This guest post was authored by Steve Berliner 

Retirement.jpgAssembly Bill 1028, which took effect on January 1, 2012,  amended certain provisions of the Public Employees’ Retirement Law (“PERL”)  pertaining to the limits on post-retirement employment.  Just recently, the California Public Employees’ Retirement System (“CalPERS”) issued Circular Letter No. 200-002-12 clarifying the importance of AB 1028 on CalPERS employers and retirees.  While the Circular Letter discusses the intended impact AB 1028 was to have on post-retirement work under Government Code sections 21221(h), 21224 and 21229, it is most significant to the majority of our clients because it interprets the meaning of the addition of the words “temporary” to “appointment” and “specialized” to “skills” under sections 21224 and 21229.  AB 1028’s addition of these words to the existing statutes caused considerable confusion among public agencies that contract with CalPERS.  This Special Bulletin will focus exclusively on these two sections.  Links to the Circular Letter and our blog post on AB 1028 are provided for their discussion of section 21221(h).

Section 21224 applies to post-retirement employment with a CalPERS contracting agency and section 21229 applies to post-retirement employment with a CalPERS school employer.  These sections do not require appointment by the governing body.  Instead the retiree can simply be employed by administration.  The hours worked by the retiree may not exceed 960 hours in a fiscal year.

The Circular Letter indicates that AB 1028 amended sections 21224 and 21229 “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 business or to perform work of limited duration…”  The examples CalPERS gives for “extra help” appointments are “elimination of backlog, special projects, work in excess of what permanent employees can do, etc.”

However, and most importantly, CalPERS stresses that “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…”  If agencies are employing CalPERS retirees in these vacant permanent positions, even if keeping hours worked below 960 in a fiscal year, the retirees “will be subject to mandatory reinstatement from retirement.”

The Circular Letter also states that retirees are not limited to working during only one fiscal year.  It does not, however, state how long the retiree may work.  Presumably, if the “extra help” project that the retiree is appointed to work on extends over multiple fiscal years, CalPERS will not object.  What remains unclear is at what point the temporary “extra help” appointment appears to be a permanent assignment.  Given that the Circular Letter states that the retiree may not be appointed to a permanent vacancy, there should never be a situation requiring that analysis.  Nonetheless, public agencies will need to carefully monitor “extra help” appointments that span several fiscal years to ensure that the retiree is not in reality simply filling a vacancy of a permanent position and that the work remains within what CalPERS considers an extra help appointment.  This is in addition to monitoring the number of hours worked each fiscal year.

AB 1028 further adds the word “specialized” to clarify that retirees hired as temporary extra help under sections 21224 and 21229 must have “specialized skills” required to perform the job. CalPERS states that the employer generally determines what specialized skills are required.  Presumably, any reasonable claim that a retiree has the requisite specialized skills will suffice.

Employers are reminded that where a retiree works for more than one CalPERS employer during a fiscal year, the total hours worked for all CalPERS employers are included within the 960 hours-per-fiscal-year maximum.  The retiree’s rate of pay (as set forth on the published, publicly available pay schedule) must be comparable to that paid to other employees performing comparable duties.

AB 1028 and the CalPERS Circular Letter serve to clarify and impress upon CalPERS employers and retirees alike that the general rule is that post-retirement employment for a CalPERS employer is not permitted without reinstatement to the system.  In order for a CalPERS retiree to work for a CalPERS employer, the employment or work must squarely fit within a statutory exception.  It is anticipated that with AB 1028 and this Circular Letter, CalPERS will be cracking down on retirees and employers who are abusing the statutory exceptions to post-retirement employment, particularly now with the recent requirement that employers report hours worked by CalPERS retirees.