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HomeMy WebLinkAbout10/01/1996, 1 - AMENDMENT TO THE PERSONNEL RULES AND REGULATIONS Council �b- i- q(p agenda RepoRt / CITY OF SAN LUIS OBISPO FROM: Ann Slate, Director of Personnel \gyp SUBJECT: AMENDMENT TO THE PERSONNEL RULES AND REGULATIONS CAO RECOMMENDATION Introduce an ordinance approving the amendment to the Personnel Rules and Regulations regarding disciplinary action for exempt employees that is compatible with maintaining their exemption from overtime as provided for in the Fair Labor Standards Act (FLSA) DISCUSSION In response to recent litigation, the City is seeking to maintain its classification of management employees as exempt from the FLSA's overtime requirements. By amending the Personnel Rules and Regulations to ensure that exempt employees are not subject to disciplinary suspensions for increments of less than a week except for major safety violations, the City is establishing an express policy that allows us to preserve the exempt status of management employees. FLSA provides that overtime requirements do not apply to "any employee employed in a bona fide executive, administrative or professional capacity . . . " 29 U.S.C. Section 213. The City classifies as exempt employees the appointed officials, department heads, fire battalion chiefs, police lieutenants and captains, department heads, and forty nine other employees commonly referred to as "mid-managers". As such, they are not eligible to receive overtime pay. The applicability of that exemption to public employees has been the subject of much litigation in recent years. In order for the City to claim this exemption, the employees must meet a "salary" test. The salary test generally requires than an employee receive a predetermined amount each pay check and that the amount is not subject to reduction due to variations in the quality or quantity of work performed. Because of this regulatory framework, disciplinary reductions in pay for increments of an entire week do not affect an employee's salary status, provided no work is done that week. Additionally, the regulations contain exceptions under limited circumstances. For example, employees can be docked pay for major safety violations without losing their exempt status, even if the result is a partial pay week. Recent courts decisions have made it clear that in order for exempt employees to fall within the salary test, the public employer needs to adopt a policy barring application of disciplinary suspensions with loss of pay for less than a week to otherwise salaried or exempt employees. Council Agenda Report - Amendment to Personnel Rules and Regulations Page 2 Based on the legal advice of outside employment law attorneys and the City Attorney, staff is recommending that the Personnel Rules and Regulations be amended to reflect its intent of maintaining the overtime exemption for its management employees. CONCURRENCES The San Luis Obispo Police Staff Officers Association that represents the lieutenants and captains met and conferred earlier this year and have adopted language in their Memorandum of Agreement (MOA), approved by the City Council last month, that solidifies their exemption. The City is in the process of negotiating with the Fire Battalion Chiefs similar language for their MOA. All other management employees are unrepresented so that formal meet and confer over the impacts of an amendment to the Personnel Rules and Regulations is not required as it is for the safety management employees. FLSCAL ]IMPACT There is no financial impact associated with this action other than nominal costs associated with reprinting the Personnel Rules and Regulations which are codifed in the Municipal Code. ALTERNATIVES The alternative of not amending the Personnel Rules and Regulations is not recommended. Since recent court cases have held that absent clear and express policy to the contrary, exempt employees who are subject to disciplinary suspensions for less than a week could lose their status as salaried. Since City management employees presumably are subject to such suspensions according to the current City rules even though such deductions have never occurred, these employees if they chose to challenge the City could lose their status as salaried. The City would then be obligated to pay them overtime, which could have significant financial impacts. No estimate is available at this time since the City does not track salaried employees hours in excess of 40 per week. Attachments Draft Ordinance ORDINANCE NO. (1996 SERIES) AN ORDINANCE OF THE CITY OF SAN LUIS OBISPO AMENDING CHAPTER 2.36 OF THE MUNICIPAL CODE, THE PERSONNEL RULES AND REGULATIONS BE IT ORDAINED by the City Council of the City of San Luis Obispo as follows: SECTION 1. Section 2.36.330 is hereby amended to read as follows: "2.36.330 Disciplinary action--Charges, response, final action "A. Removal, Demotion, Reduction in Compensation, Suspension of More Than S. ...A Five Day ..F.F. T XZ disciplinary matter wherein r it is proposed that a regular employee in the classified service all be removed, reduced in compensation, demoted, or suspended for more than five days or the shift equivalent, the procedures for notifications, response and final action shall be as follows:" The remainder of subsection 'A' remains unchanged. "B. Suspension of Five Days or Less. In any disciplinary action wherein it is proposed that a regular employee in the classified service who is . .... A:Wllil 'MX.%e suspended for five days or less, the procedures shall be be 'is P under subsection A of this section. f 9W ...C:.ii............ 4...........Y %................................ W The remainder of subsection 'B remains unchanged. SECTION 2. A synopsis of this ordinance, approved by the City Attorney, together with the names of the Council Member voting for and against, shall be published at least five days prior to its final passage, in the Telegram-Tribune, a newspaper published and circulated in this City. This ordinance shall go into effect at the expiration of thirty (30) days after its final passage- 1-5 Ordinance No. (1996 Series) Page 2 INTRODUCED AND PASSED TO PRINT by the Council of the City of San Luis Obispo at a meeting held on the 19 day of October 1996 on motion of seconded by ,and on the following roll call vote: AYES: NOES: ABSENT: Mayor Allen Settle ATTEST: City Clerk APPROVED AS TO FORM: City Attorney