LETTER OF EMPLOYMENT AGREEMENT BETWEEN THE SANTA MONICA RENT CONTROL BOARD AND LAIMA NOSEWO~THY

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1 LETTER OF EMPLOYMENT AGREEMENT BETWEEN THE SANTA MONICA RENT CONTROL BOARD AND ~ LAIMA NOSEWO~THY January 1, December 31,

2 LETTER OF EMPLOYMENT AGREEMENT This letter shall set forth the terms of employment for: Board Office Coordinator LAIMA NOSEWORTHY, Budget Office Coordinator ~ Senior Administrative Analyst Agency Office Coordinator employed with the Santa Monica Rent Control Board. DURATION OF EMPLOYMENT AGREEMENT. This Employment Agreement shall be effective as of January 1, 2010 and shall remain in full force and effect until December 31, SALARY A. Sala ry Grid Effective January 1, 2010: Step A Step B Step C Step D Step E Board Office Coordinator/ Agency Office Coordinator Budget Office Coordinator Sr. Administrative Analyst B. Ms. Noseworthy shall be responsible for the supervision and coordination of work assignments for all clerical and support staff within the Agency. For these additional duties, Ms. Noseworthy will receive a five percent (5 /o) increase in wages as a supervisory differential. C. Effective January 1, 2011, the E-step salaries of all employees covered herein shall be increased by a minimum of 2.0 percent, or, if higher, by the increase in the October to October 2010 CPI. for urban wage earners and clerical workers in the Los Angeles~Anaheim-Riverside area rounded upward to the nearest 0.1 percent. However, in no event shall the adjustment exceed 4.0 percent. 2

3 D. Effective January 1, 2012, the E-step salaries of all employees covered herein shall be increased by a -m.inimum 9f 2.0 percent, or, if higher, by the increase in the October 2010 to October 2011 CPI for urban wage earners and clerical workers in the Los Angeles-Anaheim-Riverside area rounded upward to the nearest 0.1 percent. However; in no event shall the adjustment exceed 4.0 percent. PUBLIC EMPLOYEES RmREMENT SYSTEM.. The Agency shall pay the full employer's matching contribution tq the. Public Employees' Retirement System and the full employee's contribution. In addition, the employees shall have the option of having the City implement what is-referred to as the "PERS 9ri PERS" option, whereby the City of Santa Monica, as allowed by Government Code Section 20636(c)(4), would report to the Public Employees Retirement System (PERS) as compensation. ' earnable the monetary value of normal contributions paid by the Agency (hereinafter referred to as the EPMC) on behalf of each employee covered by this Agreement pursuant to the provisions of Section of the California Government Code, as descri_bed in this Section. In _return, for employees covered herein, there shall be deducted from the net income of each employee the added cost to the City resulting from paying employer and employee retirement contributions on the EPMC, which is an amount equal to the product obtained by multiplying the value of the EPMC by a percentage equal to 7 /o, increased to 8 /o effective May 27,2007, plus the City's prescribed contribution rate to PERS (which is subject to annual adjustment). Unless the November 3~ 2006 Umbrella Agre~ment between all non-sworn miscellaneous City employees and the City is amended to stipulate otherwise, all employees will continue to contribute, through payroll -deduction, 6.7 /o of their compensation subject to CaiPERS contributions to reimburse the City for the additional cost associated with implementingthe 2.7 ss CaiPERS option for miscellaneous City employees. Employees agree that should the City and. the Coalition of Santa Monica City Employees enter into an agreement to enhance or modify the PERS retirement formula for non-sworn employees requiring an employee-paid contribution or other financial arrangement affecting e_mployee compensation, employees will be bound by the terms o(that agreement. DEFERRED COMPENSATION A. The Agency shall contribute six hundred twenty-five dollars ($625) per month on behalf of each employee into the City's 401(a) plan. 3

4 B. Effective January 1, 2011, the Agency shall contribute six hundred fifty dollars ($650) per month on.behalf of each employee into th~ City's 401(a) plan. C. Effective January 1, 2012, the Agency shall contribute six hundred seventy-five dollars ($675) per month on behalf of each employee into the City's 401(a) plan. Effective January 1 of any calendar year in which this Agreement is in effect, the employees may elect to implement a mandatory employee contribution into the 401(a) plan by providing notice to the Agency of its desire to do so at least three (3) weeks prior to the beginning of the calendar year. Mandatory employee contributions shall meet the requirements of the Internal Revenue Code. Employees may, at their option, participate in the City's 457 deferred compensation plan. HOURS OF WORK AND OVERTIME The work hours shall consist o(bo hours in a two-week period. To the extent an employee must work more than 80 hours in a two-week period or more than nine hours per day, the employee shall receive overtime compensation at 1-1/~ times her/his regular hourly wage. TERMUFEINSURANCE The Agency agrees to maintain at no cost to the employee a term life insurance plan with individual coverage in an amount equal to twice the employee's. annual base salary. PERSONAL LEAVE A. Effective July 1, 2010 each employee shall accrue nine (9) hours personal leave time annually on July 1. B. Effective July 1, 2012 each employee shall accrue an additional nine (9) hours personal leave time, for a total of eighteen (18) hours to be accru~d July 1, 2012 and each July 1 thereafter. C. In addition, each January l~hall accrue forty-four (44) hours of personal leave time; and, each July 1 1~hall accrue forty-four ( 44) hours of personal leave time. 4

5 The personal leave time shall not be carried over from one fiscal year to another. Any unused portion of the leave shall be payable to the employee upon termination or within 30 days of the end of the fiscal year in which the leave hours were accrued but unused at the sa1ary rate in effect on June 30 of the year in which they were accrued. PAYMENT OF SUPERVISORY DIFFERENTIAL In the event.that the Department Manager (DM) is on leave for a period of more than 5 days, a Senior Administrative Analyst may be designated Acting Department manager by the DM and if designated, shall be paid an additional $20 per day during that period of time. Designation of Acting DM. in the event of the absence of the DM shall be at the sole discretion of the DM or in her/his absence, the Agency's Administrator. MEDICAL/DENTALNISION INSURANCE A. Medical Insurance Effective January 1, 2010 the Agency shall pay medical insurance premiums for employees covered herein as set forth in the "Umbrella Agreement Setting the Terms and Conditions Qf Medical Insurance Coverage for All Santa Monica Rent Control Board Employees." This MOU umbrella agreement is between the EAC, Hearing Examiner Representational Organization, Society for Union Employment, and Individ~al Unaffiliated Employees and the Santa Monica Rent Control Board. The agreement, which expires on June 30, 2010, was ratified by the Rent Control Board December 6, 2007 (incorporated into this Agreement as Exhibit A). If there is a change to the current Medical Insurance Umbrella Agreement between the City and the Coalition of Santa.Monica City Employees (expires June 30, 2010), the Agency and employees agree to meet and confer to determine how medical insurance premiums for employees covered herein will be paid beginning July 1, The parties will consider but not be bound by any changes agreed to between the City and the Coalition of Santa Monica City Employees. In the event that implementation of federal health insurance reform affects how public employer provided health insurance benefits are delivered and/or paid for, the Agency agrees to meet and confer with employees. 5

6 B. Dental Insurance Dental insurance coverage shall be provided at no cost to employees and their eligible dependents provided that employees covered herein participate in the City-offered dental insurance programs. C. Vision Insurance The Agency agrees to provide vision care insurance, at no cost, to. employees covered herein and their eligible dependents. The Agency retains the right to select the provider and to set the levels of coverage for said vision care insurance plan. The Agency also retains the right to change the provider of said vision insurance plan and/or the level of benefits provided under the plan without meeting and conferring. D. Retiree Benefits Upon retirement after at least five years of service, the Agency will continue to pay the premiums for a retiree's vision and dental insurance for 18 months. After at least five years of service and immediately following retirement the Agency will reimburse a retiree for the retiree's unreimbursed medical expenses not to exceed $200 per month for a 24-month period. Reimbursement requests will be submitted by th~ retiree on a quarteriy basis. PERFORMANCE EVALUATION The Administrator or her/his designee shall evaluate the performance of each employee annually on her/his anniversary. The Administrator shall meet with each employee and discuss the evaluation and shall establish mutually agreed upon performance criteria on which the following year's evaluation shall be based. OVERPAYMENT REMEDY Each employee shall reimburse the Board for any overpayment of wages or benefits. Said reimbursement shall not be required until the Board notifies the employee in writing. Reimbursement may be accomplished by a lump sum. deduction from the next payroll warrant issued to the employee following notification or by other reasonable repayment method usually acceptable to the employee and the Board, except that lump sum deduction _may be required if the next payroll warrant issued to the employee is the final or termination warrant. CAR ALLOWANCE ~shall receive a car allowance of $85 per month in lieu of mileage for the use of her personal car on office Board business. 6

7 The balance of each employee's wages and benefits provisions will be governed by the specific provisions of the Employees Action Committee Memorandum of Understanding. Date: #./ ~ 2 1 D_ Lh~D~ Laima Noseworthy =--- 7

8 ADDENDUM TO THE LETTER OF EMPLOYMENT AGREEMENT BETWEEN THE SANTA MONICA RENT CONTROL BOARD AND, LAIMA NOSEWORTHY,._ JANUARY 1, DECEMBER 31,2012 As a result qf the Agency moving to the Kronos Payroll System beginning with the pay period ending May 20, 2010, the parties agree to amend the contract as provided below. Vacation Leave An employee will be allowed to accrue up to ten (1 0) days or eighty( SO) hours of personal leave in the event he/she reaches his/her vacation accrual limited and ceases to accrue vacation. The accrual rate for personal leave shall be the same as the _ employee's vacation accrual rate. The accrual of personal leave is not limited to a one. time accrual. The personal leave will not be subject to cash-out when the employee separates from City employment and can be carried over from year to year. Date: ~( J., d,.()/0. \

9 SECOND ADDENDUM TO EMPLOYMENT AGREEMENT This addendum modifies the terms of the January 1, December 31, 2012 Employment Agreement between the Santa Monica Rent Control Board and~ Laima Noseworthy and I I 7 as follows : PUBLIC EMPLOYEES RETIREMENT SYSTEM The Agency, through the City of Santa Monica, is a contract member of the Public Employees' Retirement System (PERS), and it is understood and agreed that such membership will be maintained and the employee eligibility, classification, contributions, and benefits are as prescribed in the contract between the City and the Public Employees' Retirement System heretofore approved by the Sarita Monica City Council. In addition, the City has implemented what is referred to as the "PERS on PERS" option, whereby the City of Santa Monica, as allowed by Government Code Section 20636(c)(4), would report to the Public Employees Retirement System (PERS) as compensation earnable the monetary value of normal contributions paid by the Agency (hereinafter referred to as the EPMC) on behalf of the employee covered by this Agreement pursuant to the provisiqns of Section of the California Government Code,.as described in this Section. In return, for the employee covered herein, there shall be deducted from the net income of each employee the added cost to the City resulting from paying employer and employee retirement contributions on the EPMC, which is an amount ~qual to the product obtained by multiplying the value of the EPMC by a percentage equal to 8 /o, plus the City's prescribed contribution rate to PERS (which is subject to annual adjustment). Unless the December 1, 2011 Umbrella Agreement (per Resolution #10626 effective July 1, June 30, 2017 which amends the November 3, 2006 Umbrella Agreement between all non-sworn miscellaneous City employees and the City) is amended to stipulate otherwise, pursuant to California Government Code Section 20516(f), which allows GaiPERS agencies to share the cost of additional retirement benefits with employees, the employee shall reimburse the City a total of 6. 7% of their compensation reportable to CaiPERS toward the mandatory employer contribution. These monies will continue to be used to reimburse the City for the additional cost associated with implementing the CaJPERS full retirement formula option for miscellaneous City employees. Employees of the Agency agree that should the City and the Coalition of Santa Monica City Employees enter into an agreement to enhance or modify. 1

10 the PERS retirement formula for non-sworn employees requiring an employeepaid contribution or other financial arrangement affecting employee compensation, employees will be bound by the terms of that agreement. DEFERRED COMPENSATION A. Effective March 1, 2012, th;-. iiilttall contribute twenty-five dollars ($25lper month on behalf of...-" --. Laima Nosewqrthy and- \ 2 into the City's 401(a) plan. B. Effective March 1, 2012, the Agency shall contribute six hundred fifty dollars ($650) per month on behalf of and Laima Noseworthy into the City's 457 plan. C. Effective March 1, 2012, while I z is serving as the Acting Public Information Manager, the Agency shall make no contribution on his behalf into the City's 457 plan~ D. Employees may, at their option, make additional employee contributions into the City's 457 deferred compensation plan. - The parties have executed this agreement on the date indicated below. ~a~~ Laima Noseworthy ~ 2

11 THIRD ADDENDUM TO LE1TER OF Ef\1PLOYMENT AGREEMF~JT BffiVEEN THE SANTA fvionica RENT CONTROL AGENCY AND LAIMA NOSEWORTHY This addendum affirms that a prior provision of the Employees; Action Committee (EAC) Memorandum of Understanding which applied to Ms. Noseworthy continues to apply although the EAC eliminated the provision in their 2012 contract. Ms. Noseworthy was not involved in those negotiations and did not agree to eliminate this provision from her Letter of Employment Agreement. EFFECT OF JOB PERFORMANCE ON SALARY An employee who has been at Step E for at least one year and whose most recent evaluation has been "outstanding" shall be eligible on his/her anniversary date for a payment equal to 5% of his/her annual pay upon_ approval by the Administrator. A rating of "outstanding" differs from an "exceeds standards" rating indicated on the Evaluation Form. A rating of "outstanding" requires additional written comments by the supervisor stating the employee is outstanding and is eligible for a performance bonus of 5o/o. Denial or lack of payment fs not subject to grievance and/or arbitration. The parties have executed this agreement on the date indicated below../j.. /) I ~~J~. tf J;/ _.tf~;. J ~/{ ()._ 6--. "-!+-. t:/a1 (,L(/b--">./ Santa ~1on{ca Rent Control Board 1

12 FOURTH ADDENDUM TO LETTER OF EMPLOYMENT AGREEMENT BETWEEN THE SANTA MONICA RENT CONTROL AGENCY AND laima NOSEWORTHY SALARY A. Effective January 1, 2013, the 5% supervisory differential Ms. Noseworthy has received since September2007 will become part of her salary and will no longer be itemized separately. B. Monthly Salary Grid Effective January : Step A Step B Step C Step D Step E Budget Office Coordinator ANNUAL LEAVE NACATION) Any unused days of annual leave may be carried over from year to year provided that the maximum accrual of vacation time shall not exceed three times Ms. Noseworthy's annual accrual rate. Upon separation, Ms. Noseworthy shall be paid for all accrued unused days of annual leave, subject to the maximum accrual rate specified above. The parties have executed this agreement on the date indicated below. Jt -d.~ Santa ~ca Rent Control Board 1

13 FIFTH ADDENDUfVJ TO LEITER OF EMPLOYMENT AGREEfVIENT BET\NEEN THE SANTA fvionica RENT CONTROL 1-\GENCY AND LAIMA NOSEVv'ORTHY DFFERRED COMPENSATION A. Effective july 1, 2013, the Agency shall contribute four hundred... tw.entv::jive. dollars ($425).. pecmonth.on.behajf.of.ms... Noseworthy into the. City's 401(a) plan. B. Effective July 1, 2013, the Agency shall contribute two hundred and fifty dollars ($250) per month on behalf of Ms. Noseworthy into the City's 457 plan. C. Ms. Noseworthy may, at her-option/ make additional employee contributions into the City's 457 deferred compensation plan. D. Effective January 1 of any calendar year in which this Agreement is in effect, the employees may elect to implement a mandatory employee contribution into the 401 (a) pfan by providing notice to the Agency of its desire to do so at least three (3) weeks prior to the beginning of the calendar year. Mandatory employee contributions shall meet the requirements of the Internal Revenue Code. The parties have executed this agreement on the date Indicated belovv. ~ /} /7 (1/.,.,.,..,::~.l J,"'f ~.tt.,.. ~ t-- /Au.. //... /~ <.. fa..;f...-,, t.,. l,...ai' l.._tj(..vtr----' J Santa t"1onfca Rent Control Board ~.' ' -- f.. Date:,... ~ t...,,. -. '~~. _, 1

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22 EXHIBIT A Contract No MEMORANDUM OF UNDERSTANDING SETTING THE TERMS AND CONDITIONS OF MEDICAL INSURANCE COVERAGE BETWEEN CITY OF SANTA MONICA AND MANAGEMENT TEAM ASSOCIATES, SUPERVISORY TEAM ASSOCIATES, ADMINISTRATIVE TEAM ASSOCIATES, MUNICIPAL EMPLOYEES ASSOCIATION, INTERNATIONAL BROTHERHOOD OF TEAMSTERS LOCAL 911, PUBLIC ATTORNEY S UNION, PUBLIC ATTORNEY S LEGAL SUPPORT STAFF UNION, UNITED TRANSPORTATION UNION (LOCAL 1785)-International Association of Sheet Metal, Air, Rail and Transportation Workers (SMART), EXECUTIVE PAY PLAN PARTICIPANTS AND CERTAIN UNREPRESNTED CLASSIFICATIONS 1. This Memorandum of Understanding ( Agreement ) sets forth the terms and conditions pertaining to the medical insurance program offered by the City of Santa Monica to permanent non-sworn miscellaneous City employees, and all members of the Executive Pay Plan (EPP). 2. Employees covered hereunder shall be all permanent non-sworn City employees represented by and/or receiving the benefits of the following City bargaining units or their respective successors: Administrative Team Associates (ATA), International Brotherhood of Teamsters Local 911 (IBT), Management Team Associates (MTA), Municipal Employees Association (MEA), Public Attorneys Union (PAU), Public Attorneys Legal Support Staff Union (PALSSU), Supervisory Team Associates (STA), and United Transportation Union, Local 1785 (UTU). This Agreement shall also cover members of the Executive Pay Plan (EPP). This Agreement does not apply to sworn safety employees represented by the Fire Executive Management Association (FEMA), Santa Monica Firefighters, Local 1109, IAFF (Local 1109) or the Santa Monica Police Officers Association (SMPOA). 3. This Agreement shall be effective January 1, 2015 and shall remain in full force and effect until December 31, Negotiations to extend this Agreement or enter into a new agreement prior to the expiration of this agreement will commence upon a date mutually agreed upon by the City, the non-sworn bargaining units, and Executive Pay 1

23 EXHIBIT A Contract No Plan members, with said negotiations to start by no later than August 1, 2018, with a signed contract desired by November 1, Each employee covered by this Agreement desiring to be covered hereunder may contribute, on a pre-tax basis, monies into an Internal Revenue Code Section 125 plan established for the purpose of enabling employees to pay for IRS qualified health care costs which are the responsibility of the employee. This plan is known as a Flexible Benefit Plan. Those monies can be used by the employee to pay on a pre-tax basis medical insurance premium contributions that the employee is required to make under the terms of this Agreement. 5. Effective January 1, 2015, the City shall contribute toward medical premiums an amount equal to the actual cost of the medical insurance premium for the medical plan that an eligible employee is enrolled in, less any required employee contributions set forth below. Each active employee covered hereunder can use this City contribution to cover a portion of the cost of medical insurance for the employee and his/her eligible dependents under one of the City-provided medical insurance plans. 6. Pursuant to the terms of the City s Internal Revenue Code Section 125 plan, any eligible employee electing not to receive medical coverage pursuant to the options available under the City-provided medical insurance program shall be entitled to a lump sum monthly cash payment in the amount of $150.00, which shall be reported as taxable income. 7. Effective January 1, 2015, active employees covered hereunder who are eligible to participate in the City-provided medical insurance program will contribute the following monthly flat dollar amount towards the premium of their selected medical insurance plan through a payroll deduction as a contribution from the Internal Revenue Code Section 125 plan. AETNA HMO January 1, 2015 Employee $36.28 Employee +1 $72.57 Family $94.34 AETNA PPO January 1, 2015 Employee $44.32 Employee +1 $88.65 Family $ KAISER January 1, 2015 Employee $27.70 Employee +1 $54.45 Family $

24 EXHIBIT A Contract No Effective February 1, 2015, active employees covered hereunder who are eligible to participate in the City-provided medical insurance program will contribute the following monthly flat dollar amount towards the premium of their selected medical insurance plan through a payroll deduction as a contribution from the Internal Revenue Code Section 125 plan. AETNA HMO February 1, 2015 Employee $39.91 Employee +1 $79.82 Family $ AETNA PPO February 1, 2015 Employee $48.76 Employee +1 $97.51 Family $ KAISER February 1, 2015 Employee $30.47 Employee +1 $59.90 Family $84.32 Effective January 1st of each subsequent year for the term of this Agreement, employees will contribute a percentage of the cost of the monthly premium for the medical insurance plan selected according to the following schedule: Effective January 1, 2016 Effective January 1, 2017 Effective January 1, % of the monthly premium 6.5% of the monthly premium 7% of the monthly premium The Coalition may continue to utilize funds which remain in the Reserve Fund established in the 2005 MOU between the City of Santa Monica and the Coalition to subsidize the employee s portion of medical premiums. The City and the Coalition both reserve their respective rights with regard to any balance remaining in the Reserve Fund. 8. Should the cost of annual premiums for the plans listed above increase, employees agree to pay contributions towards the cost of their medical insurance according to the schedule set forth in Section 7 above, not to exceed a 15% annual increase, for their selected plan. For example, an employee selects the HMO family plan that has a premium of $1,000 per month. The employee contributes $50 per month (based on a 5% employee contribution without the Coalition s subsidy) towards the premium ($1,000 x 5%=$50). A 20% annual increase to the premium for that plan would cause the premium to be $1,200 per month ($1,000 + [$1,000 x 20%] = $1,200); however, the employee s increased contribution will be capped at $7.50 ($1,000 x 15% x 5%) per 3

25 EXHIBIT A Contract No month, resulting in a contribution of $57.50 per month, rather than $10 ($1,000 x 20% x 5%) per month for that calendar year. In this example, in a subsequent calendar year, the $57.50 per month contribution will increase a maximum of 15% even if premium rates increase more than 15% in a subsequent calendar year. Any calendar year rate increases will be based on the prior year premiums less any premium increases over 15%. 9. Permanent part-time City employees hired after July 1, 2010 and before January 1, 2015, who work at least 20 budgeted hours a week and less than 32 budgeted hours a week, will have the option of electing from one of the City-provided HMO medical insurance plans. Permanent part-time City employees may, at their option, pay the difference between the premium of the less costly HMO medical insurance plan and the Preferred Provider Organization (PPO) plus any employee contribution for the selected plan. Permanent part-time City employees hired after January 1, 2015, who work at least 20 budgeted hours a week and less than 32 budgeted hours a week, will have the option of electing from one of the City-provided HMO medical insurance plans for the employee coverage only. Permanent part-time City employees may, at their option, pay the difference between the premium of the less costly HMO medical insurance plan for the employee only and the Preferred Provider Organization (PPO) plus any employee contribution for the selected plan. Permanent part-time employees may also, at their option, pay the difference between the employee only coverage for the less costly HMO medical insurance plan and the cost of the premium to add coverage for eligible dependents for either the HMO plan or a PPO plan. 10. With respect to a non-sworn permanent City employee who retired between July 1, 2001 and December 31, 2003 and was participating in the CalPERS Healthcare Program as of December 31, 2003, the City shall contribute toward the payment of medical insurance premiums on behalf of each eligible retiree the amount that had been required by CalPERS as of December 31, A retired non-sworn permanent City employee shall have the option of purchasing continued medical insurance coverage under the current medical insurance plans described above with the eligible retiree paying the full actual cost of the chosen medical insurance plan unless otherwise provided for in an individual bargaining unit s Memorandum of Understanding or agreement. 12. The City currently contributes $ per month on behalf of each eligible active nonsworn employee covered by this Agreement including sworn members of the Executive Pay Plan (EPP) into a retiree medical trust established and administered by the nonsworn employees covered hereunder in accordance with federal and state laws. The trust will be used to reimburse all or part of the health insurance premiums for eligible retirees and dependents. The employees covered hereunder shall be responsible for all costs associated with administering the trust. The City shall not be responsible for any tax liability associated with contributions to and/or payments made from the trust. The 4

26 EXHIBIT A Contract No monthly contribution for an active employee will only be made for each month that the employee is eligible to receive medical insurance coverage under the City-provided medical insurance program. Under the terms of this Agreement, City contributions to the retiree medical trust shall cease as of December 31, At the beginning of each calendar year of this Agreement the City s contribution will increase by 2%. Effective January 1, 2015, the amount of the contribution will increase to $ per month per eligible employee. Effective January 1, 2016, the amount will increase to $ per month per eligible employee. Effective January 1, 2017, the amount will increase to $ per eligible employee. Effective January 1, 2018, the amount will increase to $ per eligible employee. 13. With regard to the tax liability provisions of paragraphs 4, 6, and 7 of this Agreement, the City warrants that the cafeteria plan is a bona fide IRS Section 125 cafeteria plan. The regular and intended effect of the implementation of the plan, under current law, is to enable employees to choose between the receipt of benefits which are not subject to either State or Federal income tax and benefits which are subject to tax without the choice resulting in a taxable event. Thus, the tax liability provision shall be interpreted to mean that, in the event of a change in IRS regulations or tax law that makes cafeteria benefits taxable, the employee (not the City) is responsible for the taxes. In the absence of such a change, the provision pertaining to tax liability shall have no effect. 14. One of the medical insurance plans offered by the City will be the Kaiser plan that has been established by the Public Employees Benefit Trust (hereinafter referred to as the PEBT Kaiser plan). This Agreement shall serve as the Resolution required of the City s non-sworn bargaining units, and all members of the Executive Pay Plan under the terms and conditions pertaining to participation in the PEBT Kaiser plan. In the event the City should determine that participation in the PEBT Kaiser plan is not in the best interest of the City and/or its employees, the bargaining units that have entered into this Agreement will, upon notification by the City, file the Resolution that is required under the terms and conditions of the PEBT Kaiser plan to end participation in the plan. In order to avoid disruptions in medical insurance coverage for participants in the PEBT Kaiser plan, the effective date of the termination of said change shall be at the beginning of the medical plan (i.e., calendar) year designated by the City. 15. If, during the term of this Agreement, the City seeks to make a change to the medical insurance provider to the extent that the change in provider results in a material change in benefit or service levels provided to employees, then the City shall meet-and-confer with the Coalition at least 60 days prior to deciding on any such change. To facilitate a cooperative working relationship between the City and the Coalition, should any proposed change not warrant meet-and-confer the City agrees to discuss said changes with the Coalition before making any such change. 16. The Coalition and the City agree to re-open negotiations in or about September of 2017 regarding impacts of the Federal Affordable Care Act Cadillac Tax unless the Cadillac Tax portion of the Act is repealed. 5

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