MORE CHANGES TO PERS RULES REGARDING RETIRED ANNUITANTS
Pursuant to the Public Employees’ Retirement Law (PERL), once one retires from PERS, he/she can no longer work for a PERS agency, unless an exception applies. California Government Code 21220 states, in part, that “(a) A person who has been retired under this system, for service or for disability, may not be employed in any capacity thereafter by the state, the university, a school employer, or a contracting agency, . . . unless he or she has first been reinstated from retirement pursuant to this chapter, or unless the employment, without reinstatement, is authorized by this article.”
Following the passage of AB 1028 a few months ago, it appeared that PERS retired annuitants would be severely restricted in working for a PERS agency after retirement. AB 1028 modified the language in Gov. Code 21221 (which deals with appointments by a governing body, such as the city council) and 21224 (which deals with appointments under the general appointing authority usually granted to, for example, a city manager) regarding such employment. The changes to section 21221 included the following:
21221. (h) Upon interim appointment by the governing body of a contracting agency to a vacant position during recruitment for a permanent appointment and deemed by the governing body to require specialized skills or during an emergency to prevent stoppage of public business. These appointments, including any made pursuant to Section 21224 or 21229, shall not exceed a total for all employers of 960 hours in any fiscal year. (Emphasis added.)
When an appointment is expected to, or will, exceed 960 hours in any fiscal year, thegoverning body shall request approval from the board to extend the temporary employment. The governing body shall present a resolution to the board requesting action to allow or disallow the employment extension. The resolution shall be presented prior to the expiration of the 960-hour maximum for the fiscal year. (Emphasis added.)
Appointments under this subdivision may not exceed a total of 12 months.
As such, it appeared to clarify that governing body appointments, to fill a vacant position (such as city manager, city attorney, or city clerk) under section 21221, were limited to one 960 hour appointment, in any fiscal year, while the agency was actively seeking a permanent replacement. The law allowed for PERS to grant one extension, if more time were needed to find the permanent replacement but, under no circumstances, could the appointment exceed a total of 12 months.
The situation regarding other annuitants (such as peace officers) was addressed in section 21224, and AB 1028 created much ambiguity regarding this group of retirees. The changes to 21224 included, in part, the following:
21224. (a) A retired person may serve without reinstatement from retirement or loss or interruption of benefits provided by this system upon temporary appointment by the appointing power of a state agency or public agency employer either during an emergency to prevent stoppage of public business or because the retired employee has specialized skills needed in performing work of limited duration.
These appointments shall not exceed a total for all employers of 960 hours in any fiscal year, and the rate of pay for the employment shall not be less than the minimum, nor exceed that paid by the employer to other employees performing comparable duties. (Emphasis added.)
The concerns raised by this language focused on the inclusion of the word “temporary” to modify “appointment” and the fact that it did not address any extension of time beyond the articulated 960 hours in any fiscal year. Concerns were raised by public employers, as well as by retirees, as to the true meaning of this section. It was the opinion of many that an annuitant was, basically, restricted to one 960 hour appointment, with no extension or re-hire thereafter.
PERS staff consistently stated that was not the intent of the changes but, since an opinion by a public sector employee does not bind the employer, it was believed by many that a legislative correction was needed. Because of the uncertainty and confusion created by AB 1028, many retirees were leaving jobs they held under the 960 provision and/or public employers were dismissing them. Penalties, for unlawful employment under PERL, could be significant for both the employer and the retiree.
[JONES & MAYER published two Client Alert Memos on January 25, 2012 and February 1, 2012 discussing these issues following the advent of AB 1028 and Circular Letters issued by PERS. If the links do not work, the client alerts are accessible on our website atwww.jones-mayer.com under the News & Information tab, Client Alerts.]
Attempts were made by many of us to secure the legislative corrections deemed necessary. Within the field of law enforcement, John Lovell, the legislative advocate for the California Police Chiefs’ Association and Nick Warner, the legislative advocate for the California State Sheriffs’ Association, led the charge.
It was recommended by them that the word “temporary” be deleted from the new language, since it was not in the original statute and, therefore, raised questions as to its purpose. Concerns were raised as to why it was added if not to limit the hiring of annuitants.
In addition, it was strongly urged that affirmative wording be included in any legislative correction to state that the retired annuitant was permitted to work each fiscal year, so long as it didn’t exceed the 960 hours in any one year. Unfortunately, that wasn’t accomplished but, it appears, that some clarification has occurred. The “clean up” we requested was included in the Budget Trailer Bill which has been signed by the Governor and became effective immediately. Senate Bill 1021 states as follows:
21221. (h) Upon interim appointment by the governing body of a contracting agency to a vacant position during recruitment for a permanent appointment and deemed by the governing body to require specialized skills or during an emergency to prevent stoppage of public business. A retired person shall only be appointed once to this vacant position. These appointments, including any made concurrently pursuant to Section 21224 or 21229,shall not exceed a combined total of 960 hours for all employers each fiscal year. (Emphasis added.)
It is significant to note that the ability to apply for one extension beyond the 960 hours has been removed. In addition, the statement that “(a)ppointments under this subdivision may not exceed a total of 12 months” has also been deleted. As such, it now appears that, as long as there is active recruitment for a permanent appointment and the retiree doesn’t work more than 960 hours in “each” fiscal year, the position can be filled by a retiree beyond 12 months.
As to those covered under 21224, which impacts a much greater population, the amendment has removed the word “temporary” although the language still, as it always has, refers to “performing work of limited duration.” Many of us believe, since that phrase has always been present, it doesn’t prevent continued rehiring of an annuitant for the limited period of 960 hours.
Another change, in this amendment, involves the modification of “fiscal year.” In AB 1028, the reference was to “any fiscal year” but the new wording is “each fiscal year.” That change provides the opportunity to argue, if necessary, that the law recognizes that a retiree could be working successive years. The World English Dictionary defines the word “each” as “every (one) of two or more considered individually: each day.”
When used in the context of SB 1021, it can be read as “appointments . . . shall not exceed . . . 960 . . . each fiscal year – meaning “every (one) of two or more [years] considered individually.” Although not the clear, articulate, affirmative language we all fought to secure, it appears to provide the language needed. Therefore, the wording in 21221 and 21224 now references working no more than 960 hours in each fiscal year, considered individually.
21224. (a) A retired person may serve without reinstatement from retirement or loss or interruption of benefits provided by this system upon appointment by the appointing powerof a state agency or public agency employer either during an emergency to prevent stoppage of public business or because the retired person has specialized skills needed in performing work of limited duration. These appointments shall not exceed a combined total of 960 hours for all employers each fiscal year. (Emphasis added.)
HOW THIS AFFECTS YOUR AGENCY
There are still concerns raised by public sector attorneys, employers and retirees regarding these modifications to the language in PERL dealing with annuitants working for PERS agencies. Unfortunately, despites the efforts of many, we didn’t get what would have clearly resolved the issue but we “got something.”
As with all legal issues, it is necessary for agencies to seek out and secure advice and guidance from their own legal advisors, and for retirees to seek out advice from their legal counsel, as well. It appears that cities and counties can continue to hire annuitants to perform specific tasks and do so on a continuous basis. Again, this is what PERS staff has continuously stated is the intent of the law but, as with all legal matters which are not explicit, some confusion will remain.
As always, if you wish to discuss this matter in greater detail, please don’t hesitate to contact me at (714) 446 – 1400 or via email at mjm@jones-mayer.com.
Information on www.jones-mayer.com is for general use and is not legal advice. The mailing of this Client Alert Memorandum is not intended to create, and receipt of it does not constitute an attorney-client relationship.