FROM: Barbara Hannah, Chief Counsel
SUBJECT: Implementation of the exclusion of Night Standby (D06).
RECOMMENDATION:
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Adopt [Proposed] SBCERA Resolution No. 2024-6 regarding the implementation of exclusion of Night Standby (D06).
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BACKGROUND:
The SBCERA Board of Retirement (Board) is required by Government Code section 31461 and 31542, as well as Board Benefits Policy No. 026 (Compensation Earnable and Pensionable Compensation) to determine what items of a member compensation are included or excluded in employee compensation upon which appropriate contribution rates should be applied and upon which retirement benefits are calculated.
On July 30, 2020, the California Supreme Court filed its decision in Alameda County Deputy Sheriff’s Assn. v. Alameda County Employees’ Retirement Assn., (2020) 9 Cal.5th 1032 (Alameda decision). The Alameda decision overturns certain legal and equitable determinations made in the lower court of appeal decision, and concludes that all amendments to the definition of compensation earnable in Government Code section 31461, enacted as a result of the Public Employees’ Pension Reform Act of 2013 (“PEPRA”) and related statutory changes to CERL, effective January 1, 2013 are constitutional, and that CERL retirement boards may not be contractually bound or estopped by settlement agreements, board resolutions, or other similar actions, from implementing those amendments. The Alameda decision further determines that CERL retirement boards may not include items in compensation earnable that section 31461 requires them to exclude. As a result of the Alameda decision, the Board adopted Resolutions 2020-5 and 2020-9 excluding Night Standby (D06) pursuant to Government Code section 31461.
Night standby (D06) is paid to personnel who perform services, i.e. processing laboratory tests at $10 per test, who are not assigned to the night shift, but who volunteer to work during the hours of 11:30 p.m. to 7:30 a.m., which is in addition to their regular shift. The Board adopted Resolution 2020-8, permitting the affected retirees to appeal the specific issue whether the pay was for services rendered within the “normal working hours” of a member’s position and of persons in the same grade or class of positions during the period the member rendered services at the same rate of pay, such that it is not mandatorily excluded under subdivision (b)(3) in Government Code section 31461.
The assigned hearing officer selected to oversee the administrative hearing regarding Night Standby (D06), concluded that D06 for those who remained in residence at ARMC… is not standby service or on call service…” As part of the implementation of the hearing officer’s recommendation, staff sent questions to San Bernardino County Human Resources to determine who remained in residence at ARMC for work associated with Night Standby (D06). Relevant responses received from S.B. County HR are as follows:
1. Employees are not paid the D06 differential during regularly scheduled shifts.” When an employee works a D06 shift (i.e., Friday and Saturday 11 pm - 7:30 am), they are only paid $10 per “call” completed during this shift.
2. There is a clear break if a CLS works call (night) shift following their regular shift. CLS would clock out at the end of their shift ending the hourly compensation and then compensation would change to D06 code.
3. There are no set limits [on the units of D06 pay per day], the limitation would be the orders placed for testing and the ability for the CLS to complete them.
Based on the information received from SB County HR, D06 is not a differential as it has been presented but confirms that the work associated with Night Standby is overtime, paid to members for services they render in the excess of their normal working hours during their regular shift, regardless of how paid. The Board determines the includability or excludability of particular pay codes for compensation earnable based on the work associated with those pay codes, not with the label assigned to those pay codes. Given the information received by SB County Human Resources, the Board adopted SBCERA Resolution 2024-4, to continue the exclusion of Night Standby (D06), which states:
The item [D06] is excluded from this exhibit based upon the information obtained from the employer on October 23, 2024. The work associated with this pay code is a form of overtime as represented by additional information by the employer. The Board’s policy in interpreting the laws is that overtime, regardless of how paid (i.e. piecemeal), is not COMPENSATION EARNABLE.
If an item is not compensation earnable, then such pay item is required to be excluded from an SBCERA’s member compensation for purposes of determining a member’s final average salary.
In adopting Resolution 2024-4 to continue the exclusion of D06, staff recommends adopting the [Proposed] SBCERA Resolution No. 2024-6 to implement the Board’s continued exclusion of D06, which will be as follows:
1. Retirees - Ronald Sanchez, Sharon Ochoa, and Lisa Chesonis
a. Exclude Night Standby (D06) from their monthly benefit, prospectively, beginning with the monthly benefit of December 2024. This group of retirees would not be required to repay any overpaid benefits received during the period between January 1, 2013 and November 2024.
b. To the extent contributions paid on D06 exceed overpaid benefits, then staff shall make corrective distributions.
c. No recoupment shall be made directly from the retirees, and to the extent of any overpaid benefits prior to December 2024, authorize the overpaid benefits to be included as part of the UAAL through self-correction.
2. Existing Retirees (D06 - Not Included as part of their Final Average Salary)
a. Provide notice to the retirees regarding the continued exclusion of Night Standby (D06) from compensation earnable and that it will not be included in their final average salary for purposes of calculating their monthly benefit. As of the date of the Board meeting, the retirees in this group would have received notice of the Board meeting and that D06 would continue to be excluded from compensation earnable; thus, not being included in their benefit payment.
b. To the extent contributions paid on D06 exceed overpaid benefits, if any, then staff shall make corrective distributions of those contribution amounts that were paid subsequent to January 1, 2013 to the date of retirement.
3. Active Employee (D06 reported to SBCERA)
a. Provide notice to the active employees regarding the continued exclusion of Night Standby (D06) from compensation earnable and that it will not be included in their final average salary for purposes of calculating their monthly benefit.
b. To the extent contributions were reported for D06, staff shall make corrective distributions paid subsequent to January 1, 2013.
Staff recommends the above implementation is in compliance with correction methods.
BUDGET IMPACT:
None.
STRATEGIC PLANNING GOAL/OBJECTIVE:
Prudent Fiscal Management
STAFF CONTACT:
Barbara Hannah
Debby Cherney
Amy McInerny
ATTACHMENTS:
Exhibit A: SBCERA Resolution No. 2024-6 - Implementation of Exclusion of Night Standby Pay (D06) (For Tier 1 Members)