title
APPROVAL OF MEMORANDUM OF UNDERSTANDING BETWEEN THE CITY OF STOCKTON AND THE OPERATIONS AND MAINTENANCE UNIT
recommended action
RECOMMENDATION
It is recommended that the City Council adopt by resolution the attached successor Memorandum of Understanding (MOU) with the Operations and Maintenance Unit effective July 1, 2026, through June 30, 2029.
It is further recommended that the City Manager be authorized to take any appropriate and necessary actions to carry out the purpose and intent of the resolution, including implementation and funding of the successor MOU.
body
Summary
In March 2026, City representatives began negotiations with the Operations and Maintenance Unit for a successor MOU, as the contract was set to expire on June 30, 2026. Following a series of bargaining sessions, the City and the Operations and Maintenance Unit successfully reached an agreement on the terms of a successor MOU. The proposed successor MOU includes a three-year term and provides for cost-of-living and market salary adjustments, the addition of salary steps to the bargaining unit salary schedule, increased City contributions toward health insurance premiums, and cleanup language.
The successor MOU for the Operations and Maintenance Unit is intended to ensure that the City maintains a competitive compensation structure that supports the recruitment and retention of qualified employees while promoting internal equity and fiscal responsibility.
DISCUSSION
Background
The Operations and Maintenance Unit represents employees assigned to the City’s Municipal Utilities Department. In 2023, the City entered into a three (3) year contract term with the unit. Under this agreement, bargaining unit members received an eight percent (8%) cost of living adjustment (COLA) effective May 1, 2024, a three percent (3%) COLA effective July 1, 2025, two (2) lump sum payments of two thousand dollars ($2,000) paid out in July 2024 and July 2025, a one-time payment in the amount of five thousand dollars ($5,000) effective May 1, 2024, and a two percent (2%) increase to the City’s health contribution for each year of the contract.
In March 2026, City representatives began negotiations with the Operations and Maintenance Unit for a successor MOU. On August 24, 2026, the City reached a tentative agreement on a successor MOU with the Operations and Maintenance Unit. On August 31, 2026, the City was notified that the unit’s members had ratified the tentative agreement.
Present Situation
The relevant amendments under the successor MOU for the Operations and Maintenance Unit are summarized as follows:
1. MOU contract term for three (3) years, effective July 1, 2026, through June 30, 2029 (MOU Section 18).
2. COLAs to base pay consisting of a two percent (2%) COLA effective September 20, 2026, or the pay period following City Council approval, whichever is later, a two percent (2%) COLA effective June 27, 2027, and a two percent (2%) COLA effective June 25, 2028 (MOU Section 14).
3. Effective September 20, 2026, or the pay period following City Council approval, whichever is later, Market Adjustments in alignment with the results of a mutually agreed-upon salary study. (MOU Appendix A).
4. Salary Step Plan. Effective September 20, 2026, or the pay period following City Council approval, whichever is later, adds additional steps to the salary schedule. There will be two and a half percent (2.5%) between the added steps (MOU Section 14 and Appendix A).
5. City Health Contribution. Four percent (4%) increase to the City’s health insurance premium contribution effective January 1, 2027, two percent (2%) increase effective January 1, 2028, and two percent (2%) increase effective January 1, 2029 (MOU Section 13).
6. Safety Protective Footwear. Offers a fifty-dollar ($50) increase for eligible employees, increasing payment from two hundred fifty dollars ($250.00) to three hundred dollars ($300.00) per fiscal year. Also allows employees to use any unused funds towards the purchase of an additional pair of safety protective footwear (MOU Section 12.4).
7. Vacation Sellback. Allows a vacation cash payment option/sell-back of up to forty (40) hours of vacation each calendar year (MOU Section 8).
8. Vacation Accrual. Converts vacation accrual amounts from annual to per pay period amounts. This change reflects how vacation accruals are earned (MOU Section 8).
9. Holidays. Converts the Cesar Chavez and Birthday holidays into two (2) floating holidays that can be used throughout the calendar year. Upon separation, any accrued and unused floating holiday hours will be cashed out at the employee’s current straight rate of pay. Additionally, it changes “Columbus Day” to “Indigenous Peoples Day” (MOU Section 11).
10. Overtime Eligibility. Adds that vacation is counted as time worked for overtime purposes. Clarifies that overtime is paid at the employee’s regular rate of pay and eliminates language referring to the pay structure of employees who are not regularly scheduled to work holidays (MOU Section 10).
11. Compensatory Time Off. Clarifies that Compensatory Time Off will be paid out at the employee’s regular rate of pay and allows employees to defer the automatic payout of Compensatory Time Off (MOU Section 10.5).
12. Rates of Pay. Provides clarification of the definition of pay rates to include base rate, straight time rate, and regular rate (MOU Appendix D).
13. Bereavement Leave. Clarifies bereavement leave provisions to ensure compliance with applicable law and replaces court appearance provisions with jury duty pay language (MOU Section 8.3).
14. Union Rights. Establishes a defined timeline of fourteen (14) business days for the Union to respond to notices of meet and confer (MOU Section 2).
15. Fatigued Employees Rest Period. Offers paid time off for rest periods after an overtime shift for eligible employees (MOU Section 10.7).
16. Elimination of language that is duplicative, obsolete, or already governed by City policies or applicable federal and state laws for: non-discrimination, court appearances, call-back pay, standby pay, bi-weekly pay period, “Y” rate, lump sum payments, and one-time payment. Applicable provisions remain fully enforceable and applicable to employees regardless of whether they are specifically referenced in the MOU.
The proposed compensation plan has been reviewed by the Administrative Services Department to ensure consistency with the City's compensation strategy and available budget appropriations.
FINANCIAL SUMMARY
COLA and Market Adjustments
First-year cost includes a 2% increase to base pay and an average 5.29% market rate adjustment, totaling approximately $1,198,777 in FY27. With a 2% increase in FY28 of $411,091 and a 2% increase in FY29 of $419,312, the total 3-year cost is $2,029,180.
Additional Salary Steps
The first-year impact of the additional salary step is approximately $101,971. In the second year, the FY28 impact is $223,078, and in FY29, the impact is $405,170. The total three-year cost is approximately $730,220.
City Health Contribution
The city will contribute an additional 4% in FY27, 2% in FY28, and 2% in FY29 towards the cost of employee health care. This will result in costs of $123,996 in FY27, $126,476 in FY28, and $129,005 in FY29 for a total cost of $379,477 over the term of the agreement.
Safety Protective Footwear
The City will increase the reimbursement to eligible unit members from $250 to $300 per year for safety protective footwear. The fiscal impact is approximately $8,200 per year, for a total three-year cost of $24,600.
Total Cost of the Agreement
The fiscal impact of this agreement is approximately $1,432,944 in FY27, $768,845 in FY28, and $961,688 in FY29, for a total three-year cost of $3,163,477.
Attachment A - Operations and Maintenance Unit MOU - Redline
Attachment B - Operations and Maintenance Unit Costing Table