ARIZONA HOUSE OF REPRESENTATIVES

SB 1018: ASRS; compensation; definition

PRIME SPONSOR: Senator Livingston, LD 22

BILL STATUS: House Engrossed

Overview

Redefines compensation for members whose membership begins on or after January 1, 2020.

History

Current statute defines compensation as the gross amount paid to a member by an employer as salary or wages, including amounts that are subject to deferred compensation or tax shelter agreements, for services rendered to or for an employer among other stipulations.  Compensation does not include the following:

a. Lump sum payments, on termination of employment, for accumulated vacation or annual leave, sick leave, compensatory time or another form of termination pay whether in one payment or by installments.

b. Damages, costs, attorney fees, interest or other penalties paid pursuant to a court order or a compromise settlement or agreement to satisfy a grievance or claim even though the amount is based on previous salary or wage levels.

c. Payment, at the member's option, in lieu of fringe benefits that are normally paid for or provided by the employer.

d. Merit awards and performance bonuses paid to assistant attorneys general pursuant to statute.

e. Amounts that are paid as salary or wages to a member for which employer contributions have not been paid (A.R.S. §38-711).

Provisions

1. Maintains the current definition of compensation for members whose membership began on or before December 31, 2019. (Sec. 1)

2. Modifies the definition of compensation for members whose membership began on or after January 1, 2020 to include only gross wages paid to a member by the employer for services rendered during the period considered as credited service, including amounts reported as other compensation on the member's federal W-2 form, including pretax deductions, except for the following:

a. Payments made for accrued leave not being used to replace regular work hours, whether paid in a lump sum or in installments.

b. Payments made on termination from employment, whether paid in a lump sum or in installments or as a bonus or incentive for termination or retirement.

c. Employer-paid contributions that are made to, and any distributions from, plans, programs or arrangements qualified under certain sections of the Internal Revenue Code.

d. Payments for allowances.

e. Reimbursements for employee business or personal expenses.

f. Employer-paid contributions for coverage under, or distributions from, an accident, health or life insurance plan, program or arrangement.

g. Payments made in lieu of any employer-paid insurance coverage.

h. Workers' compensation, unemployment compensation and disability payments.

i. Merit awards pursuant to statute.

j. Payments paid pursuant to a court order or settlement agreement to satisfy a claim even though the amount of the payment is based on previous salary or wage levels, except if the court order or settlement agreement directs salary or wages to be paid for a specific period of time, the payment is compensation for that specific period of time.

k. Payments made in the form of goods or services in lieu of gross wages.

l. Any other payment that is not reported as other compensation on the member's federal W-2 statement for actual services rendered.

m. Payments in excess of the Internal Revenue Code limits established in statute.

n. Payments for any other employment benefit.

o. Payments for which employer or employee contributions have not been paid. (Sec. 1)

3. Makes technical and conforming changes. (Sec. 1)

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7. Fifty-fourth Legislature                       SB 1018

8. First Regular Session                            Version 3: House Engrossed

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