Fiscal Note - SB 0325 - Wrongful Discharge From Employment Act
L.R. NO. 1188-01
BILL NO. SB 325
SUBJECT: Wrongful Discharge from Employment Act
TYPE: Original
DATE: February 10, 1997
FISCAL SUMMARY
ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED FY 1998 FY 1999 FY 2000
All State Funds (Unknown) (Unknown) (Unknown)
Total Estimated
Net Effect on All
State Funds (Unknown) (Unknown) (Unknown)
ESTIMATED NET EFFECT ON FEDERAL FUNDS
FUND AFFECTED FY 1998 FY 1999 FY 2000
Federal (Unknown) (Unknown) (Unknown)
Total Estimated
Net Effect on All
Federal Funds (Unknown) (Unknown) (Unknown)
ESTIMATED NET EFFECT ON LOCAL FUNDS
FUND AFFECTED FY 1998 FY 1999 FY 2000
Local Government (Unknown) (Unknown) (Unknown)
FISCAL ANALYSIS
ASSUMPTION
The following agencies do not expect to be fiscally impacted: State Auditor,
Office of Lt. Governor, Attorney General, Gaming Commission, Highway &
Transportation Employees' and Highway Patrol Retirement System, Office of the
Governor, House of Representatives, Missouri Consolidated Health Care Plan,
Department of Health, Department of Labor & Industrial Relations, State
Public Defender, Department of Economic Development, Department of
Conservation, Department of Revenue, Office of Administration - Division of
Personnel, and Senate.
The Tax Commission assumes that this proposal would put in place procedures
for making the discharge of employees more difficult than at present. These
restrictions could have a chilling effect on relations between agencies and
their employees. However, there is no way to determine how frequently these
procedures might come into play, and as a result, costs would be unknown.
The Department of Agriculture (AGR) indicates that few dismissals have been
effected within the department and no UCP employee has been dismissed without
cause. Exempt employees usually have left either due to personal commitments
or by mutual agreement. Given current practice, no costs would be assumed.
However, if an employee files a complaint and demands arbitration then costs
could be incurred not only for arbitration, but also for attorney fees, back
pay, etc.
The Department of Insurance (INS) assumes that it could be fiscally impacted
only in the event that the INS engaged in retaliation or reckless disregard
of an employee's rights in discharging the employee. This could only be
determined after the fact. Therefore, the fiscal impact would be unknown.
Any expenditures resulting from this proposal could be paid from the
Insurance Dedicated Fund. This fund is financed by license fees established
by statute and not indexed for inflation. Increased expenditures paid by the
INS from this fund as a result of new legislation effectively reduce the fund
balance.
The Office of State Courts Administrator (CTS) assumes that it would be very
speculative to make any assumptions on the number of arbitration appeals
which might be filed each year. To the extent that there would be a
significant number of additional filings, there would be a corresponding
increase in the circuit civil filings and the CTS budget.
The Secretary of State (SOS) assumes an unknown fiscal impact particularly
following a change of administration.
The Department of Transportation (DHT) assumes that this proposal would have
a significant, but indeterminable fiscal impact. It was assumed that this
proposal could increase legal costs, payments in back wages, interest and
punitive damages. Given the broad nature of the language, the number of
potential claims which could be filed against the department cannot be
determined.
While the Department of Natural Resources (DNR) does not anticipate any
wrongful discharges of employees, if a wrongful discharge is alleged, the
arbitration process would take time and additional resources. There is also
the potential for severance pay, costs of awards, filing fees and attorney
fees which the department is unable to estimate. Therefore, the fiscal
impact would be unknown and could potentially impact both the DNR's Federal
Funds and Dedicated Funds.
The Department of Elementary & Secondary Education (DES) assumes that this
proposal could result in a cost in the payment of damages. The amount would
be unknown.
The Department of Corrections (DOC) assumes that it could be impacted, but it
is not unknown if new FTE or additional E&E for lawsuit judgements,
arbitration costs or expenses would be needed in the next three fiscal years.
Additional staff (i.e., legal and clerical) and expenses would be anticipated
in FY00 and beyond as legal actions would be taken against state departments
under this proposal's expanded remedies and definitions.
The Coordinating Board for Higher Education (CBH) assumes that the fiscal
impact would be unknown. CBH has a comparatively low number of terminations
per year and already has an internal grievance procedure in place, but it is
possible that a terminated employee could demand arbitration or a judicial
resolution under this proposal. Costs associated with these actions would be
unknown and impossible to estimate.
The Department of Public Safety (DPS), Director's Office and State Water
Patrol assume that the fiscal impact would be unknown. It was assumed that
this proposal would not duplicate or replace existing appeal procedures and
that terminations do not occur without cause. However, if a case arises then
costs could be incurred. Other divisions of DPS indicated no fiscal impact.
The Department of Social Services (DOS), Division of Legal Services (DLS)
assumes that it would need an additional staff attorney and .5 Clerk Typist
III. The attorney would be responsible for advising the DOS in cases
regarding personnel matters and the Clerk Typist would provide clerical
support. Total costs were estimated at $56,138 in FY98; $63,900 in FY99; and
$65,552 in FY00.
During FY96, DLS had approximately 90 terminations, with legal counsel being
utilized in disciplinary actions including terminations. DLS believes that
this proposal would expand the conditions under which employees could sue the
department which could end up in circuit court. These actions would
dramatically increase the amount of legal assistance needed. Oversight
assumes that the fiscal impact would be unknown since the number of cases
resulting from this proposal cannot be estimated.
For purposes of this fiscal note, Oversight assumes that it would be
difficult to accurately estimate the number of cases that would be filed
against any employer, as defined in this proposal, for wrongful discharge.
The definition of employer would include the state, counties, municipal
corporations, townships, school districts and any other political subdivision
of government. Oversight could not estimate the number of employees who
would demand a jury trial nor could the amount of potential damages which
could be awarded be estimated.
FISCAL IMPACT - State Government FY 1998 FY 1999 FY 2000
(10 Mo.)
ALL STATE FUNDS
Costs-State Agencies
Legal Expenses/Damage Awards (Unknown) (Unknown) (Unknown)
ESTIMATED NET EFFECT TO
ALL STATE FUNDS (Unknown) (Unknown) (Unknown)
FEDERAL
Costs-State Agencies
Legal Expenses/Damage Awards (Unknown) (Unknown) (Unknown)
ESTIMATED NET EFFECT ON
FEDERAL FUNDS (Unknown) (Unknown) (Unknown)
FISCAL IMPACT - Local Government FY 1998 FY 1999 FY 2000
(10 Mo.)
LOCAL FUNDS
Costs-Political Subdivisions
Legal Expenses/Damage Awards (Unknown) (Unknown) (Unknown)
ESTIMATED NET EFFECT ON
LOCAL FUNDS (Unknown) (Unknown) (Unknown)
FISCAL IMPACT - Small Business
This proposal could potentially have a direct impact on small businesses in
the form of legal costs and damage awards if the court determines that an
employee has been wrongfully discharged.
DESCRIPTION
The proposal would be known as the "Wrongful Discharge From Employment Act".
This proposal would only be applicable to terminations which occur after the
effective date unless the terminations result from the expiration of express
oral or written agreements for a specified duration which were existing prior
to the effective date of this proposal. Conditions would be established when
a terminated employee would no longer retain all common-law rights and claims
and when such rights and claims would be retained.
An employee could not be terminated without good cause unless otherwise
provided by a severance agreement or specified duration of employment. This
would be applicable to employees who have been employed for a total period of
one year or more and has worked for at least 520 hours during the twenty-six
weeks preceding termination. The right of an employee can not be waived
under the provisions of this proposal unless the conditions outlined exist.
The proposal would allow an employee who is terminated to file a complaint
and demand for arbitration. A filing fee of $50 would be paid to the
director of the Department of Labor & Industrial Relations (DOL). The
Uniform Arbitration Act would apply to proceedings under sections 290.600 to
290.630, except as otherwise provided in these sections, as if the parties
had agreed to arbitrate pursuant to the Act. A party could be represented by
an attorney or any other person authorized under Missouri law to represent an
individual in arbitration, with the burden of proof being on the employee to
prove termination without good cause. A complainant employer would have the
burden of proving that there was good cause for a termination.
Procedures would be determined for hearing the arbitration case as well as
the possible awards. The arbitrator cannot award damages for pain and
suffering, emotional distress, defamation, fraud or other under injury under
common law; punitive damages; compensatory damages; or any other monetary
award. Reasonable attorney's fees and costs could be awarded to the
prevailing party. Either party could seek vacation, modification or
enforcement of the arbitrator's award in circuit court.
A copy of these provisions or an approved summary must be posted in a
prominent place in the work area. Failure to do this could subject the
employer to a civil penalty not to exceed $400. The attorney general could
bring a civil action to impose and collect any civil penalty. Employers
would be prohibited from taking any adverse action in retaliation for damage
caused by the action, with punitive damages when appropriate and reasonable
attorney's fees being awarded for a violation of this provision. A separate
civil action could be brought to enforce this liability.
The provisions of this proposal would be severable.
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
Coordinating Board for Higher Education
Office of Administration
Office of State Courts Administrator
Department of Economic Development
Department of Elementary & Secondary Education
Department of Natural Resources
Department of Corrections
Department of Health
Department of Labor & Industrial Relations
Department of Revenue
Department of Social Services
Department of Transportation
Department of Public Safety
Gaming Commission
Missouri Consolidated Health Care Plan
State Highway Employees' & Highway Patrol Retirement System
Department of Insurance
Department of Agriculture
Department of Conservation
House of Representatives
Senate
State Public Defender
Tax Commission, Attorney General
Office of the Governor
Office of the Lt. Governor
State Auditor
Secretary of State
NOT RESPONDING: Department of Mental Health, Lottery Commission, State
Treasurer, St. Louis County, St. Louis City, Jackson County, Cole County, and
Greene County
This Fiscal Note is not an official copy and should not be quoted or cited.