AB 2967 – Prohibits Public Agencies From Amending Their Contract With CalPERS To Selectively Exclude Groups Of Employees

CATEGORY: Client Update for Public Agencies, Fire Watch, Law Enforcement Briefing Room
CLIENT TYPE: Public Employers, Public Safety
DATE: Oct 26, 2020

Under existing law, a public agency that has a contract with the California Public Employees’ Retirement System (CalPERS) to provide retirement benefits is generally required to cover all its employees under the contract, except for employees who are excluded from CalPERS membership by law, or groups of employees that CalPERS agrees to exclude. Current law allows an agency to seek a contract amendment to exclude specific groups of future employees.

AB 2967 was enacted in response to a city in California that recently withdrew from a regional firefighting authority and decided instead to re-establish its own fire department in an effort to save costs. As part of those cost-saving measures, it sought to save on pension costs by excluding its new firefighters from the City’s CalPERS contract and instead of providing them with a defined contribution plan instead.

In an effort to prevent CalPERS agencies from taking such action in the future, AB 2967 restricts member agencies’ ability to selectively exclude groups of employees in any contract entered into, amended, or extended on or after January 1, 2021.

The bill replaces a provision of the Public Employees’ Retirement Law that allowed agencies to exclude groups of future employees from CalPERS membership by way of a contract amendment with an explicit prohibition on doing so. However, it clarifies that where a contract already excludes groups of employees, an amendment that enumerates or clarifies that exclusion without expanding it is not prohibited. AB 2967 also adds a provision expressly stating that membership is compulsory for all employees included under a contract.

(AB 2967 amends Sections 20460 and 20502 of the Government Code.)