SL 30001.365 Public Transportation Services
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.
B. SECTION 210(k) OF THE SOCIAL SECURITY ACT
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:
the transportation system was not operated by the State or political subdivision thereof prior to 1951; and
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.
C. DEFINITION OF TERMS
1. General retirement system
Any pension, annuity, retirement or similar fund or system established by a State or political subdivision for employees of the State, political subdivision, or both. The term does not include a fund or system which covers only services performed in connection with the operation of the transportation system. For this purpose, a general retirement system is guaranteed by the State if the State constitution contains a provision which states specifically that State and local retirement systems cannot diminish or impair their benefits.
Where the transportation system is operated by an entity created specifically for that purpose, a retirement system which covers only employees of that entity is not a general retirement system. Similarly, a continuation of the private employer's pension plan by the State or local government is not a general retirement system.
2. Acquisition from private ownership
A transportation system is considered acquired by a State or by a political subdivision from private ownership if prior to the acquisition work for the system was covered for Social Security and some of its employees became employees of the State or political subdivision at the time of the acquisition. If a political subdivision acquires a transportation system from another political subdivision whose employees are covered under a Section 218 Agreement, the system is considered acquired from private ownership.
3. Services in connection with the operation of a transportation system
This includes work that is essential to or closely connected with the operation of the system. It is not limited to work done in connection with the actual physical operation. If the transportation system is operated by a transit authority or similar entity created exclusively for the purpose of acquiring and operating transportation systems, all services performed by the entity's employees are in connection with its operation. If the system is operated by an entity not created for this specific purpose, whether the services are in connection with its operation depends on whether the sum total of the individual's activities, as distinguished from any one activity or function, pertains to the conduct of the system. Factors to be considered are the functions of the employee, the funds from which he/she is paid, the type of official, agency or department which directs the employee's activities, and the activities of the agency or department. No factor is controlling; it is the nature of the total services and their relation to the operation of the transportation system that is significant.
D. TRANSPORTATION SYSTEM ACQUIRED BEFORE 1937
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.
E. TRANSPORTATION SYSTEM ACQUIRED AFTER 1950
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.
F. TRANSPORTATION SYSTEM ACQUIRED AFTER 1936 AND BEFORE 1951
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.
G. TRANSPORTATION SYSTEM ACQUIRED BEFORE 1951 AND AFTER 1951
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.