TN 17 (01-13)

A. When to resolve employer identity cases

Sometimes in benefit applications or in earnings discrepancy cases, we do not have enough evidence to identify the employer. When employers report wages for services that would be covered for all of the possible employers, it is not necessary to resolve the identity of the employer. If the identity of the employer could affect whether the earnings are covered or not, develop to determine the identity of the employer.

B. Criteria for determining the identity of the employer

The employer is the entity with the final authority to:

• hire,

• fire,

• supervise, and

• control the individual as he or she performs services, or has the right to do so.

Apply the usual common-law rules to determine the identity of an employer. For more information on the common-law rules, see RS 02101.020.

C. Developing employer identity cases

To resolve the issue of employer identity, establish whether a possible employer meets the common-law rules as outlined in RS 02101.700B (in this section). In addition to completing Form SSA-7160 (Employment Relationship Questionnaire), obtain answers from the worker and the alleged employer to the following questions:

1. Who hired the worker? NOTE: A finding as to whom pays wages is not a controlling factor in determining the identity of the employer. It is a fact to consider. Get a copy of the authorization when it is alleged that one entity delegated the authority to engage the worker and control his or her work.

2. Who paid the worker?

3. Who had the right to discharge the worker?

4. Was approval necessary to discharge the worker? If yes, who approved the discharge?

5. Was an accounting required of the worker's pay? If yes:

   • By whom?

   • To whom was such accounting made?

   • What was the purpose of the accounting?

6. What was the worker told or led to believe about the identity of his or her employer?

7. How were pay checks signed, pay envelopes marked, etc.? Obtain complete details.

8. How was the worker hired (by advertisement)?

9. Who did the worker apply with?

10. Get a complete explanation to identify who acted as the worker’s supervisor:

    • Who was the worker accountable to?

    • Who did the worker go to ask for vacation?

    • Who did the worker report to when unable to work because of illness, etc.?

    • Who set the rules and conditions for the worker?

NOTE: You may record your answers on Form SSA-5002 (Report of Contact).

Determining who pays wages is not a controlling factor in determining the identity of the employer. It is only a factor to consider in the determination. Secure a copy of the authorization when the worker alleges that one entity delegated the authority to engage the worker and control his or her work. In this case, the one with delegated authority is the employer.

Describe in detail if the authorization was oral. Confirm that the employer and the worker agree on the basic meaning of the oral authorization. If the employer and the worker disagree, attempt to reconcile their statements and obtain other evidence regarding this matter.

D. Identity of employer between federal government and another possible employer

When the issue involves the identity of the employer between the United States (U.S.) Government or a wholly owned instrumentality of the U.S. and another possible employer, resolve the issue of federal coverage first. The head of the federal agency or wholly owned instrumentality (or designated agent) determines whether the worker performed services that we include as employment. For a discussion of determinations on employees of the U.S. and its wholly owned instrumentalities, see RS 01901.380.

If the federal agency or instrumentality finds that the worker is not a federal employee, it is necessary to resolve the coverage status of the services with the other possible employer. If the latter development results in a finding that the worker is not an employee of this employer, we usually find the worker to have the status of a self-employed individual. For instructions on who is an employee, see RS 02101.010.

E. Identity of employer involving state and local employment

For a discussion of the identity of the employer involving state and local employment, see SL 60001.660 through SL 60001.670.

F. Identity of employer in property management cases

A worker may perform services on the premises owned by one person, and managed by someone else. In such cases, determining who the employer is depends on the agreement between the owner of the premises and the manager, and the methods by which they carry out the agreement.

The manager is the employer when the agreement does not:

• state that workers hired by the manager will be employees of the owner; and

• require the owner's approval of the rules and employee’s working conditions.

The owner is the employer when, under the agreement, the owner of the premises authorizes the manager to hire employees on the owner's behalf and subject to his or her approval.

G. Domestic service in rectories of Roman Catholic churches

The archdiocese or diocese regulations of the church’s location, determines the employer’s identity for employees performing domestic services in the rectories of Roman Catholic churches. Depending upon the regulations, the employer may be:

• the local church,

• the priest or priests of a particular church,

• the archdiocese, or

• the diocese.

1. Priest is the employer

SSA has already determined the priest(s) of the local churches in the following archdioceses or dioceses is the employer of employees performing domestic services in the rectories of these churches:

• Burlington, Vermont

• Charleston, South Carolina

• Dallas-Fort Worth, Dallas, Texas

• Fall River, Massachusetts

• Great Falls, Montana

• Helena, Montana

• Honolulu, Hawaii

• Lansing, Michigan

• Little Rock, Arkansas

  EXCEPTION: Domestics employed in St. Andrew’s rectory are employees of the Cathedral

• Los Angeles, California

• Mobile-Birmingham, Mobile, Alabama

• Ponce, Puerto Rico

• Reno, Nevada

• Rockford, Illinois

• Scranton, Pennsylvania

• Wilmington, Delaware

2. Priest is the former employer

SSA has already determined in the following archdioceses and dioceses, the priest(s) was the employer up to the date or period shown in the chart below. The following list begins with the date that the local church became the employer:

3. Diocese is the employer

SSA has already determined the diocese is the employer of employees performing domestic services in the rectories of the local churches in the dioceses of Salt Lake City, Utah, and Spokane, Washington.

4. Local church is the employer

Previously, local churches in all archdioceses and dioceses have always been the employer of workers performing domestic service in the rectories of the churches except those listed in RS 02101.700G.1. (in this section). Each local church in these archdioceses and dioceses is the employer of employees performing domestic service in the rectories of the churches effective with the date indicated in RS 02101.700G.2. (in this section).

5. Application of domestic service provisions

If an individual performing domestic service in the rectory of a Catholic church is an employee of the priest(s) of the church, the domestic service provisions of the law apply in determining wages because we deem the service as being performed in the private home of the employer (priest). For more information on domestic employment in a private home, see RS 01901.200.

If an individual is an employee of the church, archdiocese, or diocese, the domestic service provisions do not apply because we do not consider his or her service as being performed in the private home of the employer (priest). The conditions relating to coverage of service for organizations exempt from income tax as an organization described in section 501(c)(3) of the Internal Revenue Code apply to these employees.

Beginning January 1, 1984, the only issues are whether:

• as an employee of a 501(c)(3) organization, the $100 cash pay test is met; and

• the church elected to be excluded from coverage. (For more information on ministers and members of religious orders, see RS 01901.600).

6. Developing domestic service in rectories of Catholic churches

Development may show that wage reporting for domestic workers of a particular archdiocese or diocese does not conform to the lists in RS 02101.700G. There may also be an inconsistency among the local churches of an archdiocese or diocese in wage reporting. To resolve, check with an authority of the archdiocese or diocese to verify whether our lists in RS 02101.700G are correct.

H. Identity of employer for a farm operator and a crew leader

Many farmers employ workers on a temporary or seasonal basis to harvest their crops. We identify the employer for these farm workers by considering the following information:

1. Although these employers seldom exercise detailed supervision over the workers, one person or entity always reserves the right to supervise their workers’ services. Consequently, these workers perform services as employees.

2. A farmer unable to recruit help may obtain labor through a crew leader or intermediary, often referred to as crew boss, labor contractor, etc. If the crew leader’s services are limited to the recruitment of farm labor, we may find the farmer to be the employer of the workers.

3. There may be a question as to the identity of the employer when both the crew leader and the worker perform agricultural labor on the farm. There are two tests to help determine the employer. The statutory test that applies in resolving this question for periods after 1956, and the common-law control test for periods before 1957. We must also use the common-law control test for periods after 1956 when the worker does not meet the statutory test. Use the following rules to apply these tests after 1956:

   1. Effective January 1, 1957, the Social Security Act provides a definition of crew leader that constitutes a statutory test to determine when we deem the crew leader’s agricultural workers to be his or her employees.

   2. The law defines the term crew leader as an individual who:

      • furnishes workers to perform agricultural service for another person;

      • pays (either on his or her own behalf, or on behalf of another person) the workers for the agricultural service they perform; and

      • has not entered into a written agreement with that person designated as an employee.

4. An individual meeting this definition is a crew leader whether his or her title is crew boss, row boss, labor contractor, etc.

1. Crew leader is the employer before 1957

The crew leader is an independent contractor and the employer of farm workers when he or she is fully responsible for completing the contracted job and he or she has the right to exercise control over the ways and means to do the job. The crew leader exercises this right when he or she can:

• establish the pay rate and pay workers from his or her own funds;

• hire and fire the workers;

• furnish all or part of the necessary equipment;

• sub-contract any or all of the work to another; and

• make a profit or suffer a loss.

The crew leader may receive a flat fee for the entire job, a commission, or a percentage of the harvest.

2. When a crew leader is the employer after 1956

We deem an individual to be self-employed and the employer of the workers if:

• he or she pays the workers, and

• the farm operator does not designate him or her as an employee in a written agreement.

Under these conditions, we deem the crew leader not to be an employee of the person for whom he or she furnishes agricultural workers, with respect to his or her services in furnishing the workers, or for any services he or she may perform as a crew member. The rules of family employment apply in these cases. Therefore, we exclude services performed by spouses, or minor children for the crew leaders from coverage. For more information on family employment, see RS 01901.250.

3. Farm operator is the employer before 1957

The farm operator is the employer of the crew leader and the workers when he or she has final authority in such matters as:

• controlling the performance of their services;

• determining the work hours;

• establishing the workers’ pay rate;

• moving the workers from one field to another;

• setting the time and order of the harvesting operations; and

• terminating their employment without incurring liability.

If the crew leader is acting for or on behalf of the farm operator, his supervision status does not affect the farmer’s employer status.

4. Farm operator is the employer after 1956

When an individual enters into a written agreement with the person for whom he or she furnishes agricultural workers, and he or she is chosen as an employee of that person, we will deem that individual and the agricultural workers to be employees of such person. In this situation, the individual who furnishes the workers is not a crew leader under the statute, even though the agreement may refer to him or her as a crew leader.

5. Written agreement

The written agreement does not have to be in any special form, but both parties must sign it. The agreement must contain:

• the names of the crew leader and farmer;

• a statement reflecting their understanding that, pursuant to the statutory provision, the crew leader is the employee of the farmer;

• the approximate dates of the work; and

• the location of the farm.

6. Example of an acceptable agreement when the farmer is the employer of crew leader

The following is an IRS-approved example of an acceptable agreement for establishing the farmer as the employer of the crew leader:

It is hereby agreed by and between ____ and ____ that, in consideration of the amounts to be paid to ____ by ____, as separately agreed upon, said ____ shall recruit and furnish ____(Number)____ individuals to perform agricultural labor for said ____ at ____(Location of farm)____ from ____ to ____; that said ____ is to perform such services as an employee of said ____; and that said ____ is responsible for reporting and paying the social security taxes due on the wages of said ____ and the individuals recruited and furnished by said ____ to perform agricultural labor for said ____

(Signature of Farmer or Farm Operator)

(Signature of Crew Leader)

(Date)

7. When to apply the common-law control test

Apply the common-law control test to determine the identity of the employer of the agricultural workers, as well as the crew leader's social security status for the following situations:

• the crew leader does not pay (either on his or her own behalf or on behalf of the farm operator) the workers furnished by him or her for the agricultural services they perform; and

• a written agreement does not designate the crew leader as an employee with the person for whom he furnishes the agricultural workers.

8. The common-law control test before 1957

Before 1957, we applied the common-law control test, rather than the statutory test, to determine the status of the crew leader and the identity of the employer. Under the common-law control test, the employer is the one who retains the right to exercise control over the workers as to the time, place, manner, and means of performing the services.

I. Home makers and chore workers

Home makers and chore workers perform domestic services in the private homes of welfare recipients under programs financed by grants under the Social Security Act. A state or local welfare agency may hire and pay these workers and the services are essentially of a domestic nature. There are several published Internal Revenue Service (IRS) rulings stating the position of IRS and SSA that workers performing household tasks in private homes are generally employees under the common-law control test.

The usual common-law rules apply for questions regarding the identity of the employer. We usually find the welfare recipient to be the employer, but there have been a few instances when we found a state or county welfare department to be the employer.

We are working to resolve the issue of how to report wages for these workers. Some states agreed to act as agent of the welfare recipients and therefore, the employer of the worker, and report the wages. Other states advised the workers to report wages as self-employment.

Because of the varying conditions, the Seattle and Philadelphia regions issued instructions for developing this type of employment. In the absence of any such instruction, develop an allegation involving this kind of work in the usual manner. If the worker reported earnings as self-employment income, accept the reporting, unless we require development for a reason other than whether the person engaged in a trade or business under RS 01804.044.

J. Reference

IRS Publication 963, Federal-State Reference Guide