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  Agenda Item   25.    
City Council Meeting
Meeting Date: 06/15/2021  
FROM: Mario Maldonado

Adopt a Resolution approving a Side Letter Agreement between the City of Brea and the Brea Police Association to comply with CalPERS Special Compensation reporting requirements for Holiday Pay.
That the City Council adopt a resolution approving a Side Letter Agreement between the City of Brea and the Brea Police Association regarding Special Compensation reporting requirements for Holiday Pay in order to comply with CalPERS Regulations.
The California Public Employees’ Retirement System (CalPERS) conducted an audit in March 2020 of the City of Brea regarding Special Compensation Adjustments. To comply with an audit finding, it is necessary to clarify the term basic rate of pay/straight-time pay and define it as base pay plus incentive or specialty pay. CalPERS cited Government Code section 20636 and California Code of Regulations (CCR) Section 571 which stipulates the Employer must report special compensation pursuant to a written labor agreement. This clarification will satisfy the CalPERS audit requirement and the FLSA requirements as it relates to the rate of pay used to pay employees. The City and the Brea Police Association (BPA) have agreed to this clarification pursuant to the attached signed Side Letter agreement. The existing labor agreement with the Brea Police Association ran from July 1, 2018 to June 30, 2020 and a successor agreement is currently being negotiated. Future MOU’s shall be updated to reflect the new language.

CalPERS requires that only compensation earned as defined under Government Code Section 20636 and corresponding regulations can be reported to CalPERS and considered in calculating retirement benefits. The City has been paying and reporting Holiday Pay correctly, however, the MOU needs to include the definition of basic rate of pay in the labor agreement.
There is no fiscal impact associated with the adoption of the City of Brea Side Letter agreement between City of Brea and Brea Police Association.

This action authorizes corrections to the BPA MOU section on Holiday Pay benefits in order to address an item identified by the 2020 CalPERS Audit regarding special compensation reporting requirements that is needed to meet CalPERS regulations.
William Gallardo, City Manager
Prepared by: Mario E. Maldonado, Human Resources Manager
Concurrence: Cindy Russell, Administrative Services Director

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