HomeMy WebLinkAbout09-23-2014 B1 Labor Relations Objectives
FROM: Monica Irons, Director of Human Resources
Prepared By: Greg Zocher, Human Resources Manager
SUBJECT: REVIEW AND APPROVAL OF LABOR RELATIONS OBJECTIVES
RECOMMENDATION
Review and approve draft Labor Relations Objectives (LRO) that will guide labor negotiations with
employee groups during 2014 and 2015.
DISCUSSION
Background
The Myers Milias Brown Act governs the City’s legal obligation to meet and confer (negotiate) in
good faith in advance of changes to wages, hours, and/or working conditions with its represented
employee groups. The labor relations process has traditionally been handled behind closed doors
with limited public communication. In the past, labor relations objectives and negotiating
parameters have been provided by Council to the City’s bargaining team in closed session. In the
last round of negotiations LRO were shared with the bargaining groups and the general public while
negotiating parameters were not publically disclosed. Overall little is typically communicated about
the negotiations until an agreement is reached and brought to Council in open session for approval.
Building the trust and respect necessary to reach an agreement is more achievable when there are
provisions of confidentiality. This is because negotiating a labor agreement takes specific
knowledge of benefits, best practices, costs, the operations that the represented employees work in,
and the ability to compromise. However, during the past several years, the public’s interest in
discussions regarding wages, hours, and/or working conditions and the associated costs have
become heightened, and more and more agencies are sharing, to the extent allowed by law,
information throughout the labor relations process.
The City has made steady progress towards increasing transparency in this area as evidenced by its
2012 labor negotiations. During the 2011 Financial Plan process, Council publicly identified a
financial objective that was critical to adoption of the 2011-13 financial plan. This financial
objective, reducing employee compensation in the General Fund by $2.6 million, led to LRO that
included reducing total compensation by 6.8% and achieving significant progress in the area of
long-term systemic pension cost containment and reductions. Sharing the LRO with employee
groups and with the community was helpful in focusing the negotiations that followed. It is
worthwhile to note that agreements reached with every employee group met the stated objectives.
The City has four represented employee groups with agreements expiring as indicated below:
1. The San Luis Obispo City Employees Association (SLOCEA) that has a Memorandum of
Agreement (MOA) with the City that expires December 31, 2014.
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2. The San Luis Obispo Police Staff Officers Association (SLOPSOA) that has a MOA with
the City that expires June 30, 2015.
3. The International Association of Firefighters, Local 3523 (Fire) that has a MOA with the
City that expires December 31, 2015.
4. The San Luis Obispo Police Officers Association (POA) that has an MOA with the City that
expires December 31, 2015.
In addition, the City has two unrepresented (not covered under State laws requiring meet and confer
in advance of changes to wages, hours, and/or working conditions) employee groups: management
and confidential employees. Wages and benefits for unrepresented employees are covered by
Resolutions that expire December 31, 2014.
On July 1, 2014 Council adopted a Fiscal Responsibility Philosophy (Attachment 1). This
philosophy defines fiscal responsibility and establishes several tenants or considerations in
attempting to maintain it. Among these is a commitment to openness and transparency that
includes, to the extent legally possible, transparency in the labor relations process. This objective
combined with the benefits described above, lead to the current consideration of LRO.
Labor Relations Objectives and Negotiating Parameters Defined
Because some direction related to labor relations and negotiations will be provided in public and
other direction is more appropriately discussed in closed session, it is very important to understand
the distinction and reasoning. Ultimately, the City has a responsibility and commitment to negotiate
in good faith with its employee representatives. In order to do so, City representatives (including
Council) must understand the need to be open-minded about how LRO are achieved. It is most
effective for Council to provide policy direction in open session and direct staff on more specific
give and take in closed session. To do otherwise could put the city at risk for an unfair labor
practice charge.
LRO are overarching principles or policy direction that broadly define a desired outcome, but do
not prescribe how it will be achieved. Thus, as is the case with other general policy direction, it is
appropriate to discuss this aspect of the labor relations process in open session. However, in order
to abide by the laws that govern bargaining in good faith, the focus of the open session discussion
should be on establishing City-wide policy objectives, not plans, proposals, or concepts specific to
bargaining units or terms and conditions of employment. Sharing LRO may help all employee
groups by providing a common understanding between all the parties involved in labor negotiations
by allowing them to look at how specific proposals fit with the overall Council objectives.
Achieving LRO may require time or other trade-offs or incentives to achieve a negotiated
agreement. The specific authority that the City’s bargaining representatives need to develop and
exchange proposals with an employee group is provided by Council as negotiating parameters in
closed session.
What Are Other Agencies Doing?
More and more agencies are adopting labor relations objectives, labor guiding principles, or goals
for negotiations publicly. Some examples, that demonstrate various approaches and topics, are
provided below:
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1. City of Hayward currently cites five goals that guide its negotiations:
a. Employee labor contracts shall be structured in a manner that is fiscally prudent,
supports Council Priorities, provides as much stability for employees as possible, is
sensitive to community expectations, is administratively efficient, and is compliant
with all applicable federal, state, and local laws.
b. If fiscally prudent and necessary to attract and retain top talent at all levels of the
organization, it will be the City’s objective to compensate employees at rates
generally no less than the middle of the labor market as measured by a combination
of the norm of established survey agencies and the supplying labor market.
c. Reduce the cost of benefits to the taxpayer while providing more supportive benefit
programs, and when feasible, a more robust level of benefits for employees.
d. Provide for work schedules and attendance standards that maximize employee
service output to the Community, support a creative workplace, ensure
accountability, and promote healthy work-life balance.
e. Ensure a healthy and safe work environment. Ensure fair standards are in place and
remedies for conflict are consistent with clear procedures and timelines that promote
accountability for all parties.
2. City of Palo Alto adopted Labor Guiding Principles in 2012 which include the following:
a. City Finances: The City should be able to meet the cost of any compensation
commitment from current and projected on-going City revenues.
b. Recruitment and Retention: When economically feasible, the City’s compensation
should be set at levels sufficient to recruit, train, and retain qualified employees who
are committed to the City’s goals, programs, and delivery of high quality services.
The City should pursue hiring and training strategies that further the City’s goal of
finding and growing staff that are critical to maintaining its goals, programs, and
services.
c. Management of Increasing Benefit Costs: The City should pursue short-term and
long-term strategies to curtail increasing employee benefit costs. It should move
away from providing benefits that place the burden on the City to pay the cost of
automatic increases and toward benefit structures that require negotiations to
determine how much and who will pay for such costs.
3. County of San Luis Obispo adopted the following three major initiatives for the Labor
Program in 2010.
a. Establishment of a second, lower tier of retirement benefits (second tier) for newly
hired employees for all bargaining units in an effort to address the County’s goal of
financial sustainability with the County’s pension plan.
b. Negotiation of pension rate increases with the goal of a 50/50 share.
c. Negotiating wages and the removal of contractual obligations for wage
determinations.
4. City of Davis adopted Guiding Principles and Objectives for Negotiations Related to
Compensation in 2009, a sampling of which is provided below.
a. Expand market labor surveys to include full range of compensation and benefits, and
explore comparisons with broader range of public agency employers.
b. Avoid contract language that binds the City to decisions made by other agencies
c. Effectively manage escalating health benefit costs while maintaining comprehensive,
affordable health care coverage for all employees.
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d. Consider implementing approach whereby City employees contribute to the cost of
their retirement benefits.
All of the above examples meet the definition of objectives in that they provide overarching policy
direction and avoid specific instructions that could be construed as circumventing good faith
negotiations. Overall, three basic themes emerge: 1) cost containment, 2) cost sharing, and, 3)
recruitment and retention strategies that include competitive compensation. In essence the themes
attempt to balance the need to recruit and retain qualified employees that carry out Council
objectives and deliver projects, services, and programs to the community, with effective cost
management.
Relevant City Policies
The City has existing policies that are relevant to the above themes including:
1) Financial management policies such as “Current Revenues for Current Uses. The City will
make current expenditures with current revenues, avoiding procedures that balance current
budgets by postponing needed expenditures, accruing future revenues, or rolling over
short-term debt.”
2) The City’s Compensation Philosophy (Attachment 2) that states “The City is committed to
providing competitive compensation as part of an overall strategy of attracting and
retaining well qualified employees who exemplify the City’s organizational values.” The
Compensation Philosophy avoids any sort of formula that ties Council’s hands with respect
to determining what “competitive compensation” is and instead provides five
considerations: i) financial sustainability, ii) community acceptability, iii) the relevant
labor market, iv) internal relationships, and v) other relevant factors.
3) The City’s recently adopted Fiscal Responsibility Philosophy also has several pertinent
considerations that mirror the themes above, including:
i. “Shared responsibility. The City recognizes a shared responsibility between the
employee and employer to appropriately fund employee benefits, including pension
benefits. Ensuring an appropriate balance is a valuable tool in attracting and retaining
well qualified employees that deliver services to the community, while maintaining a
long-term, sustainable, and balanced budget.”
ii. “Aligned investments. The City shall allocate resources in alignment with community
needs and priorities for maintaining and/or adding capital projects, assets, or services.”
iii. “Long-term Unfunded Liabilities. The City will identify all long-term liabilities
including unfunded pension obligations and strive to achieve a higher funded portion of
pension obligations; and shall manage all liabilities to maintain and enhance fiscal
responsibility.”
Proposed LRO
In drafting LRO for Council consideration, staff kept with the same balanced themes other agencies
are using: 1) cost containment, 2) cost sharing, and, 3) recruitment and retention strategies that
include competitive compensation, but tried not to simply repeat principles already articulated in
other policies. The goal is to clarify and provide focus for the next round of labor negotiations.
With that goal in mind, it is important to note the City and employees have been sharing health and
pension costs for some time. All employees pay the full Member contribution to CalPERS and
employees represented by the San Luis Obispo Police Officers Association (SLOPOA) pay an
additional 3% towards the Employer contribution to CalPERS. For most employee groups, the
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City’s contribution to health insurance is annually adjusted by half of the average percentage
increase in health premiums each year while other employees absorb the total impact of health
insurance increases. Additionally, a lower second and third tier pension benefits have been
implemented in an effort to contain pension costs.
The following proposed LRO are not listed in any order or meant to suggest weight or emphasis.
1. Maintain fiscal responsibility by ensuring that fair and responsible employee
compensation expenditures are supported by on-going revenues.
2. Continue to make progress in the area of long-term systemic pension cost containment
and reduction, including reversing the unfunded pension liability trend and other
actions consistent with State law.
3. Continue to effectively manage escalating health benefit costs through balanced cost
sharing and other means while maintaining comprehensive health care coverage for all
eligible employees.
4. As necessary to attract and retain well qualified employees at all levels of the
organization, provide competitive compensation as articulated in the City’s
Compensation Philosophy.
FISCAL IMPACT
There are no fiscal impacts associated with adopting labor relations objectives. Fiscal impacts will
be identified as Council provides direction through negotiating parameters to staff in closed session
and will also be identified when proposed MOAs are presented to Council.
Further, in the spirit of the Fiscal Responsibility Philosophy there are no foreseeable environmental
impacts of adopting LRO. However, there are certainly social impacts associated with the adoption
of LRO as it signals to employees and community members negotiating priorities as well as the
importance of attracting and retaining well qualified staff committed to providing service to the
community.
ALTERNATIVES
1. Council may choose to modify the LRO either at the meeting or through direction to staff.
If Council chooses to direct staff, staff requests specific direction regarding the desired
outcome.
2. Council may choose not to adopt LRO and instead simply provide negotiating parameters to
staff in closed session.
3. Council may choose to defer the discussion of LRO until such time as the City’s financial
outlook and next two-year financial plan is more established. Council should be aware that
staff will still need direction on negotiating with bargaining units in the interim period
before this financial information is available.
ATTACHMENTS
1. Fiscal Responsibility Philosophy Resolution
2. Compensation Philosophy Resolution
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ATTACHMENT 1
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ATTACHMENT 1
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RESOLUTION NO . 10248 (2011 Series )
A RESOLUTION OF THE CITY OF SAN LUIS OBISPO MODIFYING IT S
COMPENSATION PHILOSOPHY SUPERSEDING PREVIOU S
RESOLUTIONS IN CONFLIC T
WHEREAS,the City of San Luis Obispo strives to provide excellent service to th e
community at all times, and supports this standard by promoting organizational values includin g
customer service, productivity, accountability, innovation, initiative, stewardship, and ethics ; an d
WHEREAS,to achieve our service standards, the City must attract and retain wel l
qualified employees who exemplify our organizational values ; an d
WHEREAS,fostering an environment attractive to such employees depends upon man y
factors, including a competitive compensation program .
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Lui s
Obispo that the City's compensation philosophy is adopted as follows :
SECTION 1 .The City is committed to providing competitive compensation as part o f
an overall strategy of attracting and retaining well qualified employees who exemplify ou r
organizational values .
SECTION 2 . The City will consider total compensation, including but not limited to ,
salary, health, retirement, and time off benefits .
SECTION 3 .In evaluating competitive compensation, the City considers :
A.Financial sustainability including the City's financial condition as reflecte d
throughout the financial forecast, competing service priorities, maintenance needs, capita l
improvement and other asset requirements, fund reserve levels, and revenue projections prior t o
implementing changes in compensation .
B.Community acceptability since taxpayers and ratepayers ultimately fund al l
employee compensation .
C.The "relevant labor market"that may vary depending upon classification and i s
primarily defined by the geographic region (local, state-wide, or national) and key market s
(municipal, other government agencies, private sector) where labor talent is found, recruite d
from, and/or lost.
When the relevant labor market is defined as "local"; local private sector compensation data wil l
be considered along with local public sector compensation (municipal and other governmen t
agencies . When the relevant labor market is statewide or national, the City will conside r
compensation date for public sector agencies (municipal and other government) with severa l
R 10248
ATTACHMENT 2
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Resolution No. 10248 (2011 Series )
Page 2
comparable demographic data points including but not limited to population, median home price ,
median household income, median age, median education level, services provided, an d
unemployment rate . Quality of life should also be considered when selecting comparable
municipal and other government agencies .
D."Internal relationships"referring to the relative value of classifications to on e
another as determined by the City . Classifications performing comparable duties, wit h
comparable responsibilities, requiring a similar level of skill, knowledge, ability, and judgment ,
will be valued similarly in the City's compensation structures .
E.Other relevant factors may include unforeseen economic changes, natura l
disasters, states of emergency, changes in City services, and changes in regulatory or lega l
requirements .
SECTION 4 .At least every five years, the City will evaluate its compensation structure ,
programs, and policies to assess market competitiveness, effectiveness, and compliance with Stat e
Law . Adjustments to the compensation structure may be made as a result of this periodi c
evaluation and will be done through the collective bargaining process, if applicable, or othe r
appropriate Council-management processes .
Upon motion of Council Member Carter, seconded by Council Member Carpenter, and o n
the following vote :
AYES :
Council Members Carpenter, Carter and Smith, and Mayor Mar x
NOES :
Vice Mayor Ashbaug h
ABSENT : Non e
The foregoing resolution was adopted on March 15, 2011 .
ATTEST :
Elaina Cano
City Clerk
APPROVED AS TO FORM :
ATTACHMENT 2
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