Monday, August 29, 2016

Local Government Wage Transparency Act Signed by Governor

Authored by Tiffany Nelson-Jaworski and originally posted on Julie Tappendorf's blog, Municipal Minute, for Ancel Glink covering a variety of local government issues.

In June, we reported that Illinois H.B. 5684, the "The Local Government Wage Increase Transparency Act," had passed both the Illinois Senate and House, and had been sent to the Governor for signature. On July 28, 2016, Governor Rauner signed the bill into law, which is now known as P.A. 099-0646. 

The new law prohibits certain wage increases or lump sum payments to a local government employee during the employee’s last 12 months of employment unless the increase or payment is disclosed and approved at a public meeting in open session of the employer governing body. 

The law also amends the Open Meetings Act to require the public body to discuss compensation of individuals who fall within this category in open session – a significant change from the otherwise applicable OMA exemption that allows a public body to discuss compensation of specific employees in closed session.  According to news reports about the new law, the change is an attempt by the General Assembly to prevent a “pension spike” from occurring without the public’s knowledge. 
As previously reported, this new law only applies to employees who began participating in IMRF prior to January 1, 2011, and who are not part of a collective bargaining unit. The trigger for the new disclosure requirement is any increase or payment within the final 12 months of employment that makes the reportable monthly earnings 6% or more than the previous month’s reportable earnings.

In order to comply with the Act, the public body must, at a minimum, disclose the following at a public meeting:
  1. the identity of the employee;
  2. the purpose and amount of the increase or payment;
  3. the proposed retirement date;
  4. the effect of the payment on the expected retirement annuity of the employee; and
  5. the effect of the payment on the liability of the employer to the IMRF fund.