FROM: Barbara Hannah, Chief Counsel
SUBJECT: Benefits Policy No. 032 (Retirees Returning to Work)
RECOMMENDATION:
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Approve and adopt updates to Benefits Policy No. 032 (Retirees Returning to Work).
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BACKGROUND:
Under Public Employees’ Pension Reform Act (PEPRA), a retired person is prohibited from serving or being employed by a public employer in the same public retirement system from which the retiree receives the benefit without reinstatement from retirement, unless an exception applies. Under PEPRA, one of those exceptions authorizes a retired person to serve without reinstatement if appointed by the appointing power of a public employer during an emergency to prevent stoppage of public business or because the retired person has skills needed to perform work of limited duration. The law limits those appointments to a total for all employers in that system of 960 hours in a fiscal year.
The SBCERA Board, initially adopted this Policy in January 2015 for the purpose of implementing the requirements under PEPRA to ensure compliance among retirees and employers. Now, in light of Governor Newsom signing into law Assembly Bill 2474, specifically Government Code section 31680.9 providing additional requirements regarding the enforcement of the return-to-work requirements under the County Employees’ Retirement Law (CERL) and PEPRA, staff is recommending that the Board approve the following substantive updates to Benefits Policy No. 032.
1. Return-to-Work Violations (Penalties & Fees) (Section F, pages 5-6)
The Policy unambiguously provides notice to employer and retiree that the penalties for violating the return-to-work, are specifically the following:
a. The retiree will be reinstated.
b. If reinstated, both the employer and retiree, will be required to pay to SBCERA employer and employee contributions, with interest.
c. The retiree will be required to return all benefit payments received during the period of violation.
d. The employer and retiree will be required to reimburse SBCERA for reasonable administrative expenses incurred in responding to the violation.
e. Where an employer has failed to enroll a retiree within 30 days of the effective date of hire or fail to report the pay rate and number of hours worked, within 30 days following the last day of the pay period, the employer will be required to pay $200 per retiree per month until the retiree is enrolled, or the required information is reported.
2. Chief Executive Officer Determination (Section H, pages 6-9)
Upon discovery of the violation, the Chief Executive Officer is authorized to suspend a retiree’s benefit, restore the retiree to active service, recover any improperly paid benefits, and collect employer and employee contributions.
3. Pay Rate Requirements (Section D, page 4)
PEPRA requires the rate of pay for retiree employment is not less than the minimum, nor exceed the maximum, paid by the employer to other employees performing comparable duties, divided by 173.333 to equal an hourly rate. An employer is required to certify that the pay is in compliance with the requirements under PEPRA. Failure to comply with this requirement will result in denying the request to return-to-work and referred to an administrative hearing or treated as a violation subject to penalties and fees.
4. Hour Limitations (Section C, page 4)
The Policy provides clarification that a retiree is limited to work 960 hours in a fiscal year whether the retiree is employed by one or more covered employers.
5. Employer Cooperation
a. Additional Questions: (Section E (5), page 5)
Upon receipt of an employer’s request to return a retiree to be employed under the return-to-work provisions, staff may have additional questions of the employer to ensure that the return to work is in compliance with the law. In order to facilitate cooperation that the additional information is needed to make a determination, the update to the Policy mandates the employer cooperate in responding to requests from staff. Failure to comply may result in the request for re-employment being delayed and/or denied, including a referral to an administrative hearing. In all cases, the retiree is prohibited from working during the pendency of any such determination.
b. Tracking Hours (Section G, page 6)
To further ensure cooperation from a covered employer, the Policy requires the employer to keep track of the hours worked by a retiree. At the end of each fiscal year, the employer is required to report the total hours worked to SBCERA. Failure to comply will be presumed as noncompliance and subject to violation penalties cited in the Policy.
6. Appeal Rights (Section I, page 8)
Appeal rights are limited to a retiree and/or employer challenging a determination that the return-to-work is in violation of PEPRA. In the event of a challenge, the matter is referred to an administrative hearing.
Education & Outreach Efforts
SBCERA is committed to clearly and proactively communicating post-retirement employment information and return-to-work restrictions to our members and participating employers. Current efforts include information on our website, a dedicated topic covered within our mid-career and pre-retirement seminars, retirement consultation guide, retirement 101 handout, Quick Tip video, and a disclosure that is signed off on as part of a retirement application. In addition to this, we will be adding a standalone acknowledgment document that members will be required to sign as part of their retirement application and will work with our other stakeholders such as Retired Employees of San Bernardino County (RESBC) on highlighting this topic as part of their education initiatives.
COMMITTEE REVIEW:
This item was reviewed by the Administrative Committee at its meeting on September 19, 2024, and recommends Board approval with a 4-0 vote.
BUDGET IMPACT:
None.
STRATEGIC PLANNING GOAL/OBJECTIVE:
Superior Service Experience
Effective Communications
Operational Excellence & Efficiency
STAFF CONTACT:
Barbara Hannah
Debby Cherney
Christina Cintron
ATTACHMENTS:
Exhibit A: Benefits Policy No. 032 (Retirees Returning to Work)