SSR 69-59: SECTION 210(j)(2). -- EMPLOYER-EMPLOYEE -- SERVICES PERFORMED BY HOSPITAL PATIENT FOR PRIVATE NURSING HOME UNDER HOSPITAL REHABILITATION PROGRAM

20 CFR 404.1004(c), 404.1026

SSR 69-59

D performed services for a privately-owned nursing home under the

rehabilitation program of a State mental hospital of which she was a

patient. Under this program, convalescent patients were placed in work

situations on a trial basis in nursing homes throughout the State. There

was no written agreement between the hospital and the nursing home, but

there was an understanding that the patient would be instructed in and

perform menial tasks under the direction of the nursing home operator. D

received training as a nurse's aide and performed services for a trial

period of 1 year beginning January 1967, ending January 1968. She worked 8

hours a day, 6 days a week and received $15 a week plus room and board

from the nursing home. Beginning in February 1968, however, D's pay was

raised to the going rate for regular employees, $1.40 an hour, and the

nursing home reported her earnings as wages for social security purposes.

However, the nursing home had failed to report earnings for D during the

period prior to February 1968, as its operator contended that D was not an

employee because she was performing sheltered work and the amounts paid to

her were not wages but gratuities.

D was subject to direction and control by the nursing home operator in

the day-to-day performance of her services. The nature of the services to

be done, and how they were to be performed, was decided by the operator. A

member of the rehabilitation staff of the hospital visited D and the

operator of the nursing home twice a month, to ascertain whether problems

connected with D's condition had developed and to discuss her progress

toward recovery. His interest was in D's ability to do the work assigned

without adverse effect on her condition. D would have been returned to the

hospital had she not shown improvement and ability to do the work or if

problems in her condition had developed

e nursing home twice a month, to ascertain whether problems

connected with D's condition had developed and to discuss her progress

toward recovery. His interest was in D's ability to do the work assigned

without adverse effect on her condition. D would have been returned to the

hospital had she not shown improvement and ability to do the work or if

problems in her condition had developed. Demonstration of ability to

adjust to the work situation and to do the work could result in D's

release by the hospital.

The questions to be determined are therefore, whether D's services at the

nursing home prior to February 1968 were performed as an "employee" in

employment, and whether the remuneration paid to her, including the value

of room and board, may be credited as wages for social security

purposes.

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

Security Act, includes an individual who, under the usual common law rules

applicable in determining the employer-employee relationship, has the

status of an employee. Whether an individual is an employee under such

rules depends upon the facts in each case. The guides for determining

whether an employment relationship exists are found in Regulations No. 4,

section 404.1004( c ) (20 CFR 404.1004(c)). Generally, such

relationship exists when the person for whom the services are performed

has the right to control and direct the individual who performs the

service, not only as to the result to be accomplished by the work but also

as to the manner and means by which that result is accomplished. An

employer-employee relationship does not exist, however, where the

organization for which the services are performed creates the working

environment which permits the individual to perform services, and where

this environment is created primarily for its rehabilitative and

therapeutic value to the individual. See SSR 69-60 , C.B. 1969, p. 58 (companion

ruling), which involves a situation of this type.

oyee relationship does not exist, however, where the

organization for which the services are performed creates the working

environment which permits the individual to perform services, and where

this environment is created primarily for its rehabilitative and

therapeutic value to the individual. See SSR 69-60 , C.B. 1969, p. 58 (companion

ruling), which involves a situation of this type.

While the hospital arranged for the services performed by D, and was

interested in the rehabilitative and therapeutic effects such services

would have on her, the services themselves were performed for a nursing

home and not for the hospital. Accordingly, it cannot be said that the

nursing home was primarily concerned with providing her with

rehabilitative and therapeutic activities. D's services were of

significant value in the business operations of the nursing home. The

duties for which she was paid $15 a week, plus room and board, prior to

February 1968 were the same as those she performed thereafter at the rate

paid to regular employees of the nursing home. The operator of the nursing

home exercised day-to-day control over the tasks to be performed by D, how

they should be performed, and whether they were performed satisfactorily.

On the basis of all the facts, it appears that the nursing home operator

exercised or had the right to exercise the direction and control over D

necessary to establish the relationship of employer-employee for social

security purposes. It is accordingly held that an employer-employee

relationship within the meaning of section 210(j)(2) existed between the

nursing home and D during the "trial period" lasting from January 1967 to

February 1968 and that the remuneration paid to her during that period in

cash and in kind, which included the value of room and board, are wages

creditable to D's earnings record for social security purposes.