Vol. 20 No. 2- SB 1439 – Pers Retirees

January 4, 2005

A retired member of the Public Employees’ Retirement System (PERS) is not permitted to work for an employer under PERS without reinstatement from retirement.  An exception exists to allow such retiree to work no more than 960 hours a year for such an employer, without penalty. According to SB 1439, this is done in order to allow public entities to “utilize the unique skills of those retired members and to address emergency workflow situations for a limited time.”   If the retiree works more than 960 hours, without reinstatement from retirement, he or she could suffer a loss of retirement benefits.

After completing the 960 hours those retirees are permitted to collect state unemployment insurance benefits.  (It is unclear, at this time, what law authorizes collecting unemployment insurance benefits under these circumstances, since the retiree chooses to not continue employment and is not seeking similar work elsewhere.)

SB 1439 states that, “as a result, in a given year, a retired member of the system may collect three public stipends: a retirement allowance, a salary up to 960 hours of work in a calendar year, and unemployment insurance compensation after that 960 hour limit has been reached. The Legislature believes that this “triple dipping” process is inappropriate and a violation of the public trust.”

Clients have called to ask whether this legislation applies only to the state and retired state employees, since the legislative history, including the Legislative Counsel’s Digest, makes reference specifically to “state retired annuitants” and “.services performed for the state..”   However, the language in the body of the law specifically refers to “state agencies and other public employers…;” it also refers to “retired members of.” PERS, not just retired state members; and finally, the legislation states that “it is the intent of the Legislature that managers of state agencies and departments and other public employers shall be responsible for this abuse by retired members.”  (Emphasis added.)

Therefore, it appears, based on all of the above, and a telephone conversation with a representative from the author’s office, that SB 1439 is intended to apply to all entities and retirees under PERS.

Since federal laws apparently prevent the state from prohibiting certain retirees from collecting unemployment insurance, this legislation prohibits the employment of a retiree by a PERS employer, if, “.during the 12 month period prior to an appointment.the retired person received any unemployment insurance compensation arising out of prior employment.” with the same employer.

Furthermore, if a retiree accepts employment with a PERS agency, after receiving unemployment insurance as described in this legislation, he or she “shall terminate that employment on the last day of the current pay period and shall not be eligible for reappointment.for a period of 12 months following the last day of employment.” (Emphasis added.)


SB 1439 amends Government Code section 21224, it took effect January 1, 2005 and impacts on all PERS employers and annuitants.  G.C. sections 21224 (b) and (c) imply that anyone who collected unemployment insurance, as described in the legislation, in 2004 would be prohibited from reemployment for 12 months after the last day of employment or collection of unemployment benefits.

There is nothing to indicate whether collecting unemployment benefits, after working the 960 hours, is a widespread practice.  Many agencies utilize retired members up to the 960 hours and, it appears, that some have collected unemployment benefits.  It also appears that those retirees who did so were doing so lawfully but will not be able to continue in the future.  Whether or not this negatively impacts on contracting with those individuals remains to be seen.  Even the legislation recognizes the benefit to the public by utilizing such resources, nonetheless, this is now the law.