CalPERS Disability Retirement Attorneys

Can I Work after Taking CalPERS Disability Retirement?

It’s a tough economy – and California is one of the most expensive States in the country in which to live. Living in California is notoriously expensive, particularly for those relying on fixed incomes like retirement or disability benefits. So it’s no surprise that the experienced disability retirement attorney at Cantrell Green are frequently asked by our clients if they can still work to bring in some extra income after taking disability retirement.

The answer to that question, however, is complicated. Whether you can work after taking CalPERS disability retirement depends on a number of factors – including how much you make, your age, the type of work, and whether your new job will be with the same or another CalPERS employer, with a different Public Retirement System, or within the private sector.

Cost of Living in California

The cost of living in California is significantly higher than the national average, with housing being the primary driver. According to 2023 data from the Missouri Economic Research and Information Center, California’s cost of living index is 142.2, where 100 represents the national average. This makes California the third most expensive state, behind only Hawaii and Massachusetts.

Housing costs in California are especially steep, with a housing index of 219.8. For comparison, states like Texas (91.5) and Florida (100.3) have overall cost of living indices much closer to or below the national average. The high costs in California extend beyond housing to necessities like groceries, utilities, and healthcare. For retirees or those on disability income, these elevated expenses can pose significant challenges, potentially stretching fixed incomes to their limits and requiring careful budgeting or consideration of more affordable regions.

So it’s no wonder that many of our CalPERS clients need to make a little extra money to supplement their disability retirement benefits!

Working Within CalPERS during CalPERS Disability Retirement

There are specific laws on both the state and federal level that outline employment restrictions for retirees who return to work within the same public retirement system from whom they receive benefits. The laws were enacted to prohibit a retiree “double-dipping,” or in other words, receiving a monthly CalPERS retirement benefit while simultaneously receiving pay from a CalPERS employer.

ANY CalPERS retiree may work in a so-called CalPERS “retired annuitant positions only”. And disability retirement retirees are subject to additional requirements and restrictions. However, if working for a CalPERS-covered employer, disability retirees are generally subject to the 960-hour per fiscal year limit, like other CalPERS retirees.

A CalPERS Disability Retiree’s Responsibilities

Most retirees don’t understand that it is their responsibility to ensure they comply with the law. Upon making application for employment, the retiree should:

• Determine whether or not the employer contracts with CalPERS for retirement benefits.
• Let the prospective employer know that you are currently receiving retirement benefits from CalPERS, and whether those benefits are for service, disability or industrial disability.
• Restrict applications to jobs that are specifically for retired annuitant positions. It is permissible for disability retirees to obtain work as a permanent “retired annuitant” position upon receipt of CalPERS’ pre-approval.

Working Outside of CalPERS during Disability Retirement

“Service” retirees may work for another public retirement system without terminating their CalPERS retirement and continue to receive benefits without restrictions as long as the new position qualifies for membership in a public retirement system other than CalPERS. However, this is NOT the case for CalPERS “Disability Retirement” retirees. Restrictions exist for these disability retirement retirees even if the employer’s benefits are contracted with a different public retirement system, or if they work in the private sector.

To reiterate: CalPERS disability retirement retirees are restricted in what work they can do, even for an employer in the private industry.

Restrictions on Working after CalPERS Disability Retirement

Disability retirement recipients are subject to several additional eligibility restrictions and requirements on top of all of the regular rules and restrictions, in order to NOT lose their hard earned disability retirement benefits.

To begin with disability retirement employees must immediately notify CalPERS as soon as they are no longer incapacitated.

Then, if the employee goes back to work, the type of work becomes important. The new job must be significantly different from the position the employee held prior to retirement. In other words, it should not include the same type of duties or activities that the employee was previously restricted from performing. If the jobs are similar in nature, CalPERS must be notified immediately.

In the event the employee is under the minimum service retirement age and gets a new job where the duties are similar to the ones he or she was restricted from due to the disability, CalPERS has the right to reevaluate the employee to determine if he or she should be reinstated from retirement.

Earning Limitations after CalPERS Disability Retirement

The government has also placed earnings limits onto employees who have not yet reached the “minimum service retirement age”. These restrictions appear in Government Code section 21432.

Any earnings during disability retirement must be reported to CalPERS, either monthly or quarterly. Essentially, the total amount that you make (what you earn as an employee plus your monthly retirement allowance) can’t be higher than the amount you made from the job you held prior to retirement if you are below the “minimum service retirement age”. If the combined amount is greater, your retirement allowance will be reduced. However, as soon as you reach the minimum service retirement age, the earnings limit no longer applies.

In summary, disability retirees can get a new job and still receive your CalPERS retirement allowance. However, there are restrictions. Either your new employer must contract with a different public retirement system, be in private industry and not associated with CalPERS, or be a CalPERS-covered employer in a retired annuitant compliant position.

Self Employment & Gig Work During CalPERS Disability Retirement

In California’s challenging economy, “side hustles,” “gig work,” and small businesses are very common – even among the disabled and retired. Finding a way to supplement your disability retirement income can include rideshare driving (Uber, Lyft) meal deliver (DoorDash, Postmates), and other independent contractor work. Other retirees have begun selling online or through multilevel marketing programs, while some have found a way to turn a hobby like woodworking or crafting into a source of income.

But self-employment income for a retired CalPERS employee collecting disability retirement benefits is a complicated issue. Self-employment income alone does not automatically disqualify a retiree from collecting disability retirement benefits. However, if the income exceeds the earnings limit or if the work demonstrates an ability to perform the duties of the former position, it could lead to a re-evaluation of the disability status.

Self-employment income is generally subject to the same earnings limit as other forms of employment for CalPERS disability retirees. In other words, the earnings limit typically applies regardless of the source of income, including self-employment.

Additionally, disability retirees must report all income, including self-employment earnings, to CalPERS. Failure to report can result in penalties or suspension of benefits.

The type of self-employment work is also crucial. Although highly unlikely, if it’s substantially similar to the job from which the retiree was disabled, it could potentially jeopardize their disability status. An example of this would be a CalPERS employee who drove a prison transport vehicle and then took disability retirement. If he/she then began driving for Uber or Lyft it might jeopardize or cause reevaluation of their CalPERS disability retirement benefits.

CalPERS Disability Retirement Attorneys

It’s important to note that while subsequent employment income doesn’t automatically disqualify a retiree from disability benefits, it can impact the benefits if it exceeds certain thresholds or if it demonstrates an ability to perform work similar to the former position. The specific impact depends on individual circumstances, the amount earned, the nature of the disability, and the type of employment work.

Given the complexity of these rules and their potential to change, it’s highly recommended that any CalPERS disability retirees consult directly with CalPERS, a qualified benefits advisor, or their disability retirement attorney before proceeding. They can provide guidance tailored to the individual’s specific situation and ensure compliance with current regulations.

If you are considering applying for CalPERS Disability Retirement attorneys at Cantrell Green can help you navigate these restrictions and requirements – so you obtain your maximum CalPERS Disability Retirement benefits, and are still able to survive financially in California’s challenging economic climate.

Free Consultation with a CalPERs Attorney: 562-622-4800

This article is intended as general information only and does not constitute specific advice for your situation. This information applies to members of  California Public Employees’ Retirement System (CalPERS); and does not reflect the rules, laws or regulations governing how other public retirement systems are administered. If you have question about another public employee retirement system, find your system, below – or call our disability retirement attorneys at: 562-622-4800