HOUSE BILL No. 5238

 

December 15, 2011, Introduced by Reps. Somerville, Heise, Cotter, McMillin, Cavanagh and Kowall and referred to the Committee on Local, Intergovernmental, and Regional Affairs.

 

     A bill to prohibit certain terms in public employment

 

contracts; to prohibit severance pay for voluntary termination of

 

employment; to limit contract terms and payments for early

 

termination of certain contracts; and to provide for civil fines.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 1. This act shall be known and may be cited as the

 

"public employee severance pay regulation act".

 

     Sec. 2. As used in this act, "severance pay" means

 

compensation that is payable or paid upon the termination of

 

employment that is in addition to any wages earned or generally

 

applicable retirement benefit.

 

     Sec. 3. This state, a local unit of government, or any other

 

public employer in this state shall not include a provision in an

 

employment contract that provides for, and shall not pay, severance

 

pay to a public employee who voluntarily terminates public


 

employment, except in the following situations:

 

     (a) The employee meets the conditions to leave the employment

 

under a reduction-in-force plan or early retirement agreement that

 

includes a severance payment.

 

     (b) The employee qualifies for the payment under a general

 

policy adopted for employees in the state classified service or by

 

a merit system of a local unit of government.

 

     (c) The public employer initiates the not-for-cause

 

termination.

 

     Sec. 4. This state, a local unit of government, or any other

 

public employer in this state shall not pay severance pay under a

 

contract for services upon early termination of the contract, if

 

the early termination is instigated by the contractor. A contract

 

entered into on or after April 1, 2012 shall not provide for

 

payment of severance pay in violation of this act. This subsection

 

does not prohibit a contract term providing for or payment of a

 

bonus for early completion of a contract for the production of a

 

deliverable.

 

     Sec. 5. A public employee or officer who authorizes a contract

 

term or payment in violation of this act is responsible for a civil

 

fine of not more than $25,000.00. The attorney general or the

 

attorney for the local unit of government may bring an action in

 

the circuit court for a violation of this act. A civil fine

 

collected under this section shall be submitted to the state

 

treasurer for deposit in the general fund of this state.