Salus

Under the County Employees Retirement Law of 1937 (CERL), Government Code section 31450 et seq., retirement benefits are calculated on the basis of a retired employee’s “final compensation,” as that term is defined by sections 31460, 31461 and 31462 or 31462.1. As we explain more fully below, final compensation under CERL involves three requirements: compensation in the form of cash, rather than in the form of in-kind goods and services or time off; cash earned during a usual work period, as opposed to cash earned for overtime; and cash earned before retirement, rather than at or after retirement.

The cash payments a group of former county employees received at the time of their retirement in lieu of accrued sick leave were not final compensation under CERL. The payments plaintiffs and appellants Larry Salus et al. received were not cash payable before retirement because the accrued sick leave could not be converted to cash by appellants while appellants were still county employees.

Because the sick leave payments were not final compensation, defendant and respondent San Diego County Employees Retirement Association (the Retirement Association) was not required to…