(a) “Salary,” for participants subject to the California Public Employees’ Pension Reform Act of 2013, means remuneration paid each pay period in cash by an employer to a participant for creditable service performed in that position subject to coverage under the Cash Balance Benefit Program in accordance with a publicly available written contractual agreement, including, but not limited to, a salary schedule or employment agreement, based on years of training and years of experience as specified in Section 45028. Salary shall include:
(1) Money paid for the participant’s absence from performance of creditable service as approved by an employer, except as provided in paragraph (5) of subdivision (b).
(2) Employee contributions picked up by an employer pursuant to Section 26502.
(3) Amounts deducted by an employer from the participant’s salary, including, but not limited to, deductions for participation in a deferred compensation plan; deductions for the purchase of an annuity contract, tax-deferred retirement plan, or other insurance program; and deductions for participation in a plan that meets the requirements of Section 125, 401(a), 401(k), 403(b), 457(b), or 457(f) of Title 26 of the United States Code.
(4) Any other payments the board determines by plan amendment to be “salary.”
(b) “Salary” does not mean and shall not include:
(1) Money paid for service that is not creditable service.
(2) Money not paid each pay period in which creditable service is performed for that position.
(3) Fringe benefits provided by an employer.
(4) Expenses paid or reimbursed by an employer.
(5) Money paid in exchange for the relinquishment of unused accumulated leave.
(6) Severance pay, including lump-sum and installment payments, or money paid in excess of salary to a participant as compensatory damages or as a compromise settlement.
(7) Payments, including, but not limited to, those for participation in a deferred compensation plan; to purchase an annuity contract, tax-deferred retirement program, or other insurance program; and for participation in a plan that meets the requirements of Section 125, 401(a), 401(k), 403(b), 457(b), or 457(f) of Title 26 of the United States Code that are purchased by an employer for a participant.
(8) Any payments determined by the system to have been made by an employer to enhance a participant’s benefits under the plan.
(9) Money paid to the participant in lieu of benefits provided to the participant by the employer or paid directly by the employer to a third party other than the system for the benefit of the participant.
(10) Any one-time or ad hoc payments made to a participant.
(11) Any employer-provided allowance, reimbursement, or payment, including, but not limited to, one made for housing, vehicle, or uniform.
(12) Any bonus paid in addition to compensation described in subdivision (a).
(13) Any other payments the board determines by plan amendment not to be “salary.”
(c) (1) Salary in any fiscal year shall not exceed:
(A) One hundred twenty percent of the “contribution and benefit base,” as determined under Section 430(b) of the Social Security Act (42 U.S.C. Sec. 430(b)), on January 1, 2013, for a participant whose service is not included in the federal system.
(B) One hundred percent of the “contribution and benefit base,” as determined under Section 430(b) of the Social Security Act (42 U.S.C. Sec. 430(b)), on January 1, 2013, for a participant whose service is included in the federal system pursuant to any changes in state or federal law enacted on or after January 1, 2013.
(2) The system shall adjust the limit based on the annual changes to the Consumer Price Index for All Urban Consumers: U.S. City Average, calculated by dividing the Consumer Price Index for All Urban Consumers: U.S. City Average for the month of February in the fiscal year preceding the adjustment by the Consumer Price Index for All Urban Consumers: U.S. City Average for the month of February of the previous year rounded to the nearest thousandth. Notwithstanding paragraph (1) of subdivision (d) of Section 7522.10 of the Government Code, the adjustment shall be effective annually on July 1, beginning July 1, 2014.
(3) The Legislature reserves the right to modify the requirements of this subdivision with regard to all participants subject to this subdivision, except that the Legislature may not modify these provisions in a manner that would result in a decrease in benefits accrued prior to the effective date of the modification.
(d) Any employer or person who knowingly or willfully reports salary in a manner inconsistent with the provisions of subdivisions (a) or (b) may be subject to prosecution for fraud, theft, or embezzlement in accordance with provisions of the Penal Code. The system may establish procedures to ensure that salary reported by an employer is in compliance with this section.
(e) For purposes of this section, remuneration shall be considered paid if distributed to any person in the same class of employees who meets the qualifications or requirements specified in a publicly available written contractual agreement, including, but not limited to, a collective bargaining agreement or an employment agreement, as a condition of receiving the remuneration.
(Amended by Stats. 2015, Ch. 123, Sec. 30. (AB 991) Effective January 1, 2016.)
Last modified: October 25, 2018