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San Jose City Union Agrees To Curb Sick-Pay Cash Outs

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San Jose City Hall

San Jose City Hall (City of San Jose)

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SAN JOSE (KCBS)—The Building Inspectors’ Union agreed on Tuesday to change its sick leave benefit for new city hires who will no longer be allowed to store up unused sick days and cash them out at retirement—an arrangement that costs the city millions of dollars.

The city of San Jose currently spends about $10 million a year cashing out sick leave at its employees’ retirement. Sick leave, Mayor Chuck Reed said, was intended to be an insurance policy but that over the years it’s morphed into a retirement benefit.

KCBS’ Mike Colgan Reports:

“If you get sick, you get paid. Instead it’s become sort of like bank which is if you retire after never having being sick, then you get paid for all those sick-leave days and it can be very expensive,” he said. “We’ve had people who have drawn out over $200,000 when they retire.”

In comparison, most private employers only allow workers to bank sick-leave hours for use only if they become ill. They don’t however, allow employees to cash out unused sick leave at retirement.

The agreement with union, however, will not save the city money for some time as the change will only apply to workers hired after Sept. 30, but Reed remains optimistic.

“We still have open the question of what we’ll do with current employees. That’s subject to bargaining in next year’s contract, so we’ll continue to try to eliminate it all together, but we are doing it in steps and every agreement we get is one step closer,” he said.

The City Council voted last year to eliminate sick-leave cash outs and so far only four of the city’s 11 unions have agreed to the change. According the article in the San Jose Mercury News, a former librarian sued the city claiming the $28,080 she had banked is a guaranteed retirement benefit. The suit has not been solved.

(Copyright 2012 by CBS San Francisco. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)

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