In Molina v. Board of Administration (2011) 2011 WL 4491809, the Second District Court of Appeal rejected an employee's argument that back pay should be counted toward service credit under the Public Employee's Retirement Law (PERL). After Molina was terminated from his job with the City of Oxnard, he filed an action for wrongful termination and subsequently settled for a lump sum. Following the settlement, Molina requested CalPERS increase his pension entitlement, characterizing the settlement amount as “back pay.” However, CalPERS refused to recognize the settlement amount as earnable compensation and denied his request.
The Court held the settlement amount could not count towards the employee’s “compensation earnable” because it did not meet PERL’s requirements to be “payrate” or “special compensation.”
Payrate must “either: (1) [be] paid to similarly situated employees; or (2) [be] paid in accordance with a ‘publicly available pay schedule for services rendered on a full time basis during normal working hours.’ (Gov. Code, § 20636, subd. (b)(1).)”
To qualify as special compensation, one must show the pay “(1) was available to similarly situated employees under a labor policy or federal requirement; or (2) was determined by the CalPERS Board to have been available to other, similarly situated employees as required by PERL. (Gov.Code, § 20636, subd. (c)(2); 2 Calif. Code of Regs., § 571(b)-(d).”
The Court noted CalPERS had advised Molina and the city "that a portion of the settlement payment could potentially be eligible for inclusion in Molina's pension, but only if Molina were reinstated for a full year in a valid position under a legitimate salary based on a salary schedule." That never happened. As a result, the Court rejected Molina’s appeal, leaving his existing pension calculation unaltered.
The Court held the settlement amount could not count towards the employee’s “compensation earnable” because it did not meet PERL’s requirements to be “payrate” or “special compensation.”
Payrate must “either: (1) [be] paid to similarly situated employees; or (2) [be] paid in accordance with a ‘publicly available pay schedule for services rendered on a full time basis during normal working hours.’ (Gov. Code, § 20636, subd. (b)(1).)”
To qualify as special compensation, one must show the pay “(1) was available to similarly situated employees under a labor policy or federal requirement; or (2) was determined by the CalPERS Board to have been available to other, similarly situated employees as required by PERL. (Gov.Code, § 20636, subd. (c)(2); 2 Calif. Code of Regs., § 571(b)-(d).”
The Court noted CalPERS had advised Molina and the city "that a portion of the settlement payment could potentially be eligible for inclusion in Molina's pension, but only if Molina were reinstated for a full year in a valid position under a legitimate salary based on a salary schedule." That never happened. As a result, the Court rejected Molina’s appeal, leaving his existing pension calculation unaltered.
