Following a CalPERS audit of the Town of Truckee, Calif. about three years ago, CalPERS determined that merit pay was not PERSable because it was only offered to employees who had reached the maximum on their salary ranges. The Town agreed, and stopped reporting the pay prospectively, but assumed that no adjustments would be required for previously reported merit pay.
 
However, in 2017, CalPERS contacted Truckee staff to inform them that the retirement allowances of various retirees would be reduced to eliminate the merit pay from the benefit calculations. In addition, these retirees would be repaying about 3 years of overpayments. The potential exposure to the Town — if the affected retirees were to sue it — could have been substantial.
 
Truckee retained Best Best & Krieger LLP Partner Isabel Safie to resolve this issue. Through a combination of a strong legal argument and her strong working relationship with key representatives at CalPERS, a settlement was negotiated with CalPERS, prior to the administrative appeal beginning, which left the retirement allowances of all impacted Town retirees intact with no overpayment obligation. This was the best case scenario for the Town.

[View source.]