In 2016, Gerry Serrano, a former homicide detective sergeant for the City of Santa Ana, California, took a leave of absence to serve as president of the Santa Ana Police Officers Association. During his tenure as president, the City continued to pay him his sergeant’s salary and various pay additives, including a detective premium, bilingual premium, education incentive, holiday pay, uniform allowance, and a confidential premium. The confidential premium was specified in the memorandum of understanding between the City and the Association as compensation “in lieu of 20 hours per pay period at time and one-half,” with its value equated to “28 hours of pay at straight time per pay period.” The MOU also stated that the premium’s inclusion in pension calculations was subject to approval by the California Public Employees’ Retirement System (CalPERS).
In 2020, CalPERS determined that the confidential premium and other pay additives were not pensionable because Serrano was on leave and not performing duties as a police officer. “The City appealed this determination, which Serrano later joined. CalPERS subsequently reviewed the entirety of Serrano’s pay and determined the other pay additives were also not pensionable.”
This decision was upheld by the Administrative Board of CalPERS and later by the superior court. Serrano appealed, arguing that Government Code section 3558.8, part of the Meyers-Milias-Brown Act, guaranteed he would not lose any compensation or benefits, including pensionable compensation, while serving as Association president. He also challenged the specific exclusions of the confidential premium and holiday pay from his pensionable compensation.
The California Court of Appeal, Third Appellate District, affirmed the lower court’s decision, rejecting Serrano’s arguments.
The Court first addressed whether section 3558.8 required all of Serrano’s police sergeant compensation to remain pensionable while he served as Association president. The Court concluded that the statute did not mandate this result: it interpreted “compensation” in section 3558.8 by referencing the Retirement Law’s definition, which distinguishes between general compensation and “compensation earnable” for pension purposes. Additionally, the Court noted that “compensation earnable” is limited to base pay and special compensation for work performed during normal hours, as defined by statute and regulations. The Court emphasized that section 3558.8 ensured Serrano received his base salary and employer retirement contributions but did not override CalPERS’ authority to determine what qualifies as pensionable compensation.
Regarding the confidential premium, the Court agreed with CalPERS that it was non-pensionable because it constituted overtime pay, which is excluded from pension calculations under the Retirement Law. The Court relied on the MOU’s language, which described the premium as “in lieu of 20 hours per pay period at time and one-half,” and noted that overtime is explicitly excluded from pensionable compensation. “The memorandum both acknowledged the confidential premium was in exchange for overtime and set the value of this premium.”
As for holiday pay, the Court found it non-pensionable because Serrano did not meet the regulatory definition under CalPERS’ rules. The regulation required holiday pay to be “additional compensation for employees who are normally required to work on an approved holiday.” Serrano conceded he was not required to work on holidays while serving as Association president, and the Court held this disqualification was fatal to his claim. The Court also dismissed Serrano’s reliance on a prior case involving holiday pay, noting that the facts were distinguishable and the regulation’s requirements were not met.
Serrano v. Public Employees’ Retirement System, 2025 Cal. App. LEXIS 104* (Cal. Ct. App. 2025).