BILL ANALYSIS AB 1666 Page 1 CONCURRENCE IN SENATE AMENDMENTS AB 1666 (Swanson) As Amended June 9, 2010 Majority vote ----------------------------------------------------------------- |ASSEMBLY: |76-0 |(May 13, 2010) |SENATE: |32-0 |(June 28, | | | | | | |2010) | ----------------------------------------------------------------- Original Committee Reference: L. & E. SUMMARY : Authorizes a city, county, or city and county auditor or controller who is elected to office to maintain a whistleblower hotline to receive calls from persons who have information regarding fraud, waste, or abuse by local government employees. The Senate amendments : 1)Delete the language that states that the authorization to maintain a whistleblower hotline shall not prohibit any other city, county, or agency from withholding the identity of a complainant or other information pertaining to the investigation or a complaint pursuant to statutory authorization to withhold that information. 2)Make other minor, technical changes to the provisions of the bill. EXISTING LAW : 1)Authorizes a city, county, or city and county auditor or controller who is elected to office to maintain a whistleblower hotline to receive calls from persons who have information regarding possible violations of state, federal, or local statutes, rules, or regulations by local government employees. 2)Requires a city, county, or city and county auditor who is appointed by, or is an employee of, a legislative body or the government agency that is governed by the city, county, or city and county to obtain approval of that legislative body or government agency prior to AB 1666 Page 2 establishing the whistleblower hotline. 3)Authorizes the auditor or controller to refer calls received on the whistleblower hotline to the appropriate government authority for review and possible investigation. 4)Requires the auditor or controller or other appropriate governmental agency to hold in confidence during the initial review of a call information disclosed through the whistleblower hotline, including the identity of the caller and the parties identified by the caller. 5)Requires a call made to the whistleblower hotline or its referral to an appropriate agency to not be the sole basis for a time period under a statute of limitations to commence. 6)Authorizes a city or county auditor or controller to conduct an investigative audit upon receiving specific information that an employee or local government has engaged in improper government activity. 7)Requires any investigative audit to be kept confidential except to issue any report of an investigation that has been substantiated or to release any findings resulting from a conducted investigation that is deemed necessary to serve the interests of the public. In any event, the identity of the individual or individuals involved is required to be kept confidential. 8)Defines "employee" to mean any individual employed by any county, city, or city and county, including any charter city or county and any school district, community college district, municipal or public corporation, or political subdivision that falls under the auditor's or controller's jurisdiction. AS PASSED BY THE ASSEMBLY , this bill: 1)Authorized a city, county, or city and county auditor or controller who is elected to office to maintain a whistleblower hotline to receive calls from persons who have information regarding fraud, waste, or abuse by local government employees. 2)Prohibited any other city, county, or agency from withholding AB 1666 Page 3 the identity of a complainant or other information pertaining to the investigation of a complainant pursuant to a statutory authorization to withhold that information. 3)Required any investigative audit to be kept confidential except to issue any report of an investigation that has been substantiated or to release any findings resulting from a completed investigation that are deemed necessary to serve the interests of the public. In any event, the identity of the individual or individuals reporting the improper government activity and the subject employee or employees is required to be kept confidential. 4)Authorized the auditor or controller to provide a copy of a substantiated audit report that includes the identities of the individuals involved and other pertinent information concerning the investigation to the appropriate appointing authority for disciplinary purposes. The substantiated audit report, any subsequent investigatory materials or information, and the disposition of any resulting disciplinary proceedings are subject to the confidentiality provisions of applicable local, state, and federal statutes, rules, and regulations. 5)Defined "fraud, waste, or abuse" to mean any activity by a local agency or employee that is undertaken in the performance of the employee's official duties, including activities deemed to be outside the scope of his or her employment that is in violation of any local, state, or federal law or regulation relating to corruption, malfeasance, bribery, theft of government property, fraudulent claims, fraud, coercion, conversion, malicious prosecution, misuse of government property, or willful omission to perform duty, is economically wasteful, or involves gross misconduct. FISCAL EFFECT : None COMMENTS : AB 2001 (Swanson), Chapter 325, Statutes of 2008, which added Government Code Section 53087.6, was enacted to give explicit authority to local governments to guarantee confidentiality to those coming forward with whistleblower tips. The sponsor of AB 2001, the Auditor's Office for the City of Oakland, was anxious to establish a formal whistleblower hotline, but before formalizing or advertising a whistleblower hotline, the auditor wanted to be able to assure a whistleblower AB 1666 Page 4 that their identity would be protected. Since January 1, 2004, the Attorney General has been required to maintain a statewide whistleblower hotline to receive calls from the public with information regarding possible violations of state or federal statutes, rules, regulations, or violations of fiduciary responsibility by a corporation or limited liability company to the shareholders, investors, or employees. The Attorney General also is required to refer calls to the appropriate government authority for further investigation. During the initial review, the identity of both the whistleblower and the party being investigated is held in confidence [SB 777 (Escutia), Chapter 484, Statutes of 2003]. In 1993, the California Whistleblower Protection Act [SB 37 (Maddy), Chapter 12, Statutes of 1993] authorized the State Auditor to receive complaints from state employees and members of the public who wish to report an improper governmental activity. An "improper governmental activity" is defined as any action that violates the law, is economically wasteful, or involves gross misconduct, incompetency, or inefficiency. The complaints received by the State Auditor are required to be confidential, and the identity of the complainant cannot be revealed without the permission of the complainant, except to an appropriate law enforcement agency conducting a criminal investigation. According to the author, existing law has had some unintended consequences and limitations when it took effect in 2009. First, the statute is overly broad, with about 90% of the complaints received through the whistleblower hotline being more appropriate for investigation by the local government's department of human resources. Second, the requirement the auditor keep confidential the identities of all parties involved has prevented local governments from using the information to substantiate a complaint for disciplinary purposes. Lastly, the statute conflicts with other city and county programs or hotlines that do not deal with fraud, waste, or abuse by local government employees. Support arguments: Supporters say this bill will strengthen the procedures of whistleblower hotlines related to fraud, waste, or abuse by local government employees. AB 1666 Page 5 Opposition arguments: The opposition might say everything about a complaint called in to a whistleblower hotline should remain confidential at all times. Analysis Prepared by : Debbie Michel / L. GOV. / (916) 319-3958 FN: 0004926