Wednesday, May 17, 2017

CalPERS Restoration of Service Credit and Compensation Earnable Upon Reversal of Termination for CalPERS School and Local Agency Members

Assembly Bill (AB) 2028 applies to all active California Public Employees’ Retirement System (CalPERS) school and local agency members. This recent legislation was introduced by Assembly Member Jim Cooper. AB 2028 allows active CalPERS school and local agency members who were wrongfully terminated to recover service credit and compensation earnable if their termination is reversed. This bill fixes a significant inconsistency in previous law, which treated school and local agency members differently than other state employees.

AB 2028 applies to members who were subject to a wrongful termination effective on or after January 1, 2017. Members who are reinstated by administrative or judicial order following the termination may now receive retirement benefits as though they were never terminated. Restoration of these benefits ensures that such members will be made “whole” following their disciplinary appeal.

Prior to AB 2028, school and local agency members could receive these benefits retroactively if they retired following the wrongful termination, but were later reinstated. This retirement condition was inconsistent with how other state employees were treated in the same situation. AB 2028 eliminates the inconsistency by making school and local agency members eligible to seek these same benefits, regardless of retirement.

AB 2028 provides that reinstatement of benefits will be effective as of the date from which salary is awarded. Employers are required to notify CalPERS within five days once an employee being reinstated after he or she had been wrongfully terminated.

Monday, May 15, 2017

Flores Overtime Ruling Stands: U.S. Supreme Court Denies San Gabriel's Petition for Review

On May 15, 2017, the United States Supreme Court denied the City of San Gabriel's petition for review of the Ninth Circuit decision holding the City of San Gabriel failed to include payments of unused portions of police officers’ benefits allowances when calculating their overtime rate of pay, resulting in an underpayment of overtime compensation. The Supreme Court only grants review in about 1% of petitions for review.  As a result the denial, the holding of the Appellate court now becomes settled law in the Ninth Circuit.

Appellate court also held that payments made on behalf of employees  to third party health care providers for benefits through the City's Flexible Benefits Plan could not be excluded from the overtime rate of pay.  The City's Flexible Benefits Plan was held not to be a “bona fide plan” under 29 U.S.C. § 207(e)(4) because over 40% of the City's total contributions were paid directly to employees rather than received as benefits. Additionally, the court ruled that the City’s violation of the Act was willful because it took no affirmative steps to ensure that its initial designation of its benefits payments complied with the Act and failed to establish that it acted in good faith.

Now that all appeals have been exhausted, California agencies that modified their overtime policies to comply with the Flores decision will have stability and certainty relative to their inclusion of waiver payments in overtime compensation.