§ 24-7-506 — Outsourcing - Election to participate - Definitions

(a) As used in this section: (1) (A) "Covered employer" means any public school, public educational agency, or other eligible employer participating in the Arkansas Teacher Retirement System. (B) "Covered employer" does not include a: (i) Nonmandatory employer or a PSHE employer as defined under § 24-7-1602 ; or (ii) Covered employer that reports through the Arkansas Administrative Statewide Information System; (2) (A) "Embedded employee" means a person who: (i) Provides an outsourced service on the premises of a covered employer; and (ii) Is employed and paid by an outsource contractor. (B) "Embedded employee" does not include a person who is employed by: (i) A covered employer listed under § 24-7-202 ; or (ii) An employer that offers the Arkansas Teacher Retirement System as an optional retirement plan as of the date of outsourcing; (3) "Outsource" or "outsourcing" means the use of a contractor by a covered employer for the performance of a service common to the normal daily operation on the premises of the covered employer; (4) "Outsource contractor" means a person who is contractually obligated under an outsourcing agreement to provide a covered employer with a service common to the normal daily operation of the covered employer; (5) "Participating employer" means a covered employer that outsources and opts for the embedded employees of all of the covered employer's outsource contractors to become members of the Arkansas Teacher Retirement System; (6) (A) "School nursing" means a nursing service that is required to be offered in a public school under § 6-18-706 or the Standards for Accreditation of Arkansas Public Schools and School Districts. (B) "School nursing" does not include nursing services provided by a: (i) School-based health clinic under § 6-18-703 ; (ii) Medical clinic operated on a public school campus by a hospital or physician's office that is under contract with the public school; (iii) Healthcare provider other than a nurse; or (iv) Healthcare service reimbursed or paid for by Medicaid, Medicare, health insurance, or any other third-party payer; (7) "Service common to the normal daily operation" means and is limited to a service that: (A) Is provided by an outsource contractor or embedded employee to a covered employer; (B) Is physically provided or based on the premises of a covered employer; (C) Is paid for with public funds and not with private grant funds; and (D) Consists of one (1) or more of the following: (i) The maintenance and operation of: (a) One (1) or more vehicles used for the regular and daily transport of passengers; and (b) A facility that provides support for the maintenance and operation of one (1) or more vehicles described under subdivision (a)(7)(D)(i) (a) of this section; (ii) The maintenance and operation of a cafeteria or other food service operation; (iii) Custodial or maintenance services for the regular and continuous maintenance, repair, and upkeep of grounds or facilities; (iv) Security services that are not covered by another retirement system; (v) School nursing; (vi) Substitute teaching; or (vii) Service as a teacher's aide; and (8) "Surcharge employer" means a covered employer that outsources and pays a surcharge to the Arkansas Teacher Retirement System. (b) A covered employer that enters into an agreement to outsource a service common to the normal daily operation shall become a surcharge employer within sixty (60) days of the outsourcing agreement. (c) (1) A surcharge employer shall account for and remit to the Arkansas Teacher Retirement System a surcharge of no more than four percent (4%) on the total salaries paid to all the embedded employees on an aggregate basis. (2) The Board of Trustees of the Arkansas Teacher Retirement System may establish by resolution the surcharge rate for any fiscal year following the 2022 fiscal year. (3) A surcharge adopted by the board applies to an entire fiscal year and shall be adopted before the beginning of the fiscal year. (d) (1) The Arkansas Teacher Retirement System may require a surcharge employer to provide any documentation necessary to collect and account for the surcharge as is consistent with the covered employer's election. (2) The Arkansas Teacher Retirement System shall collect an unremitted surcharge amount due, including interest, from a surcharge employer under § 24-7-401 or contribution due from a participating employer under § 24-7-406 in any manner allowed by law. (3) If a surcharge employer reasonably accepts a written statement from an outsource contractor reporting the salaries paid by the outsource contractor to embedded employees for services common to the normal daily operation of the surcharge employer, it shall be conclusively presumed that the written statement accurately reflects the salaries subject to surcharge under this section. (e) (1) The Division of Youth Services education system shall be a participating employer and may designate any or all of its embedded employees as eligible for membership in the Arkansas Teacher Retirement System. (2) An embedded employee of a contractor for the Division of Youth Services education system who becomes a member of the Arkansas Teacher Retirement System shall remain a member of the Arkansas Teacher Retirement System as long as the member remains an embedded employee of a contractor for the Division of Youth Services education system. (f) The use of the terms "employee" and "employer" in this section does not: (1) Create or modify an employment relationship between an embedded employee and a covered employer; (2) Create, permit, expand, or modify any liability or obligation by a covered employer to an embedded employee; or (3) Create, permit, expand, or modify any cause of action by an embedded employee against a covered employer under any employment, labor, civil rights, or other law. (g) The board may promulgate rules to implement this section.

Legislative History

Amended by Act 2023, No. 64,§ 1, eff. 7/1/2023. Added by Act 2017, No. 575,§ 2, eff. 8/1/2017.