CITY OF OAKLAND

Interoffice Letter

To:

City Manager's Office

From:

Attention:Mr.

Henry Gardner

D~ e~eptember 24,

1991

Office of Personnel Resource Management

Subject:

Response to Deloitte & Touche Management Letter

Regarding Compensatory Leave and vacation

In their Management Letter presented to the Council in the Spring

of this year, Auditors Deloitte & Touche recommended that the City
establish a pOlicy to limit the number of compensatory hours which
employees can carry forward from year to year and consider paying

for accrued vacation and compensatory hours at the rates at which

they were earned.
This recommendation was predicated on a finding
that certain employees have substantial vacation and compensatory
hours accrued from previous years.
COMPENSATORY

LEAVE:

Compensatory leave is a form of compensation for overtime. The

other form of such compensation in use by the City is cash.
Both

are available to employees who are covered by the federal Fair

Labor
Standards
Act ( FLSA)
which
governs
employee
overtime
eligibility and which became applicable to pUblic employers,
including the city, in 1986, or who, by negotiated agreement or
other City policy, are entitled to overtime compensation.

The city has

several policies
in place which encourage that
employees
be
compensated
for
overtime
in
cash,
rather
than
compensatory leave, and/or which limit compensatory leave accruals
for eligible employees:
By negotiated agreement, sworn Fire Fighters represented
by the International Association of Fire Fighters, Local
55 and City electrical employees represented by the
International Brotherhood of Electrical Workers, Local
1245 are compensated for overtime in cash only.

By negotiated agreement, employees represented by

United Employees, Local 790, the largest group of City
employees, primarily receive compensation for overtime
in cash, though they may receive compensatory leave up to
56 hours for those employees who work 37 1/2 hours per
week or 60 hours for those employees who work 40 hours
per week.
By negotiated agreement, sworn Police Officers receive
overtime compensation in the form of cash or compensatory
leave, at the employee's option, though the City may buy
any accrued compensatory leave in excess of 96 hours.

D- FINANCE
9-24-91
600-10

Mr. Henry Gardner

Compensatory Leave
Subject:
September 24, 1991
Page Two

The current City agreement with sworn Police" separates

pre-FLSA ( before April
5,
1986)
compensatory
leave
accruals from those earned after the City came under FLSA
and limits maximum compensatory leave accruals to 480
hours as FLSA requires.

A small group of supervisors and other miscellaneous

staff employees who are unrepresented may receive
overtime compensation in cash or compensatory leave,
though most elect cash compensation. In the case if these
employees, the City Salary Ordinance ( Ordinance No. 4727
C.M. S.)
limits the amount of compensatory leave that
these employees can carry forward from year to year to 52
1/2 hours for employees who work 37 1/2 hours per week
and 56 for employees who work 40 hours per week.

Additionally, the FLSA itself imposes limits on the amount of

compensatory leave which covered employees can accrue.
For sworn
police officers, as alluded to above, compensatory leave can be
accrued up to a maximum of 480 hours.
For all other employees,
compensatory leave can be accrued up to a maximum of 240 hours.
Since the advent of FLSA,
its requirements are automatically
implemented through the City's payroll system, so that employees
are paid cash for overtime hours in excess of legal limits.
As a
result of this and the more stringent City policies, compensatory
leave accruals for a majority of eligible employees are well within
policy and legal parameters.
The exception to this is the Police
Department where pre-FLSA compensatory leave banks, segregated from
post-FLSA leave banks as the law requires, that exceed current
limits are still in place.
On employee request and as available
funds
permit,
the City buys
back such accrued
leave.
As a
practical matter, however, most of this accrued leave is cashed out
at the time the employee leaves City employment due to the City's
inability to purchase it sooner.
Given the above, it does not appear that
regarding compensatory leave are required.

further

city

pOlicies

VACATION:

Existing
City
policy
regarding
vacation
strongly
encourages
employees to take some time away from the work place each year:

Both sworn Police and Fire personnel receive annual

vacation
awards, based on years of service, which they
are required to use within a 12 month period by
departmental rUles,
except by special Department Head
exception.

D- FINANCE
9-24-91

Mr. Henry Gardner

SUbject:
Compensatory Leave

September 24,
Page Three

1991

By negotiated agreement, non-sworn employees represented by

various employee organizations accrue vacation based on years
of City service and may carry forward one year of earned
vacation from one year to the next, unless City Management
determines that it is in the best interest of the City to
allow the employee to defer more.
By City Manager policy, unrepresented employees also accrue
vacation based on years of City service and may defer vacation

as approved by City management.

A majority of City employees do take some time away from work each year
as City guidelines encourage.
Further, employee vacation balances are
generally within pOlicy parameters where these are applicable.

Based on the above, Deloitte & Touche did not recommend that the City
impose further limits on vacation accruals; however, they did recommend
that the City pay for both accrued vacation and compensatory leave at
the rates at which they were earned.
This is not a common practice in
other pUblic jurisdictions and could not be implemented without meeting
and conferring with impacted employee groups.

rA).-J-U
GWEN McDONALD,

Director
Personnel Resource Management

APPROVED FOR FORWARDING TO

THE COUNCIL FINANCE COMMITTEE

Of~~~'~~~:~n:: a=g=e=r=:""------D- FINANCE

9-24-91