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S.F. No. 603 - Highly Paid Public Employees Severance Pay Limits Clarification
Author: Senator Mary Kiffmeyer
Prepared By: Stephanie James, Senate Counsel (651/296-0103)
Date: February 22, 2017


Section 1 [Severance pay for certain employees] precludes payment of severance for certain highly compensated state employees unless a compensation plan authorizes severance.  This section also changes the limit on the permitted maximum amount of severance pay.

In current law, “highly compensated employee” is defined as an employee of the state whose estimated annual compensation is greater than 60 percent of the governor’s annual salary and who is not covered by a collective bargaining agreement.  This definition is not changed in this bill.

Under current law, the limit for pay on severance for highly compensated state employees is six months of pay.  Section 1 changes this limit to the lesser of six months' pay or 35 percent of unused sick leave hours times the employee’s regular rate of pay.

Current law permits severance to exceed the specified limit if the severance is part of an early retirement incentive offer approved by the state and made available to all employees who meet specified criteria. Section 1 makes a conforming change as to the specified limit.

The new language in paragraph (d) makes severance available only to those highly compensated employees who are covered by a compensation plan. 

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