Restrictions on Post-Retirement Work
The restrictions on post-retirement work are set forth in the Public Employees’ Retirement Law (Government Code § 20000, et seq., the "PERL") at Government Code §§ 21220-21230. There are some types of post-retirement work that are specifically allowed by statute, but these are limited. Some of the positions allowed include the following (there are others): (1) appointment to a board or commission of a public entity; (2) employment as a school crossing guard, a juror or election officer, or as an elected official; and (e) certain teaching positions (with an annual maximum number of hours that can be worked).

Since not all retirees want to be employed in the occupations specified above, they can instead utilize Government Code § 21221(h). This statute allows a retiree to work in a wide variety of disciplines without penalty, but does have its own limitations. It states,

Upon appointment by the governing body of a contracting agency to a position deemed by the governing body to be of a limited duration and requiring specialized skills or during an emergency to prevent stoppage of public business. These appointments, in addition to any made pursuant to Section 21224, shall not exceed a total for all employers of 960-hours in any calendar year. When an appointment is expected to, or will, exceed 960-hours in any calendar year, the governing body shall request approval from the board to extend the temporary employment. The governing body shall present a resolution to the board requesting action to allow or disallow the employment extension. The resolution shall be presented prior to the expiration of the 960-hour maximum for the calendar year. The appointment shall continue until notification of the board’s decision is received by the governing body. The appointment shall be deemed approved if the board fails to take action within 60 days of receiving the request. Appointments under this subdivision may not exceed a total of one year.

Given the above, the parameters of post-retirement work under this section are:

1. Limited duration;
2. Specialized skills;
3. 960 hours or less per calendar year; and
4. The appointment may not exceed one year.

Sometimes retirees and employees attempt to create independent contractor-client relationships rather than an employer-employee relationship. Doing so may be desirable for numerous reasons, including that the 960 hour limit is inapplicable. However, if the relationship has the attributes of an employer-employee relationship, PERS can claim that the PERL’s post-retirement work restrictions apply. Whether the relationship is employer-employee or independent contractor-client requires an analysis of numerous factors. The most critical of those factors is whether the public agency has control over the day to day work, which suggests an employer-employee relationship. If the public agency can only control the end product, that suggests an independent contractor-client relationship. Given the individualized analysis necessary to determine how the relationship should be characterized, public agencies and retirees contemplating an independent contractor-client relationship should seek legal advice as to the risks involved in their particular situation.

Consequences for Violating the PERL's Restrictions on Post-Retirement Work
Government Code Section 21220 sets forth various penalties that are imposed on the retiree and post-retirement employer when post-retirement work violates the PERL. It states,

(a) A person who has been retired under this system, for service or for disability, may not be employed in any capacity thereafter by the state, the university, a school employer, or a contracting agency, unless the employment qualifies for service credit in the University of California Retirement System or the State Teachers’ Retirement Plan, unless he or she has first been reinstated from retirement pursuant to this chapter, or unless the employment, without reinstatement, is authorized by this article. A retired person whose employment without reinstatement is authorized by this article shall acquire no service credit or retirement rights under this part with respect to the employment.

(b) Any retired member employed in violation of this article shall:

(1) Reimburse this system for any retirement allowance received during the period or periods of employment that are in violation of law.

(2) Pay to this system an amount of money equal to the employee contributions that would otherwise have been paid during the period or periods of unlawful employment, plus interest thereon.

(3) Contribute toward reimbursement of this system for administrative expenses incurred in responding to this situation, to the extent the member is determined by the executive officer to be at fault.

(c) Any public employer that employs a retired member in violation of this article shall:

(1) Pay to this system an amount of money equal to employer contributions that would otherwise have been paid for the period or periods of time that the member is employed in violation of this article, plus interest thereon.

(2) Contribute toward reimbursement of this system for administrative expenses incurred in responding to this situation, to the extent the employer is determined by the executive officer of this system to be at fault."’

In addition to the above penalties, the employee could be reinstated by PERS as a member. If reinstated, the employee will no longer receive retirement benefits but will be treated as any other active PERS member.