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F4. Addendum to City Manager AgreementCity of Kalispell Post Office Box 1997 - Kalispell, Montana 59903 Telephone: (406) 758-7701 Fax: (406) 758-7758 MEMORANDUM To: Mayor Johnson and City Council From: Doug Russell, City Manager A Re: Addendum #1 to the City Manager Employment Agreement Meeting Date: November 16, 2015 BACKGROUND: In 2012, the current city manager's contract was signed and placed into service. During this year's evaluation, the topic of contract renewal was discussed and the general components of the current contract were reviewed, including their reliance upon state law, which invalidates the intent of the original contract. In 2012, it was anticipated that the contract was an at -will contract with the City Manager serving at the pleasure of the Council, which was the intent of both parties and the standard for City Manager contracts. However, in Montana, contracts that are indefinite, such as the current contract, are not considered at -will, and all regulations pertaining to employment are applicable. Most notably, this includes the Wrongful Discharge from Employment Act (MCA 39-2-904). This act does not provide for serving at the will of the employer, but rather holds all due process standards as a requirement for discharge, similar to any other employee. Both parties agree that this was not the intent of the original agreement and that the traditional employment arrangement is for the employee to serve at the pleasure of the Council. To rectify this, a term -based contract needs to be established, requiring modification of two sections of the current agreement; term, and severance. Currently, the term is indefinite. The severance, not being associated with a term, is set for 6 months. However, the Wrongful Discharge from Employment Act could potentially penalize the employer for up to 4 years of damages. The attached addendum to the current employment agreement establishes the contract for a 5 year term, with a maximum payout of 3 years, thus essentially functioning as a rolling 3 year contract for the first two years of the agreement. This does create a more traditional contract where the employment is at the pleasure of the Council by establishing a term for the contract. RECOMMENDED ACTION: It is recommended that the City Council consider Addendum #1, amending sections 1 and 10 of the current employment agreement with the City Manager. Addendum #1 to Employment Agreement between the City of Kalispell and Douglas Russell Section 1: Term The term of this agreement shall be for an initial period of 5 years from November 16, 2015, to November 15, 2020. This Agreement shall be automatically renewed for a 2 year term unless notice that the. Agreement shall not renew is given at least 12 months before the expiration date. In the event the agreement is not renewed, all compensation, benefits and requirements of the agreement shall remain in effect until the expiration of the term of the Agreement unless Employee voluntarily resigns. Section 10: Severance Severance shall be paid to the Employee when employment is terminated as defined in Section 9. If the Employee is terminated, the Employer shall provide a minimum severance payment equal to the remaining term of this employment agreement, not to exceed thirty-six (36) months at the current rate of pay and health insurance as provided in Section 4. This severance shall be paid in a lump sum unless otherwise agreed to by the Employer and the Employee. The Employee shall also be compensated for all accrued sick leave and vacation time. The Employer agrees to make a contribution to the Employee's deferred compensation account on the value of this compensation calculated using the rate ordinarily contributed on regular compensation. If the amount of the contribution under this Section exceeds the limit under applicable regulations for a contribution to the Deferred Compensation plan, the remainder shall be paid to the Employee in a lump sum as taxable compensation. The following are circumstances where the Employer is not required to provide severance pay under this agreement: 1. If the Employee is terminated because of a conviction of a felony; 2. death; 3. disability for more than 6 months; 4. malfeasance in office; 5. abuse of public office for personal gain. CITY OF KALISPELL Mayor: Mark Johnson DOUGLAS RUSSELL Addendum #1 to Employment Agreement between the City of Kalispell and Douglas Russell Section 1: Term amm"Umm"maT.7l,:E11 T�RITiF_Si7�LWi R The term of this agreement shall be for an initial period of 5 years from November 16, 2015. to October 15, 2020. This Agreement shall be automatically renewed for a 2 year term unless notice that the Agreement shall not renew is given at least 12 months before the expiration date. In the event the agreement is not renewed, all compensation, benefits and requirements of the agreement shall remain in effect until the expiration of the term of the Agreement unless Employee voluntarily resigns. Section 10: Severance Severance shall be paid to the Employee when employment is terminated as defined in Section 9. If the Employee is terminated, the Employer shall provide a minimum severance payment equal to the remaining term of this employment agreement, not to exceed thirty-six 36 months at the current rate of pay and health insurance as provided in Section 4. This severance shall be paid in a lump sum unless otherwise agreed to by the Employer and the Employee. The Employee shall also be compensated for all accrued sick leave and vacation time. The Employer agrees to make a contribution to the Employee's deferred compensation account on the value of this compensation calculated using the rate ordinarily contributed on regular compensation. If the amount of the contribution under this Section exceeds the limit under applicable regulations for a contribution to the Deferred Compensation plan, the remainder shall be paid to the Employee in a lump sum as taxable compensation. The following are circumstances where the Employer is not required to provide severance pay under this agreement: 1. If the Employee is terminated because of a conviction of a felony; 2. death; 3. disability for more than 6 months; 4. malfeasance in office; 5. abuse of public office for personal gain. Comment [DRI]: The current employment agreement is written without a specific term identified in the contract. This places the employee in the contract under the State of Muntumti s Wmngl'ul Discharge Act. rather than serving at the pleasure of the City Council, which is considered the standard for City Management contracts. In order io shift this to it more traditional contract whurc empluymamt is tit the pleasure of the Council, a term for employment must he provided in the contract. Thus modifications to Section's I and 10 of the current employment agreement are necessary to identity a terra and provisions fur termination.