You may have questions when it comes to reporting employees with special membership circumstances, such as the following employees and situations. Review this section to understand whether or not an employee is considered a member in these circumstances.
Athletic officials, referees, and umpires
Community college employees who elect an optional retirement plan (ORP)
Election workers
Fulbright Teacher Exchange program
Independent contractors and third-party workers
Library employees
Professional services leave or professional services released time
Public school academy/charter school employees
Retirees receiving a pension from MPSERS
Sabbatical leave
Student employees
Student teachers
Temporary layoff
Weekly workers' compensation
Employees working in the capacity of an athletic official, referee, or umpire may or may not be reported, depending on their relationship with the reporting unit. An employee directly employed by the reporting unit serving in an athletic role or as a referee is considered a member of this retirement system and the wages should be reported using Employment Class Code 1560 - Coaches - Recreational. Anyone not directly employed and paid by the reporting unit serving in the role of an athletic official, referee, or umpire and classified as an independent contractor is not a member and should not be reported. See Independent contractors in section 3.03: Who is not a member for rules and requirements.
Note: Employees who are issued a Form 1099 for wages in an athletic role may still be MPSERS members and should be reported. The fact that Form 1099 is issued is not enough to exclude that employee from reporting requirements per the retirement act.
Last updated: 08/31/2016
Tax-supported community colleges offer an Optional Retirement Plan (ORP) to all full-time faculty and full-time administrative staff performing professional services. Eligible newly hired employees or newly eligible current employees of these reporting units must decide within the first 90 days of employment or eligibility whether to remain a member of MPSERS or to elect the ORP. Once employees elect to participate in the ORP, the choice is irrevocable as long as they work at that reporting unit.
To offer an existing ORP to eligible new hires or current employees who are now eligible to participate:
All eligible employees choosing to participate in your ORP may request a refund of their personal contributions and accumulated interest on deposit with the retirement system for the time before the ORP eligibility date. The ORP election must be noted in the Completion by Employer portion of the refund application since the standard justification for a refund request (termination) does not apply.
Note: Universities and community colleges may offer an ORP to retirees of this retirement system. If the retiree chooses to participate in the ORP, the reporting unit is still required to report the retiree wages and hours as stated in this section.
Last updated: 04/09/2012
If a person is not a retiree of this retirement system and is working for your reporting unit for the sole purpose of an election, the person is not considered a member and wages and hours are not reportable per PA 150 of 2000.
If a person is already a member of this retirement system, is currently working for your reporting unit, and is assisting with the election, then the election wages and hours are reportable.
If a person is a retiree of this retirement system and is working for your reporting unit in another position, and is assisting with the election, or if he or she is only working for your reporting unit for the election, the wages and hours are reportable. See the Reporting Retirees section of the Employer Information website for information and reporting instructions for your retired employees. This includes the link to the Working after retirement - employer guide.
Last updated: 08/03/2022
The Fulbright Teacher Exchange program gives teachers the opportunity to teach in a foreign country while continuing employment with a Michigan public school. Usually, the member teaches in the foreign country for one year and continues to be paid by the reporting unit in exchange for a teacher from the foreign country. The teacher from the foreign country teaches in the same reporting unit and is paid by his or her representative school.
Service performed under this exchange program is reportable if the following criteria are met:
Last updated: 03/13/2012
An independent contractor is a worker who is self-employed, offers services to the general public, works for a number of people, and sets their own fees or wages. Independent contractors are not employees of your reporting unit and thus are not members of this retirement system. Sometimes it may be unclear whether a worker is an independent contractor or an employee of your reporting unit, but it is important to determine whether to report the worker for retirement purposes.
Employees hired by a third party are not employees of your reporting unit and thus are not members of this retirement system. Do not report third-party employees for retirement purposes unless they are a MPSERS retiree.
If an independent contractor or third-party employee is a MPSERS retiree, they must be reported. See the Reporting Retirees section of the Employer Information website for information and reporting instructions for your retired employees. This includes the link to the Working after retirement - employer guide.
Reporting units should use the economic realities test to determine whether an individual is an employee or an independent contractor. The economic realities test includes four (or more) factors, including: (1) control of a worker's duties, (2) payment of wages, (3) right to hire, fire, and discipline, and (4) performance of the duties as an integral part of the employer's business toward the accomplishment of a common goal. All factors are viewed cumulatively, however, and no single factor conclusively establishes the existence or absence of an employer-employee relationship.
Use this comparison guide to help distinguish whether a worker is an employee of a reporting unit or is an independent contractor.
Employee |
Independent contractor |
|---|---|
|
Works prescribed hours |
Works self-determined hours |
|
Does not offer skills or services to the public at large |
Offers services to public or to other reporting units under self-determined terms and conditions |
|
Reporting unit furnishes tools and equipment |
Furnishes own tools and equipment |
|
Expenses reimbursed |
Expenses not reimbursed |
|
Paid a salary or hourly wage |
Paid on a per-job basis |
|
Reporting unit provides fringe benefits such as sick days, unemployment insurance, hospitalization insurance, group insurance, paid vacation, etc. |
Does not participate in fringe benefits extended to regular employees of the reporting unit |
|
Reporting unit carries liability insurance for employee |
Carries own liability insurance |
|
Reporting unit furnishes assistants and determines when and how many are needed |
Hires own assistants; determines their compensation, pays their wages from personal resources |
|
Fills a position budgeted by reporting unit as part of ongoing business |
Does not fill a position budgeted by reporting unit as part of ongoing business |
|
Cannot realize a profit or loss |
Realizes a profit or loss |
|
Reporting unit withholds state and federal taxes |
Is responsible for paying their own income taxes and self-employment taxes |
The burden of proof to establish the existence of an independent contractor relationship (or a bona fide third-party employment relationship) falls on your reporting unit. The mere existence of a contract that specifies the terms and conditions under which a person is being employed does not necessarily establish that the person is a self-employed, independent contractor or, in cases where the individual is otherwise employed through a third party, whether they are a third-party employee.
The distinction between employees and self-employed independent contractors has become increasingly significant over time because of the different way these workers are treated under certain laws, particularly the Michigan Public School Employees Retirement Act and the Internal Revenue Code. Whether or not a worker is an employee or an independent contractor affects your reporting unit's employer contributions as well as the member's right to retirement benefits.
Note: As it pertains to non-retirees who are engaged to perform reporting unit service as an employee of a third-party, MPSERS reserves the right to determine whether the employment (or dual employment, as applicable) constitutes reportable service in view of the totality of the circumstances using the economic reality test.
These are general guidelines intended to help your reporting unit reach a conclusion and are not intended to force a specific conclusion. The burden of proof to establish the existence of an independent contractual relationship falls on your reporting unit.
Last updated: 08/03/2022
Employees of a library that has separated from the local school district continue their membership in this retirement system and are reported on your retirement detail report only if one or both of the following conditions are met:
The employment class code depends on the position of the individual member.
An employee of a library that separated from a local school district who did not perform services for that same library before the separation occurred is excluded from membership in this retirement system.
Last updated: 03/08/2012
Professional services leave
Professional services leave (PSL) refers to the wages and hours to be reported for a public school employee who leaves their normally assigned duties to work in a position for an employee organization or union on a part-time or full-time basis. The public school employee has a contract renewed annually with the employee organization/union for their role.
Examples:
Last updated: 07/06/2016
Professional services released time
Professional services released time (PSRT) refers to the wages and service to be reported for a public school employee who is released from their normally assigned duties to handle employment matters for an employee organization or union.
Example:
Employees on PSL or PSRT are still members of MPSERS and must be reported. It is the reporting unit's obligation to collect employer contributions from the employee organization group or unions which are paid to the retirement system for members performing PSL or PSRT. The retirement act (MCL 38.1371(6)) states: "The reporting unit shall be reimbursed those sums paid to the retirement board pursuant to subsection (5) by the member or the public school organization on a current basis."
Employer contributions are the total percentage of reportable compensation charged to all MPSERS reporting units. Contributions are the sum of Pension Normal Cost, Pension UAAL, Early Retirement Incentive Program, Health Normal Cost, Health UAAL, MPSERS UAAL Rate Stabilization and (in 2014) the One-Time MPSERS Liability Prepayment.
See section 7.03.06: Reporting professional services leave/professional services released time on a DTL2 record for more information.
Last updated: 07/06/2016
The eligibility requirements for a public school academy (PSA) or charter to become a reporting unit of this retirement system are:
Other than the specific exception noted in the first bullet above, all public school academies and charter schools are reporting units of this retirement system. Active employees should only be reported to ORS if they are hired by the PSA/charter school directly, and not indirectly through a third party or as an independent contractor. If the PSA/charter school hires a MPSERS retiree, either directly or indirectly, please review the 9: Retirees Who Return to Work to determine how to report them.
Last updated: 03/16/2012
A person who is retired and is receiving a pension from MPSERS is excluded from active membership. A MPSERS retiree must be separated from all reporting unit employment, including volunteer service, for at least one calendar month following the retirement effective date before being eligible to work in a Michigan public school.
A person receiving a pension from another retirement system administered by the state of Michigan is not recognized as a MPSERS retiree and must be reported as an active MPSERS employee. Note: retirees who have returned to work at a university may do so immediately after retirement with no earnings limit and no effect on their pension and insurance premium subsidy.
Although retirees receiving a MPSERS pension are not considered active members, you must still report their wages and hours. See the Reporting Retirees section of the Employer Information website for information and reporting instructions for your retired employees. This includes the link to the Working after retirement – employer guide. Also see 9: Retirees Who Return to Work and section 13.02.01: Detail 2 records - employment class codes and definitions for more information.
Last updated: 08/03/2022
Members on sabbatical leave maintain their membership status during their leave (as long as they have accrued service credit in the past two years), but they do not receive retirement service credit. Do not report sabbatical wages and hours on the retirement detail report for any member while on sabbatical leave. Do not submit any wages or hours until the member returns to work. See also Extended leave of absence (more than two years) in section 3.03: Who is not a member.
Last updated: 08/25/2015
If you have a student employee (not employed by a community college) who is 19 years old or older and is not enrolled in classes as a full-time student at your reporting unit, he or she is a MPSERS member.
PA 123 of 1998 excludes from membership anyone under age 19 employed by your reporting unit "in a temporary, intermittent or irregular seasonal or athletic position," whether a student or not.
A person employed by your reporting unit while also enrolled in and attending classes as a full-time student in your reporting unit is not a member of this retirement system, regardless of age. "Enrolled and attending" is defined as effective the first day a student begins classes full time within your reporting unit.
Employees who are full-time students should not be reported to ORS. Effective July 2, 2018, do not report employees who are part-time students and whose first day worked with any community college was July 2, 2018, or after. For employees who are part-time students whose first day worked with any community college was prior to July 2, 2018, follow these steps:
Last updated: 07/26/2018
If you have a student teacher who is 19 years old or older and compensated directly by your reporting unit for their student teaching role, or for any other role in your reporting unit, they are a MPSERS member.
A person working as a student teacher who is paid by their educator preparation program, with funds provided by the Department of Treasury through the School Aid Budget, is not eligible to participate in this retirement plan.
Last updated: 11/7/2023
Members terminated by temporary layoff retain membership status for a period of one year following the layoff date. Do not submit any wages or hours on DTL2 records until the member returns to work.
However, if a member who is temporarily laid off has a Tax-Deferred Payment (TDP) Agreement, continue to submit Detail 3 - TDP Deductions (DLT3) records for the member, using a TDP Deduction Amount of $0 and Deduction Reason Code 8 (No Deduction - Temporary Layoff), until the member returns to work. For more information see section 7.02.03 Reporting tax-deferred payment (TDP) deductions on a Detail 3 (DTL3) record or section 13.03: Detail 3 records - TDP adjustment record type codes and deduction reason codes.
Last updated: 03/07/2012
Weekly workers' compensation (WWC) while absent from work is recognized as the same as sick leave pay. Members receiving WWC maintain their membership unless the employer-employee relationship is terminated. Do not report WWC for retirees.
WWC is subject to employer contributions and member contributions for wages reported on a Detail 2 (DTL2) record. If the employee requires a DTL4 record and your reporting unit uses a third-party insurance provider to pay WWC, do not include workers' compensation in the wage total for the Employer Reported Wages field on a DTL4 record. If your reporting unit is self-insured for workers' compensation, include WWC wage totals in the Employer Reported Wages field on a DTL4 record.
If employees are on WWC and also being paid for working a temporary job, the wages and hours earned for work performed while receiving WWC are reportable compensation. The wages and hours earned working a temporary job would be reported using the employment class code in the job they are performing. See section 7.03.05 Reporting other compensation for a member receiving weekly workers' compensation.
For more information on workers' compensation, see Weekly workers' compensation in section 4.02: Reportable compensation and section 7.03.04: Reporting workers' compensation on a DTL2 record.
Last updated: 04/13/2022
