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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