In a recent published decision by the CalPERS Board of Administration, a warning shot was fired to third party contractors attempting to skirt CalPERS contributions. The case, Fuller v. Cambria Services began in early 2014 after Cambria Community Services District’s (“CCSD”) long-time Finance Manager gave a 30-day notice that he was retiring.
The notice came at a time when CCSD was starting an emergency water project requiring the immediate assistance of another skilled financial manager. Tracy Fuller was hired CCSD to fill that role. However, she was hired through Regional Government Services (RGS) as an interim replacement. RGS provides individuals, mostly professionals, to small and midsize public agencies to perform work.
RGS itself is not a CalPERS covered agency. RGS classifies individuals as employees of RGS and itself as an independent contractor of the CalPERS covered agencies, thereby seeking to avoid the application of CalPERS pension laws to the individuals’ work assignments. RGS currently provides individuals to about 100 public agencies, and has served about 225 public agencies since it started operating in January 2002.
CCSD treated her as an employee of RGS and did not offer her membership in CalPERS or any other retirement or health benefits. CCSD also did not require Fuller to complete its standard new employee documentation or give her a typical new employee orientation. She was given an office, phone, access to some CCSD computer systems, and a CCSD email address, but no laptop computer unlike other CCSD management personnel.
In July 2015, CalPERS sent CCSD a draft audit report stating that Fuller should have been enrolled in CalPERS as an eligible employee under the “common law test of employment.” CCSD responded that Fuller was not an employee of CCSD, but of RGS.
After examining all the evidence, the CalPERS Review Board determined Fuller was an employee of CCSD who should have been enrolled into CalPERS membership when she worked as CCSD’s Interim Finance Manager. In a well drafted 14-page decision, the Board clearly established that Fuller was CCSD’s employee for purposes of membership in CalPERS and should have been enrolled.
Specifically, the evidence established that CCSD had the right to control the manner and means by which Fuller accomplished the result desired, which is the principal test of an employment relationship. In fact, CCSD explicitly chose Fuller for the assignment, and RGS lacked the authority to reassign Fuller without CCSD’s consent. At the same time, CCSD could end Fuller’s services at any time by requesting a reassignment or terminating its agreement with RGS.
Finally, CCSD should have reasonably been expected to have known of the enrollment requirement since it was filling a longtime employee position, albeit on an interim basis. Accordingly, CCSD was ordered to pay arrears costs for member contributions and administrative costs of $500 due to the error.