Terminating the Employment Relationship

Finally, the PEPRA requires a 180 day break in service period before a retired annuitant, who retires pursuant to accepting a Golden Handshake, can return to work for a PERS agency (or an agency with a reciprocal retirement system with PERS) without reinstatement into PERS. 321 If one or more employees opt to accept the offer of a Golden Handshake, the added costs to the retirement fund for all of these employees will be included in the agency’s employer contribution rate commencing with the fiscal year starting two years after the end of the designated period. The increase in the employer contribution rate may continue for as long as 20 years. 322 All employees who are in the designated job classification, department, or other organizational unit that is slated for potential layoffs must be equally able to participate in the PERS Golden Handshake option as long as the employee meets the eligibility criteria established by PERS. In addition, employees should not be told that if they do not accept the PERS Golden Handshake option, their position will in fact be laid off. This prevents a later claim against the public agency by an employee who accepts the PERS Golden Handshake, but whose specific position was not laid off (i.e. the agency filled the position after the employee’s retirement) . Offering PERS Golden Handshakes to employees is more advantageous to employees than simply a lump sum severance payment. Early retirement cash incentives are not generally included in the employee’s final compensation upon which their retirement benefits are c alculated. This is because it will be likely considered “Final Settlement Pay.” Final Settlement Pay is excluded from compensation for purposes of calculating PERS benefits. 323 Thus, a lump sum severance payment for early retirement does not provide as great an incentive for an employee as the PERS Golden Handshake. In addition, a lump sum payment to an employee would likely be included in the employee’s taxable income. ’37 Act agencies may offer “golden handshakes” to eligible employees as an incentive for early retirement in order to reduce labor costs. When the board of supervisors, by resolution, determines that because of an impending curtailment of service or change in the manner of performing service to save money, or other economic benefit resulting to the county, the best interests of the county would be served, a member shall be eligible to receive additional service credit if the following conditions exist: The member is employed in a job classification, county department, or other county organizational unit included in the resolution adopted by the board of supervisors. The member retires on or between dates specified by the board of supervisors in its resolution. In no event shall the specified period exceed 180 days. The county transmits to the retirement fund an amount determined by the board of retirement which is equal to the actuarial equivalent of the difference between the allowance the member receives from the receipt of this additional service credit and the amount the member would have received without the credit. This must be 3. “ G OLDEN H ANDSHAKE ” FOR ’37 A CT E MPLOYERS

Terminating the Employment Relationship ©2022 (s) Liebert Cassidy Whitmore 92