13. City Attorney 3/319
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CONTRACT FOR LEGAL SERVICES
CITY OF CUPERTINO
This Contract is made and entered into this _ day of January, 2009, by and
between the City of Cupertino, State of California, a municipal corporation, by and
through its City Council ("the City"), and the Law Firm of Dang and Trachuk with Carol
Korade ("Dang and Trachuk-Korade").
RECITALS:
WHEREAS, the City conducted a fonnal application and selection process to
obtain city attorney services; and
WHEREAS, the City received several responses; and
WHEREAS, the City selected the law firm of Dang and Trachuk, with Carol
Korade to serve as City Attorney;
NOW THEREFORE, in consideration of the mutual covenants herein contained,
the parties agree as follows:
ARTICLE I DESIGNATION OF CITY ATTORNEY
The City hereby appoints Dang and Trachuk-Korade to serve as City Attorney to
serve at the will of the City Council and to be: subject to discharge at any time without
notice or cause.
Dang and Trachuk-Korade hereby accepts such at will status, and agrees to render
legal services as may be requested from time to time by the City, as described in this
Contract. Dang and Trachuk-Korade affirms that Carol Korade is a member in good
standing of the California Bar, and that her continued California State Bar membership is
a condition of her appointment.
The parties agree that Dang and Trachuk-Korade shall perform legal services
required under this Contract for Legal Service: as an independent contractor of the City,
and shall remain, at all times as to the City, a wholly independent contractor with only
such obligations as are required under this Contract for Legal Services. Neither the City,
nor any of its employees, shall have any control over the manner or means by which
Dang and Trachuk-Korade renders the legal services required under this Contract for
Legal Services, except as otherwise set forth.
ARTICLE II TERM
Section 2.01. Term of the Contract. This Contract for Legal Services will
commence on March 1, 2009, and, unless extf:nded by written agreement of the parties,
will automatically expire on June 30, 2013.
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Section 2.02. Termination Prior To Esc irp ation. Notwithstanding any provision
contained in this Contract to the contrary, the ~~arties understand and agree this Contract
may be terminated prior to expiration of the term, with or without cause and at the will of
the City. Dang and Trachuk-Korade acknowledge that the City has made no implied,
expressed, or written assurances of continued contract with the City other than as
specifically set forth in this Contract for Legal Services.
ARTICLE III DUTIES AND OBLIGATIONS OF CITY ATTORNEY
Section 3.01. Duties. The services to be provided by Dang and Trachuk-Korade
will include, but are not limited to, the following;:
(a) Advise the City Council and all Cit;? officers in all matters pertaining to their
offices;
(b) Furnish legal services at all meetings of the City Council, except when
excused, and give advice or opini~~ns on the legality of all matters under
consideration by the City Council or by any of the boards, commissions,
committees or officers;
(c) Prepare and/or approve all ordinances, resolutions, agreements, contracts, and
other legal instruments as shall be required for the proper conduct of the
business of the City and approve the form of all contracts, agreements, and
bonds given to the City;
(d) Upon request by the City Council, provide the necessary legal services
required in connection with the acq~~isition of land or easements on behalf of
the City;
(e) Upon request by the City Council., prosecute and defend the City, and all
boards, officers and employees in their official capacities, in civil and/or
administrative proceedings;
(f) Upon request by the City Council, prosecute all violations of City ordinance;
provided, however, that the City Attorney is not required to prosecute any
misdemeanor or infraction within the City arising out of a violation of State
law;
(g) Prepare a quarterly report to the City Council, giving the current status of any
legal action in which the City ma:~ be involved, including tort claims and
code enforcement. Dang and Trachuk-Korade shall comment in the report on
any new legislation or court cases that may affect the City. Dang and
Trachuk-Korade shall be responsible for advising the City Council and staff
regarding how to respond to these legislative or case law changes. Upon
request of the City Council, D~mg and Trachuk-Korade shall prepare
memoranda, guidelines, resolutions. ordinances, administrative rules, or other
procedures that the City Attorney fuels necessary for the City to comply with
these changes in the law;
(h) When authorized by the City Council, Dang and Trachuk-Korade shall
represent the City in legal proceedi~igs and other litigation, to which the City
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is a party, except: when a conflict of interest exists; or when, in the opinion of
the City Council, there is a need for specialized legal expertise. In such
situations, Dang and Trachuk-Korade will be responsible for oversight,
supervision and monitoring the specialized legal counsel as appropriate; and
(i) Supervise outside legal services under other circumstances if requested by the
City Council.
Nothing contained herein shall require Dang and Trachuk to provide litigation
services outside those provided by Carol Korade;, without additional compensation.
ARTICLE IV COMPENSATION
Section 4.01. Retainer. The City agrees to pay Dang and Trachuk-Korade for
services rendered pursuant to this Contract an annual retainer of $249,000, payable in
monthly installments commencing within 30 days of the commencement of the term of
this Contract and then each month thereafter. The parties intend that the $249,000
retainer will remain in effect until at least June 30, 2010. Thereafter, the City, in its sole
and absolute discretion, may review the annual. retainer of Dang and Trachuk-Korade at
such times and to such extent as the City may determine.
The City agrees to pay Dang and Trach~xk-Korade an additional $8,000 during the
first year of this Contract.
ARTCLE V TERMINATION AND NOTICE
5.01. Termination:
(a) Dang and Trachuk-Korade serves at the pleasure of the City and nothing
herein shall be taken to prevent, limit or otherwise interfere with the City's absolute right
to discharge Dang and Trachuk-Korade and terminate this Contract for any reason. Upon
receiving such notice, Dang and Trachuk-Kor~~de shall cease providing services and will
cooperate with the City in the orderly tran;~fer of all related files, materials, work
products, and records to the City. Dang and Trachuk-Korade agrees that it shall not have
any right to any files, materials, work product, or records that Dang and Trachuk-Korade
prepares for the City under this Contract for Legal Services, and that all such items
belong to the City. The City may but is under no obligation to provide Dang and
Trachuk-Korade with reasons for any decision to terminate this Contract.
(b) If the City terminates this Contract without cause prior to the expiration of
the term, it shall pay a lump sum to Dan€; and Trachuk-Korade in the amount of
$150,000, which the parties have agreed repre:cents fair remuneration for the loss of Dang
and Trachuk-Korade's opportunity to serve other clients due to the commitment to the
City. Notwithstanding this provision, there is no express or implied promise made to
Dang and Trachuk-Korade for any form of continued contract.
(c) If the City terminates this Contract for cause, it shall have no obligation to
pay any dollar amount to Dang and Trachuk-Korade.
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(d) As used herein the term "cause" means:
(1) Carol Korade's unavai'..ability for a period of ninety (90)
consecutive days or more.
(2) Termination of the professional relationship between Cazol Korade
and the law firm of Dang and Trachuk.
(3) Willful breach of a material term of this Contract by Cazol Korade
and/or Dang and Trachuk.
(4) A finding by Ca1PERS that Carol Korade is an employee rather
than an independent contractor.
(5) Incompetence in performance of duties.
(6) Habitual neglect of duties;.
(7) Dishonesty constituting misconduct in office.
(8) Disbarment or suspension by the California State Bar.
(9) Conviction for any crime involving moral turpitude.
(e) Dang and Trachuk-Korade may terminate this Contract after giving the
City thirty (30) days' written notice. If D~?ng and Trachuk-Korade terminates this
Contract, the City agrees to provide a substitution of attorneys promptly and otherwise
cooperate in effecting the termination. Dang and Trachuk-Korade understands and
agrees it has no legally protected property or other interest in the appointment as City
Attorney.
ARTICLE VI MISCELLANEOUS
Section 6.01. Form of Notices. Service of a notice by personal service shall be
deemed to have been given as of the date of such personal service. Notice given by
deposit with the United States Postal Service s-.hall be deemed to have been given two (2)
consecutive business days following the deposit of the same in the custody of said Postal
Service. Either party hereto may, from time. to time, by written notice to the other,
designate a different address or person which shall be substituted for that specified above.
Written notices shall be given by deposit in the custody of the United States Postal
Service, first class postage prepaid, addressed acs follows:
a. The CITY:
Mayor and City Council
City of Cupertino
10300 Torre Avenue
Cupertino, CA 95014
b. CITY ATTORNEY:
Law Offices of Dang and Trachuk
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Attn: Carol Korade
1999 Harrison Street, Suite 700
Oakland, CA 94612
Section 6.02. Insurance. Dang and Trachuk-Korade shall procure and maintain,
at its sole cost and expense, in a form and content satisfactory to City, during the entire
term of this Contract, including any extension thereof, the following policies of
insurance:
(a) Comprehensive General Liability Insurance. The law firm of Dang and
Trachuk shall provide a policy of general liability and property damage
insurance in the amount of $1 million per occurrence and $2 million
aggregate.
(b) Workers' Compensation Insurance. The law firm of Dang and Trachuk shall
provide a policy of workers' compensation insurance in such amount as will
fully comply with the laws of the State of California. Dang and Trachuk's
employees and anyone who works for Dang and Trachuk will not be
considered employees of the City of Cupertino under any circumstances.
(c) Automobile Insurance. A policy of comprehensive automobile liability
insurance on Carol Korade's vehicle with a minimum combined liability
coverage of $250,000 per person/$500,000 per occurence/$100,000 property
damage. Said policy shall include coverage for owner, non-owner, leased and
hired cars.
(d) Errors and Omissions Insurance. The law firm of Dang and Trachuk shall
provide a policy of professional liability issuance written on a claims made
basis in an amount not less than $1 million per occurrence and $3 million in
the aggregate.
Except for the policies of professional liability insurance and workers
compensation insurance, all of the above policies of insurance shall be primary insurance
and shall name City, its officers, employees ar,d agents as additionally insured. Except
for the policies of professional liability insurance and workers compensation insurance,
the insurer shall waive all rights of subrogation. and contribution it may have against the
City, its officers, employees and agents and their respective insurers. Except for the
policies of professional liability insurance and- workers compensation insurance, all of
said policies of insurance shall provide that said insurance may not be amended or
canceled without providing thirty (30) days prier written notice by registered mail to the
City. In the event any of said policies of insurance are cancelled, Dang and Trachuk-
Korade shall, prior to the cancellation date. submit new evidence of insurance in
conformance with this Section to the City.
Section 6.03. Conflicts. .Dang an~i Trachuk-Korade has no present or
contemplated employment which is adverse ~:o the City. Dang and Trachuk-Korade
agrees that it shall not represent clients in c;ither litigation or non-litigation matters
against the City. If a potential conflict of interest arises in Dang and Trachuk-Korade's
representation of two clients, if such conflict is only speculative or minor, Dang and
Trachuk-Korade shall seek waivers from eachclient with regards to such representation.
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However, if real conflicts exist, and unless those conflicts are waived by the City, Dang
and Trachuk-Korade shall withdraw from representing either client in the matter, and
assist them in obtaining outside special counsel.
Section 6.04. General Provisions
(a) The text herein shall constitutf; the entire Contract between the parties.
(b) This Contract may be amended at any time by the mutual consent of
the parties by an instrument in writing.
ARTICLE VII ARBITRATION REGARDING FEES
If a dispute between the City and Dang and Trachuk-Korade arises over fees
charged for services, the dispute will be submi~:ted to binding arbitration in accordance
with the rules of the California State Bar Fee Arbitration Program, as described in
California Business and Professions Code, sections 6200-6206. Each side will bear its
own attorneys' fees and costs, and no arbitrator ~~r arbitration panel will have authority to
award fees and costs.
IN WITNESS WHEREOF, the City has caused this Contract to be signed and executed in
its behalf by its Mayor, and duly attested by its City Clerk, and Dang and Trachuk and
Carol Korade have signed and executed this Contract, both in duplicate, the day and year
first above written.
ATTEST: CITY OF CUPERTINO
City Clerk Mayor
APPROVED AS TO FORM: DANG AND TRACHUK
By
CITY'S LEGAL COUNSEL THOMAS J. TRACHUK
CAROL KORADE
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DEB-23-2009 14:29.From:CALPERS 9167950385 To:4087773109 ) P.1~2
Benefit Servi es Division
P.O. Box 9427(11
Sacramento, A 94229-27 1
~~PE~ 686 CaiPERS or 888-225-7 77) Reply to: 47Q
TDD - (916) 7 5-3240; FAX (916) i'95-3933 Refer to: xxx-xx-6243' i
February 23, 2009 '
Sandy Abe, Human Resources Directo
City of Cupertino
10300 Torres Ave. '
Cupertino, CA 95014 '
Via Fax Number: 405-777- 109 and U Mail
Dear Ms. Abe:
RE: Carol Korade -post rettirement en~ pioyment
I asked the Membership Analysts and esign Unit in the• Employer Services Division to
review the Contract for Leal Service under the common law "control test to
determine whether Carol rade's em loyme;nt under this contract would be as an
Independent Contractor or ~ n Employee.
It is their determination that her emplo ent ~.inder the Contract for Legal Services is
more as an employee rathe than an tndependerit Contractor. Therefore, if she wishes
to remain retired and work or your ag cy, slhe may only be employed as a "retired
annuitant".
A "retired annuitant" is a to porary ap ointment in which; (1) the,employment is during
an emergency to prevent st ppage of ubllc Izusiness or, {2) the retired member has
specialized skills needed in performing work i:hat is temporary in nature The conditions
of this employment are (1) t e hours wF rkedcannot exceed 960 hours in a fiscal year
for all employers, and (2) a rate of p~ y for this employment should not be less than
the, minimum nor exceed th t paid by t e employer to other employees performing
comparable duties (Govern ent Code ectio;n 21224).
Unfortunately, the contract oes not in irate :she is a retired member of-that she is a
temporary appointment. T e contract ~ fates her annual compensation witl~be $249,000
and her employment will belfrom Marc 1, 2009 to .tune 30, 2013. These poifio.ns of
her con#ract do not comply with restHct ons under GC 21224 and if she works under the
current contract,.she shout reinstate from service retirement since It appears her
emplaymerit will be full time for approx' atel~r 4 years.
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Califo is PubUc ployE:es' Retirement System
.calpeirs.ca.gov
_
FEB-23-2009 14:29 From:CRLPERS 9167950:585 To:4067773109 P.2~2
Sandy Abe -2- ~ February 23, 2009
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wilt be faxing you under s~parate cov r a letter providing more detailed information on
the temporary employment of retired a nuitarits as well as CaIPERS definition of an .
Independent Contractor wit several a chm~~nts.
.If you have any questions, lease cont ct me. My direct number is {916} 795-3124.
Sincerely
Liz Burke {
Retirement Program Speci fist ll
Retirement Support
cc: Carol Korade
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FEB-23-2009 14:35 From:CALPERS 9167550385 To:4087773109 P.1~17
I
Benefit Service s Division '
P.O. Box 942711
Sacramento, CIPP 94229-271
888 CaIPERS ~or 888-225-7 77)
C~E~ TDD - (916) 79 -3244; FAX (916) 795-3933
• February 23, 2009
i
Sandy Abe, Director of ~Humlan Resou es
City of Cupertino (0691)
Via Fax Number: 408-777- 109 ~
Dear Ms. Abe:
This is in follow up to your quest for 't formation about the temporary employment of
CaIPERS retired members.
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Circular Letter 200-181-04 as issued n Se~~tember 3, 2004 to inform all employers
that temporary employment of a servlc retired member is not allowed if the service '
retired member is younger an the. no al rei6rement age unless both of the following
conditions are met:
• There is no verbal or~~wwnntten agr ement to return to work as a retired annuitant
. between the retired n'~ember an employer before the retired member retires,
. There is a bona fide ~ reek in se aratio~n of 60 days between the retired
member's retiremen# date and t date the temporary employment as a retired
annuitant begins.
The normal retirement age r CaIPER purp~~ses is the highest benefit formula age for
the retired member's retire ent formul- . For example: the highest benefit formula age
Is 50 for the 2% or 3% at 5~ retirement onllulas, 55 for 2% or 3% at 55 retirement
formulas or 60 for,the 2% oq 3% at 60 tirem~~nt formulas. If the retired member has
more than one retirement fo ula, the Ighesi; benefit formula age applies, even if the
retired member's service in at formul was ~vlth a previous CaIPERS employer and/or
several years prior.
After the service retired me ber has s tisf(ed the bona fide break in service
requirement, he or she may accept a t mporary appoin#ment. If the service retired
member attained normal ret rement ag prior to retirement, he or she may accept a I
temporary appointment the ay after th it retirement date.
Here is a brief description o two types f temporary appointments that a public agency
may use to employ a CaIPE S retired embE:r and copies of the Government Code
sections.
Government Code section 21221(h) ~ ermit:; the appointment of a retired member by
the governing body of a, co 'tracting ag ncy to a~ position deemed by the governing body
to be of limited duration an requiring s cialized skills or during an emergency to
C lifoe•nia Publ c Emplloyees' Retirement System
.calpers.ca.gov
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FEB-23-2009 14:35 From:CALF'El2S 916795H385 70:4087773109 P.2~17
Sandy Abe -2-- February 23, 2009
prevent stoppage of public business: eneratly, these appointments are used for
"Interim" positions pending r cruitment ~f a pf>rmanent appointment to fill the vacancy.
An appointment under Gov mment Co e~section 21.22?(h) is limited to 960 hours in'a
fiscal year; however, there i no requir ment irhat the rate of pay be comparable to that
paid to an employee doing imilar duti Aiti~ough, a one time extension of tfie
employment for longer than 960 hours ay b~~ requested for a section~21221(h)
appointment; the retired me ber cann t be employed in the position more than 12
months, with or without the xtension t work more than 960 hours.
To request an extension for appointme is made under Govemment Code section
21221(h), the governing bo y of the co tracting agency must submit a written request
including all the details abort the situa on with a resolution, passed by the governing
body, requesting the CaIPE S board t act upon the extension request. The request
must be received before they retired me ber reaches the 9G0 hour maximum. A sample j
resolution is enclosed. Ple~se submit a request with resolution to my attention by mail
or by fax. This request sho~ld include copy of the Interim employment agreement.
Government Code section 21224 pe its tP~e employment of CaIPERS retired
members in an emergency o prevent oppa~~e of work or because the retired member
has specialized skills need d to perfor worN; of limited duration. Employment is limited
to 960 hours a fiscal year a d the rate f pay must be comparable not less than the
minimum and not in excess of that p id other employees performing comparable
duties. There is no extension allowed the number of hours a retired annuitant may
work under this section. H Wvever, if th retirt~d member's specialized skills are required
next year, an agency may.t~mporarlly ppoint the retired member again, as long as the
retired member did not collect unempl en1: insurance compensation for the previous
year's temporary employmeint. .
I have included a copy of th~ Circular attar x!00-154-04 issuing the decision concerning
employment as an Independent Con ctor oir through a 3`~ party employer under .
CaIPERS. I have also inctu ed a defln tion o~F independent Contractor and the mailing
address for the review of a y contracts or employment agreements if your agency
wants to employ retired me bars as ei her Independent Contractors or through a 3`d ~
party employer.
If you have any questions, lease cont ct me:. My direct number is (916) 795-3120 and
my fax number is (916} 795 0385. .
i erel ,
Burke, Retirement Program Specia ist IF
etirement Support '
Attachments {15) ~ ~ }
Total Pages (17)
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FEB-23-2009 14:35 From: Cf~F'EF2S 91679503>3.5 To' 4087773109 P.3~17
P.O. Box 94270 ~ Date: September 3, 2004
Sacramento, C 94229-2709 Reference No.:
(888) CaIPERS (225-7377)
Telecornmunications~Device r the pear Circular Letter No.: 200.981-04
No Voice (916) 95-3240 Distribution: I, IV, V, VI, X, Xlt, XVt, XIX
~~P~~ www.calpers.ca gov Special:
~ir~ul~r L tier
T4: 'ALL STATE GENCIES, CONTRACTING .EMPLOYERS, CALPERS-
AFFILIATED MPLOYE 'AND RETIREE ASSOCIATIONS,
. AGRICULTU ~ L DISTR CTS, STATE COLLEGES 8~ UNIVERSITIES;
COUNTY SU ERINTEN ENT~i OF SCHOOLS, AND INDIVIDUAL
SCHOOL DIS RICTS
SU6JECT: EMPLOYM NT AFT RETIREMENT WITH A CALPERS-
COVERED ~ MPLOY R
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This Circular Letter is to info tit you that the "normal Retirement Age" and "Bona Fide 1
Separation in Service' regul tions have been finalized and are effective September~l9,
2004 (see attached).
In a previous Circular Letter #200-143- yt~u were informed that If a participant has
not attained their notmai tret(t~ement age ,they must have a bona fide s®paration in
service prior to returning to employment as a retired annuitant. The bona fide I
separation in service is a federal require nt iNhich prohibits in-service distributions
' from a pension plan.
The final regulations specify hat a Calif ~ rnia Public Employees' Retirement System
(CaIPERS) member who has no! reach d normal retirement age must have a
60 calendar-day separation i service p or to returning to employment as a retired
annuitant, and there must b no agree nt {either verbal or written) to return •to
employment between the me ber and CatPI~RS employer prior to retirement. ~ ~
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Background:
.The CaIPERS Defined Bene tit Plan is a tax-qu,alifed pension plan under Section 441(a)
of the Internal Revenue Cod (IRC) and, as such, it must comply with the requirements '
of this section to maintain its ax-exempt tatus. Internal Revenue Service (IRS) rules
do not permit the distribution f benefits o a retiree who returns to employment as a
retired annuitant prior to attai ing the pia 's no~rmai retirement age uMess the retiree
had a "bona fide" separation i service, retirEae may r@instate to actly@ seNiCe at any
time.
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FEB-23-2@09 14:36 From:CALPERS 916795@:38.5 To:4@87773109 P.4~17
Circular Letter #200-181- 2 September 3, 2004.
Chapter 519, Statutes of 2003 (AB15.4} added Government Cvde~ section 21220.5
effective January 1, 200x. This section stati3s:
. ~ A retired person wh has not a ained the normal retirement age shaft
have a bona fide se oration in ervicea to the extent required by the
Internal Revenue C de, and th . regullations promulgated fhereunder,
before working afte retirement ursu~~nt to thi§ article. The board shalt
' establish, by regula on, the Grit rfa under which a bona fade separation is
satisfied.
CaIPERS promylga#ed reg lotions un r Title 2, seotiona 58fi - 586.2, in order to
implement Government Code section 1220.,5 and comply with federal requirements.
Summary.of Regulations:
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Normal Retirerlnant Age -The nomna retirement age is the rtlembar's:6enefit forrnula
age. For example: The no a1 retire ent afte for a~ rrrember with the 2°~ at 55 benefit
tom~ula would be ag.e 55. he normal etirennent age for a member with the 2% at 60
benefit fomiuta would be a e 60.
No Pre-Determined ~4gree ent IMth mple~yer -Far members whq. retire before ~
reaching normal retirement aye, there n bey no agreement {either verbal or written)
prior to retirement to renders service to ny CF~iPERS covered etripioyer as a retired
annuitant regardless of the ength of th separation.
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. Bona Flde Separation in ervice~-A etiredl ~'nemberwho is ender normal retitement
. age must have a minimum pare#ion ! service of 80 calendar-days prior to returning
to any CatPERS-covered a ptoyment thou~t reinstatement.
Emergency Hiring Exceptions -All s for immediate employment of a retired
member under normal retirement age f r.®me~rgency~ situations as defined by j
Government Code section 8558.
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FEB-23-2009 14:36 From:CRLPERS 9167950385 To:4087773109 P.5~17
. Circular Letter#200-181- 3 September 3, 2004
Questions and Answ ~rs:
Question #7: When ar+e a regulatl ns efiFectlve?
Answer: The regulati ns are effective ~~eptember 19, 2004,
Qtuestion #2: iNho is impacted by th new regulations?
Answer: Employers a d any CaiP ERS .active member or retired member who has
not reached ormai retir. ment age.
Question #3: Whatls the otmal ~ meat ageT
Answ®r: The~normal retirement a e is tl~e member's benal'it formula age. For
example: T'he normal re rement age for a miseeti$neous trtember with
. the 2°r6 at 55lbenefit fo ula would-be age 55. the normal retirement
age for a me ber with a 2°r6 at 60 beneflf formula would be age 60.
Question #4: What norma~re#Iremen ale iNlil be used !f the theittber retires
under more ~ an one en~flt formula ?
Answer: The highest ~pecified ag applicable to the member Is used, For
example: If tie member retin3merit ben®fit was Calculated based on
two different ~etlrement f mtulas~ the 2°~ at 55 as~ a miscellaneous
member and he 3°~ at 5 as a safety member, age 55 would be the
normal retire ent age sii ce it~is3 the highest age. ~
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Question #5: A member tires with 2% of 56 benefit formula at age 56. Then, '
within tf0 d~ s, ~the.me ber l~: o!tetsid employment with a different
. ~ Ca/PERS co ~ ered emp yer Krlth a Z% at 5f~ benefit formula. hoes
this member have to w it at /crest 60 days to tie-employ at the new
agency?
Answer. No. The no al rettreme~ t age for the employment from which the
member retires will apply in this example, the member would not need
to have a separation ins rvice trecause the age ~at retirement (56) is
older than the normal rati ement age {5a). On the other hand, if a 2% at
b5 benefit for ula applie and tl~e member retires at age 50, at least a
60 day separa 'on is requ ed before returning to employment as a ~
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FEB-23-2009 14:36 From:CALPERS 9167950385 To:4087773109 P.6~17
Circular Letter #200-181-04 September 3, 2U04
retired annuit nt even if a po;;ition is with an ertapioyer with a 2% at 50
benefit formal .
Question #6: How w111 pro pectlve a ploy~ers know the normal retirement age of
a retired ann Itant?
Answer: Employers wil need to a k the j{ob candidate, if a job candidate does
not know thei norm$I ret ement age, employers should contact
CaIPERS at ( 88) CaIPE S (2;;5-7377)..
Question #7: yVho wfll enf rce the 8 na Fli~fe Separation In Service riequlreitrent?
Answer: If is the ample er's respo stbility to verity that any person who retired
under the Cai ERS Deft ed Benefit Plen prior tb attainment of the
applicable no~nal retire t age has a "bona tide separation in service°
prior to oomm ncement f service as a retired annuitant. Also, '
CatPERS and tor$ will m nitor C;aIPERS covered employers to assure
compliance.
Question #8: What.are ~#he con~eque~~ ces too the member a»d the employer for
falling to ~co ply with a bona fide separation In service
requlr+emen
Answer: The retired an ultant wh se employment did nQt comply with the
provisions of ovemrt~en Code section 21220..5 could be retroactively
reinstated to ctive rnem ership~ ®ffective the first day of employment as
a retired annu tent far the CaIPE:RS-covered employer.
There may. be serious tin ncial ~x~nsequences to both the member and
employer. Th se conseq ence;s are described in publication PERS-
. PU8-37 titt®d Relnstaten ant F~nm Retln3menC.
Question #9: Can a memb r return !q #mpl~~yment as an Independent contractor
wl#hout the ~6 day se etlon Jn a~ervlce r+equlremen#?
Answer: Hiring a retire as ari ind pendent contractor may be done, but it must
be clear that they are not a common law employee (See Circular letter
# 200-154-04) In order t avoicl possible mis-.classifcation of the retired
annultarit, it is suggested hat a copy of the proposed contract or
agreement be submitted o CaIF~ERS for review.
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FEB-23-2009 14:36 From:(:FlL.PERS 9167950385 To:4087773109 P.7~17
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Circular Letter #200-181-04 5 September 3, 20Q4
Question #10: fan a me bergb to ork lmrlnedlately after tetlrement !f they have
not reached their no al rc~tlrenrent ageT
Answer: CaIPERS r Itirees can ork for the private sector, a 1937 Act Coun
ty
agency, as ~ teacher o administrator whose retirement is with the
California S~at~ Teac rs' Re:tirement System or the Un(versity of '
California F2~etirement an or they can work for a public agency not
covered by ~CaIPERS thout the required minimum 6R calendar-day
separation i service. hey can also work far any CaIPERS-covered
employer if hey reins te.
Question #49: /f Callfornl ?eglslatlo ellminaled the 960.hour limitation on '
' retired ann !tents, w uld a bona fide aeparatlon In service aflll be
• r~equlred? ~ .
' Answer: ~ Yes. The na fide se ~ aratian In service requirement would stilt apply
to retirees ho haven reached their normal retirement age.
Question #'t2: Can an em loyer~and n employee who is under the normal
• retirement fie have agn~ament far the employee .to return to
• employme t as a r+etlr d annuitant? i
Answer: No, The IR has cans eyed a bona fide separation to be a good faith
and comple a terminati n of tine employment relationship, without a
predetermi red agreem nt tp i~ntinue woflcina at a later date, to
constitute ~a bona fide paral)on. If there was a side agreement or
meeting oft a minds t t the member would render services to the
employer in the future, he 1R;5 could deem the termination a sham and
find that the member h d never severed employment. As such, a
distribution o the parts pant ~iriol' to normal retirement age would, upon
subsequent assignmen ,constitute an iimpemnissible in-service
distributlan. .
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Question #13: How can a emp/oye detenmine If a member under normal
retirement fie Is Int sted Jn retumfng to employment after the
60 calenda -day sepa aUon;~ .
Answer: Surveying a ployees r gardirrg their interest in working after retirement
without mak~ng an afire ment would be permissible. Also, employers
could establ sh a pool retirees for future service.
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FEB-23-2009 14:36 From:CALPERS 91675503$5 To:4087773109 F'.8~17
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r Circular Letter #200-181-04 6 September 3, 2004
Question #14: Does the s paratlon ! serv~lce requirement apply to dlsabllity
retlremen ?
Answer: No. The se aration in ervice: requirement applies only to service
retirements.
I
Question #15: What is !nc uded in th defli7ltlon of emergency?
. Answer: It is the res onsibility o fedenal, sta#e and local agencies to determine
what constit tes an em rgency. The employment must be related to
the emerge. cy. A ba og of work does not qualify as an emergency
(Governme t Code se ion 8:.5$).
Question #16: Does the flnftlon o orm;~I Retirement Age frnpact the catch-up
provlsfon of the Ca/P RS 4th Program?
.Answer: No. The no al retire ent ague for employment after retirement does
not affec# th 457 Plan.
i
~If you have additional quests ns; please catl the Employer Contact Center at
($88) CaIPERS (225-7377).
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7~ ~
Kenneth W. Marzion, Chief
Actuarial S Employer Servi s Division ~ f
Attachment
FEB-23-2009 14:36 From:CALPERS 916?950:385 To:4087773109 F'.5~17
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Attachment
Reg latory. ctioin by Ca1~PERS
Adoption of Title 2, actions 586 through 586.2
Title 2.:Administration
Division 1. Administra ive Perso nel ~ '
Chapter 2. Board ~o Adminis anon of Public"~I?mployees' Retirement
System j
Subchapter 1. Empt yeas' ~Reti ernQrit System Regulations
Article 7.5 Norma Retirem nt Age and Bona Ftde Separation In
Servic
i
§586. Purpose
.The purpose of this Articl is to ensu the :Federal tax-qualifletd status of the '
Public Employees' Retire ant Syste by prohibiting in-service distributions to
the extent required by th Internal R enue~ Code, and the regulations
_ promulgated thereundQr. In the eve the a~ppllcable federal law changes, the ~ ~
federal law shall superce ~ these re ulations.
NOTE: Authority: Government ode :3ection$ 20121 and 21220.5.'
Reference: overnme Code: section 21220.5.
§586.1 Norrnai ttetirem nt Agar
(a). The normal retirernen age of a .ember shall be the later of: j
(1) the age when the member is first eligible to retire pursuant to Article 1 €
through Article 5 of C apter ~12, art 3; Division 5 of Title 2 of the
Government Code; o
(2) the highest spec ed age ap gcable~ to the member in the benefit
formula, where the hi hest speci ed age is defined as:
(A) 65 if th member i entitled to benefits under Government Code
section 21076 or 1100; -
(B) 601f th member i entitled to~benefits under Government Code
section 21353 or 1354.;3; ~ .
(C) 55 rf th member i entitled to benefits un~ter Government Code
section 21354, 21 54.1, 21354.5, 21363, 21363.1, 21386,
21369, r 21389.1; nd
(D) ~ 501f th member I entitled to benefits finder Government Code
section 21362, 21 62.2, 2.1383.3, 21383.4 or 21363.8.
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FEB-83-2009 14:37 From:CALPER5 5167950385 To:4~7773109 P.10~17' {
• (b) fn the event an existi g benefit f rmul~i is modified or a new benefit formula
is enacted, the chief act~rary may d rrnine the normal retirement age until such
• time that the regulations nay be am nded.
II j
NOTE: Authority: ovemmen Code sections 2p121 and 21220.5.
.Reference: Governme Code section 2122p.5.
§ 586.2 Bona Fide Sep ration in rvlce ~ 1
(a) t=or.purposes of wo ping for a C IPER:a-covered employer after retirement
pursuant to Article 8, of hapter 12, art 3,. Division 5 of TitIQ 2 of the
Government Code, a merinber who snot attained nomnal retirement age shall
have a bona fide separat on in servi e.. A Mona fide separation In service is
defined as:
(1) no predetermi Ined agree ent between the employer and the member ~ '
prior to retirement to return to~ ~ rk far the employer after retirement;
and
{2) a separation ir~ service of t 18as~t 6p calendar days between the date
of the member's r tirement a the i~irst day of work for the employer as a
retired person. Th 60•days all commence on #lie day after retirement.
(b) Any retired person a ployed in 'olatio;n of this re~ulatlon shall be subject to
the consequences provid din Gove merit Cods section 21220.
(c) In the event an erne . envy has b n dE~elared as provided in Government .
Code Section $558 that r quires the mplo~rment of a retired person. the 60
calendar day separation ii service re uirerrient set forth in subdivisian {a)(2) of
this regulation shall not a ply.
NOTE: Authority: G vemment ~ ode Ejections 20121 and 21220.5.
Reference: ovemmen Code section 21220.5,
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FEB-23-2~9 14:37 From:CALPERS ~ 9167950385 To:4087773109 P.11~17
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21221. Conditions and L'imi ttons ott Se ,ICQ After Retirement
A retired person may serve wi out reinstate ant from
retirement or loss or interruptio of benefits rovide~d by this
system, as follows:
(a) As a member of any boa , commies , or advisory committee. }
upon appointment by the Gove or, the Spe ,ker of the Assembly, the
President pro Tempore of the mate, direct r of a state department,. •
or the governing board of the Contracting ag ncy. H?iwever, the '
appointment shall not be deeded emptoym t within the meaning of '
Division 4 (commencing with Section 3204) nd Division X1.5
(commencing wfth Section 6100) of the La Code, and shall not
provide a basis for the payme 4 of workers' mpensatlon to a retired
state employee or to his or her dependents.
(b) As a school crossing gua d. ~
(c) As a juror or election offi er:
(d) As.an e)ective officer on nd after Sep mbar '15, 1961.
However, all rights and Immun ties which rrt y hav®~acxrued under
Section 21229 as it read prior o that sectio s repeeit during the '
' 1969 Regular Session of the L gislatuPe ar hereby"preserved. '
(e) As an appokstive memb$} of the gover ing bocly of a contracting
agency. However, the comp sation for the office (shall not exceed
one hundred dollars ($100) pe month.
(f) Upon appointment by the Legislatt?ra, either house, or a '
legislative committee to a post ion deemed y the a~apointing power to j
be temporary in nature. ;
(g) Upon employment by a ~ ntracting ag cY toga position found by
the governing body, by resalu ion, to be av labia bijcause of a I
Leave of absence granted to a~person on pa otl status for a.period
not to exceed one year and fo nd by the g erning bodyto require
specialized skills. The tempor ~ ry employm t sha14 be terminated at
the end of the leave of absen e. Appointm is under this section 4
shall be reported to the board nd shall be ccomps3nied by the
resolution adopted by the goo ruing body.
(h) Upon appointment by t e goverrtin body ~sf a contracting agency I
to a position deemed by thei governing b dy to ltte of a limited ~
duration and requiring apec~alited skilCs or during an emergency~to
prevent stoppage of public business. Th se apEwintments, in addition ~
to any made pursuant to Section 21224, hall nc?t exceed a total for
all ~errtployQrs of 980 hours in any fiscal ear. When art appointment is
expected to, or wiq, exceed 80 hours in any fiscal year, the •
gpverning body shall reque t approval f m the board to extend the
temporary employment. Th governing ody shall present a resolution
• to thu board requesting a on to allow disallow the employment
' extension. The resolutions all be prose tad pr~~lor to the expiration
of the 9f0 hour maximum f r the fiscal r. Th~t?~ appointment shall
' continue untihnotificatlofi f the board's decisinn is recehred by ~
the governing body. The ap ointments it be c[eemed approved if the
board fails to take action w thin 80 days of r~arcelving the request. •
Appointments under this s bdivision m y not exceed a total of 12 '
months.
(I} Upon appaintrneslt by th Administrati a Direci:or of the Courts ~ ' .
to the position of Court Secur ty Coordinat , a position deemed
temporary in nature and requ ring the spec lized skills and •
experience of a retired profs tonal peace fficer.
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FEB-23-2009 14:37 From:CALPERS 9167950;385 To:4087773109 P.12~17
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SAMf~L~ ~LA?NGtJ~1G~. .F~ ~~2E:SOLtJTij(~RI ~RE(~13iES•TING
iEM~.L°QYM' N'~' ~~XT IVS~I(?N ~I~R 1CS~ 2'~ 221::{hj 's
Re~sol t,ior3 Num'b~er
I
W:HEREAS~, (retiree nam ,last 4 di ts.of the social security number) retired from
(agency from which ~retir d) in the p sition ~~f (tltie of position from.which retired),
effective{date of CaIPE S' retireme t) anti,
WHEREAS, the (employ is governi g .body"" or its agent) appointed (retiree
Warne) to the ~ositiorr of { itle of tam ovary ~positfon) under Government Code ~ ~
section 21221(h), a posit on~ deeme to be of limited duration and requiring
specialized skills, effecti~e (date of ppointment), and, J I
WHEREAS, {retiree narn~). is expec ed to reach ~hislher maximum of 960 hours
this fiscal year on or abo I t (date em loymE3nt will reach 960 hours) and,
WHEREAS, due to (spa Ilfic reason for extension request) and,.
i
WHEREAS, {retiree nam )has (de vibe s:pecfalized skills possessed by the f
retiree, if applicable) and ~
THEREFORE, BE tT RE~OLVED b (employer's governing i~ody* or its agent)
thaf the CaIPERS $oard•of Adminis ~ tiarr be requested to approve an extension j
in accordance with Gove ment ~Co a section 21221(h) for the temporary. i ~
employment of (retiree. n me) for {n mbar of hours requested) additional hours
or through (requested en date of a ension). An appointment made under this
section of this subdivisio may not teed a total of 12 manths.
(Signatures and other no ations as er usual for resolution ~y employer's
governing body.)
*for School Employers the governin ~ body as the County Ofi'ICe of Education. .
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ae a of ~ ~ z~~ ~ r2oo9
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FEB-23-2009 14:37 From:~f~PERS 916795038.5 To:40B7773109 P.13~17
21224. Limited Service During an mergency or Special Skiits Required;
Rate of Pay
(a) A retired person may erve with tut reinstatement from ~ •
retirement or loss or inte ruptlon of b nefit;3 provided by this
system upon appointme t ~y the ap ointing power of a state agency or . •
public agency employer ither Burin an emergency to prevent stoppage
of public business or because the re fired employee, has skills needed i~
in performing work of lim,ted duratio . These appointments shall not
exceed a total for all em • layers of 9 hours in any fiscal year, ~
and the rate of pay forth employm nt shall npt be less than the
minimum, nor exceed th t peid by t e emp~byer to other employees ~ ~ ~
perfarrntng comparable atlas. '
(b) (1 ~ This •section sh II not apply o any retired person
athervvise eligible if Burin the 12-m nth pe~riad prior to an
appointment described i ~ this sectlo the retired person received any
unemployment insuren ~ compens 'on arising out of prlor employment
subject to this section wl~h the same empk~yer.
(2) A retired person who accepts appe~(ntment after nsceiving
unemployment insuranc compens on af~ described in this subdivision
shall terminate that empl yment on he last day of the current pay
period and shall not be a igible for re~appolrrtment subject to this
section for a period of i 2 months fol~owing the last day of
employment. TtYe~ratired person she I not bd subject to Section 21202
or subdivision (b) of Section 2122U.
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FEB-23-2009 14:37 From:CALPERS 9167950:385 ' To :4087773109 P.14~17
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Inde endent ontractor/Consultant
An Independent Contra for/Cans taut i:; someone who contracts to do a
piece of work according t his/her o methods, and is subject to his/her '
employer's control only a to the en product or flnat resul# of work, and not as
to the means and manne in which t work is performed. `
CaIPERS utilizes the co n5on law" ntrol test" to determine whether an
individual is an employee of a CaIP S-covered agency., This practice was
affirmed by the Califomia) Supreme ourt ire the Metropolitan Water District of
Soutttem Califomia v. Superior Cbu of Loss Angeles case, which stated that the
PERL "incorporates com~on taw pri ciptes; into its definition of a contracting
. agency employee and... squires co trading public agencies to enroll in '
CaIPERS alt common la employee except those excluded under a specific
statutory or contractual p ovision."
There are a number of d ~nitions a standards as to what_ constitutes "control." i
The Supreme Courtin th Cargill ca a cited the Tieberg v. Unemployment
Insurance Appeals Boa case in thi regard, which stated that "The righ# to '
control the. means by wh ch the wo is accomplished is clearly the most
significant test of the employment re ationship and the other matters constitute
merely 'secondary elem nts'.
We suggest reviewing B and Prece ential Decision on the Lee Neidengard case
htt ers.ca. o lei -do ~b t/I+~q-req-statutesJboard-decisionsJpd-05-
01-neidenaard:pdf) for rr~,ore inform ion.
Circular Letter 200-154-(~4 on the C IPER:~ Web site includes inforrx~ation on the .
Cargfl! decision and the f Mowing w bsite address httg;//www.irs.gov/pubrrs- ;
pdfJp15a.pdf and h .irs. ov/ ub ~~,p~/ps983,gdf
' ~ ~ I
Circular Letter 200-181- 4 on the C IPER:S Web site Vtiww.caipers.ca.4ov has
information on the "Bon Fide Brea in Separation" under GC 21220.5 if your ~
employment is not independent and you are retiring under norms! retirement age.
Mali (or fax) a complete opy of the ntra~ct and the scope of duties with a cover
letter including your na fie, socials urity number and contact information to:
• Cal~'ERS
Benefit Service Division -Unit 470
P. Box 9427 1
Sac mento, C 942;29-2711
Fax Number: 6-79'i-0385 or 916-795-3934 ~ ~
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FEB-23-2009 14:38 From:Cf~PERS 9167950385 Ta:4087773109 P.15~17
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P.O. Box 942709 .Date: May 3, 2004
Sacramento, CA 4229-2709 Reference Na.: ;
(888) CaIPERS 25-7377)
Te~lecommunicatl ns Device fo the Deaf Circular Letter No.: 200-154-04 ;
No Voice (916) 32B-3240 QlsMbution: I, Vl, Xil, XVI ;
~]PE~ www.calpers.ca.~OV Special:
Ci c~ular L~~ der
'
TO: ALL PUBLIC GENCIES
SUBJECT: METROPOLI AN WAT DISTRICT OF SO~,ITHERN CALIFORNIA I
y. SUPEl~lO COURT O LOS ANGELES ~["CARGtLL" (2004) 32 Cal, 4~'
491 ]
r This Circular Letter further ~iddresses t e abo~re court case discussed in our earlier
Circular Letters of 200-Ofi4 (dated JUIy 4, 2000, and 200-043 dated March 19, 2001..
The Supreme Court of Cal omfa has n w issued its decision in this case. With respect i
to Califomi~i Public Employees' Retire ent System (CaIPERS}, the Court reached the
following conclusions:
"We conclude, as id the lawe court;, that the PERL- incorporates common law
prindplas into its d flnition of contracting agency employee and that the
PERL requires co tractlr<g p blic agencies to enroll: in CaIPERS all
common la~iv em loyees ex pt tho:~e excluded under a specific statutory or
contractual provisicl n:' (Emph sis added; "PERL" is the Public Employees'
Retirement Law, Government ode Sectian 20000 at seq.)
• "...the PERL contains no brow exciui~ion for long-term, full-time workers hired
through private lablar suppliers '
. "Nor, of course, h Is thB Legisl ture p~rovided.in the PERL for any coemployment i f
exception to a contracting age cg's duty to•enroll employees in CaIPERS" I
The court also found that t) a definltio of "am~ployee" in Government Code Section
20028 does not require th~t the funds .used to pay employees of a contracting agency ~
be directly aontrolied by the contraatin agen~~y. Common law employees of a
contracting agency must bye enrolled 'i CaIPE:RS regardless of the source of the funds
used to pay them. Thus, ~Inless othe Ise e~i:cluded by law or by contract with
CaIPERS, a person deem d a Comm law employee of a contracting agency must be '
enrolled in CaIPERS.
Government Code Sectio 20125 pro ides that the CaIPERS' Eiaard of Administration ~ ~
"shalt determine who are mpioyees d is ttie sole judge of trie conditions under Which
. persons may be admitted o and Conti ue to receive benefits under this system." The
• Ilfomia Pubti Emp?oyees' Retirement System
Lin otn Plaza - P Street -Sacramento, CA 99814
e
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FEB-23-2009 14:38 From:CALPERS 9167950385 To:g087773109 P.16~17
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e
Circular Letter #200-154-0 ~ 2 May 3, 2004
common law rules used by aIPERS fo determining employee status can be found at
the following URLs:
httpalwww.irs.gov/pub~irs-pdf1p15 .pdf (starting from page 3)
http://www.irs.gov/publ irs-pdf/p96 .pdf (starting from page 21)
The common law rules for etermining heth~3r a worker is an employee may also be used to ~
distinguish "independent ntractors' in'ernployees " In that regard, the CaIPERS'
,erocedures Manual define an "indepe: dent ~rontractor° as follows:
"An independent contr ctor is som one who contracts to do a piece of work '
according to hislher o n methods and i,~ subject to hisfier amplbyer's control only ; •
t as to the end produc csr final re ult of work,. and not as to the means and
. manner in which the v~rork is perf •med." (Page 2.6)
Factual questions may ulti . aiely exist to whether a person is an employee under the
established common law les. To fa litate this determination, employers,should '
maintain documentations bstantia~ng whether a person meetsthe definition of a
common law employee.
QUE&TIQNS~ ~ .
Will the provisions of G vemment ode £~ection 20283 be applied ta~employers? f~
Government Code SeCtio 20283 stat s: "Any employer that fails to enroll an employee
• into rr?embership when he' or she be es eligible, or within 90: days thereof, when the
employer knows or can re sonably bQ expected to have known of that eligibility. shall be i
required to pay all arrears costs form tuber contributions and administrative costs of
five hundred dollars (~50 per memb r as a reimbursement td this system's current •
year budget'
The provisions of Government Code action 2QZ83 will be applied to contracting I
agencies on .a case-by-ca a basis, de ending on the individual circumstances relevant
to each contracting ages
Is the ruling to be appli d retroacti efy?
Ca1PERS has concluded at a corn n law employee of a contracting agency not
otherwise excluded from aIPERS a ollment by law or contract must be enrolled into
membership retroactive t ><he origins date of qualification. In cases where a person is
deemed a common law a ployee an is no longer employed with a contracting agency,
the employer must nevertheless sub It a Member Actlon Request (AESD-1) form for
the employee. This form hould indi te: .
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FEB-23-2009 14:38 From:CALPERS 9167950385 To:4087773109 P.17~17
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Circular Letter #200-154-04 ~ May 3, 2004 .
• . Box 10 (Effective D e of Action -The date the employee should have qualified .
for CaIPEf~S memb rshlp. (If u known, enter the date this person was hired.)
Box 8 (Remarks) _ nter the da the Pierson separated from your employment. ;
CaIPERS will, determine wh ther any re oactlve retirement contributions for the
employee are necessary an will notify ubsequently affected employers as necessary.
i
Can agencies request a c ntract exc~ sion of "leased" workers, or workers with a
genuine "co~mployment reiationsh p?
Requests for exclusions of I ased or " mployed" .employees will be reviewed for
compliance with the standa ds for• contr ct exc,lusions that were approved in 1997 by
the Ca1PERS' Board of Ad Inistratlon. cop~r of these standards is attached to this ,
~ - Circular Letter for your referlence.
!S! '
'Kenneth W. Marzion, Chief .
Actuarial and Employer Se ices Divisi n
Attachment
• F
t
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3/31v 9
(,f-e~ ~ 3
CONTRACT FOR LEGAL SERVICES
CITY OF CUP'ERTINO
This Contract is made and entered int~~ this _ day of Januazy, 2009, by and
between the City of Cupertino, State of California, a municipal corporation, by and
through its City Council ("the City"), and the L,aw Firm of Dang and Trachuk with Carol
Korade ("Dang and Trachuk-Korade").
RECITALS:
WHEREAS, the City conducted a formal application and selection process to
obtain city attorney services; and
WHEREAS, the City received several responses; and
WHEREAS, the City selected the lave firm of Dang and Trachuk, with Carol
Korade to serve as City Attorney;
NOW THEREFORE, in consideration of the mutual covenants herein contained,
the parties agree as follows:
ARTICLE I DESIGNATION OF CITY ATTt~RNEY
The City hereby appoints Dang and Tr;~chuk-Korade to serve as City Attorney to
serve at the will of the City Council and to b~~ subject to discharge at any time without
notice or cause.
Dang and Trachuk-Korade hereby accepts such at will status, and agrees to render
legal services as may be requested from time- to time by the City, as described in this
Contract. Dang and Trachuk-Korade affirms that Carol Korade is a member in good
standing of the California Bar, and that her co~rtinued California State Bar membership is
a condition of her appointment.
The parties agree that Dang and Trachuk-Korade shall perform legal services
required under this Contract for Legal Services as an independent contractor of the City,
and shall remain, at all times as to the City, wholly independent contractor with only
such obligations as are required under this Co~rtract for Legal Services. Neither the City,
nor any of its employees, shall have any co~rtrol over the manner or means by which
Dang and Trachuk-Korade renders the legal services required under this Contract for
Legal Services, except as otherwise set forth.
ARTICLE II .TERM
Section 2.01. Term of the Contract. This Contract for Legal Services will
commence on March 1, 2009, and, unless extended by written agreement of the parties,
will automatically expire on June 30, 2013.
1
Section 2.02. Termination Prior To Expiration. Notwithstanding any provision
contained in this Contract to the contrary, the ~~arties understand and agree this Contract
may be terminated prior to expiration of the term, with or without cause and at the will of
e i ang an rac u - ora e ac now a ge a e i y as ma e no imp ie ,
expressed, or written assurances of continued contract with the City other than as
specifically set forth in this Contract for Legal Services.
ARTICLE III DUTIES AND OBLIGATIONS OF CITY ATTORNEY
Section 3.01. Duties. The services to lie provided by Dang and Trachuk-Korade
will include, but are not limited to, the following:
(a) Advise the City Council and all City officers in all matters pertaining to their
offices;
(b) Furnish legal services at all meetings of the City Council, except when
excused, and give advice or opinions on the legality of all matters under
consideration by the City Council or by any of the boards, commissions,
committees or officers;
(c) Prepare and/or approve all ordinances, resolutions, agreements, contracts, and
other legal instruments as shall b.: required for the proper conduct of the
business of the City and approve the form of all contracts, agreements, and
bonds given to the City;
(d) Upon request by the City Council, provide the necessary legal services
required in connection with the acquisition of land or easements on behalf of
the City;
(e) Upon request by the City Council., prosecute and defend the City, and all
boards, officers and employees ire their official capacities, in civil and/or
administrative proceedings;
(f) Upon request by the City Council, prosecute all violations of City ordinance;
provided, however, that the City ~~ttorney is not required to prosecute any
misdemeanor or infraction within the City arising out of a violation of State
law;
(g) Prepare a quarterly report to the City Council, giving the current status of any
legal action in which the City ma.y be involved, including tort claims and
code enforcement. Dang and Traclmk-Korade shall comment in the report on
any new legislation or court casf;s that may affect the City. Dang and
Trachuk-Korade shall be responsible for advising the City Council and staff
regarding how to respond to then: legislative or case law changes. Upon
request of the City Council, Dang and Trachuk-Korade shall prepare
memoranda, guidelines, resolution, ordinances, administrative rules, or other
procedures that the City Attorney feels necessary for the City to comply with
these changes in the law;
(h) When authorized by the City Council, Dang and Trachuk-Korade shall
represent the City in legal proceedings and other litigation, to which the City
2
is a party, except: when a conflict of interest exists; or when, in the opinion of
the City Council, there is a need for specialized legal expertise. In such
situations, Dang and Trachuk-Korade will be responsible for oversight,
supervrsion an momtonng t e spec;ia ize ega counse as appropna e; an
(i) Supervise outside legal services under other circumstances if requested by the
City Council.
Nothing contained herein shall require Dang and Trachuk to provide litigation
services outside those provided by Carol Korade, without additional compensation.
ARTICLE IV COMPENSATION
Section 4.01. Retainer. The City agrf~es to pay Dang and Trachuk-Korade for
services rendered pursuant to this Contract art annual retainer of $249,000, payable in
monthly installments commencing within 30 clays of the commencement of the term of
this Contract and then each month thereafter. The parties intend that the $249,000
retainer will remain in effect until at least June 30, 2010. Thereafter, the City, in its sole
and absolute discretion, may review the annual retainer of Dang and Trachuk-Korade at
such times and to such extent as the City may determine.
The City agrees to pay Dang and Trachuk-Korade an additional $8,000 during the
first year of this Contract.
ARTCLE V TERMINATION AND NOTICE
5.01. Termination:
(a) Dang and Trachuk-Korade serves at the pleasure of the City and nothing
herein shall be taken to prevent, limit or otherwise interfere with the City's absolute right
to discharge Dang and Trachuk-Korade and terminate this Contract for any reason. Upon
receiving such notice, Dang and Trachuk-Kor~ide shall cease providing services and will
cooperate with the City in the orderly transfer of all related files, materials, work
products, and records to the City. Dang and Trachuk-Korade agrees that it shall not have
any right to any files, materials, work product, or records that Dang and Trachuk-Korade
prepares for the City under this Contract for Legal Services, and that all such items
belong to the City. The City may but is under no obligation to provide Dang and
Trachuk-Korade with reasons for any decision to terminate this Contract.
(b) If the City terminates this Contract without cause prior to the expiration of
the term, it shall pay a lump sum to Dan€; and Trachuk-Korade in the amount of
$150,000, which the parties have agreed repre~~ents fair remuneration for the loss of Dang
and Trachuk-Korade's opportunity to serve other clients due to the commitment to the
City. Notwithstanding this provision, there is no express or implied promise made to
Dang and Trachuk-Korade for any form of continued contract.
(c) If the City terminates this Contract for cause, it shall have no obligation to
pay any dollar amount to Dang and Trachuk-Korade.
3
(d) As used herein the term "cause" means:
(1) Carol Korade's unavailability for a period of ninety (90)
~nncarntiva ~avc nr ninrc~
(2) Termination of the profe:~sional relationship between Cazol Korade
and the law firm of Dang and Trachuk.
(3) Willful breach of a material term of this Contract by Cazol Korade
and/or Dang and Trachuk:.
(4) A finding by Ca1PERS that Carol Korade is an employee rather
than an independent contractor.
(5) Incompetence in performance of duties.
(6) Habitual neglect of dutie:~.
(7) Dishonesty constituting misconduct in office.
(8) Disbarnlent or suspensio~l by the California State Bar.
(9) Conviction for any crime involving moral turpitude.
(e) Dang and Trachuk-Korade ma}~ terminate this Contract after giving the
City thirty (30) days' written notice. If Dung and Trachuk-Korade terminates this
Contract, the City agrees to provide a substitl~tion of attorneys promptly and otherwise
cooperate in effecting the termination. Dang and Trachuk-Korade understands and
agrees it has no legally protected property or other interest in the appointment as City
Attorney.
ARTICLE VI MISCELLANEOUS
Section 6.01. Form of Notices. Service of a notice by personal service shall be
deemed to have been given as of the date of such personal service. Notice given by
deposit with the United States Postal Service s'zall be deemed to have been given two (2)
consecutive business days following the deposit of the same in the custody of said Postal
Service. Either party hereto may, from times to time, by written notice to the other,
designate a different address or person which shall be substituted for that specified above.
Written notices shall be given by deposit in the custody of the United States Postal
Service, first class postage prepaid, addressed ~.s follows:
a. The CITY:
Mayor and City Council
City of Cupertino
10300 Torre Avenue
Cupertino, CA 95014
b. CITY ATTORNEY:
Law Offices of Dang and Trachuk
4
Attn: Carol Korade
1999 Harrison Street, Suite 700
Oakland, CA 94612
Section 6.02. Insurance. Dang and Trachuk-Korade shall procure and maintain,
at its sole cost and expense, in a form and content satisfactory to City, during the entire
term of this Contract, including any extension thereof, the. following policies. of
insurance:
(a) Comprehensive General Liability Insurance. The law firm of Dang and
Trachuk shall provide a policy cf general liability and property damage
insurance in the amount of $1 million per occurrence and $2 million
aggregate.
(b) Workers' Compensation Insurance. The law firm of Dang and Trachuk shall
provide a policy of workers' compensation insurance in such amount as will
fully comply with the laws of the State of California. Dang and Trachuk's
employees and anyone who works for Dang and Trachuk will not be
considered employees of the City oi' Cupertino under any circumstances.
(c) Automobile Insurance. A polic.~ of comprehensive automobile liability
insurance on Carol Korade's vehicle with a minimum combined liability
coverage of $250,000 per person/ 500,000 per occurence/$100,000 property
damage. Said policy shall include ;overage for owner, non-owner, leased and
hired cars.
(d) Errors and Omissions Insurance. The law firm of Dang and Trachuk shall
provide a policy of professional liability issuance vv~•itten on a claims made
basis in an amount not less than million per occurrence and $3 million in
the aggregate.
Except for the policies of professional liability insurance and workers
compensation insurance, all of the above policies of insurance shall be primary insurance
and shall name City, its officers, employees a.nd agents as additionally insured. Except
for the policies of professional liability insur~~nce and workers compensation insurance,
the insurer shall waive all rights of subrogation and contribution it may have against the
City, its officers, employees and agents and their respective insurers. Except for the
policies of professional liability insurance and workers compensation insurance, all of
said policies of insurance shall provide that said insurance may not be amended or
canceled without providing thirty (30) days prior written notice by registered mail to the
City. In the event any of said policies of in:~urance are cancelled, Dang and Trachuk-
Korade shall, prior to the cancellation datf:, submit new evidence of insurance in
conformance with this Section to the City.
Section 6.03. Conflicts. Dang acid Trachuk-Korade has no present or
contemplated employment which is adverse to the City. Dang and Trachuk-Korade
agrees that it shall not represent clients in either litigation or non-litigation matters
against the City. If a potential conflict of intf;rest arises in Dang and Trachuk-Korade's
representation of two clients, if such conflict is only speculative or minor, Dang and
Trachuk-Korade shall seek waivers from each client with regards to such representation.
5
However, if real conflicts exist, and unless tho:~e conflicts are waived by the City, Dang
and Trachuk-Korade shall withdraw from representing either client in the matter, and
assist them in obtaining outside special counsel.
Section 6.04. General Provisions
(a) The text herein shall constitute the entire Contract between the parties.
(b) This Contract may be amended at any time by the mutual consent of
the parties by an instrument in writing.
ARTICLE VII ARBITRATION REGARDING FEES
If a dispute between the City and Dang and Trachuk-Korade arises over fees
charged for services, the dispute will be submitted to binding arbitration in accordance
with the rules of the California State Bar F~~e Arbitration Program, as described in
California Business and Professions Code, sections 6200-6206. Each side will bear its
own attorneys' fees and costs, and no arbitrator or arbitration panel will have authority to
award fees and costs.
IN WITNESS WHEREOF, the City has caused this Contract to be signed and executed in
its behalf by its Mayor, and duly attested by its City Clerk, and Dang and Trachuk and
Carol Korade have signed and executed this Contract, both in duplicate, the day and year
first above written.
ATTEST: CITY OF CUPERTINO
City Clerk Mayor
APPROVED AS TO FORM: DANG AND TRACHUK
By
CITY'S LEGAL COUNSEL THOMAS J. TRACHUK
CAROL KORADE
6
~ 3l3/~q
. ~3
• i
~'EB-23-2009 14:29•From:CALPERS 916795E1385 To:4087773109 ) P.1~C
Benefit Servioes Division
P.O. Box 9427 1
Sacramento, A 94229-27 1
CaIPERS 888 Ca1PER5 or 888-225-7 77) Reply to: 4T0
TDD - (916) 7 5-3240; FAX (916) 795-3933 Refer to: ~ocx-xx-6243'
February 23, 2009 .
Sandy Abe, Human Resources Directo
City of Cupertino ~ .
10300 Torres Ave.
Cupertino, CA 95014
Via Fax •Number: 408-777- 109 and U Mail i
Dear Ms. Abe:
RE: Carol Korade -post retirement en~ ployrnent
I asked the Membership Analysts and [design Unit in the• Employer Services Dlvisinn to
review the Contract for Leal Servlc a uncldr the common law "control test to
determine whether Carol K rade's employment under this contract would be as an
independent Contractor or an Employee.
It is their determination that her emplo ent underthe Contract for Legal Services is
more as an employee rathe than an In~dependertt Contractor. Therefore, if she wishes
to remain retired and work or your ag cy, :she may only be employed as a "retired
annuitant".
A "retired annuitant" is a to porary ap ointrYtent in which; (1) the,employment is during
an emergency to prevent stoppage of ub1iC business or, ~2) the retired member has
specialized skills needed in performing work that is temporary in nature The conditions
of this employment are (1) t e hours w~~rked cannot exceed 9¢0 hours in a fiscal year
for all employers., and (2) a rate of pa y for this employment should not be less than
' the minimum nor exceed th t paid by t e employer to other employees performing
comparable duties (Govern ent Code ection 21224}.
Unfortunately, the contract ~ oes not in irate she is a retired member or that she is a
temporary appointment. T e contract Mates, her annual compensation will~be $249,000
and her employment will belfrom Marc 1, 2009 to .tune 30, 2013. These portions of
her contract do not comply wi#h restrict ons ~Inder GC 21224 and if she works under the
can-ent contract,•she shout reinstate from service retirement since it appears her
employment will be full time for approxi ately 4 years. •
•
•
Califo is Publlc E piay~ees' Retirement System
• .caipers.ca.gov
FEB--23-2009 14:29 From:CRLPERS 916795Ef385 To:4087773109 P.2~"'c
Sandy Abe February 23, 2009
' a
I will be faxing you under s~parate cov r a letter providing more detailed Information on
+he _4er~r~ R3 QS_wel •
Independent Contractorwit~ several a tachments.
{f you have any questions,lease cont ct m~~. My direct number is {916} 795-3120.
Sincerely
Liz Burke
Retirement Program Speci fist II
Retirement Support
cc: Carol Korade
E
1
I
FEB-23-2009 14:35 From:CALPERS 916795E13B5 To:4087773109 P.1~17
I
Benefit Servlc~ s Division
P.O. Box 942711
Sacramento, CAPP 94229-271 •
888 CaIPERS ~or 888-225-7 77)
C~E~ TDD - {916) 78 -3240; FAX (916) '795-3933
February 23, 2009
Sandy Abe, Director of t-{uml n Resou es
City of Cupertino (0691)
Via Fax Number: 408-777- 109
• Dear Ms. Abe:
This is in follow up to your quest for i formation about the temporary employment of
CaIPERS retired members.
Circular Letter 200-181-04 as issued n September 3, 2004 to inform all employers
that temporary employment of a servic retirESd member is not allowed if the service
retired member is younger an the. no aI re;tirement age unless both of the following
conditions are met:
• There is no verbal or~~wwrriitten agr~ ement to return to work as a retired annuitant
• between the retired n'~ember an emp'!loyer before the retired member retires.
. There is a bona fide ~ teak in se oration of 60 days between the retired E
i
member's retiremen# date and t date the temporary employment as a retired
annuitant begins.
I
The normal retirement age r CaIPER ' purF~oses is the highest benefit formula age for i
the retired member's retire ent formul~ . Foi• example: the highest benefit formula age •
Is 50 for the 2% or 3% at 5t7 retirement ormulas, 55 for 2% or 3% at 55 retirement
formulas or 60 for,the 2% 0q 3% at 60 r tirement formulas. If the retired member has
more than one retirement formula, the Ighe:>t benefit formula age applies, even if the
retired member's service in that fomlul was with a previous CaIPERS employer and/or
several years prior.
After the service retired me bet has s tisfieri the bona fide break in service
requirement, he or she may accept a t ~ porary appointment. tf the service retired •
member attained normal ret rement ag prior to retirement, he or she may accept a
temporary appointment the ~ay after th it reliremerit date.
Here is a brief description o two types f temporary appointments that a public agency •
may use to employ a CaIPE S retired ember and copies of the Government Code
sections.
Government Code section 21221(h) ~ ermii:s the appointment of a retired member by
the governing body of a, co tracting ag ncy to a~ position deemed by the governing body
to be of limited duration an requiring s ecialized skills or during an emergency to
C liforrtia Publ c Eml~layees' Retirement System
.calpers.ca.gov
• 1
i
FEB-23-2009 14:35 From:CALF'ERS 9167950385 To:408777310'9 P.2~17
Sandy Abe -2; February 23, 2009
prevent stoppage of public business. enerally, these appointments are used for
• • • dt~-~.trn ,erma tttertt-to fill- th~va
An appointment under Gov mment Co e'section 21.221{h) is limited to 960 hours in'a
fiscal year; however, there i~ no requir ment that the rate of pay be comparable to that
paid to an employee doing similar dutie . Although, a one time extension of the
employment for longer than 960 hours ay k>e requested for a section•21221(h) •
appointment; the retired me ber cann t be employed in the position more than 12
months, with or without the xtension t work more than 960 hours. •
To request an extension for appofntme is made under Govemment Code section
21221 (h}, the governing bo y of the co • trading agency must submit a written request
including all the details abo ~t the situa on with a resolution, passed by the governing
body, requesting the CaIPE~S board t act capon the extension request. The request
must be received before the retired me ber reaches the 9G0 hour maximum. A sample ~
resolution is enclosed. Ple~se submit t e request with resolution to my attention by mail
or by fax. This request sho~ld include • copy of the interim employment agreement.
Government Code secttor~ 21224 per its the employment of CaIPERS retired .
members in an emergency t(o prevent opp~~ge of work or because the retired member
has specialized skills need d to perfor work of limited duration. Employment is limited
to 960 hours a fiscal year a d the rate f pays must be comparable -not less than the
minimum and not in excess of that p id other employees performing comparable
duties. There is no extension allowed the number of hours a retired annuitant may `
work under this section. H 'waver, if th retired member's specialized skills are required
next year, an agency may.t~mporarlly ppoint the retired member again, as song as the
retired member did not collect unempl er~t insurance compensation for the previous
year's temporary employment.
I have included a copy of thl Circular attar 200-154-04 issuin the decision concemin
em to ment as an Inde en ~ ant Con ctor or throw h a 3`~ g g
p Y p g party employer under .
CafPERS. I have also inclu ed a defCn tion of Independent Cpntractor and the mailing
address for the review of a y contracts or employment agreements if your agency
• wants to employ retired me bars as ei her Independent Contractors or through a 3~d ~
party employer. ~
i
If you have any questions, lease cunt ct m~~. My direct number is (916) 795-3120 and ~
my fax number Is (916} 795 0385.
i erel , •
Burke, Retirement Program Specia ist !I
etirement Support
Attachments (15) f
Total Pages (17}
FEB-23-2009 14:35 From:CAt_PERS 916795t~J385 70:4087773109 P.3~17
a '
P.O. Box 94270,9 ~ Date: September 3, 2004
Sacramento, CA g422g-2709 Reference No.:
(888) CatPER5 i(225-7377)
Telec°rnmunica~tions•Device r the Deaf Circular Letter No.: 200-181-04
No Voice (918) 95-3240 _ rn~utis
+~vWw.capers.ca.gov Special:
C~rcu~~r Le#ter•
T4: 'ALL STATE GENCIES, CONfTRACTING .EMPLOYERS, CALPERS-
AFFILIATEb MPLOYE ' ANI) RETI~tEE ASSOCIATIONS,
. AGRICULTt1 ~ L DlSTR CTS, STATE COL4EGES 8 UNIVERSITIES;
COUNTY SUPERINTEN ENTS OF SCHOOLS, AND INDIVIDUAL
SCHOOL DIS RICTS .
suB,IECT: EMPLOYM NT AFT R RE.TiREMENT WITH A CALPERS-
COVERED • MPLOY R
. This Circular Letter is to info{m you that the "IVormal Retirement Age" •and "Bona Flde 1
Separation in Servlcey regulations hays been finalized and are effective September 19,
2004 (see attached).
In a previous Circular Letter #200-143- 4), you vWer~s informed that if a participant has
not attained their normal retifemen# age ,they must have a bona fide separation in
service prior to reh?rning~to e~rlployment as a retired annuitant. The bane fide
separation in service is a federal require nt which prohibits in-service distributions
from a pension plan.
The final regulations specify hat a Calif ~ rnia I'ubllc Employees' Retirement System
(CaIPERS) member who hash not reach d normal retirement age must have a
60 calendar-cfay separation 1 service p or to returning to employment as a retired
annuitant, and there must b no agree nt (~Rither verbal or written) to returrf.to '
• employment between the me ber and CatPERS employer prior to retirement. I
. I
• ;
Background:
.The CaIPERS Defined Benef~t Plan is a 1 x-qualified pension plan under Section 401(a)
of the tntema! Revenue Cod (IRC) and, as such, it must comply with the requirements
of this section to maintain its ax-exempt tatu:~. Internal• Revenue Service (IRS) rules
do not permit the distribution ~ f benefits o a retiree who returns to employment as a
retired annuitant prior to attai ing the pia 's normal retirement age unless the retiree
• had a "bona fide" separation in service. retiree may reinstate to active service at any
time.
I
i
FEB-23-20H9 14:36 From:CALPERS 916795tJ385 To:40B7773109 P.4~17
'
Circular Letter #200-181- 2 September 3, 2004.
' at a overnment Code ~ectian 21220.5
effective ,lanuary 1.2004. This sects n states: '
. ~ A retired person who has not a ained the normal retirement age shall
have a bona fide se oration in ervics to the extent required by the '
Internal Revenue C de, and th . regt~lations promulgated thereunder,
before working afte retirement ursuant to this article. The board shalt .
' establish, by regula on, the Grit ria under which a bona fide separation is •
satisfied.
CaIPERS promulgated reg lotions un r Title 2, aeation~ 586 - 586.2, in order to
implement Government Code section 1220.5 and comply with federal requirements.
•
Summary.df Regulations: ~
Normal Retlrernerat Age -The norms retin~ment age Is the member's:benefii forfiufa
age. For example: The no ~i retire ent age for a~ member with the 2% at 55 benefit
formula would be ag.e 55. he normal etirement age for a member with the 2% at 60
benefit formula would be $ e 60.
No Pre-Determined .Agree ent With mpUoyer -For members whq. retire before
reaching normal retirement e, there n b+a no agreement (either verbal or written)
prior to retirement to rendetl service to ny CaIPERS covered employer as a retired
annuitant regardless of the ength of th sepaaration. '
• Bona fide $eparatlon in $ervlce~-A etire~d fiemberwho is under normal retitement
. age must have a minlrnum ~$paration i senrlce of 60 c~alender--days prior to returning
to any CaIPERS-covered a ptoyment 'thoiat reinstatement. '
Emergency Hiring Except ~ans - Allo for immediate em to.
p yment of a retired
member under normal retir ~ment age f r.emergency'situatians as defined by ~
Government Cade section 8558.
FEB-23-2009 14:36 From:CALPERS 916795l~J385 To:4087773109 P.5~17
. Circular Letter #200-181- 3 September 3, 2004
uestions an Answers:
Question #1: When are t e regulatl 'ns effectfveT '
Answer: The regulati ns are effe tive September 19, 2004.
Question #2: Who is impacted by the new regulations?
Answer: ~ Employers a d any CaFF ERS active member or retired member who has
net reached ormai retir. menu age, .
Question #3: What is the orma! ret meant age?
Answer: Thenormal retirement a - e is the member's benefit formula age. For
axarnple: rthe norms! retirement age for s miscellaneous rrrember with
. the 2°~6 at 55lbenefrt fo ula would-be age 55. The normal retirerrrent
age for a me ber with a 2%~ at 60 benefif formula would be age 60.
Question #4: What narma~re#lremen age will be used if the merrtber retires
under more ~ hen one enef7't formula ?
Answer: The highest ~pecifred eIg applicable to the member is used, For
example: if tie member retirement benefit was calculated based on
two different ~ettrement f rmulas, the 2°rb at 55 as~ a misceiianeous
member and he 3% at 5 as safety member, age 55 would be the
' normal retire ant age since it is the highest age. ~ ~ ~ . '
Question #5: A member tires w/th ~ 2% ,et 56 benefit formcila at age 58. Then, '
within BO days, ~the.me ber,ls offerdd employment with a different
. CaIPERS co eyed empl yer with a 2 % et #d benefit formula. Does
this member have to w it at least 80 days to re-employ at the new
agency?
Answer: No. The norrr~al retireme~: t agij for the employment from which the
member retires will apply In tP~is example, the member would not need
to have a separation ins .rvice because the age~at retirement (56) is ~
older than thelnormal yeti emerzt age {55~. On the other hand, if a 2% at '
55 benefit fort~rula applie and the member retires at age 54, at {east a
60 day separation is requ ed before returning to employment as a
.
FEB-23-2009 14:36 From•CRLPERS 916790385 To:4087773109 p,6~17
Circular Letter #200-181-04 September 3, 2004
' n even a pc?si ion is wit an employer with a 2% at SO
benefit formut~ .
Question #t: How will pro pectfve a ploiiers know the normal retirement aye of
a retired ann ltantl
Answer: Employers wii need to a k the job candidate. ~If a job candidate does
not know thei normal ret ement age, employers should contact
CaIPERS at 88} CaIPE S (2~Z5-7377}.
Question #7: yVho will enf ~ rce the B na Ffde Separation fn Service requlrehtent?
Answer: If is the emplo eCs respo sibillty to verify that any person who retired
under the Cat ~ ERS Defi ed B~~neflt Plan prior !b attainment of the
applicable normal retire t a~~e has a "bona fide separation in service" -
prior to commencemen# f service as a retired annuitant. Also,
CaiPERS and tor$ will m nitor CaIP~RS covered employers to assure
compliance.
Question #8: Wfrat.are ~ihe con.~eque ~ ces .to the member a»d the employer for
falling to •co p/y with ~e bG17a fide separation In servJce
requlrenten
Answer: The retired an uitant wh se employment c#id not comply with the
provisions of ~ overnrren Cod~3 section 21220..5 could be retroactively
reinstated to ctiva rnem ershilp effective the first day of employment as
a retired annu tant for the CaIPIERS-covered employer.
There may. be serious fin racial cgnsequences to both the rnernber and
employer. These conseq ence~s are described in publication PERS-
. PUB-37 titled Relnstafen ent From RetlremenC'.
Question Can a member return to gmpl'oyment as an Independent contractor
wi#hout the 60-day sepa ~ etlorr In sere/ce requirement?
Answer: Hiring a retire as ari ind eridr:nt contractor ranay be done, but it must
be clear that they are not a corriman law employee (See Clrcu.lar Letter
# 20Q-154-04) In order t~ avoid passible mis-.classifccation of the retired
annultarit, it is suggested that a copy of the proposed con#ract or
agreement be submitted o CaIi~ERS for review,
1
FE8-23-2009 14:35 From:CALPERS 91579.50385 To:4087773109 P.7~17
Cirouiar letter #200-181-04 5 September 3, 2004
Question 1 an a me berg~i to ~ ork lmrhedlately after retirement !f they have
aot reached their nor al retirement age?
Answer: CaIPERS r Itirees can ork for the private sector, a 1937 Act Coun •
ty
agency, as teacher o administrator whose retirement is with the
California State Teac ~ rs' Retirement System or the University of '
California t~etirement an or they can work for a public agency not •
covered by iCaIPERS jthout the required minimum 60 calendar-day
separation in service, hey can also work for any Ca1PERS-covered
employer if they reinstate.
Question #71: if Callfornl iegislatlo ellrnlnated the 960-hour llmltatfon on
' retired annuitants, w uld ~t bane fide separation In service still be
required? .
' Answer. Yes. The na fide se ~ aration in servic$ requirement would stilt apply .
to retirees who haven t rea~~ted their normal retirement age.
Question #12: Can an em loyer•and an employee who is under the normal
reNrement~ge have a ag~~eement for the employee .to return to
• empioyme t as a redr d annuitant? '
Answer: No, The IR has cons erect a bona fide separation to be a good faith •
and cample a terminate n of the employment relationship, without a •
predetermt red agreem ~.nt tq continue wortking at a later date, to
constitute.a bona fide eparition. If theta wes a side agreement or
meeting of # e minds t at tht: member would render services to the
employer in the future, he IF;S could deem the termination a sham and
.find that the member h d nearer severed employment. As such, a
distribution o the parts pant prior to normal retirement age would, upon
subsequent assignmen ,constitute an impermissible in-service
distribution.
Question #13: How can a emp/oye determine Na memberundernormal
retirement ge is lnte stec~t In returning to employment after the
BO calends day sepa atlon~?
Answer: Surveying a piayees r girdling their interest in working after retirement
without mak ng an agre .meat would be permissible. Also, employers
could establ sh a pool retirees for future service:
FEB-23-2~9 14:36 From:C~1LPERS 91679517385 To:4087773109 P.8~17
I
Circular Letter #200-181-04 6 September 3, 2004
ues es e s para on sere ce requfrement apply to dJsabfffty
retfremen ?
I
Answer: No. The se aration in ervice requirement applies only to service
retirements.
Question #15: What is fncf
uded in th deitnltfon of emergency?
Answer: it is the responsibility o federal, state and !Deal agencies to determine
~what~constit tes an em rgency. The employment must be related to
the emerge. cy. A ba og o~i work does not qualify as an emergency
(Governme t Code se ion 8558}.
• ~ f
Question #16: Does the d tlnltlon of orn~al RetJrament Age impact the catch-up
provlslon oIf the CaIP RS 4'57 Program?
Answer: No. The notmal retire ent age far employment after retirement dues
not affect th 457 Pian.
' ~~If you have additional quests • ns; please call the Employer Contact Center at
(888} CaiPERS (225-7377).
7s/ ~'yf ,
Kenneth W. Marz(on, Chief
Actuarial S Employer Servi s Division ' .
Attachment
'
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~ _ .
• Attachment
Reg Iatory. ctit:n by Cal•PERS
Title 2.:Administration
DivJsion 1. Administra ive Perso nei •
Chapter 2. Board ~a Adminis a#ior~. of Public•~Lmployees' Retirement ~ -
system
Subchapter 1. Empl yeas' ~Reti ern®~nt System Regulations
Article 7.5 Norma Retirem nt llge and Bona Ftde Separation in
Servic
• i
§886. Purpose
.The purpose of this Articl is to ensu the: federal tax-qualified status of the ' -
Public Employees' Retire ent Syste by prohibiting in-service distr~butians to
the extent required by th Intema) R enue Code, and the regulations
promulgated thereunder. In tha eve the applicable federal law changes, the •
federal law shall superce I ~ these re ulaticros. •
NOTE: Authority: G~avernrnent ode sections 20121 and 21220.5.' -
Reference: overnme Code section 21220.5.
• t
§686.1 Normal •Retlrem nt Age ~ -
•
(a). The nomzai retiremen age of a .ember shalt be the later of: '
{1) the age when the member is first E>ligible to retire pursuant to Article 1
through Article 5 of C apter '12, art 3; Division 5 of Title 2 of the
Govemment Code; o
- 'i
(2) the highest spec' ed age ap gcabie to the member in the benefit f
formula, where the hi hest speci ed age is defined as: .
(A) 65 if the member i entitled to bene#ts under Government Code
sections 21076 or 1100;
(B) 60 if they member i entitled to•benefits under Government Code
section 21353 or 1354.3; .
• (C) 55 if th member i entitled to benefits under Government Code
section 21354, 21 54.1, 21354.5, 21363, 213fi3.1, 2 f 366,
21369, r 21369.1; nd
(D) 50 if they member is entitled to benefits under Government Code
section 21362, 21 62.2„ 2.1383.3, 21363.4 or 21363.8.
. ~
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FEB-E3-2009 14:37 From:CALPERS 9167950.385 To:40B7773109 P.10~17 {
(b) In the event an exists g benefit f rmula is madlfaed or a new benefit formula
is enacted the chief act~u~a ma d '~e the neUnal ret'
time that the regulations ay be am ndeci.
. ~
NOTE: Authority: Qovemment Codes sections 2p121 and 21220.5.
.Reference: Governme Code section 21220.5. '
§ 586.2 Bona Fide Sep ration in rvfc~e
(a) t=or_purpose:s of wo !ing for a C IPER;S-covered empio er after retirement
Y
pur$uant to Article 8, of hapter 12, art Division 5 of Title 2 of the
• Government Code, a mem1ber who snot attained normal retirement age shall
have a boric fide separation in servi e.. A bona fide separation In service is
defined as:
,I
(1) no predeterminl ed agree ent between the employer and the member
prior to retirement to return to• ork for the employer after retirement;
and
{2) a separation ins service of t least 60 calendar days between the date
of the member's r t~rement a the first day of worn; for the employer as a
retired person. Th 60~days s all commence an the day after retirement. •
(b) Any retired person a ployed in 'olatii3n of this regulation shall be subject to
the consequences provid din Gove men~t Code section 2122Q.
(c) Its the event an sine . envy has b n declared as provided in Government .
Code Section 8558 that r quires the mpie~yment of a retired person, the 60 ~
calendar day separation in senribe re uireinent se# forth in subdivision (a)(2) of
this regula#ion shall not a ply. .
•
NOTE: Authority: G vemment s ode sections 20121 and 2122p.5.
Reference: overnmen Code section 21220..5.
i
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21221. Conditions and L'rmi ttons on Se .ice ~?fter Retirement
re rea person may aeives w~utivut ~ !
retirement or loss or interruptio of benefits rovided by this
system, as follows:
(a) As a member of any boar , commissi , or advisory committee, j
upon appointment by the Gove or, the Spe ker of the Assembly, the ~ .
President pro Tempore of the mate. direct r of a state department,. •
or the goveming board of the contracting ag r?cy. However, the
appointment shall not be deerryed empooym t wltF~in the meaning of
Division 4 (commencing witri Section 320x) nd Di'~ision 4.5
(commencing with Section (i100} of the La r Code, and shall not
provide a basis for the payme t of workers' mpensatlon tv a retired
state employes or to his or her~dependents.
(b) As a school crossing gua~d.
(c) Asa Juror or election.offl er:
(d) As.an elective officer on nd after Sep tuber 15.1961.
However, all rlghils and immun ties which rn y hav~3•accrued under
Section 21229 as it read prior that sectio s repeal during the
1969 Regular Session of the L gislatur`e are hereby"preserved. ' •
(e) As an appointive membb} of the gover ing body of a contracting
agency. However, the compe satlon for the office shall not exceed .
one hundred dollars ($100) pe month.
(f) Upon appointment by the Legisfattlre, either house, or a . , '
{egislative committee to a posi ion deemed ,.y the;sppointing pow®r to
be temporary- in nature.
(g) Upon employment by a ~ ntracting ag cy to a position found by ~
the governing body, by rasolu ion, to be av labia I~ecause of a
leave of absence granted to a~person on pa oil status for a.period ~ i
not to exceed one year and fo nd by the g ernin1l bodyto require
specialized skills. The tempor~ry employme t shalt be terminated a# ~ I
the end of the leave of absen e. Appointme is un~~er this section I
• shall be reported to the board nd shall be ccoml~anied by the
rasolutidn adopted by the gov ruing body.
(h} lJpan appointment by the gvvarpin body of a contracting agency
to a position deemed by thel governing dy tC~ be of a limited
duration and requiring speo~alited skiirs or during an emergency~ta
prevent stoppaSe of public business. These appointments, in addition
to any made pursuant to 3e~tion 21224, hall not exceed a fatal for
all ~eMployers of 950 hours rn any fiscat~ ear. V'Jhen an appointment Is
expected to, or wiq, exceed ~9ti0 hours in any fiscal year, the
governing body shall reque~t approval f orri the board to extend the ~ i.
. temporary employment. Th j governing ody shall present a resolution
• to the board ~requesttn~ ac on to alldw disallow the employment ,
extension. The resolution s~atl be prase tad prior to the expiration •
of the 960 hour maximun7 fc~r the fiscal ear. Tlhe~ appointor@nt shall
continue untiPnotificatioti oaf the board's decisifon is received by
the goveming body. The apppointments Il be deemed approved if the
board faits to take action within 80 days of receiving the request.
Appointments under this sr~bdivision m y not exceed a total of 12 '
months.
(I}Upon appointment by th Administrati a Director of the Courts ~ ' .
to the position of Court Secur ty Coordinat , a position deemed
temporary in nature and !`equ ring the spec lazed skills and
experience of a retired profe sional peace fficer. ,
i
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FEB-23-2009 14:37 From:CALPERS 916795Ej385 To:4087773109 P.12~17
' ~ i
S~Mf?LsE :L-ANGt1~~GE.'F.' .I~ 12ESOLtJTiO~R1 ~REG'~U~STING
'CM~DI' ~l r r
Re~sol ition. ~I~m'ber
W:HEREAS~, (retiree nam ,last 4 di ts.of the social security number) retired from !
(agency from which :retir d). in the p sitbn of (title of position from.which retired),
effective{date of CaIPE S' retireme t} and,
WHEREAS, the (employ, is governi g .body* or its agent) appointed (r®tlree
name) to the position' of { itle of tern ovary .position) under Government Cade ~
section 2122 (h), a~ posit~on~ deeme to bf; of limited duration and requiring
specialized skills, effecti~ (date of ppoir~tment), and,
WHEREAS, (retiree name). is expec ed to reach ~hislher maximum of 960 hours
this fiscal year on or abort (date em loym~ent wilt reach 960 hours) and,
WHEREAS, due to (spegific reason for extension request) and,. 1
i ~
WHEREAS, (retiree nam )has (de vibe specialized skllis possessed by the
retiree, ff applicable) and ~
. ; ,
THEREFORE, BE tT RESOLVED b (employer`s governing ~ody* or its agent) i ~
that the CaIPERS Board~~ f Adrriinis ~ tion be requested to approve an extension
in accordance with Gove ment ~Co a section 21221(h} for the temporary.
employment of (retiree. n me) for (n mbar of hours requested) additional hours ' `
ar through (requested en date of a ensi~~n)~. An appointment made under this ~
section of #his subdivisio may nat ceecl a total of 12 months.
(Signatures and other no ations as er usual for resolution fey employer's .
governing body.) .
s
*for School Employers the governin_ ~ body is the County Office of Education. _
age 1 of 1 2!11!2009
FEB-23-2009 14:37 Prom:Cf~PERS 9167950385 70:4087773109 P.13~17
• ,
•
21224. Limited Service During an Emergency or Special Skills Required;
(a} A retired person may erve with t reinstatement from
retirement or loss or inte ruption of eneflts provided by this •
system upon appointme t 4y the ap ~ ointing power of a state agency or
public agency employer~ither durin an Emergency to prevent stoppage
of public business or beciause the re fired employee, has skills needed
in performing work of limited duratior . Th+ssa appointments shall not
exceed a~ total for all em~loyers of 9 0 hours in any flscat year i
and the• rate of pay for th employm - nt snail not be less than the
minimum, nar exceed th~t paid by t employer to other employees
perfomning comparable duties.
(b) (1) This •section sh 11 net apply o any retired person ~ ~
otherwise eligible if during the 12-m nth parlod prior to an
appointment described irk this sectio the retired person received any
unemployment insurance~~ compans 'on sirising out of prior employment
subject to this section with the same employer.
{2) A retired person who accepts appointment after receiving
• unemployment insuranc~ compens ion ass described in thls subdivision .
shall terminate that empl yment on he last day of the current pay
period and shall not be a igible for reappointment subject to this ~ ,
section for a period of 12 months fol~owlnt~ the last day of
employment. Tfie•ratired parson she I not ba subject to Section 21202 j
or subdivision (b) of Section 21220.
i
•
• i
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• I
{
f
:
Inde endent ontractor/Cvnsuitant ~ ~ •
An Independent Contra for/Cons taut is someone who cflntracts to do a
piece of work according t his/her o n methods, and is subject to his/her
employer's control only a to the en ~pro~iuct or flnall result of work, and not as
to the means and manne in which t work is performed.
Ca1PERS utilizes the co r~on law" ntrol test" to determine whether an
individual is an employee of a CaIP S~overed agency., This practice was
affirmed by th$ California) Supreme .QUrt in the Metropolitan Water District of •
Southern California v. Superior Cbu of L~~s Angeles case, which stated that the
PERL "incorporates com~rton taw pri cipte:s into its definition of a contracting
. agency employee and...~,equires eo trading public agencies to enroll in '
CaIPERS all common la employee except those excluded under a specific
statutory or contractual p ovision."
There are a number of d tuitions a standards as to what constitutes "control." i
The Supreme Courtin th Cargill ca a cited the Tieberg v. Unemployment
Insurance Appeals Boa case in thi reg~~rd, which stated that "The right to `
. control the. means by wh ich the wo is accomplished is clearly the most
significant test of the employment re ationship and the other matters constitute
merely'secondary elem nts'.
We suggest reviewing B arcs Prece entiai Decision on the Lee Neidengard case ~
htt a/www.cal ers,ca. o lei -do ib ub'lea-reu-statutes/board-decisions/nd-05-
01-neidenaard:adfl for more inform ~ ion. '
Circular Letter 200-154-(~4 on the C ~ IPEF;S Web site includes information on the
Cargill decision and the f flowing w ;bsite address llttp;//www.irs.govlpub/irs- ~ ;
pdflp15a.pdf and htt :I .irs. ov/` ub/ s-ndflp983.udf
Circular Letter 200-181- 4 an the C IPEF;S Web site www.c~Ipers.ca.c~ov has
information on the "Ban Fide Brea in Se:paratlon" under GC 21220.5 if your
ernployrrtent is not indep ndent and you rite retiring under normal retirement age.
:
Mall (or fax) a complete py of the ontrict and the scope of duties with a cover
letter including your name, socials urity number and contact information #o:
CaI~ERS
Benefit Service Divi;~ion -Unit 470
P. d. Box 9427 1
Sacs amento, C 94!29-2711
Fax Number: 6-795-0385 or 916-795-3934
• ~ s
. ? 1
I
FEB-23-2009 14:39 From:CRLPERS 916795Ef385 To:4087773109 ~ P.15~17
` !
P.O. Box.942709 .Date: May 3, 2004
Sacramento, CA 4229-2709 Reference Na.: ,
(888) GaIPERS ( 25-7377)
Tetecommuntcatl ns Devlce fo the DE~af Circular Letter No.: 200-154-04
No Voice (916 3 ' s
~]PE~ www.calpers.ca.+~ov Spedal:
II ;
Ci c~ular L~ ~e~r
TO: ALL PUBLIC GENCIES ~ ~
SUBJECT: METROPOLI AN WAT DIS~rRICT OF SOUTHERN CALIFORNIA ~
v. SUPEI210 COURT O "LOS ANGELES["CARGILL" (2004) 32 Cal. 4~'
491]
r This Circular Letter further ~ddresses t e abc?ve court case discussed in our earlier
Circular Letters of 200-064 dated July 4, 2000, and 200-043 dated March 19, 2001.. i
The Supreme Court of Cali ornia has n w issued its decision in this case. With respect {
to California Public Employees' Retire ent System (GaIPERS}, the Court reached the
following conclusions:
"We conclude, as id the iowe courts, that the PERL• incorporates common law .
principles into its d flnition of a contracting agency employee and that the
PERL requires co tracting p blic .agencies to enroll: in GaIPERS all i
common IoW employees ex pt those excluded under a specific statutory or
• contractual provlsic~n:' (Emph sis added; "PERL" is the Public Employees'
. Retirement Law, Glovemment ode :3ection 20000 et seq.) ;
"...the PERL conta`iris no brow ~ exclusion for long-term, fu[I-time workers hired s
• through private labor suppliers " -
°Nor, of course, has thB Legisl ture l~rovided.in the PERL for any coemployment
exception to a con#racting age cy's duty to•enroll employees in GaIPERS."
The court also found that t) a defnitio of "employee" in Government Code Section ,
20b28 does not require th~t the funds 'used to pay employees of a contracting agency
be directly controlled by the contraotin • agency. Common law employees of a
contracting agency must ~e enrolled i GaIPERS regardless of the source of the funds
used to pay them. Thus, ~ nless othe Ise excluded bylaw or by contract with {
GaIPERS, a person deem d a comm law employee of a contracting agency must be
enrolled in CaiPERS.
Govemment Code Sectla 20125 pro Ides that the GaIPERS' Board of Administraflon
"shall determine who ere mployees d is i,he sole judge of the conditions under which
• persons may be admitted to and Conti ue to receive benefits under this system." The
• C Ilfomia Pubti F~nplffyees' Retirement System ~
t.in ofn Plaza - 40 P Street -Sacramento, CA 95814
I ~
FEB-23-2009 14:38 From:CALPERS 916795t~.385 To:4087773109 P.16~17
. ~ ~
p
+
Circular Letter #200-154-0 2 May 3, 2004 •
common law rules used by aIPERS f determining employee status can be found at •
http://www.irs.gov/pub~irs-pdf1p15 .pdf . (starting from page 3) i
httpJ/www.irs.gov/pub irs-pdf/p96 .pdf (starting fram page 21)
The common law rules for etemlining heth~er a worker is an employee may also be used to ~
distinguish "independent c ntractors" m "employees ° In that regard, the CaIPERS'
Procedures Manual define an "indepe: dent contractor' as follows: -
"An independent contr ctor is som one +~vho contracts to do a piece of work •
according to his/her n methods and is subject to hislher employer's control only i •
~ as to the end produc or fine! re ult o•f work,. and not as to the means and
. manner in which the work is perfo •med." (Page 2.6)
•
Factual questions may uiti . aiely exist s to 'whether a person is an employee under the
established common taw les. To fa litate this determination. employers,should '
maintain documentations bstantiating whether a person meetsthe definition of a
common law employee.
QUESTIUNrs
Will the provisions of G vemment ode ;5ectlon 20283 be applied ta•employers? ~ II'
Government Code SeCtio 20283 stet • s: "Any enployer that fails to enroll an employee
• into membership when, he or she becomes e?Ilglble, or within 90: days thereof, when the
employer knows ar can re sonabljr be expected to have known of that eligibility. shall be i
required to pay all arrears costs form tuber contributions and administrative costs of
five hundred dollars ($50 per memo r as reimbursement to'thls system's current .
year budget.' •
The previsions of Government Code ectiorti 20283 wail be applied to contracting i
agencies an .a case-by-ca a basis, de ending on the individual circumstances relevant
to each contracting agen
Is the rutirig to ise appli d retroacti .ety?
CaIPERS has concluded at a com , n la~r~ employee of a contracting agency not
otherwise excluded from ~ aIPERS a olime:nt by law or contract must be enrolled into
membership retroactive t~ Zhe origina'date of qualification. Incases where a persan is
deemed• a common law employee an is no longer employed with a contracting agency,
• the employer must nevertheless sub It a Member Action Request (AESC7-1) form far '
the employee. This form hould indi te: ~ '
i
FEB-23-2009 14:38 From:CALPERS 916795E1385 To:4087773109 P. 17 17
I
' !
Circular Letter #200-154-04 ~ May 3, 2004 .
. Box 10 (Effective Da a of Action - ThES date the employee should have qualified .
Box 8 (Remarks) _ nter the da the person separated from your employment.
Ca1PERS will,determtne wh ther any re oactlve retirement contributions for the
employee are necessary an will notify ubsequently affected employers as necessary. ~ .
i
Can agencies request a c ntract exc~ sion of "leased" v~rorkers, or workers with a i
genuine "ca-emplaymer~t I reiatiortsh p?
Re uests for exclusions of leeased ar " -emplloyed" .employees will be reviewed for
q
compliance with fife standa ds for cbntr' ct exclusions that were approved in 1997 by
the Ca1PERS' Baard of Ad~inistratlan. copy of these standards is a#tached to this . ~ - ;
~ Circular Letter for your refe~ence.
!SI '
'Kenneth 1JV. Marzion, Criief
Actuarial and Employer Se ices Divisi ~ n
Attachment
f
•