Can a Florida housing authority pay its director a bonus, and does the state anti-bonus law apply if the authority gets no state money?

Subject

Housing Authority -- Bonus

Plain-English summary

The general counsel for the Tampa Housing Authority asked the AG two questions. The authority is organized under Chapter 421, has revenues near $400 million, and gets no state or local money; its funding comes from federal grants and other sources, with the city's only involvement being the appointment of the board of commissioners. In 2013 the board gave the authority's president and CEO a one-time $6,500 bonus, then suspended it when questions arose. The counsel asked whether section 215.425, Florida's anti-extra-compensation statute, applies given the lack of state or local funding, and if so, whether the president's contract would allow the bonus.

The AG first set a limit: it does not interpret the terms of contracts, so whether the bonus counts as a "merit increase" under the president's employment contract is a factual question outside its role. On the statute, though, the AG was clear. Section 215.425 generally prohibits paying extra compensation to an officer, agent, employee, or contractor after the service has been rendered. "Extra compensation" means a payment for services already performed beyond what was fixed by contract or law. Paying bonuses to existing employees for past work violates the statute unless there is a preexisting contract making bonuses part of salary, or a qualifying bonus program. Section 215.425(3) sets the requirements for a valid bonus program: the award must be based on work performance, the standards and evaluation process must be described, all employees must be notified before the evaluation period, and all employees must be considered for the bonus.

The AG concluded the statute applies to the Tampa Housing Authority. Section 215.425 reaches "units of government" broadly, without limitation as to funding source, and the authority is a creation of the City of Tampa under section 421.04, so it is such a unit. That means any bonus program the authority adopts has to comply with section 215.425(3). The AG flagged a problem: while the president manages the other employees and is the only employee directly under the board, a bonus program under the statute must apply to and consider all the authority's employees, and section 421.05(2) places responsibility for setting employee compensation with the commissioners. So a single contractual "merit increase" provision for the president might not satisfy the all-employees requirements of a statutory bonus program.

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

Does Florida's anti-bonus law apply to an agency that gets no state money?
The AG concluded yes. Section 215.425 applies broadly to "units of government" regardless of funding source, and the Tampa Housing Authority, created by the city under Chapter 421, is such a unit even though it runs on federal grants.

Can a public employer pay a bonus at all?
Only under specific conditions. The AG explained that paying extra compensation for work already done generally violates section 215.425, unless a preexisting contract makes bonuses part of salary or there is a bonus program meeting section 215.425(3).

What does a valid bonus program require?
Section 215.425(3) requires that the bonus be based on work performance, that the performance standards and evaluation process be described, that all employees be notified before the evaluation period begins, and that all employees be considered for the bonus.

Did the AG approve the $6,500 bonus for the president?
No. The AG said it cannot interpret the contract to decide whether the payment was a permitted "merit increase," and it questioned whether a single contractual provision for the president would satisfy the all-employees requirements of a statutory bonus program.

Background and statutory framework

Section 215.425 is Florida's prohibition on extra compensation. Subsection (1) bars extra pay to an officer, agent, employee, or contractor after the service is rendered or the contract made; subsection (2) carves out narrow exceptions (such as bonus or severance paid wholly from nontax, nonstate-appropriated funds to employees of certain public hospitals, and a plainclothes deputy clothing allowance under s. 30.49). Subsection (3) is the gateway for lawful bonus programs and lists the four requirements the AG emphasized.

The reach question turned on whether the housing authority is a "unit of government." The AG noted its prior opinions read section 215.425 to apply broadly to units of government without limitation, and that the Tampa Housing Authority is created by the City of Tampa under section 421.04. Section 421.05(2) vests the authority's powers in its commissioners and makes them responsible for determining employees' qualifications, duties, and compensation, which the AG read to mean the commissioners, not the president, would implement any bonus program covering all employees.

Citations

• section 215.425, Florida Statutes
• Section 215.425(1), Fla. Stat.
• section 215.425(3), Florida Statutes
• Chapter 421, Florida Statutes
• section 421.04, Florida Statutes
• Section 421.05(2), Florida Statutes
• s. 30.49, Fla. Stat.

Source

• Landing page: https://www.myfloridalegal.com/ag-opinions/housing-authority-bonus
• Original PDF: https://www.myfloridalegal.com/print/pdf/node/8096

Original opinion text

Mr. Ricardo L. Gilmore

General Counsel

Tampa Housing Authority

201 East Kennedy Boulevard

Suite 600

Tampa, Florida 33602

Dear Mr. Gilmore:

This is in response to your request for assistance in determining whether section 215.425, Florida Statutes, applies to the Tampa Housing Authority, in light of the authority’s funding sources not including state or local funds. If the statute is applicable, you question whether an employment contract with the authority’s president and chief executive officer would allow the payment of a bonus.

You state the Tampa Housing Authority (authority), organized under Chapter 421, Florida Statutes, and with revenues of nearly $400 million, receives no local or state funding. Rather, the authority’s funding is derived from federal grants and from other projects and sources. You indicate that the city’s involvement is limited to appointing the Board of Commissioners which governs the authority. The board of commissioners reviews the president’s performance annually and in 2013 granted a one-time bonus of $6,500.00. When questions arose as to the propriety of such action, the bonus was suspended until advice could be obtained from this office.

You indicate that the employees of the authority are managed by the president and that the president is the only employee over whom the commission has direct authority. You also state that the president works under a contract which provides a procedure for the commission to review the president’s performance and to award a "merit increase." Historically, the board has given the president "modest annual raises," but had decided to give a bonus in 2013.

Initially, I would state that this office does not interpret the terms of contracts, so a decision as to whether a bonus is the equivalent of a "merit increase" as that term is used in the president’s employment contract is a factual question which may not be determined by this office. The following discussion, however, will address the application of section 215.425, Florida Statutes, as it would apply to the payment of a bonus.

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.[1] 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.[2] 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.[3] 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.[4] As a creation of the City of Tampa pursuant to section 421.04, Florida Statutes, the Tampa Housing Authority would appear to be a unit of government subject to section 215.425, Florida Statutes.

Thus, any bonus program instituted by the authority would have to comply with the provisions in section 215.425(3), Florida Statutes. You state that the president is the sole employee of the board, while the remaining employees of the authority are under the control and management of the president, and that the contract between the authority and the president setting forth the "merit increase" after review by the board complies with the requirements of the statute. While, as noted above, this office cannot interpret the terms of the contract to determine whether the bonus provided to the president is a "merit increase" in the president’s salary, there is some question as to whether the contractual provision would qualify as a bonus program for the housing authority, absent a strict adherence to the requirements of section 215.425(3), Florida Statutes.

Section 421.05(2), Florida Statutes, prescribes the powers possessed by housing authorities created pursuant to the chapter:

"The powers of each authority shall be vested in the commissioners thereof in office from time to time. A majority of the commissioners shall constitute a quorum of the authority for the purpose of conducting its business and exercising its powers and for all other purposes. Action may be taken by the authority upon a vote of a majority of the commissioners present, unless in any case the bylaws of the authority require a larger number. The mayor with the concurrence of the governing body shall designate which of the commissioners appointed shall be the first chair, but when the office of the chair of the authority thereafter becomes vacant, the authority shall select a chair from among its commissioners. An authority shall select from among its commissioners a vice chair; and it may employ a secretary, who shall be the executive director, technical experts, and such other officers, agents, and employees, permanent and temporary, as it may require and shall determine their qualifications, duties, and compensation. For such legal services as it may require, an authority may call upon the chief law officer of the city or may employ its own counsel and legal staff. An authority may delegate to one or more of its agents or employees such powers or duties as it may deem proper." (e.s.)

The plain language of the statute states that a housing authority has the discretion to employ employees it may require and to delegate to such employees such powers and duties it may deem proper, but it is the housing authority which must determine the qualifications, duties, and compensation of such employees. While, as you have stated, the president controls and manages the employees of the authority, it would appear that the commissioners of the housing authority would be responsible for implementing a bonus program which would be applicable to all of the housing authority employees.

I trust that these informal comments will be helpful in your advising the commissioners of the Tampa Housing Authority.

Sincerely,

Lagran Saunders

Assistant Attorney General

ALS/tsh

[1] 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.

[2] See, e.g., Ops. Att’y Gen. Fla. 89-53 (1989), 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."

[3] See Op. Att’y Gen. Fla. 00-48 (2000).

[4] 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).