SSR 76-25a: SECTION 402(d) (30 USC 902(d)) -- BLACK LUNG BENEFITS -- DEFINITION OF MINER -- OWNER OF CLOSE CORPORATION
20 CFR 410.110(h), (j), and (m)
- An individual claiming Black Lung Benefits had formed a close corporation which engaged in the general business of coal mining. He was the principal stockholder of the corporation and performed services for it in all capacities from president to laborer in the mines. HELD, since the sole stockholder of a close corporation may be considered to be an employee of the corporation, services which the claimant performed for the subject corporation established that he was an employee of such corporation and therefore a "miner" within the meaning of section 402(d) of the Federal Coal Mine Health and Safety Act of 1969, as amended.
The general issue before the Appeals Council is whether the claimant is entitled to Black Lung Benefits. The specific issue is whether he is a "miner" as defined in section 402(d) of the Federal Coal Mine Health and Safety Act of 1969, as amended.
The claimant filed an application for Black Lung Benefits on February 16, 1970. That claim has been heretofore denied on the basis that the claimant is not a "miner" within the meaning of section 402(d) of the Act, as amended, since all of his work in coal mines has been performed as a self-employed individual rather than as an "employee".
Section 402(d) of the Federal Coal Mine Health and Safety Act of 1969, as amended, provides that the term "miner" means any individual who is or was employed in a coal mine.
Section 410.110 of Social Security Administration Regulations No. 10 provides definitions of terms used in the Act:
- Subsection (h) provides, in pertinent part, that the term "coal mine" means an area of land used for the extraction of bituminous coal, lignite, or anthracite from its natural deposits in the earth and the work of preparing the coal so extracted.
Subsection (m) provides that the term "employee" means an individual in a
legal relationship (between the person for whom he performs services and
himself) of employer and employee under the usual common-law rules.
Sections (1) and (2) of subsection (m) provide as follows:
- "(1) Generally, such relationship exists when the person for whom 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 by the work but also as to the means by which that result is accomplished; that is, an employee is subject to the will and control of the employer not only as to what shall be done but how it is done. 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. The right to discharge is also an important factor indicating that the person possessing that right is an employer. Other factors characteristic of an employer, but not necessarily present in every case, are the furnishing of tools and the furnishing of a place to work to the individual who performs the services. In general, if an individual is subject to the control or direction of another merely as to the result to be accomplished by the work and not as to the means and methods for accomplishing the result, he is an independent contractor. An individual performing services as an independent contractor is not as to such services an employee under the usual common-law rules.
- (2) Whether the relationship of employer and employee exists under the usual common-law rules will in doubtful cases be determined upon an examination of the particular facts of each case."
According to the claimant's testimony, he first became connected with the coal mining industry in 1945 hauling coal for various firms as a self-employed truck driver. On March 20, 1951, the record shows that he formed a corporation, known as The XYZ Trucking Company, whose principal business activity was hauling coal. In addition, he performed these same services for the ABC Coal Company during the first six months of 1952. An itemized statement of earnings reported to his Social Security record indicates that the ABC Coal Company reported wages to that record in the first two quarters of 1952 and that the XYZ Trucking Company reported earnings to his record on a regular basis from 1953 through 1962 and again in the last quarter of 1970.
With respect to the above employers, the Appeals Council is of the opinion and so finds that the claimant's services in their employ did not constitute those of a "miner" within the meaning of section 402(d) of the Act, as amended. Section 410.110(j) of the Social Security Regulations No. 10 provides that the term "miner" means an individual who is working or has worked as an employee in a coal mine, performing functions in extracting the coal or preparing the coal so extracted. Insomuch as the claimant's services for The XYZ Trucking Company and the ABC Coal Company consisted of hauling coal after its extraction and preparation, such services would not qualify him as a "miner" within the meaning of the above cited section.
The record shows that on July 24, 1958, the claimant formed a corporation known as RST Coal Company, of which he was the principal stockholder. According to the Certificate of Incorporation, that corporation was formed in part, for the following reasons:
- "To purchase, lease or otherwise acquire, own and hold coal lands, land, real estate, minerals, timber and timber lands in the State and elsewhere; to open, operate and have coal mines and to mine coal by any method or means including deep mining, strip mining and auger mining in the State and elsewhere, and dispose of the products of such mines and such mining operations either at wholesale or retail and to conduct and carry on the general business of coal mining by any method or means and to do any and all things pertinent thereto, including the right to mine coal and operate coal mines for persons, firms and corporations * * *"
The claimant testified that RST Coal Company was engaged in strip mining operation.
It is permissible to find, under the usual common-law rules, that the owner of a close corporation is an 'employee.' The corporation has the legal status of a person. 1. Fletcher Cyc Corp (Perm. Ed.) § 7. Generally, the corporation is considered the employer, not its stockholders. Ibid, §§ 14, 25. The corporation is an entity distinct from its members even if only one person owns the entire capital stock. A sole owner and his corporation are distinct and separate legal entities and must be so treated. Ibid, § 25,1. Thus, a sole stockholder employed by the corporation would be controlled and directed by the corporate person, not himself. Even if a person is the sole owner of a corporation, he may occupy a dual capacity as an executive officer and an employee of the company. 2. Fletcher Cyc Corp (Perm. Ed.) § 266. For purposes of workmen's compensation acts, stockholders, directors and officers of corporations are not precluded from being considered employees of the company if otherwise serving in an employee capacity. Ibid. § 266.1. Thus, assuming State law requirements have been adhered to with respect to corporate structure and operating procedures (i.e., a bona-fide corporation exists) and an otherwise bona-fide employment relationship under the common-law rules exists between the individual and the corporation, a sole stockholder may be considered an 'employee' for purposes of the Act and regulations."
In the instant case, the claimant testified that he worked in every capacity for the RST Coal Company, from president of the corporation to the lowest labor job of excavating coal. He testified that, whenever there was physical work to be performed, he worked alongside of the employee he hired, and that he generally performed office work only at night and on weekends. Accordingly, since the record shows that RST Coal Company was a bona-fide corporation and was operated as such by the claimant, the Appeals Council is of the opinion and so finds that a bona-fide employment relationship under common-law rules existed between the claimant and the RST Coal Company; and, therefore, that the services performed by the claimant in the employ of that corporation constituted those of a "miner" within the meaning of section 402(d) of the Act, as amended. The record shows that RST Coal Company reported wages to the claimant's Social Security earnings record continuously from October 1, 1958 through December 31, 1961. This employment constitutes 3.25 years of coal mine employment by the claimant.
It is the decision of the Appeals Council that the claimant is a "miner" within the meaning of section 402(d) of the Federal Coal Mine Health and Safety Act of 1969, as amended.