Iowa Administrative Code › Agency 871 - Workforce Development Department › Chapter 23 - Employer's Contribution and Charges › Rule 871-23.3 - Wages

Current through Register Vol. 47, No. 3, July 24, 2024
(1)
"Wages"
means all remuneration for personal services, including
			 commissions and bonuses and the cash value of all remuneration in any medium
			 other than cash. Wages also means wages in lieu of notice, separation allowance,
			 severance pay, or dismissal pay. The reasonable cash value of remuneration in any
			 medium other than cash shall be estimated and determined in accordance with rule
			 23.2(96).
(2) The term "wages" shall
			 not include:
a.
Subsistence
			 payments.
The amount of payment made by an employer to its employee,
			 which is in addition to the employee's regular wages and is paid for the sole
			 purpose of compensating the employee for expenses inherent in the performance of
			 services by the employee away from the regular base of operation of the employer
			 and employee, commonly referred to as subsistence pay.
b.
Travel and other ordinary and
			 necessary expenses.
Amounts paid specifically for travel or other
			 ordinary and necessary expenses incurred or reasonably expected to be incurred in
			 the employer's business are not wages. Travel and other reimbursed expenses must
			 be identified either by making a separate payment or by specifically indicating
			 the separate amounts if both wages and expense allowances are combined in a
			 single payment.
c.
Employer's payments to persons performing military services.
Cash
			 payments, or the cash value of other remuneration, made voluntarily and without
			 contractual obligation to, or in behalf of, an individual for periods during
			 which such individual is in active service or training as a member of the
			 national guard, or the military or naval forces of the United States, including
			 the organized reserves.
d.
Sick pay.
(1) "Wages" shall not
			 include any amounts paid as sick pay if the payments are made by or on behalf of
			 an employer under a plan or system. The plan or system must provide sick pay for
			 the employees of the employer or a class or classes of the employer's employees.
			 The plan may include dependents.
(2)
			 In the absence of a plan or system any amounts paid by or on behalf of an
			 employer on account of sickness shall not be included after the expiration of six
			 calendar months following the last calendar month in which the employee worked
			 for such employer.
e.
Supplemental unemployment benefit plan (SUB).
The term "wages"
			 shall not include the amount of any payment by an employing unit for or on behalf
			 of an individual in its employ, under a plan or system established by such
			 employing unit, with approval of the department. Such plan or system must make
			 provision for payment to a trust fund or similar account on behalf of individuals
			 performing services for it. The account must be used to pay supplemental
			 unemployment benefits to such employing unit's employees over and above any sum
			 to which such employees might be entitled under the provisions of the state
			 employment security law. Such payments to employees are not remuneration for the
			 purposes of reducing or preventing payment of unemployment benefits. Such plan
			 shall contain the following features:
(1) The
			 employer pays into a separately established trust fund or similar account an
			 amount per hour (or amount equivalent) worked by the employees covered by the
			 agreement until the maximum amount called for has been reached. The plan
			 specifically provides for the supplementation of unemployment benefits under the
			 written terms of an agreement, contract, trust arrangement, or other
			 instrument.
(2) These payments made
			 by the employer into the trust fund or similar account are not subject to
			 recovery by the employer before the satisfaction of all liabilities to employees
			 covered by the plan.
(3) The trust
			 fund or similar account is to be used to pay supplemental unemployment benefits
			 to employees over and above any sum to which they might be entitled under the
			 provisions of a state employment security law.
(4) That the agreement shall provide that such
			 employee is not entitled to receive any payment from the trust fund or similar
			 account unless the employee is also concurrently eligible for benefits under a
			 state employment security law.
(5)
			 The plan requires that benefits are to be determined according to objective
			 standards. Thus a plan may provide similarly situated employees with benefits
			 which differ in kind and amount, but may not permit such benefits to be
			 determined solely at the discretion of the administrator of the fund.
(6) That the employee has no vested right in
			 any of the moneys paid into the trust fund or similar account except as the
			 employee may qualify for benefits under the terms of the agreement.
(7) That any payment made to or on behalf of an
			 employee be from and to a trust fund or similar account described in Section
			 401(a) of the United States Internal Revenue Code title 26 of 1970 which is
			 exempt from tax under Section 501(a) of said Code.
(8) The employer shall seek approval of its
			 plan by petitioning that its plan be designated as a supplemental unemployment
			 benefit (SUB) plan in the manner provided for petitioning for a declaratory
			 ruling. The employer should include a written copy of its plan in the petition
			 for declaratory ruling. The department will respond in the manner provided for
			 declaratory rulings.
f.
Officers of corporation.
The term "employment" shall not
			 include wages paid to an officer of corporation if such officer is a majority
			 stockholder:
(1) Unless such services are
			 subject to a tax to be paid under any federal law imposing a tax against which
			 credit may be taken for contributions required to be paid into a state
			 unemployment fund; or
(2) If such
			 services are required to be covered under this chapter of the Code as a condition
			 to receiving a full tax credit against the tax imposed by the Federal
			 Unemployment Tax Act (FUTA)  (26 U.S.C. 3301 -
			 3309) .
g.
Remuneration paid by state or
			 political subdivision.
The term "employment" shall not include wages
			 paid by this state or any of its political subdivisions or by an Indian tribe to:
(1) An elected official,
(2) A member of a legislative body,
(3) A member of the judiciary of a state or
			 political subdivision,
(4) A member
			 of the state national guard or air national guard,
(5) An employee serving on a temporary duty
			 basis for fire, storm, snow, earthquake, flood, or similar emergency,
			 or
(6) A person serving in a
			 nontenured policymaking capacity or advisory capacity pursuant to state law which
			 ordinarily does not require duties of more than eight hours per week.
See rule 871-23.71(96) for further definition of exemptions (1)
				through (6).
h.
Sole proprietorship or partnership drawing accounts.
The term
			 "wages" shall not include any of the following:
(1) Any amount of personal compensation
			 withdrawn by a bona fide sole proprietor from the business or
			 profession.
(2) Any amount of
			 personal compensation withdrawn by a bona fide partner or partners from their
			 partnership entity.
(3) Remuneration
			 for services which are paid by a limited partnership to a limited partner is
			 reportable. If a limited partner performs the duties of a general partner,
			 remuneration is considered to be exempt.
i.
Payments into 401K and other
			 deferred compensation plans.
Payments made by an employer to a deferred
			 compensation plan, established to provide for an employee's retirement, are not
			 wages subject to contributions unless the payments were deducted from the
			 employee's pay through a salary reduction agreement. In circumstances where both
			 the employer and the employee contribute to the plan, the employer's share is not
			 wages unless the employee would receive a cash payment if the employee chose not
			 to participate in the plan.
j.
Remuneration paid to members of limited liability companies based on
			 membership interest.
The term "wages" shall not include remuneration
			 paid to a member of a limited liability company based on a membership interest in
			 the company provided that the remuneration based on membership interest is
			 allocated among members, or classes of members, in proportion to their respective
			 investments in the company. The term "wages" shall not include any remuneration
			 for services performed in lieu of a contribution of cash or property to acquire a
			 membership interest in the limited liability company. See Iowa Code sections
			 96.19(18a)(9) 
			 and 96.19(41e). If
			 the amount of remuneration attributable to membership interest or the purchase of
			 a membership interest and the amount attributable to services performed cannot be
			 determined, the entire amount of remuneration shall be considered to be based on
			 the services performed.
k.
Inmates of correctional institutions.
The term "employment" shall not
			 include wages paid for services performed by an inmate of a correctional
			 institution. Persons in work release programs are considered inmates and their
			 wages are not reportable. Remuneration paid to residents of halfway houses is
			 reportable.