Side Letter Between
the City of Emeryville and the Management of Emeryville Services Authority and
the Service Employees International Union (SEIU)
This Side Letter is entered into by and between the City of Emeryville (“City”), the Management of Emeryville Services Authority (“MESA”) and the Service Employees’ International Union, Local 1021 (“Union”), hereafter referred to as “parties”. Following the determination of the Internal Revenue Service (“IRS”) that MESA employees are common law employees of the City and that their compensation constitutes wages for Social Security tax purposes, the parties have met and conferred over implementation of the IRS’ determination for those MESA employees represented by the Union.
By way of background, the governing tax laws prevent the IRS from collecting unpaid taxes for 2018 and earlier years. To settle the unpaid Social Security taxes for 2019-2021, the City made a one-time payment to the IRS, thereby absolving MESA employees of paying any Social Security taxes for those years. For tax years 2022, 2023 and January 1 through February 26, 2024,, the City is negotiating with the IRS to forgive or reduce Social Security taxes owed for those years. Irrespective of the outcome of those negotiations, the City will fully cover the back taxes due for 2022,2023 and January 1 through February 26, 2024, again absolving MESA employees of paying the employees’ share for that time period. From February 27, 2024 and going forward, the City will require MESA employees represented by the Union to pay their share of Social Security taxes, as follows:
To comply with the IRS’ determination, the City will ensure that MESA employees’ compensation paid effective February 27, 2024 will be reported as Social Security wages and subject to the required Social Security tax on those wages. Payment of the employees’ share of that tax, which is six and two tenths per cent (6.2%) of wages per pay period, will be paid by the City for the period of February 27, 2024 through June 15, 2024. For this period only, employees will be responsible for paying the required federal and state withholding tax on the 6.2% employee contribution paid by the City. Effective for the pay period beginning on June 16, 2024, bargaining unit employees will pay the 6.2% employee Social Security tax through a direct payroll deduction administered by the City.
In addition, for those SEIU bargaining unit’s employees employed by the City as of June 16, 2024, and who remain employed through September 21, 2024, the City will provide each employee a one-time, nonpensionable lump sum payment of twenty-five hundred dollars ($2,500.00), to be paid by the City on September 27, 2024.
This Side Letter is hereby incorporated by reference into the existing labor agreement by and between the City/MESA and the Union and shall carry forward as part of that labor agreement, subject to the parties’ negotiations over a successor labor contract.
For the City: For SEIU:
________________________________ ________________________________ Richard C. Bolanos, Chief Negotiator Ryan Fettes, Chief Negotiator ________________________________ ________________________________ Lilybell Nakamura, Human Resources Director Navarre Oaks, Interim President ________________________________ ________________________________ Pedro Jimenez, Assistant City Manager Michael Roberts, Negotiating Team Member ________________________________
Jamie Lee, Negotiating Team Member
Docusign Envelope ID: 27751D91-A7C4-4718-93DE-A288628C5127 08/23/2024
08/23/2024
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08/27/2024