5.3. SR 03-10-2008Item: 5.3.
ver
MEMORANDUM
ro: city council
PROM: Lori Johnson, City Administrator
DATE: March 10, 2008
SUBJECT: Severance Pay Policy
'Phis item is a follow-up to a CouncIl xequcst at last month's woxksession for staff to review
the severance pay section of the personnel policy and bring back a proposal fox Council
discussion. The uitent in reviewing the policy is to ensure the City is competitive with other
cities to achieve our goal of attracting and retaining high quality employees. As we discussed
briefly at the woxksession, the Cit3,'s severance pay falls fax below that of other cities and Elk
River il4unicipal Utilities.
The upper management staff met recently to discuss this and to put together a proposal fox
consideration by the Council. This group felt that adjusting the pay out provisions would
accomplish several things. First and foremost, it would help the City remain competitive
with other cities. This is a critical part of recruiting new employees and retaining motivated
and highly skilled employees. This is paxticulady important if we want to attract employees
from the metro communities, and keep ours from moving to metro communities, because
the City's pay is often not competitive fox upper management positions. Second, this
rewards both long-term employees and employees who have excellent attendance because
they axe not using their sick leave. It is one of the few, and probably most common, options
available to cities to offer an incentive to employees. As you know, unlike private business,
governments axe not allowed by law to reward employees in the ways that private sector
businesses do.
Finally, attached is the current severance pay section from the City's personnel policy along
with survey data on from other tides and Elk River Municipal Utilities. At the meeting we
will be prepared to discuss the survey data and possible changes to the severance pay policy.
Ells River Personnel Policy (as revised June 2006)
SEVERANCE PAY
An employee resigning his/her employment with the City may be eligible for a cash
payment for unused sick leave if the following conditions are met:
The employee must resign in good standing (not terminated by the
City); and
2. The employee must provide proper written notice of his/her
resignation (see Resignation Policy above); and
3. The employee must execute a release of claims.
Payment shall be based on the consecutive years of service completed by the
employee and his/her accrued sick leave balance.
An employee terminating after completing five (5) years of
consecutive service will receive payment for fifteen percent (15%)
of his/her accumulated sick leave balance up to a maximum
payment for one hundred forty-four (144) hours. Payment shall be
at the current rate of pay.
2. An employee terminating after completing fifteen (15) yeazs of
consecutive service will receive payment for twenty percent (20%)
of his/her accumulated sick leave balance up to a maximum
payment for one hundred ninety-two (192) hours. Payment shall
be at the current rate of pay.
An employee terminating after completing twenty (20) yeazs of
consecutive service will receive payment for twenty-five percent
(25%) of his/her accumulated sick leave balance up to a maximum
payment of two hundred forty (240) hours of pay. Payment shall
be at the current rate of pay.
For example, if an employee satisfies the above conditions, has completed ten years of
service, and has accumulated 1,000 hours of sick leave and makes $10.00 per hour, the
employee will receive severance pay as follows:
1,000 hours x 15% = 150 hours
Maximum hours eligible for severance pay = 144 hours
144 hours x $10.00/hour = $1,440 severance pay
Any accumulated sick leave in excess of nine hundred sixty (960) hours is not eligible for
payment under this policy. Employees may continue to accumulate sick leave in excess
of nine hundred sixty (960) hours to be used in accordance with the Family Medical
Leave Act.
Severance Pey Survey
2 5 10 15 20 and greater Comments
Veers of Service 1
Maximum Maximum Maximum Maximum Maximum Maximum
Percent Hours Percent Hours Percent Hours Percent Hours Percent Hours Percent Hours
Paid Paid Pai Paid Paid Paid Pai Paid Paid Paid P~
144 ;! 2D% 192 25% 240
Elk River _ .. ....
°;Affer 960 hrs 50% paid annually to PEHCP
:
ERMU ; 'S0%''.. 480 , .. . , . , .... ... ... .. ,
:
Andover (.I; ;. ,;209'd 400 40% 400 50% 400 , _, ... ... ...
Brooklyn Park '.50°>:a 360 .... .. .. . .. .... ... ..
Ea9en i 5., '. no max ... .. .... .... .. ...
Etlina I 5035 960 .. .. ... .. .. ..
Lakeville
Maple Grove
Roseville
3535'... 336 45% 432 55% 428 .... ..
460 ;~:.. .. .. ..
Woodbury
~FIBt year eligible for severance
:::: Con9nues for follovring years of service
Data taken From a survey compiled by the City of Coon Rapids. ERMU data from ERMU staff.
50% 320 .. ..... _.... ..
600