Definition of OBRA: Part-Time Employees, Seasonal Employees, Temporary Employees
The Omnibus Budget Reconciliation Act of 1990 (OBRA) expanded the definition of “employment” for Social Security
coverage and FICA tax purposes to include service performed after July 1, 1991, by a state or local government employee, unless the employee is a member of the employer’s retirement system at the time the service is rendered or is already covered under an agreement between the employer and the Commissioner of Social Security (referred to as a Section 218 agreement).
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Most full-time, state or local public employees are members of their employer’s retirement system. By virtue of that membership, full-time service is not covered employment for purposes of the Old Age Survivors and
Disability Insurance (OASDI) portion of taxes under the Federal Insurance Contributions Act (FICA), sometimes
called Social Security tax, on the wages of employees paid by employer with respect to employment.
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Generally, temporary, seasonal and part-time employees are not members of their employer’s retirement system, and their employment may be excluded from mandatory Social Security coverage provided they participate in an appropriate alternative
plan under OBRA.
All participants classified as OBRA must make a mandatory
contribution to the plan equal to 7.5% of gross pay.