HomeMy WebLinkAbout04-02-2019 Item 07 - Recruitment and Hiring Incentive Program Revisions
Department Name: Human Resources
Cost Center: 3001
For Agenda of: April 2, 2019
Placement: Consent
Estimated Time: N/A
FROM: Monica Irons, Human Resources Director
Prepared By: Brittani Roltgen, Human Resources Analyst
SUBJECT: RECRUITMENT AND HIRING INCENTIVE PROGRAM REVISIONS
RECOMMENDATION
Adopt a resolution (Attachment A) approving the City of San Luis Obispo’s Relocation and
Hiring Incentive Program and Employee Referral Policy and superseding any prior resolutions in
conflict.
DISCUSSION
Background
Previous Council Action
On July 17, 2001 the City Council adopted Resolution 9216 (Attachment B) establishing a
Recruitment and Hiring Incentive Program. The same resolution introduced an Employee
Referral Fee to encourage employees to refer friends, family members, prior co-workers, etc. to
work at the City.
These programs were developed, as described in the accompanying Council Agenda Report
(Attachment C), to address a “recruitment crisis” facing California public employers. Low
unemployment, high cost of living, and a shift in demographics that indicated fewer entries into
the job market, when compared to those higher number retiring, was cited as barriers to
successful recruitment. These challenges exist today and, as such, modifications are proposed to
assist in addressing current and future recruitment challenges. The Recruitment and Hiring
Incentive Program, approved by Council, is applicable only to management and department head
positions, and includes the following components:
1. Housing Assistance. Staff at the time, was tasked with developing a mortgage assistance
program and bringing it back to Council for approval. Staff at the time determined this was
not viable and the feature was never implemented.
2. Recruitment Incentives. Reimbursement of relocation expenses such as temporary housing
and/or movement of household goods, up to $10,000, for new management employees, and
up to $15,000 for new Department Heads, tailored to the needs of the individual hired.
3. Referral Fee. A $500 referral fee for employees who refer an applicant for a regular
position that is ultimately hired. Research indicates that referred employees take less time to
hire and orient, stay longer with an organization, and have a lower turnover rate.
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Current Recruitment Challenges
The City’s ability to effectively recruit well-qualified employees to deliver services to the
community as outlined in the City’s Compensation Philosophy (Attachment D) is affected by
many factors, including but not limited to: 1) availability of specialized skills, 2) graduation
rates, 3) unemployment rates, 4) demand for similar positions or skills, 5) criticality of needs or
the extent to which other available resources can cover the vacancy, and, 6) competitiveness of
wages and benefits offered. During the past several years, the City has had trouble recruiting at
various levels of the organization and in various classifications, not limited exclusively to
management or department head classifications. The City has recently experienced challenges
recruiting Civil Engineers as locally Cal Trans and other private sector companies are recruiting,
in large numbers, for the same talent and limited qualified pool. During the past two years the
City has opened eight recruitments for Engineers with only three of those resulting in hires.
Police Officers have been a consistently challenging position to recruit since 2012. Turnover
among Police Officers has increased from an average of 6% during the period of 2001 to 2010,
to an average of 11% from 2010 to current. Reasons for the turnover vary, with retirement being
the most common, but other reasons include Officers not completing probationary periods, and
voluntary resignations. Moreover, with the increase in turnover, also comes increased
competition for Police Officers as agencies throughout California face similar challenges, thus
positions are remaining vacant for longer periods. The Police Department in conjunction with
Human Resources, has streamlined its recruitment process to be able to make offers to applicants
in advance of other agencies, sponsor candidates in Police Academies, and expand outreach
efforts to increase the candidate pool. The results have been mixed and, as agencies across the
State and nation experience Police Officer vacancies, the competition for talent has intensified.
Assessment of the Recruitment and Hiring Incentive Program and Employee Referral Policy
In the past four years, the City has averaged four employee referrals per year. Given the value of
this recruitment method, staff would like to see this number increase.
Recruitment incentives, in the form of relocation benefits, have been used sparingly by the City.
Eleven Appointed Officials and Department Heads recruited from out of the area since 2004
were offered a relocation benefit of up to $15,000 to reimburse actual expenses associated with
the move to San Luis Obispo County. Nine management employees were offered relocation
benefits of up to $10,000 during the past fifteen years. These benefits may be taxable and are
offered pursuant to Internal Revenue Service (IRS) guidelines.
While the City’s location is typically desirable to candidates, the cost of living and specifically
cost and availability of housing, presents a challenge for many. Other challenges cited by
candidates considering employment with the City include, but are not limited to: 1) availability
of employment for a spouse, 2) availability and cost of child care, 3) distance from friends and
relatives who provide support or need support, 4) availability of specialized health care, 5)
availability of specialized education for children, and, 6) lack of public transportation that in turn
drives financial impacts on the individual as commute costs increase.
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Historically, the City has emphasized the stability of employment, the long-term benefit of a
California Public Employees Retirement System (CalPERS) retirement, and the intrinsic reward
of serving the community, as differentiators to attract employees and potentially offset some of
the challenges identified above. However, the City also implemented a lower-second tier
retirement benefit in 2011-12 that can be a deterrent for current CalPERS members with higher
retirement formulas, to make a move to the City. New employees to the CalPERS retirement
system are paying more towards the cost of retirement. While these are fiscally prudent actions
on the part of the City, they do have some level of impact on the City’s ability to recruit. What
cannot be quantified is the number of applicants who do not even apply because of the
challenges listed above.
Because Police Officers, Communications Technicians, many utilities classifications requiring
State certification, engineers, and other non-management classifications are excluded under the
current relocation and hiring incentive program, it is difficult to assess what impact this tool may
have on the City’s ability to attract and retain well-qualified employees.
What Are Other Agencies Doing?
Human Resources staff issued a survey through the League of California cities requesting
information from other cities on relocation and hiring incentives. The response rate to the survey
was low with many agencies stating they did not offer relocation benefits or offered them only to
department head classifications and were interested in survey results. This may indicate
relocation isn’t an issue in more populated areas of Northern or Southern California where an
employee has several cities or public sector agencies to potentially work for without relocating.
However, when the Police Department surveyed police agencies in Monterey, San Luis Obispo,
Ventura tri-county area, and other cities throughout the state (Attachment E). The data indicates
hiring incentives are offered by three of the 10 Tri-County agencies surveyed and three of the
eight comparison agencies. Of significance is that Grover Beach, Santa Maria, Santa Barbara,
and Santa Cruz all offer hiring incentives varying from $6,000 to $20,000 for lateral
(experienced) Police Officers.
Proposed Modifications to Recruitment and Hiring Incentive Program
In Spring 2018, the California International City/County Management Association (CalICMA)
published a report titled “Talent 2.0 A Modern Approach to Attracting and Retaining Top Talent
in Local Government” that identifies geographic challenges to recruitment including lower
salaries in rural areas, higher housing costs in urban areas, shortage of affordable childcare, long
commutes, and the challenges of dual-income households evaluating opportunities to relocate
that may result in a trailing spouse with limited career opportunities. One of the recommended
strategies for addressing these challenges is described as providing incentives that include
childcare subsidies, student loan repayments, signing bonuses, and housing assistance.
A more complete and renamed City of San Luis Obispo Relocation and Hiring Incentive
Program (Attachment F) has been created using the 2001 Council Agenda Report and Resolution
9216 as the basis. The updated Policy provides the following:
1. An updated program title that emphasizes the focus on relocation and hiring incentive.
2. Elimination of the housing assistance feature that was never developed.
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3. Expansion of eligibility to all classifications for which recruitments are conducted outside of
San Luis Obispo County based on specialized skill sets, certifications, or shortage of
qualified applicants, and where there is difficulty recruiting (as evidenced through
unsuccessful recruitments, general data regarding shortage of particular skills, high turnover,
etc.), subject to approval by the Human Resources Director.
4. Eligibility remains limited to those applicants who relocate more than 50 miles to within San
Luis Obispo County.
5. Continued ability to tailor the benefits to meet the needs of the applicant subject to identified
limits.
a. Retain current program dollar limits while broadening eligibility: up to $15,000 for
Department Head classification and up to $10,000 for any other approved classification.
b. Retain ability to modify program components (e.g. reimbursement for movement of
household goods, temporary housing, in-transit expenses, deposits, etc. and/or hiring
incentive) to meet applicant needs.
c. Hiring incentives of more than $5,000 must be split, with half paid upon hire and half
paid following eighteen months of work. Authorize the City Manager to advance up to
twelve days of sick leave upon hire as an incentive to recruit department heads. This
provision addresses a recurring challenge with recruiting experienced department heads
from other agencies that are concerned about starting employment with the City without
any accrued sick leave or vacation.
6. Update the Employee Referral Policy (Attachment G) to clarify eligibility and provide an
increased fee of $1,000 for the second and subsequent referrals by the same employee, in a
calendar year and include contract employees in the eligibility.
Policy Context
Recommendations are supported by the Compensation Philosophy that acknowledges the need
for well-qualified employees who exemplify the organizational values to provide the services
and programs the community requires. The proposed modifications will assist in the City’s
ability to effectively recruit and retain well-qualified employees.
Public Engagement
This item is on the agenda for the April 2, 2019 City Council meeting and will follow all
required postings and notification. The public may comment on this item at or before the
meeting.
CONCURRENCE
Human Resources prepared this report in response to a request from the Police Department for
assistance in developing effective means to attract and retain well qualified Police Officers.
ENVIRONMENTAL REVIEW
The California Environmental Quality Act does not apply to the recommended action in this
report, because the action does not constitute a “Project” under CEQA Guidelines Sec. 15278.
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FISCAL IMPACT
Fiscal Analysis:
Budgeted: No
Budget Year: Ongoing
Funding Identified: Yes -Department Specific Salary Savings
Funding
Sources
Total Budget
Available
Current Funding
Request
Remaining
Balance
Annual
Ongoing Cost
General Fund $0 $0 $0 $0
State
Federal
Fees
Other:
Total $0 $0 $0 $0
Staff does not anticipate a fiscal impact of updating the Relocation and Hiring Incentive Program
or the Employee Referral Fee Policy. Since their inception, the funding to support these policies
has been provided from salary savings from vacancies.
ALTERNATIVES
1. Do not approve the modifications to the Relocation and Hiring Incentive Program. Staff
does not recommend this alternative as it leaves, unaddressed, recruitment challenges for
many critical positions, not the least of which is Police Officer.
2. Broaden the Relocation and Hiring Incentive Program to include a limited list of
classifications that have evidenced difficulty in hiring, without opening it up to all
classifications. Staff does not recommend this alternative because it is difficult to predict
what classifications may be difficult to recruit in the future and the Human Resources
department is in the best position to aggregate and analyze relevant recruitment and retention
data.
Attachments:
a - Resolution Relocation and Hiring Incentive Final
b - Resolution 9216
c - 07172001, B 7 - RECRUITMENT AND HIRING INCENTIVE PROGRAM
d - Compensation Philosophy RESOLUTION NO. 10248
e - Lateral Incentive
f - Relocation and Hiring Incentive Program Final
g - New Employee Referral Fee Policy Track Changes
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RESOLUTION NO. (2019 Series)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA, ADOPTING THE RELOCATION AND HIRING
INCENTIVE PROGRAM AND EMPLOYEE REFERRAL PROGRAM, AND
SUPERSEDING ANY PRIOR RESOLUTIONS OR POLICIES IN
CONFLICT
WHEREAS, the City has a Compensation Philosophy adopted by Council in 2011 which
establishes competitive compensation as a part of an overall strategy of attracting and retaining well
qualified employees who exemplify organizational values;
WHEREAS, the City considers total compensation, including but not limited to salary,
health, retirement, and time off benefits, in evaluating competitive compensation;
WHEREAS, the City experiences difficulty in recruiting employees who possess the
specialized skills, abilities, and experience required for a wide variety of classifications
necessary to efficiently and effectively provide programs and services to the community;
WHEREAS, the City’s geographic location and distance from major metropolitan areas
impacts the qualified labor pool and results in the recruitment of employees who require
relocation from out of the area for management and non-management classifications requiring
specialized skills or when labor shortages occur; and;
WHEREAS, the City desires to expand the availability of low-cost tools to enhance the
likelihood of successful recruitment and retention of highly qualified employees for positions for
which the City has experienced recruitment and retention challenges;
NOW, THEREFORE, BE IT RESOLVED, by the Council of the City of San Luis Obispo as
follows:
SECTION 1. The Relocation and Hiring Incentive Policy attached hereto as Exhibit “A” is
hereby adopted.
SECTION 2. The Employee Referral Policy attached hereto as Exhibit “B” is hereby
amended as reflected in Exhibit B.
SECTION 3. All prior resolutions or policies governing those matters within the scope of
Exhibits A and B, as adopted and amended herein respectively, are hereby superseded and replaced.
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SECTION 4. The City Council delegates authority to the Human Resources Director to
make administrative updates to the Plan that do not have fiscal impacts.
Upon motion of ______________________, seconded by ________________________, and on the
following roll call vote:
AYES:
NOES:
ABSENT:
The foregoing resolution was adopted this 2nd day of April, 2019.
___________________________________
Mayor Heidi Harmon
ATTEST:
__________________________________
Teresa Purrington
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 ______________, _________.
______________________________
Teresa Purrington
City Clerk
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RESOLUTION NO. 9216 (2001 Series)
A RESOLUTION OF THE COUNCIL OF THE CITY OF SAN LUIS OBISPO
ESTABLISHING A RECRUITMENT AND HIRING INCENTIVE PROGRAM
WHEREAS, recruiting and hiring highly qualified employees is essential to maintaining
a productive and quality workforce; and
WHEREAS, traditional methods of recruitment are not proving effective in the current
economic environment; and
WHEREAS, cities in California are developing new and innovative approaches to
attracting qualified candidates that include incentives to assist with relocation expenses; and
WHEREAS, increases in the cost of housing throughout California and particularly in
coastal communities has outpaced the increase in wages; and
WHEREAS, housing costs are creating a barrier to those who might otherwise be willing
to relocate to San Luis Obispo to take a new job;
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis
Obispo as follows:.
SECTION 1. The City shall establish a Recruitment and Hiring Incentive Program.
SECTION 2. The Program shall include a mortgage assistance component that will
enable the City to offer home mortgages to new management and Department head employees.
The details of the mortgage assistance program will be developed by City staff and approved by
the City Council.
SECTION 3. Other program components shall include incentives not to exceed $10,000
for new management employees and $15,000 for new Department Head employees to assist with
relocation expenses such as temporary housing and moving costs. The City Administrative
Officer shall approve the use of these incentives on a case -by -case basis, uniquely tailored to the
needs of the individual employee at the time of hire.
SECTION 4. City employees shall be eligible for a referral fee of $500 if they refer an
applicant for a regular City position who is ultimately hired.
Upon motion of Vice Mayor Ewan, seconded by Council Member Marx, and on the
following roll call vote:
AYES: Council Members Marx, Mulholland, Schwartz, Vice Mayor Ewan and
Mayor Settle.
NOES: None
ABSENT: None
R9216
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Resolution No. 9216 (2001 Series)
Page 2
The foregoing resolution was adopted this 17`x' day of July 2001.
Mayor Allen
QT,TES
Lee Price, .Ci 'Clerk
APPROVED AS TO FORM:
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Mangy ahcouncil ll ' O
agcnaa Report
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CITY O F SAN LUIS O B I S P O
FROM: Ann Slate,Director of Human Resourcesav,
SUBJECT: Recruitment and Hiring Incentive Program
CAO RECOMMENDATIONS: Adopt a resolution establishing a Recruitment Incentive
and Hiring Program that provides home loan assistance, other incentives for new
employees and referral fees for City employees who refer successful candidates who are
ultimately hired for City employment.
REPORT IN BRIEF
Public employers in California are confronted with a recruitment crisis. It has become
exceedingly difficult to attract and recruit new employees,particularly in management positions.
In response to this challenge, cities are initiating a number of new strategies aimed at increasing
qualified applicants and providing incentives for accepting employment with their agencies.
Staff reviewed survey data from California cities that have implemented various recruitment
programs and recommend that the City Offer similar programs to our prospective employees.
Providing staff with a"toolbox"of recruitment incentives will result in attracting a larger
number of highly qualified applicants and in ensure that the City continue to hire the highest
caliber employee.
Staff is seeking conceptual approval of a housing assistance program that uses idle City funds to
provide home mortgages to new management employees who purchase a home in the City. In
addition, incentives that include reimbursement of moving and temporary housing expenses and
a signing bonus are recommended. Offering current City employees a referral fee for
encouraging a candidate to apply for a job who is ultimately hired is also a recommended
strategy.
Staff believes that these incentives can be made available within existing resources by using the
salary savings that occur when a position becomes vacant. Therefore,there is no need to
allocate a new appropriation for these programs.
DISCUSSION
Employers in California over the last few years have been experiencing difficulties in recruiting
new employees. The City of San Luis Obispo is no exception. Low unemployment,the high
cost of housing, and a shift in demographics that indicate fewer entries into the job market when
compared to those higher numbers retiring—these are among the factors contributing to the
recruitment problem. Recent City of San Luis Obispo management recruitments have been
filled primarily with promotions from within the City organization. The City has been fortunate
in having strong internal candidates. However, sometimes there are organizational benefits in
hiring from outside and internal candidates may not always be available in future recruitments.
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Council Agenda Report—Recruitment Incentives
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Therefore, it is necessary to develop a program of incentives that will enable the City to continue
to select the most highly qualified candidates for employment.
The job market for public employees has become quite competitive. Some may argue that our
current salaries and benefits,particularly in management positions, are not attractive enough to
draw candidates from the broader statewide or national labor market. When that factor is added
to the high cost of housing in the City and fewer opportunities for spousal employment than
more urban areas, in addition to the factors listed above,we can anticipate increased difficulties
in attracting candidates to apply for City positions.
In the coming months and in accordance with the current management compensation resolution,
staff will be analyzing our compensation program and coming back to the City Council with
recommendations that should better position the City in terms of comparable and competitive
management salaries and benefits. However,-there are steps that can be taken now to enable staff
to strengthen our ability to recruit. By equippinging staff with a"tool kit' of recruitment incentives
and offering housing assistance,we are confident that we will experience greater success in
attracting a larger number of qualified candidates for City positions which,in turn,will give the
appointing authorities a broader range of choices when selecting employees.
What are other cities doing?
Staff conducted a survey of other California cities to determine what is being done elsewhere and
what are being offered as recruitment incentives. In addition to our survey, the City Managers
Department of the League of California cities also conducted a housing assistance survey, since
housing assistance has become a more widely accepted benefit.
Housing Assistance
In the 59 cities that responded to the housing assistance surveys, a variety of programs are being
offered. The survey data indicated in those cities that responded over half have some sort of
housing assistance program. Generally,the housing assistance programs are used for two
purposes: for recruitment/retention of city employees and for meeting community
improvement/affordable housing goals through programs administered by Community
Development, Planning,Redevelopment or Housing Departments.
In those cases where city employees can qualify for community development housing programs,
they can be used as recruitment/retention incentives. Unfortunately,many of the community
development programs are based upon income and target low or moderate-income families. City
employees typically earn more than the allowable income for those programs, so their usage as
recruitment incentives is fairly low. Some of these programs are targeted at public safety
employees to encourage them to live within the city they serve and presumably shorten their
response times for returning to work for an emergency callback.
To the extent that housing funds, either state or federal, can be used for programs that can serve
the recruitment incentive goal,there is less pressure on a city's general fund to pay for these
kinds of benefits. However,using housing funds to benefit city employees and reducing the
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funding that is available to other city residents can be an unpopular concept. And at least in the
current financial plan, the City of San Luis Obispo does not have funds allocated for this purpose
as part of its affordable housing efforts.
Housing assistance programs that are designed for recruitment/retention purposes fall into 6
major categories with some overlap between these categories and the community development
affordable housing programs discussed above. They are:
1. Down payment assistance
2. Mortgage assistance
3. Personal Loans
4. Ownership of affordable housing units
5. Bridge loans
6. Equity sharing
Staff recommends that the City venture slowly into this arena, given economic uncertainties and
our lack of experience in using housing assistance as a recruitment tool. Therefore, of the six
categories listed above, staff recommends limiting our initial efforts to mortgage assistance.
The other programs, for a variety of reasons, ranging from fairly heavy administrative demands
to unfavorable risk factors, are not being advanced as part of a potential housing assistance
program at this time. Staff believes that we should"test the waters"with a narrowly defined
program at first, since we are unable to predict who might participate in a mortgage assistance
program. Taking a cautious approach is advisable until we get a better handle on what our
experience might be.
The City has provided past City Administrative Officers with a short-term(3 years) mortgage for
home purchase as part of the initial employment contract. These loans enabled the previous two
CAO's to purchase a home within the City limits, a Charter requirement for the CAO. Other
than that, the City has not ventured into the home loan/mortgage assistance arena.
The cities of Cupertino, Ventura, Sunnyvale, Inglewood, San Leandro, Redwood City and San
Mateo assist employees with purchase money loans for housing within their City limits. Their
programs are separate and apart from affordable housing programs and are used to enhance
recruitment efforts.
If the City Council is agreeable, conceptually,with the development of a housing assistance
program to strengthen our recruitment capabilities, staff recommends that the City develop a
housing assistance program with the kind of flexibility and safety that is found in the City of
Ventura's program.
Ventura's Housing Assistance Program
The City of Ventura offers mortgage loan assistance"in those cases where it is deemed to be in
the best interests of the City as an essential motivating force necessary to attract and recruit
qualified and competent employees" in certain management positions. Their program is for
executives,managers and supervisors only.
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The need for assistance is reviewed on a case-by-case basis and is not deemed available as an
absolute right. The terms of each relocation assistance plan is negotiated based on the
circumstances surrounding the appointment of an eligible employee. The City Manager
authorizes the loan with notification to the City Council. It applies to newly hired employees
who do not live within a reasonable commute distance to Ventura. The property must be a
detached single-family residence or a condominium and located within the city. Mobile homes
are not eligible.
The loan amount is capped at$350,000; the term of the loan is not to exceed 10 years. The
interest rate is no lower than the variable interest rate based on the City's current average annual
earnings rate in its idle funds investment portfolio and can not be adjusted more than three
percentage points from the initial rate over the term of the loan.
The employee is required to make a down payment equal to 5% or greater of the purchase price.
The loan assistance amount shall be repaid in monthly installments in an amount equivalent to
monthly interest charges or greater. The payments can either be made directly by the employee
or through payroll deduction. If payments are consistently late, the city reserves the right to
establish a payroll deduction for payments. A late fee of 5%of the monthly payment amount is
imposed if the payment is more than 15 days late.
The loan is immediately due and payable if the employee terminates employment with the city,
irrespective of whether the termination was prompted by the employee or the city.
The employee must obtain a title report, which endorses the city as a beneficiary of the title
insurance policy, and the employee is required to obtain fire insurance extended coverage based
upon the replacement value of the residence. The loan is secured by a first deed of trust or other
form of security acceptable to the City Manager. At the end of 10 years the loan must be paid in
full. No extensions are allowed.
According to the Ventura Human Resources Director, after several years, most participants
refinance when the commercial interest rates are more favorable. This is due to the uncertainty
of what the City's interest rate could be at the end of the 10 years when the employee will be
required to pay off the City loan or refinance their resident at whatever the going interest rate is
at that time. Currently there are about 6 employees in the program.
Ventura is continually reviewing and strengthening their program. At one point Ventura staff
became concerned because the City had allowed employees to take out the maximum loan
350,000) and an analysis revealed that several of the employees' earnings would not support
the monthly payments if they had to repay it at the going commercial interest rate.
Based upon that discovery, Ventura now does a credit check prior to talking to the employee(if
they have indicated an interest in the program). They roll the information into a spreadsheet that
determines the amount the employee could repay based on their projected income and amount of
their current debt. Then the City determines the amount they are willing to loan. In the past the
only limit was the$350,000 cap.
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Ventura's program strikes a balances between the interests of the City in recruiting quality
employees and establishing appropriate safeguards when loaning City funds and those of the
employee in providing him/her with an attractive home loan that is better than what they might
be able to get in the marketplace. Staff believes that a similar program in San Luis Obispo
would be extremely helpful in assisting new managers relocate to our community to accept a
position with the City. If the Council is supportive of developing such a program, staff
recommends that the staff be authorized to draft a program and return to the City Council with
the specifics. Staff envisions a program where the CAO has the flexibility within specific
guidelines to tailor housing assistance to the needs of the prospective employee while protecting
the City's financial interest consistent with existing fiscal policies.
Recruitment Incentives
In an effort to assist with the recruitment and retention of employees in particularly hard to fill
positions, e.g. information systems and engineering positions, the City recently began offering
incentives. For the information systems positions,the City now offers special skills pay and for
engineering positions,we implemented a career ladder that offers employees room for
advancement as they acquire needed certification and experience. It also enables us to advertise
engineering vacancies with a wider range of pay and qualifications. So far, our experience with
these strategies has been quite positive:
Staff is recommending that the program of providing incentives be further developed. By
establishing a"tool kit"of incentives, when negotiating the initial employment details with new
employees City staff can offer one or more of these incentives. Such things as reimbursing
actual moving expenses,providing some level of temporary housing payments and signing
bonuses— these are the kinds of things that employers both private and public are offering as
recruitment incentives.
A Limited Program
Staff is recommending that the expansion of recruitment incentives be limited to management
and Department head positions initially. Because we generally recruit management employees
from outside this area, relocation costs are more often a factor in management recruitments. We
recruit locally for the majority of our non-management employees so there are fewer relocation
issues associated with those positions. And, for the hard to fill non-management positions, we
have already taken steps to assist in recruitment, as described above.
Although many of our police officers and firefighters are not recruited locally, staff believes
restricting incentives to management employees is advisable,particularly since we have no
problems recruiting firefighters. By having a more narrowly defined program initially we would
avoid meet and confer obligations that we would have in trying to implement a program for our
represented employees who have expressed the legitimate concern that recruitment incentives
only benefit new employees and are not available to `veteran"employees. If, after gaining some
experience with the incentive program,we decide to expand it to non-management recruitments
we may want to consider the benefits of a retention component that would benefit longer-term
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employees. Therefore, again,with an eye to caution and starting slowly,we recommend offering
recruitment incentives to management employees initially.
Individualizing the Benefit
Because each individual applicant will have different needs and responding to those needs in as
flexible a manner as possible will be a better benefit, staff recommends that the City Council
authorize up to $10,000 in incentives per management employee and $15,000 in incentives per
Department Head being recruited. For example, a management employee could receive$ 4,500
in reimbursement for moving expenses, $3,000 in temporary housing(e.g. 2-3 months rent) and
2,500 as a signing bonus. Compared to many private sector recruitment programs, these
incentive levels are modest.
It is important to note, also, that the cost of contracting with an executive search firm to conduct
a management or department head recruitment runs from$20,000 to $35,000 depending on the
position and the scope of work. Although the City of San Luis Obispo does not use
headhunters"regularly, (i.e. 3 times in the last 12 %years)the recommended levels of
incentives are significantly lower than the costs associated with using executive recruiters.
Should a new management employee receive those amounts, they would agree to stay with the
City at least three years,unless the employee failed probation or the City decided to terminate
the employment relationship. Failure to honor the commitment to stay would require the
employee to return 50%of the incentives to the City should they decide to leave during the
initial three year period.
Because our intent is to tailor the incentives to the individual's needs,we would advertise
generally that we offer a variety of relocation assistance benefits. By not overly focusing on
those benefits and not presenting them as an absolute right, we will be able to maintain the most
flexibility and, hopefully, avoid recruiting applicants who are more attracted by the benefits than
by what employment with the City otherwise offers in terns of public service and career
advancement.
Staff in the Human Resources(HR)Department, as part of the current employment process,
makes the initialjob offer and negotiates the starting salary. With an expanded recruitment
incentive program, HR staff would explore with final candidates their relocation needs and
negotiate the various incentives based upon the individual's needs within the predetermined
parameters. The CAO would have the final authority to approve the incentives. Again, the
incentives are not an absolute right and would be based upon the City's interests first..
Referral Bonus
Because employees that are already a part of the City organization can be some of our most
effective"recruiters"staff is recommending that we offer our employees a referral bonus.
Survey results indicated that such programs are being offered in the cities of Fremont and
Fountain Valley. Fremont pays a$500 referral fee to an employee who refers a candidate at the
time of hire and another$500 when the referred employee passes probation.
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All employees have a circle of contacts that are potential job applicants--their neighbors,
colleagues, and members of their church,the parents of their children's friends. If employees are
motivated and rewarded to encourage their contacts to apply for City jobs,particularly local
contacts because that may eliminate the relocation issues associated with a new hire, the City's
applicant pools should improve.
Last year the City conducted 32 recruitments for regular, full-time positions. The first six
months of this year have yielded 24 recruitments, so we are experiencing a significant increase in
recruitments. Last fiscal year,HR spent $94,000 on recruitment related activities and supplies,
e.g. advertising,printing,oral board expenses. This was up from$66,700 the previous year.
Staff is proposing that when a current employee refers a prospective candidate to apply for a City
position and that individual is ultimately hired, the employee would receive a referral fee of
500. This would apply to referrals for regular positions only,not temporary positions.
Appointing authorities and temporary employees would not be eligible.
It will encourage employees to recruit others for City positions and to become ambassadors for
city employment. Who better can speak first hand about the benefits of City employment and
working in a desirable community? Because all employees have.a stake in creating a positive
and well-qualified workforce, the referral bonus should be extended to all regular City
employees in all classifications. If this concept is approved by the City Council, staff will then
work with the various bargaining units to develop an acceptable program.
Again, as in the other options described above for recruitment incentives, it is difficult to
estimate the exact cost of a referral bonus program. To the extent that an employee refers a
successful candidate to the City and we avoid having to re-recruit or advertise as extensively as
we would otherwise have to, the recruitment cost savings will offset the costs of a referral fee.
For example, a one-time ad in the LA Times of simply three lines and a reference to our on-line
application system costs almost$500.
SammaKy
The City is having difficulties filling our regular positions. Over the past few years,we have
implemented a number of enhancements to our process, (e.g. on-line applications,job hot-line,
and increased advertising including the internet). We have created special skills pay and career
ladders for hard-to-fill classifications in information systems and engineering. We have had
success with those activities. However, our management recruitments are yielding fewer and
fewer qualified applicants. Staff is recommending that the City take some additional steps to
enable us to continue to attract the most highly qualified job applicants. These steps include: the
development of a mortgage assistance program to attract and recruit management and department
head employees, the development of additional recruitment incentives to assist with relocation
expenses and a referral fee program for City employees who refer an applicant who is ultimately
hired by the City. Staff believes that by utilizing these new recruitment tools we should have
greater success in attracting and recruiting the most highly qualified and motivated employees to
our organization.
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FISCAL IMPACT
Mortgage Assistance
Because the mortgage assistance program will rely on the use of idle City funds for employee
mortgages, there is no need to make a new appropriation of funds to cover this program. It will
require the Finance Department to recharacterize funds that are currently in the City's investment
portfolio as relatively liquid"cash" assets to those of a longer-term asset with a yield that should
be comparable to what the City would expect from investments held in the State of California
Local Agency Investment Fund(LAIF). Staff will be returning to the Council with specifics of
the housing assistance program that will include more details on rates, terms and loan
administration. The program will notjeopardize the City's financial standing or weaken the
City's financial position. City funds invested in a housing assistance program will not earn less
than what the funds would normally earn if they continued to be invested in LAIF(currently at
5.98%) and the loss of liquidity can be taken into consideration when determining a mortgage
loan rate.
Recruitment Incentives
Staff is not requesting a new appropriation for this program either. There are existing resources
available to cover the incentives primarily through salary savings. Since we normally experience
some salary savings when positions are vacant while we recruit for replacement,we anticipate
there will be adequate funds to pay for incentives. Should additional funding be required, staff
will return to the City Council with a request for a new appropriation.
Referral Fee
Based on the recruitment activity to date,we anticipate 50 recruitments for the coming fiscal
year. Fremont, approximately three times the size of San Luis Obispo,has had a referral system
in place for all City employees since October of 2000. They have paid approximately 12 to 16
referral fees since the system's inception. If San Luis Obispo has a similar experience we can
anticipate 4 to 5 referrals in the coming year for a total of$2,500. Again, it is our belief that
salary savings will be able to cover the referral fee, particularly since salary savings from non-
management vacancies where recruitment incentives will not be available can be used to offset
the cost. Again, as stated above, if existing resources prove inadequate, staff will return with a
request for additional funding. If at that time,the costs are unacceptable to the Council, any of
the programs defined above can be discontinued or scaled back based upon our actual
experience.
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ALTERNATIVES
1. The City Council can take a more cautious approach by approving only one or more of
the described programs. Staff believes that for the recruitment tools to be truly effective
they need to be implemented as part of a comprehensive strategy. Taking tiny"baby
steps"at this time will prove less effective in attracting qualified candidates as the
recruitment challenge continues to confront us.
2. No nothing. Staff believes that if we simply maintain the status quo we will become even
less effective in filling our management vacancies. With the anticipated retirements and
normal turnover,the City will be seeing many vacancies in key positions over the next
couple of years. While management positions are vacant, important City objectives are
not being met and remaining staff has to carry the additional burden of increased
workloads. Ultimately,productivity, accuracy and quality of service will suffer.
ATTACHMENTS
Resolution
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RESOLUTION NO. 2001 Series)
A RESOLUTION OF THE COUNCIL OF THE CITY OF SAN LUIS OBISPO
ESTABLISHING A RECRUITMENT AND HIRING INCENTIVE PROGRAM
WHEREAS, recruiting and hiring highly qualified employees is essential to maintaining
a productive and quality workforce; and
WHEREAS, traditional methods of recruitment are not proving effective in the current
economic environment; and
WHEREAS, cities in California are developing new and innovative approaches to
attracting qualified candidates that include incentives to assist with relocation expenses; and
WHEREAS, increases in the cost of housing throughout California and particularly in
coastal communities has outpaced the increase in wages; and
WHEREAS, housing costs are creating a barrier to those who might otherwise be willing
to relocate to San Luis Obispo to take a new job;
BE IT RESOLVED by the Council of the City of San Luis Obispo as follows:
SECTION 1. The City shall establish a Recruitment and Hiring Incentive Program.
SECTION 2. The Program shall include a mortgage assistance component that will
enable the City to offer home mortgages to new management and Department head employees.
The details of the mortgage assistance program will be developed by City staff and approved by
the City Council.
SECTION 3. Other program components shall include incentives not to exceed $10,000
for new management employees and $15,000 for new Department Head employees to assist with
relocation expenses such as temporary housing, moving costs and signing bonuses. The City
Administrative Officer shall approve the use of these incentives on a case by case basis, uniquely
tailored to the needs of the individual employee at the time of hire.
SECTION 4. City employees shall be eligible for a referral fee of$500 if they refer an
applicant for a regular City position who is ultimately hired.
Upon motion of seconded by
and on the following roll call vote:
AYES:
NOES:
ABSENT:
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Resolution No. 2001 Series)
Page 2
the foregoing resolution was adopted this day of 92001.
Mayor Allen Settle
ATTEST:
Lee Price, City Clerk
APPROVED AS TO FORM:
PYA.Jo Ci Attorney
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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
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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 :
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Lateral Police Officer Recruitment Incentive Survey, March to November 2018Tri‐CountiesAgency Nameyes/noDetailsVentura County Sheriff's OfficeNoSanta Barbara Police Department Yes $12,000 ($3k after 6 weeks of FTO Time, $3K after completion of probation, $6K after 3rd year with the department)San Luis Obispo County Sheriff's Office NoSanta Barbara County Sheriff's Office NoSanta Maria PD Yes $6000 which is paid on first paycheckPismo PD NoMorro Bay PD NoAtascadero PD NoPaso PD NoGrover Beach PD Yes $6000 ($3000 on first paycheck, $3000 after completion of probation)POA Comp CitiesGilroy PDNoMonterey PDNoNapa PDNoPetualuna PDno Bringing people in at top step or higher stepSalinas PDemail sent outSanta Barbara PDYes $12,000 ($3k after 6 weeks of FTO Time, $3K after completion of probation, $6K after 3rd year with the department)Santa Cruz PDYes $20,000 paid in 3 increments (signing, FTO, Probation), $10,000 to academy gradsSanta Maria PDYes $6000 which is paid on first paycheckStatewideNapa County SOYes $5,000 signing BonusBeverly Hills PDYes 10% of base pay (signing bonus)Palo AltoYes $25,000La Habra PDYes $10,000 ($5K at time of hire and $5k after finishing probation)Santa Rosa PDNo Puts Laterals at top or higher step as incentiveSF BART Policeyes $10,000 ($5K at time of hire and $5k after finishing probation)Modesto PDYes $15,000Redding PDYes $5,000 signing BonusPalm Springs PDYes $10,000 hiring bonusPacket Pg. 69Item 7
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RELOCATION AND HIRING INCENTIVE PROGRAM
PURPOSE
The purpose is to establish guidelines and procedures for the eligibility, approval, and
processing of relocation and referral incentives for employees. The Relocation and Hiring
Incentive Program is designed to support the City’s Compensation Philosophy that seeks to
attract and retain well-qualified employees who exemplify the organizational values. This
program aims at easing the burden for those candidates who accept employment with the City
from out of the area and therefore face a professional and personal transition due to the need to
relocate.
POLICY
It is the policy of the City of San Luis Obispo to recruit well-qualified employees who exemplify
the City’s organizational values.
The City will reimburse relocation costs that are directly related to an employee’s relocation of
50 or more miles to San Luis Obispo County.
ELIGIBILITY REQUIREMENTS
To be eligible for the relocation incentive the applicant must:
1. Accept employment with the City of San Luis Obispo, and;
2. Relocate his/her home to San Luis Obispo County, and;
3. Relocate 50 miles or more, and;
4. Fill a regular full-time position that is deemed difficult to fill by the Human Resources
Director.
RELOCATION BENEFITS
1. Department Head positions. Total relocation benefits up to $15,000 (subject to
applicable taxes).
a. Sick leave advance. City Manager may authorize a one-time advance of up to
twelve days of sick leave upon hire of a new Department Head to alleviate
concerns about loss of accrued sick leave with a prior employer.
2. All other positions. Total relocation benefits up to $10,000 (subject to applicable
taxes).
ELIGIBLE EXPENSES
Eligible expenses are those incurred in the movement and relocation of a personal residence
meeting the eligibility requirements outlined above including the following:
1. Movement of household goods. The costs associated with packing, loading,
transporting, and unloading personal household goods.
2. In-transit expenses. Gas, food, lodging during the actual move from the employee’s
home at time of hire to his/her new temporary or permanent home in San Luis Obispo
County.
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3. Temporary living expenses. Hotel or motel, or other temporary lodging such as Airbnb
or short-term rentals, necessary to allow the employee to start work.
4. First month rent and/or deposits. Costs associated with securing a residence in San
Luis Obispo County such as the first month rent and security deposits for the new
residence and costs associated with terminating a lease or rental agreement.
5. Closing costs. Costs associated with the sale of the employee’s primary residence or
purchase of a home in San Luis Obispo County.
6. Hiring Incentive. A lump-sum payment to provide an incentive to a new employee to
accept employment with the City. Depending on the amount of the incentive it may be
split to encourage retention as well.
a. If the hiring incentive is more than $5,000, then half of it will be granted on the
employee’s first paycheck and the other half will occur on the paycheck following
eighteen months of work and successful completion of probation.
7. Other eligible expenses as defined by the Internal Revenue Service (IRS) in Publication
521, Moving Expenses.
CONTINUED SERVICE REQUIREMENT
Failure to continue in the City service for three years, due to voluntary resignation, will result in
the need to repay a proportional amount, of the relocation and hiring incentive. For example, an
employee who receives a $4,000 sign-on bonus and is reimbursed $5,000 in moving expenses,
and resigns after 24 months with the City, will be responsible for repaying the City $3,000
($9,000 total incentive divided by 36 months times remaining months to fulfill three-year
commitment). The employee agrees that the Finance Department is authorized to make a
deduction from the employee’s final payroll check for the appropriate amount of relocation and
hiring incentive to be repaid. Employees who are terminated or released from probation are not
required to repay the relocation benefits or hiring incentive.
PROCEDURES
All authorized benefits described above will be fully documented in a new employee offer letter
and the employee will sign acknowledging the benefits, potential tax consequences, and
repayment requirements prior to starting work for the City.
It is the employee’s responsibility to research and communicate with their personal tax advisor
what expenses to submit for reimbursement. Once determined, the employee shall submit a
completed Moving Expense Request Form with original receipts to his/her Department Head for
approval. The Department Head will forward the form indicating approval to Payroll or
disapproval to the Director of Human Resources, within five working days.
When Payroll receives an approved Moving Expense Request Form it will be documented
whether each item is taxable or non-taxable. Payroll will provide a copy of the Moving Expense
Request Form, once completed and processed, to the employee.
When the Department Head and the Director of Human Resources does not approve a
submitted expense, an appeal may be made to the City Manager for a final decision.
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City of San Luis Obispo
New Employee Referral Policy
I. POLICY
It is the policy of San Luis Obispo to actively recruit and employ well-qualified candidates
for all classifications for regular employment with the City of San Luis Obispo.
II. PURPOSE
To establish guidelines for a new employee referral program designed to reward City
employees who recruit candidates that are hired for regular and long term contract positions,
with an anticipated need of one or more years, with the City of San Luis Obispo.
III. PROCEDURE
A. Definitions
City employee – an employee of the City of San Luis Obispo who is employed in a
regular full or part-time position or a contract position with an anticipated need of one or
more years.
New employee – an applicant referred by an existing employee to apply for a regular or
long term contract position with the City and is hired.
B. Employee Referral Fee
The City will pay $500 to any employee who recruits a candidate for City of San Luis
Obispo employment in a regular or contract position who is ultimately hired for the
position.
C. Exclusions
1. In order to avoid a conflict of interest, the following exclusions apply:
a. Appointed Officials and Department Heads.
b. Appointing authorities or supervisors who participate in the hiring
decision are excluded from receiving a referral fee when referring
applicants to the position for which they are recruiting.
c. The Administrative Sergeant and Lieutenant in the Police
Department or any officer who participates in background
investigations are excluded from receiving a referral fee for positions
in the Police Department.
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d. Members of a departmental recruitment team are excluded from
receiving a referral fee for positions they are responsible for
recruiting.
e. Human Resources Department employees directly assigned to
recruiting.
2. Referring a current City employee, including temporary and contract
employees, to a regular position will not result in a referral fee.
D. Referral Fee
After the effective date of hire for the new employee, the referring employee shall receive
$500. Payments will be processed as a separate check and will reported as taxable
income. The fee is not reportable to PERS.
E. Referral Fee Application Submittal and Deadline
1. Applications for the referral fee are available online on SharePoint:
https://slocitycloud.sharepoint.com/:w:/s/SLOHub/EmpResources/Policies
/EbVkJivDgXlPhYI0HkqCUV0BzdlH4nfJG22nPUOF87sqcA?e=gcptg9
2. Applications for the referral fee must be submitted no later than one week
(five business days) after the new employee’s hire date. It is the
responsibility of the employee to ensure that the application for the
referral fee is submitted by the deadline. Referral fee applications will be
submitted to the Human Resources Department, which is charged with
administering the program.
3. The Human Resources Department will track each application submitted
by employees.
F. Application Certification
The new employee will be contacted by Human Resources to certify that their
employment application is valid and that a City of San Luis Obispo employee
recruited them.
In the event that more than one employee indicates he/she referred the same new
employee; the Human Resources Director shall determine to whom the referral
fee shall be paid based on the applicant’s indication of which employee actively
recruited him/her.
Prior to approving the Referral Fee Application, Human Resources staff will
ensure none of the exclusions above apply.
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G. Multiple Referrals in the Same Calendar Year
In an effort to encourage employees to actively engage in the recruitment process,
the second and subsequent approved referrals made by an employee in one
calendar year will be paid at the amount of $1,000 less applicable taxes. All other
sections of this policy apply as described above.
H. Dispute Resolution
Any disputes arising from this policy may be appealed to the City Manager whose
decision shall be final.
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