2010 Arkansas Code
Title 11 - Labor and Industrial Relations
Chapter 10 - Department of Workforce Services Law
Subchapter 2 - Definitions
§ 11-10-210

LexisNexis Practice Insights

Independent Contractor Classification for Purposes of Arkansas Unemployment Tax Liabilities

11-10-210. Employment.

(a) As used in this chapter, unless the context clearly requires otherwise, "employment" means:

(1) Service performed after December 31, 1977, including service in interstate commerce, by:

(A) Any officer of a corporation;

(B) Any individual who, under the usual common law rules applicable in determining the employer-employee relationship, has the status of an employee; or

(C) Any individual other than an individual who is an employee under subdivision (a)(1)(A) or (B) of this section who performs services for remuneration for any person:

(i) As an agent-driver or commission-driver engaged in distributing meat products, vegetable products, fruit products, bakery products, beverages other than milk, or laundry or dry-cleaning services, for his or her principal; or

(ii) As a traveling or city salesman, other than as an agent-driver or commission-driver, engaged upon a full-time basis in the solicitation on behalf of, and the transmission to, his or her principal, except for sideline sales activities on behalf of some other person, of orders from wholesalers, retailers, contractors, or operators of hotels, restaurants, or other similar establishments for merchandise for resale or supplies for use in their business operations;

(iii) Provided that for purposes of subdivision (a)(1)(C) of this section, the term "employment" shall include services described in subdivisions (a)(1)(C)(i) and (ii) of this section only if:

(a) The contract of service contemplates that substantially all of the services are to be performed personally by the individual;

(b) The individual does not have a substantial investment in facilities used in connection with the performance of the services, other than in facilities for transportation; and

(c) The services are not in the nature of a single transaction that is not part of a continuing relationship with the person for whom the services are performed;

(2) Service performed:

(A) By an individual in the employ of this state or any of its instrumentalities, or in the employ of this state and one (1) or more states or their instrumentalities; and

(B) In the employ of any political subdivision of this state or any instrumentality of any one (1) or more of the political subdivisions, or any instrumentality of this state or any of its political subdivisions and one (1) or more other states or political subdivisions. Provided that the service is excluded from "employment" as defined in the Federal Unemployment Tax Act by 3306(c)(7) of that act and is not excluded from "employment" under subdivision (a)(4) of this section;

(3) Service performed by an individual in the employ of a religious, charitable, educational, or other organization described in section 501(c)(3) of the Internal Revenue Code of 1954 if the organization had one (1) or more individuals in employment for some portion of a day in each of ten (10) different days, whether or not the days were consecutive, within the current or preceding calendar year irrespective of whether the same individuals are or were employed in each day;

(4) For the purposes of subdivisions (a)(2) and (3) of this section, the term "employment" does not apply to service performed:

(A) In the employ of:

(i) A church or convention or association of churches; or

(ii) An organization which is operated primarily for religious purposes and which is operated, supervised, controlled, or principally supported by a church or convention or association of churches;

(B) By a duly ordained, commissioned, or licensed minister of a church in the exercise of his or her ministry or by a member of a religious order in the exercise of duties required by the order; or

(C) In the employ of a governmental entity referred to in subdivision (a)(2) of this section if the service is performed by an individual in the exercise of duties:

(i) As an elected official;

(ii) As a member of a legislative body or a member of the judiciary of a state or political subdivision;

(iii) As a member of the Arkansas Army National Guard or the Arkansas Air National Guard;

(iv) In a position which under or pursuant to the laws of this state is designated as a major nontenured policymaking or advisory position or a policymaking or advisory position the performance of the duties of which ordinarily does not require more than eight (8) hours per week; or

(v) During any calendar year beginning on and after January 1, 1999, as an election official or election worker if the amount of the remuneration received by the individual during the calendar year is less than one thousand dollars ($1,000); or

(D) In a facility conducted for the purpose of carrying out a program of rehabilitation for individuals whose earning capacity is impaired by age or physical or mental deficiency or injury or for the purpose of providing remunerative work for individuals who because of their impaired physical or mental capacity cannot be readily absorbed into the competitive labor market, by an individual receiving the rehabilitation or remunerative work;

(E) As part of an unemployment work-relief or work-training program assisted or financed in whole or in part by any federal agency or an agency of a state or political subdivision thereof, by an individual receiving the work relief or work training;

(F) By an inmate of a custodial or penal institution; or

(G) Beginning on and after July 1, 1999, by a person committed to a penal institution;

(5) Service performed by an individual in agricultural labor as defined in subdivision (f)(1) of this section when:

(A) The service is performed for a person who:

(i) During any calendar quarter in either the current or the preceding calendar year paid remuneration in cash of twenty thousand dollars ($20,000) or more to individuals employed in agricultural labor; or

(ii) For some portion of a day in each of twenty (20) different calendar weeks, whether or not the weeks were consecutive, in either the current or preceding calendar year, employed in agricultural labor ten (10) or more individuals, regardless of whether they were employed at the same moment of time;

(B) For the purposes of this subdivision (a)(5), any individual who is a member of a crew furnished by a crew leader to perform service in agricultural labor for any other person shall be treated as an employee of the crew leader:

(i) If the crew leader holds a valid certificate of registration under the Migrant and Seasonal Agricultural Worker Protection Act of 1983 or substantially all the members of the crew operate or maintain tractors, mechanized harvesting or cropdusting equipment, or any other mechanized equipment, which is provided by the crew leader; and

(ii) If the individual is not an employee of the other person within the meaning of subdivision (a)(1) of this section;

(C) For the purposes of this subdivision (a)(5), in the case of any individual who is furnished by a crew leader to perform service in agricultural labor for any other person and who is not treated as an employee of that crew leader under subdivision (a)(5)(B) of this section:

(i) The other person and not the crew leader shall be treated as the employer of the individual; and

(ii) The other person shall be treated as having paid cash remuneration to the individual in an amount equal to the amount of cash remuneration paid to the individual by the crew leader, either on his or her own behalf or on behalf of the other person, for the service in agricultural labor performed for the other person;

(D) For the purposes of this subdivision (a)(5), the term "crew leader" means an individual who:

(i) Furnishes individuals to perform service in agricultural labor for any other person;

(ii) Pays, either on his or her own behalf or on behalf of the other person, the individuals so furnished by him or her for the service in agricultural labor performed by them; and

(iii) Has not entered into a written agreement with the other person under which the individual is designated as an employee of the other person;

(6) Domestic service in a private home, local college club, or local chapter of a college fraternity or sorority if performed for an employing unit which paid cash remuneration of one thousand dollars ($1,000) or more to individuals employed in domestic service in any calendar quarter in the calendar year or the preceding calendar year;

(7) Service of an individual who is a citizen of the United States, performed outside the United States, except in Canada, or in the case of the Virgin Islands, in the employ of an American employer, other than service which is deemed employment under the provisions of subsections (b) and (c) of this section or the parallel provisions of another state's law, if:

(A) The employer's principal place of business in the United States is located in this state;

(B) The employer has no place of business in the United States, but:

(i) The employer is an individual who is a resident of this state;

(ii) The employer is a corporation which is organized under the laws of this state; or

(iii) The employer is a partnership or a trust and the number of partners or trustees who are residents of this state is greater than the number who are residents of any one (1) other state; or

(C) None of the criteria of subdivision (a)(7)(A) or (B) of this section are met, but the employer has elected coverage in this state or, the employer having failed to elect coverage in any state, the individual has filed a claim for benefits, based on the service, under the law of this state;

(D) An "American employer" for purposes of this section means a person who is:

(i) An individual who is a resident of the United States;

(ii) A partnership, if two-thirds (2/3) or more of the partners are residents of the United States;

(iii) A trust, if all of the trustees are residents of the United States; or

(iv) A corporation organized under the laws of the United States or of any state;

(8) Notwithstanding subsection (b) of this section, all service performed by an officer or member of the crew of an American vessel on or in connection with the vessel if the operating office from which the operations of the vessel operating on navigable waters within or without the United States are ordinarily and regularly supervised, managed, directed, and controlled is within this state; and

(9) Notwithstanding any other provisions of this section, service with respect to which a tax is required to be paid under any federal law imposing a tax against which credit may be taken for contributions required to be paid into a state unemployment fund or which as a condition for full tax credit against the tax imposed by the Federal Unemployment Tax Act is required to be covered under this chapter.

(b) The term "employment" shall include an individual's entire service performed within or both within and without this state if the service is localized in this state. Service shall be deemed to be localized within a state if:

(1) The service is performed entirely within the state; or

(2) The service is performed both within and without the state but the service performed without the state is incidental to the individual's service within the state, for example, service that is temporary or transitory in nature or consists of isolated transactions.

(c) The term "employment" shall include an individual's entire service performed within, or both within and without, this state if the service is not localized in any state but some of the service is performed in this state and:

(1) The individual's base of operations is in this state; or

(2) If there is no base of operations, then the place from which the service is directed or controlled is in this state; or

(3) The individual's base of operations or place from which the service is directed or controlled is not in any state in which some part of the service is performed, but the individual's residence is in this state;

(4) The term "employment" shall also include an individual's service, wherever performed within the United States, the Virgin Islands, or Canada, if:

(A) Such service is not covered under the unemployment compensation law of any other state, the Virgin Islands, or Canada; and

(B) The place from which the service is directed or controlled is in this state.

(d) Service covered by an election pursuant to 11-10-403 and service covered by an election duly approved by the Director of the Department of Workforce Services in accordance with an arrangement pursuant to 11-10-544 shall be deemed to be employment during the effective period of the election.

(e) Service performed by an individual for wages shall be deemed to be employment subject to this chapter irrespective of whether the common law relationship of master and servant exists, unless and until it is shown to the satisfaction of the director that:

(1) Such individual has been and will continue to be free from control and direction in connection with the performance of the service, both under his or her contract for the performance of service and in fact; and

(2) The service is performed either outside the usual course of the business for which the service is performed or is performed outside of all the places of business of the enterprise for which the service is performed; and

(3) The individual is customarily engaged in an independently established trade, occupation, profession, or business of the same nature as that involved in the service performed.

(f) The term "employment" shall not include:

(1) Service performed by an individual in agricultural labor, except as provided in subdivision (a)(5) of this section. For purposes of this subdivision (f)(1), the term "agricultural labor" means any service performed which was agricultural labor as defined in this subsection prior to January 1, 1972, and remunerated service performed:

(A) On a farm, in the employ of any person, in connection with cultivating the soil, or in connection with raising or harvesting any agricultural or horticultural commodity, including the raising, shearing, feeding, caring for, training, and management of livestock, bees, poultry, and furbearing animals and wildlife;

(B) In the employ of the owner or tenant or other operator of a farm, in connection with the operation, management, conservation, improvement, or maintenance of the farm and its tools and equipment, or in salvaging timber or clearing land of brush and other debris left by a hurricane if the major part of the service is performed on a farm;

(C) In connection with the production or harvesting of any commodity defined as an agricultural commodity in section 15(g) of the Agricultural Marketing Act or in connection with the ginning of cotton, or in connection with the operation or maintenance of ditches, canals, reservoirs, waterways, not owned or operated for profit, used exclusively for supplying and storing water for farming purposes;

(D) (i) In the employ of the operator of a farm in handling, planting, drying, packing, packaging, freezing, grading, storing, or delivering to storage or to market or to a carrier for transportation to market, in its unmanufactured state, any agricultural or horticultural commodity, but only if the operator produced more than one-half (1/2) of the commodity with respect to which the service is performed;

(ii) In the employ of a group of operators of farms, or a cooperative organization of which the operators are members, in the performance of service described in subdivision (f)(1)(D)(i) of this section, but only if the operators produced more than one-half (1/2) of the commodity with respect to which the service is performed;

(iii) The provisions of subdivisions (f)(1)(D)(i) and (ii) of this section shall not be deemed to be applicable with respect to service performed in connection with commercial canning or commercial freezing or in connection with any agricultural or horticultural commodity after its delivery to a terminal market for distribution for consumption; or

(E) On a farm operated for profit if the service is not in the course of the employer's trade or business. As used in this subdivision (f)(1), the term "farm" includes stock, dairy, poultry, fruit, furbearing animal, and truck farms, plantations, ranches, nurseries, ranges, greenhouses or other similar structures used primarily for the raising of agricultural or horticultural commodities, and orchards;

(2) Domestic service in a private home, local college club, or local chapter of a college fraternity or sorority unless performed for an employing unit which paid cash remuneration of one thousand dollars ($1,000) or more to individuals employed in domestic service in any calendar quarter in the calendar year or the preceding calendar year;

(3) Service not in the course of the employer's trade or business performed in any calendar quarter by an employee, unless the cash remuneration paid for the service is fifty dollars ($50.00) or more and the service is performed by an individual who is regularly employed by the employer to perform the service. For purposes of this section, an individual shall be deemed to be regularly employed by an employer during a calendar quarter only if:

(A) On each of some twenty-four (24) days during the quarter, the individual performs for the employer for some portion of the day service not in the course of the employer's trade or business; or

(B) The individual was regularly employed as determined under subdivision (f)(3)(A) of this section by the employer in the performance of the service during the preceding calendar quarter;

(4) Service performed on or in connection with a vessel or aircraft not an American vessel or American aircraft if the employee is employed on and in connection with the vessel or aircraft when outside the United States;

(5) Service performed by an individual in the employ of his or her son, daughter, or spouse, and service performed by a child under the age of twenty-one (21) years in the employ of his or her father or mother;

(6) Service performed in the employ of the United States Government or of an instrumentality of the United States which is:

(A) Wholly or partially owned by the United States; or

(B) Exempt from the tax imposed by section 3301 of the Federal Unemployment Tax Act by virtue of any provision of law which specifically refers to that section or the corresponding section of prior law in granting the exemption;

(7) Service performed in the employ of any political subdivision of the state or any instrumentality of any political subdivision which is wholly owned by one (1) or more political subdivisions of the state;

(8) Service performed by an individual for any political caucus, committee, headquarters, or other groups of like nature not established on a permanent basis;

(9) Service performed by an individual as an employee or employee representative as defined in section 1 of the Railroad Unemployment Insurance Act;

(10) (A) Service performed in any calendar quarter in the employ of any organization exempt from income tax under section 501(a) of the Internal Revenue Code of 1954, other than an organization described in section 401(a) or under section 521 of the Internal Revenue Code of 1954 if the remuneration for the service is less than fifty dollars ($50.00);

(B) Service performed by an individual under the age of twenty-two (22) years who is enrolled at a nonprofit or public educational institution which normally maintains a regular faculty and curriculum and normally has a regularly organized body of students in attendance at the place where its educational activities are carried on as a student in a full-time program, taken for credit at the institution, which combines academic instruction with work experience, if the service is an integral part of the program and the institution has so certified to the employer, except that this subdivision shall not apply to service performed in a program established for or on behalf of an employer or group of employers;

(C) Service performed in the employ of a school, college, or university if the service is performed by a student who is enrolled and is regularly attending classes at the school, college, or university; or

(D) Service performed in the employ of a hospital if the service is performed by a patient of the hospital as defined in 11-10-221;

(11) Service performed in the employ of a foreign government, including service as a consular or other officer or employee or a nondiplomatic representative;

(12) Service performed in the employ of an instrumentality wholly owned by a foreign government:

(A) If the service is of a character similar to that performed in foreign countries by employees of the United States Government or of an instrumentality thereof; and

(B) If the United States Secretary of State shall certify to the United States Secretary of the Treasury that the foreign government, with respect to whose instrumentality exemption is claimed, grants an equivalent exemption with respect to similar service performed in the foreign country by employees of the United States Government and of instrumentalities thereof;

(13) Service performed as a student nurse in the employ of a hospital or a nurses' training school by an individual who is enrolled and is regularly attending classes in a nurses' training school chartered or approved pursuant to state law and service performed as an intern in the employ of a hospital by an individual who has completed a four-year course in a medical school chartered or approved pursuant to state law;

(14) Service performed by an individual for any person or employing unit as an insurance agent or as an insurance solicitor if all service performed by the individual for the person or employing unit is performed for remuneration solely by way of commission;

(15) Any service performed by an individual for any person or employing unit as a real estate agent or as a real estate solicitor or salesman if all service performed by the individual for the person or employing unit is performed for remuneration solely by way of commission;

(16) (A) Service performed by an individual in the delivery or distribution of newspapers or shopping news, not including delivery or distribution to any point for subsequent delivery or distribution, provided that the service does not constitute employment performed by an employee under the Federal Unemployment Tax Act;

(B) Service performed by an individual in, and at the time of, the sale of newspapers or magazines to ultimate consumers, under an arrangement under which the newspapers or magazines are to be sold by him or her at a fixed price, his or her compensation being based on the retention of the excess of the price over the amount at which the newspapers or magazines are charged to him or her, whether or not he or she is guaranteed a minimum amount of compensation for the service or is entitled to be credited with the unsold newspapers or magazines turned back;

(17) Service performed in the employ of an international organization;

(18) Service performed by an individual in or as an officer or member of the crew of a vessel while it is engaged in the catching, taking, harvesting, cultivating, or farming of any kind of fish, shellfish, crustacea, sponges, seaweed, or other aquatic forms of animal and vegetable life, including service performed by any such individual as an ordinary incident to any such activity, except:

(A) Service performed in connection with the catching or taking of salmon or halibut for commercial purposes; and

(B) Service performed on or in connection with a vessel of more than ten (10) net tons, determined in the manner provided for determining the register tonnage of merchant vessels under the laws of the United States;

(19) Service which is performed by a nonresident alien individual for the period that he or she is temporarily present in the United States as a non-immigrant under subparagraph (F) or (J) of section 101(a)(15) of the Immigration and Nationality Act and which is performed to carry out the purpose specified in subparagraph (F) or (J), as the case may be; or

(20) Service performed by a person committed to a penal institution.

(g) If the services performed during one-half (1/2) or more of any pay period by an individual for any person or employing unit employing him or her constitute employment, all the services of the individual for the period shall be deemed to be employment, but if the services performed during more than one-half (1/2) of any pay period by an individual for any person or employing unit employing him or her do not constitute employment, then none of the services of the individual for the period shall be deemed to be employment. As used in this section, the term "pay period" means a period of not more than thirty-one (31) consecutive days for which a payment or remuneration is ordinarily made to the individual by any person or employing unit employing him or her.