• Governor Vetoes Local Public Agency Employment Contracts Bill
  • October 5, 2010
  • Law Firm: Best Best Krieger LLP - Riverside Office
  • On September 30, 2010, Governor Arnold Schwarzenegger vetoed Assembly Bill 827 which would have prohibited various “automatic” increase and other provisions in local public agency employment contracts.  The Governor said that the Bill represented good public policy, but that it should be more broadly applied.

    AB 827 was limited to contracts between ”local agencies,” i.e., counties, cities, school districts or other local public agencies, and ”excluded employees,” i.e., any person who is employed by, and reports directly to, the legislative body of the local agency and who is not subject to the Meyers-Milias-Brown Act or specific portions of the Education Code.

    Had it passed, AB 827 would have provided that no contact executed or renewed after January 1, 2011 could provide for:

    • the automatic renewal of the contract (“evergreen contracts”);

    • an automatic increase in compensation in excess of a cost-of-living adjustment;

    • an automatic increase in compensation that is linked to another contract, including a Memorandum of Understanding with any local bargaining units; or

    • a maximum cash settlement that exceeds an amount equal to the monthly salary of the employee multiplied by the number of months left on the unexpired term of the contract and in no event greater than an amount equal to the monthly salary of the employee multiplied by 18.  

    AB 827 would have further required local agencies to conduct a performance evaluation of an excluded employee before giving the employee a compensation increase other than a cost-of-living adjustment.

    The Governor’s veto message indicated that AB 827 presented good public policy but that it should be applied to all public employees, including labor union members and state employees.  Thus, while the Bill in its current version has been vetoed and will not take effect, public entities should be mindful that similar restrictions may appear in future bills.