California law establishes several public retirement systems, including the State Teachers’ Retirement System (CalSTRS), the Public Employees’ Retirement System (CalPERS), and county retirement systems operating under the County Employees Retirement Law of 1937. These laws govern membership, service credit, retirement applications, postretirement employment, employer notification requirements, investment duties, and administration of retirement benefits.
AB 2780 makes numerous administrative and substantive changes to these retirement systems.
For CalSTRS, beginning July 1, 2027, the law expands the definition of “retired member activities,” to include all service performed within the California public school system by a CalSTRS service retiree when working as an employee of a CalSTRS employer, an employee of a third party, or an independent contractor. This means that postretirement work performed through a third-party employer or as an independent contractor may still be treated as retired member activity for purposes of CalSTRS postretirement employment restrictions. However, service performed as an employee of a third party is excluded if all three of the following conditions are met: (1) the assignment lasts 24 months or less; (2) the third-party employer does not participate in a California public pension system; and (3) the work is not normally performed by employees of a CalSTRS employer. Notably, the statute does not provide the same exclusion for independent contractors.
AB 2780 also changes the calculation of sick leave days, revises investment standards, and shortens the deadline for employers to notify part-time and substitute employees of their right to elect Defined Benefit Program membership from 30 days to 10 working days after hire. It also establishes new signature and submission deadlines for retirement applications and makes changes to Defined Benefit Supplement benefits.
For CalPERS, the law permits members to purchase up to one (1) year of service credit for qualifying service as a California Council on Science and Technology fellow and updates specified state safety member classifications. It also modifies governance and administrative provisions applicable to county retirement systems, including board elections and statutes of limitation for correcting certain erroneous payments.
Affected public employers, particularly school employers, should update retirement onboarding and notification procedures to comply with the new 10-working-day notice period and review applicable retirement reporting and administrative practices before the July 1, 2027 operative date related to such provisions.
AB 2780 amends Education Code sections 22170.5, 22250, 22455.5, 24201.5, 24204, 24209, 24209.3, 24210, 25006, 25009, 26300, and 26606; amends, repeals, and adds sections 22164.5, 26004, 26113, 26135.7, 26139, and 26139.5; amends Government Code sections 20405, 20407, 20408, 20409, 20410, 21020.5, 31520, 31520.1, 31520.2, 31621.7, 31622, 31639.3, 31641, 31641.2, 31641.6, 31641.20, 31641.21, and 31835; adds sections 31540.5 and 31789.6; and repeals section 20411.
