SR - RES-10772 - AMEMENDMENT MEMORANDUM OF UNDERSTANDING RELATING TO HOLIDAY PAYAGENDA ITEM
9�.
a March 11, 2014 Meeting
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TO: Honorable Mayor and
Members of the City C
THRU: John Sibley,
City Manager
FROM: Steven V. Pham, Human
Resources/ Employee Re
Director
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ReviewedNer' ed By:
City Manager.
Finance Dire o
To Be Presente y:
ns Calendar _
City Mgr Rpts
Council Reports _
Legal Affairs
Boards /Cmtes _
Public Hrgs
Admin Reports
Plan/Environ
1. SUBJECT
Resolution No. 10772 - A Resolution of the City Council of the City of Orange Amending
the Memorandum of Understanding Between the City of Orange and the Orange City
Firefighters, Inc. Local 2384 of the International Association of Fire Fighters, AFL -CIO
Relating to Holiday Pay and Holiday Pay in Lieu of Time Off.
2. SUMMARY
Resolution No. 10772 amends the Memorandum of Understanding between the City of Orange
and the Orange City Fire Fighters to ensure that `holiday pay in lieu of time off will continue to
be reported to Ca1PERS in the same fashion that the affected employee would have received had
he /she taken the holiday off with pay. Additional details are provided under Section 7,
"Discussion and Background" below.
3. RECOMMENDATION
Approve Resolution No. 10772.
4. FISCAL IMPACT
This is an MOU language change only; there is no additional cost since the City has paid and
continues to pay and report this form of compensation to Ca1PERS as pension reportable.
5. STRATEGIC PLAN GOAL(S)
1. Provide for a safe community
2. Be a fiscally healthy community
3. Provide outstanding public service
G. GENERAL PLAN IMPLEMENTATION
N/A
ITEM PAGE 03/11/2014
7. DISCUSSION and BACKGROUND
On August 19, 2013, CalPERS notified the City's Payroll Manager that a certain form of
compensation was not going to be included as part of an employee's pension calculation. This
was discovered as part of the retirement application process that several recently sworn fire
personnel encountered with CalPERS. CalPERS is questioning the City's practice of reporting
the premium pays that are included above base salary for holiday pay as "special compensation"
and therefore becoming included as "PERS- reportable" for retirement purposes.
The City pays to employees and reports to PERS as compensation the dollar amount of holiday
pay whenever a fire employee works on a holiday or converts his unused holiday time to
compensation. In doing so the City uses an hourly pay rate that includes base pay and premiums
such as Paramedic Bonus and Educational Incentive. However, these premiums are no longer
being accepted by CalPERS as "special compensation" (i.e., "PERS- able ") when taken as
`holiday pay in lieu of time off because they are not defined as part of holiday pay in the MOU.
It should be noted that the City has been following the same practice of how it pays and reports
the value of holiday pay including holiday pay in lieu of time off since at least 1986, and this
practice has never been identified as a problem during past CalPERS audits. This practice is also
commonly followed in many local agencies throughout the state.
The City, through its Chief Negotiator, and the Fire Union have recently agreed to amend the
existing Memorandum of Understanding (MOU) with the Fire Union (Local 2384). This
amendment will reflect that `holiday pay in lieu of time off is being calculated in a manner that
is designed to provide each affected employee the exact same compensation he /she would have
received had he /she taken the day off on a holiday with full pay. If approved, the attached
contract amendment specifies that holiday pay, including holiday pay in lieu of time off, would
continue to be calculated and paid based upon the individual's base salary plus all attendant
forms of special compensation.
City staff has contacted and received approval from the legal staff at CalPERS that the language
agreed to by both the City and the Fire Union, as incorporated in the attached Resolution, would
be acceptable to CalPERS.
7. ATTACHMENTS
• Resolution 10772
RESOLUTION NO. 10772
A RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF ORANGE AMENDING THE
MEMORANDUM OF UNDERSTANDING BETWEEN
THE CITY OF ORANGE AND THE ORANGE CITY
FIREFIGHTERS, LOCAL 2384 OF THE
INTERNATIONAL ASSOCIATION OF FIRE
FIGHTERS, AFL -CIO RELATING TO HOLIDAY
PAY AND HOLIDAY PAY IN LIEU OF TIME OFF
WHEREAS, there presently is in full force and effect a labor contract (i.e.,
"Memorandum of Understanding" or "MOU ") between the City of Orange, hereinafter
referred to as "City," and the Orange City Firefighters, Inc., Local 2384, International
Association of Firefighters, AFL -CIO, hereinafter referred to as the "Fire Union," that
sets forth wages, hours, and other terms and conditions of employment of employees
represented by the Fire Union for the period between July 1, 2012 and June 30, 2015; and
WHEREAS, Article IX, Section 9.2 provides that fire suppression personnel
shall be entitled to receive "holiday pay in lieu of holiday time off ...pursuant to policies
established by the Fire Department and the Fire Union "; and
WHEREAS, for the past several years, through and including the present time,
this holiday pay in lieu of time off (holiday pay) has been compensated at the same rate
and in the same amount an employee would have received had he /she taken the day off as
a paid holiday, which compensation included the individual's base salary plus all
attendant forms of premium pay or other additional cash compensation entitled the
employee in return for services rendered; and
WHEREAS, at all such times, the City reported to CAPERS as compensation
earnable this holiday pay, as calculated above, in accordance with Section 20636(c)(6) of
the California Government Code and Section 571(a)(5) of the Regulations promulgated
by CalPERS; and
WHEREAS, in August 2013, Ca1PERS notified the City that it was only treating
the portion of the holiday pay calculated based upon the individual's base pay as
compensation earnable; and
WHEREAS, CAPERS informed City staff that a viable option to remedy the
situation would be for the City to amend the applicable MOU "to include the details on
what is used in the calculations of the holiday pay "; and
WHEREAS, the parties desire to satisfy the concerns of Ca1PERS in the manner
described above in the previous paragraph so as to cause the entire holiday pay to
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