SSR 68-23: SECTION 218(a) and (c). -- STATE AND LOCAL COVERAGE -- STATUS OF MOTOR LICENSE AGENTS IN OKLAHOMA

20 CFR 404.1201

SSR 68-23

Section 218(a) of the Social Security Act, as amended, provides that the

Secretary of Health, Education, and Welfare shall, at the request of any

State, enter into an agreement with such State for the purpose of

extending the insurance system established by title II of the Act to

services performed by individuals as employees of such State or any

political subdivision thereof. Each such agreement shall contain such

provisions, not inconsistent with the provisions of this section of the

law, as the State may request. For purposes of this title, the term

"employment" includes any service included under an agreement entered into

with the State.

The State of Oklahoma entered into an agreement with the Secretary of

Health, Education, and Welfare pursuant to section 218 of the Act, to

provide coverage effective January 1, 1951, for the services of employees

of the State in positions not under a retirement system. The State

excluded from coverage the services of all State employees in positions

compensated by fees. Among those not covered under the Federal-State

agreement were motor license agents, who are compensated on a fee basis

(with the exception of those serving in Tulsa County and Oklahoma County,

who are paid salaries).

Motor license agents are appointed by the Oklahoma Tax Commission

pursuant to statutory authority to assist in the performance of its

duties. The agents are removable at the will of the Tax Commissioner, are

required to furnish and file bonds and, under the law, must perform all

duties required of them by the Tax Commission. On these facts, the Social

Security Administration determined in 1951 that motor license agents are

employees of the State of Oklahoma. In 1963 the Oklahoma legislature

enacted Laws of 1963, chapter 217, section 1, to provide that motor

license agents be self-employed independent contractors under the

supervision of the State Tax Commission.

duties required of them by the Tax Commission. On these facts, the Social

Security Administration determined in 1951 that motor license agents are

employees of the State of Oklahoma. In 1963 the Oklahoma legislature

enacted Laws of 1963, chapter 217, section 1, to provide that motor

license agents be self-employed independent contractors under the

supervision of the State Tax Commission.

The question for determination is the status of the services of these

motor license agents for purposes of social security.

The Oklahoma Statutes Annotated, as pertinent hereto, provide in Title 47

"Motor Vehicles" as follows:

The term "employee" as defined in section 210(j)(2) of the Social

Security Act, means "any individual who, under the usual common-law rules

applicable in determining the employer-employee relationship, has the

status of an employee." (Social Security Regulations No. 4, section

404.1004(c) (20 CFR 404.1004(c)) sets out the rules.) Generally, such a

relationship exists when the person for whom the 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 but also as to the

details and means by which the result is accomplished. 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 he has the

right to do so. Whether or not an employer-employee relationship exists

for social security purposes is a question of Federal law to be determined

by the appropriate Federal officials. Section 404.1004(a)(2) (20 CFR

404.1004(a)(2)) of the regulations cited above support this position:

ctually direct or control the

manner in which the services are performed; it is sufficient if he has the

right to do so. Whether or not an employer-employee relationship exists

for social security purposes is a question of Federal law to be determined

by the appropriate Federal officials. Section 404.1004(a)(2) (20 CFR

404.1004(a)(2)) of the regulations cited above support this position:

The statutory provisions cited above clearly indicate that motor license

agents in Oklahoma are subject to the direction and control of the State

through the Tax Commission, and that the Commission either exercises or

reserves the right to exercise such direction and control by means of

instructions issued to them. The agents are removable at the will of the

Tax Commissioner; they are required to furnish and file bonds, and must

perform all duties required of them by the Commission. Under the facts

recited, motor license agents in Oklahoma, held employees of the

State within the meaning of section 210(j) of the Social Security Act. The

fact that they are designated in the State law as self-employed

independent contractors under the supervision of the State Tax Commission

does not change this

result. [1]

[1] The Social Security

Amendments of 1967 (P.L. 90-248) provide that fees for services performed

after 1967 by State and local employees in positions compensated solely on

a fee basis which are not covered under a Federal-State coverage agreement

are compulsorilyy covered as self-employment income with one exception. An

employee occupying such a position in 1968 may make an irrevocable

election on or before the due date of his income tax return for 1968 not

to have such fees constitute self-employment income for 1968 and all

succeeding years.