California Government Code § 31541.2

(a) For purposes of this section, the following definitions apply: (1) “Agreement” means a memorandum of understanding or collective bargaining agreement between the employer and an exclusive representative pursuant to the Meyers-Milias-Brown Act (Chapter 10 (commencing with Section 3500) of Division 4 of Title 1). (2) “Alameda” means the Supreme Court case of Alameda County Deputy Sheriff’s Association v. Alameda County Employees’ Retirement Association (2020) 9 Cal.5th 1032 and its holding. (3) “Disallowed compensation” means nonpensionable compensation reported for a member of the retirement system that the system subsequently determines is not in compliance with PEPRA, the holding in Alameda, other provisions of this part, or the system’s administrative regulations or policies through no fault of the member. For purposes of this paragraph, “disallowed compensation” also includes nonpensionable compensation that was previously included in an agreement. (4) “Employer” means the appropriate applicable county, county agency, or special district standing in relationship between the employee and the system. (5) “Initiated a process” means a system has formally adopted a resolution or made an administrative determination for a correction process on identified disallowed compensation that has required or will require collecting any portion of an overpayment from, or refunding member contributions to, any affected active member, retired member, survivor, or beneficiary, or adjusting the retirement allowance of any affected retired member, survivor, or beneficiary due to the determination of disallowed compensation by the system, including a determination by the system that is consistent with PEPRA, the holding in Alameda, and other provisions of this part. (6) “PEPRA” means the California Public Employees’ Pension Reform Act of 2013 (Article 4 (commencing with Section 7522) of Chapter 21 of Division 7 of Title 1). (7) “System” means a retirement association or system established pursuant to the County Employees Retirement Law of 1937 (commencing with Section 31450). (b) If the system determines that the compensation reported for a member is disallowed compensation, it shall require the employer to discontinue reporting the disallowed compensation. (1) (A) In the case of an active member, the system shall credit all employer contributions made on the disallowed compensation against future contributions to the benefit of the employer that reported the disallowed compensation, and shall return any member contribution paid by, or on behalf of, that member, to the member directly or indirectly through the employer that reported the disallowed compensation, except as provided by subparagraph (B). (B) A system that has initiated a process prior to January 1, 2024, to recalculate an active member’s compensation earnable pursuant to Section 31461 to exclude disallowed compensation and return contributions, either directly to the member or indirectly through the employer, may continue to use that process to ensure compliance with PEPRA, and that is consistent with, and pursuant to, the holding in Alameda. (2) In the case of a retired member, survivor, or beneficiary whose final compensation at the time of retirement was predicated upon the disallowed compensation, the system shall credit the employer contributions made on the disallowed compensation against future contributions, to the benefit of the employer that reported the disallowed compensation, shall return any member contributions paid by, or on behalf of, that member, to the member directly, and the system shall permanently adjust the benefit of the affected retired member, survivor, or beneficiary to reflect the exclusion of the disallowed compensation. (3) (A) In the case of a retired member, survivor, or beneficiary whose final compensation at the time of retirement was predicated upon the disallowed compensation as described in paragraph

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