After inadvertently overpaying seven workers a total of $27,623.45, Chattanooga will require them to pay the money back — but will allow them to sell their paid time off to the city to cover the cost.
A resolution approved Tuesday by the City Council allows those employees to sell their paid time off back to the city at 100% of its value as opposed to 70%, which is the policy in the city's employee information guide.
The council approved the one-time exception during its meeting Tuesday evening. The exception will act as an option for staff as the city looks to recoup that money. Affected staff members will also be able to repay those amounts over an extended period of time.
One of the seven employees was overpaid $10,690.32, and the remaining six received $1,120.10, $1,946.92, $2,575.10, $3,525.15, $3,661.07 and $4,104.79. The overpayments accrued over multiple paychecks.
The error occurred during the rollout of the city's 2021 pay plan, under which officials boosted overall compensation to bring workers up to market rate and remain competitive with other employers.
Ellis Smith, director of special projects in Mayor Tim Kelly's office, said the city had the wrong position seniority date for a few employees during implementation, a figure that served as the primary driver for placing people in the pay plan. It helped ensure workers with a longer tenure in their current positions wouldn't receive the same or lower pay compared to someone with less time.
City officials said staff members received a letter clearly stating those dates ahead of implementation. The city is completing an audit, Smith said, and might find other overpaid employees.
(READ MORE: City employees protest change to Chattanooga payroll schedule)
Deputy City Attorney Phil Noblett told council members during an agenda review meeting Tuesday afternoon that he advised against forgiving those amounts.
"Because it is taxpayer dollars here," he explained to the Chattanooga Times Free Press afterwards. "It is supposed to be going for a specific purpose that the council has designated to occur. That would also increase the benefits above the budget levels that they have for the staff that is in place."
Asked by the council what his office is doing to prevent similar mistakes in the future, Chief Financial Officer Brent Goldberg told the panel the error was extremely isolated, only affecting five employees, and the city does not use position seniority dates on a regular basis to determine pay.
"That's why I consider it isolated," Goldberg said. "I don't know of anything we could have done on the front end to prevent this other than do a preemptive audit of all position seniority dates, which is pretty labor intensive, but we are doing an audit now to make sure all that information we have in the system is correct. It just takes some time to get through all 2,600 employees and verify information."
Kelly's chief of staff, Joda Thongnopnua, told council members that city officials want to be as flexible with the affected employees as possible, recognizing that the amounts they received could be significant to their and their family's livelihoods.
"We are willing to work with an employee to, say, offer a repayment term over, let's say 60 months, which would reduce in the most dramatic example to ... $60-$70 per paycheck," Thongnopnua said. "Certainly that's not insignificant, but it's absorbable, and I think that that is a balance between being flexible with an employee while also recognizing the city made an error while also respecting the fact that these are taxpayer dollars that we have an obligation to be good stewards of."
(READ MORE: City of Chattanooga sues after overpaying employee $44,000 for mileage)
Councilwoman Jenny Hill, of North Chattanooga, said she wanted to be sure the city implemented a solution that was merciful and compassionate.
"As a City Council person, obviously, we also carry the responsibility of being fiscally responsible and setting policy that is legally justifiable," she said, "and everything we do creates a precedent."
While Hill said she's disappointed that the city has found itself in that position, she does appreciate that the city is offering the option to buy back paid time off and an extended payback period.
In 2021, the city sued a former employee after it overpaid her $44,010.17 when she submitted mileage reimbursement of $432.17. Noblett said Tuesday that lawsuit is still pending.
Contact David Floyd at dfloyd@timesfreepress.com or at 423-757-6249. Follow him on Twitter @flavid_doyd.