This Fiscal Note is not an official copy and should not be quoted or cited.
Fiscal Note - SB 0746 - Prohibits Termination of Employment Without Cause
L.R. NO. 2597-02
BILL NO. SB 746
SUBJECT: Employees and Employers, Labor, Unions
TYPE: Original
DATE: February 5, 1996
FISCAL SUMMARY
ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED FY 1997 FY 1998 FY 1999
All State Funds (Unknown) (Unknown) (Unknown)
Total Estimated
Net Effect on All
State Funds (Unknown) (Unknown) (Unknown)
*Could exceed $100,000 annually.
ESTIMATED NET EFFECT ON FEDERAL FUNDS
FUND AFFECTED FY 1997 FY 1998 FY 1999
Federal Funds (Unknown) (Unknown) (Unknown)
Total Estimated
Net Effect on All
Federal Funds (Unknown) (Unknown) (Unknown)
*Could exceed $100,000 annually.
ESTIMATED NET EFFECT ON LOCAL FUNDS
FUND AFFECTED FY 1997 FY 1998 FY 1999
Local Government* (Unknown) (Unknown) (Unknown)
*Could exceed $100,000 annually.
FISCAL ANALYSIS
ASSUMPTION
Officials of the following Departments/Offices assumed that this proposal
would have no fiscal impact to their agencies: Secretary of State, State Tax
Commission, House of Representatives, Highway and Transportation Employees
and Highway Patrol Retirement System, Office of the State Auditor, Department
of Economic Development, Department of Insurance, Department of Health,
Office of the Governor, Department of Conservation, Office of
Administration, Office of the State Treasurer, Coordinating Board for Higher
Education Officials of the Department of Highways and Transportation (DH&T)
assumed that this proposal could have significant, but undeterminable, fiscal
impact on their department through increased legal costs and payments in
damages. DH&T officials could not estimate the number of cases that could be
made against their department.
Officials of the Department of Agriculture reported that there could be
negative fiscal impact in an unknown amount to the Department. The impact
would be based on the number of wrongfully discharged employees who receive
settlements and the number of arbitrations settled.
Officials of the Department of Revenue stated the department would need one
additional Assistant Counsel to handle workload of arbitration cases.
Officials of the State Courts Administrator (Courts) stated that it would be
speculative to make any assumptions on the number of arbitration appeals that
might be filed.
Officials of the Department of Mental Health (DMH) stated that during fiscal
year 1995 DMH had 409 employees dismissed. If all dismissed employees sought
arbitration and were awarded the maximum settlement of 36 months pay the
total award would be $27,373,143. Punitive damages could also be awarded, but
would be paid from the state's Legal Expense Fund.
Officials of the Department of Elementary and Secondary Education could not
estimate the fiscal impact that this proposal could have to their agencies.
The Department of Corrections reported additional staff and expenses might be
needed in and subsequent to Fiscal Year 2000.
Officials of the Department of Natural Resources (DNR) stated that while
their department would not anticipate any wrongful discharges of employees,
the department anticipates additional workload and cost in an unknown amount.
This proposal would allow for suit to be filed against DNR. If a wrongful
discharge were alleged, it would have the potential for costs of punitive
damages which could not be determined.
Officials of the Office of the Attorney General (AGO) assumed that they would
request one (1) Assistant Attorney General I to represent state agencies
against claims for alleged wrongful discharges and one (1) Legal Secretary as
support staff.
Officials of the Department of Labor stated that one (1) Attorney would be
needed to handle the new arbitration process, review termination summaries
and review employee demands for arbitration.
Officials of the Department of Social Services' Division of Legal Services
responded to a similar fiscal note last session and reported that they would
request two (2) Legal Counsel and one (1) Clerk Typist II and associated
expense and equipment costs due to this proposal.
Officials of the Department of Public Safety responded to a similar fiscal
note last session and reported that while the proposal could fiscally impact
their department but they could not accurately estimate that impact.
Officials from the Department of Social Services, Department of Public
Safety, and the Lottery Commission did not respond to our fiscal impact
request.
Oversight assumed for purposes of this fiscal note that it would be difficult
to accurately estimate the number of cases that would be filed against any
employer as defined in this proposal which would include the state, counties,
municipal corporations, townships, school districts and any other political
subdivision of government for wrongful discharge. Oversight could not
estimate the number of employees who would demand a jury trial for their
cases. Oversight also assumed that it would be difficult to estimate the
potential damages which would be awarded due to this proposal. Oversight
assumed that the fiscal impact resulting from this proposal could exceed
$100,000 annually.
FISCAL IMPACT - State Government FY 1997 FY 1998 FY 1999
(10 Mo.)
ALL STATE FUNDS
Costs-State Agencies
Legal costs/damages awarded (Unknown) (Unknown) (Unknown)
ESTIMATED NET EFFECT TO
ALL STATE FUNDS* (Unknown) (Unknown) (Unknown)
*Could exceed $100,000 annually.
FEDERAL FUNDS
Costs-State Agencies
Legal costs/damages awarded (Unknown) (Unknown) (Unknown)
ESTIMATED NET EFFECT TO
FEDERAL FUNDS* (Unknown) (Unknown) (Unknown)
*Could exceed $100,000 annually.
FISCAL IMPACT - Local Government FY 1997 FY 1998 FY 1999
(10 Mo.)
LOCAL FUNDS
Costs-Political Subdivisions
Legal costs/damages awarded (Unknown) (Unknown) (Unknown)
ESTIMATED NET EFFECT TO
LOCAL FUNDS* (Unknown) (Unknown) (Unknown)
*Could exceed $100,000 annually.
DESCRIPTION
This act grants rights to employees who are terminated, replacing common law
rights. It does not include contracts for limited periods of employment or
agreements to waive this act and provide severance pay. Employees do not
lose rights under state and federal laws. No employee with a year of
experience can be terminated without good cause. An employee's failure to
meet business-related standards can be good cause if an express written
agreement so provides. Additional agreements may be made between employers
and employees. A terminated employee may file a complaint and demand for
arbitration with the Department of Labor and Industrial Relations. It must
be filed within 180 days after the termination or breach of agreement for
severance pay. Procedures are provided for a response and statement of
reasons for the termination.
This legislation is not federally mandated, would not duplicate any other
program and would not require additional capital improvements or rental
space.
SOURCES OF INFORMATION
State Tax Commission
House of Representatives
Highway and Transportation Employees and Highway Patrol Retirement System
Office of the State Auditor
Department of Economic Development
Department of Insurance
Department of Health
Department of Highways and Transportation
Office of the Governor
Department of Agriculture
Department of Revenue
Department of Conservation
State Courts Administrator
Office of Administration
Department of Mental Health
Office of the State Treasurer
Department of Elementary and Secondary Education
Department of Natural Resources
Department of Corrections
Coordinating Board for Higher Education
Office of the Attorney General
Department of Labor and Industrial Relations
Office of the Secretary of State
Not Responding: Department of Social Services, Department of Public Safety,
Lottery Commission