CalPERS has suspended a program that allowed some salaried managers to moonlight in-house and take hourly pay, saying that the controversy surrounding the practice has become a "significant distraction" to its work.

In a statement issued late Friday afternoon, the state's largest public employee pension fund said it is stopping "additional appointments" immediately, despite its assertion the practice saved an estimated $1.6 million since June 2011.

The fund arrived at the figure by estimating how much it would have cost to hire new employees or to bring in consultants, depending on the task, and then subtracting the hourly wages paid to its managers who had the experience to do the work.

CalPERS didn't disclose how many employees participated in the program or its payroll cost. Earlier this week the fund said it paid 50 managers an average $900 each in November to work in hourly positions.

After The Bee reported on the program, Assembly Speaker John A. Pérez said Thursday that the dual-job news was disturbing and he promised an Assembly committee would look into it.

Meanwhile, the State Controller's Office combed through payroll data to get a statewide fix on the issue, but as of Friday it still hadn't released those figures.

CalPERS said the practice isn't unusual in state government and suggested that four departments – the Department of Motor Vehicles, the Department of Social Services, Department of Corrections and Rehabilitation, and the Office of Statewide Health Planning and Development – may have done the same.

The four departments have not answered questions this week about whether they have managers employed in additional positions.

A DMV spokeswoman said Thursday that the department didn't have any additional appointees. The DMV later retracted that assertion and said it may have spoken too soon.

CalPERS clearly wanted to put the matter behind it on Friday.

"It is now obvious that there are various interpretations of the use of Additional Appointments across all state departments," CalPERS said in its Friday statement. "Most importantly, we recognize that the media has sensationalized this practice and it has now become a significant distraction for policy makers and our own employees from the important business of serving California."

CalPERS said it resorted to the practice nearly two years ago when its new computer system launch and subsequent glitches created daunting workloads against the pressure of unyielding deadlines.

CalPERS officials have said the program was legal and above board, but personnel experts said it could be illegal and, at the very least, circumvented the notion of setting fixed salaries for managers.

"In my humble opinion, it risks violating federal labor law," said Dave Gilb, a former state personnel director, by blurring the line between salaried and hourly employees.

Gilb said Friday the program was unnecessary because the state has a bonus system of up to $1,200 per month for managers who have to work extreme overtime.

The dual-job program is on hold, CalPERS said, while it consults with two agencies that deal with employee matters, the State Personnel Board and the California Department of Human Resources, to "resolve this issue."

© Copyright The Sacramento Bee. All rights reserved.

• Read more articles by Jon Ortiz

Order Reprint