CalPERS Settles Long-Running Case Over Post-Retirement Employment

The California Public Employees' Retirement System (CalPERS) recently settled a protracted legal dispute involving retired annuitants who had violated state laws regarding post-retirement employment. The settlement reinstated the pension benefits of these retirees and mandated CalPERS to compensate for any lost gains during the legal proceedings. This case, which spanned over six years, revolved around four retirees, including Tarlochan Sandhu, who worked for various local governments after retirement, leading to significant financial implications.

Sacramento Bee

The retirees in question were found to have breached California's post-retirement employment laws, which restrict the type and amount of work retirees can undertake while receiving pension benefits. An appeals court previously ruled that these individuals should be classified as "common-law" employees rather than independent contractors, which intensified the scrutiny on their employment status. Following this ruling, Sandhu faced a potential repayment bill of nearly $660,000 to CalPERS.

Sacramento Bee

In January, Administrative Law Judge Juliet Cox determined that a three-year statute of limitations on erroneous payments applied to these cases, effectively preventing CalPERS from seeking repayments and restoring the retirees' benefits. Cox criticized CalPERS for its handling of the case, noting that the agency's staff had acted unprofessionally and issued inconsistent demands.

Sacramento Bee

Despite the settlement, confusion surrounding California's post-retirement employment laws persists. CalPERS staff recommended against adopting Cox's decision, arguing that a three-year statute of limitations could hinder the agency's ability to identify violations. This stance has drawn criticism from local government representatives, who express concern over the lack of clear guidelines and the potential for future legal disputes.

Sacramento Bee

Sophia Selivanoff, executive director of Regional Government Services, highlighted the financial strain on taxpayers and retirees caused by CalPERS' enforcement actions. She emphasized the need for clearer regulations to prevent similar situations in the future. CalPERS spokesperson Amy Morgan countered that the agency provides extensive resources to help employers and retirees comply with the laws.

Sacramento Bee

Local officials, such as Atascadero's city attorney Dave Fleishman, voiced apprehension about the implications of the settlement. Fleishman noted that the uncertainty surrounding post-retirement employment laws could deter local governments from hiring retirees, fearing aggressive enforcement from CalPERS.

Sacramento Bee

Selivanoff reiterated that public agencies and their annuitants generally aim to comply with regulations, stating, “People don’t want to break the rules.” However, the ongoing ambiguity in the law continues to pose challenges for both retirees and local governments.

Sacramento Bee

• “They could call it a settlement, but basically they agreed to implement everything that the ALJ ordered,” — Scott Kivel, Attorney

Sacramento Bee

• “CalPERS staff members have sent inconsistent demands, in some cases for shocking sums, to Sandhu, Souza, Dowswell, and Breeze’s widow. Their communications have been error-riddled and opaque,” — Administrative Law Judge Juliet Cox

Sacramento Bee

• “A lot of local governments, like my city, are reluctant to hire people who were CalPERS annuitants, because of this kind of situation and because CalPERS is so aggressive in pursuing people’s pensions,” — Dave Fleishman, Atascadero City Attorney

Sacramento Bee

The settlement marks a significant moment for the retirees involved, yet the broader implications of California's post-retirement employment laws remain unresolved, leaving local governments and retirees navigating a complex legal landscape.

Sacramento Bee