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HomeMy WebLinkAbout03-07-2017 Item 11 Adjustments to the Compensation of the Unrepresented Confidential Employees Meeting Date: 3/7/2017 FROM: Monica Irons, Human Resources Director Prepared By: Nickole Sutter, Human Resources Analyst II SUBJECT: ADJUSTMENTS TO THE COMPENSATION OF THE UNREPRESENTED CONFIDENTIAL EMPLOYEES RECOMMENDATION Adopt a resolution with a one-year term (January 1, 2017 to December 31, 2017) adjusting the compensation of the Unrepresented Confidential Employees (Attachments A & B). DISCUSSION Background The City’s confidential group includes five employees: two Human Resources Administrative Assistants, one Human Resources Specialist, one Legal Assistant, and one Administration Executive Assistant. These employees are designated as unrepresented in accordance with the Government Code 3507.5 and Employer-Employee Resolution 6620 because they are privy to information that affects employee relations and labor negotiations. The confidential employees’ compensation and benefits are established by resolution adopted by Council that expired on December 31, 2016. In September 2014, Council adopted Labor Relations Objectives (LROs) that provided guidance and high level direction for negotiations with all employee groups including discussions with unrepresented employees. The LROs, outlined below, balance recruitment and retention of well- qualified employees with fiscal responsibility: 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. Framing the Recommendation Confidential employees are unrepresented which means there are no formal negotiations, as there are for other regular employees. The group met once in November and again in January given holidays and schedules. The recommendation before Council was developed in January and is in line with compensation changes other bargaining groups will receive during the same timeframe. Discussions with the unrepresented confidential staff were collaborative, cooperative, and Packet Pg. 115 11 supportive of Council objectives. The following areas helped frame the recommendation for the unrepresented confidential group: 1) Movement in the labor market and Consumer Price Index (CPI), 2) Cost of living adjustments provided in comparison agencies, 3) Changes in compensation negotiated with other bargaining groups at the City, and 4) Council adopted LRO. The CPI for the San Francisco -Oakland-San Jose area has experienced an average increase of 2.7% per year over the past five years. Similarly, comparison agencies indicate negotiating COLAs in the range of 2% to 4% with 2.5% being the median COLA for 2016-17. All of the City’s represented groups have current agreements. The duties of the confidential group most closely align with classifications represented by SLOCEA; therefore, it is recommended that compensation for the confidential group keep pace with movement in SLOCEA compensation. Confidential Resolution The proposed resolution is for one-year and include the modest changes in compensation outlined below. No further adjustments in compensation for the confidential group is committed beyond 2017, allowing further analysis by Finance staff of the recent decision by the California Public Employees’ Retirement System (CalPERS) to reduce the discount rate. While this change by CalPERS is aimed at ensuring the financial sustainability of the retirement system, it will have significant financial impacts on the City beginning in 2018-19. The following is a summary of the key changes included in the Resolution. The Resolution includes additional revisions as staff did a complete review of compensation and benefit practices and incorporated more clarity into the resolution: Term of Resolution January 1, 2017 to December 31, 2017 Salary 2% Cost of Living Adjustment (COLA) effective the first full period in January 2017, given a recommendation was developed in January. Health Contribution Effective the first payroll following Council adoption, increase City health insurance contribution by approximately 5% to match contributions provided to the San Luis Obispo City Employees Association (SLOCEA). Maintain the current cost-sharing model that increases the City-contribution by 50% of the average percent increase in CalPERS medical premiums in December 2017 for 2018 premium increases. Discontinue cash back for employees electing coverage in the City’s health plan, ensuring compliance with the Affordable Care Act and limiting overtime costs under FLSA. Packet Pg. 116 11 FISCAL IMPACT The cumulative annual ongoing total compensation cost after all items are implemented is approximately $20,000. Funding is available in the current 2015-17 Financial Plan for cost increases resulting during that timeframe and subsequent costs are modeled in the Five-Year Fiscal Forecast. ALTERNATIVES Do not approve recommended changes to the resolution. Instead, adopt a resolution that continues unrepresented confidential employee compensation without changes. This alternative is not recommended as the resolution is in line with previous Council direction and maintains parity with other employee groups. Attachments: a - Confidential Resolution 2017 b - Exhibit A-Confidentials 2017 Packet Pg. 117 11 R ______ RESOLUTION NO. (2017 Series) A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS OBISPO, CALIFORNIA, REGARDING COMPENSATION FOR THE UNREPRESENTED CONFIDENTIAL EMPLOYEES AND SUPERSEDING PREVIOUS RESOLUTIONS IN CONFLICT WHEREAS, the City has designated the following classifications as confidential employees pursuant to the Government Code 3507.5 and Employer-Employee Resolution 6620: Administration Executive Assistant, Human Resources Administrative Assistant I, II, III, Human Resources Specialist, Legal Assistant, and Legal Assistant/Paralegal; and WHEREAS, confidential employees are precluded from collective bargaining due to their proximity to labor negotiations, and therefore are not governed by a collective bargaining agreement, and WHEREAS, the City Council is committed to providing competitive compensation as provided in the City’s adopted Compensation Philosophy. NOW, THEREFORE, BE IT RESOLVED, that the Council of the City of San Luis Obispo hereby revises unrepresented confidential compensation as follows: SECTION 1. The City agrees to increase the salaries of confidential employees with a 2% cost of living (COLA) effective the first full pay period in January 2017; and SECTION 2. The City shall continue to provide employees certain fringe benefits as set forth in Exhibit “A”, fully incorporated by reference; and SECTION 3. The Director of Finance shall adjust the appropriate accounts to reflect the compensation changes; and SECTION 4. This Resolution shall be in effect from January 1, 2017 through December 31, 2017. Upon motion of ___________________________, seconded by ________________________, and on the following vote: AYES: NOES: ABSENT: Packet Pg. 118 11 Resolution No. _____ (2017 Series) Page 2 R ______ The foregoing resolution was adopted this 7th day of March, 2017. ____________________________________ Mayor Heidi Harmon ATTEST: __________________________________ Carrie Gallagher City Clerk APPROVED AS TO FORM: __________________________________ J. Christine Dietrick City Attorney IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of San Luis Obispo, California, this ______ day of ______________, _________. ____________________________________ Carrie Gallagher City Clerk Packet Pg. 119 11 EXHIBIT “A” Page 1 of 8 CONFIDENTIAL EMPLOYEES FRINGE BENEFITS 2015-20167 Section A Medical, Dental, Vision The City shall establish and maintain medical, dental and vision insurance plans for confidential employees and their dependents. The City reserves the right to choose the method of insuring and plans to be offered. PERS Health Benefit Program The City has elected to participate in the PERS Health Benefit Program. The City shall contribute an equal amount towards the cost of medical coverage under the Public Employee’s Medical and Hospital Care Act (PEMHCA) for both active employees and retirees. The City’s contribution toward coverage under PEMHCA shall be the statutory minimum contribution amount established by CalPERS on an annual basis. The City's contribution will come out of that amount the City currently contributes to employees as part of the City’s Cafeteria Plan. The cost of the City's participation in PERS will not require the City to ex pend additional funds toward health insurance. In summary, this cost and any increases will be borne by the employees. Health Insurance Benefits for Domestic Partners The City has adopted a resolution electing to provide health insurance benefits to domestic partners (Section 22873 of the PEMHCA). The City has elected to participate in the PERS Health Benefit Program pursuant to the Public Employees’ Medical and Hospital Care Act (PEMHCA) at the PERS minimum contribution rates, currently $122.00 per month for active employees and retirees. Conditional Opt Out Employees who at initial enrollment or during the annual open enrollment period, complete an affidavit and provide proof of other minimum essential coverage for themselves and their qualified dependents (tax family) that is not a qualified health plan coverage under an exchange/marketplace or an individual plan, will be allowed to waive medical coverage for themselves and their qualified dependents (tax family). The monthly conditional opt-out amount is $200. The conditional opt-out incentive shall be paid in cash (taxable income) to the employee. The employee must notify the City within 30 days of the loss of other minimum essential coverage. The conditional opt-out payment shall no longer be payable, if the employee and family members cease to be enrolled in other minimum essential coverage. Employees receiving the conditional opt-out amount will also be assessed $16.00 per month to be placed in the Retiree Health Insurance Account. This account will be used to fund the City's contribution toward retiree premiums and the City's costs for the Public Employee's Contingency Reserve Fund and the Administrative Costs. However, there is no requirement that these funds be used exclusively for this purpose nor any guarantee that they will be sufficient to fund retiree health costs, although they will be used for negotiated employee benefits. Packet Pg. 120 11 Resolution No. (20157 Series) EXHIBIT “A” Confidential’ s Fringe Benefits 2015 - 20162017 Page 2 of 8 Employees with proof of medical insurance elsewhere are not required to participate in the medical insurance plan and may receive the unused portion of the City’s contribution (after dental and vision insurance is deducted) in cash in accordance with the City’s cafeteria plan. Those employees will be assessed $16.00 per month to be placed in the Retiree Health Insurance Account. This account will be used to fund the Cit y’s contribution toward retiree premiums and the City’s costs for the Public Employees’ Contingency Reserve Fund and Administrative Costs. However, there is no requirement that these funds be used exclusively for this purpose, nor any guarantee that they will be sufficient to fund retiree health costs, although they will be used for employee benefits. Dental and Vision Insurance/Dependent Coverage Effective the first full month following the adoption of this resolutionfor May 2017 premiumsMarch 23, 2017, employee participation in the City's dental and vision plans is optional. Employees who elect coverage shall pay the dental and/or eye premium by payroll deductions on a pre-tax basis through the City’s Cafeteria Plan. Employees will be required to participate in the City’s dental and vision plans at the employee-only rate. Should they elect to cover dependents in the City’s dental and vision plans, they may do so, even if they do not have dependent coverage for medical insurance. Employees shall participate in term life insurance of $4,000 through payroll deduction as a part of the cafeteria plan. Section B Cafeteria Plan ContributionHealth Flex Allowance Employees electing medical coverage in the City’s plans shall receive a health flex allowance, as defined by the Affordable Care Act (“ACA”), and shall purchase such coverage through the City’s Cafeteria Plan. If the health flex allowance is less than the cost of the medical plan, the employee shall have the opportunity to pay the difference between the health flex allowance and the premium cost on a pre-tax basis through the City’s Cafeteria Plan. Effective December 2017 (for January 2018 premiums), iIf the premium cost for medical coverage is less than the health flex allowance, the employee shall not receive any unused health flex in the form of cash or purchase additional benefits under the Cafeteria Plan. The Effective the first full pay period following the adoption of this resolution, the monthly health flex allowance amounts City’s contribution to the Cafeteria Plan for regular, full-time employees are as followswill increase as shown below: Level of Coverage *with no cash back option effective Dec 2017 Current Monthly Rates Monthly Rates Upon Council Adoption Employee Only $514 $539 Employee Plus One $1,017 $1,066 Family $1,375 $1,442 Opt-Out $200 monthly Employee Only $539469 monthly Employee + 1 $1,066928 monthly Packet Pg. 121 11 Resolution No. (20157 Series) EXHIBIT “A” Confidential’ s Fringe Benefits 2015 - 20162017 Page 3 of 8 Employee + Family $1,4421255 monthly “Grandfathered” $790 monthly Effective December 2015 (for the January 2016 premium) and effective December 20176 (for the January 20187 premium), the City’s total Cafeteria Planhealth flex allowance for group medical coverage contribution shall be modified by an amount equal to one-half of the average percentage increase for family coverage in the PERS health plans available in San Luis Obispo County. For example: if three plans were available and the year-to-year changes were +10%, +15%, and +20% respectively, the City’s contribution would be increased by 7.5% (10% + 15% + 20% ÷ 3 = 15% x 1/2). Employees hired on September 1, 2008 or thereafter who elect not to be covered and opt out of the City medical plan will be required to provide proof of medical insurance elsewhere and receive a $200 per month cafeteria contribution. Employees hired prior to September 1, 2008 who elected either employee only medical coverage or who elect to opt out of the City medical plan with proof of medical insurance elsewhere shall be “grandfathered” in at the $790 per month contribution amount. Less than full-time employees shall receive a prorated share of the City’s contribution. The City agrees to continue its contribution to the cafeteria planhealth flex allowance for two (2) pay periods in the event that an employee has exhausted all paid time off and leave approved under the federal Family and Medical Leave Act (FMLA) and the California Family Rights Act (CFRA) due to an employee's catastrophic illness. That is, the employee shall receive regular City health flex allowance for the first two (2) pay periods following the pay period in which the employee’s accrued leave balances reach zero (0) and FMLA/CFRA benefits have been exhausted. Section C Life and Disability Insurance The City shall provide the following special insurance benefits: 1. Long-term disability insurance providing 66 2/3% of gross salary (maximum benefit $5,000 per month) to age 65 for any sickness or accident, subject to the exclusions in the long-term disability policy, after a 30-day waiting period. 2. In addition to $4,000 term life insurance purchased by the employee , the City provides through the cafeteria plan $25,000 term life insurance, including accidental death and dismemberment through the City’s Cafeteria Plan. Section D Retirement Employees hired before December 6, 2012 The City agrees to provide the Public Employees' Retirement System’s 2.7% at age 55 plan to all eligible employees including the amendments permitting conversion of unused sick leave to additional retirement credit, the 1959 Ssurvivor's Bbenefit – Level Four (4th level), one- year Packet Pg. 122 11 Resolution No. (20157 Series) EXHIBIT “A” Confidential’ s Fringe Benefits 2015 - 20162017 Page 4 of 8 final compensation, the Military Service Credit option, and the Pre-Retirement Option 2 Death Benefit. Effective June 27, 2013, employees covered by the 2.7% at 55 plan will pay the full eight percent member contribution to PERS. The employee pays to PERS their contribution; as allowed under Internal Revenue Service Code Section 414 (h) (2) the contribution is made on a pre-tax basis. “Classic Members” hired on or after December 6, 2012 For “Classic Members” hired on or after December 6, 2012, the City will provide the PERS 2% at 60 retirement plan using the highest three- year average as final compensation. The second tier formula will include the following amendments: conversion of unused sick leave to additional retirement credit, the 1959 Ssurvivor's Bbenefit – Level Four (4th level), the Military Service Credit option, and the Pre-Retirement Option 2 Death Benefit. Employees hired under this plan will pay the full member contribution required under the plan, presently seve n percent (7%). CalPERS determines who is a “classic member” within the meaning of the California Public Employees’ Pension Reform Act (PEPRA). The employee pays to PERS their contribution; as allowed under Internal Revenue Service Code Section 414 (h) (2) the contribution is made on a pre-tax basis. New Members For all employees who CalPERS determines are “new members” within the meaning of the PEPRA, the City will provide the PERS 2% at 62 retirement plan using the highest three- year average as final compensation. Effective upon their date of hire, new members will pay 50% of the total normal cost of the member contribution, as determined by CalPERS. The employee pays to PERS their contribution; as allowed under Internal Revenue Service Code Section 414 (h) (2) the contribution is made on a pre-tax basis. Section E Vacation Vacation leave is governed by Ssection 2.36.440 of the Municipal Code, except that it may be taken after the completion of the sixth calendar month of service since the benefit date or earlier with department head authorization. Each confidential employee shall accrue vacation leave with the pay at the rate of 12 days (96 hours) per year of continuous service since the benefit date for the first five years, 15 days (120 hours) per year upon completion of five years, 18 days (144 hours) per year upon completion of ten years, and 20 days (160 hours) upon completion of twenty years. Vacation leave shall be accrued as earned each payroll periodsemi-monthly provided that not more than twice the annual rate (not including floating holiday leave) may be carried over to a new calendar year. Packet Pg. 123 11 Resolution No. (20157 Series) EXHIBIT “A” Confidential’ s Fringe Benefits 2015 - 20162017 Page 5 of 8 Vacation schedules for confidential employees shall be based upon the needs of the City and then, insofar as possible, upon the wishes of the employee. A department head may not deny a confidential employee’s vacation request if such denial will result in the loss of vacation accrual by the employee, except that, a department head may approve a two-month extension of maximum vacation accrual. However, in no event shall more than one such extension be granted in any calendar year. Confidential employees are eligible, once annually in December, to request payment for up to 40 hours of unused vacation provided that an employee’s overall performance and attendance practices are satisfactory. Section F Administrative Leave Confidential employees shall be granted 12 hours of administrative leave per calendar yearthe first full pay period in January. Administrative leave hours shall be pro-rated on a monthly basis when a confidential employee is appointed or leaves employment during the calendar year. The employee’s final check will be adjusted to reflect the pro-rated hours, however there is no provision to receive cash payment for unused administrative hours. Unused administration leave will not be carried over year to year but can be taken through the pay period that December 31st falls within. Section G Holidays Confidential employees shall receive eleven (11) fixed plus two (2) floating holidays per year. The following days of each year are designated as paid holidays:  January 1 – New Year’s Day  Third Monday in January – Martin Luther King Jr. Birthday  Third Monday in February – Presidents’ Day  Last Monday in May – Memorial Day  July 4 – Independence Day  First Monday in September – Labor Day  November 11 – Veteran’s Day  Fourth Thursday in November – Thanksgiving Day  Friday after Thanksgiving  December 25 – Christmas  One half day before Christmas  One half day before New Year’s Day When a holiday falls on a Saturday, the preceding Friday shall be observed. When a holiday falls on a Sunday, the following Monday shall be observed. A holiday shall be defined as eight (8) hours of paid time off for regular full time employees. When Christmas or New Year’s Holiday falls on a Tuesday or Thursday, the City reserves the right to close non-essential City services and offices on Monday or Friday (the day adjacent to the observed holiday). Essential City services are determined at the discretion of the Department Packet Pg. 124 11 Resolution No. (20157 Series) EXHIBIT “A” Confidential’ s Fringe Benefits 2015 - 20162017 Page 6 of 8 Head. Employees scheduled to work in non-essential functions on the days adjacent to the paid holidays would be required to use appropriate personal leave or take the days as non-pay. The City would notify employees of closure of non-essential City services and offices no later than October 31st of the same year in order to provide employees with ample time to plan accordingly. Confidential employees shall receive 11 fixed plus 2 floating holidays per year. The two (2) floating holidays shall be accrued on a semi-monthly basis and added to the vacation accrual. Section H Sick Leave Sick leave is governed by Ssection 2.36.420 of the Municipal Code. An employee shall accrue sick leave with pay at the rate of twelve (12) days or the prorated shift equivalent per year of continuous service since the benefit date. An employee may take up to 48 hours per calendar year of sick leave if required to be away from the job to personally care for a member of his/her immediate family as defined in Section 2.36.420, Labor Code 233 and/or Assembly Bill 1522. This may be extended to 56 hours if a household family member is hospitalized and the employee submits written verification of such hospitalization. In conjunction with existing leave benefits, confidential employees with one year of City service who have worked at least 1,250 hours in the previous year may be eligible for up to 12 weeks of Family/Medical Leave in accordance with the federal Family and Medical Leave Act and the California Family Rights Act. Sick leave may be used to be absent from duty due to the death of a me mber of the employee’s immediate family as defined in Section 2.36.420, provided such leave shall not exceed forty working hours for each incident. The employee may be required to submit proof of relative’s death before being granted sick leave pay. False information concerning the death or relationship shall be cause for discharge. According to the following schedule, Upon termination of employment by death or retirement, a percentage of the dollar value of the employee’s accumulated sick leave will may be paid to the employee if the employee requests upon termination by retirement, and will be paid to, or the designated beneficiary or beneficiaries upon termination by death of the employeeaccording to the following schedule: (A) Death – 25% (B) Retirement and actual commencement of CalPERS benefits: (1) After ten years of continuous employment – 10% (2) After twenty years of continuous employment – 15% (3) After twenty-five years of continuous employment – 20% (4) After thirty years of continuous employment – 25% Section I Workers’ Compensation Leave An employee who is absent from duty because of an on-the-job injury in accordance with State workers’ compensation law and is not eligible for disability payments under Labor Code Section Packet Pg. 125 11 Resolution No. (20157 Series) EXHIBIT “A” Confidential’ s Fringe Benefits 2015 - 20162017 Page 7 of 8 4850 shall be paid the difference between his/her base salary and the amount provided by workers’ compensation law during the first ninety (90) business days of such temporary disability absence. Eligibility for workers’ compensation leave requires an open workers’ compensation claim. Section J Overtime Definition Overtime is defined as all hours preauthorized by management and worked by the employee in excess of forty (40) hours worked in a work week. Holidays and sick leave will be counted as hours worked for purposes of overtime. All overtime shall be authorized by the department head or designee prior to being compensated. Compensation All overtime as defined in this Section shall be paid in cash at one and one half (1 1/2) the employee's base rate of pay. All overtime shall be compensated to the nearest five (5) minutes worked. Separate and apart from the City's contractual obligation to pay overtime in accordance with this Section, the City is obligated to calculate and pay, at a minimum, FLSA overtime based on the federally defined regular rate of pay. Compensatory Time Off (CTO) A confidential employee eligible for overtime compensation as defined in this Section may elect compensation in the form of time off (CTO). An employee may not be compensated in CTO for more than sixty (60) hours of overtime worked in the calendar year. Accumulated CTO may be taken through December 31st of each calendar year. Accumulated CTO not taken by midnight December 31st shall be compensated in cash at straight time. Such compensation shall be paid in January of the following year. Work Week for Calculation of Overtime For all confidential employees working a regular 5/40 work schedule or a 4/10 alternative work schedule, the work week for the purpose of calculating overtime as defined in this Section shall be seven consecutive days, beginning at 12:00 am Thursday and ending at 11:59 pm Wednesday. For all confidential employees working a 9/80 alternative work schedule, the work week for the purpose of calculating overtime as defined in this Section shall be seven consecutive days, beginning exactly four hours into their eight-hour shift on the day of the week which constitutes their alternative regular day off. Section K Work Out-of-Classification An out-of-class assignment is the full-time performance of all the significant duties of an available, funded position in one classification by an individual in a position of another classification. An employee assigned in writing by management to work out-of-class in a position that is assigned a higher pay range which is vacant pending an examination or is vacant Packet Pg. 126 11 Resolution No. (20157 Series) EXHIBIT “A” Confidential’ s Fringe Benefits 2015 - 20162017 Page 8 of 8 due to an extended sick or disability leave, shall receive no less than five percent (5%), but in no case more than the top salary of the higher range, in addition to their regular base rate commencing on the eleventh consecutive workday of the out-of-class assignment. Packet Pg. 127 11 Page intentionally left blank. Packet Pg. 128 11 Adjustments to Compensation for the Unrepresented Confidential Employees Monica Irons, Human Resources Director Nickole Sutter, Human Resources Analyst II March 7, 2017 Recommendation • Adopt a resolution adjusting the compensation of the Unrepresented Confidential Employees: Term of Agreement: Jan. 1, 2017 — Dec. 31, 2017 7 Cost of Living Adjustment: 2% effective Jan. 2017 ■ Health Insurance: Match contribution provided to San Luis Obispo City Employees Association (SLOCEA). Cost sharing in Dec 2017 for 2018 premiums CAT Y IS pS? 3/8/2017 1 Fiscal Impact ■ Five Year Fiscal Forecast ■ Modeled all increases ■ 2015 - 17 Financial Plan it Accounts for all compensation adjustments G1TY off, � G Questions Is D RD : CITY OF SHR LWS OBISPO 3/8/2017 2