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July 1, 2003
To: The Campus Community
From: Lisa Rose, director of Materiel Management
Re: New state law significantly changes some business practices
New California legislation known as SB 1467 significantly changes certain business practices at UC Santa Cruz. Specifically, SB 1467 restricts the ability of departments to purchase, lease or rent goods or services from university employees. Because of the severity of the penalties for violating the new law, it's imperative that all employees understand and comply with SB 1467.
SB 1467 MAY APPLY TO YOU!
This law applies to you:
- if you are thinking of selling, leasing, or renting goods or services to a UCSC department OR
- if you are thinking of ending your employment at UCSC and then returning as an independent contractor to provide services.
Beginning July 1, 2003, the new law will:
- PROHIBIT purchasing, leasing, or renting goods or services from UC employees.
- RESTRICT hiring former UC employees as independent contractors to perform work related to contracts that the ex-employee may have planned, negotiated, or executed while still an employee
- RESTRICT hiring former UC employees as independent contractors to perform work related to contracts if the ex-employee was employed by that department in a policy-making position in the same general subject area as the contract.
The following paragraphs summarize the effect of the new law and provide additional resources.
EMPLOYEE CONTRACTORS
University employees (or entities in which the employee has a 10% or greater financial interest) are prohibited from selling, leasing, or renting goods or services to university departments. UC employees with teaching or research responsibilities are exempted from this provision of SB 1467 but are still subject to University guidelines for employee-vendors.
In many circumstances, employees may be compensated through the payroll system for providing services outside the scope of their normal jobs. If you are contemplating or have been asked to provide goods or services to the university, you should determine whether compensation through the payroll system is possible BEFORE doing the work or risk not being paid.
To determine whether you can be compensated through the payroll system for services outside the normal scope of work, contact your Service Center HR analyst.
CONTRACTORS WHO ARE FORMER UC EMPLOYEES
A former university employee cannot be paid as an independent contractor for two years from the date of separation to perform work related to contracts that were planned, negotiated, or executed by that employee.
A former university employee cannot be paid as an independent contractor for one year from the date of separation to perform work on a contract if he or she was employed by that department in a policy making position in the same general subject area as that contract.
Exceptions may be available for employees whose separation from UC was because of retirement.
To determine whether you can be hired as an independent contractor following your separation, contact your Service Center HR analyst.
PENALTIES
Penalties for lack of compliance with SB 1467 are serious and include personal criminal sanctions and/or liability for money damages.
Additionally, every contract or other transaction entered in violation of SB 1467 is void.
RESOURCES
Departments contemplating transactions involving employee vendors, or employees who have been asked to provide goods or services to UCSC should review the following briefing documents which explain in greater detail changes at UC resulting from SB 1467.
Background:
http://www.ucsc.edu/matman/purchasing/SB1467%20Background.pdf
Summary of Dos and Don'ts:
http://www.ucsc.edu/matman/purchasing/SB1467%20Summary.pdf
Examples:
http://www.ucsc.edu/matman/purchasing/SB1467%20Scenarios.pdf
Maintained by:pioweb@ucsc.edu