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January 23, 2012

Employing CalPERS Retirees May Have Become More Difficult


In a time when many public agencies have relied on CalPERS retirees to fill in key positions, the state legislature has amended the Public Employees Retirement Law (“PERL”) to limit these appointments. AB 1028 altered PERL in a number of ways, including school member payrate, the request for a new amortization period by a contracting agency or school employer, budgetrelated contribution rates, funds to reduce the employer contribution for patrol members, trial court member furlough credit, patrol member retirement formulas, death benefits, the appointment of a disabled retiree, a limited duration appointment of a retiree and retiree interim or temporary appointments. These last two modifications amend Government Code Sections 21221(h) and 21224 and have garnered the most attention as they will require change to how a contracting agency appoints CalPERS retirees.

The amendments to Section 21224 are intended to clarify that an appointment under this Section is only temporary and that the subject retiree must possess specialized skills. Both of these preconditions codify implicit requirements previously contained in this Section; therefore, they do not reflect a departure from the prior practice. For example, the temporary nature of the work was understood from the previous requirement that the work to which the retiree was appointed be of “limited duration.” Additionally, while the word “specialized” did not formerly appear in the statute’s body, it was contained in the heading. Therefore, the need for “specialized skill” should come as no surprise. In short, most agencies already recognized these two requirements in employing CalPERS retirees and incorporated those conditions into their practices.

The changes to Section 21221(h) also integrate implicit requirements contained in the former version. However, before the implementation of these modifications, CalPERS was generally unable to enforce these implicit limitations because they were not expressly incorporated into the statute’s language. Consequently, these alterations may reflect a departure from prior practices and will significantly transform if and how an agency appoints a retiree under this Section.

The changes are as follows:

  • The appointment must be an interim one to a vacant position during recruitment for a permanent appointment and deemed by the governing body to require specialized skills, or during an emergency to prevent the stoppage of public business
  • The compensation for the interim appointment must not exceed the maximum published pay schedule for the vacant position
  • The appointment is limited to a 12-month term and cannot continue under any other section, including Section 21224
  • An agency is prohibited from appointing a retired person under this provision more than once

AB 1028 did not affect any other rules concerning the employment of CalPERS retirees. For example, the requirement that employees retiring before they reach normal retirement age achieve a minimum 60-day bona fi de separation of employment before beginning to work for a CalPERS agency remains the same. AB 1028 also did not modify the prohibition on employing a retiree who has collected unemployment during the 12 months immediately preceding an appointment under Section 21224, as well as the 960-hour limitation for appointments under Sections 21221(h) and 21224.

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