SSR 68-23: SECTION 218(a) and (c). -- STATE AND LOCAL COVERAGE -- STATUS OF MOTOR LICENSE AGENTS IN OKLAHOMA
20 CFR 404.1201
- Motor license agents appointed by the Oklahoma Tax Commission under State law to assist in its duties, who are removable at the will of the Tax Commissioner, who are required to furnish and file bonds and who must perform all duties required of them by the Commission, held employees of the State of Oklahoma.
Section 218(a) of the Social Security Act, as amended, provides that the Secretary of Health, Education, and Welfare shall, at the request of any State, enter into an agreement with such State for the purpose of extending the insurance system established by title II of the Act to services performed by individuals as employees of such State or any political subdivision thereof. Each such agreement shall contain such provisions, not inconsistent with the provisions of this section of the law, as the State may request. For purposes of this title, the term "employment" includes any service included under an agreement entered into with the State.
The State of Oklahoma entered into an agreement with the Secretary of Health, Education, and Welfare pursuant to section 218 of the Act, to provide coverage effective January 1, 1951, for the services of employees of the State in positions not under a retirement system. The State excluded from coverage the services of all State employees in positions compensated by fees. Among those not covered under the Federal-State agreement were motor license agents, who are compensated on a fee basis (with the exception of those serving in Tulsa County and Oklahoma County, who are paid salaries).
Motor license agents are appointed by the Oklahoma Tax Commission pursuant to statutory authority to assist in the performance of its duties. The agents are removable at the will of the Tax Commissioner, are required to furnish and file bonds and, under the law, must perform all duties required of them by the Tax Commission. On these facts, the Social Security Administration determined in 1951 that motor license agents are employees of the State of Oklahoma. In 1963 the Oklahoma legislature enacted Laws of 1963, chapter 217, section 1, to provide that motor license agents be self-employed independent contractors under the supervision of the State Tax Commission.
The question for determination is the status of the services of these motor license agents for purposes of social security.
The Oklahoma Statutes Annotated, as pertinent hereto, provide in Title 47 "Motor Vehicles" as follows:
- Section 22.21. Commission to administer Act -- Rules and Regulations. It shall be the duty of the Commission, and said Commission is hereby granted authority and jurisdiction to administer this Act with the aid of its Motor License Agents, Department of Public Safety, Highway Patrol, county sheriffs and all other duty authorized peace officers; and the Commission is hereby authorized to promulgate all necessary rules and regulations and prepare forms and records to carry this Act into effect and to enforce the provisions thereof. Laws 1951, p. 189, § 22.
- Section 22.22. Motor license agents -- Bond -- Removal -- Duties -- Fees. The Tax Commission when it deems such to be necessary, shall appoint Motor License Agents in any county of this State, to assist in the enforcement and administration of this Act and acts amendatory thereof or akin thereto. Such agents shall be self-employed independent contractors, under the supervision of the Tax Commission. Any such Agent upon being appointed, shall furnish and file with the Commission a bond in such amount as may be fixed by said Commission. Such Agent shall perform all duties and do such things in the administration of the laws of this State as shall be enjoined upon and required of him by the Commission.
- Provided, that all appointments of tag agents heretofore made by the Oklahoma Tax Commission, and its predecessor, are hereby authorized and confirmed; and all notary fees and other charges made by such tag agents in connection with the registration of motor vehicles are hereby authorized and validated; and the withholding of such notary fees and other charges by such tax agents, as full compensation for their services in connection with the registration of motor vehicles, is hereby authorized, validated and confirmed.
- When an application for license is made with the Commission or a Motor License Agent, a registration fee of Fifty Cents ($.50) shall be collected. Such fee shall be in addition to the license fees on motor vehicles and shall be retained by the Motor License Agent and such amount retained by the Motor License Agent after payment of his office operating expense has been deducted shall be his compensation for services rendered, or, when paid by a person making or filing his application directly with the Commission, said registration fee of Fifty Cents ($.50) shall be apportioned in the same manner as are the license fees on motor vehicles. As amended Laws 1963, c.217, § 1.
The term "employee" as defined in section 210(j)(2) of the Social Security Act, means "any individual who, under the usual common-law rules applicable in determining the employer-employee relationship, has the status of an employee." (Social Security Regulations No. 4, section 404.1004(c) (20 CFR 404.1004(c)) sets out the rules.) Generally, such a relationship exists when the person for whom the services are performed has the right to control and direct the individual who performs the services, not only as to the result to be accomplished but also as to the details and means by which the result is accomplished. In this connection, it is not necessary that the employer actually direct or control the manner in which the services are performed; it is sufficient if he has the right to do so. Whether or not an employer-employee relationship exists for social security purposes is a question of Federal law to be determined by the appropriate Federal officials. Section 404.1004(a)(2) (20 CFR 404.1004(a)(2)) of the regulations cited above support this position:
- If the relationship of employer and employee exists, the designation or description of the relationship by the parties as anything other than that of employer and employee is immaterial. Thus, if such relationship exists, it is of no consequence that the employee is designated as a partner, coadventurer, agent, independent contractor, or the like.
The statutory provisions cited above clearly indicate that motor license agents in Oklahoma are subject to the direction and control of the State through the Tax Commission, and that the Commission either exercises or reserves the right to exercise such direction and control by means of instructions issued to them. The agents are removable at the will of the Tax Commissioner; they are required to furnish and file bonds, and must perform all duties required of them by the Commission. Under the facts recited, motor license agents in Oklahoma, held employees of the State within the meaning of section 210(j) of the Social Security Act. The fact that they are designated in the State law as self-employed independent contractors under the supervision of the State Tax Commission does not change this result.
 The Social Security Amendments of 1967 (P.L. 90-248) provide that fees for services performed after 1967 by State and local employees in positions compensated solely on a fee basis which are not covered under a Federal-State coverage agreement are compulsorilyy covered as self-employment income with one exception. An employee occupying such a position in 1968 may make an irrevocable election on or before the due date of his income tax return for 1968 not to have such fees constitute self-employment income for 1968 and all succeeding years.