TN 4 (01-10)

RS 02101.010 Who Is an Employee

Citations: Act as amended Sec. 210 (j) , 218(b)(3) ; [42 U.S.C. §§ 410(j), 418(b)(3)]; 20 C.F.R. §§ 404.1005 -404.1008

A. Introduction

Section 210 of the Social Security Act determines what work is covered employment. Before examining whether work is covered, the worker must meet the definition of “employee”.

B. Definitions

1. Agent or commission driver

An agent or commission driver is someone hired by another person to distribute beverages (other than milk), laundry or dry-cleaning services, meat, vegetable, fruit or baking products.

2. Full-time life insurance salesperson

A full-time life insurance salesperson primarily sells life insurance or annuity contracts for one life insurance company.

3. Home worker

A home worker works away from the place of business of the person by whom he or she is employed.

4. Officer of a corporation

An officer of a corporation is an employee of the corporation if he or she is paid, or is entitled to payment, for holding office or performing services.

5. Traveling or city salesperson

Traveling or city salespeople take orders for merchandise for another person or firm. Most of the work is done for a single person or firm.

C. Employee status

1. After 1951

For Social Security purposes, an individual is an employee if he or she meets any of the following employee tests:

  1. a. 

    Test I: is an officer of a corporation;

  2. b. 

    Test II: has the status of an employee under the common-law rules (RS 02101.020); or

  3. c. 

    Test III: performs services for remuneration for any person as an:

    • agent or commission driver;

    • full-time life insurance salesperson;

    • home worker; or

    • traveling or city salesperson (when their services are subject to scrutiny and control by the firms).

NOTE: Do not apply Test III to anyone who qualifies as an employee under Test I or II.

2. Before 1951

Apply Tests I and II.

D. State and local employment

For State and local employment only:

  • Section 218(b)(3) of the Social Security Act provides that the term “employee” include an officer of a State or political subdivision (see RS 01505.015).

  • A worker is an employee if his or her position is covered by an agreement under Section 218 of the Social Security Act.

E. Employee vs. self-employed

Someone performing services as an employee cannot be self-employed with respect to the same service. Other service by an individual may be deemed self-employment under the Social Security Act regardless of their possible status as employees. Such self-employed individuals could include U.S. citizens performing services as any of the following:

If these individuals’ work meet the conditions for self-employment, it is unnecessary to consider their status as employees.

Use the common law control test to determine if an individual is an employee. The test involves a great degree of subjectivity and it still may be difficult to determine if services were performed as an employee.

For coverage questions, it is not always necessary to make a determination on the precise employment status of an individual. Accept an individual’s allegation as to status if:

  • the activity could constitute a trade or business;

  • the services would be covered if performed as an employee; and

  • there is a consistent reporting of the earnings, see RS 01802.220.

F. Exclusions from employer-employee relationships

An individual may meet the definition of employee under one of the above tests, but their services may be excluded from employment under Section 210 of the Social Security Act. See RS 01901.000 for a list of special provisions regarding coverage and exceptions.

G. References

  • IRS Publication 15, Employer’s Tax Guide

  • Social Security Handbook, Chapter 8: Who are Employees?

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RS 02101.010 - Who Is an Employee - 01/29/2010
Batch run: 07/03/2014