Washington Administrative Code › Title 415 - Retirement Systems, Department of › Chapter 415-02 - General provisions › GENERAL RULES AFFECTING MULTIPLE PLANS AND SYSTEMS › Section 415-02-110 - Determination of employee status

Current through Register Vol. 24-14, July 15, 2024
(1) An employee of a retirement system
				employer, other than a teachers' retirement system plan I retiree, who
				otherwise meets the eligibility criteria to participate in a state-administered
				retirement system is required to establish or continue membership in that
				system. An independent contractor is not eligible for active membership in any
				state-administered retirement system.
(2)
(a) The
				department will review the entire relationship between the worker and the
				retirement system employer in order to determine whether a worker is an
				independent contractor or an employee. Generally, a worker is an employee if
				the employing individual or entity has the right to control and direct the work
				of the worker, not only as to the result to be accomplished, but also as to the
				means or methods by which the result is accomplished.
(b) Generally, a worker is an independent
				contractor if the employing entity has the right to control or direct only the
				result of the labor or services and not the means and methods accomplishing the
				labor or services.
(c) Whether or
				not the parties intend to establish an employer-employee relationship, or
				whether the parties regard the worker as being an independent contractor is not
				controlling. When the elements of direction and control are present in
				determining the means and methods of performing the worker's labor or service,
				any disclaimers to the contrary are not binding on the department for the
				purpose of determining employer-employee status. The terms of the contract and
				the actual arrangement under which the labor or services are performed will
				determine whether a worker is an employee or independent contractor.
(d) In evaluating whether the retirement
				system employer has direction or control over the means and methods of
				performing the worker's labor or services, no one factor is determinative. The
				department will apply several factors, including but not limited to the
				following:
(i) Is the worker required to
				comply with detailed work instructions or procedures about when, where and how
				the worker must perform services? An employer has control if the employer
				requires or has the right to require the worker to comply with instructions
				about the manner in which services must be performed.
(ii) Does the employing individual or entity
				provide free training for the worker, or have the right to train the worker?
				Typically, an employer would have the right to train an employee but not an
				independent contractor.
(iii) Are
				the worker's services an integral part of the employing individual's or
				entity's business operation? Usually the regular administrative work of a
				business is performed by employees rather than independent contractors.
				Services outside the usual course of the employer's business may imply
				independent contractor status.
(iv)
				Is the worker required to perform the labor or services personally? While
				employees are typically required to personally perform labor or services,
				independent contractors are not necessarily required to perform personally, but
				may subcontract part or all of the required labor or services to another
				party.
(v) Does the employer hire,
				supervise or pay others to perform the same job as the worker? Usually a person
				who works the same job or performs the same function as performed by employees
				of the employer is an employee rather than an independent contractor.
(vi) Does the worker hire, supervise and pay
				others on the job under a contract to furnish labor and materials? Independent
				contractors may or may not be responsible for performing the contracted labor
				or services themselves, and usually have the right to hire and terminate their
				own employees who perform the contracted labor or services.
(vii) Does the worker perform continuing
				services for the retirement system employer? Independent contractors are
				typically hired for a job of relatively short-term or temporary duration and do
				not have a continuous relationship with or perform continuing services for the
				employing entity.
(viii) Are the
				worker's hours, routine or schedule set by the employing entity? The
				establishment of a set routine or schedule for the worker by the employer
				indicates employee status. Independent contractors are typically free to set
				their own hours of work.
(ix) Is
				the worker required to devote his or her full time to the business of a single
				employing individual or entity? A worker who is required to work full time for
				a single employer is likely to be an employee. Independent contractors are
				usually free to provide labor or services for two or more employing entities
				concurrently.
(x) Does the
				employing individual or entity require the worker to perform labor or services
				on the employer's premises? The employing entity is likely to have the right of
				control over the worker's method of work if the work is performed solely on the
				employer's premises, particularly if the worker could perform the required
				labor or services elsewhere.
(xi)
				Does the employing individual or entity require the worker to perform labor or
				services in a set sequence? A worker is likely to be an employee if the worker
				must perform work in an order or sequence set by the employer.
(xii) Is the worker required to provide
				regular, oral or written reports to the employer? Regular reports, for example
				weekly time sheets, are usually required of employees as opposed to independent
				contractors.
(xiii) Is the worker
				paid by unit of time (hour, week or month)? Employees are typically paid by
				unit of time while independent contractors are typically paid by the job
				(commission, bid, piecework or lump sum). Payment for labor or services upon
				completion of the performance of specific portions of a project or on the basis
				of an annual or periodic retainer usually indicates independent contractor
				status.
(xiv) Does the employing
				individual or entity reimburse the worker for the worker's job-related
				expenses? Independent contractors typically pay their own business or travel
				expenses; the regular expenses they incur as part of providing labor or
				services are generally included in the stipulated contract payment and are not
				reimbursed by the employing entity.
(xv) Does the worker providing labor or
				services furnish the tools and supplies necessary for the performance of the
				contracted labor or service? Generally, an employer furnishes tools and
				supplies for their employees while independent contractors furnish their
				own.
(xvi) Has the worker invested
				in the equipment or facilities used in performing the labor or services? A
				significant investment by the worker in the equipment or facilities used in
				performing the labor or services usually indicates independent contractor
				status.
(xvii) Does the worker have
				a right to realize a profit or have a significant risk of loss as a result of
				the worker's services? Having the right to a profit or the risk of loss arising
				from the worker's services implies independent contractor status. The worker
				may be presumed to have assumed the risk of loss if the worker assumes
				financial responsibility for defective workmanship or for service not provided
				as evidenced by the ownership of a performance bond, warranties, errors, and
				omissions insurance or liability insurance relating to the labor or services
				provided.
(xviii) Does the worker
				perform services for several persons or firms concurrently? Performance of
				services for a number of different unrelated clients indicates independent
				contractor status.
(xix) Does the
				worker offer services to the general public on a regular or consistent basis?
				An individual actively advertising services to the general public and
				representing to the public that the labor and services are to be provided by an
				independently established business is typically an independent contractor. The
				following are evidence of "actively advertising":
(A) The worker uses commercial advertising or
				business cards as is customary in operating a similar business, or is a member
				of a trade association;
(B) The
				worker uses a telephone listing and service for the business that is separate
				from the worker's personal residence listing and service.
(xx) Does the employer have the right to
				discharge the worker at will? An employee is typically subject to discharge or
				layoff at the will of the employer.
(xxi) Does the worker have the right to
				terminate the employment relationship without incurring liability? The right to
				terminate the work relationship at will usually indicates employee
				status.