6th Circuit Court of Appeals Rules WEP Applies to Dual Status Technicians

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6th Circuit Court of Appeals Rules WEP Applies to Dual Status Technicians

Ben Banchs • May 15, 2020

"...dual status technician employment is essentially...not wholly military in nature."

Earlier this week the 6th Circuit Court of Appeals issued the latest decision concerning whether a dual-status technician who retires under the Civil Service Retirement System (CSRS) can have their Social Security benefits reduced by the Windfall Elimination Provision (WEP), even though they claim a military-service exemption due to their being required to be in the National Guard as a condition of their technician employment. The short answer is, yes, the WEP reduction still applies, except in states under the jurisdiction of the 8th Circuit Court of Appeals (i.e., Arkansas, Iowa, Minnesota, Missouri, Nebraska, North Dakota, and South Dakota). Technicians who retire under the Federal Employee Retirement System (FERS) are not subject to WEP since their earnings were taxed by Social Security.

WEP can affect you if you earn a retirement or disability pension from an employer who did not withhold Social Security taxes (like CSRS annuitants) and you also qualify for Social Security retirement or disability benefits from work in other jobs for which you did pay Social Security taxes (like service in the National Guard and Reserves). However, claimants can request to be exempt from the WEP reduction if the non-taxed work qualifies as "a payment based wholly on service as a member of the uniformed service." For those whose eligibility year is 2020, benefits can be reduced by upwards of $480 per month, but that amount is adjusted for every year over 20 that you worked at the job where you paid Social Security taxes, so if you paid Social Security taxes for 30 or more years then your benefits will not be reduced by WEP.

Most CSRS annuitants (other than dual-status technicians for example) may have only worked for the Federal government their entire career, so they are not eligible to receive Social Security since they did not pay into it. However, some CSRS annuitants also worked other jobs where their pay was subject to Social Security withholding for a minimum of 40 quarters (10 years). For example, a dual-status technician who was covered by CSRS also earned military pay that was subject to Social Security for the entire time they were "dual-status." If they earned military pay for at least 10 years then they are eligible to receive Social Security benefits. However, since they retired under CSRS then their Social Security benefits are subject to the WEP reduction.

Technicians have tried to make the case for years that since they were required to be in the military as a condition of their civilian employment then they should be exempted under the WEP's military clause. In 2011, one such technician, David Petersen from Nebraska, was able to argue his case successfully before the 8th Circuit Court of Appeals. As a result of Petersen v. Astrue, all technicians residing in the 8th Circuit's jurisdiction who apply for Social Security benefits after 2012 will be exempt from the WEP reduction. Since then, several other technicians outside of the 8th Circuit have tried to appeal the Social Security administration's application of WEP. None have been able to duplicate Petersen's success.

The latest decision came on May 11, 2020, when the 6th Circuit court issued a decision in Babcock v. Commissioner of Social Security, adopting the 2018 analysis of the 11th Circuit in Martin v. Social Security, that technician employment is essentially rather than wholly military in nature, and "is not subject to the uniformed services exception" in the WEP. Babcock tried to raise three arguments in support of his appeal: 1. that technician service is military and should be exempt from the WEP reduction; 2. that previous 6th Circuit decisions concerning the Feres Doctine established precedent that technician employment is indeed military; and, 3. that because technicians residing within the 8th Circuit's jurisdiction are exempt from WEP reductions, that he (Babcock) was being treated differently and that this is a violation of his due process and equal protection rights. The 6th Circuit judges were not persuaded by any of the arguments.

While these two recent decisions represent a split from the 8th Circuit's Petersen v. Astrue, the 6th and 11th Circuit merely re-affirm the Social Security Administration's longstanding policy on WEP and technicians; basically, that technicians do not meet the WEP's military-service exception and that their retirements are subject to reduction. The 6th Circuit's decision in Babcock is just the latest in a long line of court battles that attempt to unravel where, exactly, dual-status technicians fall within the federal construct. Yes, they are military...no, they are not military...as long as the language in the law remains vague so will the lasting effects. Bottom line, if you want a little extra scratch, you may have to move!

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