Today's Law As Amended

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AB-1404 Nonprofit sponsors: reporting obligations.(2019-2020)

As Amends the Law Today


 Part 12 (commencing with Section 10850) is added to Division 2 of Title 1 of the Corporations Code, to read:

PART 12. Reporting Obligations Regarding Deferred Compensation Allocated by Nonprofit Sponsors to For-Profit Recipients

 This part applies to nonprofit sponsors that allocate deferred compensation to any listed person at a recipient for profit.
 For the purposes of this part:
(a) “Allocate” means to hold, reserve, designate, provide, use, or intend to use assets, whether or not the assets are held in trust, legally segregated, or restricted.
(b) “Deferred compensation” means a pension, profit-sharing, share bonus, share purchase, share option, savings, thrift, and other retirement, incentive, and benefit plans, trusts, insurance, or any other form of deferred compensation or retirement benefits for any listed person, for whom the compensation is described in audited financials, bond documents, Internal Revenue Service Form 990s, or other official disclosures as exempt from the Employee Retirement Income Security Act of 1974 (29 U.S.C. Sec. 1001 et seq.), as amended (ERISA), such as by indicating that the benefits or arrangements are “not subject to ERISA” or “non-ERISA.”
(c) “Listed person” means an individual or entity that is a current or former officer, director, employer, or trustee of a recipient for profit, or an individual who is or was employed by, contracted with, or a partner in any recipient for profit, provided the individual has over one million dollars ($1,000,000) in reportable compensation.
(d) “Nonprofit sponsor” means a nonprofit corporation that is defined in Section 5046 and does one or more of the following:
(1) Operates or controls a health facility, as defined in Section 1250 of the Health and Safety Code.
(2) Operates or controls a facility that provides similar health care to a health facility, as defined in Section 1250 of the Health and Safety Code.
(3) Is a health care service plan licensed pursuant to the Knox-Keene Health Care Service Plan Act of 1975 (Chapter 2.2 (commencing with Section 1340) of Division 2 of the Health and Safety Code).
(e) “Recipient for profit” means any for-profit entity that employs, contracts with, comprises a partnership of, or otherwise uses the services of any listed person for which the nonprofit sponsor allocates deferred compensation.
(f) “Reportable compensation” means compensation from recipient for-profits and related or affiliated entities, including, but not limited to, base compensation, bonus and incentive compensation, and other nontaxable benefits, as reported on any of the following:
(1) Internal Revenue Service Form W-2, Box 1 or 5, whichever amount is greater, or Box 11.
(2) Internal Revenue Service Form 1099-MISC, Boxes 6 and 7.
(3) Internal Revenue Service Form 1065, Schedule K-1, Box 14.
 (a) Notwithstanding, and in addition to, any other law, a nonprofit sponsor subject to this part under Section 10850 shall make the following annual disclosures publicly available by posting on the nonprofit sponsor’s public internet website in the same location where it posts copies of its annual report. These disclosures shall include all of the following:
(1) The total amount of deferred compensation allocated by the nonprofit sponsor.
(2) (A) For each listed person receiving deferred compensation allocated by a nonprofit sponsor, the total amount and type of the compensation paid to or allocated on behalf of each listed person, and reportable compensation, including base compensation, bonus and incentive compensation, other reportable compensation, and other nontaxable benefits.
(B) The information under subparagraph (A) shall be reported in pay scales showing the number of listed persons in each scale, without names or titles identified. The first scale shall include listed persons earning one million dollars ($1,000,000) to one million five hundred thousand dollars ($1,500,000) in base compensation. Each pay scale after the one-million-five-hundred-thousand-dollar ($1,500,000) pay scale shall increase by five hundred thousand dollars ($500,000).
(C) For purposes of this paragraph, “pay scale” has the same definition as in Section 432.3 of the Labor Code.
(3) Whether taxes were paid on the deferred compensation.
(4) The applicable plan document, summary plan description, trust agreement, and any other agreement or legal document governing the deferred compensation.
(b) The nonprofit sponsor subject to this part shall make the disclosures required pursuant to this section within 30 days of the nonprofit sponsor filing an Internal Revenue Service Form 990 for the nonprofit sponsor’s taxable year.
(c) A nonprofit sponsor subject to this part shall certify that the information it discloses pursuant to this section is true and correct.
(d) The Attorney General may enforce these provisions against a nonprofit sponsor that fails to disclose the required documents in a complete, timely, or accurate manner.
SEC. 2.
 The provisions of this part are severable. If any provision of this part or its application is held invalid, that invalidity shall not affect other provisions or applications that can be given effect without the invalid provision or application.
SEC. 3.
 No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.