September 27, 2017

New Law Penalizes Employers Who Fail to Provide Information About Annuitants Working During Retirement

BY: Nate Kowalski, Jorge Luna, Joshua Morrison

On September 23rd, Governor Brown signed Assembly Bill No. 1309, which provides for assessments on employers that fail to report the hiring and payroll information of California Public Employees’ Retirement System (CalPERS) members working in retirement. The fine is 200 dollars per month for each annuitant employee the employer fails to report. The law will go into effect on January 1, 2018.

Details of the New Law

Existing law, including California Government Code section 21220, allows people who have retired under CalPERS to work again in the same public retirement system under certain circumstances. Their employers—the state, the university, a school employer, or a contracting agency—must inform CalPERS about the retiree’s change in employment status.

Existing law requires retired CalPERS members who were employed unlawfully to reimburse CalPERS for any retirement allowances received in violation of the law. Employees and employers also must pay CalPERS for any contributions they should have made during the unlawful employment, in addition to administrative fees and interest.

The new law adds three subsections to section 21220. New subsection (d) adds fines for employers who fail to enroll, “solely for the administrative recordkeeping purposes of the system,” within 30 days of the effective date of hire, a retired member employed in any capacity without reinstatement. New subsection (e) provides fines for employers that fail to report the pay rate and number of hours worked of a retired member employed in any capacity, without reinstatement, within 30 days following the last day of the pay period in which the retired member worked. The fees pursuant to these subsections are $200 per retired member per month until the retired member is enrolled in the administrative aspects of CalPERS and the information about the employee’s pay rate and hours is reported.

New subsection (f) provides: “An employer shall not pass on to an employee any fees assessed pursuant to subdivisions (d) and (e).”

Background of the Bill

CalPERS Circular Letter 200-002-14, issued on January 14, 2014, provides: “Public Agency and School employers must enroll retirees in the my|CalPERS system; State employers must enroll retirees in Personnel Information Management System (PIMS). CalPERS employers have enrolled more than 13,200 retirees since the launch of the my|CalPERS system. While enrolling retirees allows CalPERS to track compliance with applicable statutes, it is the responsibility of both the retiree and the employer to ensure compliance with all applicable statutes.”

According to the office of Assemblymember Ken Cooley (D), who authored the bill, “When an employer enrolls and reports pay rate and hours worked for a retired member…[CalPERS will] issue letters to the employer and retired member as they near the 960-hour limit on post-retirement employment. Thus, it is critical that employers follow this requirement to guarantee retired members don’t violate post-retirement rules.”

CalPERS’ statement in support of the bill provides: “Recent CalPERS audit findings have found numerous employers failed to timely and accurately enroll or report the payrate and hours worked of retired members, in disregard of existing reporting requirements. This, at times, has led to otherwise preventable post-retirement employment violations that have required retired members’ reinstatement to active service. The Board voted to seek this statutory authority to help ensure employers and retired members remain in compliance with existing post-retirement employment restrictions.”

Comment

It is important for employers to comply with CalPERS reporting requirements. In addition to the penalties already provided in section 21220, the new law adds potentially steep fines for employers who do not provide necessary information about annuitant employees.

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Attorney Bio(s)

nkowalski

Nate Kowalski

Partner

562-653-3200

nkowalski@aalrr.com

Nate Kowalski is a Partner in the Cerritos office and Chair of the firm’s Public Entity Labor and Employment Practice Group. He is an accomplished litigator who represents employers in both the private and public sectors. Mr. Kowalski has litigated hundreds of sensitive and complex labor and employment cases in state and federal courts and has achieved remarkable results for his clients in hearings, arbitrations, trials and appeals.

full bio

jluna

Jorge Luna

Partner

562-653-3200

jluna@aalrr.com

Jorge Luna is a partner in the Cerritos office of Atkinson, Andelson, Loya, Ruud & Romo. Mr. Luna has been practicing law since 1996 in a variety of areas, including employment, construction, business litigation, intellectual property and entertainment. For the past 12 years, Mr. Luna has focused his practice exclusively on employment matters, with an emphasis on litigation.

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Joshua Morrison

Joshua Morrison

Senior Counsel

(562) 653-3200

jmorrison@aalrr.com

Joshua Morrison is a senior counsel in the Cerritos office of Atkinson, Andelson, Loya, Ruud & Romo. Mr. Morrison represents California public school districts in all aspects of general education law. His areas of specialty practice include public employee discipline/dismissal, administrative hearings, matters before the Public Employment Relations Board, petitions for writ of mandate, retirement health benefits, PERS/STRS, and school district audit appeals.

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