HomeMy WebLinkAboutRESO7294RESOLUTION NO. 7294
RESOLUTION OF THE COUNCIL OF THE CITY OF PALO
ALTO ADOPTING AN AMENDMENT TO THE CITY OF PALO
ALTO FLEXIBLE BENEFITS PLAN
WHEREAS, the City of Palo Alto (the "City") maintains the
City of Palo Alto Flexible Benefits Plan (the "Plan") which is
intended to qualify as a Cafeteria Plan under section 125 of the
Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, the City Council wishes to adopt certain
technical amendments to the Plan, as hereinafter set forth, in
conformance with amendments to the Code and regulations promulgated
pursuant thereto, effective January 3, 1993; and
WHEREAS, the City is permitted to amend the Plan pursuant
to Section 6.1 of the Plan.
NOW, THEREFORE, the Council of the City of Palo Alto does
RESOLVE as follows:
SECTION 1. The City Council hereby approves the
amendment of the Plan by adoption of that certain document entitled
"City of Palo Alto Flexible Benefits Plan --Amended and Restated
Effective January 1, 1993," a copy of which is attached hereto and
incorporated herein by reference.
SECTION 2. The Council finds that this is not a project
under the California Environmental Quality Act.
INTRODUCED AND PASSED: Marcn 21, 1994
.AYES: ANDERSEN, FAZZINO, HUBER, KNISS, MCCOWN, ROSENBAUM, WHEELER
NOES:
ABSENT: SCHNEIDER, SIMTTIAN
AbSTENTIONS:
ATTEST:'' APPROVED:
City' Clerk i
APPROVED AS TO FORM:
�� .C—o,-Lsz
genior Asst. City Attorney
i
y Manag
D r tor o Finance
Di'ect• of Human Resources
940131 lac 0030569
CITY OF PALO ALTO
FLEXIBLE BENEFITS PLAN
Amended and Restated Effective January 1, 1993
.ta
October 4 1440
CITY OF PALO ALTO FLEXIBLE BENEFITS PLAN
Amended and Restated Effective January 1, 1993
TABLE OF CONTENTS
Page
ARTICLE I INTRODUCTION
ARTICLE II DEFINITIONS 1
2.1 Benefit Plans 1
2.2 City 1
2.3 City Council 1
2.4 Code 1
2.5 Dependent Care Plan 2
2.6 Effective Date 2
2.7 Eligible Employee 2
2.8 Employee 2
2.9 Employee Contribution 2
2.10 Enrollment Form 2
2.11 Highly Compensated Individual 2
2.12 Highly Compensated Participant 2
2.13 Key Employee 2
2:14 Open Enrollment Period 3
2.15 Participant 3
2.16 Plan 3
2.17 Plan Administrator 3
2.18 Plan Year 3
ARTICLE III ELIGIBILITY AND PARTICIPATION 3
3.1 Commencement of Participation 3
3.2 Termination of Participation 4
3.3 Reinstatement of Former Participant 4
3.4 Reinstatement of Suspended Participant 5
3.5 Discrirnination Limitations 6
ARTICLE IV BENEFITS 7
4.1 Benefit Plans `7
4.2 Benefit Plan Selection 7
4.3 Description. of Benefits Other Than Cash 7
ARTICLE V ENROLLMENT 8
5.1 Enrollment of Newly Eligible Employees 8
5.2 Open Enrollment Period 8
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Cksoler 4.1993
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5.3 Failure to Elect 9
5.4 Irrevocability of Election by the Participant During the Plan Year 9
5.5 Forfeiture of Unused Benefits 10
ARTICLE VI CONTRIBUTIONS 10
6.1 Employee Contribution 10
6.2 Allocation of Contributions 10
ARTICLE VII ADMINISTRATION OF PLAN 11
7.1 Plan Administrator 11
7.2 Examination of Records 12
7.3 Indemnification of Plan Administrator 12
ARTICLE VIII BENEFIT CLAIMS PROCEDURE 12
ARTICLE IX AMENDMENT OR TERMINATION OF PLAN 12
9.1 Amendment or Termination of Plan 12
9.2 Authority of Plan Administrator 13
ARTICLE X MISCELLANEOUS PROVISIONS 13
10.1 Exclusive Benefit 13
10.2 Information To Be Furnished 13
10.3 Limitation of Rights 13
10.4 Benefits Solely From General Assets 14
10.5 Nonassignability of Rights 14
10.6 Gender and Number 15
10.7 Titles 15
10.8 Governing Law 15
10.9 Severability 15
?A4447.W
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CITY OF PALO ALTO
FLEXIBLE BENEFITS PLAN
Amended and Restated Effective January 1, 1993
ARTICLE I
INTRODUCTION
The City of Palo Alto Flexible Benefits Plan, originally effective July 30, 1988 and
amended and restated as set forth herein effective January 1, 1993, is maintained by the
City of Palo Alto for the purpose of providing Eligible Employees with a choice between
cash and the opportunity to pay for dependent care expenses and such other benefits
under the various Benefit Plans as may from time to time be offered under the Plan with
pre-tax dollars. The Plan is intended to qualify as a cafeteria plan under section 125 of
the Code, and is to be interpreted in a manner consistent with section 125 of the Code.
ARTICLE II
DEFIN11iONS
2.1 "Benefit Plans" means all benefit plans available for elec.:ion by a
Participant as described in more detail in Section 4.1.
2.2 "City" means the City of Palo Alto.
2.3 "City Council" means the governing legislative body of the City, as
constituted from time to time.
2.4 "Code" means the Internal Revenue Code of 1986, and the regulations and
rulings issued pursuant thereto, all as in effect and amended from time to time.
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2.5 "Dependent Care Plan" means the City of Palo Alto Dependent Care
Assistance Plan, as amended from time to time, the terms of which shall be incorporated
into the Plan by reference.
2.6 "Effective Date" of the amended and restated Plan means January 1, 1993.
2.7 "Eligible Employee" means each Employee who is eligible to participate in
any Benefit Plan maintained by the City and whose participation is provided for in an
applicable Memorandum of Understanding or Compensation Plan.
2.8 "Employee" means a person who receives remuneration for rendering
services to the City, any portion of whose income is subject to withholding of income tax
and/or employment tax by the City, as well as any other person qualifying as a common
law employee of the City.
2.9 "Employee Contribution" means the contribution which a Participant elects
to make as a reduction in compensation to pay for benefits under one or more Benefit
Plans he or she has chosen under the Plan, as set forth in Section 6.1. Employee
Contributions are made on a pre-tax basis by payroll deduction.
2.10 "Enrollment Form" means the form which an Employee shall complete in
order to select the Benefit Plans offered under the Plan.
2.11 "Highly Compensated Individual" means any Employee who is a highly
compensated individual as defined in section 125(e)(2) of the Code.
2.12 'Highly Compensated Participant" means a Participant who is a highly
compensated Participant as defined in section 125(e)(1) of the Code.
2.13 "Key Employee" means any person who is a key employee as defined in
section 416(i)(1) of the Code.
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2.14 "Open Enrollment Period" means the period selected by the Plan
Administrator during which Eligible Employees may elect benefits for the following Plan
Year.
2.15 'Participant" means an Eligible Employee who becomes a Participant in the
Plan pursuant to the terms of Article III.
2.16 "Plan" means the City of Palo Alto Flexible Benefits Plan as set forth
herein, together with any and all amendments thereto.
2.17 "Plan Administrator" means the committee or individual appointed by the
City from time to time to administer the Plan.
2.18 "Plan Year means a 12 -month period ending with the last pay period of
the calendar year.
ARTICLE III
ELIGIBILITY AND PARTICIPATION
3.1 Commencement Participation. Each Eligible Employee may participate
in the Plan subject to his or her election made pursuant to the provisions of Article V.
3.2 Termination of Participation.
(a) A Participant will cease to be a Participant in the Plan as of the
earliest of (1) the date on which the Plan terminates, (2) the date on which the
Participant ceases to be an Eligible Employee and has $0 credited to his or her account
under the Plan, or (3) the date on which the Participant's benefit election pursuant to
Article V expires or terminates in accordance with Article V. However, benefits under
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the Benefit Plans elected when participation ceases shall continue to the extent specified
;it such Benefit Plans.
(b) A Participant's election to receive benefits under a given Benefit
Plan and corresponding salary reduction authorization to pay for benefits under that
Benefit Plan shall automatically :ease either when the Participant is no longer eligible for
coverage under such Benefit Plan or the Participant elects to cease participation in such
Benefit Plan in accordance with the terms of such Benefit Plan and the Plan.
(c) In the event that a Participant is no longer an Eligible Employee
during a Plan Year, Employee Contributions shall cease and the Participant will be
entitled to receive the ,enefits under the Benefit Plans for which Employee
Contributions have been made in accordance with the provisions of such Benefit Plans.
(d) Subject to any specific limitations which the City shall impose under
a Benefit Plan, (i) participation shall continue during a leave of absence during which the
Participant continues to receive compensation from the City and (ii) participation shall
be suspended during an unpaid leave of absence.
3.3 Reinstatement of Former Participant.
(a) A former Participant who once again becomes an Eligible Employee
may enroll in the Plan in accordance with Article V.
(b) A former Participant who at all times remains an Eligible Employee
may enroll in the Plan in accordance with Sections 5.2 and 5.4.
(c) Notwithstanding the foregoing, a Participant who terminates
participation in the Plan due to his or her termination of employment during a Plan Year
may not re -enroll in the Plan during that same Plan Year.
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4
3.4 Reinstatement of Suspended Participant.
(a) A suspended Participant who once again becomes an Eligible
Employee after an unpaid leave of absence of 30 days or less shall resume participation
upon return to work, provided such return is within the same Plan Year. The
withholding for such a Participant shall be the same amount after the Participant resumes
participation as it was prior to the unpaid leave of absence, with no adjustment for the
time during the unpaid leave of absence when no withholding occurred. Every other
Participant who is on an unpaid leave of absence resumes participation as soon as
administratively feasible after completing, signing and filing an Enrollment Form with the
Plan Administrator, and such Enrollment Form shall be effective, subject to Section 5.4,
for the period beginning on the date determined by the Plan Administrator and ending
on the last day of The Plan Year during which such form was filed.
(b)
if a suspended Participant resumes participation after an unpaid
leave of absence in the same Plan Year as the unpaid leave of absence began, the
benefits elected for the remainder of the such Plan Year shall be identical to those
benefits, if any elected at the beginning of such Plan Year, except as otherwise permitted
in Section'5.4.
3.5 L.scrimination Limitations.
(a) The Plan shall not discriminate in favor of Highly Compensated
Individuals as to eligibility to participate or Highly Compensated Participants as to
contributions and benefits. In addition, no more than twenty-five percent (25%) of the
aggregate amounts paid under the Plan during any Plan Year shall be paid to Key
Employees.
412
O •4.t 3
5
(b) If the Plan Administrator determines, before orr during any Plan
Year, that the Plan may fail to satisfy for such Plan Year any of the nondiscrimination
requirements set forth in paragraph (a) above or any other nondiscrimination
requirement which applies to a Benefit Plan, the Plan Administrator may modify the
elections of all those Participants who are Highly Compensated Participants, Key
Employees or highly compensated employees within the meaning of section 414(q) of the
Code. In the event that the elections of some Participants are modified, such elections
shall be modified fog any such affected Participant by reducing the Employee
Contribution of such affected Participant in the proportion that such affected
Participant's compensation bears to the compensation of all such affected Participants
during the Plan Year until the Plan is in compliance with the applicable
nondiscrimination requirements. For purposes of this Section 3.5(b), compensation shall
mean wages within the meaning of section 3401(a) of the Code (i.e., wages for purposes
of income tax withholding), at the effective date of the modification of the elections. The
Plan Administrator shall determine in which order the Benefit Plans offered under the
Plan shall be affected by such modifications of elections in its sole discretion, pursuant to
rules uniformly applied to similarly situated Participants.
ARTICLE IV
BENEFITS
4.1 Benefit Plans. A Participant may select among the following Benefit Plans
for each Plan Year:
(a) Dependent Care Plan;
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(b) Such other Benefit Plans as the Plan Administrator may designate
from time to time.
The Benefit Plans to be offered under the Plan shall be selected at the discretion
of the Plan Administrator and may be prospectively chang:,d at any time upon written
notice to Participants and Eligible Employees.
4.2 Benefit Plan. Selection. A Participant shall designate on the Enrollment
Form those Benefit Plans described in Section 4.1 which he or she selects. If a
Participant has elected to receive benefits from the Dependent Care Plan, the Participant
shall also designate the amount of his or her Employee Contribution to be allocated to
such Benefit Plan.
4.3 Description of Benefits Other Than Cash. While the election to receive
benefits from one or more of the Benefit Plans described in Section 4.1 shall be made
under the Plan, the benefits wil: be provided not by the Plan but by the particu!ar Benefit
Plan. T'ne types and amounts of benefits available under each optional Benefit Plan
described in Section 4.1, the requirements for participating in such Benefit Plans, and the
other terms and conditions of coverage and benefits under such Benefit Plans, are as set
forth from time to time in the documents that constitute (or are incorporated by
reference in) such Benefit Plans The Benefit Plans are hereby incorporated by
reference into the Plan. Any amendments to such Benefit Plans are also to be
incorporated by reference automatically into the Plan.
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7
ARTICLE V
ENROLLMENT
5.1 Enrollment of Newly Eligible Emplc�rees.
(a) If a newly Eligible Employee w' -hes to receive benefits from one or
more of the Benefit Plans described in Section 4.1, such newly Eligible Employee shall
complete, sign and return the Enrollment Form to the Plan Administrator before the pay
period following the first day of the month after the Employee's date of hire by the City
(the "Enrollment Date"). Any election by the newly Eligible Employee shall, subject to
Sections 5.2 and 5.4, be effective for the period beginning on the Enrollment Date and
ending on the last day of the Plan Year within which such participation begins.
(b) An Eligible Employee who does not file an Enrollment Form with
the Plan Administrator in a timely fashion upon first being eligible for the Benefit Plan
described in Section 4.1(a) of the Plan may become a Participant in Lhe future in
accordance with the provisions of Sections 5.2 and 5.4.
5.2 Open Enrollment Period. Each Participant may (and an Eligible Employee
who is not a Participant may, in order to become a Participant) complete, sign and file a
new Enrollment Form with the Plan Administrator during the Open Enrollment Period.
The elections made by the Participant during an Open Enrollment Period shall be
effective, subject to Section 5.4, for the next Plan Year.
5.3 Failure to Elect. A Participant failing to make a timely and proper election
in accordance with Sections 5.1(a) or 5.2 shall be deemed to have elected to receive his
or her full compensation in cash.
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5.4 Irrevocability of Election by the Participant During the Plan Year.
(a) Elections made or deemed to be made under the Plan for a given
Plan Year shall be irrevocable during such Plan Year unless the Participant has a change
in family status. A Participant may revoke a benefit election for the balance of a Plan
Year and file a new election only if both the revocation and the new election are on
account of and consistent with a change in family status. For purposes of this
Section 5.4, a change in family status includes marriage, divorce, death of a spouse or
dependent, birth or adoption of a child, commencement or termination of employment of
a spouse, change from full-time to part-time employment status (or vice versa) by a
Participant or spouse, the return from an unpaid leave of absence by a Partkipant or
spouse, the taking of unpaid leave of absence by a Participant's spouse, a significant
change in health coverage attributable to a spouse's employment, a significant increase in
the Participant's portion of the premium cost under a health plan when the Participant
may elect similar coverage under another health plan, a significant curtailment or
cessation of coverage under a health plan when the Participant may elect similar
coverage under another health plan, and such other events as the Plan Administrator
determines will qualify as a change in family status under regulations and rulings of the
Internal Revenue Service. Any new election under this Section 5.4 shall be made by
filing a new Enrollment Form within a reasonable period of time after the change in
family status and shall be effective at such time as the Plan Administrator shall prescribe,
but not earlier than the first pay period beginning after the Enrollment Form is
completed and returned to the Plan Administrator.
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(b) A Participant may, during the Open Enrollment Period, revoke or
change his or her election 3r deemed election effective as of the beginning of the next
Plan Year in accordance with Section 5.2.
5.5 Forfeiture of Unused Benefits. Any amount of the Employee Contribution
hereunder which is not applied to provide a Participant the benefits elected (or deemed
elected) hereunder on or before the end of the third month after the close of the Plan
Year will be retained by the City and such unused benefits will be forfeited by the
Participant.
ARTICLE VI
CONTRIBUTIONS
6.1 Employe; Contribution. For each Plan Year, the amount of each
Participa,_tt's Employee Contribution shall be equal to the cost of the Benefit Plans
selected by such Participant. Such Participant shall enter into a salary reduction
agreement authorizing the reduction of such Participant's compensation, on a pro rata
basis per pay period, by an amount equal to his or her Employee Contribution.
6.2 Allocation of Contributions. As of each date an amount equal to the
Participant's Employee Contribution is withheld from the Participant's compensation
pursuant to Section 6.1, such amount shall be credited to provide benefits under the
appropriate Benefit Plans consistent with the Participant's election under the Plan.
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ARTICLE VII
ADMINISTRATION OF PLAN
7.1 Plan Administrator. It shall be a principal duty of the Plan Administrator
to see that the Plan is carried out, in accordance with its terms, for the exclusive benefit
of persons entitled to participate in the Plan without discrimination among them. The
Plan Administrator will have full power to administer the Plan, subject to applicable
requirements of law. For this purpose, the Plan Administrator's powers will include, but
will not be limited to, the following:
(a) To make and enforce such rules and regulations as it deems
necessary or proper for the efficient administration of the Plan, including the
establishment of a claim procedure;
(b) To interpret the Plan in its sole discretion, its interpretation thereof
in good faith to be final and conclusive on the City, Employees, Participants and all
persons claiming benefits under the Plan;
(c) To decide, in its sole discretion, all questions concerning the Plan
and the eligibility of any person to participate in the Plan;
(d) To appoint such agents, counsel, accountants, consultants and other
persons as may be required to assist in administering the Plan; and
(e) To allocate and delegate its responsibilities under the Plan and to
designate other persons to carry out any of its responsibilities under the Plan, any suet
allocation, delegation or designation to be by written instrument and in accordance with
applicable requirements of law.
4447.02
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7.2 Examination of Records. The Plan Administrator shall make available to
each Participant such of -the records under the Plan as pertain specifically to th.. t
Participant, for examination at reasonable times during normal business hours.
7.3 Indemnification of Plan Administrator. The City agrees to indemnify and
defend to the fullest extent permitted by law any Employee, includi4 any former
Employee, to whom it has delegated or allocated responsibilities with respect to the
administration of the Plan, against all liabilities, damages, costs and expenses, including
attorneys' fees and amounts paid in settlement of any claims approved by the City,
occasioned 'oy any act or omission to act in connection with the Plan, if such act or
omission does not involve bad faith, gross negligence, or willful misconduct.
ARTICLE VIII
BENEFIT CLAIMS PROCEDURE
Ali claims for benefits provided under a Benefit Plan shad be determine
under the benefit claims procedures contained in such Benefit Plan.
ARTICLE IX
AMENDMENT OR TERMINATION OF PLAN
9.1 Ainendment or Termination of Plan. Although the City has established the
Plan with the intention of maintaining it for an indefinite period of time, the City
reserves the right at any time, and from time to time,
(a)
of the Plan; or
to modify or amend in whole or in part any or all of the provisions
.0e
October 479).1
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(b) to discontinue or terminate the Plan at any time. Any such
discontinuance or termination shall be effective as of such date as the City shall
determine.
9.2 Authority of Plan. Administrator. The Plan Administrator shall have
authority to modify or amend the Plan as may be necessary to
(a) implement any additional Benefit Plans as may be designated under
Section 4.1(c): or
(b) enable the Plan to meet any requirements for qualification under
section 125 of ttie Code or other applicable law.
ARTICLE X
MISCELLANEOUS PROVISIONS
10.1 Exclusive Benefit. The Plan shall be established and maintained for the
exclusive benefit of Eligible Employees, their spouses, and dependents.
10.2 Information To Be Furnished. Participants shall provide the City and the
Plan Administrator with such information and evidence, and shall sign such documents,
as may reasonably be requested from time to time for the purpose of administration of
the Plan.
10.3 Limitation of Rights. The establishment of the Pan or any amendment
thereof, the creation of any fund or account, or the payment of any benefits shall not be
constriee as giving to any Participant or other person a legal or equitable right against
the City or the Plan Administrator except as provided in the Plan. Under no
circumstances shall the terms of employment of any Participant be modified or in any
iMN,.a2
Ociaber 4,1,93
13
way affected by the provisions of the Plan. The maintenance of the Plan shall not
constitute a contract of employment and participation in the Plan will not give any
Participant a right to be retained in the employ of the City. Each Employee's rights with
respect to continuing employment with the City are established by the Merit System
Rules and Regulations.
10.4 Benefits Solely From General Angels. Except as otherwise required by
applicable law, the benefits provided hereunder will be paid solely from the general
assets of the City. Nothing herein will be construed to require the City or the Flan
Administrator to maintain any fund or segregate any amount for the benefit of any
Participant, and no Participant or other person shall have any claim against, right to, or
security or other interest in, any fund, account or asset of the City from which any
payment under the Pan may be made, except as an unsecured general creditor of the
City.
10.5 Nonassignability of Rights. Neither the City nor the Plan Administrator
shall recognize any transfer, mortgage, pledge, hypothecation, order or assignment by any
Participant or beneficiary of all or any part of his or her interest under the Plan. Any
attempt by a Participant or beneficiary to assign, alienate, sell, transfer, pledge or
encumber his or her benefits shall be void. A Participant's or beneficiary's interests shall
not be subject in any manner to transfer by operation of law, and shall be exempt from
the claims of creditors or other claimants (including but not limited to debts, contracts,
liabilities, or torts) from all orders, decrees, levees, garnishments, and/or executions and
other legal or equitable process or proceedings against such Participant or beneficiary to
the full extet;t which may be permitted by law. -
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10.6 Gender and Number. Words used in the masculine, feminine or neuter
genders shall each be deemed to refer to the other, whenever the contexts r., a required;
and words used in the singular or plural shall each be deemed to refer to the other
whenever the contexts are required.
10.7 Titles. Titles are for convenience only and are not deemed to be a part of
the Plan.
10.8 Governing Law. The provisions of the Plan shall be construed,
administered and enforced according to applicable federal law and the laws of the State
of. Californi.
10.9 Severabilit`y.- If any provision of the Plan is held by a court of competent.
jurisdiction to be invalid or unenforceable, the remaining provisions shall continue to be
fully effective.
IN WITNESS WHEREOF, the City adopts the amended and restated Plan to be
effective as of January 1, 1993.
CITY OF PALO ALTO
Bv:
ATTEST:
City Clerk
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