201 S. Anaheim Blvd.
Suite 501
Anaheim, CA 92805
Tel: (714) 765-5111
Fax: (714) 765-5215
www.anaheim.net
CITY COUNCIL AGENDA REPORT
City of Anaheim
HUMAN RESOURCES DEPARTMENT
DATE: APRIL 21, 2026
FROM: HUMAN RESOURCES DEPARTMENT
SUBJECT: CLASSIFICATION AND COMPENSATION IMPLEMENTATION,
PHASE I, RESOLUTIONS TO APPROVE COMPENSATION OF
STUDY AND MINIMUM WAGE COMPLIANCE, AND
PERSONNEL RULE REVISIONS
ATTACHMENT (Y/N): YES ITEM # 24
GOVERNMENT CODE § 84308 APPLIES: NO
RECOMMENDATION:
That the City Council, take the following actions:
1. By Motion, approve the implementation of Phase I, in part, based on the Segal Company, Western States, Inc. (Segal) Citywide classification and compensation study, by realigning base salary ranges for specified classifications within the Non- Represented Non-Management and Executive Management groups to support the City’s recruitment and retention strategy, while addressing internal equity and compensation compaction; and
2. By Resolution, modify the City of Anaheim Personnel Rules to adjust pay policies for classifications designated as Non-Represented Full-Time and Part-Time to comply with the mandated 2026 California minimum wage increase, to reflect Non-Represented Part-Time pay policies based on adjustments to Full-Time equivalent positions, and to realign base salary ranges for Fire Management to ensure internal equity for recruitment and retention; and
3. By two (2) Resolutions, modify Appendix B in two separate Memoranda of Understanding establishing the base rates of pay for classifications in the i) General Employees, and ii) Clerical Employees, represented by the Anaheim Municipal Employees Association to comply with the mandated 2026 California minimum wage increase; and
4. By two (2) Resolutions, modify Appendix B in two separate Memoranda of Understanding establishing the base rates of pay for classifications in the i) General Management Unit and ii) Professional/Technical Management Unit, represented by the American Federation of State, County, and Municipal Employees, Local 2002, to comply with the mandated 2026 California minimum wage increase; and
5. By Motion, amend the Fiscal Year 2025/2026 budget by $368,441 for the cost of unrepresented Phase I implementation and minimum wage compliance.
Classification and Compensation Implementation, Phase I, Resolutions to Approve Compensation of Study and Minimum Wage Compliance, and Personnel Rule Revisions
April 21, 2026
DISCUSSION:
Background:
In compliance with the provisions of the Municipal Code, the City of Anaheim maintains a personnel system comprised in part by a position classification plan and a plan of compensation.
On August 15, 2023, the City Council approved a Professional Services Agreement with The Segal Company, Western States, Inc. (Segal) to conduct a citywide classification and compensation study. The purpose of the study was to evaluate the City’s current classification and compensation practices across all bargaining units and recommend strategies that ensure the City consistently maintains (1) the ability to successfully recruit and retain a talented and highly qualified workforce, (2) review compensation practices that achieve internal equity and external competitiveness, and (3) provide a safe, productive work environment with high employee engagement.
Immediately following approval of the contract, Segal and Human Resources engaged all bargaining units and departments to identify and select comparable agencies and benchmark classifications.
On October 29, 2024, the City Council approved a second agreement with Segal to set the City’s competitiveness to be set at the 75th percentile in the labor market as well as implementation strategies based on anticipated economic forecasts.
This effort represents the first comprehensive citywide review of the City’s classification and compensation structures. The last study, conducted over a decade ago, included only those certain classifications in management.
The Classification Plan establishes positions based on departmental operational needs and an analysis of assigned duties and responsibilities. Due to the City’s one-of-a-kind placement in the competitive labor market that is similarly situated with agencies providing usual public services, including utilities, police, fire services, and the largest exhibition facility on the West Coast, the City maintains a complex classification system. Human Resources currently manages approximately 1,000 classifications, supporting about 2,000 full-time and 1,200 part-time employees.
The City’s Compensation Plan aligns with the Classification Plan and must be approved by City Council in compliance with Title 2 of the California Code of Regulations (“CCR”), Section 570.5.
Typically, salary ranges are established after consideration of multiple factors, including scope of responsibility, level of complexity, degree of risk, labor market conditions, and internal equity.
Together, the classification and compensation structures ensure organizational consistency, competitiveness, and fiscal responsibility. These salary ranges, along with other forms of compensation, make up the City’s plan of compensation, which includes 388 unique salary ranges.
Classification and Compensation Implementation, Phase I, Resolutions to Approve Compensation of Study and Minimum Wage Compliance, and Personnel Rule Revisions
April 21, 2026
Study Scope and Methodology:
To ensure the City remains competitive in the labor market and maintains internal equitable compensation practices, Segal conducted the study using a multi-phase approach that included stakeholder interviews, review of classification specifications, and a comprehensive market compensation analysis. Key components of the study included:
I) Project Initiation to set clear goals and objectives, gather and analyze critical information, and facilitate interviews with key stakeholders, including management and union representatives.
II) Compensation Philosophy to provide recommendations regarding compensation strategy, governance, and communication.
III) Classification Analysis for existing classification specifications to identify and confirm relevancy, accuracy, and adequacy of distinguishing characteristics, essential functions, working conditions, minimum qualifications, and Fair Labor Standards Act (FLSA) designations. Employees, supervisors, and directors also provided input through Job Description Questionnaire (JDQ). Based on the completed JDQs, Segal developed recommendations for updates to classification specifications and the overall classification structure.
Benchmark Classifications and Market Survey:
Segal conducted a benchmark position analysis using the City’s workforce census to facilitate the selection of a broad range of jobs representing different functions, departments, existing pay grades, labor contracts, FLSA statuses, etc. These would include “anchor” jobs, or those that define pay relationships within the City’s existing Memoranda of Understanding (MOU). Human Resources, department directions, and all bargaining units collaboratively selected the 117 benchmark classifications and 16 peer organizations included in the compensation survey.
Human Resources collaborated with department directors and all labor groups to finalize a list of 117 benchmark classifications and 16 peer organizations to be included in the compensation survey (See Attachment A).
Segal used the City’s existing classification specifications to develop job summaries for the market survey. Given that exact job matches are uncommon due to differences in organizational size, structure and services, the survey focused on positions with substantially similar duties and qualifications. Nationally recognized published compensation data sources were also used to represent private sector pay data.
Market Analysis Results:
Comparisons were conducted relative to the 75th percentile. Segal adjusted data for geographic labor cost differences in labor between the peer agencies and Anaheim as well as cost-of-labor differentials reported by the Economic Research Institute (ERI).
Classification and Compensation Implementation, Phase I, Resolutions to Approve Compensation of Study and Minimum Wage Compliance, and Personnel Rule Revisions
April 21, 2026
Segal’s Approach to Defining Market Competitiveness
Segal uses the concept of a “competitive range”, defined as any value between 95% to 105% of the desired competitive position (in this case, the market 75th percentile): City of Anaheim as a % of Overall Market 75th Percentile1
Base Pay Range
Minimum Midpoint Maximum
Peer Agencies Survey 93% 97% 99%
Published Data Sources 111% 96% 103%
Overall Market 75th Percentile 94% 97% 100%
In summary, Segal found that the City pays at or near top-market levels, with only a minimal gap at the minimum salary range. Across all benchmark jobs, Segal found that the City is market competitive as base pay ranges align closely with the market’s 75th percentile (97%-100% of the market 75th percentile). At the minimum pay range, Anaheim has a minimal gap of 1% when compared to the 75th percentile.
Classification Plan Review:
As part of the classification review process, classifications were reviewed to identify obsolete or inactive classifications. This review resulted in 103 inactive or obsolete classifications being deleted on January 14, 2025, with the concurrence of bargaining units. This allowed the study to focus on classifications that reflect current operational needs.
With the completion of the analysis and study phase, Human Resources is prepared to move forward with other areas of the study and its findings.
Phase I Implementation:
Consistent with Council direction, Phase I implementation will prioritize realigning classifications identified as below the 75th percentile of the labor market, including necessary adjustments to address compaction and/or compression. Phase I key components include:
Continue review of classification specifications with departments labor groups. Salary adjustments to address market competitiveness, compaction and internal equity. Structural range adjustments to the Executive and Master Salary Schedules consistent with the approved framework.
The study identified approximately 176 incumbents in classifications with base pay more than five percent (5%) below the 75th percentile market minimum. These classifications include benchmark 1 Segal uses the concept of a “competitive range”, defined as any value between 95% to 105% of the desired competitive position (in this case, the market 75th percentile):
● Values shown in red text are less than 95% of the market and are considered “below market” ● Values shown in black text are between 95% and 105% of the market and are considered “at market”, “market competitive”, and/or “in the competitive range” ● Values shown in blue text in are greater than 105% of the market and are considered “above market”
Classification and Compensation Implementation, Phase I, Resolutions to Approve Compensation of Study and Minimum Wage Compliance, and Personnel Rule Revisions
April 21, 2026
positions, as well as classifications tied to existing MOUs, and have been evaluated for internal equity concerns.
To take steps to implement Council’s direction to move incumbents to the minimum of the 75th percentile, Council’s action this evening will implement Phase 1 for unrepresented classifications.
Our labor partners representing the impacted classifications have requested additional time to evaluate the data and schedule additional meetings to address full implementation. On an ongoing basis, staff will continue to collaborate with our labor partners on the City’s classification plan and the compensation structure.
The current compensation structure for the Executive Management team consists of four broad salary ranges (XER 10, 20, 30, and 40), with each classification assigned to one of the four levels.
Results of the market study indicate that the minimum base salary for the Executive Director of Convention, Sports & Entertainment, Finance Director, and Fire Chief classifications is more than 15 percent below the 75th percentile of the market. Reassignment to the next salary range will align these positions while maintaining the existing framework. Further, to acknowledge the current combined classification of the Finance Director and City Treasurer, authorized under section 701 of the City Charter, it is recommended a new classification of Finance Director/Treasurer be created and realigned to XER 25. Accordingly, the Executive Director of Convention, Sports & Entertainment classification will be (re)assigned to XER 25, the Fire Chief to XER40, the Police Chief to XER50 consistent with compensation approved on December 28, 2025, and the City Manager to a newly created XER 60 salary range, which will correct salary compression, maintain internal equity, and remain competitive in attracting top executive talent (Appendix A).
Adjustment to salary ranges will not require a salary increase as affected incumbents’ current salaries are above the minimum of the 75th percentile. This realignment is to remain competitive with the market.
Next Steps, Implementation:
City Staff will continue to meet and confer with our labor partners regarding Phase I implementation - prioritize realigning classifications identified below the 75th percentile of the labor market, including necessary adjustments to address compaction and/or compression.
City Council’s approval of the foregoing will complete Phase I of the Implementation Plan, which is compensation alignment of the classifications that fall below the minimum of the 75th percentile.
This step is a significant investment and must be followed by sound compensation administration policy, or compaction issues will grow over time.
Staff recommends and intends to implement Phase II and Phase III, which will complete the implementation of the City’s study as follows:
Phase II, Classification Structure Modification - retitle, collapse, and/or expand up to 200 classifications pursuant to Segal’s recommendations.
Phase III, Compensation Structure Reconstruction – establish compensation ranges for master salary structure and align classifications internally based on grade, as well as Classification and Compensation Implementation, Phase I, Resolutions to Approve Compensation of Study and Minimum Wage Compliance, and Personnel Rule Revisions
April 21, 2026
externally to the labor market. This step is critical to ensure City classifications are based on job requirements and the actual market.
Each phase is anticipated to require approximately one (1) year due to the level of coordination required with departments and all labor groups. Full implementation is projected to take approximately two (2) years. However, staff is committed to prioritizing this effort and will proactively pursue all reasonable opportunities to accelerate completion of each phase.
Revisions to Personnel Rules
Concurrent to the above recommendations, staff further recommends approval of revisions to the Personnel Rules and Policies Covering Non-Represented Full-Time and Part-Time Employees (“Personnel Rules”) to update terms and conditions of employment, related salary schedules, temporary upgrade assignments, promotional increases, and the City’s Health Reimbursement Arrangement plan.
Section 1.2(c)(4), Scope – At-Will Appointments: clarified language for the term of employment to include all time combined regardless of part-time or full-time status Section 6.8, Temporary Upgrade – Management Employees: added language regarding upgrade pay for management positions deployed to all risk incidents. Section 6.10, Exemption: Amend Section 6.10 to replace the current exemption language with Longevity Pay provisions applicable to Fire Management and establish new Section
6.11 to relocate the existing Exemption language.
Section 24.6, Health Reimbursement Arrangement Plan: updated references to Retirement Health Savings to the appropriately named Health Reimbursement Arrangement Plan; added language regarding the exclusion of the Chief of Police from HRA employer contributions
Appendix B, Non-Represented Non-Sworn Management: updated tables to include increases provided by the minimum wage increase
Appendix D, Non-Represented Fire Management: updated tables to include a 4% (four percent) base salary increase to Fire Management.
Appendix E, Ambulance Operator (Part-Time and Full-Time): updated table to include hourly rate increases following a survey of the labor market identifying a current ranking of 23% below the 75th percentile.
Minimum Wage Adjustments
On January 1, 2026, under California Labor Code §1182.12(c), California’s minimum wage increased from $16.50 to $16.90, thereby requiring exempt employees to earn at least twice the state minimum wage, establishing the annual salary to $70,304.
To ensure compliance, Council approval will adjust pay steps and salary below the mandated wages, effective December 19, 2025 (the pay period that includes January 1, 2026). The affected classifications are outlined in each respective salary schedule reference within the attached exhibits.
Classification and Compensation Implementation, Phase I, Resolutions to Approve Compensation of Study and Minimum Wage Compliance, and Personnel Rule Revisions
April 21, 2026
Parity Increases for Non-Represented Part-Time Classifications There are certain Non-Represented Part-Time classifications that have full-time equivalent classifications represented by AMEA. Council approved negotiated increases for AMEA on February 24, 2026. Pursuant to the Personnel Rules, Section 3.1, Compensation Plan, staff realigned salary rates and ranges of these Non-Represented Part-Time classifications for parity by providing the same increases granted by Council to their full-time equivalent counterparts. Staff recommends approval of the City’s updated salary schedule to reflect increases for parity between the Full-Time and Part-Time equivalent positions.
IMPACT ON BUDGET:
The Fiscal Year 2025/26 impact to implement the above-referenced adjustments is approximately $368,441.
The department budgets will be amended as follows:
Department Amendment
Finance $10,189
Community Services $87,538
Police $2,671
Fire $221,805
Public Works $12,621
Planning $8,981
Convention Center $14,936
Public Utilities $9,699
Total $368,441
Respectfully submitted,
Linda N. Andal
Human Resources Director
Attachments:
1. Resolution – for Non-Represented Part-Time Classifications and Executive Management
2. Resolution – AMEA General Unit
3. Resolution – AMEA Clerical Unit
4. Resolution – AFSCME General Unit
5. Resolution – AFSCME Professional/Technical Unit
6. Personnel Rules – Redlined
7. Personnel Rules – Final