HomeMy WebLinkAboutAgenda - 08-17-2010 - 7d1
ORANGE COUNTY
BOARD OF COMMISSIONERS
ACTION AGENDA ITEM ABSTRACT
Meeting Date: August 17, 2010
Agenda ~, ,
Item No. ~ ~_
SUBJECT: Implementation of a One-Week Payroll Deferral -Amendment to Orange
County Personnel Ordinance Article III, Section 1.0, The Work Week and
Resolution Authorizing the Use and Advancement of Sick,- Personal and Petty
Leave During Payroll Deferral
DEPARTMENT: Human Resources PUBLIC HEARING: (Y/N) No
ATTACHMENT(S): INFORMATION CONTACT:
1. Revised Pay Schedule Michael McGinnis, Human Resources
2. Orange County Personnel Ordinance Director, 245-2552
Amendment to Article III, Section 1.0 Clarence Grier, Financial Services
3. Resolution Authorizing the Use and Director, 245-2453
Advancement of Sick, Personal and Annette Moore, Staff Attorney, 245-2317
Petty Leave During Payroll Deferral
4. 8/12/10 County Manager's Memo to
County Employees
PURPOSE: To consider an amendment to the Orange County Personnel Ordinance Article III,
Section 1.0, "The Work Week" to change the standard work week and a resolution authorizing
the County Manager to allow employees to use up to 40 hours of sick leave and personal and
petty leave accrued through June 30, 2011 to supplement their pay during the payroll deferral
and advancing employees sick, personal and petty leave during the payroll deferral.
BACKGROUND: In January 1989, the County adopted the standard work week as being
"...from 12:01 am Monday until 12:00 midnight on Sunday, a time span of seven (7)
consecutive 24 hour periods". Based on this standard the County developed a practice
whereby employees are paid bi-weekly and receive their paychecks on the second Friday of
each pay period. Permanent employees are paid on Friday prior to the end of the second
workweek, which ends on Sunday. The vast majority of County employees have chosen to
have their pay deposited directly into their bank accounts and receive a pay stub rather than
receive an actual paycheck. The Financial Services Department releases direct deposit
information for payroll to the County's bank on the Tuesday prior to each payday, so the payroll
process must be completed on Tuesday prior to the end of the second workweek in each pay
period, five days before the end of the pay period.
As a result, paychecks are based on the employee's anticipated schedule, not on the actual
hours worked. Any adjustments for scheduled hours not worked cannot be resolved until the
following pay period and can result in overpayment of wages. to the employee, which must be
deducted from the employee's next paycheck. Further, payment of overtime earned must be
deferred by a minimum of one pay period. When employees separate, they are paid for their
anticipated work schedule through their last day of work, as well as any unused vacation.
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When the employee does not work his/her anticipated schedule, an overpayment results and
collecting this overpayment is a difficult process.
Orange County's process also makes it difficult to develop, and implement an automated time
and attendance process. This current process has caused problems in the past as various
paper forms have been used to make adjustments prior to being turned into payroll. With an
automated time system, employees will enter their time each day, and the time they input
determines the number of hours they will be paid. It is not possible to implement an automated
time system paying for actual hours worked without a pay deferral.
Over the past several months, Human Resources, Financial Services and County Attorney staff
have been meeting to review options for implementing a payroll deferral and develop a process
that will improve current payroll procedures with minimal impact on employees. As a result of
these discussions, the County Manager is proposing modification of the pay cycle in two ways:
Modifying the standard workweek to begin at 12:01 am on Saturday, and end at 12:00
midnight on Friday. This change provides for administrative verification and accurate
input- of the hours to be paid; and
2. Implementing aone-week payroll deferral to improve the accuracy of payroll processing
and payment. This deferral creates the opportunity to process payroll in advance of each
payday and for employees to be paid based on actual hours worked.
Modifying the standard work week would require a change to the Personnel Ordinance, Article
III, Section 1.0, "The Work Week." The proposed one-week deferral would occur on October
15, 2010, which is the second payday in a month in which employees are paid three times.
Deductions for benefits are not taken out of employees paychecks during the second pay
period in a three pay period month.
Implementing aone-week payroll deferral would result in employees receiving a full paycheck
during the first and third pay periods in October and a one week paycheck during the second
pay period. Human Resources and Financial Services have developed options from which
employees can choose to supplement their paycheck during the second pay period so they will
not receive a paycheck for one week pay and instead receive a full two week paycheck while
the change is implemented in the system. The options are as follows:
1. An employee may elect to receive a one week paycheck for the period of October 4
through October 8, 2010 and not supplement their paycheck.
2. An employee may elect to use accrued compensatory, vacation, sick, personal and/or
petty leave to supplement his or her regular bi-weekly pay.
3. An employee may request an advance of vacation, sick, personal and/or petty leave to
supplement his or her regular bi-weekly pay. Any leave advanced will be reimbursed to
the County using earned vacation, sick, personal or petty leave no later than June 30,
2011.
In order for employees to either use sick leave or be advanced sick, personal or petty leave
during the payroll deferral as provided in Options 2 and 3 the Board would have to expand, for
the situation only, the reasons that sick leave could be used and that the County Manager could
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advance sick, personal and petty leave. The Board's approval of the attached resolution would
authorize both the use and the advancement of sick, personal and petty leave for purpose of
supplementing an employees' pay for the period ending October 8, 2010.
Alf permanent employees will be asked to sign an agreement selecting one of the above
options. If an employee does not designate one of the options, they will receive Option 1.
Below is a proposed schedule for implementing the payroll deferral:
August 5, 2010 Presentation to Department Directors at Director's Meeting
August 17, 2010 Presentation to BOCC
August 18, 2010 Email from County Manager to All Employees
August 20, 2010 Memorandum sent to all employees notifying them of the payroll change
and acknowledgement form. Website posted on County Intranet,
including Frequently Asked Questions.
August 23, 2010 HR begins department training regarding timekeeping policies and
procedures, electronic timesheet and payroll change.
September 23, 2010 Deadline for acknowledgement forms returned to HR
October 1, 2010 Regular payday for hours worked between September 20 and October 3,
2010, and overtime and other special pays associated through
September 19, 2010. All payroll deductions currently established in
payroll records will be deducted from this check.
October 4, 2010 Follow-up with Departments for unsigned acknowledgement forms.
Beginning of the transition to the revised pay cycle.
October 15, 2010 Payday for hours worked between October 4, 2010 and October 8, 2010,
and overtime and other special pays associated with September 20, 2010
through October 8, 2010.
October 29, 2010 Regular payday for hours worked between October 9, 2010 and October
22, 2010 and overtime and other special pays associated through
October 22, 2010. All payroll deductions currently established in payroll
records will be deducted from this check.
FINANCIAL IMPACT: Implementing aone-week payroll deferral and pursuing automation of
the County's payroll process will create cost savings by reducing staff time spent processing
payroll and reducing costs associated with creating and maintaining paper records. Allowing
employees the option of using accrued and/or advanced leave to supplement hours worked in
the pay period ending October 8, 2010, will create an expense not to exceed $800,000 with a
corresponding reduction in the County's booked liability for vacation and sick leave.
RECOMMENDATION(S): The Manager recommends the Board adopt the amendment to
Article III, Section 1..0 of the Orange County Personnel Ordinance and approve the resolution
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authorizing use and advancement of up to forty hours of sick leave and personal and petty
leave accrued through June 30, 2011 for the sole purpose of supplementing employee pay for
the period ending October 8, 2010 during implementation of the payroll deferral.
Attachment 1
Payroll Schedule
Pa Date Hours Worked Holida s
October 1, 2010 9/20 - 10/3
October 15, 2010 10/4 - 10/10
October 29, 2010 10/11 -10/24
November 12, 2010 ~ 10/25 - 11/7
November 24, 2010 11/8 -11/21
December 10, 2010 11/22 -12/5 11/25, 11/26 -Thanks ivin
December 23, 2010 12/6 - 12/19
January 7, 2011 12/20 - 1/2/11 12/24, 12/27, 12/28 -Christmas
12/31 -New Year's
Janua 21, 2011 1 /3/11 - 1 /16
Februa 4, 2011 1/17 -1/30 1/17 - MLK
Februa 18, 2011 1 /31- 2/13
March 4, 2011 2/14 - 2/27
March 18, 2011 2/28 - 3/13
A ril 1, 2011 3/14 - 3/27
A ril 15, 2011 3/28 - 4/10
A ril 29, 2011 4/11 - 4/24 4/22 -Easter
Ma 13, 2011 4/25 - 5/8
Ma 27, 2011 5/9 - 5/22
June 10, 2011 5/23 - 6/5 5/30 -Memorial Da
June 24, 2011 6/6 - 6/19
Jul 8, 2011 6/20 - 7/3
Orange County Personnel Ordinance Amendment Date: August 17, 2010
Article III
Conditions of Employment
1.0 The Work Week
1.1 The standard work week shall be from 12:01 a.m. ~ Saturday until Amended
12:00 midnight on Suzy Friday, a time span of seven (7) consecutive 01/19/89
twenty-four (24) hour periods. Exceptions may be granted by the County
Manager in an effort to meet scheduling needs and be in compliance with the Fair Labor
Standards Act.
s
Article III -Page 1
~~ S- ~~I~ - oCn~f
Attachment 3
ORANGE COUNTY BOARD OF COMMISSIONERS
A RESOLUTION AUTHORIZING THE USE AND ADVANCEMENT OF SICK,
PERSONAL AND PETTY LEAVE BY ORANGE COUNTY EMPLOYEES FOR
THE PURPOSE OF SUPPLEMENTING PAY FOR THE PAY PERIOD ENDING
OCTOBER 8, 2010
WHEREAS, the Orange County Personnel Ordinance Article III, Section 1.0
provides that employees standard work week is from "12:01 am Monday until 12:00
midnight on Sunday;" and
WHEREAS, permanent employees receive their paychecks on the Friday prior to
the end of the workweek in which they are paid; and
WHEREAS, this results in employees receiving paychecks based on the
employee's anticipated work schedule instead of on the employees actual hours worked;
and
WHEREAS, this practice has caused several issues including overpayment of
wages and difficulty in collection overpaid wages and delay in receipt of overtime
compensation; and
WHEREAS, in addition this practice makes it difficult to develop and implement
an automated time and attendance process to not only cut down on errors in timekeeping
and increase efficiencies but to also standardize the methodology used to process time
and attendance; and
WHEREAS, to change the current system a "payroll deferral" is required that
moves the pay period one week which will cause employees to receive, in the second of
three paychecks in October 2010, a one week paycheck instead of a two week paycheck;
and
WHEREAS, the County Manager has recommended several options which
include the use of up to forty (40) hours of sick leave, advancing an employee up to forty
(40) hours of sick leave and allowing employees to use any personal and petty leave
earned but not used through June 30, 2011 for the sole purpose of supplementing an
employee's pay for the period ending October 8, 2010; and
WHEREAS, the Orange County Personnel Ordinance Article IV, Section 6.2
"Use of Sick Leave," Section 6.9 "Advancing of Sick Leave," and Sections 10.3 and
10.4 limit the use of sick and petty leave to those enumerated in the Orange County
Personnel Ordinance and do not allow for the use recommended by the County Manager.
NOW, THEREFORE, BE IT RESOLVED that the Orange County Board of
Commissioners is authorizing the County Manager to allow County employees the use of
Attachment 3
up to forty (40) hours of sick leave for the sole purpose of supplementing the employee's
pay for the pay period ending October 8, 2010; and
BE IT RESOLVED that the County Manager is authorized to advance employees up to
forty (40) hours of sick leave for the sole purpose of supplementing the employee's pay
for the pay period ending October 8, 2010; and
BE IT FURTHER RESOLVED that the County Manager is authorized to allow
employees to use any petty and personal leave earned but not used through June 30, 2011
for the purpose of supplementing the employee's pay for the pay period ending October
8, 2010.
This the 17~' day of August, 2010.
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Valerie P. Foushee, Chair
Orange County Board of Commissioners
1 ~'f~GC~MC.t~' ~ 9
ORANGE CC3UNTY
HILLSBOROUGH
NORTH CAROLINA
l`7lanaye~'s Of~ce
August 12, 2010
Fellow Orange County Employees
~,rfa6ls~ed~7sz
I am taking this opportunity to communicate with all of you on a very important issue and
to update you on corrective improvements to the County's payroll system. Economic
conditions dictate the County must pursue efficiencies wherever possible to ensure
valuable resources are not wasted. County staffing reductions force us to look for
methods to improve productivity and eliminate wasteful practices, especially related to
areas where staff can avoid repetitive work processes that do nothing to improve services.
Several aspects of the County's currentpayroll process are tedious, repetitive and
outdated. We arc operating a paper driven process that requires multiple persons to
manually complete, review and sort timesheets for 800 employees every two weeks.
Manual errors each payday require correc#ive actions after the payroll has been issued. It
is a wasteful use of individual effort by numerous employees involved in the process
from beginning to end. This is the primary reason the County will automate the process.
Automation of the payroll process will Gaunt each employee's time in a manner that
assures correct time worked is recorded; overtime (if applicable) is coirectIy applied and
the accuracy of the payroll will be automatically verified.
An issue must be addressed prior to implementing this simple payroll accounting change.
The current payroll system created a process that actually counts and pays employees in
advance of actual time worked. -
Currently, for a payday scheduled on Friday; the Monday before is the day that
"anticipated" hours to be worked far each employee are submitted by departments to our
payroll processing staff. Staff in Finance and Human Resources complete several
functions related to getting the payroll ready for deposit to each employee's designated
bank account at 12:01 AM on Fi~day morning of paydays. The actual verification of
deposits to be made by the bank to employees is complete and at the County's bank on
Wednesday before the Friday payday.
The CounTy's work week is cut7ently Monday through Sunday (EMS, Solid Waste and
the Sheriffls Off ce and other Department work Sahzrdays and Sundays). Payroll on
Fridays for each employee's payday is deposited prior to actual days worked; Fridays for
all employees and Saturdays and Sundays far those departments regularly working
weekends.
This situation creates the need after each payday to make corrections for all employees
not working scheduled hours; taking vacation or sick leave instead of working;
recalculating the impact of overtime worked on those days; and, any other issue that
miglrt affect actual hours worked. These tasks take Finance and Human Resource staff
away from other important functions and create payroll issues for employees every
payday.
AREA CODE (919) 245-2300 • 688-7331 F'AX (919) 644-3004
Ext. 2300
~o
The practice of paying employees in advance of actual hours worked is a bad business
practice. It obligates staff time to correct avoidable errors. It is anon-standard
accounting practice frowned upon by the State and investment banks that finance County
debt. Continuing the current system is not sound financial management practice.
It is our intention to correct this issue during this fiscal year so that future audits and
financial reports will be clear as to the County's payroll practices.
We can and will accomplish this change to the payroll system without negatively
impacting county employee take home pay.
The planned change to the payroll system will occur during the month of October 2010.
That is one of two months this fiscal year with three regularly scheduled Friday paydays.
In order to make this correction and begin paying county employees for actual hours
worked before a scheduled payday, a deferral of one week between the end of the
scheduled work week and payday Friday is necessary. This change is planned for
October 15th, 2010.
The payroll for October 15`h will be set for hours actually worked between October 4th -
October IO`h, 2010. Most county employees would see a payday based upon 40 hours
plus any overtime (if applicable} for that time period. The next regular payday of
October 29th, 2010 would be based upon the actual hours worked fiom October 11`h -
October 25`h. County employees would see a normal payday based on hours worked
{typically 80 hours plus overtime, if applicable).
We are also changing the standard work week from a Monday through Sunday to a
Saturday through Friday accounting period. This change will affect time shee#s .
accordingly but will have no impact upon normal work schedules or employees and is for
accounting puzposes only.
To assist all county employees with this transition of the payroll system we are
planning to make three options available (at each individuaPs choice}:
1. Each county employee may elect to be paid for the actual hours worked as
indicated above {normally 40 hours, plus applicable overtime). This would be
roughly half of the normal scheduled pay each employee receives under the
current system. Or;
2. Each county employee may use accrued individual leave time comp-time (if
applicable), vacation, sick, personal and petty leave or combination of up to the
number of hours needed to obtain the norma184 hours scheduled for each payday.
Or;
3. Each county employee that may not have enough accrued leave (all categories
above) may request an advance of leave time available to be repaid through future
accruals during the FY 10 -11 fiscal year ending June 30th, 2011. (County
Commissioners will consider authorization of specific leave categories not
currently allowed within County personnel policies at their 8!17/10) regular
meeting.)
There has been much discussion among county employees about this change in payroll
policy. It is not something (as County Manager} I enjoy having to correct but it is a
practice that needs correction. The current system negatively impacts the County and
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those responsible for ensuring you are paid correctly. Ignoring the problem is not
reflective of Orange County's commitment to public accountability or transparency.
To ensure that these changes have the least impact upon county employees, the use of
accrued leave time or advanced leave time (subject to authorization by County
Commissioners on 8/l.7/10) is being proposed to allow eac12 employee to select between
the three options proposed. Each employee is encouraged to review the options and
select the one that best fits their individual circumstances.
Clearly, for some county employees implementation of this change will be more difficult
than others. The use of accrued leave time or the advancement of leave time is provided
as a method to avoid any negative impact of the change.
In these difficult economic times, residents of Orange County are coping with individual
financial challenges. As public employees, we must accept obligations to take corrective
action when necessary and maintain the highest levels of public accountability.
The County Commission has maintained a strong commitment in support of county
employees. In the recent difficult budget process there were: no layoffs; no
mandatory furloughs; and no reduction in compensation.
We still face difficult days ahead. We are duectly impacted by the general economic
conditions affecting North Carolina State Government. We continue to work at creating
efficiencies and reducing internal expenses when possible. This change to our payroll
system was intended to reduce the number of hours that Finance and Human Resource
staff spend on each payroll and reduce errors being processed with each payroll. This
payroll adjustment is a consequence of historical ei~or. Correcting that error is otu -
responsibility. -
As this payroll change progresses Human Resources and Finance staff will provide more
information and assistance to enable each of you to select the best personal choice to fit
individual needs. Seek their assistance.
Thank you for your commitment to public service and to Orange County
Respectfully,
3r.
CC: County Commissioners