HB 1287 Summary

• Allows covered employers (public schools, educational agencies, and eligible employers in the Arkansas Teacher Retirement System) to choose between two options when outsourcing services: become a "participating employer" with embedded employees as system members, or become a "surcharge employer" paying monthly surcharges instead.

• Surcharge rates for employers choosing not to enroll embedded employees begin at 0.5% of embedded employee salaries in fiscal year 2018, increasing to 1% (2019), 2% (2020), 3% (2021), and up to 4% (2022 and beyond) as set by the Board of Trustees.

• Defines "embedded employees" as contractor workers providing outsourced services on an employer's premises in specified areas: vehicle maintenance/operation, food service, custodial/maintenance, security, school nursing, substitute teaching, and teacher aide services.

• Requires covered employers to make an irrevocable election within 60 days of entering an outsourcing agreement and permits phased-in transitions to participating employer status over three to four fiscal years while paying surcharges during the transition period.

• Designates the Division of Youth Services Education System as a mandatory participating employer and establishes that use of employment terminology does not create actual employment relationships or liability between embedded employees and covered employers.