North Dakota Administrative Code › Title 27 - Job Service North Dakota › Article 27-02 - Unemployment Insurance Contributions › Chapter 27-02-14 - Definition of Employment › Section 27-02-14-01 - Employment defined

Current through Supplement No. 393, July, 2024
1. Subdivision a of
				subsection 17 of North Dakota Century Code section
				 52-01-01 contains three separate
				and independent tests for determining if the service is employment.
2. The first test relates to the test for
				determining whether the service of an officer of a corporation is employment
				with respect to service performed for the corporation. That test is found in
				paragraph 1 of subdivision a of subsection 17 of North Dakota Century Code
				section  52-01-01. The second test relates
				to the test for determining whether an individual's service is employment with
				regard to the test provided for in subdivision e of subsection 17 of North
				Dakota Century Code section
				 52-01-01. That test is found in
				paragraph 2 of subdivision a of subsection 17 of North Dakota Century Code
				section  52-01-01. The third test relates
				to the test for determining if an individual's service in certain occupational
				groups is employment if such service is not employment under the test. That
				test is found in paragraph 3 of subdivision a of subsection 17 of North Dakota
				Century Code section
				 52-01-01. If an individual's
				service is employment under any one of these tests, it is to be considered
				employment for purposes of this section.
3. If the service is employment under one of
				the tests in subsection 2, the designation or description of the relationship
				by the parties as anything other than that of employment or of employer and
				employee is immaterial.
4.
				Generally, an officer of a corporation is an employee of the corporation and
				the service performed for the corporation is employment. However, an officer of
				a corporation who does not perform any services or performs only minor services
				and who neither receives nor is entitled to receive, directly or indirectly,
				any remuneration is not an employee of the corporation. A director of a
				corporation, in the director's capacity as such, is not an employee and such
				service is not employment.
5. Any
				service performed for another for wages or under any contract of hire is deemed
				to be employment unless it is shown that the individual performing the service
				is an independent contractor as determined by the "common law" test.
a. Generally, an employment relationship
				exists when the person for whom services are performed has the right to control
				and direct the individual who performs the services, not only as to the result
				to be accomplished by the work but also as to the details and means by which
				that result is accomplished. That is, an employee is subject to the will and
				control of the employer not only as to what must be done but how it must be
				done. In this connection, it is not necessary that the employer actually direct
				or control the manner in which the services are performed; it is sufficient if
				the employer has the right to do so. The right to discharge is also an
				important factor indicating that the person possessing that right is an
				employer. However, the right to terminate a contract before completion to
				prevent and minimize damages for a potential breach or actual breach of
				contract does not, by itself, suggest an employment relationship. Other factors
				characteristic of an employer, but not necessarily present in every case, are
				the furnishing of tools and the furnishing of a place to work, to the
				individual who performs the services. The fact that the contract must be
				performed at a specific location, such as a building site, does not, by itself,
				constitute furnishing a place to work if the nature of the work to be done
				precludes a separate site or is the customary practice in the industry. In
				general, if an individual is subject to the control or direction of another
				merely as to the result to be accomplished by the work and not as to the means
				and methods for accomplishing the result, the individual is an independent
				contractor. An individual performing services as an independent contractor is
				not as to such services an employee. Individuals such as physicians, lawyers,
				dentists, veterinarians, construction contractors, public stenographers, and
				auctioneers, engaged in the pursuit of an independent trade, business, or
				profession, in which they offer their services to the public, are independent
				contractors and not employees.
b.
				As an aid to determining whether an individual is an employee under the common
				law rules, twenty factors or elements have been identified as indicating
				whether sufficient control is present to establish an employer-employee
				relationship. These twenty factors have been developed based on an examination
				of cases and rulings considering whether an individual is an employee. The
				degree of importance of each factor varies depending on the occupation and the
				factual context in which the services are performed. These twenty factors are
				designed only as guides for determining whether an individual is an employee;
				special scrutiny is required in applying these twenty factors to assure that
				formalistic aspects of an arrangement designed to achieve a particular status
				do not obscure the substance of the arrangement; that is, whether the person or
				persons for whom the services are performed exercise sufficient control over
				the individual for the individual to be classified as an employee. These twenty
				factors are described below:
(1)
				Instructions. A person who is required to comply with other persons'
				instructions about when, where, and how the person is to work is ordinarily an
				employee. This control factor is present if the person or persons for whom the
				services are performed have the right to require compliance with instructions.
(2) Training. Training a person by
				requiring an experienced employee to work with the person, by corresponding
				with the person, by requiring the person to attend meetings, or by using other
				methods, indicates that the person or persons for whom the services are
				performed want the services performed in a particular method or manner.
(3) Integration. Integration of
				the person's services into the business operations generally shows that the
				person is subject to direction and control. When the success or continuation of
				a business depends to an appreciable degree upon the performance of certain
				services, the persons who perform those services must necessarily be subject to
				a certain amount of control by the owner of the business.
(4) Services rendered personally. If the
				services must be rendered personally, presumably the person or persons for whom
				the services are performed are interested in the methods used to accomplish the
				work as well as in the results.
(5) Hiring, supervising, and paying
				assistants. If the person or persons for whom the services are performed hire,
				supervise, and pay assistants, that factor generally shows control over the
				persons on the job. However, if one person hires, supervises, and pays the
				other assistants pursuant to a contract under which the person agrees to
				provide materials and labor and under which the person is responsible only for
				the attainment of a result, this factor indicates an independent contractor
				status.
(6) Continuing
				relationship. A continuing relationship between the person and the person or
				persons for whom the services are performed indicates that an employer-employee
				relationship exists. A continuing relationship may exist where work is
				performed at frequently recurring although irregular intervals.
(7) Set hours of work. The establishment of
				set hours of work by the person or persons for whom the services are performed
				is a factor indicating control.
(8) Full time required. If the person must
				devote substantially full time to the business of the person or persons for
				whom the services are performed, such person or persons have control over the
				amount of time the person spends working and impliedly restrict the person from
				doing other gainful work. An independent contractor, on the other hand, is free
				to work when and for whom he or she chooses.
(9) Doing work on the premises of the person
				or persons for whom the services are performed. If the work is performed on the
				premises of the person or persons for whom the services are performed, that
				factor suggests control over the person, especially if the work could be done
				elsewhere. Work done off the premises of the person or persons receiving the
				services, such as at the office of the worker, indicates some freedom from
				control. However, this fact by itself does not mean that the person is not an
				employee. The importance of this factor depends on the nature of the service
				involved and the extent to which an employer generally would require that
				employees perform such services on the employer's premises. Control over the
				place of work is indicated when the person or persons for whom the services are
				performed have the right to compel the worker to travel a designated route, to
				canvass a territory within a certain time, or to work at specific places as
				required.
(10) Order or sequence
				set. If a person must perform services in the order or sequence set by the
				person or persons for whom the services are performed, that factor shows that
				the person is not free to follow the person's own pattern of work but must
				follow the established routines and schedules of the person or persons for whom
				the services are performed. Often, because of the nature of an occupation, the
				person or persons for whom the services are performed do not set the order of
				the services or set the order infrequently. It is sufficient to show control,
				however, if such person or persons retain the right to do so.
(11) Oral or written reports. A requirement
				that the person submit regular or written reports to the person or persons for
				whom the services are performed indicates a degree of control. By contract,
				however, parties can agree that services are to be performed by certain dates
				and the persons performing those services can be required to report as to the
				status of the services being performed so that the person for whom the services
				are being performed can coordinate other contracts that person may have which
				are required in the successful total completion of a particular project.
(12) Payment by hour, week, month.
				Payment by the hour, week, or month generally points to an employer-employee
				relationship, provided that this method of payment is not just a convenient way
				of paying a lump sum agreed upon as the cost of a job. Payment made by the job
				or on a straight commission generally indicates that the worker is an
				independent contractor.
(13)
				Payment of business or traveling expenses, or both. If the person or persons
				for whom the services are performed ordinarily pay the person's business or
				traveling expenses, or both, the person is ordinarily an employee. An employer,
				to be able to control expenses, generally retains the right to regulate and
				direct the person's business activities.
(14) Furnishing of tools and materials. The
				fact that the person or persons for whom the services are performed furnish
				significant tools, materials, and other equipment tends to show the existence
				of an employer-employee relationship.
(15) Significant investment. If the person
				invests in facilities that are used by the person in performing services and
				are not typically maintained by employees (such as the maintenance of an office
				rented at fair value from an unrelated party), that factor tends to indicate
				that the person is an independent contractor. On the other hand, lack of
				investment in facilities indicates dependence on the person or persons for whom
				the services are performed for such facilities and, accordingly, the existence
				of an employer-employee relationship.
(16) Realization of profit or loss. A person
				who can realize a profit or suffer a loss as a result of the person's services
				(in addition to the profit or loss ordinarily realized by employees) is
				generally an independent contractor, but the person who cannot is an employee.
				For example, if the person is subject to a real risk of economic loss due to
				significant investments or a bona fide liability for expenses, such as salary
				payments to unrelated employees, that factor indicates that the person is an
				independent contractor. The risk that a person will not receive payment for his
				or her services, however, is common to both independent contractors and
				employees and thus does not constitute a sufficient economic risk to support
				treatment as an independent contractor.
(17) Working for more than one firm at a
				time. If a person performs services under multiple contracts for unrelated
				persons or firms at the same time, that factor generally indicates that the
				person is an independent contractor. However, a person who performs services
				for more than one person may be an employee for each of the persons, especially
				where such persons are part of the same service arrangement.
(18) Making service available to general
				public. The fact that a person makes his or her services available to the
				general public on a regular and consistent basis indicates an independent
				contractor relationship.
(19)
				Right to discharge. The right to discharge a person is a factor indicating that
				the person is an employee and the person possessing the right is an employer.
				An employer exercises control through the threat of dismissal, which causes the
				person to obey the employer's instructions. An independent contractor, on the
				other hand, cannot be fired so long as the independent contractor produces a
				result that meets the contract specifications.
(20) Right to terminate. If the person has
				the right to end his or her relationship with the person for whom the services
				are performed at any time he or she wishes without incurring liability, that
				factor indicates an employer-employee relationship. A contract can be
				terminated by the mutual agreement of the parties before its completion or by
				one of the parties to the contract before its completion to prevent a further
				breach of the contract or to minimize damages. This situation indicates an
				independent contractor relationship.