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HomeMy WebLinkAboutItem 11g - Fair Labor Standard Act Auditing Services DATE: October 1, 2024 TO: Honorable Mayor and City Council FROM: Anely Williams, Interim Human Resources Director By: Sairy Stepanian, Human Resources Manager SUBJECT: PURCHASE ORDER WITH LIEBERT CASSIDY WHITMORE FOR AUDITING SERVICES RELATED TO THE FAIR LABOR STANDARDS ACT (“FLSA”) IN AN AMOUNT NOT TO EXCEED $125,000 CEQA: Not a Project Recommendation: Approve SUMMARY As part of the Fiscal Year 2024-25 Operating Budget, the City Council approved a New Project for auditing services associated with the Fair Labor Standards Act (“FLSA”). To take proactive measures and ensure adherence to the provisions set forth by the FLSA, a comprehensive assessment of the City’s practices is necessary. The City of Arcadia currently contracts with the law firm of Liebert Cassidy Whitmore to provide an array of personnel-related legal services. In consideration of the already existing legal services agreement, it is recommended that the City Council approve a Purchase Order with Liebert Cassidy Whitmore for comprehensive auditing services pertaining to the FLSA, in an amount not to exceed $125,000. BACKGROUND The FLSA was enacted in 1938 to provide protection to eligible workers for matters related to wages, overtime compensation, and payroll recordkeeping practices. Periodic amendments to the FLSA have been implemented to address changes in workplace expectations and practices. Although amendments to the FLSA do occur, including as recently as 2024, legal determinations that are based on the FLSA can occur more frequently than formal amendments. Ensuring the City’s practices keep pace with these complex legal rulings and formal amendments is necessary to ensure full compliance with the law. In 2011, the City conducted a formal FLSA audit. The professional audit and comprehensive review resulted in a detailed report that was based upon information Purchase Order for FLSA Audit October 1, 2024 Page 2 of 3 gathered through interviews, fact finding, and inspection of documents provided by the City. The results of the audit encompassed recommendations on best practices and policy samples to ensure compliance with the FLSA. Generally, it is good practice for agencies to conduct a periodic FLSA audit of internal practices to capture changes in the FLSA and legal determinations. In consideration of the 13 years that have elapsed since the City’s last FLSA audit, an updated comprehensive audit is necessary. DISCUSSION To ensure a fair and comprehensive approach, the audit will involve the participation of all departments during the data gathering phase. The audit will also entail a detailed review of various pertinent Human Resources and Payroll practices, with respect to the FLSA and any changes that have occurred since the City’s last audit. The resulting report will inform the City of best practices to ensure ongoing compliance with the provisions of the FLSA. The City of Arcadia currently contracts with the law firm of Liebert Cassidy Whitmore (“LCW”) to provide an array of personnel-related legal services. The legal services agreement provides flexibility in that the necessary annual amounts are established in the Human Resources Department’s Operating Budget, which can vary depending on the needs of the City in any given year. LCW conducted the 2011 FLSA Audit for the City and does this type of work for many agencies throughout the state. The decades’ long professional relationship between the City and LCW, combined with the existing contract, are conditions that make it more favorable for the City to immediately commence the intended FLSA audit. Notably, having conducted the City’s last FLSA audit, LCW is equipped with access to historical information and familiarity with the City’s systems. LCW’s knowledge and understanding of the City will expedite the audit and reduce costs through an efficient and timely project onboarding process. Accordingly, it is recommended that the City Council approve a Purchase Order under the existing legal services agreement with LCW for a comprehensive FLSA audit, in an amount not to exceed $125,000. ENVIRONMENTAL ANALYSIS The proposed action does not constitute a project under the California Environmental Quality Act (“CEQA”), as it can be seen with certainty that it will have no impact on the environment. Purchase Order for FLSA Audit October 1, 2024 Page 3 of 3 FISCAL IMPACT The comprehensive FLSA audit will not exceed $125,000 and sufficient funds have been allocated in the Human Resources Department’s Fiscal Year 2024-25 Operating Budget for this expense. An updated FLSA Audit resulting in necessary changes to City policies and procedures is expected to save substantial legal and other costs over time. RECOMMENDATION It is recommended that the City Council determine that this action does not constitute a project under the California Environmental Quality Act (“CEQA”); and approve a Purchase Order with Liebert Cassidy Whitmore for Auditing Services related to the Fair Labor Standards Act (“FLSA”) in an amount not to exceed $125,000.