The post was authored by Stephanie Lowe.
CalPERS agencies must report the number of hours worked by employees in “out-of-class appointments” to CalPERS no later than July 30, 2018. As discussed in our earlier blog, Assembly Bill 1487 went into effect January 1, 2018 adding Government Code section 20480 to the Public Employees’ Retirement Law. The statute prohibits out-of-class appointments of members for more than 960 hours per fiscal year. To ensure compliance, CalPERS issued Circular Letter No,: 200-021-18 directing contracting agencies to track and report hours worked in “out-of-class appointments” each fiscal year. With the July 30 reporting deadline quickly approaching, here is everything CalPERS agencies need to know to meet the reporting requirements.
Definition of “Out-of-Class Appointment”
Section 20480 expressly 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 for a limited duration.” A “vacant position” is defined as “a position that is vacant during recruitment for a permanent appointment.” The definition of “vacant position” excludes a “position that is temporarily available due to another employee’s leave of absence.”
The compensation for the appointment must also be stated in a collective bargaining agreement or a publicly available pay schedule.
How to Report Out-of-Class Appointments to CalPERS
CalPERS requires agencies to report “out-of-class appointments” for each member using the Out-of-Class Appointment Employer Certification form no later than 30 days following the end of each fiscal year.
What Information to Report
For CalPERS purposes, the previous fiscal year began July 1, 2017 and ended June 30, 2018. Since Section 20480 went into effect on the middle of the fiscal year on January 1, 2018, the Out-of-Class Appointment Employer Certification form only requires agencies to report information for the period between January 1, 2018 to June 30, 2018.
The information requested by CalPERS includes: the member’s name, permanent position title and “out of class” position title; beginning and end date of the out-of-class appointment; pay rates of both the permanent and out-of-class positions; and special compensation and total earnings.
The form further requires the employer to disclose if the out-of-class appointment is in a “vacant” position. Note that the statute, as reiterated in the CalPERS Circular Letter, defines “vacant” as “a position that is vacant during recruitment for a permanent appointment.” If the appointment is to a filled position, such as when another employee is on extended leave of absence, or the agency is not actively recruiting for the vacancy, such as a temporary position, then it is not an “out of class appointment” subject to the 960-hour limitation. Although the form is somewhat unclear, because the Circular Letter reiterates the definition of “vacancy,” it is unlikely employers are required to disclose appointments that do not meet the definition of “vacancy.” Employers may need additional clarification from CalPERS.
CalPERS agencies should receive an Annual Notice from CalPERS in June reminding them of the July 30 reporting requirements for out-of-class appointments. CalPERS will send out a Second Notice in September to inform agencies if CalPERS has not received their Out-of-Class Appointment Employer Certification form.
Failure to Report
Failure to report the information may result in penalties under Section 20480 and notification to CalPERS Office of Audit Services to initiate an audit of the employer’s records.
A CalPERS agency that fails to comply with Section 20480, including any failure to report out-of-class appointments, shall pay penalties to CalPERS in an amount equal to three times the employee and employer contributions that would otherwise be paid to CalPERS for the difference between the compensation paid for the out-of-class appointment and the compensation paid and reported to CalPERS for the member’s permanent position for the entire period the member serves in the out-of-class appointment. The employer must also reimburse CalPERS for administrative expenses incurred by CalPERS in responding to the violation. Although the statute did not provide the amount of administrative expenses, the Circular Letter states the fee will be $200. The penalties and fees are not credited to the employer or the employee’s individual account and the employer may not pass the penalties or fees onto the employee.
If your agency needs assistance in reporting this information to CalPERS, please contact one of our offices.