Transcript Return to Service and Emergency Employment Guidelines

Annuitant Return to Service
and
Emergency Employment
Guidelines
Training and Informational Seminar
By Troy Peechatka
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Introduction
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Emergency Employment and Personnel
Shortage
Extracurricular Employment
College Employment
Guidelines for Independent Contractor
Employment
General Rule
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A PSERS retiree is not permitted to return to work in
a Pennsylvania public school without a suspension
of their monthly benefits
The exceptions to this rule are:
Emergency Employment/Personnel Shortage
(Emergency)
Extracurricular Employment, and
(if specific conditions are met) Employment as an
Independent Contractor
WHY IS PSERS INVOLVED?
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PSERS has a legal obligation to properly
administer the terms of the Retirement Code
There are specific tax qualification rules that
PSERS must follow. The I.R.S. does not
allow an individual to work for the same
company from which they receive an annuity,
and PSERS must ensure any post-retirement
employment is in compliance with the
Retirement Code.
EMERGENCY EMPLOYMENT
An emergency is defined
by the Retirement Code
as creating an increase
in the workload such
that there is serious
impairment of service to
the public, or in the
event of a shortage of
appropriate staff. The
initial determination of
an emergency situation
is in the judgment of the
employer
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EMERGENCY EMPLOYMENT
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A retiree may return to
service for the number of
days the emergency
exists per school year
without loss of annuity
The period of emergency
service is limited to the
length of the emergency
itself per school year
Generally, PSERS will
not pre-approve
emergency service
beyond one school year
PSERS’ EXPECTATIONS
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Before hiring a PSERS
retiree under the
Emergency provision, the
employer must be able to
demonstrate that other
alternatives were sought
Employer should be
prepared upon request to
provide to PSERS the
nature of the emergency
and the recruitment efforts
the employer undertook to
fill the position with a nonretiree
RECRUITMENT EFFORTS
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Must be a “bona fide”
recruitment effort
Generally, proof of recruitment
effort must include the method
of advertising the vacant
position, the total number of
applicants, and the number of
non-retirees that applied for the
position
If an employer requests
approval to employ a retiree
beyond one school year, or if
PSERS is informed that a
retiree has been employed for a
period extending beyond one
school year, a second request
and approval is REQUIRED
before PSERS would approve
any emergency service
EMPLOYMENT AS DAILY SUBSTITUTE
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There is much confusion
among employers and
members regarding a retiree’s
ability to work as a daily
substitute
Substitute employment may
be, but is not necessarily,
emergency employment
Generally, the same
emergency rules apply – the
vacancy must first be offered
to non-retirees before
employing a retiree as a
substitute
Generally, this process must
be followed each day to
ensure compliance with the
Retirement Code
EMPLOYMENT AS DAILY SUBSTITUTE
(continued)
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An employer MAY use a
subject-certified retiree before
employing a non-retiree that is
not certified in the particular
subject, or before a non-retiree
“guest teacher” (not certified).
Example – Spanish Teacher
The employer can also decide
not to use the retiree – It is the
employer’s decision, and it is
not PSERS’ responsibility nor
the intent of the Retirement
Code to police the use of
subject-certified personnel
Our concern is that retirees are
only employed in true
emergency situations
HOW PSERS IS NOTIFIED OF
POSSIBLE RETURN TO SERVICE OR
EMERGENCY SERVICE
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Receive written
request for approval to
employ retiree in an
emergency capacity –
may come from either
the member or
employer
Anonymous phone call
or letter from
concerned member or
citizen, or the media
HOW PSERS IS NOTIFIED
(continued)
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Member submits Purchase
of Service application for
time rendered while a
retiree
PSERS staff uncover data
previously reported for a
retiree from an employer
This should be increasingly
less frequent due to a
system block that prohibits
employers from
automatically reporting
retirees to PSERS
HOW DOES PSERS RESPOND?
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Once notified, staff sends letter of
inquiry to employer
Depending on the notification, we
will ask if member has returned to
service or is working as an
emergency employee or an
emergency capacity
We will ask for the nature of the
emergency and recruitment
efforts
If it is a letter from an employer
seeking pre-approval to employ a
retiree in an emergency capacity,
and they provide sufficient
information, based on the facts
we may be able to send an
approval letter without further
inquiry
PSERS may also contact the
member if appropriate
BAILLIE DECISION
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Baillie v Public School Employees’
Retirement Board, 993 A. 2d 944 (Pa. 2010)
Announced intention to retire in January
2007, yet filled his own vacancy in an
emergency capacity for remainder of school
year
PSERS determined that he had, in fact,
never terminated service, and this position
was upheld by the Commonwealth Court
BAILLIE DECISION
(continued)
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PSERS has an obligation to review the
emergency employment of annuitants, to
ensure the employer has used reasonable
judgment in declaring an emergency
PSERS must properly administer the
Retirement Code
The Baillie Decision sets a precedent for
future cases
QUESTIONS?
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EXTRACURRICULAR
EMPLOYMENT
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EXTRACURRICULAR EMPLOYMENT
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Another common
misconception among
PSERS retirees and
employers is the
difference between
emergency and
extracurricular
employment
These terms are not
interchangeable and
describe entirely different
employment scenarios
EXTRACURRICULAR EMPLOYMENT
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Extracurricular
employment is
defined by the
Retirement Code as
service that is
performed primarily
outside regular
instructional hours
and is not part of the
mandated curriculum
WHAT DOES THIS MEAN?
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Regular instructional hours
refer to the school’s daily
class schedule. If a
school’s first period of
class begins at 7:55 a.m.
and the last period of class
ends at 2:55 p.m., these
times would represent the
regular instructional hours
of the school
“Primarily” means more
than half of the work must
be performed outside
normal instructional hours
WHAT DOES THIS MEAN?
(continued)
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Mandated curriculum
refers to any classes that
are part of the established
academic course
structure, and fulfill
graduation requirements
Some examples of
extracurricular
employment would
include athletic directors,
coaches, ticket takers at
athletic events or school
functions, and club
sponsors
Extracurricular Employment as Tutor
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Much like employment as a
daily substitute, many
employers and retirees are
of the belief that tutoring is
always permitted
It is not
At least half of the tutoring
must be performed outside
of normal instructional
hours, and it must be
separate from the
established academic
course structure
EXTRACURRICULAR EMPLOYMENT
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Must also be performed
under a separate
employment contract,
which must include a
waiver whereby the retiree
waives any potential
retirement benefits that
could arise from the
employment, and releases
the employer and PSERS
from any liability for the
payment of benefits
There is no time limit
associated with
employment in an
extracurricular position
QUESTIONS?
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COLLEGE EMPLOYMENT
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COLLEGE EMPLOYMENT
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Notwithstanding being institutions of higher
education, public colleges are still deemed to
be “public schools” by the Retirement Code
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Under the Retirement Code, “school service”
is defined as service rendered as a school
employee (24 Pa.C.S §8102)
A “school employee” is any person working
for a public school (24 Pa.C.S §8102)
COLLEGE EMPLOYMENT
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A “public school” is defined as “any or all schools …
conducted under the order and superintendence of the
Department of Education, including …state-owned
colleges and universities, [PSU], community colleges,
area vocational technical schools intermediate units,
…” 24 Pa. C.S. §8102
Bottom line: Public colleges are employers under
the Retirement Code and thus are subject to the
provisions of the Retirement Code as they apply to
active and retired members of PSERS, with some
additional factors that must be considered as well
COLLEGE EMPLOYMENT
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Approved postretirement employment
with Penn State
University, ANY
Community College
and one of the 14 stateowned Universities is
based on the member’s
eligibility to elect an
alternate retirement
plan
STATE-OWNED UNIVERSITIES
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Bloomsburg University
California University
Cheyney University
Clarion University
East Stroudsburg
University
Edinboro University
Kutztown University
Lock Haven University
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Indiana University of
Pennsylvania (IUP)
Mansfield University
Millersville University
Shippensburg
University
Slippery Rock
University
West Chester
University
COLLEGE EMPLOYMENT
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In addition, there must be a
bona fide break in service
from all employers for a
retiree to elect an alternate
retirement plan
This means there can be no
pre-arrangement for
employment with the college
prior to retirement
A signed employment
contract or letter of intent to
return would constitute a prearrangement, and PSERS
reserves the right to contact
the college for evidence of a
pre-arrangement
Emergency
College Employment
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Emergency employment
at a college is not
common, as there are
generally many qualified
people to fill the vacancy,
or the college may
choose not to offer the
course that semester
Generally, the same
emergency rules apply
with regards to
recruitment efforts, length
and nature of emergency
Extracurricular
College Employment
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A retiree may also be
employed in an extracurricular
capacity for a college.
Because colleges offer forcredit courses during both day
and evening hours, there
generally are no normal
instructional hours.
It still must not involve
instruction of mandated
curriculum. Examples of
approved extracurricular
employment with a college
would include tutoring,
coaching, and non-credit
course instruction
QUESTIONS?
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INDEPENDENT CONTRACTOR
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INDEPENDENT CONTRACTOR
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Of all the different types of
post-retirement employment,
requests to work as an
independent contractor can
be the most difficult for both
our members and staff
We recommend that
members put their specific
requests in writing and mail
them to the PSERS
Headquarters in Harrisburg,
so we may review the details
of the arrangement and offer
a formal determination
INDEPENDENT CONTRACTOR
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In general, if a retired member is doing different work
than they did while active
Is paid under a Form 1099 with a separate written
contract
Receives no fringe benefits
Sets his/her own hours
Does not receive a performance evaluation
Supplies his/her own work materials
Has an office outside the school grounds
This may indicate the member is an independent
contractor
INDEPENDENT CONTRACTOR
Zimmerman v. Public School
Employees’ Retirement System, 522 A.
2d 43 (Pa. 1987)
 PSERS also uses the factors set forth
in the Zimmerman case to determine if
an individual is a school employee or
an independent contractor
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INDEPENDENT CONTRACTOR
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Zimmerman Factors
• The control of the manner in which the work
is to be done
• Responsibility for the result
• Terms of agreement between the parties
• The nature of the work or occupation
• The skill required for the performance
• Whether one is engaged in a distinct
occupation or business
INDEPENDENT CONTRACTOR
Zimmerman Factors (continued)
• Which party supplied the tools
• Whether payment is by the time or by the job
• Whether the work is part of the regular
business of the employer
• Whether the parties have the right to
terminate employment at any time
No factor is dispositive of one’s status
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INDEPENDENT CONTRACTOR
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PSERS will almost never approve an
annuitant to return to the same job or
position simply by forming a Limited Liability
Company (LLC)
Positions such as Superintendent or teacher
cannot be filled by an independent
contractor, as these positions are normally
filled by active, contributing members of
PSERS
INDEPENDENT CONTRACTOR
The types of positions that PSERS may approve as an
independent contractor include:
• Bus Drivers
• Custodians
• Cafeteria Workers
• Some Payroll Functions
If positions such as these are hired through a third
party entity, PSERS is more likely to determine that
they are not employees of the public school employer
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CONSULTANT/INDEPENDENT
CONTRACTOR EMPLOYMENT
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There really are no
absolutes or definite
situations that are always
approved or not approved
when it comes to postretirement employment as
an independent
contractor
These requests truly must
be reviewed on a case by
case basis, and we must
take all the factors into
consideration before
rendering a determination
QUESTIONS?
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Current Communication
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Members
– Active and retired member handbooks
– Returning to School Service After Retirement pamphlet
– Being Retired pamphlet
– Your PSERS Benefits & Leaving Employment pamphlet
– PSERS Disability Retirement Benefits pamphlet
– PSERS website FAQ’s
– Newsletter articles
– Foundations for Your Future presentation
– Retirement Exit Counseling presentation
– Initial and final benefit letters
Employers – Employer manual, newsletters, website and annual
training workshops
THANK YOU!!
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