On June 17, 2011, the Governor signed Senate Bill 88, which limits the amount of severance and/or bonus a governmental entity may provide to a contractual employee. The law explicitly provides that no extra compensation shall be made to any officer, agent, employee or contractor after service has been rendered or a contract entered into unless the compensation is allowed by a law enacted by two-thirds of both the Florida House of Representatives and the Florida Senate. Although contracts entered into before July 1, 2011 are grandfathered, municipalities, counties and other units of government in Florida will be required to comply with the new restrictions limiting the availability of bonuses and severance pay for contractual employees.
SIGNIFICANT RESTRICTIONS ON BONUSES
The law significantly restricts bonus schemes available for officers, agents, employees and contractors. It eliminates the lump sum bonus programs previously permitted and now provides that any policy, ordinance, rule or resolution designed to implement a bonus scheme must:
- Base the bonus on work performance;
- Describe the performance standards and evaluation process used to award bonuses;
- Notify all employees of the policy, ordinance, rule or resolution before the beginning of the evaluation period begins; and
- Consider all employees for the bonus.
NEW LIMITATIONS ON SEVERANCE PAY
The new legislation defines “severance pay” as actual or constructive compensation, including salary and benefits, for employment services yet to be rendered which is provided to an employee who recently has been or is about to be discharged. Severance pay does not include earned and accrued leave, early retirement in a pension plan, or subsidies for the cost of a group insurance plan.
Under the new law, units of government must include certain provisions restricting the availability of severance pay in all contracts with officers, agents, employees and contractors entered into on or after July 1, 2011:
- Severance pay cannot exceed an amount greater than 20 weeks of compensation; and
- An officer, agent, employee or contractor may not receive severance pay if he or she was fired for misconduct (willful or wanton disregard, carelessness or negligence for the employer’s interests or the employee’s duties and obligations to the employer).
An officer, agent, employee or contractor may receive severance pay that is not provided for in a contract if the severance pay is a settlement in an employment dispute, but the amount is limited to six weeks of compensation. In addition, the settlement cannot contain provisions limiting the ability of the parties to discuss the dispute or settlement.
NO RESTRICTIONS ON DISCUSSING EXTRA COMPENSATION
All agreements entered into after July 1, 2011 between a unit of government and an officer, agent, employee or contractor are prohibited from including provisions limiting the ability of any party to the agreement to discuss the agreement.
Author(s): Brett J. Schneider & Brooke P. Dolara
