City of Inglewood Human Resources Director Jose O. Cortes has sent termination letters to approximately 80 annuitant employees citing an alleged CalPERS rule. [adsenseyu2]
During the regular city council meeting held on February 13, 2018, Assistant City Manager/CFO David Esparza presented first quarter budget numbers which detailed a $17 million dollar budget shortfall. The presentation included ways the city was preparing to close the gap by saving $2.5 million dollars by not filling open positions. After prodding from Mayor James Butts, Esparza stated his presentation to the city’s residents included incorrect numbers and the shortfall is only $250k. The city also expects to close the budget shortfall with nearly $6 million dollars from the sale of a building previously owned by the redevelopment agency, that housed AMAN Inc., and was more well known as Burger King, who closed after the city refused to give them permission to add a drive thru window. The meeting can be viewed by clicking here.
Retirees were sent a letter dated February 14, 2018, stating they are only allowed to work up to one year as a retiree and their last day will be April 13, 2018, however, the CalPERS website states retirees can work indefinitely, as long as they are not reinstated as employees and don’t work in excess of 960 hours per fiscal year (July 1-June 30) although the city’s fiscal year runs from October 1-September 30.
In February 7, 2012, cities were given a presentation on the Employment of CalPERS Annuitants, provided by the League of California Cities, which stated retirees could be rehired under several changes to the law. You can view the document presented to local cities by clicking here.
Section 21220(a) provides, in relevant part, that “a person who has been retired under this system . . . may not be employed in any capacity thereafter by . . . a contracting agency, . . . unless the employment, without reinstatement, is authorized by this article.” A retiree whose employment without reinstatement is authorized by the Public Employees’ Retirement Law (“PERL”) will acquire no service credit or retirement rights under PERS with respect to that employment. However, the advantage of being employed without reinstatement is that the retiree may continue collecting his or her pension while employed.
Section 21221 identifies several types of employment that a retired annuitant may hold with a PERS contracting agency without reinstatement from retirement or loss or interruption of retirement benefits, such as: (1) member of a board, commission or advisory committee; (2) school crossing guard; (3) juror or elections official; and (4) a position with a contracting agency that is temporarily vacant (up to a year) because of a leave of absence and involving specialized skill. Section 21221(h) relates to appointments made by a local agency governing body during an emergency or to provide specialized work of limited duration, subject to strict limitations. Section 21224 provides a separate authority pursuant to which a retiree may be employed for specialized work of limited duration. Both 21221(h) and 21224 appointments are subject to a maximum individual working hours cap of 960-hours per fiscal year for all PERS contracting employers combined.
The Retirement Annuitant Program detailed on the CalPERS website affirms the presentation made to the cities:
A “retired annuitant” is a CalPERS retiree who, without applying for Reinstatement From Retirement, returns to work with a CalPERS employer in a designated retired annuitant position. You don’t need CalPERS’ approval to work as a retired annuitant, however, you and your employer have equal responsibility to ensure your potential employment is lawful by meeting all of the requirements outlined in Employment After Retirement (PUB 33) (PDF).
The requirements are based on California Public Employee Retirement Law (PERL) and federal tax law. If you work in violation of these laws, CalPERS must terminate your retirement and collect all of the retirement allowance paid to you during the period of unlawful employment.
Basic requirements include:
- Your position must be designated as a retired annuitant position (not any other full- or part-time position).
- If you retire prior to your retirement formula benefit age (i.e., age 55 for the 2% at 55 formula, age 60 for the 3% at 60 formula), you can’t agree verbally or in writing to post-retirement employment before you retire. If you have multiple retirement benefit formula ages, the highest benefit formula age applies, up to the maximum normal retirement age of 62 (i.e., age 62 for the 1.25% at 65 formula).
- You must wait 180 days after your retirement date before you can return to work for a CalPERS employer. Exceptions to the 180-day wait period can be found in Employment After Retirement (PUB 33) (PDF).
- Your salary must be an hourly pay rate that falls within the regular salary schedule for that position.
- You can’t be paid any other compensation or benefits in addition to the hourly pay rate.
- Without exception, a maximum of 960 hours can be worked within a fiscal year (July 1 to June 30). Nonpaid or volunteer hours can’t be used in order to exceed 960 hours in a fiscal year.
- You will not accrue service credit or any additional retirement rights or benefits.
If you’re on a disability or industrial disability retirement there are additional restrictions related to age, the type of work you can do, and a limit may be placed on your retirement allowance relative to your post-retirement earnings.
Many of the affected city employees have shared with 2UrbanGirls that they were forced into retirement, back in 2011, under the threat of losing lifetime medical. After accepting, the city then rehired them in annuitant positions, that many have held for at minimum three years.
Why is the city’s Human Resources department director, misleading employees citing government codes, that fall in line with the language found on the CalPERS website?
Click here for information on the Government Codes cited by the city justifying termination under California Government Code Section 7522.56
Click here for information on the Government Codes cited by the city justifying termination under California Code, Government Code – GOV § 21221.
Click here for information on the Government Codes cited by the city justifying termination under California Code, Government Code – GOV § 21224.
Click here for information on the Government Codes cited by the city justifying termination under California Code, Government Code – GOV § 21227
Click here for information on the Government Codes cited by the city justifying termination under California Code, Government Code – GOV § 21229