FOLLOW UP
AB 1028 – CalPERS CIRCULAR LETTER – HIRING OF ANNUITANTS
When we issued our client alert last week on the changes to hiring of CalPERS annuitants by CalPERS contracting agencies as instituted through AB 1028, we noted that staff at CalPERS had said that they would be publishing further guidance on these issues, and that they would include us in that distribution. We had said to all of you that upon receipt of that, further guidance would be in a follow up Client Alert.
Our thanks, therefore, to CalPERS for including us in the evening of January 27 in the distribution of what they captioned as their “Circular Letter” dated January 26, 2012 pertaining to AB 1028.
We have included below the entire and unedited text of the Circular Letter from CalPERS.
For reasons which we believe will be apparent, this further information only serves to reinforce the conclusions and opinions expressed by us in our earlier Client Alert.
CalPERS CIRCULAR LETTER – JANUARY 26, 2012
The purpose of this Circular Letter is to inform you of changes to the Public Employees’ Retirement Law (PERL). Effective January 1, 2012, Assembly Bill (AB) 1028 amended Government Code (G.C.) sections 21224, 21229, and 21221(h) concerning employment after retirement.
G.C. section 21224 – Limited Service During Emergency or Special Services Required; Rate of Pay, is used by the appointing powers of State and Public Agencies to temporarily employ CaIPERS retirees.
G.C. section 21229 – Service for School Employer or California State University (CSU) During Emergency or Special Skills Required; Rate of Pay, is used by the appointing powers of school employers and the CSU System to temporarily employ CaIPERS retirees. Both sections were amended as follows:
· To include the word “temporary” to clarify that these sections apply to retirees employed as temporary “extra help” appointments—during an emergency to prevent stoppage of public business or to perform work of limited duration, i.e., elimination of backlog, special projects, work in excess of what the employer’s permanent employees can do, etc. Retirees should not be appointed to vacant permanent part-time, permanent intermittent, or permanent full-time positions, even if the hours worked will not exceed 960 hours per fiscal year or the retiree will be subject to mandatory reinstatement from retirement.
· To include the word “specialized” to clarify that retirees employed as temporary “extra help” are to have the specialized skills required to perform the needed work. The employer generally determines what specialized skills are required.
This Circular Letter also serves to remind that pursuant to G.C. sections 21224 and 21229:
· Existing law provides that retirees are permitted to work up to a total of 960 hours per fiscal year. Where a retiree works for more than one CaIPERS employer during a fiscal year, the total hours worked for all employers are included within the 960-hour maximum.
· The retiree’s rate of pay must be comparable to that paid to other employees performing similar duties. The rate of pay is the base salary as listed in the employer’s published (publicly available) salary schedule.
· A retiree can work for more than one fiscal year for the same employer only if the employment is temporary “extra help” work as defined above.
G.C. section 21221(h) – Conditions and Limitations on Service After Retirement, applies to the governing body of contracting agencies (Public Agencies andSchool Employers only) was amended as follows:
· To specify that a retiree can be appointed by the governing body of a contracting agency as an interim appointment to a vacant position during recruitment for a permanent replacement.
· To specify that the compensation for this interim appointment shall not exceed the maximum published (publicly available) pay schedule for the vacant position.
· To clarify that this interim appointment is limited to 12 months from the appointment date, with or without an extension to work more than 960 hours as provided in G.C. section 21221(h).
· To provide that an interim appointment under this section cannot continue under G.C. section 21224 or 21229 after the end of the 12-month term under G.C. section 21221(h).
· To clarify that a retiree can be appointed under this G.C. section only once.
If you have any questions, please call our CalPERS Customer Contact Center at 888 CalPERS (or 888-225-7377). MARY LYNN FISHER, Chief Benefit Services Division
HOW THIS AFFECTS YOUR AGENCY
The publication by CalPERS of their circular letter serves in our view to reinforce the apparent Legislative intent to so amend the processes for hiring of annuitants as to ensure the “interim” and “temporary” nature of these appointments, and to highlight the necessity in the position in question of someone with “specialized skills.”
Too, the Circular Letter serves to emphasize the point of caution raised in our earlier Client Alert regarding the risk to the annuitant in such post-retirement appointments.
We note information being heard to the effect that further Legislative amendments may be forthcoming to bring these statutes into what some purport to have been the more benign intent vis-à-vis hiring of annuitants. Of course, that is the purview of our Legislature, and we will leave such efforts, if any, to the sound discretion of those involved.
In the meantime, and as it stands at this time, we can only reiterate our earlier caution that post-retirement appointments are not without potential peril to the annuitant’s retirement benefits, both received and to be received. Therefore, any agency and any annuitant contemplating a post-retirement appointment are strongly advised to seek legal counsel before embarking upon, continuing, or extending the duration of the appointment of a CalPERS annuitant.
If you wish to discuss this case in greater detail, please don’t hesitate to contact us at (714) 446 -1400 or via e-mail at prc@jones-mayer.com or 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.