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HomeMy WebLinkAboutORD-2010-078 Implementation of a One-Week Payroll Deferral–Amendment to OC Personnel Ordinance Article III, Section 1.0, The Work Week-Resolution Authorizing the Use and Advancement of Sick, Personal & Petty Leaveit>- a9..le Article III a R -a -eve -- © Z Conditions of Employment 1.0 The Work Week 1.1 The standard work week shall be from 12:01 a.m. Saturday until 12:00 midnight on Friday, a time span of seven (7) consecutive twenty -four (24) hour periods. Exceptions may be granted by the County Manager in an effort to Amended meet scheduling needs and be in compliance with the Fair Labor 110/09/10 Standards Act. - Io iZ) `y 1 - 7- yw 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 12:00 midnight on Friday, a time span of seven (7) consecutive 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. Approved Orange County Board of Commissioners First Reading: August 17, 2010 Second Reading: September 2, 2010 The Board approved on second reading the granting of a franchise for a five -year term to AAA Transport, Inc. Basic Life Support Convalescent Transport Services and Emergency Services; authorized the Chair to sign the Franchise Ordinance; directed staff to discuss and enter into an Operations Agreement with AAA within 90 days that identifies the subcategories under which AAA will be permitted to operate the Convalescent and Emergency Medical Basic Life Support Franchise based on the needs of the County and the capacity and capabilities of AAA as well as to provide for the daily operational functions of AAA as it works within the Orange County Emergency Services System; and after the Emergency Services Director negotiates the Operations Agreement with AAA, authorized the County Manager to sign the Agreement subject to review by the County Attorney or his staff. The granting of the Franchise Ordinance is conditional upon successful completion of the Operations Agreement with 90 days of acceptance of the Franchise Ordinance by AAA Medical Transport. m. Second Reading: 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 The Board approved on second reading the amendment to Article III, section 1.0 of the Orange County Personnel Ordinance and approved the resolution 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. n. Second Reading: Amendment to the Orange County Personnel Ordinance, Article VI, Sections 5.1 and 5.2 of the Position Classification Plan The Board approved on second reading an amendment to Article VI, Sections 5.1 and 5.2 of the Position Classification Plan. o. Second Reading: Amendment to the Orange County Personnel Ordinance, Article II, Recruitment and Employment to Add Section 5.7 Appointments of Incumbents and Others to Vacant Positions The Board approved on second reading an amendment to Article ll, Sections 5.0 Appointments and 5.7 Appointments of Incumbents and Other to Vacant Position, with staff providing the Board with the administrative rules and procedures guiding the implementation of this amendment at an upcoming meeting. Q. Animal Services Facility — Third Amendment to Agreement for Construction Manager at Risk and Approval of Budget Amendment # 2 -A This item was removed and placed at the end of the consent agenda for separate consideration. g, Justice Facility — General Contractor Extended Overhead Request and Approval of Budget Amendment # 2 -13 The Board approved the $40,000 negotiated amount related to the extended construction overhead costs requested by the General Contractor; and approved the attached Budget Amendment #2 -B consolidating all costs for the Justice Center Facility into one capital project account. The total of all costs for this project is $12,277,329. r. Change in BOCC Regular Meetinq Schedule for 2010 The Board amended its regular meeting calendar for 2010 by: - Adding a location for the Orange County Assembly of Governments Meeting, which is scheduled for Thursday, September 16, 2010 at 7:00 p.m. and will be held at the Southern Human Services Center, 2501 Homestead Road in Chapel Hill. VOTE ON CONSENT AGENDA: UNANIMOUS ORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: September 2, 2010 Agenda Item No. -} SUBJECT: Second Reading: 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: (YIN) 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 approve on second reading an amendment to the Orange County Personnel Ordinance Article ill, 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 Vi anticipated work schedule through their last day of work, as well as any unused vacation. 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: 1. 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 a one -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 Ill, 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 a one -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 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. All 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 Approval on First Reading by the BOCC September 2, 2010 Proposed Approval on Second Reading by BOCC September 3, 2010 Email to All Employees notifying them of the payroll change and acknowledgement form. Website posted on County Intranet, including Frequently Asked Questions. September 13, 2010 HR begins department training regarding timekeeping policies and procedures, electronic timesheet and payroll change. September 27, 2010 Deadline for acknowledgement forms returned to Human Resources 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. The Board of Commissioners discussed and approved this item on first reading at the August 17, 2010 regular meeting with six Board members present If ordinance amendments such as this one are not approved by all members of the governing board, North Carolina General Statutes require approval on second reading for the amendment to be effective. FINANCIAL IMPACT: Implementing a one -week payroll deferral and pursuing automation of the County's payroll process will create cost savings by reducing staff time spent processing 4 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 on second reading approve the amendment to Article Ili, Section 1.0 of the Orange County Personnel Ordinance and approve the resolution 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 Pay Date Hours Worked Holidays October 1, 2010 9/20-10/3 October 15, 2010 10/4-10/10 October 29, 2010 10/11 — 10124 November 12, 2010 10/25-11/7 November 24, 2010 11/8-11121 December 10 2010 11/22-12/5 11/25,11/26 —Than giving December 23, 2010 12/6-12/19 January 7, 2011 12/20 — 1/2111 12/24, 12/27, 12/28 — Christmas 12/31 — New Year's January 21, 2011 1/3/11 — 1/16 February 4, 2011 1/17-1/30 1/17 - MLK .February 18, 2011 1/31-2/13 March 4, 2011 2/14-2/27 March 18, 2011 2/28-3/13 April 1, 2011 3/14-3/27 April 15, 2011 3/28-4110 April 29, 2011 4/11-4124 4/22 - Easter May 13, 2011 4/25-5/8 May 27, 2011 5/9-5/22 June 10, 2011 5/30 — Memorial Da June 24, 2011 .5/23-6/5 616-6119 July 8, 2011 ' 6/20-7/3 o R D - ao 1D- o _7g Orange County Personnel Ordinance Amendment Date: August 17, 2010 6 Article III Conditions of Employment 1.0 The Work Week 1.1 The standard work -week shall be from 12:01 a.m. M Saturday until jAme,ded 12:00 midnight on Sund y 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. Article III - Page 1 99,5- X010 -0(a4 Attachment 3 ORANGE COUN'T'Y BOARD OF COIVIIVIISSIONERS 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 103 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 Z 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 2nd day of September, 2010. Valerie P. Foushee, Chair Orange County Board of Commissioners M ORANGE COUNTY HILLSBOROUGH NORTH CAROLINA .ana,ver s D�ce August 12, 2010 Fellow Orange County Employees 1isl -Z0i aead /T.S2 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 current payroll process are tedious, repetitive and outdated We are 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 corrective actions alter 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 count each employee's time in a manner that assures correct time worked is recorded-, overtime (if applicable) is correctly 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 for 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 Friday 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 currently Monday through Sunday (EMS, Solid Waste and the Sheriff's Office and other Department work Saturdays 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 for 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 might 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) 246 -2300 • 688 -7331 • FAX (9 19) 644 -3004 Ext. 2300 10 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 a non - 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 tame 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 15a', 2010. The payroll for October 15`' will be set for hours actually worked between October 41' --- October 100', 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 29', 2010 would be based upon the actual hours worked from October 11 t' — 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 sheets. accordingly but will have no impact upon normal work schedules or employees and is for accounting purposes only. To assist all county employees with this transition of the payroll system we are planning to make three options available (at each individual's 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 normal 80 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 30, 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 creeds correction. The current system negatively impacts the County and 11 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 8/17110) is being proposed to allow each 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 directly impacted by the general economic conditions affecting Forth 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 eachpayroll. This payroll adjustment is a consequence of historical error. Correcting that error is our 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, Jr. CC: County Commissioners 4 The Board approved on second reading the granting of a franchise for a five -year term to AAA Transport, Inc. Basic Life Support Convalescent Transport Services and Emergency Services; authorized the Chair to sign the Franchise Ordinance; directed staff to discuss and enter into an Operations Agreement with AAA within 90 days that identifies the subcategories under which AAA will be permitted to operate the Convalescent and Emergency Medical Basic Life Support Franchise based on the needs of the County and the capacity and capabilities of AAA as well as to provide for the daily operational functions of AAA as it works within the Orange County Emergency Services System; and after the Emergency Services Director negotiates the Operations Agreement with AAA, authorized the County Manager to sign the Agreement subject to review by the County Attorney or his staff. The granting of the Franchise Ordinance is conditional upon successful completion of the Operations Agreement with 90 days of acceptance of the Franchise Ordinance by AAA Medical Transport. m. Second Reading: 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 The Board approved on second reading the amendment to Article III, section 1.0 of the Orange County Personnel Ordinance and approved the resolution 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. n. Second Reading: Amendment to the Orange County Personnel Ordinance, Article VI, Sections 5.1 and 5.2 of the Position Classification Plan The Board approved on second reading an amendment to Article VI, Sections 5.1 and 5.2 of the Position Classification Plan. o. Second Reading: Amendment to the Orange County Personnel Ordinance, Article II Recruitment and Employment to Add Section 5.7 Appointments of Incumbents and Others to Vacant Positions The Board approved on second reading an amendment to Article II, Sections 5.0 Appointments and 5.7 Appointments of Incumbents and Other to Vacant Position, with staff providing the Board with the administrative rules and procedures guiding the implementation of this amendment at an upcoming meeting. L., Animal Services Facility — Third Amendment to Agreement for Construction Manager at Risk and Approval of Budget Amendment # 2 -A This item was removed and placed at the end of the consent agenda for separate consideration. 9L Justice Facility — General Contractor Extended Overhead Request and Approval of Budget Amendment # 2 -15 The Board approved the $40,000 negotiated amount related to the extended construction overhead costs requested by the General Contractor; and approved the attached Budget Amendment #2 -13 consolidating all costs for the Justice Center Facility into one capital project account. The total of all costs for this project is $12,277,329. r. Change in BOCC Regular Meeting Schedule for 2010 The Board amended its regular meeting calendar for 2010 by: - Adding a location for the Orange County Assembly of Governments Meeting, which is scheduled for Thursday, September 16, 2010 at 7:00 p.m. and will be held at the Southern Human Services Center, 2501 Homestead Road in Chapel Hill. VOTE ON CONSENT AGENDA: UNANIMOUS Gam-- .90 /0 -a'767-1 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: (YIN) 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 pJgr 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. 2 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: 1. Modifying the standard workweek to begin midnight on Friday. This change provides input- of the hours to be paid; and at 12:01 am on Saturday, and end at 12:00 for administrative verification and accurate 2. Implementing a one -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 a one -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 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. All 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 a one -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 4 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 Pay Date Hours Worked Holidays 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 1118-11/21 December 10, 2010 11/22-12/5 11/25, 11/26 —Thanksgiving 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 January 21, 2011 1/3/11 — 1/16 February 4, 2011 1/17-1/30 1/17 - MLK February 18, 2011 1/31-2/13 March 4, 2011 2/14-2/27 March 18, 2011 2/28-3/13 April 1, 2011 3/14-3/27 April 15, 2011 3128-4/10 April 29, 2011 4/11-4124 4/22 - Easter May 13, 2011 4/25-5/8 May 27, 2011 5/9-5122 June 10, 2011 5/23-6/5 5/30 — Memorial Da June 24, 2011 6/6-6/19 July 8, 2011 6/20-7/3 men- - a C)PZD- ,;�O(0 -CO' -7 6 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. Men Saturday until Amended 12:00 midnight on 9 Friday, a time span of seven (7) consecutive 101/19/89 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. Article III - Page 1 N C) C) (0 — 0( 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 7 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 17th day of August, 2010. Valerie P. Foushee, Chair Orange County Board of Commissioners 91 ORANGE COUNTY HILLSBOROUGH NORTH CAROLINA lr7lana ,"-', Qpce August 12, 2010 Fellow Orange County Employees 4 s �sfa6irr�ed11S2 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 current payroll process are tedious, repetitive and outdated. We are 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 corrective 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 count each employee's time in a manner that assures correct time worked is recorded; overtime (if applicable) is correctly 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 for 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 Friday 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 currently Monday through Sunday (EMS, Solid Waste and the Sheriff's Office and other Department work Saturdays 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 for 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 might affect actual hours worked. These tasks take Finance and Human Resource staff away fi-om other important functions and create payroll issues for employees every payday. AREA CODE (919) 245 -2300 - 688 -7331 - FAX (919) 644 -3004 EXt. 2300 10 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 a non - 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 156' will be set for hours actually worked between October 4th — October 106i, 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 from October 116' — October 256. 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 sheets. accordingly but will have no impact upon normal work schedules or employees and is for accounting purposes only. To assist all county employees with this transition of the payroll system we are planning to make three options available (at each individual's choice); I . 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 normal 80 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 JA 4"yv�k 4 ORANGE COUNTY HILLSBOROUGH NORTH CAROLINA J�ana�er's Q�ce August 12, 2010 Fellow Orange County Employees &ArIaXlr eolIZU 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 current payroll process are tedious, repetitive and outdated. We are 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 corrective 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 count each employee's time in a manner that assures correct time worked is recorded; overtime (if applicable) is correctly 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 for 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 Friday 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 currently Monday through Sunday (EMS, Solid Waste and the Sheriff's Office and other Department work Saturdays 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 for 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 might 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 • FAX (919) 644 -3004 Ext. 2300 10 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 a non - 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 15", 2010. The payroll for October 15`x' will be set for hours actually worked between October 40' — October I &, 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 29", 2010 would be based upon the actual hours worked from October 11 �n — October 25a'. 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 sheets. accordingly but will have no impact upon normal work schedules or employees and is for accounting purposes only. To assist all county employees with this transition of the payroll system we are planning to maIce three options available (at each individuaYs 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 normal 80 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 30'', 2011. (County Commissioners will consider authorization of specific leave categories not currently allowed within County personnel policies at their 8117110) 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 11 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 /17 /10) is being proposed to allow each 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 directly 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 error. Correcting that error is our 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, Jr. CC: County Commissioners