HomeMy WebLinkAbout2010 10 11 Consent 200 Resolution 2010-55 Regress Pay Period COMMISSION AGENDA
CONSENT X
INFORMATIONAL
ITEM 200
PUBLIC HEARING
REGULAR
October 11, 2010 MGR /DEPT
Meeting Authorization
REQUEST: The Finance Department seeks Commission review and adoption of resolution
2010 -55 which will make it possible to regress the pay period by three days and
authorize the utilization of short —term loans to those employees that may wish
to request such loans for the purpose of lessening the financial impact associated
with the adjustment.
SYNOPSIS:
The time frame which currently exists from the last day of the bi- weekly pay period to the actual
pay date is insufficient for the following reasons:
• data entry and review time limited to 4 hours
• hours worked must be estimated for last day of pay period (Wednesday)
• new initiative (Employee Self - Serve) will bring increased functionality and
efficiencies to the payroll process. This new technology will decentralize payroll and
require adequate time for review.
• current practices are inconsistent with Fair Labor Standards Act (FLSA)
A three -day regression of the pay period would serve to remedy the problem; however, it will result
in a reduced paycheck for the first payroll that includes the regression. The 3 days that are deferred
in the week the regression occurs, will be paid to the employees on November 12 (the next
paycheck). An optional short-term loan has been identified as a reasonable means to lessen the
financial impact to the employee that may need the assistance.
CONSIDERATIONS:
Problem:
Currently, the City has a 14 -day pay period which begins on Thursday and ends on Wednesday (see
Attachment 1 for calendar view). Funds are distributed Friday morning which is less than 48 hours
from the last day of the pay period. Additionally, the direct deposit file must be transmitted to the
bank by Wednesday at 5 p.m. which only allows Wednesday afternoon for the payroll accountant to
complete data entry and review. The problems associated with this very constricted time frame
have been an ongoing topic of conversation for years but the issues associated with a regression of
the pay period discouraged progressive action.
Also, in order to accomplish this unusually quick payroll `turn- around', the hours worked for the
last day in the pay period must be estimated. That is, employees must estimate the hours they will
work on the last Wednesday. When actual hours differ from estimated hours, corrections must
follow in the subsequent payroll cycles. This is problematic for the following reason: 1) inconsistent
with Fair Labor Standards Act (FLSA), 2) creates several prior period adjustments and 3) doesn't
provide time for through payroll review prior to checks being issued.
Further, the 2009 audit, the City's external auditors (McDirmit Davis) recommended additional
payroll review in order to compensate for our limitations regarding segregation of duties. In
response we modified our payroll review process and expedited an initiative known as Employee
Self Serve. The City is now in the testing phase and there are a number of benefits to be derived one
of which is greater segregation of duties. However, in order for this initiative to be successful,
additional time is required to review and electronically pass the data through the approval process.
Backing -up the pay period will provide the additional time required to review and electronically
pass the data through the approval process.
Proposed Solution:
Backing up the pay period by three days remedies the problem but creates a potential concern for
employees in that the first paycheck following the regression will result in a reduced paycheck.
Although the first paycheck would compensate for eleven rather than the usual fourteen days, all
subsequent paychecks would compensate for the full fourteen. This shift in the pay period satisfies
the goals of:
• thorough review
• `estimate' elimination
• seamless decentralization
In order to overcome the one -time paycheck reduction, October 29 has been identified as an
optimum pay date to implement the change since it is one of two months in a year in which
employees receive three paychecks (10 /1, 10/15, 10/29). Consequently, a smaller paycheck on
October 29 may be more easily overcome since two full paychecks have already been received
within that same month. In fact, the first paycheck was actually larger than usual because it does
not have deductions for insurance.
After thorough discussions with Department heads, the following alternatives met with unanimous
approval while also serving to lessen the financial impact to the employee. A brief description of
each alternative is included along with the primary pros and cons. The employee would be offered
ONE choice from among the alternatives.
EMPLOYEE ALTERNATIVES' SUMMARY
Alternative Description Pros Cons
Alternative 1: - No cost to the City -Some employees may have
Reduced pay (11 rather than 14 - `Extra' paycheck would serve to already designated the funds
days) in a three - paycheck mitigate reduced pay from the `3 paycheck'
month absent loan -1 paycheck in October does
not have insurance deductions
Alternative 2: -No cost to City (opportunity cost - Slight reduction in
Short-term, interest -free loan to would be less than $500 city - wide; employee's successive
employee to be repaid no later assuming maximum participation at paycheck(s)
than 9/30/2011 maximum loan amount) - Administrative effort to
- Distributes financial impact monitor loan payments, loan
over term of loan
Consent 202
October 11, 2010
Pay Period Revision
status
Solution Alternative Detail:
Alternative 2 offers the employee a loan within the fiscal year. However, some part-time and
seasonal employees may not have 24 pay periods over which they could `spread' the repayment. In
such case, the City would extend special arrangements to accommodate the specific situation.
The following scenario reflects an employee who selects the maximum loan amount and opts to
pay it back over the maximum 24 pay periods. The maximum loan amount is a function of an
employee's regularly scheduled hours in this three -day period which in no case would exceed 24
hours. Therefore, this loan would be paid back at the rate of one hour per pay period or 30 minutes
per week as reflected by the calculation below.
Regularly Scheduled Hours # of Pay Periods for Repayment Rate of Repayment
Col 1= Col 2
24 24 1 hr /pay period
If the employee typically works an 80 -hour pay period the repayment deduction would be roughly
equivalent to 1.25% of their typical paycheck. If the employee typically works an 84 -hour pay
period (Police) this repayment deduction would be roughly equivalent to 1.19% of their typical
paycheck. If one factors in payroll deductions the repayment deduction percentage is even smaller.
Additional Comments:
Incurrence of overtime hours will complicate the payroll calculation. The Department of Labor
requires that this pay period's overtime be calculated as falling in whichever week yields the
greater amount. Police Department employees who have an 84 -hour pay period would have to
wait until the next payroll to receive their `maximized' overtime pay. This delay in the processing
of overtime is necessary in order to ensure that overtime is calculated to the employee's advantage.
Attachment 2 is a prototype of the Employee Alternative Selection Form which the employees
would be required to fill out and sign prior to processing their October 29 paycheck. Although the
City's law firm has approved of the concept as an administrative change, this form would be
submitted to the City's legal counsel for legal sufficiency.
FISCAL IMPACT:
- Reduced paycheck to employees in a 3- paycheck month — will not have net impact on the
F 11 budget.
- Short term loans to employees - negligible opportunity cost in the form of lost interest
earnings; assuming that everyone chose the maximum loan this amount would be less than
$500 city -wide
COMMUNICATION EFFORTS:
Employees would receive communication in a variety of forms. Department heads have already
met with employees to inform them of the potential pay period regression. If approved a packet
would be distributed on October 12 which would include full details as well as the requisite
alternative selection form. A reminder letter would be included in the paycheck advice prior to the
Consent 202
October 11, 2010
Pay Period Revision
ti
revised pay period (10/15). Lastly, workshop(s) and /or individual appointments would be made
available to any employee who desires further assistance or explanation.
RECOMMENDATIONS:
It is recommended that the Commission approve resolution 2010 -55 which will facilitate a three -
day regression of the pay period; that short-term loans to the employees be extended for purposes of
assisting employees with the financial impact associated with a three -day regression of the pay
period; and that the City Manager and City Attorney be authorized to prepare and execute all
required documents.
ATTACHMENTS:
Resolution
Calendar view — October and November 2010
Employee Alternative Form Prototype — pending legal review by City Attorney
Consent 202
October 11, 2010
Pay Period Revision
Non - Exempt Employee Alternatives for Pay- Period Adjustment (backing -up pay period)
In order to improve payroll accuracy and processing, it is necessary to adjust the City's current pay period. In order to
implement the pay period adjustment, the third paycheck for Octob r, distributed on October 29, 2010, will cover an 11
calendar day pay period (10/14 - 10/24), rather than a 14 calendar day pay period. Pay for 10/25, 10/26, 10/27 will be
paid in the next payroll cycle. This is a one -time payroll adjustment. All subsequent pay periods shall include 14 calendar
days. In an effort to lessen the financial impact this adjustment may cause, non - exempt employees have the option to
secure a short -term loan from the City. All non - exempt employees, whether or not opting for the loan, shall complete,
sign and submit this form by October 20th.
EMPLOYEE -- John Q. Public Servant
Please select ONE of the following Alternatives by placing your initials in adjacent box
I 1 understand that my 10/29/2010 paycheck will cover an 11 calendar day pay period, which will likely result
in a one -time reduced amount of pay. I do NOT desire a loan from the City.
I I understand that my 10/29/2010 paycheck will cover an 11 calendar day period, which will likely result in a
one -time reduced amount of pay. Therefore, I desire a loan from the City and agree to pay it back
through automatic payroll deductions over 1, 8, 16, or 24 pay periods as indicated below. I understand
that the deductions will begin with the November 12th payroll.
Please circle the desired number of payroll periods for loan repayment
1 8 16 24 Deductions will begin with the November 12th payroll
Part -time and /or seasonal employees who desire to take advantage of the loan alternative may call
Roseann (X -317) or Kelly (X -232) to discuss further alternatives.
To be completed by Department
Regularly Scheduled Net Payroll
Hrly rate Hrs (10/18- 10/20) Factor
MAXIMUM LOAN ALLOWED = $230.40 $12.00 24 0.8 example ONLY
Maximum loan may not exceed the amount in the grey box above. The amount of your loan request may
be slightly adjusted (cents only) so as to. result In an equal repayment amount for the entire repayment
period. Please enter the amount of your loan request here
I understand that the City's pay period is being adjusted and that my October 29, 2010 paycheck will cover 11 calendar
days. The City has offered the Alternatives above and my signature indicates my selection and agreement to the terms
as stated.
Signature and Date
Consent 202
August 23, 2010
Attachment 2
RESOLUTION NO. 2010 -55
A RESOLUTION OF THE CITY COMMISSION OF THE
CITY OF WINTER SPRINGS, FLORIDA, AMENDING
SECTION 20 OF THE CITY PERSONNEL MANUAL;
PROVIDING FOR REPEAL OF PRIOR INCONSISTENT
RESOLUTIONS, INCORPORATION INTO THE PERSONNEL
MANUAL, SEVERABILITY, AND AN EFFECTIVE DATE.
WHEREAS, the City is granted the authority under Section 2(b), Article VIII, of the State
Constitution to exercise any power for municipal purposes, except when expressly prohibited by law;
and
WHEREAS, the City desires to revise section 20 of the City's Personnel Manual related to
employee work week and pay.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COMMISSION OF THE
CITY OF WINTER SPRINGS, SEMINOLE COUNTY, FLORIDA, AS FOLLOWS:
Section 1. Recitals. The foregoing recitals are hereby fully incorporated herein by this reference
and are deemed a material part of this Resolution.
Section 2. Amending Section 20 of the City Personnel Manual. The City Commission hereby
approves the following revisions to Section 20 of the City of Winter Springs Personnel Manual as
follows (underlined type indicates additions to and atiikttlnou type indicates deletions from the
Personnel Manual; portions of the Personnel Manual unaffected by this Resolution shall remain
unchanged):
20.1 Work Week
The standard workweek consists of seven (7) consecutive calendar days commencing
at 12:00 a.m. on the first day and ending at 11:59 p.m. on the seventh day Lum„im.uccs
•• The
standard number of working hours for full -time employees during any standard
workweek will be 40 hours unless otherwise specified. The work hours for Fire and
Police Department shift employees shall be governed by the Department Head and/or
union contract.
* **
City of Winter Springs
Resolution No. 2010 -55
Page 1 of 3
20.3 Pay Periods and Checks
Employees shall be paid on a bi- weekly basis and paychccks aye distiibuLd qtr
Thursday. Each paycheck shall include earnings for all work performed through the
end of the previous payroll period. In the event that a regularly scheduled payday
falls on the date of a holiday, employees will receive pay on the last day of work prior
to the regularly scheduled payday.
Paychecks, which arrive during an employee's vacation, will be held in a secure
location by the Department Head or designee pending the employee's return.
* **
20.5 Advances of Pay.
It is the general policy of the City of Winter Springs not to make advances on
employee pay. Exceptions . • . • .. .: • .:. :
can be made for emergencies with prior written approval of the City Manager.
Section 3. Repeal of Prior Inconsistent Resolutions. All prior resolutions or parts of
resolutions in conflict herewith are hereby repealed to the extent of the conflict.
Section 4. Incorporation into Personnel Manua.. Upon adoption of this Resolution by the
City Commission, the City Manager or his designee shall incorporate these revisions into the Winter
Springs Personnel Manual.
Section 5. Severability. If any section, subsection, sentence, clause, phrase, word, or portion
of this Resolution is for any reason held invalid or unconstitutional by any court of competent
jurisdiction, such portion shall be deemed a separate, distinct and independent provision and such
holding shall not affect the validity of the remaining portion hereto.
Section 6. Effective Date. This Resolution shall become effective immediately upon adoption
by the City Commission of the City of Winter Springs, Florida.
DONE AND ADOPTED in regular session of the City Commission of the City of Winter
Springs, Florida, this day of , 2010.
JOHN F. BUSH, Mayor
City of Winter Springs
Resolution No. 2010 -55
Page 2 of 3
ATTEST:
ANDREA LORENZO - LUACES, City Clerk
Approved as to legal form and sufficiency for
the City of Winter Springs only:
ANTHONY A. GARGANESE, City Attorney
City of Winter Springs
Resolution No. 2010 -55
Page 3 of 3
Calendar Views
Blue shading — old pay periods Bold and underlined dates indicate pay dates
Neutral shading — revised pay periods Arrows indicate review /processing time; file
transmitted to bank by Wed at 5 pm
October / November 2010
Sun Mon Tues Wed Thu Fri Sat
9/30 1 2
3 4 5 6 7 8 9
10 11 12 13 14 15 16
17 18 19 20 21 22 23
Last day of Back -up day Back -up day Back -up day
week 1 1 2 3
(4days)
27
24 25 26 10/29 payday 28 29 30
14 days
Last day of
10/29 pay
•
period
(11 days)
31 1 2 3 4 5 6
7 8 9 10 11 12 13
11/12 payday '°
14 days
14 15 16 17 18 19 20
21 22 23 24 25 26 27
11/26 payday
14 days
Consent 205
October 11, 2010
Attachment 2
RESOLUTION NO. 2010-55
A RESOLUTION OF THE CITY COMMISSION OF THE
CITY OF WINTER SPRINGS, FLORIDA, AMENDING
SECTION 20 OF THE C1TY PERSONNEL MANUAL;
PROVIDING FOR REPEAL OF PR10R INCONSISTENT
RESOLUTIONS, INCORPORATION INTO THE PERSONNEL
:VIANUAL, SEVERABILITY, A.ND AN EFFECTIVE DATE.
WHEREAS, the City is granted the authority under Section 2(b), Article VIiI, of the State
Constitution to exercise any power for municipal purposes, except when expressly prohibited by law;
and
WHEREAS, the City desires to revise section 20 of the City's Personnel Manual related to
employee work week and pay.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COMMISSION OF THE
CITY OF WINTER SPRINGS, SEMINOLE COUNTY, FLORIDA, AS FOLLOWS:
Section 1. Recitals. The foregoing recitals are hereby fully incorporated herein by this reference
and are deemed a material part of this Resolution.
Section l. Amending Section 20 of the City Personnel Manual. The CityCommission hereby
approves the following revisions to Section 20 of the City of Winter Springs Personnel Manual as
follows (underlined type indicates additions to and strii�cct�reng�r type indicates deletions from the
Personnel Manual; portions of the Personnel Manual unaffected by this Resolution shall remain
unchanged):
20.1 Work Week
The standard workweek consists of seven (7) consecutive calendar days commencin�
at 12:00 a.m. on the first day and endin� at 11:59 p.m. on the seventh day commerrces
. . . . . . The
standard number of working hours for full-time employees during any standard
workweek will be 40 hours unless otherwise specified. The work hours for Fire and
Police Department shift employees shall be governed by the Department Head and/or
union contract.
***
City of Winter Springs
Resolution No. 2010-55
Page I of 3
20.3 Pay Periods and Checks
Employees shall be paid on a bi-weekly basis
�daq. Each paycheck shall include earnings for all work performed through the
end of the previous payroll period. In the event that a regularly scheduled payday
falls on the date of a holiday, employees will receive pay on the last day of work prior
to the regularly scheduled payday.
Paychecks, which arrive during an employee's vacation, will be held in a secure
location by the Department Head or designee pending the employee's return.
***
20.5 Advances of Pay.
It is the general policy of the City of Winter Springs not to make advances on
employee pay. Exceptions
can be made for emergencies with prior written approval of the City Manager.
Section 3. Repeal of Prior Inconsistent Resolutions. All prior resolutions or parts of
resolutions in conflict herewith are hereby repealed to the extent of the conflict.
Section 4. Incorporation into Personnel Manual.. Upon adoption of this Resolution by the
City Commission, the City Manager or his designee shall incorporate these revisions into the Winter
Springs Personnel Manual.
Section 5. Severability. If any section, subsection, sentence, clause, phrase, word, or portion
of this Resolution is for any reason held invalid or unconstitutional by any court of competent
jurisdiction, such portion shall be deemed a separate, distinct and independent provision and such
holding shall not affect the validity of the remaining portion hereto.
Section 6. Effective Date. This Resolution shall become effective immediatelyupon adoption
by the City Commission of the City of Winter Springs, Florida.
DO:VE AND ADOPTED in regular session of the City Commission of the City of Winter
Springs, Florida, this l lthday of October , 2010.
� ,/C�'��• � �
JO F. BUSH, ?V��:yar _ .
City of Winter Springs
Resolution No. 2010-55
Page 2 of 3
ATT�ST:
� _
;:
�LORENZO-LUACES, City Clerk
Approved as to legal form and sufficiency for
the City o inter Springs only:
ANTHONY A. GARGANESE, City Attorney
City of W inter Springs
Resolution No. 2010-55
Page 3 of 3