Covered transportation service refers to work for public transportation systems which is compulsorily covered under Section 210(k) of the Act and required to be excluded from coverage under a Section 218 Agreement. The 1950 Social Security Amendments, which provided coverage for employees of State and local governments, included special coverage rules under Section 210(k) for employees of public transportation systems acquired from private ownership and operated by these entities. These rules, which are still in effect, provide mandatory Social Security coverage for work for public transportation systems under certain conditions. Whether the services are covered under Section 210(k) or may be covered under a Section 218 Agreement depends on the date the system was acquired by the State or local government and whether the services are covered by a general retirement system.

Section 218(c)(6)(C) of the Act requires transportation services covered under Section 210(k) to be excluded from coverage under a Section 218 Agreement. However, transportation services also may be excluded from coverage under Section 210(a)(9) of the Act and Section 3231 of the Internal Revenue Code, as amended, if services are performed by a railroad employee as determined by the Railroad Retirement Board (RRB) for purposes of the Railroad Retirement Act, or by IRS for purposes of the Railroad Retirement Tax Act provisions of the Internal Revenue Code. Therefore, before a coverage determination is made, it must first be ascertained if the RRB or IRS has made any prior related determinations.

Section 210(k) of the Act sets forth two factors that determine if service performed in the employee of a State or political subdivision in connection with its operation of a public transportation system is covered transportation. Those factors are:

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  the transportation system was not operated by the State or political subdivision thereof prior to 1951; and

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  at the time of its first acquisition after 1950, the State or political subdivision did not have a general retirement system covering substantially all service performed in connection with the operation of the transportation system.

Services performed after 1950 for a State or political subdivision in connection with the operation of a transportation system which was acquired in its entirety by the State or political subdivision from private ownership before 1937 are not covered transportation service. Employees can be covered only pursuant to a Section 218 Agreement.

If a State or political subdivision did not own a transportation system before 1951 and took over a private system after 1950, all employees are compulsorily covered unless at the time of acquisition the State or political subdivision has a general retirement system that covers substantially all work connected with the operation of the system.

If the transportation service was acquired from private ownership in whole or in part after 1936 and before 1951, or was operated at least in part by the State (or political subdivision) on December 31, 1950, with no general retirement system, all employees are compulsorily covered after 1950.

If the transportation system was acquired from private ownership in part before 1951 and in part after 1951 and there was no general retirement system on the date of acquisition, the services are covered transportation service. Coverage is compulsory effective on the first day of the third quarter after the quarter of acquisition only for those individuals employed before the acquisition.