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
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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.