The Medford City Council discovered Thursday it has few options when it comes to paying off employees who bank overtime and vacation hours.
The issue arose in June when the council approved a $920,000 payout to employees who had accrued extra time. Much of the money was paid to fire and police employees who were called on to work overtime and vacation hours.
Tighter staffing levels have increased the need for overtime, the council discovered.
"I see a benefit to the employee and a disadvantage to the taxpayer," Councilor Chris Corcoran said.
In the private sector, a worker typically loses vacation time if it hasn't been taken by the end of the year, he said. The same goes for compensation time if a worker works overtime, Corcoran said.
The council studied the issue Thursday in hopes of bringing down costs but realized there was little it could do other than to pay the lump-sum payouts.
When an employee retires, the city is required to pay for any vacation days accrued. Employees who work overtime have the option to get paid or to bank their hours if they want to take leave at a later date.
Employees can accrue a maximum of 400 hours.
The Fire Department received the largest share at $400,000. The second-largest share was $330,000 to the Police Department.
Finance Director Alison Chan said the ability to accrue hours is protected by union contracts and the Fair Labor Standards Act, which was amended in 1988 to allow compensatory time for public sector workers who work overtime.
"An employee has a right to be paid for their work," she said.
The issue of accrued time was spotlighted when the city of Medford years ago decided to make it part of the Finance Department budget rather than part of the individual city departments's budgets.
She said the city changed the practice when it was discovered that department heads routinely overestimated how much they would spend for accrued hours.
"It had become like a slush fund," she said.
Chan said her suggestion to help keep the costs down as much as possible is to create a "hybrid" approach. Department heads would devise a budget, providing an estimate of what they expect the accrued costs would be. She then would analyze these proposed budgets and refine the amount estimated if necessary.
Chan noted that it was difficult for department heads to predict which staff members might be retiring in a given year.
Councilor Bob Strosser said that leaner staffs have increased the problem of accrued time.
He said police officers are called into court or come back to work for ongoing investigations.
"It's vastly different than the private sector," he said.
Councilor Dick Gordon said the private sector also compensates for overtime and vacation time. The difference is that most companies force employees to take the vacation or compensation time within a certain period.
"I don't think there's much difference between the public and private sector," he said. However the private sector has a pay-as-you-go policy versus the public sector's ability to accrue the time and get a lump sum payout, he said.
City Manager Eric Swanson said the city has limitations on its ability to deal with accrued time, but he said staff would continue to pay close attention to the problem.
He said a much larger issue for the city's personnel budget has been rising costs for the Public Employee Retirement System.
Reach reporter Damian Mann at 541-776-4476 or firstname.lastname@example.org.