October 29, 2020

CalPERS will consider determining an administrative law ruling as precedential at their November meeting, as discussed in a previous Bulletin article. Doing so would clarify some regulations around the use of retired annuitants, but would also determine that no statute of limitations applies to CalPERS’ ability to recover pension payments made during an annuitant’s unlawful employment and that when CalPERS accuses a retiree of unlawful employment, the burden falls entirely on the retiree to prove otherwise.         

By way of background, retirees collecting a pension may return to work, so long as they meet specific requirements, which include limits on the types of positions they may fill, the amount of pay they may receive, and the number of hours they may work. If they are found to have broken any of these regulations, they forfeit the pension payments they received during the time they were employed and must re-register with the retirement system as an employee.

The decision in question relates to the post-retirement employment of Dudley J. Lang. In 2012, Mr. Lang, the retired Controller for the City of Industry, returned to his former job. He worked over the 960-hour limit while collecting about $66,000 in pension payments, which CalPERS then directed him to pay back. CalPERS attorneys now want to use the case to set precedent on several matters related to post-retirement employment, including that the statute of limitations on payment errors does not apply and that the burden of proof is on accused retirees to show their employment was lawful. When combined with CalPERS’ incentive to recover funds, the consequences of this precedent would be far-reaching for retirees and member agencies.

That is why CSAC wrote a letter in opposition to making the Lang decision precedential. Under this precedent, if there are cases calling into question the post-retirement employment of members whose work took place 10 or more years ago, it’s likely that records in at least some cases will have been lost or degraded, especially if the member has passed away and the burden fall on their surviving family members, leaving no way to meet the level of evidentiary proof required. In these circumstances, the cost of failure to the member or their family would be payment to CalPERS of tens of thousands of dollars or more.

Statutes of limitations exist for all but the most heinous acts for exactly this reason, because as time wears on memories fade and records are lost, and because a past indiscretion should not hang forever over a person’s head threatening drastic penalties. Member agencies have reported passing multiple CalPERS audits, only to have a subsequent audit find a violation for a post-retirement relationship. Removing these limits does a disservice to members, retirees, and member organizations by significantly increasing the financial liability of those who are trying to navigate complicated regulations.