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U.S. DEPARTMENT OF LABOR
Employment and Training Administration
Washington, D. C. 20213

CLASSIFICATION

UI

CORRESPONDENCE SYMBOL

TURL

ISSUE DATE

April 30, 1980

RESCISSIONS

 

EXPIRATION DATE

February 28, 1981

DIRECTIVE

:

UNEMPLOYMENT INSURANCE PROGRAM LETTER NO. 22-80, Change 1

 

TO

:

ALL STATE EMPLOYMENT SECURITY AGENCIES

 

FROM

:

OFFICE OF THE DEPUTY ASSISTANT SECRETARY

ROBERTS T. JONES LEWIS
Administrator
Office of Management Assistance

 

SUBJECT

:

Coverage of Agricultural or Domestic Service Performed for State or Local Government Entities or Nonprofit Organizations

 

  1. Purpose. To advise State agencies of corrections to Unemployment Insurance Program Letter No. 22-80.

  2. Reference. UIPL No. 22-80; Sections 3304(a)(6)(A), 3306(c)(8), 3309, FUTA.

  3. Explanation of Changes. Unemployment Insurance Program Letter No. 22-80 advise State agencies of the applicability of the size-of-firm limitations on required coverage of service performed in agricultural labor or domestic work to such service when performed for State or local government entities or nonprofit organizations. The examples given on page 3 of that program letter may be misleading.

    The first example describes a State government entity which functions as a State farm. We did not mean to imply, by this example, that a State farm will always be an entity for which the State agency must make a separate determination of employer status. It is likely that a State farm will not be an employer in and of itself, but will be a part of a larger organization (the State itself, or the State Department of Agriculture) which is the employer for purposes of the unemployment insurance law.

    In the second example, we concluded that the employer, a local chapter of a college fraternity, was exempt from coverage because it did not have at least four workers in at least 20 different weeks. This example is not valid, since the exemption for small nonprofit organizations applies only to organizations described in section 501 (c) (3) of the Internal Revenue Code, and college fraternities are not such organizations (They are described in section 501 (c) (7).

  4. Action Required. State Administrators are requested to provide the above information to the appropriate staff, who should remove and discard pages 3 and 4 and insert in its place the new pages 3 and 4. (attached).

  5. Inquiries. Questions should be directed to the appropriate regional office.

  6. Attachments. Pages 3 & 4 to UIPL 22-80.

 

 


 

 

Attachment UIPL to 22-80 Change 1 Page 3

4.  Interpretation. The question has been raised as to whether, in determining the liability for coverage of a government entity or nonprofit organization, the size-of-firm limitations on agricultural labor and domestic service in section 3306(c)(1) and (2), FUTA, may be taken into account. The answer is yes. The following examples are offered.

(1)  A State or local government entity employs three office workers and nine individuals performing agricultural labor. Wages paid for agricultural labor have been less than $20,000 in each quarter of the current and preceding calendar year. Because the minimum size-of-firm requirements for coverage of agricultural labor (3306 (o) (1), FUTA) have not been met, the service performed by the agricultural workers is not in "employment" as defined in the FUTA. The State law is, therefore, not required to cover those nine agricultural workers. The three office workers must be covered under the State law.

(2)  A nonprofit organization which is described in section 501(c)(3) of the Internal Revenue Code and which is exempt from income tax under section 501(a) of the Code regularly employs four workers--one in agricultural labor and three in other jobs. Wages paid for agricultural labor have been less than $20,000 in each quarter of the current year and the preceding calendar year. Thus, the minimum size-of-firm criteria for agricultural labor (3306(c)(1)) have not been met, and the service performed by the agricultural laborer is not in "employment." This leaves only three individuals in employment for the nonprofit organization. Since section 3309(c), FUTA, provides that coverage is required for a nonprofit organization only if it employs at least four workers in at least 20 different weeks, and since this coverage criterion is not met in the examples given, the nonprofit employer would not be required by the FUTA to be covered under the State law. The results would be different of course, if the State law provided broader coverage for nonprofit organizations than is required by Federal law.

Revised 4/30/80

 

 


Attachment UIPL to 22-80 Change 1 Page 4

 

 

No examples have been included above identifying situations in which domestic services are performed for governmental entities or nonprofit organizations since according to IRS regulations (Reg. section 31.3306(c)(2)-l.), the exemption provided by section 3306(c)(2) is applicable only when the services are performed in or about a private home of the person by whom the individual is employed. We are not aware of any situations in which this arrangement exists in the case where the employer of such services is a governmental entity or nonprofit organization.

Revised 4/30/80