POLICY 9
EMPLOYMENT STATUS
SECTION INDEX: Employment Status
1 Purpose
2 Reference
3 Application
4 Guidance
4.1 Employment Designations
4.2 Budget Defined
4.3 Exempt and Non-Exempt Positions
4.4 Regular Employment
4.5 Temporary Employment
4.6 Emergency Employment
4.7 Instructor Employment
4.8 Independent Contractor
4.9 DRS Retiree
1. PURPOSE
The employment relationship between an employee and the City is “at will,” meaning that the City can terminate employment, or change the terms and conditions of employment, with or without notice and with or without cause. Conversely, employees may resign employment with the City at any time, with or without cause and with or without notice. The “at will” status of an employee can be changed by Collective Bargaining Agreement or by the City Manager, after a review of the position requirements. This Policy also defines the employment status of individuals employed by the City with regard to compensation, benefit eligibility and personnel actions.
2. REFERENCE
None.
3. APPLICATION
This Policy applies to all individuals employed by the City of Olympia unless employment status is established otherwise by contract or statute (e.g., civil service rules, union contract, individual employment contract or memorandum of understanding).
4. GUIDANCE
4.1. EMPLOYMENT DESIGNATIONS
All employment will be defined as “Exempt or Non-Exempt” “Regular,” “Temporary,” “Emergency,” “Instructor” or “Independent Contractor.” Departments may be able to designate an individual as an Independent Contractor if the individual meets the criteria outlined in section 4.7 or DRS retiree.
4.2. BUDGETED POSITION DEFINED
“Budgeted positions” are specific positions approved by the City Manager and City Council, which are funded in the operating or capital budgets as FTEs or Project Funded. Such positions are budgeted for both salaries and benefits.
4.3. EXEMPT and NON-EXEMPT POSITIONS
All City positions are governed by the Federal Fair Labor Standards Act (FLSA) and are classified as either “exempt” or “nonexempt.” Non-exempt employees are entitled to overtime pay; exempt employees are not. Most positions covered by the FLSA are non-exempt; thus entitled to overtime. Consult with Human Resources on questions about status of positions. Any position that changes from non-exempt to exempt, the incumbent shall be cashed out for any compensatory time that they have accrued up to the time of the change.
a. Tests to determine Exempt or Non-Exempt status.
1. Non-exempt Positions: Non-exempt positions are those positions that do not meet the salary and duties test under the FLSA and are therefore eligible for “overtime pay”. Employees in positions that do not meet the tests are entitled to time and one half their “regular rate” of pay for each hour they actually work over 40 hours during the applicable work period.
2. Exempt Positions: Exempt positions must meet the salary and duties tests under the FLSA. If the position meets those tests, then the employee in the position is not entitled to overtime at all. They may be required to work certain scheduled hours in addition to other hours necessary to complete their tasks. They may be required to record their work hours, “punch a clock”, or make up time lost due to absences. The FLSA does not limit the amount of work time an employer may require or expect from an exempt employee, on any schedule, without additional compensation.
Nothing in the FLSA prohibits an employer from requiring exempt employees to “punch a clock,” or work a particular schedule, or “make up” time lost due to absences.
a. Salary level and Salary basis tests: These tests are not normally determinative as to whether a position is exempt or non-exempt. However, if a position pays less than $23,600 per year ($455 per week), it cannot be an exempt position. Additionally, if a position does not have a guaranteed amount of pay, then that position cannot be exempt.
However, the salary basis test is not affected by whether pay is expressed in hourly terms (as this is a fairly common requirement of many payroll computer programs), nor is it impacted by whether the position is required to charge absences from work to leave accruals, as long as the monetary amount of the employee’s paycheck remains the same. Similarly, paying an employee more than the guaranteed salary amount is not normally inconsistent with salary basis status, because this does not result in any reduction in the base pay.
b. Duties tests: A position that meets the salary tests is exempt only if its duties are exempt. The FLSA exemptions are usually limited to employees who perform relatively high-level work. Job titles or position descriptions are of limited use in this determination
There are three typical categories of exempt job duties: “executive,” “professional,” and “administrative.”
1. Exempt “Executive” positions: Position duties are exempt under the executive duties test if the employee
a. regularly supervises two or more other employees;
b. also has management as the primary duty of the position; and
c. has some genuine input into the job status of other employees (such as hiring, firing, promotions, or assignments).
Supervision means what it implies. In addition, the supervisory employee must have “management” as the “primary duty” of the job. The FLSA regulations contain a list of typical management duties. These include (in addition to supervision):
• interviewing, selecting, and training employees;
• setting rates of pay and hours of work;
• maintaining production or sales records (beyond the merely clerical);
• appraising productivity;
• handling employee grievances or complaints, or disciplining employees;
• determining work techniques;
• planning work;
• apportioning work among employees;
• determining the types of equipment to be used in performing work, or materials needed;
• planning budgets for work;
• monitoring work for legal or regulatory compliance; and
• providing for safety and security of the workplace.
2. Exempt “Professional” positions: The job duties of the traditional “learned professions” are exempt. These include positions that require a specialized degree like accountants, actuaries, scientists and other positions that require the employee to perform work requiring “advanced knowledge.”
3. Exempt “Administrative” positions: The job duties of an administrative position are normally:
a. office or non-manual work, which is
b. directly related to management or general business operations of the employer or the employer’s customers, and
c. a primary component, which involves the exercise of independent judgment and discretion about matters of significance.
The administrative exemption is designed for relatively high-level employees whose main job is to “keep the business running.” Examples of administrative functions include labor relations and personnel (human resources employees), payroll and finance (including budgeting and benefits management), records maintenance, accounting and tax, marketing and advertising (as differentiated from direct sales), quality control, public relations (including shareholder or investment relations, and government relations), legal and regulatory compliance, and some computer related jobs (such as network, internet and database administration).
4. Exempt “IT” Positions: IT positions that perform work that fits under one of the other duties test can be properly exempted under those tests. Additionally, there are special provisions which exempt some computer employees who might not otherwise qualify as “professionally” exempt. These include systems analysts, programmers (who “write code”), and software engineers. More specifically, the special computer employee exemption applies to workers who apply systems analysis techniques and procedures to determine hardware, software, or system functional specifications, or who design, develop, test, or modify computer systems or programs based on user or design specifications.
The special computer employees’ exemption does not include workers whose primary duties are manufacturing or repair of computer hardware, nor employees who are not primarily engaged in systems analysis, programming, or software engineering even if their jobs are highly dependent on using computers. (An example might be drafters who use computer-aided design software.)
Also refer to Policy 13-Leave (Section 4.13); Policy 16- Overtime (Section 4.8) for additional information on Exempt positions.
4.4. REGULAR EMPLOYMENT
Regular employment is “at will.” Employees in this designation have been hired through a competitive recruitment and selection process. Employees who are employed in regular positions are eligible to participate in benefit programs provided their position is budgeted for at least a half-time (0.5FTE) position and the employee works at least twenty (20) hours per week. Regular employees whose positions are budgeted for less than forty (40) hours per week will be eligible for benefit programs on a pro-rated basis according to the number of hours budgeted, subject to limitations imposed by external authorities such as insurance carriers and the State Department of Retirement Systems (DRS). Refer to 4.9, DRS PERS I Retirees.
a. Regular Full and Part-Time (RFT/RPT): City benefits will be offered to employees whose employment is expected to exceed eight months and not otherwise governed by a contract or statute (e.g., union contract, civil service rules, or individual employment contract).
b. Project-Funded (P): Employment relationships that are contingent upon continued funding, or are funded by a specific project or program. The employment relationship will terminate when funding for the position has been discontinued. Offer letters to employees in Project-Funded positions will clearly state the specifics of the contingent factors affecting their Project-Funded position and, when applicable, the anticipated termination date. If the employee filling the Project-Funded position is not going to be provided with benefits, the project cannot last beyond the end of the calendar year and the employee cannot be hired to fill another non-benefitted position in the City for 6 months after they leave the Project-Funded position.
c. Back-Fill (BF): Departments are authorized to hire an employee to “back-fill” behind another employee under specific or special situations, and for vacancies that are anticipated to last for longer than nine (9) months. For example, a department may choose to back-fill behind an employee who has been called up to active military duty or for an employee who will perform a different combination of duties for a period of time (such as an out-of-class opportunity). Opportunities designated as back-fill employment must be tied to a regular FTE; back-fill employees will receive benefits associated with the regular FTE (to include health and welfare benefits, vacation and sick leave accruals). Employment for those designated as back-fill will terminate upon the return of the regular employee. Offer letters to employees in back-fill positions will clearly state the terms of the employment relationship. Back-fill employees are eligible for direct appointment.
d. Intern (IN): The City may employ individuals in paid and unpaid internships. Persons must be enrolled as a higher-education student to be eligible to perform duties as an intern. Persons in this designation may not work more than nineteen (19) hours per week during the school year, no more than forty (40) hours per week during breaks and no more than 1372 hours per year.
An internship will normally terminate upon graduation, but no later than the start of the next school year (typically in September). Offer letters to persons in intern positions will clearly state the terms of their employment. (including length of employment, which is not to exceed nine (9) months). If the Intern position is a paid position, it cannot last beyond nine (9) months and the employee cannot be hired to fill another non-benefitted position in the City for thirteen (13) weeks after they leave the intern position.
4.5. TEMPORARY EMPLOYMENT
Temporary employment is not to exceed nine (9) months. After the completion of the temporary employment (no matter the length), a thirteen (13) week break is required prior to the employee being hired into any other position in the City other than a regular, benefited position. Employees who are employed in temporary positions are normally hired through a competitive recruitment and selection process and are not eligible to participate in benefit programs except those required by law, e.g., worker’s compensation and state retirement programs. (Refer 4.9, DRS PERS I Retirees.) Temporary employment can be ended with one (1) day notice to the employee. Time in temporary positions is not credited toward the probationary period in the event a temporary employee becomes a regular employee. Offer letters to temporary employees will clearly state that the position is a temporary position and that no benefits are being paid.
4.6. EMERGENCY EMPLOYMENT
Emergency employment is appropriate when it is necessary to suspend normal hiring procedures to accommodate immediate employment needs (i.e., not hired through a competitive recruitment and selection process). Emergency employment shall not exceed nine (9) months in duration. After the completion of the emergency employment (no matter the length), a thirteen (13) week break is required prior to the employee being hired into any other position in the City other than a regular, benefited position. Employees in emergency positions are not eligible to participate in benefit programs except those required by law, e.g., worker’s compensation and state retirement programs. (refer to 4.9, DRS PERS I Retirees), nor may they compete for job openings on an “in-house” basis. The base pay for emergency employees hired into exempt positions shall not be reduced based on the quality, quantity, or hours of work performed. Emergency employees hired into non-exempt positions shall be compensated on an hourly basis. Offer letters to emergency employees will clearly state that the position is an emergency position and that no benefits are being paid. Emergency employment can be ended at any time with no notice.
4.7. INSTRUCTOR EMPLOYMENT
Instructors are employees who are hired only for the purpose of providing specialized instruction to participants of City sponsored programs. Instructors may be employed indefinitely and/or intermittently but may not exceed sixty-nine (69) work hours per month. Instructors are not eligible to participate in benefit programs other than those required by law e.g., worker’s compensation and state retirement programs. (refer to 4.9, DRS PERS I Retirees), or compete for job openings on an “in-house” basis. Compensation for instructors will be a flat rate negotiated individually and based upon the specialty area. Compensation may be re-negotiated at any time, based on program need and quality of work. Instructors will be required to attend certain “basic training” such as safety orientation and workplace harassment prevention training. Standard hiring procedures may be suspended when seeking instructors. Offer letters to instructor employees will clearly state that the position is an instructor position and that no benefits are being paid. Instructor employment can be ended at any time with no notice.
4.8. INDEPENDENT CONTRACTOR
Departments may designate an individual as an independent contractor if the individual meets the criteria outlined below. Individuals who meet the criteria outlined below are not considered “employees” and have no rights associated with being an employee, other than those outlined in an agreed upon contract.
Criteria for Independent Contractor Status
a. No representative of the City has control over the daily activities of the contractor;
b. The contractor is involved in a distinct occupation or business, which is one that the City does not engage in or the nature of the services hired are in areas of specialty or expertise which City staff does not possess;
c. The contract is for a specific product or service, as in a report, a set of plans, or an analysis;
d. The contractor uses their own tools, materials, and place of work;
e. The contractor holds themselves as being a specialist or doing business in a specialty. More specifically, if the individual has a business license and professional license, and keeps a set of business records, then they must possess a City of Olympia Business License;
f. The contractor, or another agency on their behalf (such as a temporary help agency) files their own business federal tax returns and state tax returns for business;
g. The contractor, or another agency on their behalf, withholds and pays all taxes, unemployment compensation, and worker’s compensation for services rendered to the City; and
h. The City is not the contractor’s only client.
i. The contractor is providing Public Defender services to the City’s Municipal Court.
4.9. DRS RETIREE
Retirees are any person who retired under the Washington State Department of Retirement System. When a retiree who meets the criteria outlined below is hired into a PERS eligible position requiring more than eight-hundred and sixty-seven (867) hours of work per year, there must be a justified need to hire the retiree, the established hiring process must be followed, and a record must be kept of the hiring process. This documentation must be retained and made available in the event of an audit.
Criteria for Retirees:
a. Retired; and
b. Has had at least a ninety (90) day break in service.
The retiree is responsible for monitoring their hours worked and understanding the DRS rules that govern hour limits to prevent reduction or suspension of their retirement benefits.
Revision history: September 2019; February 2018; May 2016; January 2015; March 2014; October 2013; September 2011. Superseded: Administrative Guideline “Employment Status”.