Effective January 1, 2018, CalPERS contracting agencies and school employers are required to restrict “out of class appointments” to 960 hours in a fiscal year. Gov. Code § 20480.  Government Code section 20480(f) defines “out of class appointment” as “an appointment of an employee to an upgraded position or higher classification by the employer or governing board or body in a vacant position.”  It should be noted that contracting agencies are required to compensate employees who are working out of classification based upon “collective bargaining agreement or a publicly available pay schedule.”  Gov. Code § 20480(c). “Vacant position” is defined as a “position that is vacant during the recruitment for a permanent position.”  Gov. Code § 20480(g).

However, a position that is temporarily available due to another employee’s leave of absence does not qualify as a “vacant position” and the limitation would not be applicable. As such, a police sergeant who is working as an acting lieutenant due to the retirement of the previous lieutenant can only serve in the position for 960 hours in a fiscal year.  By way of contrast, the same sergeant would not have the 960-hour limitation for serving as an acting lieutenant for a lieutenant who is on medical or administrative leave.

Failure to adhere to the 960-hour limitation will result in a fine. Gov. Code § 20480(d)(1). The fine will be three times the difference in what was actually paid to PERS and what would have been paid if the employee was working fulltime in the new classification for the entire period that the employee worked out of classification.  Gov. Code § 20480(d)(1)(a).  The amount that PERS “would have been paid” is calculated utilizing the contracting agency’s collective bargaining agreements or publicly available pay schedules. Gov. Code § 20480(c).  In addition, PERS will be entitled to reimbursement for the costs associated with enforcement of the section. Gov. Code § 20480(d)(1)(b).

It should also be noted that the fines and the reimbursement cost will only be enforced against the contracting agency; not the employee. Gov. Code § 20480(e). Further, the penalties and the reimbursement costs are not considered “normal” or “supplemental contributions” for the employee’s retirement account.  As such, if the employer is found to be in violation of this section, the contracting agency will have to pay both the fine/reimbursement and the normal contribution to the employee’s retirement account.

It is also important to emphasize that the City is responsible for paying three times the salary for the entire period of out of classification work. As such, if a sergeant works in an “out of classification” assignment for 961 hours within a fiscal year, the contracting agency will be responsible for paying CalPERS three times the difference between the sergeant and the lieutenant’s pay for the entire 961 hours of work.  Lastly, the contracting agency must track the “out of classification” work that is done within a fiscal year and report it to PERS within thirty days of the completion of the fiscal year.  Gov. Code § 20480(b).


Government Code section 20480 limits the use of “out of classification” employees to fill vacancies within contracting agencies’ work force. As such, municipalities should evaluate the utilization of “out of classification” employees in light of Government Code section 20480 and take any appropriate steps as the municipality deems necessary and appropriate to avoid potential liability for penalty payments to PERS.

As always, if you wish to discuss this matter in greater detail, please feel free to contact us at (714) 446–1400 or via email at jrt@jones-mayer.com [for James Touchstone] or jbw@jones-mayer.com [for Jamaar Boyd-Weatherby].

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