California governor signs Union-backed CRONEY Act into law

The CRONEY Act (SB 331) requires certain local government agencies, including cities and counties, to make their negotiations and approval of private contracts more transparent.  The CRONEY Act applies only to local government agencies that have implemented a COIN ordinance.

Since 2012, a number of local government agencies have passed “civic openness in negotiations” ordinances (“COIN ordinances”).  The first COIN ordinance was passed by the predominantly conservative City Council in Costa Mesa.  The ordinance specifically targeted negotiations with Unions, creating transparency requirements pertaining to labor negotiations that did not also apply to private contractors.  Similar COIN ordinances followed in Fullerton, Beverly Hills, and the County of Orange.

Although the specifics vary, generally, COIN ordinances require local governments to publically disclose proposals and counter-proposals made at the bargaining table, use independent auditors to cost out proposals, provide reports summarizing negotiation sessions which include the names of all individuals present during bargaining, and allow public comment prior to approval of a collective bargaining agreement.  Recently, an administrative law judge with the Public Employment Relations Board (PERB) found that Orange County’s decision to implement a COIN ordinance constituted an unlawful unilateral change and refusal to bargain in good faith.

Now under the CRONEY Act, just as information about Union negotiations must be disclosed under a COIN ordinance, before a local government agency can enter into a contract for goods or services in many areas, listed in detail below, it must:

  • (1) designate an independent auditor to review and report on the cost of the proposed contract;
  • (2) disclose certain information regarding the contract on its website; and
  • (3) place the proposed contract on the agenda for at least two public meetings of the agency’s governing body prior to final approval of the contract.

The auditor’s report must include a recommendation regarding the viability of the contract, and must determine the fiscal impact of each term and condition of the proposed contract.

Required disclosures include: all offers and counteroffers made in negotiating the contract; a list of the names of persons in attendance during any negotiation session; and, all verbal, written, electronic, or other communications regarding the negotiations or the “subject matter” of the negotiations.

With a few exceptions, the CRONEY Act applies to contracts for goods and services valued at $250,000 or more in the following areas:

  • accounting,
  • financing,
  • hardware and software maintenance,
  • health care,
  • human resources,
  • human services,
  • information technology,
  • telecommunications,
  • janitorial maintenance,
  • legal services,
  • lobbying,
  • marketing,
  • office equipment maintenance,
  • passenger vehicle maintenance,
  • property leasing,
  • public relations,
  • public safety,
  • social services,
  • transportation, or
  • waste removal.

The CRONEY Act goes into effect on January 1, 2016.

For more information about COIN ordinances and the CRONEY Act, contact your labor law counsel.

By Jake White | October 26, 2015

Legal Developments