This course fully explains the optional exclusion for part-time positions. It defines part-time, explains how to include the exclusion in modifications, and provides examples and case studies, as well as, addresses numerous other questions related to the subject.
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- Why is it important to identify part-time positions?
- What does the Social Security Act say about the part-time exclusion?
- What is the definition of part-time?
- How does SSA define part-time positions?
- How does IRS define part-time positions?
- How do States define part-time positions?
- How should part-time be defined in a modification?
- What if an entity attempts to define part-time, but vaguely does so?
- What is a "class of part-time positions?"
- How does Mandatory Coverage affect part-time employment?
- What happens when a person works part-time, in addition to their full-time employment?
- What is the difference between part-time and seasonal and temporary positions?
- What resources are best for helping determine part-time?
- Case Study:
- Case Study II:
- Other random things to consider about part-time:
1. Why is it important to identify part-time positions?
It is important to identify part-time positions because States can optionally exclude the positions from voluntary coverage. Thus, in order to apply the exclusion, if taken, state administrators must be able to recognize whether the services performed are in fact part-time.
The States’ Section 218 Agreement or modifications should clearly indicate the application of the optional exclusion for part-time positions. Additionally, the Agreement or modification should explicitly state what exactly part-time entails (ex. 20 hours or less per week).
What you should know about exclusions: When a Section 218 Agreement or modification covers a coverage group, the services of all employees who are members of the coverage group are covered unless they are mandatorily or optionally excluded. The mandatory exclusions may not be listed in the Agreement or modification; however, it is always recommended. Conversely, the Agreement or modification must specify the optional exclusion(s); otherwise, the exclusion cannot be taken. Although, any service a State optionally excludes can be included later if permitted by Federal and State law and the State’s Agreement.
2. What does the Social Security Act say about the part-time exclusion?
Section 218 (c)(1), “An agreement under this section shall be applicable to any one or more coverage groups designated by the State…(3) Such agreement shall, if the State requests it, exclude (in the case of any coverage group) any one or more of the following: (A) All services in any class or classes of (i) elective positions, (ii) part-time positions, or (iii) positions the compensation for which is on a fee basis;”
Note: Information included in a modification must meet the requirements of Federal and State laws. If it does not, the State must either withdraw the modification or the modification will be disapproved by the Commissioner and all copies will be returned to the State with an explanation for the disapproval. Therefore, it is not to be assumed that just because a modification lists optional exclusions, that those exclusions were taken correctly.
3. What is the definition of part-time?
Part-time, as a term, cannot be defined by a single definition. It may require that you to take into account multiple considerations. In other words, part-time can come down to more than identifying whether someone works less than 40 hours, or 30 hours, or even 15 hours a week. Part-time employment can be defined by the number of hours worked in a day, week, or month. The frequency of the work can also determine whether employment is part-time (i.e., the number of days worked in a week, a month, or even a year). Even the type of work performed can dictate whether employment is part-time. This obscurity makes it paramount that States include modification language that defines part-time. Unfortunately, modifications commonly exclude this essential piece of information.
If the modification does not define part time, it will be necessary to refer to the employing entity (e.g., State or political subdivision), the retirement system, or the appropriate legislative code—whichever is most suitable for the situation. If the aforementioned fail to define part time adequately, then it will be necessary to consult SSA and the IRS.
SSA, the IRS, and the States have the following to say about part-time—refer to questions 4, 5, and 6.
4. How does SSA define part-time positions?
“SSA defines a part-time position as one in which the number of hours normally required by the position in a week or pay period is less than the normal time requirements for the majority of the positions in the employing entity. The part-time position exclusion is based on the normal time requirements of the position and not the time spent by an employee in the position.
Example: A City Sanitation Department has the following positions: management, administrative staff, street crews, and maintenance workers. Management works Monday through Friday from 8:00 to 5:00. The administrative staff works Monday through Friday from 7:30 – 4:30. Street crews work 10-hour shifts, 4 days a week. The maintenance crew comes in Monday through Saturday and works 4-hour shifts.
In the above example, the maintenance crew is clearly part-time, as a majority of all other positions in the City Sanitation Department work 9-10 hour days, or 40-45 hours a week, while the maintenance crew works 4-hour days and only 24 hours a week. Therefore, using this example, assume that the State has taken the part-time exclusion, but failed to define part-time. In such a situation, the aforementioned circumstances clearly indicate that the maintenance crew position is part-time and excluded from coverage by the modification.
Important: While SSA provides the above guidelines for defining “part-time,” SSA considers the requirements established by the State or the employing entity when determining whether a position is part-time or full-time. Therefore, it is critical that States define part-time in the modification—when taking the optional exclusion. Failure to define part-time could lead to the incorrect application of the exclusion and could result in improper coverage.
5. How does IRS define part-time positions?
The IRS mirrors SSA when defining part-time in terms of optional exclusions. In Pub. 963, the definition for part-time is:
“A part-time position is one in which the number of work hours normally required by the position in a week or a pay period is less than the normal time requirements for the majority of the positions in the employing entity. The part-time position exclusion is based on the normal time requirements of the position and not the time spent by an employee in the position. Where the part-time position exclusion is taken, the State should include a definition of part-time in the modification if one has not been previously established.
Note: The definition of part-time under a Section 218 Agreement may be different from the part-time definition under Mandatory Social Security. More information about the effects of mandatory coverage can be found below in question # 10.
Any additional differentiation between part-time and full-time employment will be determined by the State or the employing entity.
6. How do States define part-time positions?
Many part-time positions, today, are covered under the mandatory coverage rules. However, States still need to differentiate between part-time and full-time positions for purposes of voluntary coverage. Thus, each State is responsible for defining part-time positions, individually.
If a State optionally excludes part-time positions from their State’s Section 218 Agreement or modification then they should state the terms of what constitutes being “part-time.” State administrators should consult the employer when drafting the modification to make sure that part-time is appropriately defined. However, employers do not always define part-time, which will require obtaining the information from another source. Other potential resources in which the definition of “part-time” may be obtained are employee handbooks, union agreements, public employee retirement system handbook, attorney general opinions, legislative code, etc.
If this information is absent from the modification and there are questions regarding the status of a position—SSA should be consulted.
Important: Not only is it possible for one State’s definition of part-time to differ from another State’s definition, but it is also possible that what constitutes part-time in one position may not be part-time in another position—even within the same State.
7. How should part-time be defined in a modification?
The definition used in the modification should mirror the definition used by the source from which it was obtained.
Remember: State and Federal law generally leaves it up to the employer to define what constitutes full-time and part-time status.
SSA identifies the following examples of definitions of part-time employment to be common and acceptable.
- Any position which normally requires less than 20 hours of work each week.
- Any position which does not normally require over 50 hours of service per month in any calendar year.
- Services performed by an employee in a position that does not normally require actual performance of duty for at least 600 hours each year.
When possible, States should make every effort to identify part-time positions by name, in addition to the above requirements.
8. What if an entity attempts to define part-time, but vaguely does so?
A commonly encountered definition provided by employers is, "Full-time employees are those who are regularly assigned to work at least 40 hours each week, and part-time employees are those who are regularly assigned to work less than full-time.”
In such instances, does this mean that any employee who works less than 40 hours a week represents a part-time position? No. An employee’s work schedule does not influence whether a position is part-time or full-time. Part-time employees may occasionally work 40 or more hours in a particular workweek, or in a series of workweeks, but that by itself will not change their regular schedule—nor does it dictate whether a position is part-time.
Consider the following example. A school employs the following teaching positions.
- Academic Studies Teacher (Math, Science, etc): Regularly scheduled 40 hours a workweek
- Trade Skills Teacher (Cosmetology, Auto-shop, etc): Regularly scheduled 40 hours a workweek
- Substitute Teacher: Irregularly scheduled, but may work 40 hours a week, and for multiple weeks
In this example, employees can work in any of the three teaching positions, and do so for 40 hours a workweek. However, only academic studies and trade skills teachers are considered full-time positions by the school. Substitute teachers are part-time—regardless of whether the position is being occupied for 40 hours a workweek.
Considering the above example, it is important that modifications define part-time and identify the positions that fall into this category. As evidenced by the substitute teacher example, it could easily be misinterpreted that substitutes meet the definition of full-time, when political subdivisions most often consider them to be part-time, regardless of hours or duration worked. If the modification covers multiple positions, each position should be defined.
9. What is a “class of part-time positions?”
Classes of part-time positions are defined as a grouping of positions that have similar characteristics. The same part-time exclusion can be applied to a ‘class of part-time positions’ as well as to individual part-time positions. A class of part-time positions is a designator used to identify where exclusions may apply to groups of positions as opposed to individual positions.
Examples of classes of part-time positions include:
- all part-time positions the compensation for which is less than $50 per calendar quarter;
- all services in part-time legislative elective positions;
- all services performed in part-time positions by employees working on a retainer basis.
Note: If the definition for part-time or class of part-time contains multiple criteria, all criteria must be met for the exclusions to apply.
10. How does Mandatory Coverage affect part-time employment?
The part-time exclusion is an optional exclusion for voluntary coverage. However, if it is determined that a Section 218 Agreement does not cover the employee’s position, and the employee is not a member of a public retirement system, then mandatory coverage applies regardless of employment status. Mandatory Social Security became effective July 2, 1991.
Example: Assume that a State’s Section 218 Agreement covers all State positions for Social Security and Medicare. The State, however, has excluded part-time positions. The State’s Public Employees Retirement System (PERS) also excludes part-time employees. Therefore, in this example, all non-part-time positions are voluntarily covered for both Social Security and Medicare, as well as, by PERS.
Does this mean that part-time workers do not have coverage, from either SSA or the State?
NO. Beginning July 2, 1991, Section 11332 of Public Law 101-508 mandated Social Security and Medicare coverage for State and local government employees who are not members of a public retirement system and not covered by a Section 218 Agreement. Therefore, Mandatory Coverage will cover all part-time employees of the State, unless an exclusion to Mandatory Coverage applies (see the below chart for a list of exclusions).
Important: The exclusions to mandatory coverage are different and should not be confused with the mandatory exclusions to voluntary coverage. The below chart illustrates the differences between the two exclusion types.
Exclusions to Mandatory Coverage
Mandatory Exclusions to Voluntary Coverage
11. What happens when a person works part-time, in addition to their full-time employment?
This is a unique situation in which multiple variables will have to be analyzed. If the employee works for the same employer and one of the jobs is covered under a qualifying retirement system, but is not covered for Social Security; and the other [part-time] job is not covered by the retirement system or Social Security; would mandatory Social Security apply to the non-covered part-time job? NO. See explanation below
Chapter 6 in the Publication 963: Federal-State Reference Guide, Individuals Employed in More than One Position, states: “if the individual is employed by a government entity in a full-time position which is covered by a qualifying retirement system, then the individual is generally treated as a member of the retirement system with respect to any other position with the same employer.
In most other situations, the positions will not be treated the same and coverage should be applied individually, based on what is accurate for each position. If you have questions regarding how coverage applies to multiple positions, contact your SSA Regional Office State and Local Coverage Specialists.
12. What is the difference between part-time and seasonal and temporary positions?
Generally, seasonal positions exist only for a specified duration by entities that need additional assistance during a particular season, typically around various Holidays (i.e., Thanksgiving, Christmas, etc) or for the months around summer and winter. For example, a city hires 100 lifeguards each year to work from June 1st through August 31st. Depending on how the city has defined part-time, will determine whether the lifeguards are part-time or full-time. Thus, employees hired temporarily or seasonally may or may not occupy part-time positions.
The following table lists possible examples of both part-time and seasonal positions. The positions listed below are for example purposes only.
|Part-Time (Definition: less than ___ hours a workweek)||
Seasonal and Temporary (Definition: no specified # of hours a workweek, but employment is not to exceed ___ days)
Summer Program Counselor
City Holiday Crew (hanging lights on the city streets, for example)
*Keep in mind that for some States a seasonal position may not be considered a seasonal employee because they are employed year-round due to climate or conditions.
13. What resources are best for helping determine part-time?
For determining part-time, consider the following actions.
- Look at the Agreement and modifications.
- If not in the modification, check with the employer.
- If the employer does not know, check with the public employees’ pension system (if applicable).
- Check with the union, if represented.
- If you still cannot locate the information, begin searching through State documentation, such as legislation.
- Finally, contact the appropriate SSA Regional Office State and Local Coverage Specialists.
The additional sources for determining part-time are:
- The State and Local Handbook, Optional Exclusions;
- The State and Local Handbook, Effects of Mandatory Coverage on Section 218 Agreements; and
- The IRS Pub 963
As a state administrator, you have been contacted by a political subdivision in your State. The person who contacted you has the following concern.
The political subdivision has a modification covering all positions, except those that are part-time. The modification does not define part-time. After the modifications execution, the political subdivision began reporting covered wages for an employee performing services as a janitor—an action generally confirming that the janitor position is not an optionally excluded part-time position. The political subdivision later hires another janitor, which leads to a reduction in the amount of time it takes the employee(s) performing services as a janitor to complete the individual duties and responsibilities of the position. The political subdivision subsequently reduces the number of weekly hours worked by employee(s) in the janitor position. While the hours now worked by each employee might be defined as part-time, the position itself has not changed. Thus, the employer cannot apply the part-time exclusion to each employee—as the position itself has not changed. Therefore, the janitor position remains covered by the modification.
Taking the scenario above, reconsider the situation, and this time assume that the janitor position is a part-time position. Remember, the modification excludes part-time positions. Therefore, while Social Security coverage cannot be obtained through the modification, it may be covered under the rules of Mandatory Coverage. Thus, you must verify whether the public pension system also excludes part-time positions; if so, they are subject to Social Security under Mandatory Coverage.
16. Other random things to consider about part-time:
- SSA generally looks to the employer to determine whether the employer classifies the position as full-time or part-time (POMS GN 02608.102(A)(3)(b)).
- Once a position is established as a full-time position, whether by definition, or through the employer’s actions, the position is full time and the exclusion does not apply—even if the employee works part-time in this position.
- If a State re-defines part-time, and the redefinition broadens the scope of the part-time exclusion (thus excluding additional positions), then the application of such a definition is not permissible. Remember, as a general rule, services already covered by a Section 218 Agreement or modification cannot be removed from coverage.
- Under the mandatory Social Security provisions, if an employee is a member of a retirement system with respect to service he or she performs in one position, in the employ of a State, political subdivision or instrumentality thereof, the employee is generally treated as a member of a retirement system with respect to all service performed for the same State, political subdivision or instrumentality in any other positions." (See Reg. 31.3121(b)(7)-2(c)(2)).
- Under the mandatory Social Security provisions, part-time employees are not considered covered by a public pension system unless they are immediately vested. If they are not fully vested from the first day, they are subject to mandatory coverage (See Reg. 31.3121(b)(7)-2(d)(2)).