Several State governments and some businesses voluntarily provide their employees
who are on active reserve or National Guard duty (referred to as reservists) with
payments to supplement their military pay so that they do not suffer a loss of income
while serving. Employers may consider such payments to be a continuation of the employees’
regular salary or wages. The reservists should also continue to receive benefits as
if they were still working, e.g. accrual of vacation time and coverage under the employer’s
health insurance plan.
However, for purposes of Social Security coverage, section 209(a) of the Act defines
wages as “remuneration…for employment” and section 210(a) defines employment (in part)
as “any service…performed…by an employee for his or her employer.” See also 20 CFR
sections 404.1003 through 404.1010 regarding the definition of “employment”. Since
reservists on active military duty are not performing services for their civilian
employers, payments made to them by those employers are not considered remuneration
for employment. Therefore, military differential or supplemental pay is not wages for Social Security purposes. (NOTE: On the other hand, reservists on active duty are performing services as employees
of the military and, effective January 1, 1957, their military base pay is wages.)