Eligibility for Participation in Retirement Benefits Have Changed Under the Budget Bill
2011-07/13 Dean R. Dietrich Printer Friendly PDF Version

The newly adopted Budget Bill has changed the eligibility requirements for participation in the Wisconsin Retirement System.  The changes affect all local government units and provide additional flexibility for determining when a local government employee is required to participate in the Wisconsin Retirement System. 

Section 40.22 of the Wisconsin Statutes governs the participation of employees in the Wisconsin Retirement System.  The general standard that applied in the past was if an employee was likely to be working for the local government unit for a period of 12 months and would work 600 hours or more during that 12-month period, the employee was required to be included in the Wisconsin Retirement System.  That concept will continue to apply but the numbers of hours worked for eligibility has changed; the employee still must have an expectation of employment of more than one year in order to be included in the Wisconsin Retirement System. 

The new eligibility requirements apply to employees who initially begin employment on or after the effective date of the Budget Bill, July 1, 2011.  If the employee is “not expected to work at least two-thirds of what is considered full-time employment by the department,” the employee would not be eligible for participation in the Wisconsin Retirement System.  The definition of two-thirds of what is considered full-time employment will depend upon the municipal employer.  The annual 1200-hour limitation would apply for local government units.  In other words, an employee must be expected to work at least that number of hours and be expected to work at least a full year in order to be eligible for participation in the Wisconsin Retirement System. 

As a result of this legislative change, many part-time or seasonal employees of the local government unit may not qualify for participation in the Wisconsin Retirement System and the local government unit would not be required to pay the employer contribution for that individual.  Of course, the employee would not have to pay the employee-required contribution either.

It is important that municipal employers review all of their part-time and seasonal positions to determine what liability for retirement contributions will exist in the future.  Remember, however, that current employees participating in the Wisconsin Retirement System will continue to be eligible for participation and required contributions even though the employee may work less than the 1200-hour floor established by the statute for participation for new employees.

There is no requirement or process to voluntarily agree to place an employee into the Wisconsin Retirement System if the employee does not qualify under this new criteria.  The municipal employer must determine whether the employee is likely to be working for a 12-month period and working sufficient hours to meet the new eligibility criteria.  If a new employee is not likely to meet those eligibility criteria but ultimately does do so because of the number of hours actually worked, the employee must participate in the Wisconsin Retirement System effective after that initial one year of employment. 

Another change in WRS participation occurred in the Budget Bill that became effective on July 1, 2011.  Under language contained in the Budget Bill, a local government unit is prohibited from negotiating with a public safety employee union over the payment of employee-required contributions for newly hired public safety employees (hired after July 1, 2011).  Any language requiring the payment of the employee-required contribution becomes a prohibited subject of bargaining.  Local governments are still required to bargain with public safety employee unions over WRS contributions for employees that were hired prior to the effective date of the Budget Bill (July 1, 2011).  The practical effect of this language is that newly hired public safety employees will be required to pay the 5.8% employee contribution.  This provision will take effect immediately for local government employees if there is an expired labor agreement with the police or fire union; otherwise it will take effect when the existing labor agreement has expired.

Please feel free to contact Dean Dietrich, the author of this article, or any of the attorneys on the Local Governments & Municipalities Focus Team, or the School Districts and Educational Institutions Focus Team of Ruder Ware: Steve Immel, Jeff Jones, Steve Lipowski, Randi Osberg, Ron Rutlin, Mary Ellen Schill, Bryan Symes, or Kevin J.T. Terry, if you have questions in regard to this update.

© 2011 Ruder Ware, L.L.S.C. Accurate reproduction with acknowledgment granted. All rights reserved.
This document provides information of a general nature regarding legislative or other legal developments. None of the information contained herein is intended as legal advice or opinion relative to specific matters, facts, situations, or issues, and additional facts and information or future developments may affect the subjects addressed.