Can a Florida public agency pay an employee a bonus or extra compensation?

Subject

Employment Contracts -- Bonuses

Plain-English summary

The General Counsel of the Riviera Beach Community Redevelopment Agency was negotiating an employment contract with the agency's executive director and asked whether a proposed "lump sum merit retention payment" would run afoul of section 215.425, Florida Statutes, the statute that prohibits extra compensation. The director had been on a fixed base salary and was now asking for the lump-sum payment on top of base salary.

The AG started with two limits on the office's role: it does not interpret the terms of contracts, so it could not analyze what this particular "lump sum merit retention payment" actually was, and with no explanatory details provided, its comments stayed at the level of general principles.

On those principles: section 215.425(1) generally prohibits paying extra compensation to an officer, agent, employee, or contractor after the service has been rendered or the contract has been made. The office has read "extra compensation" to mean an additional payment for services already performed, or compensation beyond what the contract or law fixed when the service was rendered. So paying bonuses to existing employees for work they already did would violate the statute, unless the bonus was already part of a preexisting employment contract or there is a qualifying bonus program. Subsection (3) sets out what a bonus scheme must include: basing the award on work performance, describing the performance standards and evaluation process, notifying all employees before the evaluation period, and considering all employees. The AG also noted the statute applies broadly to "units of government," and that the CRA appears to be such a unit. The takeaway the AG offered: extra compensation paid as part of a preexisting employment contract is not prohibited, and because the lump-sum payment was still being negotiated into the contract, that distinction could matter here.

Currency note

This opinion was issued in 2014. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

What does section 215.425 prohibit?
Subsection (1) generally prohibits paying extra compensation to an officer, agent, employee, or contractor after the service has been rendered or the contract made. The office has read "extra compensation" as a payment for services already performed, or compensation beyond what the contract or law fixed at the time of service.

Are bonuses to public employees always banned?
No. The AG explained that a bonus to existing employees for work already performed would violate the statute unless it was part of a preexisting employment contract or there is a qualifying bonus program. Section 215.425(3) lists what a bonus scheme must do, including basing awards on work performance, describing the standards and evaluation process, notifying all employees beforehand, and considering all employees.

Did the AG decide whether this specific lump-sum payment was allowed?
No. The office does not interpret contract terms, and no explanatory information about the payment was provided, so the AG limited itself to a general discussion. It noted that extra compensation paid as part of a preexisting employment contract is not prohibited, and that the payment here was the subject of ongoing contract negotiations.

Does the statute apply to a community redevelopment agency?
The AG noted section 215.425 applies broadly to "units of government" without limitation, and that the Riviera Beach Community Redevelopment Agency, as a creation of the Legislature and the city, would appear to be a unit of government subject to the statute.

Background and statutory framework

Section 215.425, Florida Statutes, is Florida's prohibition on extra compensation and unauthorized bonuses for public officers, agents, employees, and contractors. Subsection (1) states the general prohibition. Subsection (2) provides limited exceptions (for certain bonus or severance payments at public hospitals operated by a county or special district paid wholly from nontax revenues, and a clothing allowance for plainclothes deputies under section 30.49). Subsection (3) sets the requirements a bonus scheme must meet to be valid.

The AG drew the meaning of "extra compensation" from prior opinions (89-53 and 75-279) describing it as something furnished in addition to, or in excess of, what the contract required, and relied on opinion 00-48 for the point that bonuses for past work need either a preexisting contract or a qualifying bonus program. Opinion 13-09 supported reading the statute to apply broadly to units of government. The office's practice of not interpreting contracts is grounded in section 16.01(3) and the Department of Legal Affairs' statement on attorney general opinions.

Citations

• Section 215.425, Florida Statutes (including (1) and (3)); section 30.49, Florida Statutes
• Section 16.01(3), Florida Statutes
• Attorney General Opinions 00-48, 89-53, 75-279, and 13-09

Source

• Landing page: https://www.myfloridalegal.com/ag-opinions/employment-contracts-bonuses
• Original PDF: https://www.myfloridalegal.com/print/pdf/node/8087

Original opinion text

Mr. J. Michael Haygood

701 Northpoint Parkway

Suite 209

West Palm Beach, Florida 33407

Dear Mr. Haygood:

As General Counsel of the Riviera Beach Community Redevelopment Agency, you have requested this office's assistance in resolving a question related to negotiations of an employment contract with the executive director of the agency. Attorney General Bondi has asked me to respond to your letter.

More specifically, you have asked whether a "lump sum merit retention payment" would violate the provisions of section 215.425, Florida Statutes. According to your letter, the executive director was initially hired in September 2010 under a two-year term agreement. The current contract negotiations represent the second modification of the agreement. The executive director negotiated a fixed base salary during the first two terms of the agreement and is now requesting a "lump sum merit retention payment" payable on the effective date of the second modification of the agreement in addition to a base salary. You have requested our assistance in determining whether this "lump sum merit retention payment" is prohibited by section 215.425, Florida Statutes, which prohibits extra compensation claims.

Initially, I must advise you that this office does not interpret the terms of contracts, so an analysis of the nature of a "lump sum merit retention payment" as that term is used in the executive director's contract may not be undertaken by this office.[1] In addition, you have provided no explanatory information about this lump sum payment and my comments are therefore limited to a general discussion of section 215.425, Florida Statutes, and its application.

Section 215.425, Florida Statutes, generally prohibits the payment of extra compensation to any officer, agent, employee, or contractor after the service has been rendered or the contract has been made.[2] This office has determined that "extra compensation" generally refers to an additional payment for services performed or compensation over that fixed by contract or by law when a service was rendered.[3] As this office previously found, the payment of bonuses to existing employees for services they have already performed would violate section 215.425, Florida Statutes, absent a preexisting employment contract making such bonuses a part of their salary or the existence of a bonus program rewarding outstanding employees.[4] Subsection (3) of the statute, however, provides:

"(3) Any policy, ordinance, rule, or resolution designed to implement a bonus scheme must:

(a) Base the award of a bonus on work performance;

(b) Describe the performance standards and evaluation process by which a bonus will be awarded;

(c) Notify all employees of the policy, ordinance, rule, or resolution before the beginning of the evaluation period on which a bonus will be based; and

(d) Consider all employees for the bonus."

This office has previously determined that the provisions of section 215.425, Florida Statutes, apply broadly to "units of government" without limitation.[5] As a creation of the Florida Legislature and, I assume, the City of Riviera Beach, the Riviera Beach Community Redevelopment Agency would appear to be a unit of government subject to section 215.425, Florida Statutes.

However, as the text emphasized above suggests, this office has stated in several previously issued Attorney General Opinions that extra compensation that is paid as part of a preexisting employment contract is not prohibited by section 215.425, Florida Statutes. It appears from your letter that the "lump sum merit retention payment" for the executive director is the subject of contract negotiations and, if that is the case, I believe that these informal comments may provide you with some direction in this matter.

I trust that these informal comments and the copies of previously issued Attorney General Opinions that I am enclosing will be helpful to you in advising your client, the Riviera Beach Community Redevelopment Agency.

Sincerely,

Gerry Hammond

Senior Assistant Attorney General

GH/tsh

Enclosures: Op. Att'y Gen. Fla. 00-48 (2000)

        Inf. Op. To Gilmore, dated May 7, 2014

[1] See s. 16.01(3), Fla. Stat., and Department of Legal Affairs Statement Concerning Attorney General Opinions (available at www.myfloridalegal.com).

[2] Section 215.425(1), Fla. Stat. Subsection (2) of the statute provides an exception for bonus or severance payments paid wholly from nontax revenues and nonstate appropriated funds paid to an officer, agent, employee, or contractor of a public hospital that is operated by a county or a special district, and for the payment of a clothing allowance given to plainclothes deputies pursuant to s. 30.49, Fla. Stat.

[3] See, e.g., Ops. Att'y Gen. Fla. 89-53 (1989) and 75-279 (1975), stating that the term "denotes something done or furnished in addition to, or in excess of the requirement of the contract; something not required in the performance of the contract."

[4] See Op. Att'y Gen. Fla. 00-48 (2000).

[5] See Op. Att'y Gen. Fla. 13-09 (2013) (dependent district port authority subject to s. 215.425, Fla. Stat., as a unit of government).