BILL ANALYSIS SENATE PUBLIC EMPLOYMENT & RETIREMENT BILL NO: SB 1217 Lou Correa, Chair Hearing date: April 12, 2010 SB 1217 (Senate PE&R Comm) as introduced 2/18/10 FISCAL: YES ALLOWS MULTIPLE DESIGNEES TO BE IDENTIFIED FOR RECEIPT OF FINAL PAY WARRANTS UPON DEATH OF A STATE EMPLOYEE HISTORY : Sponsor: Office of the State Controller Prior legislation: none SUMMARY : This bill would allow an employee of the State to designate a primary person and up to three contingent persons for receipt of final pay warrants upon the employee's death. In addition, it clarifies that the employee could also designate a corporation, trust, or the employee's estate as a recipient of those warrants. BACKGROUND AND ANALYSIS : Existing law authorizes an employee of the State to file with his or her employer a designation naming the person who will receive the employee's final pay warrants in the event of the employee's death. The employee may change the designation from time to time and may name anyone as his or her designee. In addition, the law gives the designee the right to claim the final warrants, upon proof of identity, and to negotiate the warrants as if he or she were the original payee. This bill would allow an employee to designate a primary recipient and up to three additional recipients, in order, to receive the final warrants in situations in which the primary designee predeceases the employee. Additionally, this bill also specifies that the employee could name a corporation, trust or the employee's estate as the designee. Michael Bolden Date: 4/6/10 Page 1 COMMENTS : 1) Sometimes Employees Die Without Having Updated Their Designations Upon entering employment, an employee designates a recipient for his or her final warrant. In some cases, many years go by between that initial designation and the employee's death. After a number of years have passed, an employee may not think to change a designation or even remember having made a designation in the first place. For example, an employee who is young and single upon entering employment may designate a parent or sibling as recipient. If the parent or sibling predeceases the employee, or if the employee dies without having changed the designation and the designee cannot be found within a specified time, the State Controller's Office (SCO) then has no legally designated recipient to release the warrant to. According to the SCO, this becomes a problem because the final pay warrants of the decedent must then be released under provisions of the Probate Code if the sole designee is not eligible or cannot be located within 60 days of the employee's death. 2) Frequency of Incidents According to the SCO, 42.6 death transactions occurred in the last six months. Although incidences of a beneficiary predeceasing the employee are rare, they do occur from time to time. Amending this section would enable the SCO to release a deceased employee's final pay warrants to a contingent designee if the primary designee is deceased minimizing financial hardship to the deceased employee's family. 3) SUPPORT : Michael Bolden Date: 4/6/10 Page 2 Office of the State Controller (Sponsor) California State Employees Association (CSEA) 4) OPPOSITION : None to date ##### Michael Bolden Date: 4/6/10 Page 3