TN 4 (01-10)
RS 02101.016 Officer or Director of a Corporation
Citations: Act as amended - Sec. 210 (j)(1) [42 U.S.C. § 410(j)]; 20 C.F.R.
Generally, an officer of a corporation is an employee of the corporation. Conversely, a director of a corporation performing directorial services is not an employee since their services are self-employment.
1. Director of a corporation
A director of a corporation is not an employee when performing directorial services such as attending and participating in board meetings. The director is not subject to control by the corporation.
2. Officer of a corporation
An officer of a corporation is an employee of the corporation if he or she is paid or entitled to payments for holding office or performing services. Generally, the board of directors elects or appoints the officers of a corporation. Generally, the corporate charter or its by-laws list the types of officers that usually include a president, vice-president, secretary, treasurer, and sometimes others.
C. Employment status of an officer of a corporation
The officer is deemed to be in “employment” even if the officer does not perform any services for the corporation, provided the remuneration is received for holding corporate office. See RS 01401.280 and RS 01402.290 for the wage status of payments, other than vacation or sick pay, made to a corporate officer prior to January 1, 1984, after the month of attainment of retirement age if the officer did not work for the corporation in the period when the payment is made. However, an officer of a corporation who does not perform any services or only minor services and who neither receives nor is entitled to receive, directly or indirectly, any remuneration for serving as an officer, is not considered an employee of the corporation.
Although an officer of a corporation is generally an employee, payments made to the officer do not constitute “wages” unless such payments are for performing services for the corporation or for holding corporate office.
Payments by a corporation to an officer for reasons other than the holding of a corporate office are not wages. Some examples of these types of payments include payment of dividends, repayment of loans, and fees for services performed in other capacities of a non-employment nature. Such payments are often made to “honorary” or inactive corporate officers.
D. Employment status of a director of a corporation
The board of directors is the governing body of the corporation and is not subject to control by the corporation. Such services are self-employment, see RS 01802.032. A director who works for the corporation, other than attending and participating in meetings of the board of directors, may be an employee, with respect to such work, if it is non-directorial in nature.
Attending and participating in the meetings of subordinate committees seldom creates an employment relationship because most of these committees are directorial in nature. Committees formed pursuant to Federal or State statute, corporate by-laws, or authority vested in the board of directors, are directorial in nature. It may be assumed, in the absence of evidence to the contrary, that the directors serving on such committees are not employees with respect to such service. This assumption applies if the committee is composed entirely of directors or in part of directors and non-directors.
Where a director is a member of a committee engaged in non-directorial services, for example, doing appraisal work for the corporation and the services are subject to actual control by the board of directors, the director is an employee with respect to services.