BILL ANALYSIS �
SB 407
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Date of Hearing: June 26, 2013
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
K.H. "Katcho" Achadjian, Chair
SB 407 (Hill) - As Amended: April 1, 2013
SENATE VOTE : 35-0
SUBJECT : Local government: officers and employers: contracts
SUMMARY : Extends limitations on local agencies' employment
contracts to cover additional employees. Specifically, this
bill :
1)Expands existing law that prohibits an employment contract for
a local agency executive from providing an automatic renewal
of a contract to include any person who is a deputy or
assistant chief executive officer, and any person whose
position is held by an employment contract between that person
and the local agency.
2)Provides that if the Commission on State Mandates determines
that the bill's provisions contain costs mandated by the
state, then reimbursement to local agencies and school
districts for those costs shall be made.
EXISTING LAW :
1)Prohibits an employment contract for a local agency executive
from providing an automatic renewal of a contract that
provides for an automatic compensation increase in excess of a
cost-of-living adjustment or a maximum cash settlement in
excess of certain limits, as specified.
2)Defines "local agency executive" to mean any person employed
by a local agency who is not subject to the
Meyers-Milias-Brown Act, as specified, and who meets either of
the following criteria:
a) The person is the chief executive officer of the local
agency; or,
b) The person is the head of a department of a local
agency.
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3)Defines "local agency" to mean a county, city, whether general
law or chartered city and county, town, school districts,
municipal corporation, district, political subdivision, or any
board commission, or agency thereof, or other public agency.
4)Defines "compensation" to mean annual salary, stipend, or
bonus, paid by a local agency employer to a local agency
executive.
5)Defines "cost-of-living" to mean the California Consumer Price
Index for Urban Wage Earners and Clerical Workers as
calculated by the Department of Industrial Relations.
6)Prohibits, on or after January 1, 2012, any contract executed
or renewed between a local agency and a local agency
executive, from providing for the following:
a) An automatic renewal of a contract that provides for an
automatic increase in the level of compensation that
exceeds a cost-of-living adjustment; and,
b) A maximum cash settlement that exceeds the amounts
determined as specified in the Government Code for officers
and employees in local agencies.
7)Requires all contracts of employment between an employee and a
local agency employer to include a provision which provides
that regardless of the term of the contract, if the contract
is terminated, the maximum cash settlement that an employee
may receive shall be an amount equal to the monthly salary of
the employee multiplied by the number of months left on the
unexpired term of the contract. However, if the unexpired
term of the contract is greater than 18 months, the maximum
cash settlement shall be an amount equal to the monthly salary
of the employee multiplied by 18.
8)Requires, on or after January 1, 2012, any contract executed
or renewed between a local agency and an officer or employee
of a local agency that provides paid leave salary offered by
the local agency to the officer or employee pending an
investigation, that any salary provided for that purpose be
fully reimbursed if the officer or employee is convicted of a
crime involving an abuse of his or her office or position.
9)Requires, on or after January 1, 2012, any contract executed
or renewed between a local agency and an officer or employee
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of a local agency that provides funds for the legal criminal
defense of an officer or employee, that any funds provided for
that purpose be fully reimbursed to the local agency if the
officer or employee is convicted of a crime involving an abuse
of his or her office or position.
10)Requires, on or after January 1, 2012, any contract of
employment between an employee and a local agency employer to
include a provision which provides that, regardless of the
term of the contract, if the contract is terminated, any cash
settlement related to the termination that an employee may
receive from the local agency shall be fully reimbursed to the
local agency if the employee is convicted of a crime involving
an abuse of his or her office or position.
11)Requires, on or after January 1, 2012, if a local agency
provides, in the absence of a contractual obligation, for any
of the payments described in this article, then the employee
or officer receiving any payments provided for those purposes
shall fully reimburse the local agency that provided those
payments in the event that the employee or officer is
convicted of a crime involving the abuse of his or her office
or position.
12)Defines "abuse of office or position" to mean either of the
following:
a) An abuse of public authority, including, but not limited
to, waste, fraud, and violation of the law under color of
authority; or,
b) A crime against public justice, as specified.
FISCAL EFFECT : This bill is keyed fiscal.
COMMENTS :
1)The Meyers-Milias-Brown Act governs labor-management
relations, although its bargaining and representation
procedures generally do not apply to executive employees.
Existing statutes restrict the compensation that can be
offered by local agencies to employees not covered by the
Meyers-Milias-Brown Act.
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AB 1344 (Feuer and Alejo), Chapter 692, Statutes of 2011,
prohibited, starting on or after January 2, 2012, any contract
executed or renewed between a local agency and an employee
(those employees that are excluded from the
Meyers-Milias-Brown Act) from including an automatic renewal
of the contract if the contract provides for an automatic
increase in compensation that exceeds a cost-of-living
adjustment and a maximum cash settlement that exceeds the
amounts provided for in statutory provisions governing
employment contracts. The bill also provided more public
review when a city is considering placing the adoption of a
charter before the voters and required local agencies'
governing boards to ratify their executive employees'
contracts of employment in an open session.
Finally, the bill required employment contracts to include
provisions limiting, upon termination, the maximum cash
settlement to be paid to no more than an amount equal to 18
months' salary. If the executive's contract has less than a
year to run, then the amount can't exceed the remaining
expected salary. Employment contracts also must include
provisions for the local agency to be reimbursed for any paid
leave salary and the cost of legal criminal defense funded by
the agency, if the officer or employee is convicted of a crime
involving an abuse of public office or position.
According to the authors of AB 1344, the bill "was introduced
in response to the scandal surrounding the City of Bell in
2010 which exposed deficiencies in existing law that must be
addressed to ensure greater transparency and so voters have
confidence that taxpayer dollars are being used wisely." AB
1344 targeted practices exploited by some local governments
that inappropriately (and sometimes extravagantly) rewarded
elected officials and top executive officers outside of public
view. The bill aimed to require basic good governance
measures as they relate to compensation practices and
provided, to the maximum extent possible, the public with the
opportunity to be informed and comment on local
compensation-setting practices.
2)This bill builds upon the provisions of AB 1344 and expands
the definition of several terms that were added into law by AB
1344. The bill expands the definition of "local agency
executive" to include a deputy chief executive officer, or an
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assistant chief executive officer of the local agency and also
adds a person whose position within the local agency is held
by an employment contract between the local agency and that
person.
This bill is sponsored by the California City Management
Foundation.
3)According to the author, "This bill simply extends the
compensation restrictions and abuse of power provisions to all
local agency executives who work under an employment contract.
This expansion of the definition will include not only
department heads, such as city managers or county executives,
but will also include city managers, assistant county
executives, and any other employee who has an employment
contract with a local agency.
"SB 407 will prevent extravagant rewards to local agency
employees and reduce the liability of local governments to
provide paid leave and legal defense costs for employees who
are convicted of abuse of power charges."
4)Support arguments : Supporters argue that this bill is a minor
expansion of legislation adopted last session to address abuse
of power practices and will assist in the prevention of
inappropriate and extravagant rewards to local agency
executives.
Opposition arguments : None on file
REGISTERED SUPPORT / OPPOSITION :
Support
California City Management Foundation [SPONSOR]
Opposition
None on file
Analysis Prepared by : Debbie Michel / L. GOV. / (916)
319-3958
SB 407
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