Public Housing Authority Financial Management Module 13: Personnel Policies Module 13 Topics • Contracting Out Services • PHA Employee Compensation – Items to Consider – Maintenance Determination – Executive Compensation Limits • Time and Attendance Policies – Fair Labor Standards Act (FLSA) – Exempt and Non-Exempt – Frequent Topics • Employee Evaluations – PHA Bonuses • PHA Hiring Policy and Practices Module 13 CONTRACTING OUT SERVICES Contracting Out: Factors to Consider - Activity • Is the activity temporary, recurs in cycles, or requires less than a full-time resource? – Plumbing, Electrical, Information Technology (IT) • Would it cost less for the PHA to outsource the activity? Would the quality of the work be better if outsourced? – Grass-cutting, snow removal, painting • While the activity can be performed in-house, is staff time better used elsewhere? – • Does the activity require specialized knowledge and is it impractical to have a PHA employee perform this function? – Legal, Human Resources • What can the PHA afford to pay? Contracting Out: Factors to Consider – PHA Staff Assessment • What are staff’s duties and workload? – Examine productivity metrics for staff • Maintenance – Number of work orders completed; work order completion time; average unit turnaround-time, etc. • Property Management – reexaminations, unit inspections, lease-up time, etc. • What are the skill set of staff? • What is the contract cost versus contract benefits? Contracting Out: Who to Contract To? • Who to Contract To? – Private companies – Other PHAs – City – Shared-service arrangements with other entities • When contracting, PHA should consider: – Oversight of Contract – Contract Cost – Compliance with HUD regulations and PHA’s policies

PHA Services Typically Contracted Out

Administrative Services Maintenance Services • Information Technology (IT) Services • Grass-cutting/Snow Removal Services • Legal Services • REAC Inspection • Accounting • Unit turns • Payroll/Human Resources • Painting • Cleaning services • Specialized (Plumbing, Electrical, Roofing, etc.) Property Management HQS Inspections (HCV Program)

Note: PHAs with unionized workforce may be constrained when considering what services can be outsourced Module 13 PHA EMPLOYEE COMPENSATION PHA Employee Compensation Items to Consider • Why are reviews important: – Compliance with HUD requirements – Salary not competitive for market place; not able to attract and retain talent – Pay equity (Review to make sure that there is not a pattern of inequity between gender, race, or other State or Federal protected class) • Has the PHA established a minimum (entry level), midpoint, and maximum salary range for each position? – Entry level pay is typically 75-80% of the market rate – Market rate = what an experienced solid performing employee is paid – Highly experienced employee pay is typically 120% to 125% of market rate • How does the PHA determine pay increases and bonuses? • Who in the PHA is authorized to approve pay increase and bonuses? Salary Comparability Review • PHAs should periodically perform a salary comparability review for all PHA positions – Determine methodology and data source to be used – Review pay scales to make sure align with other staff positions (for example, a maintenance position generally should not be paid more than a property manager position • Surveys of comparable wage data can be gathered from the following sources: – Local area private entities that employ workers in similar positions (e.g., apartment complexes, private management companies, etc.) – City Human Resources – If the PHA is connected with the City and complies with the City’s personnel/human resource policy – Hire a firm to conduct salary survey HUD’s Requirements for PHA Compensation • Compensation for PHA staff is largely determined by a PHA’s Board of Commissioners and Executive Director • HUD’s requirements for PHA compensation only pertains to: – PHA Maintenance: PHAs are required to annually establish a prevailing wage (i.e., minimum hourly wage) for maintenance positions – PHA Executives: Congress caps the amount that the Board can pay PHA executive positions using certain HUD program funds Prevailing Wage Requirements: Maintenance • Maintenance work on properties under the Annual Contributions contract (ACC) are subject to prevailing wage requirements, that is the minimum hourly wage that can be paid for maintenance (Source: Section 12(a) of the US Housing Act of 1937) • Prevailing wage requirement is set by each PHA and applies to: – Routine Maintenance: Janitorial and maintenance staff – Non-Routine Maintenance: Includes electrical, roofing, or other classification that are performed annually by licensed contractors (HVAC, elevator, etc.) – Development (required under Davis-Bacon Act) • HUD’s Davis Bacon and Labor Standards Office is responsible for the administration and enforcement of labor standards within their jurisdiction – There are regional and local field offices that work with all PHAs PHA Maintenance Wage Determination • PHAs are required to submit a maintenance wage determination and fringe benefits (if applicable) to HUD annually – Applies whether work is performed in-house or maintenance is contracted • The maintenance wage determination should represent: – Minimum or lowest hourly wage that a PHA is permitted to pay a maintenance position – Entry-level position and not an experienced or long-time employee • Davis-Bacon wage can be used as a rough proxy for the prevailing maintenance wage determination PHA Maintenance Wage Determination Process • HUD sends the PHA a letter at least 180 days before the PHA’s fiscal year start date. The letter requests that the PHA submits the proposed prevailing maintenance wage rate, and fringe benefits (if applicable), using: – HUD Form 4750 (Maintenance Wage Rate Recommendation); – Collective Bargaining Agreement; or – Survey of wage rates using HUD Form 4751 (Maintenance Wage Rate Survey) and 4752 (Maintenance Wage Rate Survey – Summary Sheet) • Position descriptions must also be submitted, if HUD does not have this information or if changes have been made PHA Maintenance Wage Determination Process (continued) • The wage information and position descriptions for each maintenance classification is due to HUD at least 90 days before the PHA’s fiscal year start date • HUD approves maintenance wage determination 30 days before PHA’s fiscal year start date • HUD’s Davis Bacon and Labor Standards office will issue the PHA a HUD Form 52158 (Maintenance Wage Rate Decision). Form 52158 is the same as HUD Form 4750 submitted by PHA, with the approved wage rates for all maintenance work classification • If the PHA does not submit the wage information to HUD, HUD will calculate the prevailing maintenance wage rate for the PHA using last year’s submitted data x Consumer Price Index (CPI) inflation rate. For 2016, the CPI was 0.5% HUD 52158 Form - Example PHA Maintenance Wage Determination – Other HUD Requirements • Posting Requirements: HUD Form 52158 must be posted in employee common area (lunch room, office, etc.) and incorporated into routine maintenance contracts • Recordkeeping: PHAs must maintain records associated with determination of maintenance wage determination for 3 years • HUD Resources: HUD Handbook – Federal Labor Standards Requirements in Housing and Urban Development Programs (1344.1 REV 2 issued 2012) PHA Executive Compensation: HUD Requirements • Starting in FY 2012, Congress capped the salary, including bonuses, for the Executive Director or any other PHA employee paid using Section 8 and 9 funds to the annual rate of basic pay for Level IV of the federal Executive – Section 8 & 9 Funds include: 1) HCV; 2) Capital Fund; 3) Operating Fund; and 4) ROSS • Does not apply to Moderate Rehabilitation or Project Based Rental Assistance (PBRA) funds – Salary cap does not apply to and benefits (such as , , medical insurance, or the use of a PHA vehicle) – For 2018, the pay cap is $164,200 annually. Salary and bonus above this level, must be paid for with other funds • Salary cap applies to all PHAs, including Moving-to-Work (MTW) PHAs PHA Executive Compensation: HUD Requirements (continued) • PHAs with a COCC: COCC fees from Section 8 & 9 funds that are used to pay PHA employees’ are also subject to the salary cap • If several PHAs hire the same person, the cap applies to that person’s total compensation from all sources • Covered Individuals: Includes all PHA employees and persons who are employed in a legally separate entity of the PHA but are reported in the PHA’s financial statement as a component unit – Not Covered: Independent contractors or hourly employees PHA Executive Compensation: HUD Requirements (continued) • PHAs are required to submit executive compensation information annually using HUD-52725 form (Excel-based) and submit online through HUD’s Secure Systems – Salary information provided for: 1) top management official; 2) top financial official; and 3) highest compensated employee, not top management or financial for full calendar year – Compensation is to be broken out by salary and bonus; and by funding source (Section 8 funds, Section 9 funds, and non-Section 8 or 9 funds) – Data Source: Compensation reported based on employee's W-2 form • Penalty: HUD may impose monetary sanctions as well as other remedies pursuant to HUD regulations for failure to comply with reporting requirements PHA Executive Compensation: HUD Requirements (continued) • Executive Compensation data will be made available on HUD’s website • Website for CY 2015 executive compensation data: – https://portal.hud.gov/hudportal/HUD?src=/program_offices/public_indian_housing/reac/ rd/cy15phaec • When reviewing, please note the following: – The 2015 compensation limit was $158,700. Salaries are further broken out into portion paid with Section 8 & 9 funds and salary from non-Section 8 & 9 funds • CEO = Executive Director; CFO = Finance Director; Executive = Other (for example, Maintenance ) • Some salaries may appear artificially low and may indicate where an individual is serving as a part- time ED or an ED for multiple PHAs • HUD provides annually a PIH Notice on how to report the Executive Compensation information to HUD Module 13 TIME & ATTENDANCE POLICIES Fair Labor Standards Act Requirements • FLSA Requirements: Initial law was enacted in 1938 and establishes , overtime pay, recordkeeping, and child labor standards for full and part- time workers in the private and public (Federal, state, local) sectors – The Act generally applies to hourly employees – Minimum Wage: Requires that non-exempt employees be paid at least the federal minimum wage (currently $7.25 per hour) • Where the state minimum wage rate is higher than the federal rate, employers are required to pay workers the higher amount. – Overtime: Requires that non-exempt employees be paid overtime (i.e., time and a half) for hours worked over 40 in a work week – Record-keeping: Employers are required to keep records on employees’ , hours, deductions, etc. as provided in the Department of Labor regulations • PHAs need to define: 1) work week and 2) work-day • Records do not have to be kept in any particular form and time clocks are not required to be used Fair Labor Standards Act Requirements (Continued) • Policies Not Covered by FLSA: – Vacation; – Holidays off or pay; – Severance; – Sick pay; – Meals or rest periods; – Pay raises or fringe benefits; – Employee discharge • Employees Exempted from FLSA: The following positions are generally exempt from FLSA’s minimum wage and overtime requirements – considered to be salaried employee – Executive – Professional Capacity – Certain computer-related positions – Independent contractors Fair Labor Standards Act Exempt Employees • All criteria must be met to be considered exempt from FLSA Exempt Employees: Classification Criteria 1. Hired to do a – not for the quality or quantity of 5. Work is directly related to management or work, or number of hours worked business operations of employees or customers 2. Must be paid a guaranteed salary or fee without 6. Can bind the employer in financial or regards to number of hours worked contractual matters 3. Currently, must be paid not less than $455/week; 7. Executive: Must supervise at least 2 FTEs $1,971.67/month (equivalent $23,660/annually) 4. Primary duty – office (not including clerical duties) 8. Exercises discretion and independent or non-manual work judgement for significant matters Exempt and Non-Exempt Classification PHA Example Non-Exempt Positions Exempt Positions • HCV Staff • Executive Director • Maintenance Staff • Senior Management . Deputy Director . Program Supervisor . Finance Director • Clerical Staff • Property Managers & Assistant Managers • Other Professional Staff . Human Resources . Legal . Information Technology (IT) . Procurement . Modernization Coordinator . Accountant 1. Time Reporting Non-Exempt Employees PHAs generally require Non-Exempt employees to clock in and out for payroll and attendance purposes to conform to FLSA requirements • Hours Worked: Includes all time an employee must be on duty, on the employer premises, or at any other prescribed places of work • Travel Time: Travel from job site to job site during the workday must be considered as part of hours worked • Rounding Hours Worked: A PHA can round an employee time to the nearest quarter hour (i.e., 15 minutes increments) – Employee time from 1 to 7 minutes may be rounded down and not counted as hours worked – Employee time from 8 to 14 minutes must be rounded up and counted as a quarter hour of work time – Prohibited from always rounding down (29 CFR 785.48(b)) 1. Time Reporting Non-Exempt Employees Best Practices • Time Tracking for Non-Exempt Staff: Personnel Policy should include: • How early/late employees can clock in or out for a shift. For example: no sooner than 10 minutes before or no later than 10 minutes after a shift • Whether Non-Exempt staff is required to clock in and out for lunch breaks or rest periods • Prohibition on employee clocking in or out for another employee • Overtime work requires prior authorization from supervisor • Additional Time Tracking Policy for Maintenance Staff: If maintenance starts/ends day at a unit, they should call property office and request that the property manager to clock the person in/out • Time sheets are signed by employee and immediate supervisor • Time & attendance records maintained by designated office, e.g., Finance 2. Time Reporting Exempt Employees FLSA does not require or prohibit that Exempt Employees time be tracked • PHAs can require Exempt Employees to use a in order to track attendance – The PHA must implement this policy evenly. For example, the PHA • Cannot require that one property with exempt employees use a time clock because of problems with attendance and tardiness but not require the same for another property. • Cannot require exempt HCV employees but not exempt PH employees to use a time clock – PHAs cannot deduct pay from exempt employees for tardiness – PHAs can use time reporting data for disciplinary actions • Best practice for exempt Public Housing property staff: – Post and maintain established office hours – Require visitor log at property office 3. On-Call Policy: Non-Exempt Employees • FLSA Requirement (29 CFR 785.17): – An employee who is required to remain on call on the employer’s premises or close to the premises so that the employee cannot use the time effectively for personal use is considered working while on call – An employee who is required to carry a cell phone, or a beeper, or who is allowed to leave a message where he or she can be reached is not working (in most cases) while on call – Additional constraints on an employee’s freedom could require on call time to be compensated • Option for PHA On-Call Policy: – Provide flat fee amount for person on call (Example: $50 a week) – Pay for hours actually worked – Provide a minimum number of hours to be paid if there is a work order call • For example, the PHA’s policy is to pay a minimum of 3 hours if there is a call. Ed is on call and received 1 emergency work order that night which took him 2 hours to complete including travel time. The PHA would pay him as if he had worked 3 hours 4. Annual (Vacation) Policy: All Employees • Annual (Vacation) Leave: Governed by state law; most states do not require employers to provide employees with vacation benefits, either paid or unpaid – Typically, if an employer choose to provide such benefits, the employer must comply with the established policy or contract • Best Practice - PHA Policy: – Establish a policy or provision that denies the payment of accrued annual leave upon separation from employment without two weeks notice. – Establish number of hours earned per pay period, annual leave cap, and cap on annual leave carryover – Annual leave cannot be advanced to employees – Annual leave is not transferable between employees – PHA cannot buy back annual leave from employees Frequent Topic: 5. Policy: All Employees • Sick Leave: Governed by state law; most states do not require employers to provide employees with sick leave, either paid or unpaid • PHAs will need to comply with the Family and Medical Leave Act • Best Practice - PHA Sick Leave Policy: – Situations where sick leave should be taken (e.g., personal illness, care of employee’s spouse or dependent children, health care appointments, etc.) – Number of hours accrued per pay period and annually – Whether new employees or employees in a probationary period can earn sick leave – Whether employees on injury leave or in a non-pay status can accrue sick leave – Whether accrued sick leave is paid upon separation from employment – No advancement of sick leave is permitted • Consider a consolidated or Paid Time-Off (PTO) plan versus traditional annual and sick leave plan Module 13 EMPLOYEE EVALUATIONS Employee Evaluations: Factors to Consider • PHA assumes significant risk when dismissing an employee (outside of probationary period) when an employee has not been conducted in accordance with the PHA’s Personnel Policy • Employee evaluation should align with position description and duties • Establish timeline for conducting employee evaluations. Steps in the process include: – Goal-setting: At the beginning of the fiscal year, employee and supervisor should establish employee’s goals (including training/) for the year – Feedback: Provide feedback (formal or informal) and possible areas for improvement during the year – Impact on Pay: Annual evaluation of employee’s job performance should be aligned with consideration of merit pay increases • Evaluations (both goals and outcomes) should include information on job metrics where applicable Employee Evaluations: Factors to Consider (continued) • Typical components of employee evaluation: Component Component 1. Quality – The employee’s work is accurate, thorough, 6. Independence – The employee performs work with little or no and neat. supervision. 2. Productivity – The employee produced a significant 7. Creativity/Initiative – The employee proposes ideas, seeks out volume of work efficiently in a specified period of time. assignments, and assumes additional duties when necessary. 3. Job Knowledge – The employee possesses the 8. Adherence to Policy – The employee follows safety and practical/technical knowledge required on the job. conduct rules, other regulations and adheres to PHA policies. 4. Reliability – The employee can be relied upon 9. Collegiality – The employees communicates and cooperates regarding task completion and follow-up. with coworkers, , subordinates, and /or outside contacts. 5. Attendance – The employee is punctual, observes 10. Judgement – The employee demonstrates proper judgment prescribed work /meal periods and has an and decision-making skills when necessary. acceptable overall attendance record. Executive Director Evaluation • Board Evaluation for Executive Director – Should be conducted annually – PHA metrics should be considered; metrics should be focused on what is in the control of the PHA – Should be conducted prior to renewal of Executive Director’s contract PHA Bonuses • OMB in 2 CFR 200.430(f) has the following guidance on bonuses

Incentive compensation. Incentive compensation to employees based on cost reduction, or efficient performance, suggestion awards, safety awards, etc. is allowable to the extent that the overall compensation is determined to be reasonable and such costs are paid or accrued

pursuant to an agreement entered into in good faith between the non-Federal entity and the employees before the services were rendered, or pursuant to an established plan followed by the non-Federal entity so consistently as to imply, in effect, an agreement to make such payment.

• Applicability to PHA. A housing authority is considered a “non-Federal entity” so this provision applies to PHAs • Justification for Bonus. Cost reduction, efficient performance, suggestions, safety awards PHA Bonuses (continued) • Agreement Required Before Services are Rendered. The amount of bonus and the metrics a person must meet in order to get a bonus must be established beforehand and not after the fact (e.g., goal-setting). PHA must ensure that the determination that a person meet the metrics was properly determined (e.g., staff evaluation) – Metric target should reflect “cost reduction” or “efficient performance” • Christmas Bonus. Based on OMB’s requirement, Christmas/Holiday bonus is not permitted • Longevity Bonus. Does not appear to fit into the intent of the provision to lower costs, improve efficiency, etc. • Applicability to Executive Director Bonus. This provision only applies to Executive Directors that are hired as an employee (W-2) and not under a contract arrangement Module 13 PHA HIRING POLICY AND PRACTICES PHA Hiring Policy – Why Important

Statistic • Workplace violence accounts for 18% of all violent crime (Workplace Violence: Bureau of Justice Statistics) • The typical organization loses 5% of its annual revenue to occupational fraud (Association of Certified Fraud Examiners (ACFE): 2014 report on Occupational Fraud and Abuse) • About 1/3 of resumes have some degree of puffery (Bankrate.com: Do a Thorough on Workers – Or Let the Hirer Beware) • 16% of executive resumes contain false academic claims and/or material omissions relating to educational experience (Business Week: Executives Making It by Faking It) • The replacement cost of a bad hire is up to 3 times the salary of the job in question (Impact of a Bad Hire: Right Management Survey) PHA Hiring Policy • PHA should establish strong hiring policy to ensure that potential hires has the necessary knowledge, experience, and skills. In addition, a PHA’s hiring policy should ensure that a potential hire has integrity and is trustworthy • Keys to an effective PHA hiring policy: – Use application form for systemic pre-screening of a potential hire – Conduct reference checks – Perform background checks – Use provisions that protect the PHA – Test candidates’ knowledge for certain skilled positions • Interviews can be helpful but some prospective hires can present themselves well. Verified past behavior is considered the best indicator for future performance

Source: HUD Inspector General Bulletin (December 4, 2013) Application Form Components • Employment History – Timeframe of employment – Job title – Job duties – Supervisor name – Salary – Reason for leaving • and degree(s) earned (including institution and date) • Request reference checks • Request information required for background check: – SSN, other names used, current and previous address (if less than 5 years) • Disclosure of potential conflict of interest or nepotism Application Form Components (continued) • Include certifications that the applicants sign. For example: Certifications • I certify that in the last 10 years, I have not committed a felony offense. • I certify that in the last 10 years I have not filed for bankruptcy and am not currently more than 180 days delinquent on any financial obligation.

• I certify that neither my immediate family nor I have any conflicts of interest with housing authority business.

• I certify that all of my answers on this certification are true and complete. • A provision permitting the PHA to contact references and to perform a background check • A provision stating that deliberate failure or refusal to sign certifications is grounds for denial of the position • A provision stating that an applicant’s failure to provide complete and accurate information is grounds for denial of the position or termination Application Review • Review and verify information provided on application • Look for potential Red Flags: – Unexplained gaps in employment – Lost licenses – Frequent job changes – Terminations – Admissions of criminal behavior – Potential falsification or misrepresentation of information provided – Applicant is willing to accept a significant pay cut Reference Checks • Compose questions for references in advance and document response to questions • Example of questions for reference checks: – Applicant duties at previous job – Reason for applicant leaving or wanting to leave his or her last position – Applicant’s , timeliness, professionalism, and ability to work well with others • Potential Red Flags – Duties as described by reference is different or less meaningful than applicant represents – None of the references is from someone who is the applicant’s prior or current supervisor – Reference is marginally related/relevant to position considered for Background Checks • Background checks should be performed before a job offer is made • The following checks should be performed: – Criminal history – Prior employment – Credit report – Internet search to verify employment and position • For position of trust hires (e.g., Executive Director, Finance Director, etc.), – Check with HUD – Check Departmental Enforcement Center (DEC) for information on limited denial of participation, or debarment – Office of Inspector General (OIG) audit reports – Internet searches of prospective employee or (former) place of employment Employment Contract Provisions • Employment contracts should not include the following: – Unreasonable bonuses – Buy-out clauses and unreasonable separation (severance) pay • Employment contracts/personnel policies should have provisions that: – Require financial disclosures for position of trust as permitted by State law – Limits PHA liability for acts of fraud, financial non-compliance, personal tort claims (harassment, hostility), etc. – (Personnel Policy) State that employment is at will (i.e., an employee can be dismissed by an employer for any reason (that is, without having to establish “just cause” for termination), and without warning • State Civil Service Rules , union agreements etc. may limit at will employment Test for Skilled Positions • Where possible, PHAs should test or quiz candidates for certain skilled positions • For example: – PHAs could test staff on word-processing and spreadsheet software such as MS Word and MS Excel. – Maintenance candidates could be tested on maintenance skills (See HUD’s Housing Manager’s Procedures Manual – PHA) Link: https://www.hud.gov/sites/documents/DOC_9211.PDF Example Questions: 1. What type of drywall sheeting is best suited for 2. Which of the following items would not be use in interior, high moisture areas? used to repair a wooden door? a. Bulldog wet board a. Drywall compound b. Brown board b. Plastic wood c. Green board c. Rubbing compound d. Primer grade yellow board d. Carpenters glue End of Module

This Ends the Training Module on Personnel Policies