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Employers

Employer Bulletin

Local Employers
Vol. 17, Local F
July 5, 2000

Joint Instrumentality Rule Effective July 1, 2000

Effective July 1, 2000, the Department of Employe Trust Funds (ETF) promulgated a rule to help employers determine:

  • If an employe of a joint instrumentality qualifies as a participating employe under the Wisconsin Retirement System (WRS), and
  • How to apportion responsibility among the WRS participating employers for reporting hours and earnings to the WRS.

Under state law, some local units of government are permitted to join together to create a joint instrumentality. It is possible for two or more employers to create a joint instrumentality which is not recognized as a separate unit of government for purposes of Titles II and XVIII of the

Federal Social Security Act and for WRS purposes. One example would be a joint library district.

This rule specifies that an employe of a joint instrumentality is a participating employe under the WRS if any of the units of government forming the joint instrumentality is a participating employer under the WRS and the employe meets the WRS eligibility criteria. In determining whether an employe meets the WRS eligibility criteria, the employe's work for the joint instrumentality is to be considered as a whole, without regard to the number of separate units of government which created the joint instrumentality or any agreement among them apportioning responsibility for the retirement contributions. For example, a librarian in a permanent position working 900 hours per year for a joint library district created by six towns and villages, at least one of which is a WRS participating employer, would qualify as a participating employe under the WRS.

Reporting Hours and Earnings for WRS

The number of hours and the amount of earnings to be reported by each WRS participating employer with respect to an employe of the joint instrumentality are determined by prorating the hours and earnings among the employers that created the joint instrumentality. If the proration is not specified by the agreement establishing the joint instrumentality, it must be in accord with the agreed proration of other expenses. If no proration is provided in the agreement, each WRS participating employer must report as hours and earnings, the total amount divided by the number of units of government forming the joint instrumentality.

EXAMPLE:

A librarian works 1,800 hours annually and is paid $20,000 per year by a joint library district created by a town and a village, both of which are WRS participating employers, and both agree to split the expenses, with the town paying 80% and the village 20%:

  • The town would report for WRS purposes, 1,440 hours of service and $16,000 in earnings.
  • The village would report for WRS purposes, 360 hours of service and $4,000 in earnings.

NOTE: If the village is not a WRS participating employer, it would have no obligation for WRS purposes, whatsoever, while the town's responsibilities would be exactly the same.

For more information about this new rule, please contact the Employer Communication Center at (608) 264-7900.

JOINT INSTRUMENTALITY RULE

SECTION 1. ETF 10.55 is created to read:

ETF 10.55 Joint Instrumentalities; reporting participating employes, service and earnings.

(1) SCOPE. This section applies to reporting and contributions with respect to employment by joint instrumentalities created by two or more units of government, when all of the following apply:

(a) At least one of the units of government creating the joint instrumentality is, or subsequently becomes, a participating employer in the Wisconsin retirement system.

(b) The joint instrumentality is not a separate and independent employer within the meaning of s. 40.02 (28), Stats., as determined by the department. A joint instrumentality which has not established itself as a separate unit of government for OASDHI purposes is not a separate and independent employer under this paragraph.

Example: A joint library district is not a separate and independent employer.

(c) There are persons employed by the joint instrumentality. This section does not apply with respect to employes of a unit of government loaned or assigned to perform services for a joint instrumentality. Those individuals remain the employes of their employing unit of government which is subject to the usual reporting and contribution requirements.

Example: If a joint library district's library board hired a librarian but the library was located on the premises of one of the units of government establishing the joint library district, which assigned one of its janitors to the library, then this section would apply with respect to the librarian but not the janitor.

(2) PURPOSE. With respect to the employes of joint instrumentalities subject to this section:

(a) Each participating employer forming a joint instrumentality covered by this section shall be responsible for its share of the retirement benefits of the instrumentality's employes who meet the qualifications for participating employes as both the share and qualifications are determined under this section.

(b) Nothing in this section prevents the units of government forming a joint instrumentality subject to this section from providing for their share of responsibility for the retirement benefits of the employes of the joint instrumentality in the agreement establishing the joint instrumentality. If they fail to expressly address the issue then the share of each participating employer shall be determined as provided in this section.

(c) Whether an employe of a joint instrumentality covered by this section is a participating employe under s. 40.22, Stats., is not affected by the number of units of government which form the joint instrumentality.

(3) PARTICIPATING EMPLOYES.

(a) An employe of a joint instrumentality subject to this section is a participating employe for Wisconsin retirement system purposes if any of the units of government forming the joint instrumentality is a participating employer under s. 40.21, Stats., unless the employe is excluded under s. 40.22 (2), Stats.

(b) In making determinations concerning the work expected of or services rendered by an employe of a joint instrumentality, including determining whether an employe is expected to work at least one-third of what is considered full time employment by s. ETF 20.015, the employe's work for the joint instrumentality shall be considered as a whole, without regard for the number of separate units of government which created the joint instrumentality or any agreement among them apportioning responsibility for expenses or for retirement contributions.

Example: A librarian working 900 hours per year for a joint library district created by six towns and villages, at least one of which is a participating employer, would not be barred from being a participating employe under the WRS by s. 40.22 (2)(a), Stats.

(4) REPORTING REQUIREMENTS.

(a) Report participating employe. Among the units of government which formed the joint instrumentality, each unit which is a participating employer under s. 40.21, Stats., shall report each employe of the joint instrumentality who qualifies as a participating employe under sub. (3) to the department as its own participating employe.

(b) Reported earnings. Earnings shall be reported by each participating employer, in the same manner and subject to the same requirements as for its other participating employes, with respect to each employe of the joint instrumentality required to be reported as a participating employe under sub. (3). The amount of earnings to be reported shall be determined by prorating the gross amount paid to the employe for services rendered to the joint instrumentality which would qualify as "earnings" under s. 40.02 (22), Stats., if the joint instrumentality were itself the employer among the units of government which created the joint instrumentality. If the proration is not specified by the agreement that establishes the joint instrumentality, proration shall be made as are expenses for the joint instrumentality. If no proration of expenses is provided in the agreement, each participating employer shall report the total amount of earnings divided by the number of units of government forming the joint instrumentality during that annual earnings period. If a unit of government joins or leaves a joint instrumentality during an annual earnings period, reported shares of earnings shall be adjusted as of the date of that event.

(c) Contributions. Each participating employer shall transmit as required contributions to the department the same percentages of the employe's reportable earnings determined under par. (a) as is required, and in the same manner as, contributions on earnings for its other participating employes in the same employment category.

(d) Service. The employe's hours of service for creditable service purposes shall be prorated in the same manner as earnings under par. (a) and reported to the department by each participating employer in the same manner as is required for its other employes.

Example: If a librarian qualifying as a participating employe worked 1,800 hours annually and was paid $20,000 per year by a joint library district created by a town and a village, both of which are participating employers, and they had agreed to split the expenses, with the town paying 80% and the village 20%, and the agreement was silent on allocating responsibility for the employes, then the town would report 1,440 hours of service and $16,000 in earnings, while the village reported 360 hours of service and $4,000 in earnings, with each making the associated contributions. If the village in this example was not a participating employer, it would have no obligation whatsoever while the town's responsibilities would remain exactly as stated.

(5) NON-PARTICIPATING EMPLOYERS.

Nothing in this section shall be construed to require any employer which does not participate in the Wisconsin retirement system to make any report to the department or to pay any contributions to the public employe trust fund.

(END OF RULE TEXT)

 

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