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HomeMy WebLinkAbout2004-04-13 City Council (2)City of Palo Alto City Manager’s Report TO:CITY COUNCIL ATTN:POLICY AND SERVICES COMMITTEE FROM:CITY MANAGER DEPARTMENT: HUMAN RESOURCES DATE: SUBJECT: APRIL 13, 2004 CMR: 220:04 REQUEST FOR APPROVAL TO MAKE EXECUTIVE MANAGERS AT-WILL EMPLOYEES RECOMMENDATION Staff recommends that the Policy and Services Committee recommend to City Council that the City adopt a new policy under which all Department Heads hired after July 1, 2004 will be "at will" employees whose terms of employment are specified by an employment contract. BACKGROUND Currently the Council Appointed Officers (City Manager, City Attorney, City Clerk and City Auditor) along with the Administrative Services Director and Library Director are at-will employees. At-will employment establishes that certain positions serve at the will of the City Manager, or Council if a Council Appointed Officer, with no expectation of continued employment and with no right to pre or post separation due process or appeal. All the Council Appointed Officers have employment agreements, including a severance provision. The Administrative Services Director and Library Director agreed to be at-will employees in exchange for housing loan assistance. All other department heads and the Assistant City Manager, like other regular City Employees, are presently covered by the City’ s Merit Rules and can only be terminated for cause, DISCUSSION It is atypical for department heads in City government to have protection from being terminated without cause. The industry standard is for top-level managers to be "at will" employees. Staff is recommending that Council require that newly hired department heads be "at will" employees. Because public employees in general have constitutionally protected property interests in their employment (meaning the right to due process before being "deprived" of their job or salary), it is necessary that each department head sign a written CMR: 220:04 Pagelof 3 waiver of due process fights. This should be part of a written employment contract specifying all material terms of the contract. A severance provision would be a standard provision of the contract providing for four months of full salary payments for employees with four years of service or less with a month added for every additional year served up to a maximum of six months. This recommended four to six month severance package is the standard practice for providing severance to at-will employees within the City’s labor market cities. Any existing Department Head or the Assistant City Manager may elect to remain covered by the Merit Rules or to become at-will with an employment agreement including the severance package. Those current executive managers choosing to become at-will would preserve all benefits that they presently have or would have as new executive managers. RESOURCE IMPACT Compensation and associated salary-related benefit costs of the proposed severance package would range from $63,000 to $95,000 depending on the length of the package. These costs are based on the average Department Head compensation rate within the 2003-04 compensation plan. A Budget Amendment Ordinance (BAO) may be necessary at the time the severance provision is executed, depending on available resources. POLICY IMPLICATIONS Implementation of this policy will require an amendment to the City’s Merit System Rules and Regulations and the Management and Professional Compensation Plan ENVIRONMENTAL REVIEW This is not a project under the California Environmental Quality Act (CEQA). ATTACHMENTS 1. Sample At-Will Employment Agreement CMR: 220:04 Page2of 3 PREPARED BY: Leslie Loomis, Director of Human Resources DEPARTMENT HEAD: LESLIE LOOMIS Director of Human Resources CITY MANAGER APPROVAL: Assistant City Manager CMR: 220:04 Page3of 3 SAMPLE AT-WILL EMPLOYMENT AGREEMENT EMPLOYMENT AGREEMENT THIS AGREEMENT is between the City of Palo Alto, a muni’cipal corporation and chartered city ("City") and [Name]__, its __[Job Title]("~") . It is effective on the latest date next to the-signatures on the last page. This Agreement is entered into on the basis of the following facts, among others: A. City, acting by and through its duly appointed City Manager and with the approval of its duly elected City Council, desires to employ [Name] as its [job title] subject to the terms and conditions set forth in this Agreement, the Palo Alto Municipal Code and in the Charter of the City of Palo Alto (the "Charter"). B.__[Name]desires to be employed by the City as its [Job Title] , subject to the terms and conditions set forth in this Agreement, the Palo Alto Municipal Code, and in the Charter. C. City and __.[Name] desire to establish specific terms and conditions relating to Compensation and benefits,performance evaluations, and related matters.. D. Notwithstanding any provision of the City of Palo Alto Merit System Rules. and Regulations, the City desires. [name] to serve on an at-will basis, with no expectation of Continued employment, and with no right to pre-or post-separation due process or appeal. E. __[Name]__ desires a predictable amount of severance notice and severance pay should his/her employment be terminated with or without cause or notice. BASED UPON THE FOREGOING, AGREE AS FOLLOWS: CITY AND __ [Name ] __ i.Employment.~City will appoint and employ [Name]as [job title]with the City of Palo Alto and __[Name]__ will accept the appointment and employment for the City for an indefinite term to begin on __[Date] -i- 040406 sm 8120460 SAMPLE AT-WILL EMPLOYMENT AGREEMENT 2. Duties of __[Name]__ shall perform the duties established for the [job title] by the Charter, Palo Alto Municipal Code, direction of the City Manager, or as otherwise provided by law,ordinance, or regulation. 2.1. Full Energy and Skill.__[Name]__ shall devote his/her full energy, skill, ability, and productive time to the performance of his/her duties. 2.2. No Conflict. ____[Name]__ shall not engage in any employment, activity, consulting service, or Other enterprise, for compensation or otherwise, which is actually or potentially in conflict with, inimical to, or which interferes with the performance of his/her duties. [name] acknowledges that he/she is subject to the various conflict of interest ~ requirements found in the California Government Code and state and local policies and regulations. 2.3 Permission Required For Outside Activities. __[Name]__ shall not engage in any employment, activity, consulting service, or other enterprise, for compensation or otherwise, without the express, written permission of the City Manager. 3. Compensation. While performing the duties of [title],__[Name]__ shall be compensated as provided in this Section 3. an initial 3.1. Compensation. __[Name]__ shall receive base annual salary of Dollars ) con~nencing on the effective date of the contract. 3.2. Salary Adjustments. Not less than once each year, the City Manager shall meet with __[Name]__ for the express purpose of evaluating the performance of __[Name]__ The City Manager will act in good faith in determining whether to increase the salary of __[Name]__, but the ultimate decision in this regard is within the sole discretion of the City Manager. 4. Regular Benefits and Allowances. __[Name]__ will be eligible for, and shall receive, all regular benefits (i.e., health insurance, PERS contribution paid by City, etc.) and vacation, sick leave, and management leave as are generally provided to management employees pursuant to the City Council- approved Management Compensation Plan. 040406 srn 8120460 SAMPLE AT-WILL EMPLOYMENT AGREEMENT 5. Additional Benefits and Allowances. In addition to the benefits specified in section 4, ___[Name]__ shall receive the following additional benefits and allowances: 5.1 Reimbursementfor Relocation Expense: 5.1.1 approval of Ci ty Manager. Basic Relocation Benefits. See Comp. Plan for details] [Upon 5.1.2 Optional Relocation Benefits. [Intended for Exceptional Circumstances upon approval of City Manager. Contingent upon completion of two (2) years City employment. See Comp Plan for details] 5.1.3 Additional Relocation Benefits. [Upon approval of Council. Contingent upon completion of minimum of five (5) years employment. See Comp. Plan for details] 6. Additional Expenses of Employment. City shal! pay the following usual and customary employment expenses: 6.1. The cost of any fidelity or other bonds required by law for the [Name] 7. Duration of Emplo!rment.__[Name]__ understands and agrees that he/she has no constitutionally protected property or other interest in his/her employment as __[Job Title]__ He/She understands that notwithstanding any provision in the MSRR, he/she has no- right to pre-or post- disciplinary due process. He/She understands and agrees that he/she works at the will and pleasure of the City Manager and that he/she may be terminated, or asked to resign, at any time, with or without cause, upon 30 days written notice to [name]. [name] may terminate this agreement upon 30 days written notice to the City Manager. [OPTIONAL SEVERANCE LANGUAGE 7.1 and 7.2] 7.1.Severance Pay. If __[Name]__ is asked to resign or is terminated as __[job title]__ he/she shall receive a cash severance payment, or payments (without interest) at intervals specified by ___[Name]__, equaling 6 months salary and benefits. 7.2.Non-Payment of Severance Under Certain Conditions. If the termination of __[Name]__ is the result of conviction of a felony, he/she shall not be paid any severance pay° 040406 sm 8120460 SAMPLE AT-WILL EMPLOYMENT AGREEMENT 8.Miscellaneous. 8.1. Notices. Notices given under this Agreement shall be in writing and shall be either: ~) served personally; or b) sent by facsimile (provided a hard c~py is mailed within one (i) business day); or c) delivered by first-class United States mail, certified, with postage prepaid and a return receipt requested; or d) sent by Federal Express, or some.. equivalent private mail delivery service. Notices shall be deemed received at the earlier of actual receipt or three (3) days following deposit in the United States mail, postage prepaid. Notices shall be directed to the addresses shown below, provided that a party may change such party’s address for notice by giving written notice to the other party in accordance with’this subsection. CITY: Attn: .Mayor City of Palo Alto 250 Hamilton Avenue Palo Alto, CA 95901 Phone: (650) 329-2226 FAX: (650) 328-3631 [Name ] __ : [Name] 250 Hamilton Avenue Palo Alto, CA 94301 Phone : FAX: 8.2. Entire Agreement/Amendment. This Agreement constitutes the entire understanding and agreement between the parties as to those matters contained in it, and supersedes any and all prior or contemporaneous agreements, representations and understandings of the parties. This Agreement may be amended at any time by mutual agreement of the parties, but any such amendment must be in writing, dated, and signed by the parties and attached hereto~. 8.3. Applicable Law and Venue. This Agreement shall be interpreted according to the laws of the State of California. Venue of any action regarding this Agreement shall be in the proper court in Santa Clara County. -4- 040406 sm 8120460 SAMPLE AT-WILL EMPLOYMENT AGREEMENT 8.4. Severability. In the event any portion of this Agreement is declared void, such portion shall be severed from this Agreement and the remaining provisions shall remain in effect, unless the result of such severance would be to substantially alter this Agreement or the obligations of the parties, in whic~ case this Agreement shall be immediately terminated.~ 8.5. Waiver. Any failure of a party to insist upon strict compliance with any term, undertaking, orcondition of this Agreement shall not be deemed to be a waiver of such term, undertaking, or.condition. To be effective, a waiver must be in writing, signed and dated by the parties. 8.6. Representation by Counsel. __[Name]__ and City acknowledge that they each did, or had the opportunity to, consult with legal counsel of their respective choices with respect to the matters that are the subject of this Agreement prior to executing it. 8.7 Section Headings. The headings on each of the sections and subsections of this Agreement are for the convenience of the parties only and do not limit or expand the contents of any such section or subsection. Dated:CITY OF PALO ALTO By Mayor or city Manager Dated:[Job Title Attest: ( Name ) City Clerk Approved as to Form: By : Wynne S. Furth Interim City Attorney -5- 040406 sm 8120460