WARWICK, RI — As part of its audit of the Warwick Fire Department’s sick pay practices that showed the city paid up to $386,000 more in sick time than it should have, Marcum LLC also outlines the situation that led to the discrepancy.
Marcum’s analysis shows that fire department sick time was governed by what the firm called “contradictory” language in fire union contracts and a “carryforward” policy that essentially let firefighters collect excess payments for sick time even as they used it.
These factors led to employees of the fire department receiving more pay for unused sick time than they otherwise would have, Marcum concluded, especially after a 2013 memorandum signed by then-IAFF Local 2748 President William Lloyd and then-Fire Chief Edmund Armstrong.
That so-called “side agreement” was never signed by then-Mayor Scott Avedisian or approved by the city council, leading attorney John Harrington of Haronian, Bramley & Harrington of Warwick to term it “void and unenforceable,” and to recommend that the city seek to recover the funds.
Contract language left loophole
The first issue that Marcum identifies is a section in the 2015 fire union contract that states firefighters are eligible to be paid for 75 percent of their unused sick time “at the end of each year,” and then later says that the payments “shall be paid to the employee by the last day of each month.”
“This section appears to be contradictory,” the Marcum audit notes, because “[i]t is not practical to maintain accruals, calculate and pay benefits under both monthly and annual payment scenarios, as both will arrive at very different results.”
As one example, the audit uses the example of an employee who starts with 140 sick days, then adds 20 during the course of the year while using four in the last month of the year.
Under the annual payout plan, the employee would be paid for 12 unused sick days — but with the monthly payout, the employee would actually be paid for nearly 14 unused days.
The audit also notes that the fire department would add the 25 percent of unused sick time back to each employee’s sick time account, “resulting in the employee maintaining a maximum level of sick leave once such maximum level has been achieved.”
This “carryforward” practice let firefighters use sick time without falling under the 140-hour maximum and still be eligible for unused sick time payouts, resulting in the $386,000 overpayment of unused sick time, Marcum notes.
Sick pay exploded after 2013 memo
Along with the firm’s introductory letter and the legal review by Harrington, the Marcum audit also includes 65 months’ worth of sick time taken by every member of the Warwick Fire Department, compared to what should have been paid.
Marcum reviewed sick pay records starting in February 2013 because firefighter sick time was calculated from Feb. 1 through Jan. 31 of the following year.
One notable trend is how the number of fire department staffers with 140 sick days grew after the memorandum had been signed by Lloyd and Armstrong: In February, just 12 staffers were listed and in March, 23 — but that number climbed to 44 in April, 50 in May, and 57 in June.
By January 2014, the end of the first full year of Marcum’s review, 93 members of the fire department were listed as holding at least 140 sick days and collecting payments for unused sick time.
The amount that had been overpaid likewise ballooned, Marcum noted, from $494 in April 2013 to $4,526 in January 2014, totaling $27,948 for the 12-month period, based on the monthly payment system.
For February 2014 through January 2015, Marcum calculated an overpayment of $65,657, nearly 2 1/2 times the amount of the previous year. That figure was then eclipsed by the $96,643 overpayment from February 2015 through January 2016 before falling to $84,500 from February 2016 to January 2017 and $81,343 from February 2017 through January 2018.
In the final four months before late Mayor Joseph Solomon ended the unused sick time payments in June 2018, Marcum determined an overpayment of $29,744.
If these payments had been made annually instead of monthly, Marcum estimated the excess cost to the city would have been $308,000 from 2013 through 2018.
What can the city do?
In its report, Marcum offers several suggestions for how to remedy the overpayment situation, starting with fixing the contradictory contract language to clarify how sick time payments should be made.
The firm also recommends that the city change its policies “to better control and more accurately account” for how sick time is recorded and paid, and that a written policy be put in place for the fire chief and assistant fire chief.
In his legal opinion, Harrington states that the city “should pursue restitution and reimbursement” from the union and/or individual firefighters for the overpayments.
City Council President Stephen McAllister has said that local officials are reviewing the Marcum report and determining what to do next. Mayor Frank Picozzi has not responded to requests for comment.
A copy of part two of the Marcum report is attached at the following link: Warwick-Firefighter-Overtime-Report-marcum_part_2_of_2
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