ITEM 4.4
CITY MANAGER' S REPORT
DECEMBER 11, 2023 CITY COUNCIL REGULAR MEETING
ITEM: AMENDMENT NO. 5 TO THE CITY MANAGER
EMPLOYMENT AGREEMENT
RECOMMENDATION: Adopt a Resolution Approving Amendment No. 5 to the City Manager Employment Agreement to Allow
Payout of a Portion of Accumulated Sick Leave
Balance
BAC KG ROU N D:
The City Council is responsible for the employment agreements of the three Council appointed officials; City Manager, City Attorney, and Police Chief. These employment agreements allow for the payout of unused accrued leave.
Section 8 of the City Manager' s contract states that Employee shall be paid for all accrued and unused sick leave" upon end of contract. Under the current employment agreement, time accrued continues to appreciate in value at annual cost of living adjustments or salary increases. Over the course of employment, the accrued sick leave has become a funded liability of the City.
Amendment Number 5 to the City Manager' s Employment Agreement is prepared in accordance with the direction of the City Council pursuant to closed session discussions held on November 13, 2023. Amendment Number 5 would allow the City Manager to cash out 14 Hours per pay period of accrued unused sick leave, so long as accrued sick leave balance remains at a minimum of 160 hours. Increments of less than 14 hours above 160 hours of accrued sick leave will not be cashed out.
The proposed amendment is attached herein ( Attachment B). Special Counsel Michael Youril reviewed the proposed resolution and employment contract amendments, which are recommended for City Council review and approval.
REASON FOR RECOMMENDATION:
The proposed contract amendment allows the City to be prudent and paydown the City' s accumulated liability at the current rate of pay to eliminate future appreciation in value pursuant to annual cost of living adjustments or salary increases.
FISCAL IMPACT:
If approved by Council, the attached resolution will result in an immediate City fund balance savings of $27, 251 by paying out accrued sick leave at current hourly rates instead of future rates. This item authorizes the Finance Department to make appropriate adjustments to the Compensated Absences Liability Account and increase the vacation/ sick leave expenditures for FY 23- 24 and FY 24- 25, and decrease funded future liability by the same amount.
CITY MANAGER' S REPORT PAGE 2
DECEMBER il, 2023 CITY COUNCIL REGULAR MEETING
AMENDMENT NO. 5 TO THE CITY MANAGER EMPLOYMENT AGREEMENT ATTACH M E NTS:
A. Resolution Approving Amendment No. 5 to the City Manager Employment Agreement
B. Amendment No. 5 to the Employment Agreement for City Manager, Stephen J. Salvatore
CITY MANAGER' S REPORT PAGE 3
DECEMBER 11, 2023 CITY COUNCIL REGULAR MEETING
AMENDMENT NO. 5 TO THE CITY MANAGER EMPLOYMENT AGREEMENT APPROVALS:
I 2l 41 oZ3
Thomas Hedegard Date
Deputy City Manager
L 6 zo
Salvador Navarrete Date
City Attorney
l2•t • Z-3
S en J. Salvatore Date
City Manager
RESOLUTION NO. 23-
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LATHROP APPROVING AMENDMENT NO. 5 TO THE CITY MANAGER EMPLOYMENT
AGREEMENT TO ALLOW PAYOUT OF A PORTION OF ACCUMULATED SICK
LEAVE BALANCE
WHEREAS, the City Council is responsible for the employment agreement of the three Council appointed officials; City Manager, City Attorney, and Police Chief; and
WHEREAS, Section 8 of the City Manager' s contract states that " Employee shall be paid for all accrued and unused sick leave" upon end of contract. Under the current employment agreement, time accrued continues to appreciate in value at annual cost of living adjustments or salary increases; and WHEREAS, over the course of employment, the accrued sick leave has become a funded liability of the City; and
WHEREAS, Amendment Number 5 to the City Manager' s Employment Agreement is prepared in accordance with the direction of the City Council pursuant to closed session discussions held on November 13; and
WHEREAS, Amendment Number 5 requires the City Manager to cash out up to 14 Hours per pay period of accrued unused sick leave, so long as accrued sick leave balance remains at a minimum of 160 hours; and
WHEREAS, the proposed contract amendment allows the City to be prudent and paydown the City' s accumulated liability at the current rate of pay to eliminate future appreciation in value pursuant to annual cost of living adjustments or salary increases.
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Lathrop does hereby approve the Amendment Number Five ( 5) to the City Manager Employment Agreement; and
BE IT FURTHER RESOLVED, that the City Council of the City of Lathrop authorizes the Finance Department to make appropriate adjustments to the Compensated Absences Liability Account and increase the vacation/ sick leave expenditures for FY 23- 24 and FY 24- 25, and decrease funded future liability by the same amount.
The foregoing resolution was passed and adopted this 11th day of December 2023, by the following vote of the City Council, to wit:
AYES:
NOES:
ABSENT:
ABSTAIN:
Sonny Dhaliwal, Mayor
ATTEST: APPROVED AS TO FORM:
Teresa Vargas, City Clerk Salvador Navarrete, City Attorney ATTACHMENT' '° "
Amendment Number Five to Employment Agreement between
The City of Lathrop and Stephen 1. Salvatore
December 11, 2023
The original Employment Agreement between the City of Lathrop and Stephen J. Salvatore, attached hereto and incorporated herein as Exhibit " A", was entered into between the parties for the services of City Manager on or about September 17, 2012.
On or about August 17, 2015, the City Council approved Amendment Number One to the Employment Agreement, which is attached and incorporated herein as Exhibit " B." On or about November 19, 2018, the City Council approved Amendment Number Two, which is attached and incorporated herein as Exhibit " C."
On or about August 8, 2022, the City Council approved Amendment Number Three, which is attached and incorporated herein as Exhibit" D."
On or about August 14, 2023, the City Council approved Amendment Number Four, which is attached and incorporated herein as Exhibit" E."
The City Council hereby approves an amendment to the second paragraph of Section 8 of the Employment Agreement to read as underlined below:
If this contract is terminated for any reason specified herein, Employee shall be paid for all accrued and unused sick leave, vacation time, paid holidays; and the value of all benefits including employer' s contribution to PERS, Health Insurance allowance, and car allowance.
Severance will be paid in one payment within 30 days of termination. Emplovee shall cash out 14 hours per pav period of accrued unused sick leave, so lon as the accrued sick leave balance remains at a minimum of 160 hours. Increments of less than 14 hours above 160 hours of accrued sick leave will not be cashed out.
Unless specifically stated above, no other changes to the original agreement ( or Amendments) are intended by this Amendment.
EMPLOYEE CITY OF LATHROP
By:
Stephen J. Salvatore Sonny Dhaliwal, Mayor
Date: Date:
APPROVED AS TO FO M:
Salvador Navarrete, City Attorney
ATTEST:
Teresa Vargas, City Clerk
Attachments:
Exhibit " A"— Employment Agreement for Stephen J. Salvatore effective September 17, 2012 Exhibit " B"— Amendment Number One to Employment Agreement dated August 17, 2015 Exhibit " C"— Amendment Number Two to Employment Agreement dated November 19, 2018 Exhibit " D"— Amendment Number Three to Employment Agreement dated August 8, 2022 Exhibit " E"— Amendment Number Four to Employment Agreement dated August 14, 2023 Exhibit " A"
EMPLOYMENT AGREEMENT
THIS EMPLO i' MENT AGREEMENT (" Contract"} is made and entered into this 17 day of September, 2012, by and between the City of Lathrop, California, a general law city organized under the laws of the State of Califomia, hereinafter called " Employer," and Stephen J.
Saivatore, an individual, hereinafter called " Employee," and is effective as of September 17, 2012(" Effective Date"}.
The parties agree as follows:
SECTION 1. DUTIES.
Employer hereby employs Employee as City Manager to perform the functions and duties specified in the laws of the State of California, the Municipal Code of the CiTy of Lathrop, and the Ordinances and Resolutions of the City of Lathrop, and to perform such other Iegally permissible and proper duties and functions as the City Council shall from time to time assign.
SECTION 2. TERM.
A. The term of this Contract shall initially be for three ( 3) years, commencing as of the Effective Date, and shall be automatically renewed and elctended for additional three ( 3) year perioas at the end of each three year period, unless either party sha11 provide written notice of non- renewal at Ieast ninety ( 90) days prior to the end of the period in which notice is given.
B. Nothing in this Contract shaIl prevent, limit, or otherwise interfere with the right of Employee to resign as City Manager or as an employee of the City at any time for any reason.
C. Employee shall remain in the exclusive employ of Employer, and shall neither accept ather employment nor become employed by any other employer except upon written approval of Employer.
D. The term " employed" shall not be construed to include occasional teaching, writing, speaking, or consuIting performed during Employee' s time off.
E. Employee' s initial date of hixe was January 1, 2008, but this Agreement is effective as the Effecbve Date specified above.
SECTION 3. SALARY.
Employer agrees to pay Employee, commencing with the Effective Date far his duties, the base annual salary of or e hundred and seventy one thousand one hundred fihirty one dollazs
17I, I 31) payable in installments at the same time and in the same manner as other Employees of the Ernployer are paid.
On the one ( 1) year anniversary of the Effective Date, tbe City Council shall conduct an annual performance evaluation. This evaluation shall be completed as a joint effort between Employee and Employer. If desired, an outside facilitator, to be mutually agreed upon by Employer and Employee, and at Employer's sole cost, may be utilized. On the subsequent anniversaries, Emplayer may grant merit increases to the base annual salary and provide other benefits to Employee under this Contract at their discretion.
SECTION 4. FIQURS OF WORK.
It is recagnized that Employee must devote a great deal of time outside normal office hours to husiness of Employer. To that end, Employee will be granted management leave at a rate of four 4) weeks of management leave per calendar year. Management leave is fully credited on January 1 of each year.
SEC' ITON 5. AUTOMOBILE ALL4WANCE.
Employer sha1l receive an a automobile allowance of$450.00 per month for the general business use of his personal vehicle; however, Employer shall also reimburse Employee at the IRS standazd mileage rate for any business use of his personal vehicle for any single business trip totaling more than 100 miles.
SECTI4N 6. TERMINATION.
This Conixact shal! terminate upon the occurrence of any of the following events:
A. The death fEmployee.
B. The dissolution or bankruptcy of Ernployer.
C. The disability ofEmployee, as defined herein.
D. The majority of the City Council of Employer votes to terminate the Employee at a duly autharized meeting. Except for non-renewal of contract pursuant to 2A, the Employer however shall not terminate Employee within a " cooIing off' period of ninety ( 90) days either before or after an election for which a City Council Member is elected.
E. If the Employer, citizens or Iegislature act or acts to amend any provision of applicable law that substaintially changes the role, powers, duties, authority, or responsibilities of the Emplayee, the Employee shall have the right to declare fihat such amendments constitute termination.
Page z of 6
F. If the Employer reduces the base salary, compensation ar any ather fnancial benefit of the Employee, unless any such reduction is pursuant to a City wide fiulough program, such action shall constitute a breach of this Contract and will be regazded as termination.
G. Ifthe Employee resigns following an offer to aceept resigna ion, by majority of the City Council of Employer, then the Employee may declare a ternunation as of the date of the requested resignation.
H. Breach of contract declared by either party with a tiv.rty (3U) day cnre period for either Employee or Employer to be provided. Written notice of a breach of contract shall be pravided.
I. Conviction of Employee of any public offense that is a felony, and/ or involves moral tuxpztude, and / or the punishment for which includes a prohibition of holding public employment.
SECTION 7. CONFIDENTIALITY.
Unless the Employee expressly requests otherwise in writing, the evaluation of the Employee during his service as City Manager shall at all times be conducted in closed session of the City Council and shall be considered confidential to the full extent permitted by law. Nathing herein shall prohibit the Employer ar the EmpIoyee from sharing the content of Ennployee' s evaluation with their respective legal counsel.
SECTION 8. SEVERANCE P AY.
If tlni s Contract is terininated pursuant to Section 6, Pazagraph B, D, E, F, G or City bzeach of Contract, Employer shatl pay severance to Employee in the amount of six ( months' salary.
Instead of six of severance pay in accordance with this Section, Employee may elect to treat the non- renewal of the Contract ( as described in herein and in Section 2) as a termination that entitles him to three ( 3} months' severance pay in addition to regular pay during the 90 day notice period of non-renewal referenced in Section 2A.
Tf this contract is terminated for any reason specifed herein, Employee shall be paid for a.11 accrued and unused sick leave, vacation time, paid holidays; and the value of all benefits including employer' s contribu ion to PERS, Heatth Insurance allowanee, and car allowance.
Severance will be paid in one payment within 30 days of temunation.
SECTION 9. NOTICE TO RESIGN
Employee may terminate this Contract by providing written notice to the City at least tturty ( 30) days prior to the effective date of resignation. The Employer sha l have no further obligation to provide payments and benefits to Employee for his service as City Manager after the effective date of the resignadon except for a l accrued and unused management Iea.ve, sick leave and vacation time. The City requests that Employee provide silc ( 6) to twelve ( I 2) months advance notice in the event that he determines to retire from service.
SECTYON 10. IIVDENIl IFICATION.
Employer shall defend, save harn ess and indemnify Emplayee in accordance with Division 3. 6 of the Catifomia Government Code, commencing with section 8I0.
SECT' TON 11. BONDII TG.
Employer sha.tl beaz the full cost of any fidelity or ather bonds required of the Employee under any Iaw or ardinance.
SECTION 12. DISABILITY. ADJUSTMENTS. HEALTH AND LIFE
INSURANCE. COST- OF-LIVING. VACATION AND SICK LEAVE.
Unless otherwise spec cally provided herein, all provisions of the Municipal Code and regulations and rules of Employer relating to va,cation and sick leave, retirement system contributions, holidays and other fringe besiefits and warking conditions as they now exist or hereaf er may be amended also sha11 apply to Employee as they wou d to other unrepresented employees ofthe Employer. An annual cost of living increase ad.justment sha11 be applied to the base annual salary going forward to Employee as established for all other non-represented emplayees. Adclitionally, Employee will accrue vacation and sick leave at a rate as outlined in the City's Adminisbrative Policies Manual based on his initial hire date.
SECTION 13. RETIREMENT.
Employer shali pay Employee' s contribution to the Public Employees Retirement System in accordance with adopted policies of Employer.
SECTTON 14. NOTICES.
Notices pursuant to this Contract shall be in writing given by deposit i.n the custody ofthe United States Postal Service, postage prepaid, addressed as follows:
1} Employer Mayor, City afLathrop, 390 Towne Centre Drive, Lathrop, CA 2) Employee At his address as reflected in his personnel records ofthe City.
Alternatively, notices required pursua nt to this Contract may be personally served in the same manner as is appIicable to civil judicial process. Notice shall be deemed given as of the date of personal service or as of the date of deposit of such written notice in the course of transmission in the United States Postal Service.
SECTION 25. GENERAL PROVYSIUNS.
A. The text herein shall constitute the entire Contract between the pazties.
Page4of6
B. Tf any provision, or any portion thereof, contained in this Contract is held uticonstitutional, invalid or unenforceable, the remainder of this Contract, or portion thereof, shall be deemed sevezable, shall not be afFected and shall remain in full force and effect.
IN WITNESS WHEREOF, the City of Lathrop has caused this Contract ta be signed and executed in its behalf by its Mayor and duly attested by its City Clerk, and the Employee has signed and executed tius Contract, both in duplicate, the day and year first above written.
EMPLOYEE CITY 4F LATH OP
By:
en J. Salvatore J Chaka s,
Date: 1' 1!
T
I Z Date: a `
APPROVED AS TO F4 .
Salvador Navanete, City Attorney
ATTEST:
Mitzi rtiz, ' Clerk
Exhibit ~g
Amendment Plumber ne to Emptoyment l greement between
The C ty of tathrop and Stephen 1. Salvatore
August 17, 2015
The origfial Employment Agreement between the City of Lathrop and Stephen 1. Salvatore, attached hereto and incorporated herein as Exhibit" A, was entered Into between the parties fo the services of City Manager on or about September 17, 2012.
The Gty Council has met and unanimously agreed to renew and extend this Employment Agreement pursuant to the conditions as described in Section 2 of the Employment Agre ment.
IN WlTNESS WHEREOF the Gty of lathrop h s caused this Amendment Ido. 1 to be signed and executed n its behalf by its Mayor and duly attested by its City Clerk, and the employee has signed and executed this Amendment both in dupiicate.
EMPLOYEE CITY OF LATHROP
B ' ..
ephen J. Sa{ vatore Sonny D aliwal, lVlayor
Date: 15 Date: /' 72 /
APPROVED AS TQ fQl M:
Saivador iVava rete, City Attorney
ATTEST:
eresa Vargas, City
Attachment: Fachibit A— Empfoyment Agreement for Stephen J. Salvatore effecttve Septemher 17, 2012 Exhibit" C"
Aaa t Nr tber 1 o tn Emplpymeat Agree ocnt Betw tLe
9' oP P. i.3slvxton
Nonaber 19, 20 8
T
a'ipnv BmPloya a Agc ee neat betweat the City of Lathrop and S phan J. Salva ta+e. attacJ ed ha eto end iQoocpor ted herein as Exhibit" A", was d into betwam he puties fa secvices ofC ry Mao r as ac about Sapmember 27. 2012.
Ua or about August 1?, 2015, the City conuc,'ti ut imoaaly agroe i to ew and extand the P.mplaymeat A ut pu ant ta the condiaoas as do ibed ia Secxio 2 of the Bmploymcnt A,gnaems t, aaact d he aad iaoo pocamd herein as Bahibit'". l'n addition, the& aplayn eat Agroatitat automatic y tenaw d tor an addidonal3 years in September 2018.
The City Council has met aad wit6 a voDe of'4-0,with Councilmembar Dnesaer absent, spptnves d e n8 m die EmploYm nt AS+eemeat, effedive November 19. 7A18:
1. Ituaraase curient base Lunual salary by 596;
2. Up to farty( 40) lio us af sic C lsavc c n be cashed out annually; and
3. Ea toya wiU concribu e Z2, 179 per monifi towards the Bmployee' a 6ea1W. deuwl aad visio . i
uanoe beneSfs. and any such increaaes m beaefits pc+ovided w o er maaagement oYUnless specifiically stated above. no other chaogee w the originsl ag nent( ac Am ment Oa) are int nded by tbia Agree ent
A- CTfY OF LATHItOP
By:
i , ea J. satva one
y nhaliwat, Mayor
Dste: Ds be:
APPItOVED AS TO FORM:
Salvadoc Navaerete. City Attom y
ATTES1':
Varges,( ity
ttecbments:
Bxhibit" A"_ p,a ployment A roca ettt{ nr Stcp ea I.Salvat ne effcdive Septemb r 17,2Al2 i1 t" B"— A ndmeat Number One ta Fniploymeat Agree mest dsted Aug sc 17, ZUlS EXfl ilt••,•
Amendment Number Th ee to Empioyme t AgreenieM Between the City of L,athrop and Stephen J. SaMtore
Au ust 8, 2022
The original Employment Agreement between the City of Lathrop and Stephen 1. Saivato e, attached hereto and incorporated herein as Exhibit" A", was entered into between the parties for services of City Manager on or about Septemtier]. 7, 2012.
On o about August 17, 2015, the City Council unanimously agreed to renew and extend the Employment Agreement( Amendment Number One attached and hereta incorporated herein as Exhibit" B".
On or about November 14, 2 18 the City Council approved Amendment Number Two, attached and incorporated herein as Exhib t" C".
The Gty Council hereby approves a perfo mance-based increase in the City Manager' s current base salary of 6%, effective luiy li,2022.
Unless spetifical{ y stated aboye, no ather changes to the original agreement( or Amendmentsf are intended by this Amendment.
EMPLOYEE CRY 0 THROP
gY.
w' .'
BY
Stephen 1. Satvatore Sonny phaliwal, Mayor
Date• t/f Date: g/'
APPROVED AS Tl? fORM:
MichaeE C. Colantuonc
Special Counsel
A7TEST:
eresa Vargas, City Clc+ / Govemment Services Directar
Attachments:
Exhibit" A"- Empleyment Agreement far Stephen 1. Salvatore effecti e September 17. 2012 Exhibit" B"- Amendment Number One to Employment Agreement dated August 17, 20i5 Exhibit° C'- Amendment Number Two to Employment Agreement dated Navember 19, 2QI8 EXHIB T " E "
Amendment Num6er Four tc Employment Agreement Between the City of Lathrvp and Stephen J. Salvatore
August 14, 2023
The vriginal Employment Agreement between the City of Lathrop and Stephen J. Salvatore, attached and incorporated herein as Exhibit" A," was entered into between the parties far services of City Manager on or about 5eptember 17, 2012.
On or about August 17, 2015, the City Council approved Amendment Number One to the Employment Agreement, which is attached and incorporated herein as Exhibit " B:' On or about November 19, 201$, the City C uncil approved Amendment Number Two, which is attached and incorporated herein as Exhibit " C."
On or about August 8, 2022, the City Council appro ed Amendment Number Three, which is attached and incorporated he ein as Exhibit" D."
The City Council hereby approves an amendment to the first paragraph of Sectian 8 of the Employment Agreement to read as follows:
If this Contract is terminated pursuant to Section 6, Pa agraph B, D, E, F, G, or City breach of Contract, Employer shaN pay severance to Employee in the amount of twelve ( 12) months of salary. Instead of twelve months af severance pay in accordance with this Section, Employee may elect to treat the non-renewal ofthe Contra t( as described in Section 2} as a termination that entitles him to nine ( 9) months of severance pay in addition to regular pay during the 90 day notice period of non- renewa referenced in Section 2A. This provision shall be limited by the requirements of Government Code sections 53260 and 53621.
Unless specifically stated above, no other changes to the original agreement (or Amendments) are intended by this Amendment.
EMPLOYEE CITY F R P
B By:
J. Salvatore P I i ' , Vice
oate: t
a Z3 oate: l Z
APP AS TO FORM:
eu Counsel
A EST:
T resa Vargas, City Clerk/ Go ent Services Manager
Attachments:
Exhibit" A"— Employment Agreement for Stephen J. Salvatare effective September 17, 2012 Exhibit" B"— Amendment Number ne to Employment Agreement dated August 17, 2015 Exhibit" C"— Amendment Number Two to Empioyment Agreement dated November 19, 2018 Exhibit" D"— Amendment Number Three to Employment Agreement dated August 8, 2022