Memorandum

City of Lawrence

City Manager’s Office

TO:	David L. Corliss, City Manager
FROM:	Diane Stoddard, Assistant City Manager Lori Carnahan, Human Resource Manager Marlo Cohen, Management Analyst Michelle Stevens, Management Intern
CC:	Cynthia Wagner, Assistant City Manager
Date:	January 5, 2011
RE:	Overtime Policy Recommendations

Please place the following item on the January 11, 2011 City Commission meeting agenda:

Authorize the City Manager to make various policy changes, as recommended, to the City’s Employee Handbook related to overtime effective February 27, 2011. 

Background:

During the 2011 budget process, staff provided the City Commission a report regarding the City’s utilization of overtime.  The City Commission discussed this report during the budget process and also again in November 2010.  At its meeting in November, the City Commission directed staff to draft policy changes based upon a memorandum prepared by Commissioner Chestnut.  In late November and early December, staff discussed the policy changes with the Management Team and distributed information about the policy changes to City employees. 

Feedback on the policy changes was received by City employees which addressed several items, but largely focused on two main issues:  1) a desire by some to have overtime accrue for response to emergency situations, such as snow events, floods and other natural disasters, and utility line breaks regardless of the 40 hour accrual period and 2) a concern that an unintended consequence of allowing compensatory time in every City department/division would trigger additional overtime costs for work groups that require minimum staffing, such as Utility plant operators.

Recommended Policy Changes:

In accordance with the direction provided by the City Commission and incorporating feedback related to the two main items above, staff has prepared draft policy changes for the City Commission’s consideration.  The draft policy changes achieve the following:

• Payment of Overtime by Workweek Rather than Daily Shift:
• Nonexempt (paid hourly) employees will be eligible for overtime for hours worked over forty (40) in a standard workweek or other work period,
• Nonexempt employees will no longer be eligible for overtime for hours worked in excess of their regular daily work schedule or shift.
• Exclusion of All Paid Leave, Except Holiday Leave in Overtime Calculation:
• All paid leave, with the exception of holiday leave, will no longer be counted as hours worked for the purpose of calculating overtime. This includes paid leave such as vacation, sick leave, personal leave, wellness leave and compensatory time.  
• Compensatory Time:
• Compensatory time in lieu of overtime will be available to all nonexempt employees, with Department Director authorization.  Compensatory time allows employees the option of taking leave at a rate of 1.5 hours per hour of overtime worked in lieu of being paid for the overtime. A cap of 60 hours will be placed on banked compensatory time.
• The reason for staff’s recommendation that utilization of compensatory time be subject to Department Director authorization is the possible unintended consequence of incurring more overtime hours to cover an employee’s compensatory time off in work groups that have minimum staffing requirements.  An example would be a manager having to call in an employee at an overtime rate to cover the work of someone taking their compensatory time off work.  Staff believes that in these situations, the payment of the overtime rate for the initial overtime hours, rather than granting compensatory time off, would be the most cost effective alternative for the City. 
• Work on a Holiday:
• Employees who work holidays and/or weekends will receive their regular rate of pay for their actual hours worked.
• Employees who work holidays will receive holiday pay plus their regular rate of pay for their actual hours worked.
• Employees will no longer be paid an overtime rate for working a holiday and/or weekend unless such work brings the total hours worked that week over 40 hours.
• Call Back Policy:
• No changes are recommended related to the City’s call-back policy, which applies to emergency situations when a City employee is called back into work after having left his/her regular shift.  Call-back pay provides for pay at a premium rate of 1.5 times the regular rate and a two-hour minimum regardless of where the employee is in the accrual of regular hours during the week. The continuation of the call-back policy will ensure prompt response in emergency situations that disrupt an employee’s non-work hours. 
• Premium Pay During Extended Emergency Situations:
• The draft policy provides for the premium pay at 1.5 times the regular rate for hours over the regular daily work schedule (e.g. 8 or 10 hour work schedule) in response to extended emergency situations, lasting 48 hours or more, as determined by the City Manager. 
• This recommendation responds to situations in which a City employee may be called upon to change their regular work schedule to work multiple shifts in excess of regular work hours in response to extended emergencies, such as snow events, flooding, or response to other natural or manmade disasters. The policy provides for the ability of the City Manager to declare an emergency situation after an event lasting 48 hours or more, or at least two 12 or more hour shifts.  If the City Manager determines that an emergency existed, the hours worked beyond the regular daily work schedule would be paid at a premium rate for the duration of the emergency event.  For example, a large snow event begins on a Monday and lasts through Wednesday, requiring employees to work three 12-hour shifts.  If the City Manager declared the event to be a snow emergency, employees who worked beyond 8 hours per day during the event would be paid at the regular rate for 8 hours and 1.5 times the regular rate for 4 hours each day, regardless of accumulation of hours worked for that work week or whether paid time off were taken in the that work week.  Staff believes that including this provision in the policy will ensure response in emergency situations.  Staff would use an appropriate reporting mechanism back to the City Commission in these situations.  Additionally, further staff research showed that several other peer cities, including Lenexa, Olathe and Overland Park have special premium pay provisions related to work during snow operations. 

Staff recommends that the policy changes be effective on February 27, 2011, which is the beginning of a pay period.  This timeframe allows ample time for further communication with employees and notification. 

It should be noted that the changes will not affect certain police and fire/medical employees covered by Memorandum of Understanding agreements through 2011. 

Action Requested:

Direct the City Manager to make the changes to the overtime-related policies in the Employee Handbook, as recommended.