REPORT TO COUNCIL
SUBJECT
Title
Authorize the City Manager to execute the Side Letter Agreement that amends the 2019-2024 Memorandum of Understanding Between the City of Santa Clara and the Miscellaneous Unclassified Management Employees (Unit 9), that incorporates the terms of the Side Letter Agreement
Report
COUNCIL PILLAR
Enhance Community Engagement and Transparency
BACKGROUND
The City of Santa Clara and the Miscellaneous Unclassified Management Employees (Unit 9) reached an agreement on a Memorandum of Understanding (hereafter, “MOU”) in November of 2020 with a term of December 15, 2019 to December 31, 2024. As part of the MOU, the parties agreed to revisions in the Vacation Accrual and Usage section of the MOU that would be effective December 25, 2022. The revisions include a maximum vacation accrual cap of 480 hours in the current vacation accrual balance and moving any accrued vacation hours over 400 to a separate Temporary Supplemental Vacation Accrual balance that must first be utilized. If an employee leaves or retires from City service, any unused Temporary Supplemental Vacation Accrual hours will be cashed out upon the employee’s retirement or other separation from City service.
In a letter dated April 28, 2022, Unit 9 expressed concern that a significant number of Unit 9 employees have vacation accrual limits above 400 hours. When the City and Union agreed to the vacation revisions, it was understood that from November 2020 to December 2022, employees would work with their supervisors and be encouraged to utilize their accrued vacation. However, due to a combination of factors including, but not limited to, the COVID-19 pandemic, workload demands, managers stepping in to cover duties of other vacant positions, and the citywide vacancy rate of approximately 17%, many managers have been unable to take time off. Unit 9 requested to explore options to address this concern.
The letter also expressed concerns with the City’s current performance evaluation process, specifically the completion and delivery of performance evaluations in a timely manner and corresponding eligibility for merit increases, when available. Unit 9 requested a formalized standard for evaluating individual performance, and to move away from an anniversary-based rating period to an annual fixed cycle for employees represented by Unit 9.
The City and Unit 9 engaged in several discussions regarding these two items and in September 2022, the City and the Miscellaneous Unclassified Management Employees (Unit 9) reached agreement on a Side Letter Agreement that amends the terms of the current MOU as follows:
§ Effective December 25, 2022, all unused accrued vacation hours above 350 hours (instead of 400 hours) as of December 24, 2022, shall be placed in a Temporary Supplemental Vacation Accrual balance. No additional hours shall be allowed in the Temporary Supplemental Vacation Accrual balance after December 25, 2022. Subject to supervisory approval, any accrued vacation hours and Temporary Supplemental Vacation Accrual hours shall be available for use. This means that employees will no longer be required to use the Temporary Supplemental Vacation Accrual Hours first. Once an employee exhausts any accrued hours in the Temporary Supplemental Vacation Accrual, no additional Temporary Supplemental Vacation Accrual hours shall be available.
§ Effective January 1, 2023, the rating period for employees represented by Unit 9 shall move from an anniversary-based system to an annual fixed cycle, which will be January 1 - December 31 of each calendar year. Effective January 1, 2023 employees represented by Unit 9 shall be ineligible for a merit increase for the January 1, 2022 - December 31, 2022 rating period. Effective the first full pay period in April 2023, employees shall receive a one-time lump sum non-pensionable payment of $2,500 (pro-rated for part-time employees), for the calendar year 2022 rating period.
Effective January 1, 2024, any merit increase that an employee may be eligible for would be effective the first pay period after July 1st of the year subsequent to the rating period.
It should be noted that no other terms of the current MOU are amended or otherwise altered.
On or about September 7, 2022, the Miscellaneous Unclassified Management Employees (Unit 9) notified the City that its membership had ratified the terms of the Side Letter Agreement amending the current MOU.
DISCUSSION
The recommended action authorizes the City Manager to execute the Side Letter Agreement that amends the current Memorandum of Understanding with a term of December 15, 2019, through and including December 31, 2024, that incorporates the terms of the Side Letter Agreement reached between both parties.
The following is a summary of the notable provisions of the Side Letter Agreement, and a complete copy of the Side Letter Agreement is attached:
Vacation Accrual and Usage
Effective December 25, 2022, all unused accrued vacation hours above 350 hours (instead of 400 hours) as of December 24, 2022, shall be placed in a Temporary Supplemental Vacation Accrual balance. No additional hours shall be allowed in the Temporary Supplemental Vacation Accrual balance after December 25, 2022. Subject to supervisory approval, any accrued vacation hours and Temporary Supplemental Vacation Accrual hours shall be available for use. This means that employees will no longer be required to use the Temporary Supplemental Vacation Accrual Hours first. Once an employee exhausts any accrued hours in the Temporary Supplemental Vacation Accrual, no additional Temporary Supplemental Vacation Accrual hours shall be available.
Performance Appraisals
Effective January 1, 2023, the rating period for employees represented by Unit 9 shall move from an anniversary-based system to an annual fixed cycle, which will be January 1 - December 31 of each calendar year. Effective January 1, 2023 employees represented by Unit 9 shall be ineligible for a merit increase for the January 1, 2022 - December 31, 2022 rating period. Effective the first full pay period in April 2023, employees shall receive a one-time lump sum non-pensionable payment of $2,500 (pro-rated for part-time employees), for the calendar year 2022 rating period.
Effective January 1, 2024, any merit increase that an employee may be eligible for would be effective the first pay period after July 1st of the year subsequent to the rating period.
ENVIRONMENTAL REVIEW
The action being considered does not constitute a “project” within the meaning of the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines section 15378(b)(5) in that it is a governmental organizational or administrative activity that will not result in direct or indirect changes in the environment.
FISCAL IMPACT
The cost of providing a lump sum non-pensionable payment of $2,500 in April 2023 (pro-rated for part-time employees) is approximately $438,000, of which $214,000 is in the General Fund. This cost would be offset by savings generated from freezing merit increases in 2023. Assuming average merit increases of 3%,
The annual savings generated from freezing these increases in 2023 is anticipated to be approximately $702,000, of which $340,000 is in the General Fund.
It is difficult to determine the fiscal impact of moving 50 additional hours to the Temporary Supplemental Vacation Accrual because employees may take time off and utilize the accrued hours in this leave balance. It is also unknown if any employee will separate or retire from the City and have a Temporary Supplemental Vacation Accrual balance at the time of separation, which would result in a payout.
COORDINATION
This report has been coordinated with the Finance Department and City Attorney’s Office.
PUBLIC CONTACT
Public contact was made by posting the Council agenda on the City’s official-notice bulletin board outside City Hall Council Chambers. A complete agenda packet is available on the City’s website and in the City Clerk’s Office at least 72 hours prior to a Regular Meeting and 24 hours prior to a Special Meeting. A hard copy of any agenda report may be requested by contacting the City Clerk’s Office at (408) 615-2220, email clerk@santaclaraca.gov <mailto:clerk@santaclaraca.gov> or at the public information desk at any City of Santa Clara public library.
RECOMMENDATION
Recommendation
Authorize the City Manager to execute the Side Letter Agreement that amends the current Memorandum of Understanding with Miscellaneous Unclassified Management Employees (Unit 9) with a term of December 15, 2019 through and including December 31, 2024, that incorporates the terms of the Side Letter Agreement reached between both parties.
Staff
Reviewed by: Aracely Azevedo, Director of Human Resources
Approved by: Rajeev Batra, City Manager
ATTACHMENTS
1. Side Letter Agreement Between City and Unit 9