Terminating the Employment Relationship

These are general minimum requirements. Some ’37 Act agencies may have different minimum requirements.

b. Mandatory Retirement A ’37 Act agency may be able to establish a mandatory retirement age of 60 for local safety members through adoption of a resolution if the age requirement is a “bona fide occupational qualification” consistent with the Fair Employment and Housing Act and Age Discrimination in Employment Act. 285 However, employers seeking to adopt such a resolution should first consult with legal counsel. C. E ARLY R ETIREMENT I NCENTIVES This portion of the workbook applies to all California public employers and is not limited entirely to PERS or ’37 Act agencies. However, there is some discussion for PERS or ’37 Act agencies at the end of this Section. Early retirement incentives are monetary or benefit awards intended to entice current employees at or near the age of retirement to retire. The benefits to employers may include avoidance of layoffs and a reduction in labor costs when senior employees are replaced with more junior employees or by no new employees at all. The benefit to an employee is the ability to retire earlier without the monetary loss that would typically result from an earlier retirement. Early retirement incentives can be offered in a number of ways. The most common methods are to offer the incentive to one or more employees at a specific time, offering the incentive to a class or group of employees during a “window period,” or offering the incentive as a standing benefit in an employer’s group benefit package. Whatever the reasons for an early retirement incentive or however an employer may wish to offer an incentive, an incentive must adhere to the following legalities: (1) it must not violate the Age Discrimination in Employment Act (“ADEA”) or California Fair Employment and Housing Act (“FEHA”); (2) it must not violate the Older Worker Benefit Protection Act (“OWBPA”); and (3) if it is a PERS or ’37 Act statutory incentive, it must comply with PERS law or the ’37 Act. In addition, it appears that the Public Employees’ Pension Reform Act of 2013 (PEPRA) prohibits early retirement incentives structured as supplemental defined benefit plans that provide for a defined benefit payout over time. 286 If your agency intends on providing an early retirement incentive, we advise that your agency consults with legal counsel to ensure that it complies with PEPRA. This is not intended to be an exhaustive legal review of early retirement incentives. For example, there may be tax implications for certain early retirement incentives which this workbook does not address. However, this portion of the workbook is designed to address the main issues public employers face when dealing with early retirement incentives: (1) compliance with age discrimination statutes (i.e., ADEA, FEHA, and OWBPA); and (2) if offering a PERS or ’37 Act statutory incentive, then compliance with PERS or the ’37 Act.

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