AB 827: Limits on Local Employment Contracts

AB 827 is part of a six-bill package of legislation in response to the salary scandal at the City of Bell. AB 827 would prohibit any employment contract for a local, unrepresented employee from including: 1) an automatic renewal provision; 2) an automatic raise in excess of a cost-of-living adjustment; or 3) an automatic compensation increase, including any increase that is linked to a third-party contract. The bill itself is a “gut and amend” of a prior bill dealing with the archival of county records. Perhaps because the bill was so quickly written, the language – although extremely short – contains several ambiguities.

1. The bill would add to the MMBA the following language:

“3511.1. For the purposes of this chapter, “excluded employee” means any unrepresented individual who is or will be employed by, and report directly to, the legislative body of the local agency. “Excluded employee” includes any person contracted with the local agency as well as any person who is considered an at-will employee.”

The first question that arises is whether the second sentence modifies or adds to the first. Specifically, the first sentence says that an “excluded” employee is any unrepresented employee who reports directly to the legislative body. The second sentence says that “excluded employee” includes contract employees and at-will employees. Does that just clarify what is an “unrepresented” employee in the first sentence? In other words, unrepresented employees, whether contract or at-will, who report directly to the legislative body are covered.

You could read the second sentence as being in addition to the first. In other words, unrepresented employees who report directly to the legislative body are covered. And in addition, any contract or at-will employee is also covered, regardless of whether that employee reports directly to the legislative body. Given the history behind this bill, I don’t think the latter interpretation is correct. I believe the bill was only intended to apply to the few individuals who report directly to a legislative body. However, the language is certainly less than clear.

2. The bill also adds the following to the MMBA:

“3511.2. For any contract executed or renewed on or after January 1, 2011, an excluded employee’s employment contract shall not include any clause that provides for any of the following: (a) An automatic renewal. (b) An automatic raise in excess of a cost-of-living adjustment. (c) An automatic compensation increase, including any increase that is linked to a third-party contract. (d) Notwithstanding Section 53260, a severance payment greater than 12 months’ salary.”

I’m not sure why you need (b) when you have (c). If you prohibit all automatic increases, why do you need to say that automatic increases above the cost-of-living are prohibited? It doesn’t make sense.

Other than that, the language of 3511.2 is clear. What I find confusing is why this language is being placed in the MMBA. Because excluded employees are not represented, this isn’t an issue related to collective bargaining. Perhaps because it deals with the terms and conditions of employment, the Legislature thought it made sense to include it in the MMBA. However, it seems to me that it would be better placed in the part of the Government Code dealing with local compensation.

3. Finally, the bill would add the following to the Government Code:

“54957.05. (a) For any unrepresented individual who is or will be employed by, and report directly to, the legislative body of the local agency, before implementing a raise in excess of a cost-of-living adjustment, the following requirements shall be met: (1) A performance review of that individual shall be completed. A completed summary of the performance review shall be discussed at open session. The performance review shall be publicly available upon request. (2) The vote to implement the raise in excess of a cost-of-living adjustment shall be conducted in an open session meeting. (b) For the purposes of this section, the board shall use the Bureau of Labor Statistics’ Consumer Price Index to determine the cost-of-living adjustment each year.”

The big change here is the requirement that any performance review of an unrepresented employee who reports directly to a legislative body be conducted in open session of the legislative body. The issue that comes to mind is whether such individuals have privacy rights preventing a performance evaluation from being discussed in open session. In California, the right to privacy is constitutionally protected and could potentially trump any legislation. However, because this bill only applies to the very few individuals who report directly to a legislative body – people who are usually very high in the chain of command – I think this requirement is probably permissible. This is because the right to privacy must be balanced against the public’s right to information about its government. For the people at the very top, the courts have generally found that the public’s right to information generally outweighs any individual right to privacy. However, it’s certainly a balancing act. To the extent a performance evaluation touches on highly personal areas (for example, if a City Manager who is HIV positive has to take time off for medical treatment and that affects his attendance), I’m not sure that such issues should be aired in public. So even if this bill passes, there may be some areas related to an individual’s performance that are not properly subject to the provisions of this bill requiring a public hearing.

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