Terminating the Employment Relationship

other organizational unit will remain permanently unfilled so that there is an overall reduction in the workforce of the department or organizational unit.

The agency must also designate a time period, also by resolution, wherein a qualifying employee may elect to accept the Golden Handshake, provided that the period is not less than 90 days or more than 180 days in length. Sixth, the public agency must only offer the Golden Handshake to employees within those designated classifications, departments, or other organizational units who are eligible. To be eligible, an employees must: (a) be currently employed by the agency at the time of accepting the Golden Handshake; (b) be over the age of 50; (c) have a minimum of five years’ service credit (the two years of purchased service credit under this provision does not count toward the minimum five years’ service credit required); and (d) not receive unemployment insurance payments during that 90 to 180 day designated period. In addition, if an employee accepts the Golden Handshake, retires, and then later re-enters PERS through employment with any PERS public agency, the employee will forfeit the two years of additional service credit acquired from the Golden Handshake. 312 Finally, the PEPRA requires a 180 day break in service period before a retired annuitant, who retires pursuant to accepting a Golden Handshake, can return to work for a PERS agency (or an agency with a reciprocal retirement system with PERS) without reinstatement into PERS. 313 If one or more employees opt to accept the offer of a Golden Handshake, the added costs to the retirement fund for all of these employees will be included in the agency’s employer contribution rate commencing with the fiscal year starting two years after the end of the designated period. The increase in the employer contribution rate may continue for as long as 20 years. 314 All employees who are in the designated job classification, department, or other organizational unit that is slated for potential layoffs must be equally able to participate in the PERS Golden Handshake option as long as the employee meets the eligibility criteria established by PERS. In addition, employees should not be told that if they do not accept the PERS Golden Handshake option, their position will in fact be laid off. This prevents a later claim against the public agency by an employee who accepts the PERS Golden Handshake, but whose specific position was not laid off (i.e. the agency filled the position after the employee’s retirement). Offering PERS Golden Handshakes to employees is more advantageous to employees than simply a lump sum severance payment. Early retirement cash incentives are not generally included in the employee’s final compensation upon which his or her retirement benefits are calculated. This is because it will be likely considered “Final Settlement Pay.” Final Settlement Pay is excluded from compensation for purposes of calculating PERS benefits. 315 Thus, a lump sum severance payment for early retirement does not provide as great an incentive for an employee as the PERS Golden Handshake. In addition, a lump sum payment to an employee would likely be included in the employee’s taxable income.

Terminating the Employment Relationship ©2019 (s) Liebert Cassidy Whitmore 90