California Code, Government Code - GOV § 20572

(a) If a contracting agency fails for 30 days after demand by the board to pay in full any installment of contributions required by its contract, or fails for three months after demand therefor by the board to file any information required in the administration of this system with respect to that contracting agency's employees, or if the board determines that the contracting agency is no longer in existence, the board may terminate that contract by resolution adopted by a majority vote of its members effective 60 days after notice of its adoption has been mailed by registered mail to the governing body of the contracting agency.

(b) In addition to the interest obligations set forth inSection 20537, if a contracting agency fails to pay in full any installment of the contributions when due and the failure continues for a period of three months, the contracting agency may be assessed a penalty of 10 percent of the total amount due and unpaid, including any accrued and unpaid interest.The penalty may be assessed once during each 30-day period that the outstanding amount remains unpaid.In addition, the contracting agency may be assessed the costs of collection, including reasonable legal fees and litigation costs, including, without limitation, legal fees and legal costs incurred in bankruptcy, when necessary to collect any amounts due.