HomeMy WebLinkAbout04/14/2009, B1 - OVERTIME PRACTICES Council MeeinpDte, o
j Acenda Repoat It.Nu'mJb7e,
CITY O F SAN LUIS O B I S P O
FROM: Monica Irons,Director of Human Resources
SUBJECT: OVERTIME PRACTICES
RECOMMENDATION
Modify the City's Budget and Fiscal Policies to be included in the 2009-11 Financial Plan to clearly
define the use and management of overtime costs throughout the organization.
DISCUSSION
Background
Council reviewed and discussed the City's Budget and Fiscal Policies, which are contained as a
section of each Financial Plan at its December 16, 2008 meeting. Discussion included direction
to staff to consider adding a "generic statement that sets forth a principle regarding the use of
overtime and how it is managed"in the City's 2009-2011 Financial Plan.
The City defines, schedules and compensates overtime in accordance with federal and state laws,
as well as internal polices and procedures. The Federal Labor Standards Act (FLSA) was
extended to all public employers effective April 15, 1986 and established minimum wage,
overtime compensation requirements, recordkeeping, and child labor standards. It also defines
work weeks and provides some exemptions from paying overtime.
FLSA Requirements
The FLSA requires employers to pay overtime compensation, at not less than one and a half
times the regular rate of hourly pay, for all hours worked beyond a specified number (usually 40
hours in a seven consecutive day workweek), unless otherwise exempted from this provision.
FLSA overtime may also be compensated through compensatory time off(CTO). CTO must be
credited at time and one-half for every hour of FLSA overtime worked. The FLSA established
`'caps" on accumulated CTO hours beyond which FLSA overtime must be paid in cash. These
caps vary based on the type of work regularly performed by an employee. For work in "public
safety", "emergency response", and "seasonal" activities, the cap is 480 hours of CTO, or 320
hours of FLSA overtime hours worked, per year. The cap is 240 hours of CTO, or 160 FLSA
overtime hours worked, for all other jobs.
Page 2 of 6
The FLSA exempts executive, administrative, and professional — or"white collar" employees
from the Act's overtime requirements. The FLSA itself does not define these terns; it delegated
this responsibility to the Department of Labor (DOL). The DOL established salary and duties
tests to determine whether a position is exempt from the FLSA. The City refers to positions that
meet the standards established in these exempt status tests as `'management" positions. In other
words, management employees (including Police Lieutenants, Police Captains, and Fire Battalion
Chiefs) are exempt from the FLSA and overtime compensation is not required.
Defining the Work Week
One of the cornerstone provisions of the FLSA is its requirement to pay premium overtime pay to
nonexempt employees for all hours worked over specified maximum hours within a designated
work period. For the majority of employees outside of public safety, this means overtime must
be paid for all hours worked over forty in a seven daywork period. The FLSA provides for some
flexibility in defining a work week and allows for "flexible" or "compressed" work week
schedules such as a 9/80 or 4/10 work schedule.
The City supports voluntary participation in flexible or compressed work schedules if approved
by a department head and the City Manager. The City's standard compressed work schedule is
the 9/80 schedule; it is compliant with the FLSA, supports the City's desire to reduce green
house gas emission through the reduction of commuting, and does not incur overtime for regular
hours worked within the schedule. Employees on a 9/80 schedule are scheduled to work eight
nine-hour days, one eight-hour day, and have one day off every two weeks. By establishing the
start of the work week as mid way through the eight-hour work day, the City does not incur
overtime.
Because of the special scheduling problems inherent in police and fire departments, Congress
authorized longer work periods, if elected by the public employer, for employees employed in
law enforcement activities or fire protection activities. These work periods, known as 7(k) work
periods, may be for periods of between seven and 28 consecutive days. For example, City
Firefighters, Fire Engineers, and Fire Captains are assigned to eight, 24-hour shifts, in 24 day
work period. Police utilizes a 3/12 work schedule for patrol and dispatch where operational
services are provided 24 hours a day, seven days per week.
Overtime Requirements in Memorandums of Agreement
The City has four employee associations that represent employees eligible for overtime. These
employee associations are the San Luis Obispo City Employees' Association (SLOCEA), the
International Association of Firefighters, Local 3523 (Fire Union), the San Luis Obispo Police
Officers' Association (POA), .and the San Luis Obispo Police Staff Officers' Association
(SLOPSOA). Memorandums of Agreement (MOAs)between each employee association and the
City define the work period in hours, what constitutes overtime, whether non-work hours (paid
time off) are considered in computing overtime hours, caps associated with CTO, pre-
authorization required to work overtime, and special circumstances when overtime compensation
G:Wgenda repons\2009\Overtime\Overtime PoGcy.doc
Page 3 of 6
may be used. These circumstances include the following: 1) standby; 2) call back; 3) court time;
4) training; 5) FLSA Overtime for Fire; and 6) Constant Staffing Overtime for Fire.
1. Standby. Circumstance which requires an employee so assigned to: be ready to respond
immediately to a call for service; be readily available at all hours by telephone or agreed-upon
communication equipment; and refrain from activities which might impair his/her assigned
duties upon call. Employees assigned to standby are compensated at a flat rate to compensate for
the inconvenience of standby. Overtime is paid for hours actually worked as a result of standby
(e.g. an employee is called to work while on standby). Standby is typically used to ensure
evening and weekend coverage of critical services such as support by information technology of
911 systems, support of water and wastewater operations, or emergency response due to
accidents,repairs, storms, or natural disasters.
2. Callback Circumstance that require an employee to unexpectedly return to work after they
have left at the end of the work shift or work week. The employee is paid a guaranteed minimum
number of hours (typically four or four and a half) at straight time or paid at time and one-half for
time actually worked, whatever is greater.
I Court Time. Police employees who report to court to testify as witnesses in cases outside of
their normally scheduled shifts are guaranteed three hours minimum payment at time and one-
half.
4. Training. Training is generally planned and scheduled to avoid overtime if at all possible.
However, training is mandated in many departments such as police, fire, and utilities where shifts
may vary and minimum staffing levels are required to ensure essential services are not
interrupted. In some cases, scheduled training involves overtime for an employee or overtime is
incurred to backfill for an employee attending training.
S FLSA Overtime for Fire. Firefighters, Fire Engineers and Fire Captains assigned to 24-hour
shift duty are assigned to a 56 hour work week. For hours over 53 in a week, the FLSA requires
premium payment. As a practical matter, it is recommended that departments absorb premium
pay obligations above the 53 hours per week rather than increase staffing.
6. Constant Staffing Overtime for Fire. Constant staffing provides for a mandated fourteen
firefighters on-duty everyday including the Battalion Chief. Mandated overtime is used to
maintain the fourteen firefighters per day minimum.
How is Overtime Managed at the City?
Each department is responsible for budgeting and managing overtime costs. All departments
require pre-approval of overtime by a department head or delegate, unless the overtime is
assumed to be pre-approved by the nature of the overtime. For example, a police officer who is
required to appear in court on his or her day off or a utilities employee who is called back to
GAAgenda repofts\2009\0vertime\0vertime Policy.doc
91 -3
Page 4 of 6
repair a broken water main. Departments have the leeway to shift schedules during the defined
work period in order to avoid overtime.
Assignment of overtime typically is based on necessary skills and/or a seniority or rotational
process if multiple employees have the same skill set (e.g. police patrol, dispatch, and fire
suppression). Personal needs of the employees are considered whenever possible in order to
avoid undue hardship of repeated overtime assignment which can lead to burnout.
The City timecard system includes the reason for overtime and timecards must be approved by a
manager before being submitted to payroll for payment. Finance reports show overtime incurred
and most departments regularly monitor overtime costs to ensure that amounts stay within those
budgeted or that unforeseen overruns are addressed.
What Does Overtime Cost?
As a percent of total operating costs, overtime expenditures have remained stable during the past
five years at between three and four percent.
Overtime as Percentage of Operating Cost
4.5%
4.0%
3.5%
3.0%-
2.5% —
2.0%
1.5%
1.0%
0.5% —
0.0%-
2003-04 2004-05 2005.06 2006.07 2007-08
Fiscal Years 2003-04 to 2007-08
G:Wgenda reports\2009\0vertime\0vertime Policy.doc
Page 5 of 6
All departments except Police and Fire incur less than two and a half percent of their total
operating costs through overtime.
Overtime By Department
Administration
City Attorney
City Clerk
Human Resources
Community Development
I
Parks&Recreation
Public Works
Utilities
Finance 8 IT
Police
Fin,
0.0% 2.5% 5.0% 7.5% 10.0% 12.5%
2007-08 Overtime as Percentage of Total Operating Costs(Excluding Mutual Aid Reimbursements)
An analysis of the past five years of overtime costs at the City indicates the primary drivers of
overtime are: 1) vacancies, 2) call back, 3) standby, 4) special events, and 5) mutual aid.
Vacancies may result when employees leave the City and the position remains unfilled for some
time (e.g. while a replacement is recruited or a vacancy is held during a hiring "chill" or
"freeze"). Short-term absences such as vacations, industrial injuries or illnesses, or medical,
military, or personal leaves of absences may drive overtime. Overtime is used most extensively
in departments where it is critical to maintain minimum staffing levels to ensure essential service
levels such as utilities laboratory, water and wastewater plants, police patrol, emergency
dispatch, and fire suppression.
Call back and standby were discussed earlier in this report, and are primarily used by Information
Technology, Utilities, Public Works, and Police..
Overtime for special events are primarily used by Police and Fire for traffic control, additional
patrols and response due to increased activity during Mardi Gras, Saint Patrick's Day, Fourth of
July, Halloween, festivals, and parades.
Mutual aid overtime is used exclusively by the Fire Department and the City is fully reimbursed
for these costs. Employees responding to disasters out of the City's jurisdiction receive overtime
for hours worked on the incident. The City is reimbursed for these hours at the employee's
overtime rate as well as hours necessary to backfill the employee while they are on out of county
G:\Agenda reports\2009\0vertime\0vertime Policy.doc
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Page 6 of 6
assignment. The City also receives an additional administrative fee that varies by agency and
may also receive reimbursement for Workers Compensation, unemployment, and Medicare
benefits.
Added Fiscal Policy—Human Resources Management
Staff proposes adding Section D Overtime Management to the Human Resources Management
section of the 2009-2011 Financial Plan Budget and Fiscal Policies (see below).
D. Overtime Management
1. Overtime should be used only when necessary and when other alternatives are not
feasible or cost effective.
2. All overtime must be pre-authorized by a department head or delegate unless it is
assumed pre-approved by its nature. For example, overtime that results when an
employee is assigned to standby and/or must respond to an emergency or complete an
emergency response.
3. Departmental operating budgets should reflect anticipated annual overtime costs and
departments will regularly monitor overtime use and expenditures.
4. When considering the addition of regular or temporary staffing, the use of overtime as an
alternative will be considered. The department will take into account:
a. The duration that additional staff resources may be needed.
b. The cost of overtime versus the cost of additional staff.
c. The skills and abilities of current staff.
d. Training costs associated with hiring additional staff.
e. The impact of overtime on existing staff.
FISCAL IMPACT
There is no fiscal impact of adding the proposed language.
G:Wgenda repons\2009\0vertime\0vertime Policy.doc
BI-6:7
council memoRAn um
RED FILE
April 14, 2009 MEETING AGENDA
TO: City Council DATC� ITEM #__P1
FROM: Ken Hampian, City Administrative Officer !}yq
Bill Statler, Director of Finance&Information Technology
SUBJECT: SUPPLEMENTAL OVERTIME INFORMATION
Council Member Carter requested additional information regarding overtime costs. Attached is a detailed
spreadsheet showing overtime costs for 2003-04 through 2008-09, which provides the following
information for each year:
• Overtime by type(such as callback,court time and standby) for each department.
• Percent that total overtime costs (excluding mutual aid overtime, which can vary significantly from
year-to-year and is fully reimbursed by the State and Federal government) represents of operating
costs (the basis of comparison used in the agenda report), staffing costs and regular salaries.
Provided in the sidebar chart is a
summary of overtime as a percent Overtime as%of Operating Costs,Staffing Costs&
of these three bases of comparison. Regular salaries:2003-04 to 2008-09
It shows three things: 14%
1. Regardless of the"base,"the 10% ------- - - - - -- - -- -
results are consistent with the 8% ----- --- -- -- -
agenda report findings that 6% ----
overtime
% --overtime costs have remained 4% ------
stable
_-_-stable over the past six years.
2% --
2. The results are very similar in 0%
comparing overtime costs with 2008-09 2007-08 2006-07 2005-06 2004-05 2003-04
operating or staffing costs. (Budget) Fiscal Year
This is because staffing ❑%Operating Costs ■%Staffing Costs ❑% Regular Salaries
represents about 80%of
operating costs.
3. While still showing stable costs, there is a difference when comparing overtime costs to just regular
salaries. However, this is not the best"apples to apples" comparison. In most cases, overtime costs
are incurred in lieu of regular staffing (which includes benefit costs) due to vacancies or constant
staffing requirements in the Fire Department.
Please call Bill Statler at extension 7125 if you have any questions concerning this matter or require
additional information. Oao CAal 0iln-a-
COUNCIL r'CDD DIR
ATTACHMENT DleAe Grfy /71G.t:' [211FIN DIR
[5'A$Aeft CM/lae-d'FIRE CHIEF
Overtime Costs by Department and Type: 2003-04 to 2008-09 ATTORNEY C1'Pw DIR
2TLERK/ORIO 3-POLICE CHF
DEPT HEADS L�REC DIR
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