SSR 68-34: Rescinded 1984

20 CFR 404.1270-404.1274

SSR 68-34

Pursuant to the State's request for review under section 218(s) of the

Social Security Act, the Commissioner affirmed assessments made on the

basis that services performed subsequent to March 1962 by ferry operators

for Chouteau County were performed as employees of the county and were

covered under section 218 of the Social Security Act and the Montana

agreement for coverage of State and local employees.

The State of Montana timely requested a review pursuant to section 218(s)

of the Administration's assessments of contributions due. The Secretary

has delegated to the Commissioner of Social Security authority to make

reviews and findings and to give notice of his findings as required by

section 218(s). The assessments made were based on the Administration's

determination that services of ferry boat operators for Chouteau County

for periods after March 1962 were performed in an employment relationship

and covered under the State's coverage agreement. The State is of the view

that these individuals performed their services subsequent to March 1962

as independent contractors.

The facts in this matter are that services of employees of Chouteau

County in positions under the Public Employees' Retirmeent System of

Montana were covered effective July 1, 1955, by Modification 17 to the

Montana Federal-State agreement. The county has provided for the operation

of four cable ferries across the Missouri River. Prior to April 1962, the

individuals engaged to operate these ferries were paid $300 a month. The

county furnished gasoline and oil and made all major repairs to the ferry

and motor. IN addition, the county furnished a dwelling for the operator

at the ferry site and furnished all utilities except telephone. The

operators were required to provide ferry service to the public free of

charge from 7:00 a.m. to 7:00 p.m. daily. For crossings after these hours,

they were authorized to charge and retain a toll of $1.00

d oil and made all major repairs to the ferry

and motor. IN addition, the county furnished a dwelling for the operator

at the ferry site and furnished all utilities except telephone. The

operators were required to provide ferry service to the public free of

charge from 7:00 a.m. to 7:00 p.m. daily. For crossings after these hours,

they were authorized to charge and retain a toll of $1.00. During this

period the operators were considered to be county employees. They were

members of the Public Employee's Retirement System and their wages were

reported for social security purposes.

Since April 1962, however, the services of these ferry operators have

been engaged pursuant to a written contract. Basically, the contract

provides that the county will pay the operator $350 a month to provide

ferry services from 7:00 a.m. to 7:00 p.m. daily free of charge to all

passengers. The county is to finish the operator with a dwelling and all

utilities except personal telephone. Major repairs to the ferry and motor

(which at all times were owned by the country) are to be made by the

county. The operator is required to finish all gasoline and oil.

Information obtained from several of the operators shows that the county

had first call on the operators' services to the extent that ferry had to

be operated from 7:00 a.m. to 7:00 p.m. daily, but the operators could

work for others if such work did not interfere with the operation of the

ferry; that the operators were given brief initial instructions in the

operation and maintenance of the ferry; that the only schedule they were

required to follow related to the hours of operation; that the operators

were required to make minor repairs and do all necessary maintenance work

on the ferries; and that the operators could neither quit nor be

discharged before the end of the contract term without liability

given brief initial instructions in the

operation and maintenance of the ferry; that the only schedule they were

required to follow related to the hours of operation; that the operators

were required to make minor repairs and do all necessary maintenance work

on the ferries; and that the operators could neither quit nor be

discharged before the end of the contract term without liability. With

respect to this last point, it should be noted that under the contract the

county retained the right to suspend the operations of a ferry at any time

during which period the operators receive no compensation.

Information obtained from the county indicates that the ferry operators

ceased to be covered by the Public Employees' Retirement System of Montana

in April 1962. (With respect to this point, removal of a position covered

by social security as part of a retirement system does not terminate the

social security coverage.) Additionally, information was obtained from the

county to the effect that the county ceased to carry workmen's

compensation or public liability insurance effective with the month of

April 1962; prior to April 1962 the operators were directly supervised by

the county commissioners, whereas only "checks" were made thereafter to

see whether the terms of the contract were being observed; personal

services were required prior to April 1962, but not thereafter; and

reports were not operator might charge for after hours crossings was fixed

by each operator at his discretion. The contract provides for submittal of

disputes between passengers and operators to the county commissioners for

disposition; the county alleged, however, that such disputes were to be

settled by the operators.

services were required prior to April 1962, but not thereafter; and

reports were not operator might charge for after hours crossings was fixed

by each operator at his discretion. The contract provides for submittal of

disputes between passengers and operators to the county commissioners for

disposition; the county alleged, however, that such disputes were to be

settled by the operators.

The operators, on the other hand, indicated that the only significant

changes beginning April 1962 were that the county ceased to furnish

gasoline and oil for the ferry and that the operator's monetary

compensation was increased from $300 a month to $350 to cover the cost of

these items. They stated that before and after April 1962 they were

required to submit periodic reports of the number of crossings to the

county commissioners (one operator disagreed on this point, indicating he

was not required to file reports); and that a county commissioner or other

county employee regularly checked on the operation of the ferries. It also

appears from information obtained from the operators that disputes with

passengers were rare and were not, in practice, referred to the county

commissioners for settlement. The operators are of the view that the

county entered into the contractual arrangement to avoid paying overtime

and to overcome the practice of some operators of converting

county-supplied gasoline and oil to personal use.

rs from information obtained from the operators that disputes with

passengers were rare and were not, in practice, referred to the county

commissioners for settlement. The operators are of the view that the

county entered into the contractual arrangement to avoid paying overtime

and to overcome the practice of some operators of converting

county-supplied gasoline and oil to personal use.

The Commissioner found on review pursuant to the State's request that the

preponderance of evidence in file established that the only significant

change in the relationship after March 1962 was that the county ceased to

furnish gasoline and oil and instead increased the operator's remuneration

to cover the cost of those items. The Commissioner further found that

although the county may have intended to establish an independent

contractual relationship with the ferry operators, the actual changes in

the extent of control exercised over the activities of the operators did

not suffice to bring them within the concept of self- employment; and that

the terms of the contract itself, which specified the hours of work, the

days on which services were to be provided, as well as the duties of the

operators and the place where services were to be performed, established

an employment relationship. On the basis of these findings, the

Commissioner affirmed the assessments.