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Legal Alert

Executive Compensation and Brown Act Requirements

Executive Compensation and Brown Act Requirements

New Laws Adopted Requiring Greater Transparency in the Public Agency Decision-Making Process

In the wake of the City of Bell executive compensation scandal, the Legislature has taken aggressive steps to protect against future abuse by government officials. Two such bills effective January 1, 2012, AB 1344 and AB 23, are aimed at preventing excessive compensation for public officials and promoting greater transparency in local governance.

AB 1344

AB 1344, which applies to all local agencies, including charter cities and counties, establishes new requirements applicable to an employment contract between a local agency and a Chief Executive Officer or department head of a local agency as follows:

  1. The Contract may not provide for automatic contract renewal that includes an automatic compensation increase that exceeds a cost of living adjustment. This provision only applies to contracts executed or renewed after January 1, 2012, and not to existing contracts.
  2. The Contract may not allow severance benefits that provide a cash settlement greater than the monthly salary of the employee multiplied by the number of months left on the unexpired term of the contract, with a maximum of 18 months.
  3. The Contract must require that the officer or employee reimburse the local agency for specified payments (paid leave pending an investigation, legal criminal defense, cash settlement related to termination) made by that local agency if the officer or employee is convicted of a crime involving abuse of office or position. This provision applies to contracts executed after January 1, 2012. It is less clear whether the new requirements apply to existing contracts with automatic renewals, however, we recommend that agencies comply with the new requirements (thus amending existing contracts, if necessary). Even in the absence of a contractual obligation to reimburse the agency, AB1344 requires that the employee or officer receiving any of the aforementioned payments 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.

AB 1344 provides for greater transparency in the process of adopting a local charter. Specifically, AB 1344 requires that ballots seeking adoption of a city charter or a charter amendment include an enumeration of any new city powers that will result, including any power to raise compensation of city officials without voter approval. In addition, AB 1344 increases from 88 days to 95 days the amount of time that a city charter or charter amendment must be presented to voters prior to a statewide or general municipal election.

Finally, AB 1344 modifies the Brown Act by prohibiting any legislative body from holding a special meeting regarding the salary, salary schedule, or other form of compensation for any local agency executive. The bill also requires local agencies to post the agendas of meetings of their legislative bodies on the agency’s website (if the agency has one), including all regular and special meetings, as well as standing committee meetings. Agencies that don't already follow these practices will need to prepare to do so in order to comply with the new law.

AB 23

This measure modifies the Brown Act by requiring that, prior to holding a serial or simultaneous meeting, the clerk or a member of the legislative body verbally announce the amount of compensation that members of the legislative body will receive for attending the serial or simultaneous meeting. An exception exists if the compensation is prescribed in a statute and no additional compensation has been authorized by the agency. Compensation is not defined to include amounts reimbursed for actual and necessary expenses, including, reimbursement of expenses related to travel, meals and lodging.

Agencies should examine their current practices to determine whether changes are required to be compliant with these new requirements. We are pleased to assist in this effort.

For More Information, Please Contact:

Julie Sherman
Julie Sherman
San Francisco, CA