# 20 CFR § 210.3 - Month of service.

§ 210.3 Month of service.

(a) Reported. A reported month of service is any calendar month or any part of a calendar month for which an employee receives compensation for services performed for an employer; or receives pay for time lost as an employee; or is credited with compensation for a period of creditable military service; or is credited with compensation under § 211.12 of this chapter based on benefits paid under title VII of the Regional Rail Reorganization Act of 1973.

(b) Deemed. A deemed month of service is any additional month of service credited to an employee subject to paragraphs (b)(1) and (2) of this section.

(1) An employee who is credited with less than twelve reported months of service for a calendar year after 1984 may be “deemed” to have performed service for compensation in additional months, not to exceed twelve, providing:

(i) The employee's compensation for the calendar year in question exceeds an amont calculated by multiplying the number of reported months credited for that year by an amount equal to one-twelfth of the current annual maximum for non-tier I components as defined in § 211.15 of this chapter; and

(ii) The employee maintains an employment relation to one or more employers or serves as an employee representative in the month or months to be deemed. For purposes of this section, employment relation has the same meaning as defined in part 204 of this chapter, disregarding the restrictions involving the establishment of such a relationship as of August 29, 1935. Employee representative has the same meaning as defined in part 205 of this chapter.

(2) Employees satisfying the conditions in both paragraphs (b)(1)(i) and (b)(1)(ii) of this section shall have their months of service for a calendar year calculated using the following formula:

$\text{Months of service}=\frac{\text{Employee's creditable non-tier I compensation}}{\text{Maximum annual creditable non-tier I compensation}÷12}$

The quotient obtained using this formula equals the employee's total months of service, reported and deemed, for the calendar year. Any fraction or remainder in the quotient is credited as an additional month of service.

(3) Examples. The provisions of paragraphs (b)(1) and (2) of this section may be illustrated by the following examples.

Example (1):
Employee B worked in the railroad industry in 1985 and was credited with nine reported months of service (January through September) and non-tier I compensation of \$20,000. The 1985 annual maximum for non-tier I compensation is \$29,700. B maintained an employment relation in the three months he was not employed in 1985. The following computations are necessary to determine if B has sufficient non-tier I compensation to be credited with deemed months of service.
(1) Enter the annual maximum for non-tier I compensation for the calendar year
\$29,700
(2) Divide line (1) by 12
\$29,700 ÷ 12
\$2,475
(3) Enter the employee's reported months of service for the calendar year
9
(4) Multiply line (2) by line (3) \$2,475 × 9
\$22,275
(5) Enter the employee's non-tier I compensation for the calendar year
\$20,000
(6) Subtract line (4) from line (5). Enter the result (but not less than zero). This is the employee's excess non-tier I compensation for the calendar year.
\$20,000−\$22,275
0
a. If line (6) is zero, the employee does not have sufficient non-tier I compensation to be credited with deemed months of service.

b. If line (6) is greater than zero, the employee has sufficient non-tier I compensation to be credited with deemed months of service.

Since the amount on line (6) is zero, employee B does not have enough non-tier I compensation to be credited with deemed months of service. B is credited with only nine reported months of service for the year.

Example (2):
Assume the same facts as in example (1), except that employee B was credited with non-tier I compensation of \$25,000 for 1985. The following computations are necessary to determine if B has sufficient non-tier I compensation to be credited with deemed months of service.
(1) Enter the annual maximum for non-tier I compensation for the calendar year
\$29,700
(2) Divide line (1) by 12
\$29,700 ÷ 12
\$2,475
(3) Enter the employee's reported months of service for the calendar year
9
(4) Multiply line (2) by line (3) \$2,475 × 9
\$22,275
(5) Enter the employee's non-tier I compensation for the calendar year
\$25,000
(6) Subtract line (4) from line (5). Enter the result (but not less than zero). This is the employee's excess non-tier I compensation for the calendar year.
\$25,000−\$22,275
\$2,725
a. If line (6) is zero, the employee does not have sufficient non-tier I compensation to be credited with deemed months of service.

b. If line (6) is greater than zero, the employee has sufficient non-tier I compensation to be credited with deemed months of service.

Since the amount on line (6) is greater than zero, employee B has enought non-tier I compensation to be credited with deemed months of service. B now satisfies all the requirements for deeming, therefore his months of service for the calendar year are calculated using the formula in § 210.3(b)(2).

$\text{Months of service}=\frac{\text{Employee's creditable non-tier I compensation}}{\text{Maximum annual creditable non-tier I compensation}÷12}$

$\text{(1)}\phantom{\rule{0ex}{0ex}}\text{Months of service}=\frac{25,000}{29,700÷12}\text{or 25,000}÷2,475$

$\text{(2)}\phantom{\rule{0ex}{0ex}}\text{Months of service}=\frac{25,000}{2,475}\text{or 25,000}÷2,475$

(3) Months of service = 25,000 ÷ 2,475 or 10.10
(4) Round the result in line (3) to the next higher whole number. This is the employee's total months of service for the calendar year.
10.10 becomes
11
Employee B is credited with 11 months of service for 1985; nine reported months (January through September) and two deemed months (October and November).
[53 FR 17182, May 16, 1988]