This perk boosted pensions for 2 Sacramento-area firefighters. Now CalPERS won’t allow it
Michael McLaughlin and Paul Zehnder couldn’t take holidays in the final years of their firefighting careers as top chiefs at Elk Grove’s Cosumnes Services District.
Their employer, recognizing the demands of their jobs, gave them a holiday pay perk to compensate for the loss of that time. They took home more than $12,000 a year in special compensation.
Now the fire chiefs and Cosumnes officials want CalPERS to add that special income to the calculations it uses to set their lifetime retirement earning. So far, the California Public Employees’ Retirement System has rejected their request.
At issue are contract agreements between the Elk Grove-based district and now-retired Cosumnes Fire Chief McLaughlin and retired Deputy Chief Zehnder that granted the firefighters pay for holidays because their duties as chiefs would not allow them to take the days off.
As part of those pacts, the district determined the holiday pay would be considered so-called earnable compensation. The district then planned to use the adjusted salaries to calculate the chiefs’ monthly retirement pay at a higher rate.
Zehnder and McLaughlin retired from the district days apart in December 2020, according to public documents released by CalPERS. Both Zehnder and McLaughlin began receiving retirement checks in February.
But CalPERS is rejecting Cosumnes Services District’s attempts to include holiday pay in the final salaries of the two now-retired fire chiefs — cash increases that would have bumped up the firefighters’ monthly retirement checks.
CalPERS is calling foul, saying the extra pay does not qualify as special compensation for retirement purposes under the California Public Employees Retirement Law, or PERL.
CalPERS has rejected appeals by the district, which provides fire protection, parks and other services in Elk Grove, Galt and unincorporated south Sacramento County, and by McLaughlin and Zehnder; but the chiefs and the Elk Grove-based agency are taking a final shot at a Tuesday hearing before the CalPERS Board of Administration.
In 2021, after Zehnder retired, Cosumnes Services District attempted to rectify the issue, retroactively amending the deputy chief’s contract to ensure that the holiday pay count toward his pension.
Cosumnes Services District similarly retroactively amended McLaughlin’s contract in February, documents show, and in March asked CalPERS to reconsider the decisions levied in the McLaughlin and Zehnder cases.
But CalPERS maintains the contracts, tendered to both McLaughlin and Zehnder in 2017, and renegotiated in 2019, are their guide. The contracts’ language was clear, CalPERS said, ensuring that the chief and deputy chief remained on-call during the district’s recognized holidays. CalPERS considers on-call pay the same as standby or overtime pay and is specifically excluded from special compensation under PERL.
In McLaughlin’s case, the fire chief understood that he had to stay in town during holidays and be available to respond to calls, CalPers said. An administrative law judge in January agreed.
“McLaughlin’s position is a sympathetic one. He and the district intended for the holiday pay to be included in the calculation of compensation earnable for retirement purposes,” administrative law judge Tiffany L. King wrote in her January decision. “However, …the plain language of the contract must be followed,” King concluded in denying McLaughlin’s appeal.
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