1. (a) Commencing October 1, 2019, and based on the availability of funds, an appointing authority may provide a lump sum merit reward payment, in an amount of up to two and one-half percent of the annual base salary of a qualified employee on his or her anniversary date if, on October 1 of the fiscal year in which the merit reward payment is to be paid, all of the following conditions have existed for the previous two consecutive fiscal years:

   1. (1) The employee has earned the maximum rate of pay allowed in his or her pay range.
   2. (2) The employee has met or exceeded standards on his or her annual performance appraisal.
   3. (3) A cost-of-living increase has not been provided to state employees.
2. (b) At the beginning of each fiscal year, an appointing authority shall determine what percentage amount shall be used for calculating the total amount of lump sum merit reward payments to be paid to all qualified agency employees for that fiscal year. If the appointing authority determines that agency funds are insufficient to provide lump sum merit reward payments to all qualified agency employees for any fiscal year, no lump sum merit reward payments may be provided to any qualified employee of the agency for the duration of that fiscal year.
3. (c) An employee may not receive a lump sum merit reward payment pursuant to this section every year. An agency may not adjust the anniversary date of an employee to provide a lump sum merit reward payment to the employee on an earlier date. A lump sum merit reward payment issued pursuant to this section may not increase the salary of an employee for retirement purposes.

4. (d) For the purposes of this section, a qualified agency employee does not include any of the following:

   1. (1) An employee, including an hourly employee, whose service or rate of pay is covered by any labor agreement or contract.
   2. (2) Any retired person performing duties in accordance with Section 36-27-8.2.
   3. (3) Any employee who does not receive an annual performance appraisal or service rating.
   4. (4) Any appointing authority or employee who is considered the head of an agency.
   5. (5) Any deputy appointing authority or employee who is considered the deputy head of an agency.
   6. (6) Any unclassified employee or exempt employee.
5. (e) An employee who has received an increase in his or her pay, bonus pay, or incentive pay during the previous two years may not receive a lump sum merit reward payment under this section.
6. (f) Any law to the contrary notwithstanding, any branch of state government may provide lump sum merit reward payments to qualified employees pursuant to this section if the government entity regularly assigns employees to standardized pay ranges and administers annual performance appraisals. The award of lump sum merit reward payments to employees pursuant to this subsection shall be subject to the approval of the applicable appointing authority.

(Act 2019-397, §1.)