On August 19, 2011, CalPERS adopted a new regulation and amended an existing regulation to further define those items of compensation which will be included in a member’s “compensation earnable” for purposes of determining the member’s retirement allowance.

Compensation earnable is made up of payrate and special compensation.  These regulations affect both.  Title 2 of the California Code of Regulations, section 570.5 was added providing that for purposes of determining “compensation earnable,” a member’s payrate will be limited to the amount listed on a pay schedule that meets all of the following requirements:

  • Has been duly approved and adopted by the employer’s governing body pursuant to public meeting laws;
  • Identifies the position title for every employee position;
  • Shows the payrate for each identified position, which may be stated as a single amount or as multiple amounts within a range;
  • Indicates the time base, including, but not limited to, whether the time base is hourly, daily, bi-weekly, monthly, by-monthly, or annually;
  • Is posted at the office of the employer or immediately accessible and available for public review from the employer during normal business hours or posted on the employer’s internet website;
  • Indicates an effective date and date of any revisions;
  • Is retained by the employer and available for public inspection for not less than five years; and
  • Does not reference another document in lieu of disclosing the payrate.

This new regulation clarifies existing law which limited payrate to amounts set forth on a publicly availably pay schedule, but provided little guidance as to what the schedule was to include.

If an employer fails to meet these requirements with regard to “payrate,” CalPERS may, in its sole discretion, determine an amount that will be considered the member’s payrate, taking into consideration all information it deems relevant including, but not limited to: documents that were approved by an employer’s governing board in conformance to public meeting laws, as well as the last payrate of the member listed on a pay schedule that conforms to the requirements above for the current employer, current position, or former CalPERS employer, or the last payrate for the position with the current employer.

Continue Reading CalPERS Issues New Regulations Defining Compensation For Retirement Benefit Purpose