Actually it has been flaky for a few years now. When I turn the volume up or down sometimes it jumps all over the place, getting louder when I wanna go soft and vice versa. If I am persistent it will do what I want but it takes a little while longer.

Well, I've always been i na older junky car so no biggie but now I might get something nice so if I can manage to get the empeg in the new car I'd like it to operate well.

Any idea how to fix?

The problem is with your rotary encoder.
You can search the BBS and the FAQ for replacement strategies, but unless you are *very*good* with a soldering iron I suggest you farm it out to whomever is near you.
I sent mine to Stu at Eutronix (linked above) and had several things done at once (rotary encoder included).
I highly recommend him, but there are a couple others around that also do excellent work.

I second the praise for Stu and his work. He's done a light-kit, rotary encoder and dry IDE solder repairs for me.

Top notch!

I must say, Stu has done some work for me too, and its some of the best craftsmanship I’ve seen. I'm saving up to send him my empeg to get the encoder replaced, ram upgrade, and maybe some buttons for the heck of it. I already had him do the light kit and digital out kit, great job.