Discussion Regarding Non-Union Sick Leave Severance

The purpose of this work-session discussion is to review the current sick leave severance policy, specific to non-union staff and to consider modifications to the policy.   Several non-union staff members have asked if  the City Council would consider revising the policy to better align with the severance benefits of many other cities.

The City currently has 28 non-union employees, all working in single job classes (meaning there is not another employee that performs the same duties -- such as in the case of a Patrol Officer or a Maintenance Worker).  Twenty of the twenty-eight non-union employees are exempt -- meaning they do not receive overtime pay.  This point is relevant because many times exempt employees return to work after being ill only to put in extra hours to get caught up on their work. 

Staff surveyed several metro cities and found that severance benefits vary from city to city.  With just one exception, all of the responding cities have sick leave severance policies.  Some offer sick leave severance as soon as just two years of service and some (the minority) offer very similar benefits to Ramsey.  However, overall  Ramsey's sick leave severance benefits are on the low end based on the percentage of payout and it takes longer to reach the higher percentages.   An increased sick leave severance benefit would reward employees for maintaining a healthy lifestyle and behaviors; as well as a positive work ethic. 

The Human Resources Manager consulted the City's benefits broker, the City Attorney, and the Health Care Savings Plan administrator to confirm that if such a revision is authorized  the City remains compliant with state and federal employment law.   As an alternative option to revising the policy for all non-union employees, the City Council may wish to limit any possible revisions to just the non-union/exempt group (20 employees); if so, staff will provide additional detail about such an option.  Staff will be prepared to discuss the pros and cons of any possible revisions. 

Certain employee groups currently participate in a post-employment healthcare savings plan (HCSP).  Currently, the non-union group, upon separation, has 50% to 100% percent of their *eligible sick leave severance automatically sent to a HCSP (percentages are dependent on type of group -- either PERA Coordinated or *PERA Police and Fire).  In conjunction with any possible policy revisions, staff proposes increasing the percent of eligible sick leave that that would be required to be deposited into a mandatory HCSP.  Depositing the funds into a HCSP is consistent with the original intent of sick leave pay -- to protect employees when faced with illness; hence, dollars sent to a HCSP continue to be used for healthcare expenses.

*Eligible, meaning the tier or percent of unused accrued sick leave; for example:  If an employee is eligible for 33% of their accrued sick leave balance, then 50% of that 33% would go into the HCSP.

*PERA Police and Fire already contribute 100% of their "eligible" severance.
 
Excerpt from Section 6.7 of the Personenl Policy -- Severance Pay:
Employees shall receive a lump sum payment upon termination of employment with the City of Ramsey based on thirty-three (33) percent of employee’s unused, accumulated sick leave after five (5) years of continuous employment.  After fifteen (15) years of continuous employment, the employee will receive thirty-five (35) percent of said employee’s unused, accumulated sick leave.  After twenty (20) years of continuous employment, the employee will receive thirty-seven (37) percent of unused accumulated sick leave. After twenty-five (25) years of continuous employment, the employee will receive forty (40) percent of said employee’s unused, accumulated sick leave.
 
Severance pay shall not be available in any sum to an employee if that employee is discharged for just cause, if an employee voluntarily terminates his or her employment prior to five (5) years of continuous employment service or if the employee voluntarily terminates his or her employment without giving the City of Ramsey fourteen (14) days written notice.
 
Receipt of severance pay terminates all seniority rights and ends all City of Ramsey’s liability with regard to other benefits.

Excerpt from Section 7.3 of the Personnel Policy -- Sick Leave Accrual Rates:
Every probationary and regular employee is entitled to earn sick leave with pay at the rate of 1 day for each calendar month of full-time service or major fraction thereof.  Sick leave may be banked to a maximum of 120 days.  Unused sick leave in excess of 120 days at the end of a calendar year (December 31st) shall be converted to vacation at a rate of one hour of vacation for each two hours of sick leave. 
 
Regular part-time employees are eligible to earn sick leave in proportion to that earned by regular full-time employees based on the number of hours worked. Sick leave will count toward total budgeted work hours for the year. 

   

Comparison of Responding Cities:
Maximum percentage of Sick Leave Severance	33% to 75%	Ramsey is 40%
Number of Years Required for Minimum Payout	1 to 10	Ramsey is After 5 years
Highest Number of Years for Maximum Payout	10 to 25	Ramsey is After 25 years

 
 

Current Severance Policy:	Possible Non-union Revision Option
After 05 years of service / 33%	Same
After 15 years of service / 35%	After 15+ years of service / 50%
After 20 years of service /37%	N/A
After 25 years of service / 40%	N/A

 

Approximately 20 minutes.

There is no funding required at this time.  However, if the proposed policy revision is authorized, the actual severance benefit payout would occur over time as employees separate from employment.   Although the liability would very likely occur intermittently, the city is required to fund 100% of the liability at the percentage earned; resulting in an increased liability of approximately $39,700 in 2015.  This funding is referred to as a Sick Leave Deferred Absence Liability. 

Colleen Lasher, Human Resources Manager.

For the City Council to provide staff with direction regarding modifications to the non-union sick leave severance policy.