Cal. Gov. Code § 19992.11
Performance reports shall be considered, in the manner prescribed by department rule, for purposes of employee development, in determining salary increases and decreases, the order of layoffs, the advisability of transfers, demotions, and dismissals. Performance reports shall be considered in promotional examinations in the manner prescribed by State Personnel Board rule. On or before July 1, 1988, performance appraisal reports for managers shall be used to award merit salary increases on a flexible basis so that each such employee may receive up to a 10-percent increase provided that this does not increase the employee's salary beyond the highest step of the range for the class of position occupied by the employee. The total amount awarded by the appointing power for merit salary increases through this practice shall not exceed the amount which otherwise would be available under current methods.
Ca. Gov. Code § 19992.11