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Staff Report Reviewed by: Town Attorney and Finance Director 110 E. Main Street Los Gatos, CA 95030 ● 408-354-6832 www.losgatosca.gov TOWN OF LOS GATOS COUNCIL AGENDA REPORT MEETING DATE: 04/04/2017 ITEM NO: 7 DATE: MARCH 23, 2017 TO: MAYOR AND TOWN COUNCIL FROM: LISA VELASCO, HUMAN RESOURCES DIRECTOR SUBJECT: APPROVE AN AMENDMENT TO THE EMPLOYMENT AGREEMENT BETWEEN THE TOWN OF LOS GATOS AND THE TOWN MANAGER RECOMMENDATION: Approve an amendment to the Employment Agreement (Attachment 1) between the Town of Los Gatos and the Town Manager. BACKGROUND: As an appointee of the Town Council, the Town Manager is employed under an Employment Agreement specifying the terms and conditions of employment. The terms and conditions of employment include items such as base pay, basic and optional benefits, covered expenses, parameters for annual performance review, and conditions for termination/severability. Senate Bill 1436, effective January 1, 2017, requires an oral summary of a recommendation related to modifying the salary, salary schedule, or fringe benefits of any person employed under an Employment Agreement with a local agency. DISCUSSION: The Town Manager’s performance and compensation, as outlined in the Employment Agreement, is reviewed on an annual basis in conjunction with a performance evaluation. The review of the Employment Agreement is conducted to ensure legal compliance and to provide for any adjustments in the terms and conditions of employment. The original Employment Agreement for the appointment of Town Manager Laurel Prevetti was approved by the Town Council effective September 1, 2015. In accordance with the contract PAGE 2 OF 2 SUBJECT: APPROVE AN AMENDMENT TO THE EMPLOYMENT AGREEMENT BETWEEN THE TOWN OF LOS GATOS AND THE TOWN MANAGER DATE: MARCH 23, 2017 S:\COUNCIL REPORTS\2017\04-04-17\Town Manager Compensation\Staff Report FINAL.docx 3/30/2017 3:45 PM LV DISCUSSION (cont’d): terms, the Town Council completed the evaluation process for the Town Manager for her second year in the position, from September 2015 through September 2016. Although the Employment Agreement permitted for a review of compensation concurrently with performance, Ms. Prevetti requested to defer compensation review until the Town’s three bargaining units concluded labor negotiations. Labor negotiations concluded in February. Council appointees do not receive across-the-board increases that bargaining units, unrepresented management and confidential employees are eligible to receive, instead, base pay adjustments are limited to periodic review by Council and are awarded based on performance. CONCLUSION: Based upon the satisfactory completion of the Town Manager’s performance review in closed session, it is recommended that the Town Manager’s annual base salary increase to $212,000 effective April 4, 2017. In addition, the Town Manager’s proposed salary is still well below other City Managers within the Town’s comparable survey agency pool and it is recommended that the Town Manager receive a one-time lump sum performance bonus of $3,000. FISCAL IMPACT: Funding to support the Town Manager’s Employment Agreement is authorized in the annual budget each fiscal year along with all other Town employee compensation and benefits. The additional fiscal impact for the remainder of 2016/2017 is $6,300. The total salary and benefits cost for a full year is approximately $319,000. The increased base salary will be included in the base budget for future fiscal years. The total cost impact will be absorbed in the Town’s existing operating budget. Attachments: 1. Amendment to the Employment Agreement – Town Manager