Limit on Cash Settlement in Superintendent Contracts (K-12)
On September 2, 2015, the Governor signed Assembly Bill (“AB”) 215, which amends Government Code section 53260 and applies to all school district superintendents’ contracts executed on or after January 1, 2016.
LEGAL UPDATE
September 16, 2015
To: Superintendents, Member School Districts (K-12)
From: Carl D. Corbin, General Counsel
Subject: Limit on Cash Settlement in Superintendent Contracts
Memo No. 24-2015
On September 2, 2015, the Governor signed Assembly Bill (“AB”) 215, which amends Government Code section 53260 and applies to all school district superintendents’ contracts executed on or after January 1, 2016.
Existing law requires all employment contracts between an employee and a local agency employer to contain a provision that provides for the amount of a cash settlement that may be paid out if the contract is terminated with the maximum settlement that an employee can receive being no more than the amount equal to the monthly salary of the employee multiplied by the number of months left on the unexpired term of the contract, or, if the unexpired terms of the contract is greater than 18 months, an amount equal to the monthly salary of the employee multiplied by 18.
AB 215 provides an exception only applicable to school district superintendent contracts, executed on or after January 1, 2016[1], which limits the maximum cash settlement to no more than the amount of the superintendent’s monthly salary multiplied by 12. In addition, in the case of a superintendent who is terminated when the district believes, and subsequently confirms pursuant to an independent audit, the superintendent has engaged in fraud, misappropriation, or other illegal practices, then the district shall not provide a cash or non-cash settlement in any amount.[2]
For your convenience, a copy of AB 215 is attached at the end of this Legal Update.
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The information in this Legal Update is provided as a summary of law and is not intended as legal advice. Application of the law may vary depending on the particular facts and circumstances at issue. We, therefore, recommend that you consult legal counsel to advise you on how the law applies to your specific situation.
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