SSR 78-2: SECTIONS 209(b) and (d) and 218(s) (42 U.S.C. 409(b) and (d) and 418(s)) STATE AND LOCAL COVERAGE -- COMMISSIONER'S RULING -- ACCIDENT DISABILITY PAYMENTS REPORTED AS WAGES -- NEW YORK
20 CFR 404.1026(a), 404.1027(b) and (d), 404.1220, and 404.1270
SSR 78-2
- The State of New York reported accident disability payments to a policeman as wages. The Social Security Administration determined that such payments were made on account of sickness or accident disability and under a plan or system, and therefore, excluded from covered wages under section 209(b) of the Social Security Act. The State contended the payments were made from regular salary accounts in accordance with sections 207(a) and (c) of the General Municipal Law of New York State which provide for the continued employment (with full pay) of firemen and policemen absent from work because of a job-related illness or injury, and that the payments other than salary from such accounts are not legally authorized. Held, there is no legal authority for the State to make payments solely on account of accident disability, as distinguished from authorization to continue salary payments during periods of absence due to such an injury or illness, and thus the payments made under the cited provisions of State laws were not payments on account of disability, but were a continuation of salary and therefore not excluded from wages as provided in sections 209(b) and (d) of the Act.
The State of New York timely requested review under section 218(s) of the allowance of a credit granted to the State for Social Security contributions paid by the State on accident disability payments made under Section 207(c) of the General Municipal Law of New York State.
The State reported these payments made by the city of Jamestown, to a policeman as wages covered under its section 218 agreement. The Social Security Administration found that such payments were made on account of sickness or accident disability and under a plan or system. On this basis it was determined that the payments were excluded from wages as defined in section 209 of the Act and were not covered under the State of New York's section 218 agreement.
The two sections of the General Municipal Law of New York State that are pertinent in regard to the sickness and accident disability payment in question are sections 207(a) and (c). Section 207(a) applies to firemen and section 207(c) applies to policemen employed by a political subdivision of New York State. Specifically, these sections provide that a municipality shall continue to employ a fireman or policeman and to pay him the full amount of his salary if he becomes sick or insured as a result of the performance of his duties.
Section 209 of the Social Security Act, as amended, defines "wages as remuneration for employment. The types of payments which are excluded from "wages," as defined in the Act, are set forth in subsections 209(a) through (o) of the Act. The subsections of the Act applicable to sickness and accident disability payments are subsections 209(b) and (d). Payments made on account of sickness or accident disability under a plan or system are excluded from wages pursuant to section 209(b) of the Act. Lacking a plan or system, such payments are excluded from wages pursuant to section 209(d) of the Act beginning with the first day of the seventh calendar month following the last calendar month in which the employee worked for the employer. However, the wage exclusions of sections 209(b) and (d) of the Social Security Act are applicable only if a public employer has legal authority to make payments specifically on account of sickness or accident disability as distinguished from authorization to merely continue salary payments during periods of absence due to illness (payments despite illness).
Under Sections 207(a) and (c) of the General Municipal Law of New York State, the political subdivision of the State, as employer, must retain the incapacitated employee, as an employee, until he is able to return to work, dies, retires, or voluntarily quits. During the period of work absence the employer must pay him his full salary from the regular salary account, including any increases in that salary which he would receive if he were working full-time. In addition, the employee continues to accumulate credit for vacation and sick leave to which he is entitled because of such employment. Essentially, under New York law the employee is made "whole" and suffers no loss of his regular salary or fringe benefits because of his job-related illness or accident. The State contends that payments made under Sections 207(a) and (c) are wages in accordance with State law and are covered under the State's section 218 agreement. Specifically, the State argues that:
- 1. Payments under Section 207(a) and (c) of the General Municipal Law of New York State are made from regular salary accounts which cannot legally be used for any purpose other than salary payments; and
- 2. Payments other than salary from these accounts constitute gifts of public money which are prohibited by Article VIII of the New York State Constitution. (Salary continues despite the sickness or injury. There is no legal authority to make any payment except salary.)
The Commissioner found, on review pursuant to the State's request, that the payments made under Sections 207(a) and (c) of the General Municipal Law of New York State are not excluded wages as defined in Sections 209(b) and (d) of the Social Security Act. On the basis of this finding the Commissioner cancelled the Social Security Administration's credit allowance.