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HomeMy Public PortalAbout08) 10B Staff Report-COVID-19 Admin Leave Pay for staff Non-Working HourAGENDA ITEM 10.B. ADMINISTRATIVE SERVICES DEPARTMENT MEMORANDUM DATE: April 21, 2020 TO: The Honorable City Council FROM: Bryan Cook, City Manager SUBJECT: OVERVIEW OF TEMPORARY EMERGENCY ACTION RELATED TO CONTINUITY OF CITY SERVICES AND PERSONNEL AND REQUEST FOR DIRECTION RECOMMENDATION: The City Council is recommended to provide direction as to how the City Manager, as the Director of Emergency Services, is to proceed regarding certain personnel status for City staff and the budgetary considerations associated with such status in the time period after his emergency authority expires on May 1, 2020. BACKGROUND: 1. On January 21, 2020, the first case of the Novel Coronavirus 2019 (COVID-19) was reported. 2. On March 4, 2020, the Health Officer of Los Angeles County declared a local health emergency regarding COVID-19 and the Los Angeles County Board of Supervisors concurrently proclaimed the existence of a local emergency for the County of Los Angeles. 3. On March 4, 2020, Governor Newsom of the State of California declared a State of Emergency in response to the COVID-19. 4. On March 13, 2020, the City Council adopted Resolution No. 20-5457, declaring a local state of emergency which gave authority to the City Manager in his role as Director of Emergency Services to implement measures in line with state and county health officials’ recommendations to slow the spread of COVID-19 while not impacting critical services. 5. On March 18, 2020, in an abundance of caution for the health and safety of City staff City Council April 21, 2020 Page 2 and patrons, the City indefinitely closed City buildings to the public and modified services. On the same day, the United States Senate passed the Families First Coronavirus Response Act (the Act) with President Trump signing the bill into law shortly thereafter. 6. On March 19, 2020, to mitigate the spread of COVID-19, state and county officials ordered residents to stay home or at their place of residence. On the same day, with the authorization granted by the declaration of local emergency, the City Manager ordered some staff to work from home, though essential office workers are to come to the office if needed and if sufficient distancing is maintainable, and essential field staff are to practice all safety and social distancing related to such work in the field. 7. On March 31, 2020, City Council directed the City Manager to continue the implementation of paid administrative leave for employees not working or working from home from April 3, 2020 to May 1, 2020. 8. On April 10, 2020, the County of Los Angeles extended its order requiring residents to stay home or at their place of residence through the date of May 15, 2020. ANALYSIS: Before the expiration date of May 1, 2020, the City Manager is seeking direction from the Council regarding those members of staff who fall into the category of receiving paid administrative leave. Paid administrative leave is a tool that permits the City to temporarily compensate an employee who is ready and able to work but whom the City has directed to remain away from the workplace in the City’s interest. This report provides the City Council with an update of several key areas of analysis including: payroll costs of the administrative leave, preliminary financial analysis of the immediate term of this event, and lastly an overview of relevant and new legal considerations, including the availability of paid leave for some employees under the Families First Coronavirus Relief Act (“FFCRA”) that took effect on April 1, 2020. Financial Considerations Immediate Payroll Costs of Administrative Leave The estimated costs for the administrative leave for the following periods are: Periods: Source of Parameter Est. Cost: May 2 to May 15, 2020 County of Los Angeles Department of Public Health (CLADPH) Order Deadline $ 32,900 May 16 to May 31, 2020 Anticipated Extension to CLADPH Deadline $ 32,900 Total Est. Salary Costs-Admin. Leave $ 65,800 City Council April 21, 2020 Page 3 Please note that these costs are budgeted in the current fiscal year (FY) 2019-2020 in the form of regular employee compensation. Hence, no additional appropriation is required at this time. Also, as discussed at the special meeting on March 31, 2020, the City is now legally obligated to provide at least a partially-compensated leave under the new Families First Coronavirus Response Act (FFCRA) to eligible employees for qualifying reasons. The Act went into effect on April 1, 2020, and, where applicable, will require the City to provide leave upon an employee’s request. The availability of emergency paid sick leave and extended FMLA leave under the Act likely takes on greater significance for employees with non-worked hours should the Council direct the City Manager not to extend administrative leave for affected employees. Revenue Reductions City staff continues to monitor the revenue impacts of COVID-19. It remains difficult at this time to determine the size of the impact. Although, the City’s cash flow could potentially be affected by the timing of its sales tax revenues collections. Recently, the California Department of Tax and Fee Administration (CDTFA), the State of California agency that collects sales tax liabilities from businesses, will allow small businesses with less than $5 million in annual taxable sales to defer payment on up to $50,000 of sales/use tax liabilities. Under the program, qualifying businesses can enter into payment plans to distribute up to $50,000 of sales tax liability over a 12-month period, interest-free. For example, a qualified business that chooses to defer their first quarter 2020 (January to March) liability, can defer up to $50,000 of their obligation and would pay it in twelve equal monthly installments, instead of one full payment, with the first payment not due until July 31, 2020. It is not clear if the CDTFA, or the State of California, will remit the full amount to the receiving agencies, such as the City, on time. Additionally, it is unknown how many businesses in the City will enter into this plan and what amount of revenue will affect the City in the short term. However, the City is well poised to handle the delay in the collection of these revenues as discussed below. City Financial Stability – Planning for an Emergency As discussed in the special meeting on March 31, 2020, the fiscal health of the City would be able to handle the potential revenue losses because of the build-up of the City’s General Fund reserves over the last decade. Furthermore, if its sales tax revenue collections were deferred due to CDTFA’s program, the City will be able to handle the City Council April 21, 2020 Page 4 temporary impact of its cash flow. CONCLUSION The City continues to monitor the impacts of COVID-19 and implement recommendations of State and County health officials. Staff continues to respond quickly with the safety and well-being of the community and City employees as its priority while closely monitoring the effect to the City’s long-term financial health. To address the impact of City employees not working or working from home, the City Council is asked to consider directing the City Manager to implement one of the following: 1. Paid administrative leave for the period May 2 to May 15, 2020; or 2. Paid administrative leave for the period May 2 to May 31, 2020, or 3. An alternative approach such as: a. Use of Accrued Leave; or b. Reduction in Hours; or c. Furloughs No matter the approach, the City will be bound by FFCRA and the financial implications thereof. CITY STRATEGIC GOALS: Actions contained in this report align with the City’s strategic goal of good governance. FISCAL IMPACT: There are no additional appropriations recommended at this time.