Some California retirees go back to work with CalPERS pensions. Union lawsuit seeks limits

California departments that employ former state workers for years after their retirements often are violating state civil service rules, and they’re doing it with impunity, a state employee union alleged in a lawsuit filed this week.

The California Attorneys, Administrative Law Judges, and Hearing Officers in State Employment made the allegations in a lawsuit filed Tuesday in Fresno County Superior Court.

The union sued the state Human Resources Department, accusing it of failing to enforce restrictions on the duration and the circumstances under which departments may rehire retirees who work while continuing to receive pension checks.

“This is a big problem,” said Tim O’Connor, the union’s president. “It’s with a lot of agencies, it’s been very abusive, and we’re going to do something about it.”

In the lawsuit, the union says state departments regularly employ “retired annuitants” for many years without justification, robbing existing workers of opportunities for professional growth and promotion — and hurting the union’s ability to recruit dues-paying members.

Human Resources Department spokeswoman Camille Travis said she could not comment on pending legal matters.

CalHR director Eraina Ortega has said publicly that departments often rely on the annuitants to provide limited help with things like long-running lawsuits or highly technical water projects and to bolster workforces in rural parts of the state where hiring is difficult.

The lawsuit focuses on state regulations that say departments may rehire former employees in emergencies and in cases where their specialized skills are needed for a “limited duration” — a term that is not precisely defined.

The suit asks the court to declare CalHR’s interpretation and enforcement of “limited duration” and “specialized skills” to be contrary to state law, and to issue clarifying definitions. It also seeks legal fees.

Promotions, union membership

The attorneys’ union represents about 4,500 employees in more than 100 state departments, agencies and offices. The state employs at least 173 retired annuitant attorneys and judges whose work is similar to that of the union’s members, according to the lawsuit.

Hiring retirees is easy and relatively cheap for state departments since they don’t have to make contributions toward retirees’ pensions and they don’t have to pay for their health insurance, the attorneys’ union said in the lawsuit.

But the practice robs rank-and-file attorneys of opportunities to perform the high-level work often taken on by retired annuitants, making it more difficult for them to promote to the highest-paying job classifications, according to the lawsuit.

And departments’ use of retired annuitants harms the union, according to the lawsuit. The lawsuit cites the union’s reliance on dues-paying members in the wake of a 2018 U.S. Supreme Court decision that forbids public-sector unions from collecting fees from union-covered employees who don’t elect to become members.

While retired annuitants are eligible for union membership, they often don’t elect to join since they’ve already obtained a pension based on their best-paid years and secured health benefits, according to the suit.

Of the 173 retired annuitants doing legal work, just one is a union member, according to the suit.

If those jobs were instead filled by rank-and-file employees, the union would have a better shot at increasing its “membership, revenue, and collective bargaining leverage,” according to the suit.

CalPERS retired annuitant rules

Lengthy retired annuitant appointments have come under scrutiny before, partly due to charges that it’s unfair for public employees to retire between the ages of 50 and 62 and then go right back to work for their former employer, often performing similar work for similar pay plus a pension check from the California Public Employees’ Retirement System.

The state adopted regulations aimed at curbing abuse, including specifying that retirees must wait six months to go back to work at a CalPERS-covered agency and that they may not work more than 960 hours per year in retirement.

Yet lengthy appointments continue to be a sticking point between public agencies and unions.

Retired annuitant appointments at local government agencies were the subject of a CalPERS audit three years ago. The audit found nearly half of retired annuitants worked for more than two years, with a quarter working more than four years. Some have worked in the appointments for more than a decade, according to CalPERS data.

The retirement system has been drafting new rules to limit the appointments, but the permitted lengths keep getting longer.

The most recent proposal would allow initial appointments of up to two years. Once that ends, public agencies could seek up to two one-year extensions, but would need to demonstrate the retiree’s work couldn’t be done by a regular employee.

After that, agencies could seek additional year-long extensions, but would need to certify they tried to recruit a new employee for the work and failed. Or agencies could seek one-time, permanent extensions for retired annuitants who work no more than 120 hours per year.

The CalPERS board is set to revisit the proposal at its meeting in November.

O’Connor said that while CalPERS’ rules hold the retired annuitants accountable for their post-retirement employment, the union aims to force CalHR to hold employers accountable.

This story was originally published October 21, 2022 at 5:30 AM.