BP BHEAD INT H

AN ACT Relating to employer responsibility for retirement contributions; amending RCW 41.50.140; adding a new section to chapter 41.50 RCW; creating a new section; and providing an effective date.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. The legislature finds that:

(1) Since enactment of chapter 227, Laws of 1984 most employers that participate in state retirement systems have been responsible for ensuring that member retirement contributions are transferred to the retirement trust funds, even in situations where service credit is being established on a retroactive basis for a member who is no longer employed by the employer.

(2) It is the responsibility of employers to accurately report their employees' compensation and service, and to ensure that all required member and employer contributions are transferred to the department of retirement systems. However, in situations where an employer determines that a former employee should have had contributions transferred, it is more reasonable and efficient to bill the employee for the past due member contributions than to make the employer responsible for them.

NEW SECTION. Sec. 2. A new section is added to chapter 41.50 RCW to read as follows:

(1) If an employer, pursuant to RCW 41.50.140(2), does not transfer member contributions for a former employee's prior period of service, the member shall not receive service credit for the period of service unless the member pays the required member contributions as provided in this section. In such cases the member shall have the option, but shall not be obligated, to pay the member contributions necessary to receive credit for the period of service. As provided by RCW 41.50.140(1), the department shall collect from the employer all employer contributions due for periods of service, regardless of whether the member elects to pay the member contributions necessary to receive credit for the period of service.

(2) The department shall adopt, by rule, a process by which separated and active members may pay member contributions needed to establish service credit for prior periods of service for which their employers did not transmit member contributions.

Sec. 3. RCW 41.50.140 and 1982 1st ex.s. c 52 s 33 are each amended to read as follows:

(1) Every employer participating in one or more of the retirement systems listed in RCW 41.50.030 shall fully cooperate in the administration of the systems in which its employees participate, including the distribution of information to employees, and shall accept and carry out all other duties as required by law, regulation, or administrative instruction. Every employer shall transmit to the department all member and employer contributions due for periods of service rendered in the retirement systems, except as provided in subsection (2) of this section.

(2) When the department bills an employer for member and employer contributions owed for a prior period of service, the employer shall transmit the required contributions if the member is still an employee of the employer at the time of the billing. The employer shall have no duty to transfer member contributions for persons who are not employees on the date the department bills the employer but shall transfer the required employer contributions for the prior service.

(3) Members for whom member contributions for a prior period of service are not transferred by the employer pursuant to subsection (2) of this section shall have the option of paying the required member contributions pursuant to section 2 of this act.

(((2) If an employee is entitled to retroactive service credit which was not previously established through no fault of the employee, or through an employer error which has caused a member's compensation or contributions to be understated or overstated so as to cause a loss to the retirement funds, the director may bill the employer for the loss, to include interest, if applicable. The employer contributions, with interest thereon, will be treated as if in fact the interest was part of the normal employer contribution and no distribution of interest received shall be required.

(3) Employer-paid employee contributions will not be credited to a member's account until the employer notifies the director in writing that the employer has been reimbursed by the employee or beneficiary for the payment. The employer shall have the right to collect from the employee the amount of the employee's obligation. Failure on the part of the employer to collect all or any part of the sums which may be due from the employee or beneficiary shall in no way cause the employer obligation for the total liability to be lessened.))

(4) If an employer transfers member contributions which were not paid by the member, the employer shall have the right to collect the amount of the employee's obligation from the employee.

NEW SECTION. Sec. 4. This act shall take effect July 1, 1996.