Chapter 40

40.02(21d)(f)3. 3. One of the individuals leaves the common residence with the intent to return.

40.02(22) (22) “Earnings”:

40.02(22)(a) (a) Except as provided in pars. (b) to (f) and s. 40.63 (1) (c), means the gross amount paid to an employee by a participating employer as salary or wages, including amounts provided through deferred compensation or tax shelter agreements, for personal services rendered to or for an employer, or which would have been available for payment to the employee except for the employee’s election that part or all of the amount be used for other purposes; any amount considered earnings under sub. (15) (d) and (e); and the money value, as determined by the employer, of any board, lodging, fuel, laundry and other allowances provided for the employee in lieu of money. For purposes of this paragraph, the gross amount shall be determined prior to deductions for taxes, insurance premiums, retirement contributions or deposits, charitable contributions or similar amounts and shall be considered received as of the date when the earnings would normally be payable by the employer. For reporting and computation purposes, fractions of a dollar shall be disregarded in determining annual earnings.

40.02(22)(b) (b) Does not mean payments made for reasons other than for personal services rendered to or for an employer, including, but not limited to:

40.02(22)(b)1. 1. Uniforms purchased directly by the employer.

40.02(22)(b)2. 2. Employer contributions for insurance and retirement.

40.02(22)(b)3. 3. Unemployment insurance benefits.

40.02(22)(b)4. 4. Payments contingent on the employee providing the employer with or assisting the employer in acquiring tangible or intangible property of the employee.

40.02(22)(b)5. 5. Payments contingent on the employee having attained an age which, if increased by 5 years, is greater than what the employee’s age would be on the employee’s normal retirement date.

40.02(22)(b)6. 6. Lump sum payments at termination for accumulated vacation, sick leave or compensatory time, except that for disability purposes any lump sum payments shall be treated as a continuation of the employee’s earnings and service at the employee’s then current rate of pay. This subdivision does not exclude payments which are broadly applicable to the employees of the employer regardless of age, length of service or likelihood of employment termination.

40.02(22)(b)7. 7. Payments contingent on the employee having terminated covered employment or having died.

40.02(22)(b)8. 8. Payments contingent on the employee terminating employment at a specified time in the future including payments to secure voluntary release of an unexpired contract of employment.

40.02(22)(b)9. 9. Payments for damages, attorney fees, interest or penalties paid under court judgment or by compromise settlement to satisfy a grievance or wage claim even though the amount of damages or penalties might be based on previous salary levels. However, the department may by rule provide that a payment of additional wages to a continuously participating employee, or the payment of salary to a participant for any period of improper termination of participating employment, is earnings, if the payment is treated by the employer and employee as taxable income and is consistent with previous payment for hours of service rendered by the employee.

40.02(22)(b)10. 10. Payments made in the last 5 years of employment which are the result of a change in the method of computing the base compensation of an employee, unless the change in method for computing the base compensation is a permanent change and is broadly applicable to the employees of that employer or unless the change is the result of a significant change in the nature of the duties and activities expected of the employee.

40.02(22)(b)11. 11. Payment in lieu of fringe benefits normally paid for or provided by the employer but which can be paid to the employee at the employee’s option.

40.02(22)(b)12. 12. For any employer, earnings paid to an employee directly by any other unit of government except county supplements to judges under s. 20.923 (3m), 1977 stats., s. 753.016, 1977 stats., s. 753.071, 1977 stats., and s. 753.075, 1977 stats., are earnings if the supplemental payments were subject to subch. I of ch. 41, 1977 stats.

40.02(22)(b)14. 14. Any other type of payment determined by the department by rule to be a distortion of the normal progression patterns on which an individual’s benefits should be based.

40.02(22)(c) (c) For OASDHI purposes, has the meaning specified for wages under federal regulations.

40.02(22)(d) (d)

40.02(22)(d)1. 1. For Wisconsin retirement system purposes only, for a state elected official who is prohibited by law from receiving an increase in compensation during the official’s term of office, means the compensation which would have been payable to the participant if the participant had not been prohibited by law from receiving an increase in compensation during his or her term of office.

40.02(22)(d)2. 2. For Wisconsin retirement system purposes only, for a state senator, means the compensation which would have been payable to the participant if the participant had not been prohibited by law from receiving an increase in compensation during part of his or her term of office.

40.02(22)(e) (e) For purposes of the Wisconsin retirement system, but not for OASDHI purposes, means compensation determined as required under 38 USC 4318 (b) (3) and regulations adopted thereunder with respect to a person who has actually returned to employment under section 414 (u) (9) (A) of the Internal Revenue Code, 38 USC 4312, or any predecessor veteran’s reemployment rights provision under federal law, provided contributions and premiums on the compensation are paid as required under s. 40.05. If the participant does not pay any portion of the employee contributions that the participant would have paid if the participant had not left employment to enter military service, the value of the benefits payable from the participant’s account shall be reduced by the value of the unpaid contributions plus interest as provided by rule.

40.02(22)(ec) (ec) Includes contributions made by a reduction in salary as provided in s. 40.05 (1) (b).

40.02(22)(ef) (ef) For Wisconsin retirement system purposes only, for a state employee, means compensation that would have been payable to the participant, at the participant’s rate of pay immediately prior to the beginning of any mandatory temporary reduction of work hours or days during the period from July 1, 2009, to June 30, 2011, for service that would have been rendered by the participant during that period if the mandatory temporary reduction of work hours or days had not been in effect. Contributions and premiums on earnings considered to be received under this paragraph shall be paid as required under s. 40.05.

40.02(22)(em) (em) For Wisconsin retirement system purposes only, for a member of the faculty, as defined in s. 36.05 (8), of a university who is on sabbatical leave under s. 36.11 (17), means the compensation that would have been payable to the participant, at the participant’s rate of pay immediately prior to beginning the sabbatical leave, for service that would have been rendered at the university during the period of the sabbatical leave if the participant had continued to render services for the participant’s employer during that period. Contributions and premiums on earnings considered to be received under this paragraph shall be paid as required under s. 40.05.

40.02(22)(f) (f) Does not mean credits for payment of health insurance premiums converted from accumulated unused sick leave for a participating employee who qualifies for a disability benefit under s. 40.63 or 40.65, and who qualifies for the conversion of accumulated unused sick leave under s. 40.05 (4) (b), (bc) or (bf) or as provided by a participating employer’s compensation plan or contract.

40.02(22)(g) (g) Does not include credits for the payment of health insurance premiums provided under s. 40.05 (4) (bw) or subch. IX or any sabbatical or vacation leave converted into such credits.

40.02(22m) (22m) “Educational support personnel employee” means a person who is a school district employee, but who is not a teacher.

40.02(23) (23) “Effective rate” means:

40.02(23)(a) (a) For the core annuity division, the rate, disregarding fractions of less than one-tenth of one percent, determined by dividing the remaining core annuity division investment earnings for the calendar year or part of the calendar year, after making provision for any necessary reserves and after deducting prorated interest and the administrative costs of the core annuity division for the year, by the core annuity division balance at the beginning of the calendar year as adjusted for benefit payments and refunds paid during the year excluding prorated interest.

40.02(23)(b) (b) For the variable annuity division, the rate, disregarding fractions less than one percent, which will distribute the net gain or loss of the variable annuity division to the respective variable annuity balances and reserves using the same procedure as provided in par. (a) for the core annuity division.

40.02(24) (24) “Elected official”, except as otherwise provided in sub. (48), means a participating employee who is:

40.02(24)(a) (a) A supreme court justice, court of appeals judge, circuit judge or state, county or municipal official elected by vote of the people.

40.02(24)(b) (b) Appointed as provided by statute to fill a vacancy in a position specified in par. (a).

40.02(24)(c) (c) The chief clerk and sergeant at arms of the senate and assembly.

40.02(25) (25) “Eligible employee” means:

40.02(25)(a) (a) For the purpose of any group insurance:

40.02(25)(a)1. 1. Any participating state employee.

40.02(25)(a)2. 2. Any state employee who is a member or employee of the legislature, a state constitutional officer, a district attorney who did not elect under s. 978.12 (6) to continue insurance coverage with a county, or who did elect such coverage but has terminated that election under s. 978.12 (6), a justice of the supreme court, a court of appeals judge, a circuit judge or the chief clerk or sergeant at arms of the senate or assembly.

40.02(25)(a)3. 3. The blind employees of the Wisconsin workshop for the blind authorized under s. 47.03 (1) (b), 1989 stats., or of the nonprofit corporation with which the department of workforce development contracts under s. 47.03 (1m) (a), 1989 stats. Persons employed by an employer who are blind when hired shall not be eligible for life insurance premium waiver because of any disability that is directly or indirectly attributed to blindness and may convert life insurance coverage only once under the contract.

40.02(25)(a)4. 4. Only a person who has not attained age 70 at the time of becoming initially eligible for the group insurance coverage provided under this chapter; but this subdivision does not exclude any participant from participation in the group health insurance plan nor does it exclude from participation in the group life insurance plan any employee who is initially eligible on the employer’s effective date of participation.

40.02(25)(a)5. 5. Any participating state employee who is on union service leave except the cost for premium payments shall be entirely the responsibility of the state employee on union service leave.

40.02(25)(a)6. 6. Any participating state employee of the office of district attorney, other than the district attorney, in a county having a population of 750,000 or more who did not elect under s. 978.12 (6) to continue insurance coverage with that county, or who did elect such coverage but has terminated that election under s. 978.12 (6), and who has participated under the retirement system established under chapter 201, laws of 1937, and under the Wisconsin retirement system.

40.02(25)(b) (b) For the purpose of group health insurance coverage:

40.02(25)(b)1. 1. Any teacher who is employed by the university for an expected duration of not less than 6 months on at least a one-third full-time employment basis and who is not described in subd. 1m.

40.02(25)(b)1m. 1m. Any teacher who is a participating employee and who is employed by the university for an expected duration of not less than 6 months on at least a one-third full-time employment basis.

40.02(25)(b)2. 2. Any person employed as a teaching assistant or graduate assistant and other employees-in-training as are designated by the board of regents of the university, who are employed on at least a one-third full-time basis.

40.02(25)(b)2c. 2c. A state employee described in s. 49.825 (4) or (5) or 49.826 (4).

40.02(25)(b)2g. 2g. Any person employed as a graduate assistant and other employees-in-training as are designated by the board of directors of the University of Wisconsin Hospitals and Clinics Authority, who are employed on at least a one-third full-time basis with an expected duration of employment of at least 6 months.

40.02(25)(b)3. 3. The surviving spouse or domestic partner of an employee, or of a retired employee, who is currently covered by health insurance at the time of death of the employee or retired employee. The spouse or domestic partner shall have the same right to health insurance coverage as the deceased employee or retired employee, but without state contribution, under rules promulgated by the secretary.

40.02(25)(b)4. 4. Any insured employee who is retired on an immediate or disability annuity, or who receives a lump sum payment under s. 40.25 (1) that would have been an immediate annuity if paid as an annuity, if the employee meets all of the requirements for an immediate annuity including filing of application whether or not final administrative action has been taken.

40.02(25)(b)5. 5. Any participating state employee under the Wisconsin retirement system, notwithstanding par. (a) 1.

40.02(25)(b)6. 6. A participating state employee who terminates creditable service:

40.02(25)(b)6.a. a. After attaining 20 years of creditable service; and

40.02(25)(b)6.b. b. Who is eligible for an immediate annuity but defers application.

40.02(25)(b)6e. 6e. A state employee who terminates creditable service after attaining 20 years of creditable service, remains a participant, and is not eligible for an immediate annuity.

40.02(25)(b)6g. 6g. Any state constitutional officer, member or officer of the legislature, head of a state department or state agency who is appointed by the governor with senate confirmation, or head of a legislative service agency, as defined in s. 13.90 (1m) (a), who terminates all creditable service on or after January 1, 1992, who is eligible for and has applied for a retirement annuity or a lump sum payment under s. 40.25 (1), who, if eligible, is receiving medicare coverage under both part A and part B of Title XVIII of the federal social security act, 42 USC 1395 to 1395zz, and who has acted under s. 40.51 (10m) to elect group health insurance coverage.

40.02(25)(b)6m. 6m. Beginning on the date specified by the department, but not earlier than March 20, 1992, and not later than July 1, 1992, any of the following persons who, if eligible, is receiving medicare coverage under both part A and part B of Title XVIII of the federal social security act, 42 USC 1395 to 1395zz, and who has acted under s. 40.51 (16) to elect group health insurance coverage:

40.02(25)(b)6m.a. a. A retired employee of the state who is receiving a retirement annuity or has received a lump sum payment under s. 40.25 (1).

40.02(25)(b)6m.b. b. An employee of the state who terminates creditable service after attaining 20 years of creditable service, remains a participant and is not eligible for an immediate annuity.

40.02(25)(b)6r. 6r. Any insured employee of the state who terminates creditable service on or after April 23, 1992, after attaining at least 20 years of creditable service, remains a participant and is not eligible for an immediate annuity or is not receiving a retirement or disability annuity, and who, if eligible, is receiving medicare coverage under both part A and part B of Title XVIII of the federal social security act, 42 USC 1395 to 1395zz.

40.02(25)(b)7. 7. Any employee whose health insurance premiums are being paid under s. 40.05 (4) (bm).

40.02(25)(b)8. 8. Any other state employee for whom coverage is authorized under a collective bargaining agreement pursuant to subch. V of ch. 111 or under s. 230.12 or 233.10.

40.02(25)(b)9. 9. Except as provided under s. 40.51 (7), any other employee of any employer, other than the state, that has acted under s. 40.51 to make such coverage available to its employees.

40.02(25)(b)10. 10. Any participating employee who is an employee of this state and who qualifies for a disability benefit under s. 40.63 or 40.65.

40.02(25)(b)11. 11. Beginning on July 1, 1988, any retired public employee, other than a retired employee of the state, who is receiving an annuity under the Wisconsin retirement system, or any dependent of such an employee, as provided in the health insurance contract, who is receiving a continuation of the employee’s annuity, and, if eligible, is receiving medicare coverage under both part A and part B of Title XVIII of the federal social security act, 42 USC 1395 to 1395zz, and who has acted under s. 40.51 (10) to elect group health insurance coverage.

40.02(25)(bm) (bm) For the purpose of long-term care insurance, in addition to any state annuitant, any employee of the state who received a salary or wages in the previous calendar year, and any participant who was at one time employed by the state who receives a lump sum payment under s. 40.25 (1) which would have been an immediate annuity if paid as an annuity, if the employee is a resident of this state and meets all of the requirements for an immediate annuity including filing of an application, whether or not final administrative action has been taken.

40.02(25)(c) (c) For the purpose of group life insurance coverage, for participating employees and employees subject to s. 40.19 (4) of any employer, other than the state, which has acted under s. 40.70 (1) (a) to make group life insurance available to its employees the same as provided under par. (a) 1. and 3.

40.02(25)(d) (d) For the purpose of income continuation insurance coverage, and except as provided under s. 40.61 (3), for participating employees of any employer under sub. (28), other than the state, which has acted under s. 40.61 to make such coverage available to its employees.

40.02(25g) (25g) “Eligible retired public safety officer” has the meaning given in section 402 (l) (4) (B) of the Internal Revenue Code.

40.02(26) (26) “Employee” means any person who receives earnings as payment for personal services rendered for the benefit of any employer including officers of the employer. An employee is deemed to have separated from the service of an employer at the end of the day on which the employee last performed services for the employer, or, if later, the day on which the employee-employer relationship is terminated because of the expiration or termination of leave without pay, sick leave, vacation or other leave of absence. Except as provided in s. 40.82 (4), a participant receiving a differential wage payment or earnings, contributions, or service credit under sub. (15) (e) is considered an employee of the employer making the payment. A person shall not be considered an employee if a person:

40.02(26)(a) (a) Is employed under a contract involving the furnishing of more than personal services.

40.02(26)(b) (b) Is customarily engaged in an independently established trade, business or profession providing the same type of services to private individuals and organizations as is provided to the employer and whose services to a participating employer are not compensated for on a payroll of that employer, except that persons holding offices provided for by statute shall be considered employees.

40.02(26)(c) (c) Is a patient or inmate of a hospital, home or institution and performs services in the hospital, home or institution.

40.02(26g) (26g) “Employee-funded reimbursement account plan” means any of the following:

40.02(26g)(a) (a) A plan in accordance with section 125 of the Internal Revenue Code under which an employee may direct an employer to place part of the employee’s gross compensation in an account to pay for certain future expenses of the employee under section 125 of the Internal Revenue Code.

40.02(26g)(b) (b) A plan in accordance with section 132 of the Internal Revenue Code under which an employee may direct an employer to place part of the employee’s gross compensation in an account to pay for certain future expenses of the employee under section 132 of the Internal Revenue Code.

40.02(26r) (26r) “Employee-funded reimbursement account plan provider” means a person who provides administrative services related to employee-funded reimbursement account plans.

40.02(27) (27) “Employee required contribution” means the contribution made by an employee under s. 40.05 (1) (a) 1. to 4. and 7.

40.02(28) (28) “Employer” means the state, including each state agency, any county, city, village, town, school district, other governmental unit or instrumentality of 2 or more units of government now existing or hereafter created within the state, any federated public library system established under s. 43.19 whose territory lies within a single county with a population of 750,000 or more, a local exposition district created under subch. II of ch. 229, and a long-term care district created under s. 46.2895, except as provided under ss. 40.51 (7) and 40.61 (3). “Employer” does not include a local cultural arts district created under subch. V of ch. 229. Each employer shall be a separate legal jurisdiction for OASDHI purposes.

40.02(29) (29) “Employer required contribution” means the contribution made by an employer under s. 40.05 (2) (a) to (f).

40.02(30) (30) “Executive participating employee” means a participating employee in a position designated under s. 19.42 (10) (L) or 20.923 (4), (7), (8), or (9) or authorized under s. 230.08 (2) (e) during the time of employment, and also includes the president and vice presidents of the University of Wisconsin System and the chancellors and vice chancellors who are serving as deputies of all University of Wisconsin institutions, the University of Wisconsin Colleges, and the University of Wisconsin-Extension. All service credited prior to May 17, 1988, as executive service as defined under s. 40.02 (31), 1985 stats., shall continue to be treated as executive service as defined under s. 40.02 (31), 1985 stats., but no other service rendered prior to May 17, 1988, may be changed to executive service as defined under s. 40.02 (31), 1985 stats.

40.02(31) (31) “Federal annual compensation limits” means any annual compensation limit under section 401 (a) (17) of the Internal Revenue Code, as adjusted for any cost of living increases under section 401 (a) (17) (B) of the Internal Revenue Code, but only with respect to plan years beginning after December 31, 1995, and only with respect to individuals who first became participating employees in plan years beginning after December 31, 1995. This subsection shall be applied in compliance with section 401 (a) (31) of the Internal Revenue Code pursuant to any applicable federal regulations or guidance adopted under the Internal Revenue Code.

40.02(32) (32) “Federal regulations” means the provisions of section 218 of Title II of the federal social security act and applicable regulations adopted under the federal social security act.

40.02(33) (33) “Final average earnings” means:

40.02(33)(a) (a) The monthly rate of earnings, ignoring any fractions of a dollar, obtained by dividing:

40.02(33)(a)1. 1. The participant’s total earnings received or considered to be received under sub. (22) (e), (ef), or (em) and for which contributions are made under s. 40.05 (1) and (2) during the 3 annual earnings periods (excluding any period more than 3 years prior to the effective date for any participating employer) in which the earnings were the highest, subject to federal annual compensation limits; by

40.02(33)(a)2. 2. Twelve times the total amount of creditable service for the 3 periods.

40.02(33)(b) (b)