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CalPERS Requirements Public Agencies Should Know Heading into the New Fiscal Year
As public agencies head into the end of the 2020-2021 fiscal year and prepare for the 2021-2022 fiscal year, it is the perfect time of year for agencies that contract with the California Public Employees’ Retirement System (“CalPERS”) to refresh their knowledge about upcoming deadlines and requirements. Below are the key CalPERS deadlines and requirements agencies should know.
End of Year Payroll Reporting Deadlines
Public agencies must ensure that they meet CalPERS’ closing deadlines for accounts and records for the fiscal year ending June 30, 2021. Reporting on time allows CalPERS to timely process the payroll earned period and adjustment reports and enables CalPERS to provide the proper service, contributions, and interest to member accounts. All payroll reports for the last complete earning period ending in June 2021 must be created and posted in myCalPERS by the original due date or before 5:00 p.m. on July 29, 2021, whichever due date is earlier. Inaccurate reporting may lead to inaccurate member information. (See CalPERS Circular Letter: 200-024-21.)
July 30, 2021 Reporting Deadline for Out-of-Class Assignments
CalPERS agencies must report the number of hours worked by employees in “out-of-class appointments” to CalPERS no later than July 30, 2021. Government Code section 20480 expressly defines “out-of-class appointment” as “an appointment of an employee to an upgraded position or higher classification by the employer or governing board or body in a vacant position for a limited duration.” A “vacant position” is defined as “a position that is vacant during recruitment for a permanent appointment.” The definition of “vacant position” excludes a “position that is temporarily available due to another employee’s leave of absence.” The compensation for the appointment must also be stated in a collective bargaining agreement or a publicly available pay schedule.
CalPERS requires agencies to certify “out-of-class appointments” for each member through myCalPERS no later than 30 days following the end of each fiscal year. The information requested by CalPERS includes: the member’s name, permanent position title and “out of class” position title; beginning and end date of the out-of-class appointment; pay rates of both the permanent and out-of-class positions; and special compensation and total earnings.
Failure to report the information may result in penalties under Section 20480 and notification to CalPERS Office of Audit Services to initiate an audit of the employer’s records.
Please see CalPERS Out-of-Class Reporting Frequently Asked Questions for more information about reporting out-of-class assignments.
CalPERS’ Suspension of Work Hour Limitation for Retired Annuitants Performing Services to Ensure Adequate Staffing During the COVID-19 Emergency Remains in Effect
In response to Governor Gavin Newsom’s March 2020 Executive Order N-25-20 at the beginning of the COVID-19 pandemic, CalPERS issued Circular Letter 200-015-20. The letter explains that any hours worked by a retired annuitant to “ensure adequate staffing during the state of emergency will not count toward the 960-hour per fiscal year limit.” In addition, the 180-day wait period between retirement and returning to post-retirement employment is suspended. Most other retired annuitant restrictions, including the limitations on permissible compensation and the prohibition of any benefits in addition to the hourly rate, remain in effect. However, the exception only applies to the extent that the retired annuitants are working to “ensure adequate staffing during the state of emergency.” The exception does not automatically cover all retired annuitant appointments and a case-by-case assessment is necessary.
The suspension of the retired annuitant work hour limitation and wait period exceptions remains in effect until the state of emergency has been lifted. Agencies should be aware that they must continue to notify the director of the California Department of Human Resources of any individual employed pursuant to these waivers by emailing CAStateofEmergency@calhr.ca.gov.
Track Hours Worked for Out-of-Class Appointments, Retired Annuitants, and Part-Time/Temporary Employees
Looking ahead to the next fiscal year, agencies should ensure that they have a system in place to track hours worked for certain groups of employees. Accurate and timely tracking of hours will cut down on potential liability if an employee inadvertently meets or exceeds their work hours limitation. Agencies should track work hours for out-of-class appointments, which are limited to 960 hours per fiscal year. Agencies should also track the work hours for retired annuitants, which is limited to 960 hours per fiscal year if the retired annuitant is not hired to ensure adequate staffing during the COVID-19 state of emergency (otherwise CalPERS has suspended the work hour limitation as described above). Agencies should record the hours worked by part-time/temporary employees, including those hired on a seasonal, intermittent, on-call, limited-term, or irregular basis who must be monitored for enrollment in CalPERS membership. These employees will generally be eligible for CalPERS membership after 1,000 hours of paid service (including paid leaves) or 125 days (if paid on a daily or per diem basis) in a fiscal year.
2022 Minimum Employer Contribution for PEMHCA (CalPERS Medical)
For employers that provide benefits under the Public Employees’ Medical and Hospital Care Act (“PEMHCA” or “CalPERS medical”) CalPERS recently announced that the new 2022 minimum employer contribution for members is $149. (See CalPERS Circular Letter: 600-026-21.) This is a 4.1% increase from the 2021 minimum employer contribution ($143). Although the increase does not go into effect until January 1, 2022, public agencies should be aware of this increase and take it into account for budgeting purposes as they prepare for the new fiscal year. Beginning January 1, 2022, CalPERS will automatically update billing to reflect the new $149 amount for contracting agencies that have designated the PEMHCA minimum as their monthly employer health contribution.