Subject: DRS Email 17-014, Employer Pickup of State Contributions on LEOFF Plan 2 Non-Employer Services
The recently approved state operating budget for the 2017-19 biennium includes a provision making LEOFF Plan 2 employers responsible for funding both the employer and state contributions owed on LEOFF Plan 2 basic salary earned for services rendered by members whose services were provided directly, or indirectly, to a non-LEOFF employer.
This change, set forth in Section 963 of the budget (SB 5883), amends RCW 41.26.450. The provision became effective July 1, 2017 and applies to Fiscal Years 2018 and 2019. This change does not prevent LEOFF employers from recovering the cost of the contributions from the non-LEOFF employers receiving services from the member.
DRS is identifying how to best administer this change. Once we know the specific changes that will affect the tools and processes you use, we will communicate those changes to you. Our focus is to administer this change in a way that adheres to the budget requirements, but minimizes impacts to current processes and tools where possible.
Below is a list of questions and answers regarding this change. If you need additional information, please reply to this notice or call Employer Support Services at 360-664-7200, option 2, or 800-547-6657, option 6, option 2.
The 2017-2019 state operating budget (SB 5883) includes a provision (Section 963) that says if a LEOFF employer charges a fee or recovers costs for services rendered by a LEOFF 2 member to a non-LEOFF employer, the LEOFF employer must cover the employer and state contributions on the LEOFF 2 basic salary earned for those services.
When is it effective?
The 2017-2019 state operating budget became effective July 1, 2017. This change applies to Fiscal Years 2018 and 2019.
What does it change in our processes?
DRS is analyzing the operational impacts of this change. As soon as we know the implementation details and timing, we will communicate that information to all LEOFF employers. Once the changes are implemented, DRS will work with employers to collect state contributions owed on applicable basic salary retroactive to July 1.
What is meant by “non-LEOFF” employer?
Any employer not covered under RCW 41.26.030(14)(b). One example of this may be work performed for a private entity’s sporting event for which you receive a fee or recover costs for services rendered
What if we don’t contract out our LEOFF 2 employees for these types of services?
You will not be responsible for the state contributions on any of your LEOFF 2 employees’ basic salary.
Will this affect my LEOFF 2 employees’ contributions or accounts in any way?
No. The LEOFF Plan 2 members’ accounts will not be affected by this change.
Will we have to change our payroll system to report a different code to separate it from the member’s regular compensation?
DRS will make every effort to avoid requiring reporting changes that would affect payroll systems.