Title
Adoption of Resolution Approving Letter of Understanding Between the International Association of Firefighters, Local 689, and the City of Alameda. (Human Resources 10025060)
Body
To: Honorable Mayor and Members of the City Council
From: Adam Politzer, Interim City Manager
EXECUTIVE SUMMARY
As a contracting agency of the California Public Employees’ Retirement System (CalPERS), the City of Alameda (City) is subject to statutory and regulatory requirements that govern whether compensation is reportable for pension calculation purposes. The Public Employees’ Retirement Law (PERL), the Public Employees’ Pension Reform Act of 2013 (PEPRA), and the California Code of Regulations (CCR) require that contracting agencies must accurately reflect information related to compensation items in approved documentation. For compensation paid in addition to base salary, this must include the relevant intent, eligibility criteria, and conditions of payment.
Through a compliance review for one International Association of Firefighters, Local 689 (IAFF) member, CalPERS identified reported compensation that did not comply with the PERL. The Letter of Understanding makes clarifications in order to bring the related language into compliance.
IAFF members have ratified this agreement.
BACKGROUND
An IAFF member received a compensation compliance review letter dated October 22, 2025, stating that compensation used in the pension calculation was not compliant and, therefore, would be excluded. The excluded compensation related to education pay, temporary upgrade pay, and additional compensation for working on holidays as a part of employees’ regular schedule. These compensation items were excluded because the supporting language in the IAFF memorandum of understanding (“MOU”) does not comply with the PERL.
CalPERS determinations concerning labor policy or agreement language also extend to all employees subject to the IAFF MOU. Therefore, clarifications to the IAFF language must be approved or CalPERS will exclude related compensation from pension calculations for all IAFF members, including the employee who was the subject of the recent determination.
DISCUSSION
All items of compensation which are reportable to CalPERS aside from salary are delineated in the exclusive list of special compensation items under Title 2 California Code Regulations (CCR) sections 571(a), 571(a)(3), and 571.1(b).
1. Acting Procedures and Pay
The compensation in Section 11.5 of the IAFF MOU referred to as Acting Procedures and Pay closely aligns with “temporary upgrade pay” special compensation under CCR section 571(a)(3).
Temporary Upgrade Pay is defined in CCR section 571 as follows:
“Compensation to members who are required by their employer or governing board or body to work in an upgraded position/classification of limited duration.”
Additionally, under Government Code (“GC”) section 20636 a “group or class of employment”, meaning a number of employees considered together as they share similarities in job duties, work location, collective bargaining unit or other logical work-related grouping , must meet the nine criteria under CCR section 571 for reportable special pay which includes “available to all members in the group or class”.
Section 11.5 in the IAFF MOUs effective December 19, 2023 to December 31, 2025, and effective January 1, 2026 to December 31, 2027 contained discretionary language creating a class or group issue under GC section 20636. Additionally, the section contains reference to the General Order Bulletin (“GOB”), an external document to the MOU, which outlines the administrative procedures for acting assignments and pay. CalPERS strongly advises against references to external documents in lieu of or disclosing elements of special compensation to avoid confusion or unnecessary delays in compensation reviews.
The Letter of Understanding now being considered addresses two issues by 1) removing discretionary language, and 2) removing reference to the GOB.
2. Career Development Incentive Program
The compensation in Section 25.4 of the IAFF MOU referred to as Career Development Incentive Pay closely aligns with “education incentive” special compensation under CCR section 571(a).
Education Incentive is defined in CCR section 571 as follows:
“Compensation to employees for completing educational courses, certificates and degrees which enhance their ability to do their job. A program or system must be in place to evaluate and approve acceptable courses. The cost of education that is required for the employee’s current job classification is not included in this item of special compensation.”
The IAFF MOUs effective December 19, 2023 to December 31, 2025, and effective January 1, 2026 to December 31, 2027 did not explicitly state how the eligibility criteria for the award levels under the Career Development Incentive Program enhances an employee’s ability to their job or how the City has an evaluation in place to ensure suitability and relevancy of the various achievements, and reflects discretionary evaluation and approval by the Fire Chief which creates a group or class issue under GC section 20636.
Additionally, Appendix “C” - Career Development Incentive Program is the previous provision that was grandfathered for employees hired prior to December 19, 2023, and includes years of service as an eligibility criterion in addition to education achievements which is noncompliant. While the City looked to address this compliance issue with previous negotiations, inclusion of this document in the labor agreement was noted as an issue under CCR section 571. Lastly, this section 25.14 also references the GOB for administration of the program, which is an external document from the MOU and as mentioned above CalPERS advises against.
The Letter of Understanding now being considered resolves the following four concerns: (1) clearly states that achievement of one of more levels under the Career Development Incentive Program enhances an employee’s ability to do their job, (2) clarifies that the City has a program in place to evaluate the effectiveness and relevancy of the awards and removes discretionary evaluation, (3) removes references to external documents, and (4) eliminates Appendix “C” which was a grandfathered provision that incorporated years of service with education which is noncompliant with the PERL.
3. Holiday Compensation
Compensation paid to employees for being scheduled to work on holidays as a part of their normal duties due to required scheduled staffing aligns with “Holiday Pay” special compensation under CCR section 571(a)(5) for classic CalPERS members and CCR section 571.1(b)(4) for PEPRA CalPERS members.
Holiday Pay is defined in CCR section 571, in pertinent part as follows:
“Additional compensation for employees who are normally required to work on an approved holiday because they work in positions that require scheduled staffing without regard to holidays. If these employees are paid over and above their normal monthly rate of pay for approved holidays, the additional compensation is holiday pay and reportable to PERS.”
While the successor IAFF MOU effective January 1, 2026 to December 31, 2027, addresses this issue, the previous IAFF MOU effective December 19, 2023 to December 31, 2025 which was used in CalPERS compensation review determination does not explicitly identify eligibility criteria that aligns with the definition of Holiday Pay in the PERL. Specifically, the language did not identify that the compensation was paid due to required scheduled staffing resulting in being regularly scheduled to work on holidays, and the language did not include a specific list of approved holidays.
The Letter of Understanding now being considered makes clarifications that explicitly outline the eligibility criteria for receiving holiday compensation, and a defined list of approved holidays.
The City and IAFF have agreed to the language clarifications included in the Letter of Understanding.
ALTERNATIVES/OPTIONS
City Council may consider a number of alternatives, including:
• Approve the resolution as recommended. The City has met with IAFF in good faith and reached agreement with respect to the clarifying language.
• Reject the resolution. Staff does not recommend this option as it would result in the exclusion of the compensation for IAFF members.
FINANCIAL IMPACT
Approving the Resolution would avoid the possibility of liability to the City as a result of having noncompliant compensation removed from pension calculations of retired IAFF members.
MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE
This action is consistent with the Alameda Municipal Code.
ENVIRONMENTAL REVIEW
This action does not constitute a “project” as defined in California Environmental Quality Act (CEQA) Guidelines Section 15378 and therefore no further CEQA analysis is required.
CLIMATE IMPACT
There are no identifiable climate impacts or climate action opportunities associated with the subject of this report.
RECOMMENDATION
Adopt a resolution approving the Letter of Understanding between IAFF, and the City concerning acting procedures and pay, holiday pay, and career development incentive program.
Respectfully submitted,
Noelle White, Human Resources Director
Financial Impact section reviewed,
Ross McCarthy, Finance Director
Exhibit
1. Letter of Understanding between IAFF and the City