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CalPERS Agencies Must Limit Out-of-Class Appointments to 960 Hours per AB 1487

Client Alert

Introduction

AB 1487 took effect on January 1, 2018.  The new law places limitations on employees in out-of-class appointments (i.e. an upgraded position or higher classification) temporarily filling a vacancy during recruitment for a permanent appointment.  This bill is intended to incentivize employers to permanently fill the vacant positions by limiting the time employees can serve in a temporarily upgraded position.  The substantive requirements of the new law are explained below.

On April 27, 2018, CalPERS issued Circular Letter 200-021-18, informing contracting agencies of AB 1487 (Government Code section 20480) reporting requirements and procedures.  In brief, contracting agencies will be required to submit to CalPERS completed “Out-of-Class Appointment Employer Certification” forms by July 30, 2018.  The forms are intended to demonstrate compliance with AB 1487 limitations on out-of-class appointments. 

960 Hour Limit Per Fiscal Year; Compensation

The most significant requirement of AB 1487 is that an out-of-class appointment by a CalPERS contracting agency must not exceed 960 hours in each fiscal year.  (Gov. Code section 20480(a).)  Additionally, the compensation for a limited duration position under these circumstances must be pursuant to a collective bargaining agreement or publicly available pay schedule.  (Gov. Code section 20480(c).)

What is an Out-of-Class Appointment?

This limitation applies only to employees working out-of-class in a vacant position that is an upgraded position or higher classification during recruitment for a permanent employee to fill the position; it does not apply to employees working out-of-class to fill in for an employee who is on temporary leave.  Thus, AB 1487 does not apply to positions filled during an employee’s leave of absence.

Tracking and Reporting in 30 days

The contracting agency is required to track the hours worked by an employee serving in an out-of-class appointment and report that service to CalPERS no later than 30 days following the end of each fiscal year (i.e. July 30).  (Gov. Code section 20480(b).)

What are the Consequences to an Employer Who Violates AB 1487?

An employer who violates this new law is required to pay penalties to CalPERS equal to three times the amount of money for the difference between the compensation paid for the out-of-class appointment and the compensation paid and reported to the system for the member’s permanent position, for the entire period or periods the member serves in an out-of-class appointment.  (Gov. Code section 20480(d)(1)(A).)  The agency will also be required to pay of fee of $200 to reimburse CalPERS for administrative expenses incurred.  (Gov. Code section 20480(d)(1)(B); Circular Letter 200-021-18.)

The law shields the employee from any liabilities or fees resulting from the employer’s violations of this law.  (Gov. Code section 20480(e).)

Recommendation

If a contracting agency makes out-of-class appointments, as determined by reviewing personnel rules and policies, then it must ensure that compensation for an out-of-class appointment is specified in an MOU or some other publicly available pay schedule.  Additionally, a contracting agency must ensure that an out-of-class appointment is made for a vacant position, during recruitment for a permanent appointment, and that the hours are limited to 960 (for a 40 hour work week, the out-of-class appointment is limited to approximately 24 weeks per fiscal year).  Lastly, the agency must ensure that it reports compliance with these requirements to CalPERS by July 30.  CalPERS has issued an Out-of-Class Appointment Employer Certification form for use by employers; this form must be used until CalPERS has updated its system to allow online reporting.

Remember that the new law and related rules does not apply to employees working out-of-class to fill in for an employee who is on temporary leave such as positions filled during an employee’s leave of absence.

We will continue to monitor the interpretation of this new law and provide an update if any further guidance from CalPERS is provided.

For further information, please contact Colin J. Tanner, Pam K. Lee, or Michael Huston from Aleshire & Wynder, LLP’s Labor & Employment Practice Group at (949) 223-1170.