CITY COUNCIL STAFF REPORT
Meeting: November 7, 2023
Subject
Approve the Tentative Agreement revising salary and benefits terms of the Memorandum of Understanding (MOU) for the Operating Engineers Local No. 3 Union, AFL-CIO (OE3) for the term of July 1, 2022 through June 30, 2025.
Recommended Action
Adopt the Resolution 23-XXX approving the Tentative Agreement between the City of Cupertino and Operating Engineers Local No. 3 Union, AFL-CIO (OE3); and Approve the corresponding Salary Schedule for OE3 employees effective July 1, 2023.
Reasons for Recommendation
On August 16, 2022, the City Council approved a three-year agreement with the OE3. This included a 5% cost of living adjustment (COLA) and $3,800 in a one-time lump sum payment. That agreement included a side letter that allowed for wage and health reopener. OE3 contacted the City in February 2023 to reopen contract negotiations.
The City has since reached a tentative agreement with OE3. As part of the Council packet for the November 7, 2023, City Council meeting, Council has been presented with the revised salary and terms and conditions of employment for the OE3 successor MOU, covering the period from July 1, 2022, through June 30, 2025. Key provisions of the tentative agreements are summarized below:
Cost of Living Adjustment (COLA): 3.5% for year 2 and no additional COLA for year 3 of the MOU.
Health Premiums: Effective January 1, 2024, the City shall contribute up to the Kaiser Family health premium cost per month for OE3 employees. Required contribution amounts exceeding this premium contribution of the City are the responsibility of the employee.
For any change in the monthly medical plan premium charged by CalPERS in the plan year 2025 compared to the plan year 2024, the City’s maximum contributions shall be capped at no more than 6%.
Adding Lunar New Year and Cesar Chavez Day as paid holidays starting in 2024. For Calendar Year 2023, employees will receive one (1) floating holiday in lieu of Lunar New Year holiday.
Wage Reopener: The agreement includes a wage reopener for the third year of the contract should specific criteria be met.
Title 2 of the California Code of Regulations, section 570.5, requires that the pay schedule of every CalPERS agency be approved and adopted by the agency's governing body pursuant to public meeting law. The City's Salary Schedule for OE3 employees is attached for the Council's review and approval, effective July 1, 2023.
Sustainability Impact
There is no sustainability impact resulting from the recommended action in this report.
Fiscal Impact
The City incurred an estimated cost of $471,742 in the first year (FY2022-23) for OE3 employees, estimated costs for the second year (FY2023-24) are $320,142, for a total estimated cost of $791,884 for the three-year contract. At the time of the adopted budget, costs related to the labor contracts were unknown, but estimates were included in the adopted budget. Budget estimates are sufficient to cover the additional estimated cost and no budget adjustment is needed.
California Environmental Quality Act (CEQA)
Not applicable.
Prepared by: Vanessa Guerra, Human Resources Manager
Reviewed by: Kristina Alfaro, Director of Administrative Services Matt Morley, Assistant City Manager
Approved for Submission by: Pamela Wu, City Manager
Attachments:
A – OE3 signed Tentative Agreement
B – Draft Resolution
C – OE3 Salary Schedule