Chapter 2: PERS Membership

Summary & Employer Responsibilities

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SERS Membership - Summary

The information in this section is provided to help you determine an employee's eligibility for membership in the School Employees' Retirement System (SERS).

The actual rules that govern membership are contained in state retirement law. [RCW 41.35]  [WAC 415-110] This handbook summarizes those rules in less legalistic terms. It is not a complete description of the law. If there are any conflicts between what is written here and state retirement law, the law will govern

SERS Membership - Employer Responsibilities

As the employer, you have certain responsibilities involved with enrolling and reporting retirement system members. You will want to keep the following points in mind:

  • You are responsible for making the initial determination of an employee's eligibility for membership. This chapter explains the membership rules that currently apply.
  • You are responsible for reporting all eligible employees from the first day of eligibility. (See Chapters 7 and 8 for instructions on how to report eligible employees.)
  • You are responsible for documenting your decision regarding a position's eligibility. (See the Position Eligibility Worksheet for documenting your decisions.) Your documentation will help protect you in case questions arise about a decision you have made.
  • In addition to reporting SERS eligible positions, beginning with the 2004-2005 school year, employees working in SERS substitute positions must be reported on the transmittal. See the New Hire Pyramid "Substitutes" for additional information.
  • You are responsible for regularly reviewing the determinations you have made. By doing so, you can ensure that you are reporting correctly.

SERS Plan Rules

SERS Membership - SERS Plan Rules

Employees working in eligible positions for SERS employers must be enrolled as members. This section outlines current rules for membership in SERS. For prior period membership rules, see SERS Membership Rules for Prior Periods. If you have questions about SERS eligibility, please Employer Support Services.

Plan 2 or Plan 3 Membership

  • Membership rules are the same for SERS Plan 2 and Plan 3.
  • Refer to SERS Membership Definitions Plan 2 or Plan 3 for plan definitions.
  • Prior retirement membership impacts current SERS Plan membership. Use Member Reporting Verification (MRV) to view an employee's prior retirement status before determining in which plan to enroll a new employee.
  • If you have questions about SERS eligibility, please contact Employer Support Services.

How Eligibility Is Determined

The employer is responsible for the determination of the employee's eligibility for membership. The primary determination of eligibility for SERS is based upon the position. An employee who worked for one month in an eligible position before quitting would be entitled to SERS membership. In SERS, there are two ways a position can be eligible. A position is eligible if:

The position normally requires at least five months each year in which regular compensation is earned for at least 70 hours per month. [RCW 41.35.010(22), WAC 415-110-680]

  • As used in this definition, "normally" means a position that requires at least five months of at least 70 hours for two consecutive years. Once a position is determined to be eligible, it will continue to be eligible if it requires at least five months of 70 or more hours of compensated service during at least one year in any two-year period. [WAC 415-110-010]
  • "Year" means any 12 consecutive month period established and applied consistently by an employer to evaluate the eligibility of a specific position. In the case of ongoing positions, the year used by the employer must be the same for all positions. In the case of a project or temporary position, the year used may be specific to the position. The term generally will be limited to a school year. [WAC 415-110-010]

Or

The position is occupied by an elected official or person appointed directly by the Governor. Refer to Exemptions for Persons Employed in SERS Eligible Positions for additional information.

To determine if a position is eligible, you may find it helpful to ask the following three questions.

  1. Will the position ever require 70 or more hours of compensated employment in a month?
    • If the answer is no, the position is not eligible.
    • If the answer is yes, ask question 2.
  2. Will the position ever require five or more months with at least 70 hours of compensated employment per month in a 12-month period?
    • If the answer is no, the position is not eligible.
    • If the answer is yes, ask question 3.
  3. Will the position normally meet this standard? That is, will the position require five months of 70 hours during each of two consecutive years?
    • If the answer is no, the position is not eligible.
    • If the answer is yes, the position is eligible.

Exceptions to Position Eligibility

In some circumstances a person may establish or continue membership even if he or she is employed in an ineligible position. In some circumstances a person may be excluded from membership even if he or she is employed in an eligible position.

  • A SERS substitute may qualify for and may elect to establish membership in SERS at the end of the school year. See the New Hire Pyramid Substitutes for additional information.

A substitute is defined as "a classified employee who is employed as a substitute for an absent employee or is working in an ineligible position". [WAC 415-110-010(9)].

  • A SERS member who leaves an eligible position to serve in a project position will continue in membership if the position requires at least seventy hours per month and the employee accepts the position conditioned on returning to a permanent eligible position at the completion of the project. [WAC 415-110-680 and WAC 415-110-010]
  • If an employee, in an ineligible position, made member contributions for at least nine months, the employee will be treated as having been in an eligible position during such period of employment. When it is discovered the position is ineligible, submit an end date on the next monthly transmittal and stop reporting the employee to DRS. [RCW 41.35.040]
  • A SERS disability retiree may not establish SERS membership if employed in an eligible position unless receiving comparable compensation. [RCW 41.35.440 and 41.35.690]

The employer must contact Membership Retirement Services to determine comparable compensation. If it is determined compensation compares to the compensation reported prior to the disability retirement, the employee must be reported in SERS retroactive to the first date of hire.

A SERS disability retiree who returns to work does not fall under the post-retirement employment provisions, but must be reported on the transmittal.

  • A retiree from PERS, TRS, LEOFF Plan 1 or WSPRS that retired with 15 or more years of service may not establish SERS membership if employed in an eligible position. [ RCW 41.04.270]

Determining Plan Membership When Hiring a New Employee

Current membership status is impacted by prior retirement membership history. Use Member Reporting Verification (MRV) to determine if the member has prior membership history with DRS. Next, select from the following to determine current plan membership:

  1. When the Employee is a Retiree
  2. When the Employee Is Working In One Eligible Position
  3. When the Employee is Working Concurrently In More Than One Retirement System
  4. When the Employee Is Working As a Substitute In a School District or Educational Service District
  5. When the Employee Is Working in More than One SERS-Covered Position for the Same Employer

When the Employee Is a Retiree

  • When reporting a retiree returning to work, special rules apply. Those rules are summarized in the Retiree Returning to Work Reporting Charts.
  • Use the same eligibility criteria for retiree and active member positions. All retirees who return to work must be reported on the transmittal report.
  • Generally, retirees who are performing services for an employer as a contractor are exempt from the retiree reporting requirements. However, employers must report any SERS Plan 2 or 3 retiree, who retired using the 2008 ERF and has not attained age 65; if they are directly compensated for services performed as a contractor, or any other similiar compensated relationship. These contractors should be reported as if they are in an ineligible position.
  • If a retiree chooses to reenter membership, the retiree must contact DRS. Report as a Retiree Return to Work until notified by DRS to report as an active member.
  • A SERS retiree who returns to work in an eligible position is not required to return to SERS membership but may elect to do so.
  • A retiree from PERS, TRS, LEOFF Plan 1 or WSPRS that retired with 15 or more years of service may not establish SERS membership if employed in an eligible position. [RCW 41.04.270]
  • A SERS member who has retired on disability may be required to reenter membership if returning to work at a job with a salary comparable to the salary earned before the disability. If hiring a SERS disability retiree, notify PERS/SERS Retirement Services.
  • See the Handbook Chapter 5 Employing Retirees and the New Hire Pyramid Retirees for additional information.

Return to Determining Plan Membership

When the Employee Is Working In One Eligible Position

Select from the following:

  1. No Prior Membership
    Beginning July 1, 2007, a new or potential SERS member with no prior membership history has the option to become a member of SERS Plan 2 or Plan 3 if hired into an eligible position.

    • A new or potential member has 90 calendar days to make an irrevocable Plan Choice, or they are defaulted by the employer into Plan 3, rate option A, investment program SELF.
    • An employee employed in a SERS eligible position should initially be reported in SERS Plan 2, unless the employer receives the Member Information Form (MIF) from an employee choosing Plan 3 before the first payroll cutoff. If reporting for the first time, be sure to include the begin date, even if it is the same as the Plan Choice Date.
  2. Has Prior Membership

    • Use the SERS Reporting Chart to determine the correct plan for a new employee hired into a SERS eligible position when the employee has prior membership history.

Return to Determining Plan Membership

When the Employee Is Working Concurrently In More Than One Retirement System

An employee may work for you in a position that would be covered by SERS and in a position that would be covered by another retirement system; e.g., TRS. In such a case, the employee's eligibility for membership depends upon the types of positions the employee occupies. Refer to the following types of concurrent employment:

Return to Determining Plan Membership

When the Employee Is Working As a Substitute In a School District or Educational Service District

An employee hired into a substitute position must be reported on the transmittal report beginning with the 2004-2005 school year using the substitute reporting codes. Refer to the New Hire Pyramid School District and Educational Substitutes for additional information and for reporting charts.

SERS Substitute is defined as "any classified employee who is employed as a substitute for an absent employee or working in an ineligible position." [WAC 415-110-010(9)]

An ineligible position is one that normally does not require at least five months each year in which regular compensation is earned for at least 70 hours per month.

Example #1: A position requires part time work for 60 hours each month for the entire year.

Explanation: The position is not eligible because employment is for less than 70 hours each month.


Example #2: A position requires full time work for 3 months each year.

Explanation: The position is not eligible because employment is for less than five months each year.


Example #3: A new position is created that is funded for only one year and will then cease to exist. The new position will require full time work.

Explanation: The position is not eligible because it does not exist on an on-going basis. The position does not meet the definition of "normally."


Be sure to review ineligible positions at least annually and document your eligibility determinations using the Position Eligibility Worksheet, or you may develop a form to document eligibility decisions for your organization.

Return to Determining Plan Membership

Employees Working in More than One SERS-Covered Position for the Same Employer

All work an employee performs for you in a given month must be taken into account when determining an employee's eligibility for membership. If the employee's combined hours of employment meet the definition of an eligible position and if this is the employee's normal pattern of employment, the employee is eligible for SERS membership.

An employee's eligibility for membership is based only on his or her employment with you. An employee cannot combine hours of employment in positions with separate employers to establish membership in SERS.

Example #1: An employee normally works for you for 40 hours each month as a cook and for 40 hours each month as a bus driver.

Explanation: The employee is eligible for membership. The employee works a total of 80 hours each month for at least five months each year and this is the normal pattern of employment.

Example #2: An employee normally works for you for 40 hours each month as a cook. For one year, the employee takes on extra duties and works 40 hours per month as a bus driver.

Explanation: The employee is not eligible for membership. Although the employee works 80 hours each month for five or more months during the year, this is not the normal pattern of employment.

Example #3: An employee works for you for 40 hours each month as a cook and works for another employer for 40 hours each month as a bus driver.

Explanation: The employee is not eligible for membership. The employee cannot combine the hours of employment with separate employers to establish membership.

Return to Determining Plan Membership

Employees Working in Educational Staff Associate Positions

An Educational Staff Associate (ESA) is defined as an individual employed by a public school in any of the following positions:

  • Communications Disorders Specialist
  • Occupational Therapist
  • Physical Therapist
  • Reading Resource Technician
  • School Counselor
  • School Nurse
  • School Psychologist
  • School Social Worker

A person working in an ESA position in a public school must hold a certificate authorized by the Superintendent of Public Instruction. Although ESA positions are generally TRS eligible positions, there are instances where a person who was employed as an ESA before June 7, 1984, may have rights to SERS membership. If you are a public school employer and you hire a person who served in an ESA position before June 7, 1984, contact ESS to help determine the membership options available to this member.

Exemptions for Persons Employed in SERS Eligible Positions

SERS Membership - Exemptions for Persons Employed in SERS Eligible Positions

Membership Is Optional For Elected and Governor-Appointed Officials

Elected and Governor-appointed officials are exempted from SERS membership unless they elect to join. They may apply at any time during their current term of office."Elected" officials for SERS include:

  • Individuals who are elected or appointed to any vacant elective office at a school district or educational service district; or
  • Individuals who are active SERS members or were previously active SERS members who become elected or appointed to any state elective position

"Governor Appointed" officials include:

  • Individuals who are active SERS members or were previously active SERS members and are appointed directly by the governor to any position, including but not limited to agency directorships and memberships on a state committee, board or commission. [RCW 41.35.030(2), WAC 415-110-550, WAC 415-110-560, WAC 415-110-570]

Independent Contractors Exempted from SERS

Only an employee of a SERS employer is eligible for SERS membership. Because independent contractors are not employees, they are exempted from SERS membership. DRS applies the common law right of control test to determine if a worker is an employee or an independent contractor. Because of the complexity of the test, it is often difficult to determine if a person is an independent contractor without auditing the working situation. If you have questions about determining if a person is an independent contractor, contact PERS/SERS Retirement Services. [WAC 415-02-110]

Professional Employees

Employees rendering professional services may be exempted from PERS RCW 41.40.023(9), SERS RCW 41.35.030(9) or PSERS RCW 41.37.020(5) membership if they:

  • are employed on a fee, retainer or contract basis; or
  • earn less than 50 percent of their gross income from the practice of their profession with a DRS-covered employer.

This exemption is limited to persons providing professional services. The terms "profession" and "professional services" are not defined in statute or rule. Some occupations that qualify as "professions" include: law, medicine, accounting, teaching, engineering, or lobbying.

If you encounter a person working in an occupation other than those listed above, contact DRS Employer Support to discuss whether the occupation qualifies as a profession. Remember that the question of whether an occupation is a profession is not relevant if the person earns 50 percent or more of their income from a PERS, SERS or PSERS employer. A person who earns 50 percent or more of their income from a PERS, SERS or PSERS employer may be entitled to membership as long as they qualify as an employee.

When Employment is on a Fee, Retainer or Contract Basis

If the employee renders services on a fee, retainer or contract basis they may be exempted from membership. This issue usually focuses on whether the person is an employee or an independent contractor. RCW 41.35.030(5)

When Less than 50 percent of Gross Income is from the Employer

If the employee earns less than 50 percent of his or her gross income from the practice of their profession from the employer, then the person is exempted from membership. The best way to determine the percentage of a person's income earned from the practice of their profession would be to ask the employee for a statement of their income.

Professional Services

If an employee earns less than 50 percent of his or her gross income from the practice of his or her profession from a SERS employer, then the person is exempted from SERS membership. The terms "profession" and "professional services" are not defined in statute or rule, but some occupations that qualify as "professions" include:

  • Law
  • Engineering
  • Medicine
  • Lobbying
  • Teaching

If you encounter a person working in some occupation other than those listed above, please contact the legal unit at DRS to discuss whether the occupation qualifies as a profession.

SERS Retirees are Exempted from Membership

SERS retirees are exempted from SERS membership. Retirees will only reenter membership if they elect to do so. The option may be exercised prospectively. If a SERS retiree reenters membership, benefits stop until the member retires again.

Membership Rules for Prior Periods


The following chart provides a brief summary of the membership rules in effect for prior periods. If you need additional information about SERS eligibility rules, contact Employer Support Services.

Period Membership Rule in Effect
08/01/2009 forward New SERS members and potential members (substitutes) have the option to become members of Plan 2 or Plan 3 if hired into an eligible position.
07/01/2007 through 07/31/2009 New SERS members and potential SERS members have the option to become members of Plan 2 or Plan 3, if no prior PERS Plan 2 service and if hired into an eligible position
09/01/2000 through 06/30/2007 Plan 3 established by legislature 9/1/2000.  All new members mandated into Plan 3, except those with prior PERS Plan 2 service who are reported in  SERS Plan 2 with a January transfer option
09/01/1991 forward* Eligible position: Normally requires at least five months each year in which regular compensation is earned for at least 70 hours per month
09/01/1990 through 08/31/1991* Eligible position: Normally requires at least five months each year in which regular compensation is earned for at least 90 hours per month
July 23, 1989 forward* All of an employee's work each month for an employer must be considered as a single position
10/01/1977 through 08/31/2000* PERS Plan 2 established by legislature 10/1/1977. All new classified employees working in school districts and educational service districts are reported in PERS Plan 2
03/23/65 through 06/06/90* Employee could work in an eligible position on a temporary basis not to exceed six consecutive months without being brought into SERS membership
04/01/1955 through 08/31/1990* Eligible position: Normally requires at least five consecutive months each year in which regular compensation is earned for at least 90 hours per month

*Note: Prior to SERS effective date of September 1, 2000, classified employees working in school districts and educational service districts held PERS membership. Classified employees working in eligible PERS Plan 2 positions on September 1, 2000 were converted to SERS Plan 2. The PERS service rules prior to September 1, 2000 apply to these converted SERS members.

Questions and Answers


The following provides answers to some of the more frequently asked questions regarding membership and reporting requirements for SERS.

Select from the following topics:

Eligible Positions

  1. A member in an eligible position takes an extended unpaid leave of absence and does not have at least five months with 70 hours or more of compensated employment in a given 12-month period. Is this individual still eligible for membership?

    Yes. An unpaid leave of absence does not affect the eligibility of a position. If the position normally requires five months of 70 hours or more of compensated employment, then the position is still eligible. The employer should continue to report the employee on the monthly transmittal using status code B.

  2. An eligible position continues for more than a year without requiring the individual in that position to work at least 70 hours a month for five months or more each year. Is the individual in this position eligible for membership?

    The employer should review the requirements of the position. If this is no longer an eligible position, the employer should separate the employee from the monthly transmittal. If this is still an eligible position, the employer should continue to report the employee on the monthly transmittal.

  3. An eligible position is filled with two individuals each working three hours a day. Are the individuals eligible for membership?

    Yes. Although separately the individuals do not work 70 hours a month for five months or more each year, the position requires that much work. Each of the individuals is eligible for membership and should be reported on your transmittal.

  4. An employee works in an ineligible position from March 1 through November 10. On November 11, you redefine this as an eligible position. When do you begin reporting the individual in this position?

    With November's report using November 11 as the begin date. You would report all retirement information for work performed by the individual worked during November--the information for the eligible position plus the hours for the ineligible position. All of an employee's work each month is considered as a single position.

  5. During a review, it is discovered that a position that had been defined as ineligible has actually required the employee in the position to work 70 hours or more in at least five months in each of the last two years. What will happen in this case?

    The position will be declared eligible beginning from the first month of the first year in which employment was for at least 70 hours. The employee will enter membership beginning with that month. The employer must use the monthly transmittal to report all compensation, contributions and hours of service back to the first date of eligibility.

  6. You hire a new employee on or after July 1, 2007. Does the member have a plan choice?

    It depends on the past membership history of the employee. First use Member Reporting Verification (MRV) to view the past membership history and to determine if they are eligible to make a plan choice. Then use Reporting an Employee to determine the correct reporting options.

Temporaries or Classified Substitutes

  1. An employee is hired as a "temporary" or as a "classified substitute" to fill in for someone who is on leave for two weeks. Is this employee eligible for membership and should he or she be reported?

    Beginning with July 27, 2003, an employee working in a substitute position in a school district or in an educational service district may elect to apply for service credit at the end of the school year. PERS Plan 1 does not have the option to apply for substitute service credit.

    The definition of a substitute includes “a classified employee who is employed as a substitute for an absent employee or is working in an ineligible position." [ WAC 415-110-010(9)]; See the New Hire Pyramid Substitutes for additional information.

Definitions


The following definitions are given for the terms that are used in the SERS Membership section of the Employer Handbook. For additional terms, refer to the Handbook Glossary.

Comparable Compensation refers to the compensation a disability retiree receives from an employer that makes him or her eligible to return to SERS membership when all conditions are met. DRS compares the retiree's current compensation to the compensation received prior to the disability retirement to determine comparable compensation.

Compensated employment means salaries or wages earned for hours of employment.

Eligible position is one that normally requires at least five months each year in which regular compensation is earned for at least 70 hours per month in each of two consecutive years.

Normally, as used in the definition of an eligible position, means a position that requires at least five months each year in which regular compensation is earned for at least 70 hours in each of two consecutive years. Once a position is determined to be eligible, it will continue to be eligible if it requires at least five months of 70 or more hours of compensated service during at least one year in any two-year period.

Plan 2 refers to an employee who:

  • Established membership in a SERS eligible position at a school district or Educational Service District (ESD) during the period October 1, 1977 – August 31, 2000; or
Note: On or after 10/1/77 and prior to 9/1/2000, SERS did not exist and classified employees working for school districts and educational service districts held PERS Plan 2 membership.
  • Beginning July 1, 2007, a new member who chose Plan 2. New and potential SERS members hired into eligible positions with no prior PERS Plan 2 service have up to 90 days to choose Plan 2 or Plan 3 or the employer defaults them to Plan 3.
  • New members of SERS with prior PERS Plan 2 service are mandated into SERS Plan 2 [WAC 415-110-910]. These members have a January Transfer Option to Plan 3.

For more detailed information, refer to chapter 8, Plan Choice Reporting.

Plan 3 refers to:

  • An employee who established membership in an eligible position at a school district or Educational Service District (ESD) on or after September 1, 2000 through June 30, 2007 and who had no prior PERS Plan 2 service; or
  • Beginning July 1, 2007, a new member or potential member who chose Plan 3, or was defaulted to Plan 3. New members with no prior PERS Plan 2 service beginning July 1, 2007 have up to 90 calendar days to choose between Plan 2 or Plan 3, or the employer defaults them into Plan 3 [RCW 41.35.610] or
  • A SERS Plan 2 member who had SERS Plan 2 membership prior to July 1, 2007, then elected during the month of January to transfer to Plan 3 [RCW 41.35.510]

For more detailed information, refer to chapter 8, Plan Choice Reporting.

Position refers to a group of duties and responsibilities normally assigned to an employee. A position may be filled or vacant, full time or part time, seasonal, temporary or permanent.

Potential member in SERS is someone who has worked in an ineligible or substitute classified position at a school district or educational service district, but hasn't purchased their substitute service credit and hasn't established membership in SERS.

SERS Substitute is defined as "any classified employee who is employed as a substitute for an absent employee or working in an ineligible position." [ WAC 415-110-010(9)].

Year, as used in the definition of an eligible position, means any 12 consecutive month period established, and applied consistently, by an employer to evaluate the eligibility of a specific position. In the case of ongoing positions, the year used by the employer must be the same for all positions. In the case of a project or temporary position, the year used may be specific to the position. The term may include, but is not limited to, a school year, calendar year or fiscal year. Employers should document the 12-month period used to define a year for a given position; e.g., January through December, September through August, April through March, etc.

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