No. 29681 (Repeal and Reenact): R994-205. Exempt Employment

DAR File No.: 29681
Filed: 03/15/2007, 12:30
Received by: NL

RULE ANALYSIS

Purpose of the rule or reason for the change:

This proposed repeal and reenactment is to ensure the rule accurately reflects current law and practice.

Summary of the rule or change:

These changes are being made as part of the Department's effort to rewrite all of its rules. This rule was changed to more accurately reflect current practice and state and federal law. Archaic language has been removed and additional explanations and clarifying language have been added throughout. Federal definitions have been added to assist the industry in determining coverage. There were so many, mostly minor changes that the underlining and strikeout method of amending the rule made it too difficult to read and understand. For that reason, the Department determined to repeal and reenact the rule. The current rule and this new proposed rule are essentially equivalent in substance.

State statutory or constitutional authorization for this rule:

Section 35A-1-104, and Subsections 35A-1-104(4) and 35A-4-502(1)(b)

Anticipated cost or savings to:

the state budget:

This is a federally-funded program so there are no costs or savings to the state budget.

local governments:

This is a federally-funded program so there are no costs or savings to local government.

other persons:

There are no costs or savings to any other persons as there are no fees associated with this program and it is federally funded.

Compliance costs for affected persons:

There are no costs or savings to any affected persons as there are no fees associated with this program and it is federally funded. These changes will not impact any employer's contribution rate.

Comments by the department head on the fiscal impact the rule may have on businesses:

There are no compliance costs associated with this change. There are no fees associated with this change. There will be no cost to anyone to comply with these changes. There will be no fiscal impact on any business. These changes will have no impact on any employer's contribution tax rate. Tani Downing, Executive Director

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Workforce Services
Unemployment Insurance
140 E 300 S
SALT LAKE CITY UT 84111-2333

Direct questions regarding this rule to:

Suzan Pixton at the above address, by phone at 801-526-9645, by FAX at 801-526-9211, or by Internet E-mail at [e-mail]

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

05/01/2007

This rule may become effective on:

05/09/2007

Authorized by:

Tani Downing, Executive Director

RULE TEXT

R994. Workforce Services, Unemployment Insurance.

R994-205. Exempt Employment.

[R994-205-101f. Domestic Service Excluded.

(1) General Definition.

Subsection R994-205-101f defines domestic services which are exempt under the Act, provided they are not included under Subsection 35A-4-204(2)(k).

(2) Domestic Service.

(a) Services Which Are Domestic Services.

Domestic services include services of a household nature in or about a private home, local college club, or local chapter of a college fraternity or sorority, performed by individuals including: cooks, maids, baby-sitters, handymen, gardeners, and chauffeurs of automobiles for family use. In order to be exempted, the domestic services must be performed by an individual in or about the private home, local college club, or local chapter of a college fraternity or sorority of the person employing him.

(b) Services Which are Not Domestic Services.

Some examples of services which are not domestic services are secretarial services performed in a private home and services in relation to remodeling or building a private home, local college club, or local chapter of a college fraternity or sorority.

(3) Private Home.

A private home is a fixed place of abode of an individual or family; this may include a dwelling unit in an apartment building or hotel.

(4) Local College Club or Local Chapter of a College Fraternity or Sorority.

A local college club does not include an alumni club or chapter.

(5) Services Not Exempt.

Services of a household nature if performed in or about rooming or boarding houses, hotels, hospitals, commercial offices or for home-owner's associations are not exempt. Services not of a household nature, regardless of where performed, are not exempt.

 

R994-205-102h. Exempted Service: Family Service.

(1) General Definition.

Family service is exempt under the Act only if a required family relationship exists between the employee and all partners. Services performed in the employ of a corporation are not exempt.

(2) Family Relationship Requirement.

(a) One of the following relationships must exist for family service to be exempt:

(i) an individual employed by his or her spouse,

(ii) a parent employed by his or her son or daughter,

(iii) a child under the age of 21 employed by his or her parent regardless of his marital status.

(b) In the parent-child employment situation, the exempt family relationship is met even if the child is an adopted child, stepchild, or foster child; the foster child, however, must be living with the foster parent.

(3) Examples of Family Relationships Which Are or Are Not Exempt.

A required family relationship, not necessarily the same relationship, must exist between the employee and each member of the employing unit. Examples are:

(a) A woman who is employed by a partnership composed of her husband and her son is exempt from "employment."

(b) A woman who is employed by a partnership composed of her husband and his brother is not exempt from "employment" because the required family relationship between the woman and her brother-in-law does not exist.

(c) A man who is employed by a partnership composed of his wife and his son-in-law is not exempt from "employment" because the required family relationship between the man and his son-in-law does not exist.

 

R994-205-103j. Exempted Service: Casual Labor.

(1) General Definition.

Casual labor is exempt under the Act only if it is not in the course of the employing unit's trade or business. Casual labor does not apply to domestic service exempt under Subsection 35A-4-205(1)(f).

(2) Casual Labor.

Services performed by an individual for an employing unit is casual labor unless:

(a) cash remuneration for such service is $50 or more in a calendar quarter; and

(b) the individual performs such service on each of 24 days during the calendar quarter or 24 days during the preceding calendar quarter.

(3) Not in the Course of the Employing Unit's Trade or Business.

Services "not in the course of the employing unit's trade or business" include services that do not promote or advance the trade or business; for example, services performed in connection with the employer's hobby or repairs to the employer's private home. Casual labor performed by an individual for a property owner in regard to building or remodeling the owner's home is exempt under Subsection 35A-4-205(1)(j). Services for a corporation will always be in the course of business.

 

R994-205-104n. Exempted Service: Commission Insurance Agents.

(1) General Definition.

"Employment" does not include services performed as an insurance agent if remuneration for such services is solely by way of commission.

(2) Services Performed as an Insurance Agent.

Services performed by an individual as an insurance agent are exempt if ALL SUCH services are paid solely by way of commission. For example, if this individual works for an insurance company both as an insurance agent and an accountant, is paid for services as an insurance agent by way of commission and paid a salary for the accounting services, the commissions are excluded from employment and the salary for the accounting services is included. If the payment for all services including commissions and salary, is for the same pay period, the "included and excluded service" provision of Subsection 35A-4-205(2) must be applied.

(3) Solely by Way of Commission.

(a) If any part of the remuneration for services as an insurance agent is a salary, all of these services are considered to be employment and the total remuneration (salary and commission) is included.

(b) If the individual performing services as an insurance agent is guaranteed a minimum salary for any pay period in which his commissions are less than the guaranteed minimum, his earnings are included when he is paid the guaranteed salary. In any pay period in which his commissions equal or exceed the guaranteed salary, his earnings are considered to be solely by way of commission and are excluded.

(c) If the individual performing services as an insurance agent is given advances against future commissions and he is required to repay any advances which exceed the commissions, the advances against future commissions are considered to be remuneration solely by way of commission and are excluded.

 

R994-205-105r. Exempted Service: Real Estate Agents.

(1) General Definition.

"Employment" does not include services as a licensed real estate agent if remuneration for such services is solely by way of commission.

(2) Services Performed as a Licensed Real Estate Agent.

Services performed by an individual as a licensed real estate agent are exempt if ALL services performed are paid solely by way of commission. For example, if this individual works for a real estate company both as a real estate agent and an accountant, is paid for services as a real estate agent by way of commission and paid a salary for the accounting services, the commissions are excluded from employment and the salary for the accounting services is included. If the payment for all services including commissions and salary, is for the same pay period, the "included and excluded service" provision of Subsection 35A-4-205(2) must be applied.

(3) Solely by Way of Commission.

(a) If any part of the remuneration for services as a real estate agent is a salary, all of these services are considered to be employment and the total remuneration including salary and commission is included.

(b) If the individual performing services as a real estate agent is guaranteed a minimum salary for any pay period in which his commissions are less than the guaranteed minimum, his earnings are included when he is paid the guaranteed salary. In any pay period in which his commissions equal or exceed the guaranteed salary, his earnings are considered to be solely by way of commission and are excluded.

(c) If the individual performing services as a real estate agent is given advances against future commissions and he is required to repay any advances which exceed the commissions, the advances against future commissions are considered to be remuneration solely by way of commission and are excluded.

 

R994-205-201. Included and Excluded Service.

(1) General Definition.

When some of an individual's services performed for the person employing him during a pay period are included and some excluded from employment, all the services are considered to be included or excluded for that pay period. Whether all the services are considered to be included or excluded depends on the time spent in each activity.

(2) Time Spent in a Pay Period.

(a) If 50% or more of an individual's time in the employ of a particular person is spent in performing services which constitute employment, all the services are considered to be employment.

(b) This 50% test must be applied to each pay period. An individual could have all services performed by him included in one period and excluded in another.

(3) Employer Must Verify Time Spent.

In order to have all services performed by an individual excluded, the employer must show to the satisfaction of the Department that less than 50% of the time spent in any pay period is for services which constitute employment.

(4) Pay Period.

Subsection 35A-4-205(2) does not apply if there is no regular pay period, the pay period covers more than 31 consecutive days or there are separate pay periods for the included and excluded services.]

R994-205-101. Exempt Domestic Service.

Domestic services are exempt under the Act, provided they are not included in covered employment under Subsection 35A-4-204(2)(k).

 

R994-205-102. Exempt Family Service.

Certain family service is exempt from coverage under the Act based upon the type of employing entity.

(1) Sole proprietorship exempt family service includes the following relationships:

(a) A worker employed by his or her spouse.

(b) A parent employed by his or her son or daughter. The exemption also applies to a stepparent employed by his or her stepchild.

(c) A child under the age of 21 employed by his or her parent regardless of the child's marital status. The exempt relationship is met even if the child is an adopted child, stepchild, or foster child. The foster child must be living with the foster parent.

(2) Partnership family service is exempt from coverage if the worker has an exempt family relationship to all partners. Exempt family relationships are the same relationships as for sole proprietorships in subsection (1) of this section. However, it is not necessary for the same relationship to exist between the worker and each partner.

(a) Examples of partnership family relationships that are exempt include:

(i) A child employed by a partnership composed of the child's parents.

(ii) A woman employed by a partnership composed of her husband and her son.

(b) Examples of partnership family relationships that are not exempt include:

(i) A woman employed by a partnership composed of her husband and his brother is not exempt because the required family relationship between the woman and her brother-in-law does not exist.

(ii) A man employed by a partnership composed of his wife and his son-in-law is not exempt because the required family relationship between the man and his son-in-law does not exist.

(3) There are no exempt family relationships in corporations, limited liability companies, and any other entity types not discussed in this section.

 

R994-205-103. Exempt Employees Hired Temporarily for a Disaster.

The Act excludes the services of governmental entity or Indian tribe employees hired solely on a temporary basis for disaster-type emergencies.

(1) Temporary basis employment is not the same as intermittent or irregular employment. Intermittent or irregular employment involves an on-going relationship, such as workers with an "on-call" status.

(2) Disaster type emergencies are those that affect the community on a wide scale, such as a forest fire, storm, or flood. Incidents that affect a few individuals, such as a house fire or automobile accident are not disaster type emergencies.

 

R994-205-104. Exempt Casual Labor.

(1) Casual labor is exempt under the Act if:

(a) The service is not in the course of the employing unit's trade or business;

(b) The payment for such service is less than $50 in a calendar quarter; and

(c) The worker performs such service on some portion of a day for less than 24 days in a calendar quarter or less than 24 days during the preceding calendar quarter.

(2) Services "not in the course of the employing unit's trade or business" include services that do not promote or advance the trade or business, such as services performed in connection with the employer's hobby or repairs to the employer's private home.

(3) Casual labor does not apply to domestic service exempt under subsection 35A-4-205(1)(f).

(4) Casual labor does not apply to any services performed for a corporation or limited liability company.

(5) Services performed by a worker for a property owner in regard to building or remodeling the owner's home are exempt if the requirements in subsection (1)(a) of this section are satisfied.

 

R994-205-105. Exempt Commission Insurance Sales.

Employment does not include services performed as an insurance agent or solicitor if payment for such services is solely by way of commission.

(1) An insurance solicitor is an employee of an insurance agent and is empowered to sell insurance on behalf of the agent. The solicitor usually does not have binding authority, and the business generated by the solicitor is usually owned by the agent, and not the solicitor.

(2) Services performed by a worker selling insurance are exempt if all such services are paid solely by way of commission.

(a) If any part of the payment for insurance sales services is a salary, all of the services are covered employment and the total payment, salary and commission, is subject to contribution payments.

(b) If a worker is guaranteed a minimum salary for any pay period in which sales commissions are less than the guaranteed minimum, all earnings are subject to contribution payments when the worker is paid the guaranteed salary. In any pay period in which the commissions equal or exceed the guaranteed salary, the earnings are considered to be solely by way of commission and are not subject to contribution payments.

(c) If the worker is given advances against future commissions and is required to repay any advances that exceed the commissions, the advances are considered to be payment solely by way of commission.

(d) If a worker performs both commission sales services and other salaried services, such as an accountant, the sales are excluded from employment and the other services are included in covered employment. If the payment for all services is for the same pay period, the "included and excluded" provisions of Subsection 35A-4-205(2) are applied.

 

R994-205-106. Exempt Real Estate Sales.

Employment does not include services as a licensed real estate agent if payment for such services is solely by way of commission.

(1) The "licensed" requirement refers to the license issued by the Utah Division of Real Estate to principal real estate brokers, associate real estate brokers, and real estate sales agents.

(2) The services performed as a real estate agent are those activities generally associated with the sale of real property. Such services include appraising property, advertising and showing property, closing sales, acquiring a lease to the property, and recruiting, training and supervising other salespersons. The services performed as a real estate agent do not include the management of property.

(3) Services performed by a worker as a licensed real estate agent are exempt if all such services are paid solely by way of commission.

(a) If any part of the payment for real estate sales services is a salary, all of the services are covered employment and the total payment, salary and commission is subject to contribution payments.

(b) If a worker performing real estate sales services is guaranteed a minimum salary for any pay period in which sales commissions are less than the guaranteed minimum, all earnings are subject to contribution payments when the worker is paid the guaranteed salary. In any pay period in which the commissions equal or exceed the guaranteed salary, the earnings are considered to be solely by way of commission and are not subject to contribution payments.

(c) If a worker performing real estate sales services is given advances against future commissions and is required to repay any advances that exceed the commissions, the advances against future commissions are considered to be payment solely by way of commission.

(4) If a worker performs both commission sales services and other salaried services, such as an accountant, the sales are excluded from employment and the other services are included in covered employment. If the payment for all services is for the same pay period, the "included and excluded" provisions of Subsection 35A-4-205(2) are applied.

 

R994-205-107. Exempt Outside Sales.

The Act excludes the services of salespersons if the services are performed outside the employer's place of business, the salesperson is paid solely by way of commission, the services are not employment at common law, and the services are not employment as a traveling or city salesperson defined in Subsection 35A-4-204(2)(i).

(1) The employer's place of business is defined as an establishment where business is conducted, services are rendered, retail sales are made, or goods are manufactured, stored, or processed. This definition also includes temporary places of business such as booths or exhibits at trade shows, fairs and festivals.

(2) A commission is defined as a payment calculated as a percentage of the sales volume or value. Outside sales services are exempt if all such services are paid solely by way of commission.

(a) If any part of the payment for outside sales services is a salary, all of the services are covered employment and the total payment, salary and commission, is subject to contribution payments.

(b) If a worker is guaranteed a minimum salary for any pay period in which sales commissions are less than the guaranteed minimum, all earnings are subject to contribution payments when the worker is paid the guaranteed salary. In any pay period in which the commissions equal or exceed the guaranteed salary, the earnings are considered to be solely by way of commission and are not subject to contribution payments.

(c) If the worker is given advances against future commissions and is required to repay any advances that exceed the commissions, the advances are considered to be payment solely by way of commission.

(d) If a worker performs both outside commission sales services and other salaried services, such as an accountant, the sales are excluded from employment and the other services are included in covered employment. However, if the payment for all services is for the same pay period, the "included and excluded" provisions of Subsection 35A-4-205(2) are applied.

(3) Employment at common law is defined by the Internal Revenue Service's current common law rules.

(4) An outside salesperson may perform incidental activities at the employer's place of business, such as writing up and transmitting orders, replenishing sales supplies, or attending sales meetings, provided such activities are not routine, without losing the classification as an outside salesperson.

 

R994-205-201. Included and Excluded Service.

When a worker performs both included and excluded services for an employer during a pay period, all the services are considered to be included or excluded for that pay period, depending on the time spent in each activity.

(1) Time Spent in a Pay Period.

(a) If 50% or more of a worker's time is spent performing services that constitute employment, all the services are considered to be covered employment.

(b) This 50% test is applied to each pay period. A worker could have all services included in covered employment during one period and excluded in another.

(2) Employer Must Verify Time Spent.

In order to have all services performed by an worker excluded from covered employment, the employer must show to the satisfaction of the Department that less than 50% of the time spent in any pay period is for services that constitute employment.

(3) Pay Period.

Subsection 35A-4-205(2) does not apply if there is no regular pay period, the pay period covers more than 31 consecutive days or there are separate pay periods for the included and excluded services.

 

KEY: unemployment compensation, employment tests

Date of Enactment or Last Substantive Amendment: [1990]2007

Notice of Continuation: April 1, 2005

Authorizing, and Implemented or Interpreted Law: 35A-4-205