Fired — and paid

If you’re one of these guys, getting the boot doesn’t seem to be such a bad thing; in fact, it appears to be quite profitable

By Marissa Harshman, Columbian health reporter

Published:

 

A city manager accused of mishandling police affairs and showing favoritism to developers was paid nearly a quarter of a million dollars when he was fired.

A city finance director whose past prevented him from receiving the proper insurance coverage required for his job was paid $45,000 when he received his pink slip.

And another city manager, whose bosses lost confidence in his ability to lead, left with $95,000 in pay and health benefits when he was dismissed.

The hefty payouts for people who were fired from their public jobs oftentimes leaves taxpayers scratching their heads.

They were fired

• DENNIS OSBORN, former Battle Ground city manager

Severance: Four months pay, health coverage for six months, payment for all accrued vacation and half of accrued sick leave.

Total cost: $95,000

• GEORGE FOX, former Ridgefield city manager

Settlement: Fox requested $579,000 to fulfill the remainder of his four-year contract.

Total settlement: $247,500

• JEFFREY BIVENS, former Washougal finance director

Severance: Five months pay, payment for accrued vacation and reimbursed for payment of bond insurance.

Total cost: $45,835

Why pay a fired employee to leave?

Many mayors and city managers say the severance pay is needed to attract top talent, which explains why three local cities recently paid off top employees and then gave their replacements similar guarantees.

CITY ADMINISTRATOR EMPLOYMENT CONTRACTS with details on severance pay

This chart compares the employment contracts of current and former city managers and administrators throughout the county. The chart also includes employment contract details for former Washougal Finance Director Jeffrey Bivens. At the time of his termination, the city did not have a city administrator, making Bivens the highest paid city employee. The city of La Center does not have a city manager or administrator. Those duties are divided between Finance Director Suzanne Levis and Public Works Director Jeff Sarvis, neither of whom have employment contracts.

• ADMINISTRATOR: John Williams, Battle Ground city manager

Annual salary: $123,066

Contract length: Indefinite.

If terminated or asked to resign: Four months pay; five months pay after six months employment; six months pay after one year of employment; health benefits for six months (including dependents); all accrued vacation; half of accrued sick days.

If resigns voluntarily: All accrued vacation; half of accrued sick days.

If fired for misconduct: Voids the obligation to provide severance.


• ADMINISTRATOR: Dennis Osborn, Former Battle Ground city manager

Annual salary: $123,066, fired March 2010.

Contract length: Indefinite.

If terminated or asked to resign: Four months pay; health benefits for six months; all accrued vacation; half of accrued sick days.

If resigns voluntarily: All accrued vacation; half of accrued sick days.

If fired for misconduct: All accrued vacation; half of accrued sick days.


• ADMINISTRATOR: Lloyd Halverson, Camas city administrator

Annual salary: $132,876

Contract length: Indefinite.

If terminated or asked to resign: Six months pay; health benefits for six months.

If resigns voluntarily: Nothing.

If fired for misconduct: Nothing.


• ADMINISTRATOR: Justin Clary, Ridgefield city manager

Annual salary: $101,455

Contract length: Indefinite.

If terminated or asked to resign: Six months pay; health benefits for six months (including dependents); all accrued vacation; half of accrued sick days.

If resigns voluntarily: All accrued vacation; half of accrued sick days.

If fired for misconduct: Voids the obligation to provide severance.


• ADMINISTRATOR: George Fox, Former Ridgefield city manager

Annual salary: $142,706, fired July 2006.

Contract length: Four years (March 2005 - February 2009).

If terminated or asked to resign: Cannot be canceled until after February 2009; if fired, city must pay salary, health benefits, sick leave and all other benefits through February 2009.

If resigns voluntarily: Can only resign for serious personal or family health and/or welfare issues; no severance.

If fired for misconduct: No cancellation payments required.


• ADMINISTRATOR: Pat McDonnell, Vancouver city manager

Annual salary: $171,650

Contract length: Indefinite.

If terminated or asked to resign: 90 days pay; health benefits for 90 days; all accrued vacation and paid days off.

If resigns voluntarily: Nothing; if gives less than 60 days notice, must forfeit equivalent number of accrued days off.

If fired for misconduct: No severance.


• ADMINISTRATOR: David Scott, Washougal city administrator

Annual salary: $124,032

Contract length: Indefinite.

If terminated or asked to resign:Three months pay after six to 18 months employment; four months pay after 19-30 months; five months pay after 31-42 months; six months pay after 43 or more months; health benefits for length of severance pay; all accrued vacation days; 25 percent of sick days after five years of employment.

If resigns voluntarily: All accrued vacation days; 25 percent of sick days after five years of employment.

If fired for misconduct: All accrued vacation days; 25 percent of sick days after five years of employment.


• ADMINISTRATOR: Jeffrey Bivens, Former Washougal finance director

Annual salary: $110,004, fired December 2009.

Contract length: Indefinite.

If terminated or asked to resign: Three months pay if fired with cause; six months pay if fired without cause; all accrued vacation days; 25 percent of sick days after five years of employment.

If resigns voluntarily: All accrued vacation days; 25 percent of sick days after five years of employment.

If fired for misconduct: Three months pay; all accrued vacation days; 25 percent of sick days after five years of employment.


“If nothing else, it gives an incoming manager or department head some safety net or assurance that if things change, there will be something to hold them over until they find a new position,” Washougal Mayor Sean Guard said.

City administrators, department heads and other non-represented employees don’t have the protection offered by a union, Guard said.

City managers’ and administrators’ bosses can change every election year as city council members are voted in and out of office. That change can mean instability for top city employees, who usually work under indefinite contracts, if their decisions or views don’t jibe with those of a changing council.

“It can be a very politically charged position,” Ridgefield City Manager Justin Clary said. “If, for whatever reason, you have to make some difficult decisions and the council decides it doesn’t align with their thinking or isn’t the right decision politically, they can get rid of you.”

Severance clauses for city managers and administrators typically include monthly pay and health benefits for a certain duration. Typically, the contracts include a clause voiding the severance if the employee if fired for cause, such as poor job performance, misconduct or dishonesty, said Henry Drummonds, a professor who teaches labor and employment law at Lewis and Clark College in Portland.

Ron Bartels, who has been in the public sector for 52 years, said he’s not aware of any city managers receiving severance after being fired for proven wrongdoing. Bartels is a retired city manager who spent 11 years as assistant city manager in Vancouver.

Top executives of smaller businesses usually work under a contract as well, but Drummonds said it’s hard to compare the two. Many presidents and chief executive officers of companies also hold some ownership stake in the business, complicating their severance, he said.

Top executives of larger companies often receive sizeable severance packages. And as news of those payouts makes headlines across the country, Drummonds said the expectations of hefty severance packages begin to seep into the public sector. He cited University of Oregon Athletic Director Mike Bellotti’s $2.3 million payout when he resigned earlier this year as an example.

However, many are not as generous.

Most contracts for the current city managers and administrators in Clark County include severance pay for three to six months, as well as health benefits. Vancouver City Manager Pat McDonnell’s pay and benefits would end after 90 days, should he be dismissed.

But not all contracts follow the standard. And in the end, that could end up costing cities.

Four months of pay

The most recent termination of a top local government officer involved former Battle Ground City Manager Dennis Osborn. The city council fired Osborn in February following his controversial decision to fire the city’s police chief.

Osborn’s contract entitled him to four months of pay plus health coverage for six months, which cost the city about $95,000. Battle Ground Mayor Mike Ciraulo and several council members voiced their displeasure over the cost of ending Osborn’s employment.

When it came time for officials to draft the contract of its next city manager, John Williams, the city evaluated Osborn’s contract. Negotiators also looked at how similar cities, both larger and smaller than Battle Ground, compensate their city managers and administrators, Ciraulo said.

The council did make a change in its severance clause for Williams. If Williams is fired or asked to resign, he could potentially receive more than Osborn. Williams’ severance pay increases based on the length of time he is employed with the city, beginning with four months and growing to six months’ pay after one year of employment.

The change doesn’t apply if Williams is fired for dishonesty or willful misconduct, which voids the severance clause. Ciraulo said the increase in severance pay was part of the negotiations with Williams and his attorney and didn’t comment further.

Ciraulo said severance packages are necessary to attract top talent. Osborn’s controversial departure likely didn’t make the situation any easier.

“How could we attract anybody when we just fired the last city manager?” Ciraulo said. “They’re going to want some guarantee that they’ll have a job for a little while or will be compensated if they’re let go.”

Washougal’s ‘anomaly’

In Washougal, the firing of and subsequent settlement payment for Finance Director Jeffrey Bivens also caused a stir.

Bivens was the highest-paid employee at the time of his termination in December because the city had not yet replaced former City Administrator Nabiel Shawa, who quit in October.

Bivens’ contract entitled him to receive three months’ pay if he was fired with cause and six months’ pay if he was fired without cause. Bivens was to be paid a severance even if he was fired for misconduct.

Bivens, a former city councilman who only worked as finance director for seven months, was paid a $45,835 settlement, equal to five months’ pay. The city and Bivens could not come to an agreement as to whether Bivens was fired with or without cause, which is why the severance did not follow the stipulations of the contract. Bivens was terminated after he could not obtain a fidelity bond required by the city due to having his law license suspended.

Guard, who was not mayor when Bivens was hired, said Bivens’ contract did not follow the city’s department head manual, which outlines severance packages for all department heads and the city administrator.

“His was an anomaly that shouldn’t have happened,” Guard said. “Why would you pay someone who was fired for cause?”

When the city hired its current city administrator, David Scott, officials reverted back to the manual, Guard said. Scott will receive severance pay if he is fired or asked to resign and receives nothing if he is fired for misconduct or dereliction of duties.

“Everything in David’s contract goes back to the department head manual,” Guard said. “And that’s the way it should be. … Everyone we hire from here on out will do the same thing.”

Ridgefield makes changes

The city of Ridgefield made drastic changes in its city manager contract after firing former City Manager George Fox in July 2006.

Fox’s contract was for four years, from March 2005 to February 2009. His contract prohibited the city from firing Fox unless he was convicted of a felony or gross misdemeanor or committed material acts of fraud. If he was terminated for any other reason, the city was to pay him his salary and provide health benefits through the end of the employment contract. City officials later claimed Fox drafted his own contract and they didn’t fully understand the terms.

The council voted to fire Fox after a little more than a year, claiming he mismanaged police affairs, collected contributions that appeared to favor developers and misrepresented himself as an attorney.

The city attempted to get the contract voided. In court documents, the city’s attorney, John Spencer Stewart, called Fox’s contract “the product of a unilateral mistake by the city.” That mistake cost the city $247,500 — the result of the mediated settlement. Fox initially asked for $579,000 to fulfill the terms of his contract.

“It was a big burden on the city when they council decided to fire him,” said Clary, who succeeded Fox as city manager. That burden was still there when the council and Clary began negotiations on the new city manager’s contract. “The city was still very much feeling the settlement agreement, both financially and politically.”

As a result, the city council members charged with contract negotiations, Clary and both parties’ attorneys looked at contracts used throughout the state for direction and melded them to fit Ridgefield, Clary said.

Clary’s contract includes a more typical severance package of six months’ pay and health benefits if he is fired or asked to resign. His contract also includes a clause that voids the severance if Clary is dishonest or commits willful misconduct.

Two schools of thought

In instances when top city employees or CEOs of private companies receive significant payouts, Drummonds said there is usually two schools of thought to explain the severance agreement.

One view is the market. People hired to fill those top-level positions are talented and have unique skill sets that make them valuable. To some, acquiring a high-caliber employee justifies the heftier severance, Drummonds said.

The other view revolves around self-dealing. The people responsible for negotiating severance clauses have close relationships with the employee and, therefore, agree to contract terms more favorable to the employee. Also, if the employee’s attorney is pushing for certain terms and the city’s representatives are indifferent, they may be more likely to agree to the employee’s terms, he said.

Contracts for city administrators and managers have been the norm for about the last 40 years, said Bartels, who is one of five state “range riders,” a group of retired city managers who offer assistance to cities across the state.

“It became more and more recognized that this was imposing a major burden on the individual to move his family, sell his house, buy a new one and then be fired a year later,” Bartels said. “It became recognized as being unfair.”

Initially, contracts were simple but many did include severance clauses that usually offered about three months’ pay, he said. Throughout the years, the severance pay has grown. Most recently, contracts incrementally increase the length of severance pay with the length of time the person was employed, Bartels said. Severance pay and health benefits usually don’t exceed one year, he said.

In the end, though, Bartels and Drummonds agree the contract terms revolve around what each side considers agreeable, making no two contracts the same.

“It’s all a matter of what seems reasonable to the people doing the negotiating,” Drummonds said.

Marissa Harshman: 360-735-4546 or marissa.harshman@columbian.com.