will have a way to overhaul much of its operating profile, and it looks like they are gearing up to do just that. It is critical that the LIRR work to become as efficient as possible while not skimping out on service to those who will still need it. The current LIRR management has the opportunity to set the railroad up in such a way that it can be very successful in the coming decades. They also have the opportunity to ruin it for generations. Let's see how it all turns out.
