i. General Rules of Interpretation

The purpose of the law is to promote employment security by increasing opportunities for placement through the maintenance of a system of public employment offices and to provide through the accumulation of reserves for the payment of compensation to individuals with respect to their unemployment. Miss. Code § 71-5-1 (2014).

As a guide to the interpretation and application of the Mississippi Employment Security Law, the public policy of this state is declared to be as follows: Economic insecurity due to unemployment is a serious menace to the health, morals, and welfare of the people of this state. Involuntary unemployment is therefore a subject of general interest and concern which requires appropriate action by the legislature to prevent its spread and to lighten its burden, which now so often falls with crushing force upon the unemployed worker and his family. The achievement of social security requires protection against this greatest hazard of our economic life. This can be provided by encouraging employers to provide more stable employment and by the systematic accumulation of funds during periods of employment to provide benefits for periods of unemployment, thus maintaining purchasing power and limiting the serious social consequences of poor relief assistance. The legislature, therefore, declares that in its considered judgment the public good and the general welfare of the citizens of this state require the enactment of this measure, under the police powers of the state, for the compulsory setting aside of unemployment reserves to be used for the benefit of persons unemployed through no fault of their own. Miss. Code § 71-5-3 (2014).

I. General Definition — Common-Law Test

The definition of covered employment for purposes of state unemployment taxes is contained in the Mississippi Employment Security Law, Miss. Code §§ 71-5-1 through 71-5-545.

Employment means and includes any service performed, which was employment as defined in this section [Miss. Code § 71-5-11] and, subject to the other provisions of this subsection [Miss. Code § 71-5-11(I)], including service in interstate commerce, performed for wages or under any contract of hire, written or oral, express or implied. Miss. Code § 71-5-11(I)(1) (2014).

Services performed by an individual for wages shall be deemed to be employment subject to the Mississippi Employment Security Law unless and until it is shown to the satisfaction of the department that such individual has been and will continue to be free from control and direction over the performance of such services both under his contract of service and in fact; and the relationship of employer and employee shall be determined in accordance with the principles of the common law governing the relation of master and servant. Miss. Code § 71-5-11(I)(14) (2014).

Pay Period Test

If the services performed during one-half (1/2) or more of any pay period by an employee for the employing unit employing him constitute employment, all the services of such employee for such period shall be deemed to be employment; but if the services performed during more than one-half (1/2) of any such pay period by an employee for the employing unit employing him do not constitute employment, then none of the services of such employee for such period shall be deemed to be employment. As used in this subsection [Miss. Code. § 71-5-11(I)], the term pay period means a period (of not more than 31 consecutive days) for which a payment of remuneration is ordinarily made to the employee by the employing unit employing him. Miss. Code § 71-5-11(I)(15)(n) (2014).

II. Defined Terms

As used in the Mississippi Employment Security Law, unless the context indicates otherwise, the following words and phrases have the following meanings:

Benefit year with respect to any individual means the period beginning with the first day of the first week with respect to which he first files a valid claim for benefits, and ending with the day preceding the same day of the same month in the next calendar year; and, thereafter, the period beginning with the first day of the first week with respect to which he next files his valid claim for benefits, and ending with the day preceding the same day of the same month in the next calendar year. Any claim for benefits made in accordance with Section 71-5-515 [Miss. Code § 71-5-515] shall be deemed to be a valid claim for purposes of this subsection [Miss. Code § 71-5-11(B)] if the individual has been paid the wages for insured work required under Section 71-5-511(e) [Miss. Code § 71-5-511(e)]. Miss. Code § 71-5-11(B) (2014).

Benefits means re-employment assistance. Miss. Code § 71-5-11(O) (2014).

Calendar quarter means the period of three consecutive calendar months ending on March 31, June 30, September 30, or December 31. Miss. Code § 71-5-11(D) (2014).

Commission or department means the Mississippi Department of Employment Security, Office of the Governor. Miss. Code § 71-5-11(E) (2014).

Contributions means the money payments to the State Unemployment Compensation Fund required by the Mississippi Employment Security Law. Miss. Code § 71-5-11(C) (2014).

Department or commission means the Mississippi Department of Employment Security, Office of the Governor. Miss. Code § 71-5-11(E) (2014).

Employee leasing firm means any entity which provides specified duties for a client company such as payment of wages, reporting of wages for unemployment insurance purposes, payment of unemployment insurance contributions and other administrative duties, in connection with the client’s employees, that are directed and controlled by the client and that are providing ongoing services for the client. Miss. Code § 71-5-11(W) (2014).

Employer means:

(1) Any employing unit which,

(a) In any calendar quarter in either the current or preceding calendar year paid for service in employment wages of $1,500 or more, except as provided in paragraph (9) of this subsection [Miss. Code § 71-5-11(H)(9)], or

(b) For some portion of a day in each of 20 different calendar weeks, whether or not such weeks were consecutive, in either the current or the preceding calendar year had in employment at least one individual (irrespective of whether the same individual was in employment in each such day), except as provided in paragraph (9) of this subsection [Miss. Code § 71-5-11(H)(9)];

(2) Any employing unit for which service in employment, as defined in subsection I(3) of this section [Miss. Code § 71-5-11(I)(3)], is performed;

(3) Any employing unit for which service in employment, as defined in subsection I(4) of this section [Miss. Code § 71-5-11(I)(4)], is performed;

(4) Any employing unit for which:

(a) Agricultural labor, as defined in subsection I(6) of this section [Miss. Code § 71-5-11(I)(6)], is performed;

(b) Domestic service in employment, as defined in subsection I(7) of this section [Miss. Code § 71-5-11(I)(7)], is performed;

(5) Any individual or employing unit which acquired the organization, trade, business, or substantially all the assets thereof, of another which at the time of such acquisition was an employer subject to the Mississippi Employment Security Law;

(6) Any individual or employing unit which acquired its organization, trade, business, or substantially all the assets thereof, from another employing unit, if the employment record of the acquiring individual or employing unit subsequent to such acquisition, together with the employment record of the acquired organization, trade, or business prior to such acquisition, both within the same calendar year, would be sufficient to constitute an employing unit as an employer subject to the Mississippi Employment Security Law under paragraph (1) or (3) of this subsection [Miss. Code § 71-5-11(H)(1) or (3)];

(7) Any employing unit which, having become an employer under paragraph (1), (3), (5) or (6) of this subsection [Miss. Code § 71-5-11(H)(1), (3), (5), or (6)] or under any other provisions of the Mississippi Employment Security Law, has not, under Section 71-5-361 [Miss. Code § 71-5-361], ceased to be an employer subject to the Mississippi Employment Security Law;

(8) For the effective period of its election pursuant to Section 71-5-361(3) [Miss. Code § 71-5-361(3)], any other employing unit which has elected to become subject to the Mississippi Employment Security Law;

(9) In determining whether or not an employing unit for which service other than

(a) Domestic service is also performed is an employer under paragraph (1) or (4) (a) of this subsection [Miss. Code § 71-5-11(H)(1) or (4)(a)], the wages earned or the employment of an employee performing domestic service, shall not be taken into account;

(b) Agricultural labor is also performed is an employer under paragraph (1) or (4)(b) of this subsection [Miss. Code § 71-5-11(H)(1) or (4)(b)], the wages earned or the employment of an employee performing services in agricultural labor, shall not be taken into account. If an employing unit is determined an employer of agricultural labor, such employing unit shall be determined an employer for purposes of paragraph (1) of this subsection [Miss. Code § 71-5-11(H)(1)];

(10) All entities utilizing the services of any employee leasing firm shall be considered the employer of the individuals leased from the employee leasing firm. Temporary help firms shall be considered the employer of the individuals they provide to perform services for other individuals or organizations. Miss. Code § 71-5-11(H) (2014).

Employing unit means this state or another state or any instrumentalities or any political subdivisions thereof or any of their instrumentalities or any instrumentality of more than one of the foregoing or any instrumentality of any of the foregoing and one or more other states or political subdivisions, any Indian tribe as defined in Section 3306(u) of FUTA [26 U.S.C. § 3306(u)], which includes any subdivision, subsidiary or business enterprise wholly owned by such Indian tribe, any individual or type of organization, including any partnership, association, trust, estate, joint-stock company, insurance company, or corporation, whether domestic or foreign, or the receiver, trustee in bankruptcy, trustee or successor thereof, or the legal representative of a deceased person, which has or had in its employ one or more individuals performing services for it within this state. All individuals performing services within this state for any employing unit which maintains two or more separate establishments within this state shall be deemed to be employed by a single employing unit for all the purposes of the Mississippi Employment Security Law. Each individual employed to perform or to assist in performing the work of any agent or employee of an employing unit shall be deemed to be employed by such employing unit for all purposes of the Mississippi Employment Security Law, whether such individual was hired or paid directly by such employing unit or by such agent or employee, provided the employing unit had actual or constructive knowledge of the work. All individuals performing services in the employ of an elected fee-paid county official, other than those related by blood or marriage within the third degree computed by the rule of the civil law to such fee-paid county official, shall be deemed to be employed by such county as the employing unit for all the purposes of the Mississippi Employment Security Law. For purposes of defining an employing unit which shall pay contributions on remuneration paid to individuals, if two or more related corporations concurrently employ the same individual and compensate such individual through a common paymaster which is one of such corporations, then each such corporation shall be considered to have paid as remuneration to such individual only the amounts actually disbursed by it to such individual and shall not be considered to have paid as remuneration to such individual such amounts actually disbursed to such individual by another of such corporations. Miss. Code § 71-5-11(G) (2014).

FUTA means the Federal Unemployment Tax Act, 26 U.S.C. §§ 3301-3311.

Hospital means an institution which has been licensed, certified, or approved by the State Department of Health as a hospital. Miss. Code § 71-5-11(M) (2014).
Includes and including, when used in a definition contained in the Mississippi Employment Security Law, shall not be deemed to exclude other things otherwise within the meaning of the term defined. Miss. Code § 71-5-11(U) (2014).

Insured work means employment for employers. Miss. Code § 71-5-11(T) (2014).

Mississippi Employment Security Law means Miss. Code §§ 71-5-1 through 71-5-545.
Re-employment assistance means money payments payable to an individual as provided in the Mississippi Employment Security Law and in accordance with Section 3304(a)(4) and 3306(h) of FUTA [26 U.S.C. §§ 3304(a)(4) and 3306(h)] and Section 303(a)(5) of the Social Security Act [42 U.S.C. § 503(a)(5)], with respect to his unemployment through no fault of his own. Miss. Code § 71-5-11(O) (2014).

State includes, in addition to the states of the United States of America, the District of Columbia, Commonwealth of Puerto Rico and the Virgin Islands. The provisions of paragraphs (1) and (2) of subsection P [Miss. Code. § 71-5-11(P)(1) and (2)], as including the Virgin Islands, shall become effective on the day after the day on which the United States Secretary of Labor approves for the first time under Section 3304(a) of the Internal Revenue Code of 1954 [26 U.S.C. § 3304(a)] an unemployment compensation law submitted to the secretary by the Virgin Islands for such approval. Miss. Code § 71-5-11(P)(1), (3) (2014).

Temporary help firm means an entity which hires its own employees and provides those employees to other individuals or organizations to perform some service, to support or supplement the existing workforce in special situations such as employee absences, temporary skill shortages, seasonal workloads and special assignments and projects, with the expectation that the worker’s position will be terminated upon the completion of the specified task or function. Miss. Code § 71-5-11(X)(1) (2014).

United States, when used in a geographical sense, includes the states, the District of Columbia, Commonwealth of Puerto Rico and the Virgin Islands. The provisions of paragraphs (1) and (2) of subsection P [Miss. Code. § 71-5-11(P)(1) and (2)], as including the Virgin Islands, shall become effective on the day after the day on which the United States Secretary of Labor approves for the first time under Section 3304(a) of the Internal Revenue Code of 1954 [26 U.S.C. § 3304(a)] an unemployment compensation law submitted to the secretary by the Virgin Islands for such approval. Miss. Code § 71-5-11(P)(2)-(3) (2014).

Wages means all remuneration for personal services, including commissions and bonuses and the cash value of all remuneration in any medium other than cash, except that wages, for purposes of determining employer’s coverage and payment of contributions for agricultural and domestic service means cash remuneration only. The reasonable cash value of remuneration in any medium other than cash shall be estimated and determined in accordance with rules prescribed by the department;

The term wages shall not include:

(a) The amount of any payment made to, or on behalf of, an employee under a plan or system established by an employer which makes provision for his employees generally or for a class or classes of his employees (including any amount paid by an employer for insurance or annuities, or into a fund, to provide for any such payment), on account of:

(i) Retirement, or

(ii) Sickness or accident disability, or

(iii) Medical or hospitalization expenses in connection with sickness or actual disability, or

(iv) Death, provided the employee:

(A) Has not the option to receive, instead of provision for such death benefit, any part of such payment or, if such death benefit is insured, any part of the premiums (or contributions to premiums) paid by his employer, and

(B) Has not the right, under the provisions of the plan or system or policy of insurance providing for such death benefit, to assign such benefit or to receive a cash consideration in lieu of such benefit, either upon his withdrawal from the plan or system providing for such benefit or upon termination of such plan or system or policy of insurance or of his employment with such employer;

(b) Dismissal payments which the employer is not legally required to make;

(c) Payment by an employer (without deduction from the remuneration of an employee) of the tax imposed by the Internal Revenue Code, 26 USCS Section 3101 [26 U.S.C. § 3101];

(d) From and after January 1, 1992, the amount of any payment made to or on behalf of an employee for a “cafeteria” plan, which meets the following requirements:

(i) Qualifies under Section 125 of the Internal Revenue Code [26 U.S.C. § 125];

(ii) Covers only employees;

(iii) Covers only noncash benefits;

(iv) Does not include deferred compensation plans. Miss. Code § 71-5-11(R)(1) (2014).

Week means calendar week or such period of 7 consecutive days as the department may by regulation prescribe. The department may by regulation prescribe that a week shall be deemed to be in, within, or during any benefit year which includes any part of such week. Miss. Code § 71-5-11(S) (2014).

III. Specific Inclusions

As defined in the Mississippi Employment Security Law, covered employment specifically includes:

A. Agent-Driver or Commission-Driver

Services performed for remuneration for a principal 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. Miss. Code § 71-5-11(I)(2)(a) (2014).

However, for purposes of this subsection [Miss. Code § 71-5-11(I)], the term employment shall include services described in subsection I(2)(a) and (b) of this section [Miss. Code § 71-5-11(I)(2)(a) and (b)], only if:

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

(ii) 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

(iii) 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. Miss. Code § 71-5-11(I)(2) (2014).

B. Traveling or City Salesman

Services performed for remuneration for a principal 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, a principal (except for sideline sales activities on behalf of some other person) of orders from wholesalers, retailers, contractors, or operator of hotels, restaurants, or other similar establishments for merchandise for resale or supplies for use in their business operations. Miss. Code § 71-5-11(I)(2)(b) (2014).

However, for purposes of this subsection [Miss. Code § 71-5-11(I)], the term employment shall include services described in subsection I(2)(a) and (b) of this section [Miss. Code § 71-5-11(I)(2)(a) and (b)], only if:

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

(ii) 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

(iii) 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. Miss. Code § 71-5-11(I)(2) (2014).

C. Government Service – State

Service performed in the employ of this state or any of its instrumentalities or any political subdivision thereof or any of its instrumentalities or any instrumentality of more than one of the foregoing or any instrumentality of any of the foregoing and one or more other states or political subdivisions or any Indian tribe as defined in Section 3306(u) of FUTA [26 U.S.C. § 3306(u)], which includes any subdivision, subsidiary or business enterprise wholly owned by such Indian tribe; however, such service is excluded from employment as defined in FUTA by Section 3306(c)(7) of that act [26 U.S.C. § 3306(c)(7)] and is not excluded from employment under subsection I(5) of this section [Miss. Code § 71-5-11(I)(5)]. Miss. Code § 71-5-11(I)(3) (2014).

D. Nonprofit Service

Services performed in the employ of a religious, charitable, educational, or other organization, but only if:

(a) the service is excluded from employment as defined in FUTA, 26 USCS Section 3306(c)(8) [26 U.S.C. § 3306(c)(8)], and

(b) The organization had four or more individuals in employment for some portion of a day in each of 20 different weeks, whether or not such weeks were consecutive, within the current or preceding calendar year, regardless of whether they were employed at the same moment of time. Miss. Code § 71-5-11(I)(4) (2014).

E. Agricultural Service

Service performed by an individual in agricultural labor as defined in paragraph (15)(a) of this subsection [Miss. Code § 71-5-11(I)(15)(a)] when:

(a) Such 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 $20,000 or more to individuals employed in agricultural labor, or

(ii) For some portion of a day in each of 20 different calendar weeks, whether or not such weeks were consecutive, in either the current or the preceding calendar year, employed in agricultural labor 10 or more individuals, regardless of whether they were employed at the same moment of time. Miss. Code § 71-5-11(I)(6)(a) (2014).

For the purposes of subsection I(6) [Miss. Code § 71-5-11(I)(6)] 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 such crew leader:

(i) If such crew leader holds a valid certificate of registration under the Farm Labor Contractor Registration Act of 1963 [7 U.S.C. §§ 2041-2052 – repealed by the Migrant and Seasonal Agriculture Worker Protection Act, Pub. L. No. 97-470, § 523, 96 Stat. 2583, 2600 (1983) – the subject matter of the Farm Labor Contractor Registration Act of 1963 is now covered by the Migrant and Seasonal Agriculture Worker Protection Act, 29 U.S.C. §§ 1801-1872]; or substantially all the members of such crew operate or maintain tractors, mechanized harvesting or crop dusting equipment, or any other mechanized equipment, which is provided by such crew leader; and

(ii) If such individual is not an employee of such other person within the meaning of subsection I(1) [Miss. Code § 71-5-11(I)(1)]. Miss. Code § 71-5-11(I)(6)(b) (2014).

For the purpose of subsection I(6) [Miss. Code § 71-5-11(I)(6)], 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 such crew leader under paragraph (6)(b) of this subsection [Miss. Code § 71-5-11(I)(6)(b)]:

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

(ii) Such other person shall be treated as having paid cash remuneration to such individual in an amount equal to the amount of cash remuneration paid to such individual by the crew leader (either on his own behalf or on behalf of such other person) for the service in agricultural labor performed for such other person. Miss. Code § 71-5-11(I)(6)(c) (2014).

For the purposes of subsection I(6) [Miss. Code § 71-5-11(I)(6)] 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 own behalf or on behalf of such other person) the individuals so furnished by him for the service in agricultural labor performed by them; and

(iii) Has not entered into a written agreement with such other person under which such individual is designated as an employee of such other person. Miss. Code § 71-5-11(I)(6)(d) (2014).

F. Domestic Service – Private Home

Domestic service in a private home performed for an employing unit which paid cash remuneration of $1,000 or more in any calendar quarter in the current or the preceding calendar year to individuals employed in such domestic service. For the purpose of this subsection [Miss. Code § 71-5-11(I)], the term employment does not apply to service performed as a sitter at a hospital in the employ of an individual. Miss. Code § 71-5-11(I)(7) (2014).

G. Domestic Service – College

Domestic service in a local college club or local chapter of a college fraternity or sorority performed for an employing unit which paid cash remuneration of $1,000 or more in any calendar quarter in the current or the preceding calendar year to individuals employed in such domestic service. For the purpose of this subsection [Miss. Code § 71-5-11(I)], the term employment does not apply to service performed as a sitter at a hospital in the employ of an individual. Miss. Code § 71-5-11(I)(7) (2014).

H. Multi-State Issues

An individual’s entire service, performed within or both within and without this state, if:

(a) The service is localized in this state; or

(b) The service is not localized in any state but some of the service is performed in this state; and

(i) The base of operations or, if there is no base of operations, the place from which such service is directed or controlled is in this state; or

(ii) The base of operations or place from which such 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. Miss. Code § 71-5-11(I)(8) (2014).

Services not covered under paragraph (8) of this subsection [Miss. Code § 71-5-11(I)(8)] and performed entirely without this state, with respect to no part of which contributions are required and paid under an unemployment compensation law of any other state or of the federal government, shall be deemed to be employment subject to the Mississippi Employment Security Law if the individual performing such services is a resident of this state and the department approves the election of the employing unit for whom such services are performed that the entire service of such individual shall be deemed to be employment subject to the Mississippi Employment Security Law. Miss. Code § 71-5-11(I)(9) (2014).

Service shall be deemed to be localized within a state if:

(a) The service is performed entirely within such state; or

(b) The service is performed both within and without such state, but the service performed without such state is incidental to the individual’s service within the state; for example, is temporary or transitory in nature or consists of isolated transactions. Miss. Code § 71-5-11(I)(10) (2014).

I. International Service

The services of an individual who is a citizen of the United States, performed outside the United States (except in Canada), in the employ of an American employer (other than service which is deemed employment under the provisions of paragraph (8), (9) or (10) of this subsection [Miss. Code § 71-5-11(I)(8), (9), or (10)] 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; or

(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; or

(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 the partners or trustees who are residents of this state is greater than the number who are residents of any one other state; or

(c) None of the criteria of subparagraphs (a) and (b) of this paragraph [Miss. Code § 71-5-11(I)(11)(a) and (b)] 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 such service, under the law of this state. Miss. Code § 71-5-11(I)(11)(a)-(c) (2014).

An American employer, for purposes of this paragraph, means a person who is:

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

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

(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. Miss. Code § 71-5-11(I)(11)(d) (2014).

J. Service on a Vessel – American

All services performed by an officer or member of the crew of an American vessel on or in connection with such vessel, if the operating office from which the operations of such vessel operating on navigable waters within, or within and without, the United States are ordinarily and regularly supervised, managed, directed and controlled, is within this state, notwithstanding the provisions of subsection I(8) [Miss. Code § 71-5-11(I)(8)]. Miss. Code § 71-5-11(I)(12) (2014).

K. Federal Unemployment Insurance Program

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 FUTA, 26 USCS Section 3301 et seq. [26 U.S.C. § 3301 et seq.], is required to be covered under the Mississippi Employment Security Law, notwithstanding any other provisions of this subsection [Miss. Code § 71-5-11(I)]. Miss. Code § 71-5-11(I)(13) (2014).

IV. Specific Exclusions

As defined in the Mississippi Employment Security Law, covered employment specifically excludes:

A. Church / Religious Service

For the purposes of subsection I(3) and (4) of this section [Miss. Code § 71-5-11(I)(3) and (4)], 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; or

(b) By a duly ordained, commissioned, or licensed minister of a church in the exercise of his ministry, or by a member of a religious order in the exercise of duties required by such order. Miss. Code § 71-5-11(I)(5)(a)-(b) (2014).

B. Government Service – State

For the purposes of subsection I(3) and (4) of this section [Miss. Code § 71-5-11(I)(3) and (4)], the term employment does not apply to service performed in the employ of a governmental entity referred to in subsection I(3) [Miss. Code § 71-5-11(I)(3)], if such 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 or a member of an Indian tribal council;

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

(iv) As an employee serving on a temporary basis in case of fire, storm, snow, earthquake, flood or similar emergency;

(v) In a position which, under or pursuant to the laws of this state or laws of an Indian tribe, is designated as:

1. A major nontenured policy-making or advisory position, or

2. A policy-making or advisory position the performance of the duties of which ordinarily does not require more than eight hours per week. Miss. Code § 71-5-11(I)(5)(c) (2014).

C. Rehabilitation Service

For the purposes of subsection I(3) and (4) of this section [Miss. Code § 71-5-11(I)(3) and (4)], the term employment does not apply to service performed 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 providing remunerative work for individuals who because of their impaired physical or mental capacity cannot be readily absorbed in the competitive labor market, by an individual receiving such rehabilitation or remunerative work. Miss. Code § 71-5-11(I)(5)(d) (2014).

D. Inmate Service

For the purposes of subsection I(3) and (4) of this section [Miss. Code § 71-5-11(I)(3) and (4)], the term employment does not apply to service performed by an inmate of a custodial or penal institution. Miss. Code § 71-5-11(I)(5)(e) (2014).

E. Work Relief Program

For the purposes of subsection I(3) and (4) of this section [Miss. Code § 71-5-11(I)(3) and (4)], the term employment does not apply to service performed as part of an unemployment work-relief or work-training program assisted or financed, in whole or in part, by any federal agency or agency of a state or political subdivision thereof or of an Indian tribe, by an individual receiving such work relief or work training, unless coverage of such service is required by federal law or regulation. Miss. Code § 71-5-11(I)(5)(f) (2014).

F. Agricultural Service

Agricultural labor, except as provided in subsection I(6) of this section [Miss. Code § 71-5-11(I)(6)].

The term agricultural labor includes all services performed:

(i) On a farm or in a forest in the employ of any employing unit in connection with cultivating the soil, in connection with cutting, planting, deadening, marking or otherwise improving timber, 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, fur-bearing animals and wildlife;

(ii) 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 such 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 such service is performed on a farm;

(iii) In connection with the production or harvesting of naval stores products or any commodity defined in the Federal Agricultural Marketing Act, 12 USCS Section 1141j(g) [12 U.S.C. § 1141j(g)], or in connection with the raising or harvesting of mushrooms, or in connection with the ginning of cotton, or in connection with the operation or maintenance of ditches, canals, reservoirs, or waterways not owned or operated for profit, used exclusively for supplying and storing water for farming purposes;

(iv) (A) In the employ of the operator of a farm in handling, planting, drying, packing, packaging, processing, 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 such operator produced more than one-half (1/2) of the commodity with respect to which such service is performed;

(B) In the employ of a group of operators of farms (or a cooperative organization of which such operators are members) in the performance of service described in subitem (A) [Miss. Code § 71-5-11(I)(15)(a)(iv)(A)], but only if such operators produced more than one-half (1/2) of the commodity with respect to which such service is performed;

(C) The provisions of subitems (A) and (B) [Miss. Code § 71-5-11(I)(15)(a)(iv)(A) and (B)] 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;

(v) On a farm operated for profit if such service is not in the course of the employer’s trade or business;

(vi) As used in paragraph (15)(a) of this subsection [Miss. Code § 71-5-11(I)(15)(a)], the term farm includes stock, dairy, poultry, fruit, fur-bearing animals, and truck farms, plantations, ranches, nurseries, ranges, greenhouses, or other similar structures used primarily for the raising of agricultural or horticultural commodities, and orchards. Miss. Code § 71-5-11(I)(15)(a) (2014).

G. Domestic Service – Private Home

Domestic service in a private home, except as provided in subsection I(7) of this section [Miss. Code § 71-5-11(I)(7)]. Miss. Code § 71-5-11(I)(15)(b) (2014).

H. Domestic Service – College

Domestic service in a local college club, or local chapter of a college fraternity or sorority, except as provided in subsection I(7) of this section [Miss. Code § 71-5-11(I)(7)]. Miss. Code § 71-5-11(I)(15)(b) (2014).

I. Companionship Service

Service performed as a sitter at a hospital in the employ of an individual. Miss. Code § 71-5-11(I)(15)(b) (2014).

J. Casual Labor

Casual labor not in the usual course of the employing unit’s trade or business. Miss. Code § 71-5-11(I)(15)(c) (2014).

K. Family Service

Service performed by an individual in the employ of his son, daughter, or spouse, and service performed by a child under the age of 21 in the employ of his father or mother. Miss. Code § 71-5-11(I)(15)(d) (2014).

L. Government Service – Federal

Service performed in the employ of the United States government or of an instrumentality wholly owned by the United States; except that if the Congress of the United States shall permit states to require any instrumentalities of the United States to make payments into an unemployment fund under a state unemployment compensation act, then to the extent permitted by Congress and from and after the date as of which such permission becomes effective, all of the provisions of the Mississippi Employment Security Law shall be applicable to such instrumentalities and to services performed by employees for such instrumentalities in the same manner, to the same extent, and on the same terms as to all other employers and employing units. If this state should not be certified under FUTA, 26 USCS Section 3304(c) [26 U.S.C. § 3304(c)], for any year, then the payment required by such instrumentality with respect to such year shall be deemed to have been erroneously collected and shall be refunded by the department from the fund in accordance with the provisions of Section 71-5-383 [Miss. Code § 71-5-383]. Miss. Code § 71-5-11(I)(15)(e) (2014).

M. Railroad Service

Service performed in the employ of an employer as defined by the Railroad Unemployment Insurance Act, 45 USCS Section 351(a) [45 U.S.C. § 351(a)], or as an employee representative as defined by the Railroad Unemployment Insurance Act, 45 USCS Section 351(f) [45 U.S.C. § 351(f)], and service with respect to which unemployment compensation is payable under an unemployment compensation system for maritime employees, or under any other unemployment compensation system established by an act of Congress; however, the department is authorized and directed to enter into agreements with the proper agencies under such act or acts of Congress, which agreements shall become effective 10 days after publication thereof in the manner provided in Section 71-5-117 [Miss. Code § 71-5-117] for general rules, to provide reciprocal treatment to individuals who have, after acquiring potential rights to benefits under the Mississippi Employment Security Law, acquired rights to unemployment compensation under such act or acts of Congress or who have, after acquiring potential rights to unemployment compensation under such act or acts of Congress, acquired rights to benefits under the Mississippi Employment Security Law. Miss. Code § 71-5-11(I)(15)(f) (2014).

N. Nonprofit Service

Service performed in any calendar quarter in the employ of any organization exempt from income tax under the Internal Revenue Code, 26 USCS Section 501(a) [26 U.S.C. § 501(a)] (other than an organization described in 26 USCS Section 401(a) [26 U.S.C. § 401(a)]), or exempt from income tax under 26 USCS Section 521 [26 U.S.C. § 521] if the remuneration for such service is less than $50. Miss. Code § 71-5-11(I)(15)(g) (2014).

O. Education Service – Student

Service performed in the employ of a school, college, or university if such service is performed:

(i) By a student who is enrolled and is regularly attending classes at such school, college or university, or

(ii) By the spouse of such a student if such spouse is advised, at the time such spouse commences to perform such service, that:

(A) The employment of such spouse to perform such service is provided under a program to provide financial assistance to such student by such school, college, or university, and

(B) Such employment will not be covered by any program of unemployment insurance. Miss. Code § 71-5-11(I)(15)(h) (2014).

P. Student Service – Co-op

Service performed by an individual under the age of 22 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 such institution, which combines academic instruction with work experience, if such service is an integral part of such program and such institution has so certified to the employer, except that this subparagraph [Miss. Code § 71-5-11(I)(15)(i)] shall not apply to service performed in a program established for or on behalf of an employer or group of employers. Miss. Code § 71-5-11(I)(15)(i) (2014).

Q. Hospital Service – Patient

Service performed in the employ of a hospital, if such service is performed by a patient of the hospital, as defined in subsection M of this section [Miss. Code § 71-5-11(M)]. Miss. Code § 71-5-11(I)(15)(j) (2014).

R. Medical Intern / Student Nurse

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 services 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. Miss. Code § 71-5-11(I)(15)(k) (2014).

S. Insurance Agent

Service performed by an individual as an insurance agent or as an insurance solicitor, if all such service performed by such individual is performed for remuneration solely by way of commission. Miss. Code § 71-5-11(I)(15)(l) (2014).

T. Newspaper Distributor

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, except those employed by political subdivisions, state and local governments, nonprofit organizations and Indian tribes, as defined by the Mississippi Employment Security Law, or any other entities for which coverage is required by federal statute and regulation. Miss. Code § 71-5-11(I)(15)(m) (2014).

U. Barber / Cosmetologist

Service performed by a barber or beautician whose work station is leased to him or her by the owner of the shop in which he or she works and who is compensated directly by the patrons he or she serves and who is free from direction and control by the lessor. Miss. Code § 71-5-11(I)(15)(o) (2014).

V. Direct Seller

Service performed by a direct seller if:

(i) Such person is engaged in the trade or business of selling (or soliciting the sale of) consumer products to any buyer on a buy-sell basis, a deposit-commission basis, or any similar basis which the department prescribes by regulations, for resale (by the buyer or any other person) in the home or otherwise than in a permanent retail establishment; or such person is engaged in the trade or business of selling (or soliciting the sale of) consumer products in the home or otherwise than in a permanent retail establishment;

(ii) Substantially all the remuneration (whether or not paid in cash) for the performance of the services described in item (i) of this subparagraph [Miss. Code § 71-5-11(I)(15)(p)(i)] is directly related to sales or other output (including the performance of services) rather than to the number of hours worked; and

(iii) The services performed by the person are performed pursuant to a written contract between such person and the person for whom the services are performed and such contract provides that the person will not be treated as an employee with respect to such services for federal tax purposes. Miss. Code § 71-5-11(I)(15)(p) (2014).

V. Judicial and Administrative Interpretations

In Miss. Employment Sec. Com. v. PDN, Inc., 586 So. 2d 838 (Miss. 1991), the Mississippi Supreme Court considered the application of the common law test for employment. While the court confirmed that the burden of proof was upon the party seeking to show the worker was not an employee, it also noted that since employment security contribution assessments are an excise tax, every doubt as to their application must be resolved in favor of the taxpayer and against the taxing power. Ultimately, the court indicated that they were unwilling to set an unyielding formula for all cases.

According to the court, the factors to consider in determining the employee/independent contractor issue are:

(1) The extent of control exercised over the details of the work;

(2) Whether or not the one employed is engaged in a distinct occupation or business;

(3) The skill required in the particular occupation;

(4) Whether the employer supplies the tools and place of work for the person doing the work;

(5) The length of time for which the person is employed;

(6) The method of payment, whether by the time or by the job; and

(7) Whether or not the work is a part of the regular business of the employer.

The court noted that the primary factor is the right to or degree of control. The test as to who is a servant is “whether the service is rendered by one whose physical conduct, time and activities in the performance of his duties are controlled, or are subject to the right of control, by the alleged master under the contract of employment or hire.” 586 So. 2d at 842 (quoting Texas Co. v. Wheeless, 187 So. 880, 886 (Miss. 1939).

The court also indicated that, “[w]hile the contracts of service are not conclusive of the issue, the contracts and facts of operation must be considered in determining the relationship of the parties.” Additionally, a finding that the workers are an integral part of the business of the putative employer is “not sufficient, standing along, to create an employer/employee relationship.” Finally, the court indicated that while IRS letter rulings cannot be used as precedent, “the rulings are pertinent to show how the relationship in issue in considered by other taxing agencies.”

The Mississippi Supreme Court also commented on the common law test for employment in Miss. Employment Sec. Com. v. Total Care, Inc., 586 So. 2d 834 (Miss. 1991). In Total Care, the court stated that the fact that a putative employer paid its workers, “does not per se make the workers employees” or the payor an employer. Total Care, 586 So. 2d at 836. The court indicated that they “ordinarily consider the actual practice of the parties which supplements their written contract and [whether] their actual relationship is such as to bring the parties within the scope of the act.” Id. at 837. According to the court, “[t]he statute directs us to the common law principles of master and servant, [which is] a flexible, functional test. Among the most prominent factors we have considered is ‘control,’ that is, to what extent does the putative employer control in substance and in detail the work activities of the person said to be an employee.” Id.

The court then pointed out that:

[o]ne may be actually under slight supervision or control but still be an employee where the right of control existed and the service performed was a part of the regular business of the alleged employer. There is no talismanic formula we may mechanically apply. We draw from the general law of master and servant and in a variety of contexts. We have emphasized that the terms of the contract between the parties are only a part of the inquiry and that, even though the contract gives no right of control, the worker will be found a servant if there is substantial control in fact.

Ultimately, “[t]he true test incorporates a consideration of all of the facts and the economic realities.”

Court Decision Validates IC Status of Product Demonstrators

An important appeals court decision applying Mississippi’s common-law test upheld the independent-contractor status of product demonstrators. The guidance provided by this decision would be equally applicable to other types of businesses that engage self-employed service providers to perform services for unaffiliated clients.

The product demonstrator at issue in Mississippi Dept. of Employment Security v. Product Connections, LLC, 2007 Miss. App. LEXIS 262 (Ct. App. Miss. Apr. 24, 2007), conducted product demonstrations for a company’s clients during the period of May 22 through June 18, 2004. Shortly thereafter, the individual filed a claim seeking unemployment benefits. The claim triggered an investigation of the company by the Mississippi Department of Employment Security (the “Department”), which concluded that the claimant and all other product demonstrators under contract with the company are employees for purposes of Mississippi unemployment.

The company appealed the decision, but the Department’s hearing officer affirmed. The company appealed again, to the Board of Review, which also affirmed. The company next appealed to a circuit court, which reversed – holding that the product demonstrators qualified as independent contractors. The Department appealed that decision to the Court of Appeals of Mississippi, which affirmed the circuit court.

Applying the common-law test, the appeals court held that for purposes of Mississippi unemployment, the product demonstrators qualified as independent contractors, based principally on the following findings:

• The company contracted with various manufacturers to provide product demonstrators as needed by a manufacturer;

• When a manufacturer requested product demonstrators to perform an event, the company contacted area coordinators who in turn informed product demonstrators about the opportunities;

• Product demonstrator could accept or decline opportunities offered;

• Demonstrators provided their own transportation and equipment for each event;

• The company never provided demonstrators with any supplies, tools or materials;

• Demonstrators were supplied an information kit from the manufacturer, containing all the details and instructions for an event, including dates, length of demonstration, break times, appropriate dress code, specific instructions on how to conduct the demonstration, a name tag (identifying the manufacturer, not the company) and other items relevant to the particular product such as sampling cups, gloves, or a hair net;

• If a demonstrator had to buy samples for a demonstration, the kit would include a check made payable to the store where the demonstration would be conducted;

• If a demonstrator experienced any problems during a demonstration, he or she was to contact the manufacturer;

• One of the documents stated that if a demonstrator was unable to report to the store at the scheduled time, he or she should contact the manufacturer as well as the company. The operating owner of the company testified that it was acceptable for a demonstrator to obtain a replacement without notifying the company;

• The company could not guarantee future opportunities for demonstrators;

• The company’s principal customer required the company to carry workers’-compensation and liability coverage on the demonstrators;

• One of the documents from a manufacturer’s kit required demonstrators to conduct a “pre-event store check” wherein the demonstrators would contact the store or food manager, introduce themselves, locate the product to be sampled and verify the date and time of the event;

• After each event, the demonstrator completed a form included in the kit and sent it to the company, which, in turn, mailed the forms to the manufacturer;

• Demonstrators were paid by the job and, although their checks issued from the company, the amount was determined by the manufacturer; and

• The company received a fee from the manufacturer, which was deducted from the amount of compensation before being distributed to the demonstrators. The area coordinator also received a booking fee.

The appeals court noted that the administrative decisions holding the product demonstrators to be employees of the company inappropriately imputed to the company the directions and details that a manufacturer imposed. The court also acknowledged that the product demonstrators performed their services for the manufacturers, not the company.

The Product Connections decision provides helpful guidance for how product-demonstration firms – and other firms that contract with independent contractors to perform services for their unaffiliated clients – should structure their business model.

Several especially important aspects of the company’s business model enhanced its ability to prevail in the case. These included: (i) its detachment from the details and instructions concerning an event, (ii) its characterization of a product demonstrator’s services as being performed for a manufacturer, not the company, and (iii) its characterization of demonstrator payments as being made by the manufacturer, albeit through the company.

Interestingly, the court did not appear to attach much if any weight to the fact that the company maintained workers’-compensation and general-liability insurance covering the product demonstrators. This could be because the court found that the coverage was maintained at the insistence of a client, thereby neutralizing the issue.

Because this decision was based on the common-law test, certain businesses that operate under a similar business model might be able to rely on it as a “reasonable basis” for purposes of Section 530 of the Revenue Act of 1978, a safe-harbor provision for purposes of avoiding federal employment taxes. See Alternate Staffing, Paragraph 4030, for more details.

VI. Administrative Regulations

[Reserved]

VI. Other Developments

[Reserved]

Updated: May 2014