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Councilwoman Gray crafting new plan on severance pay

Jeremy M. Lazarus | 6/21/2017, 7:29 a.m.
Remember the $166,000 in severance packages former Richmond Mayor Dwight C. Jones awarded to four members of his staff as ...

Remember the $166,000 in severance packages former Richmond Mayor Dwight C. Jones awarded to four members of his staff as his term ended last December and the $77,000 City Council awarded to three outgoing employees?

Remember the vows of incoming council members to reform the way the city handles severance and end-of-service pay for departing employees?

Five months later, City Councilwoman Kim B. Gray, 2nd District, is still struggling to move the reform legislation she is spearheading out of the Governmental Operations Committee.

If all goes well, she hopes to have the proposed ordinance in shape and ready to advance at the committee’s next meeting on Thursday, June 22.

Among the key elements, her proposal would wipe out “golden parachutes,” or big lump-sum payments, to departing city executives.

In addition, the proposal would apply equally to qualifying lower-level employees who are considered classified and work under civil service-style rules.

At this point, there is a separate severance plan for classified workers who lose their jobs if their positions are wiped out because departmental changes result in a reduction in force.

“There would be one plan for everyone,” Ms. Gray said.

Under the current pay plan, outgoing executives who are fired but did nothing wrong can be awarded up to seven months of pay in a lump sum at the discretion of the mayor or the council, depending on who hired them.

Usually, the severance is calculated on the basis of one month’s pay for each year of service. But since 2004, the mayor and the City Council have had the discretion to award up to seven months of pay.

Under Ms. Gray’s reform, severance would continue to be based on years of service. But instead of a lump sum, her plan would provide a certain number of weeks of severance based on time on the job, following a model now in place for the state and in Chesterfield and Henrico counties.

For example, employees with less than two years of service could receive up to four weeks of severance at the discretion of their hiring authority, such as City Council, the chief administrative officer or an independent board or commission.

Employees with less than 10 years of service could receive up to 11 weeks of severance. Those with less than 15 years could receive a maximum of 16 weeks of pay; and those with 15 years or more of service could receive two weeks of salary for each year served, up to a maximum of 36 weeks.

While that is longer that the current maximum of seven months or 28 weeks, managers and executives rarely stay 15 years; turnover has increased since 2004, when the elected mayor position was created.

If Ms. Gray’s plan had been in place, the city would have paid out far less in severance to Mayor Jones’ four staff members.

For example, Mayor Jones’ press secretary, Tammy Hawley, qualified for a lump sum equal to seven months of pay under the current plan. Under the Gray plan, Ms. Hawley would have qualified for 10 weeks in severance, or two and a half months, based on her eight years of service during the Jones administration.

Overall, Ms. Gray estimates that her plan could reduce the cost of severance payments by as much as 40 percent.

Ms. Gray also proposes to spread out severance payments. Her plan calls for severance to be a continuation of pay. It would be paid on a pro rata basis twice a month on the same schedule as regular city paychecks.

That would end the practice of employees receiving a lump sum and then applying for unemployment benefits, she said.

“Former employees would have to wait until the severance was fully paid before applying for unemployment,” Ms. Gray said.

Also, under her plan, the severance would end if a discharged employee took a new job with the city before the payments ran out.

Her plan also would allow discharged executives and classified employees to stay on the city’s health insurance plan for up to a year.

Ms. Gray also wants to eliminate the city practice of having outgoing executives sign a secret “amicable departure” agreement, such as the one that former Richmond Chief Administrative Officer Byron Marshall signed when he was fired in September 2014. The terms remain undisclosed.

“We still don’t know what is in the agreement or how much the city was obligated to pay him,” said Ms. Gray’s aide, Craig Bieber.

Instead of secret agreements, employees due severance would have to sign a waiver of their right to sue the city to qualify for the payments, according to Ms. Gray’s proposal.

“It would be open and above board,” she said.