20 CFR 404.1004(c)

SSR 73-46c

Lillian I. Belcher v. Richardson, Civ. No. 2972, U.S.D.C., S.D. of W.Va. (10/17/72) (CCH UIR, Vol. I, Fed. Para. 16,925)

Where claimant cared for her grandchild in her own home while the child's parents worked but received no instructions from them relevant to care of child and there was no indication that parents retained right to direct and control the details of claimant's services, held, the payments claimant received pursuant to this arrangement were not earnings for social security purposes since the work arrangement was a mutually beneficial family undertaking and did not constitute a bona fide employer-employee relationship.

CHRISTIE, District Judge: This is an action under Section 205(g) of the Social Security Act, 42 U.S.C.A. 405(g), to review a final decision of the Secretary of Health, Education, and Welfare. The decision of a hearing examiner on July 23, 1971, became the final decision of the Secretary in this case on March 7, 1972, when the Appeals Council denied plaintiff's request for review. The decision holds that plaintiff is not entitled to retirement insurance benefits for the reason that she lacks a sufficient number of quarters of coverage under the provisions of the Act. This matter is now before the court upon the cross motions of both parties for summary judgment under Rule 56.

Plaintiff's claim of her entitlement to retirement benefits rests upon the payment of FICA taxes for her account upon moneys she allegedly received from one of her four sons during the years 1969 and 1970. The Secretary ruled that no employer-employee relationship existed between plaintiff and her son, and the five quarters of coverage earned pursuant to the arrangement, therefore, could not be counted toward retirement benefits. This left plaintiff with only thirteen of the eighteen quarters necessary under Section 214(a) of the Act for her to qualify for retirement benefits.

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Plaintiff was born September 24, 1907. She has an eight grade education and is the divorced mother of four sons, none of whom are living with her. She first began work, after her divorce in 1957, at a meat processing plant and remained there until sometime in 1959 when she was "laid off." Subsequently, she worked sporadically in various restaurants until 1964. Pursuant to these work activities, she earned thirteen quarters of coverage under the Act.

Plaintiff apparently did not work again until January 1969, when she began working for one of her sons and his wife as a babysitter for their infant daughter. Both her son and his wife were working a this time and they were in need of a babysitter. Plaintiff testified that she had previously visited a social security representative and was told that she needed additional quarters to qualify for retirement benefits and that she could earn them by doing any kind of work she desired as long as she earned at least $50 a quarter. Thus, plaintiff asserts that she thought she could perform work as a baby sitter for her granddaughter for remuneration and earn the necessary quarters to qualify for retirement benefits.

The child was left at plaintiff's home each weekday morning at about 6:30 a.m. and picked up each evening at about 4:30 p.m. Plaintiff's duties were to care for and feed the child for which she was paid $15 a week, the same as was allegedly paid a previous sitter. However, late in 1969, her son's wife became pregnant and ceased to work on a full-time basis sometime in 1970. Consequently, plaintiff's hours were reduced and her pay cut to an average of about $5 per week. After the birth of the second child in August 1970, plaintiff stopped babysitting for remuneration although she would care for the children on special occasions without pay.

A statement dated December 15, 1970, submitted by plaintiff to the Social Security Administration relates:

"Beginning in 1969 I have been working for my son and daughter-in-law. She had been working until a child was born in 10/70. She worked about a year.
"I had been babysitting for them as needed and am doing that now. In 1969 she was working fairly regularly and I had to keep another child every day.
"I am paid by no particular standard. There is and was no regular hourly or daily wage rate. They mostly pay as they are able and as I have need.
"I was paid $60 in the first quarter of 1970, $50 in the 2nd quarter, and $55.00 in the 3rd. I don't know what I have made this quarter, but it would average about $5 per week. They keep a record of the amounts paid."

Plaintiff further testified at her hearing that she had been paid in cash for her services but that she had not provided her son with receipts for such pay. However, FICA taxes were paid on the alleged wages. Social Security records reflect that in 1969 plaintiff was credited with $102 the first quarter, $101 the second quarter, $68 the third quarter, and $130 the fourth quarter. In 1970, she was credited with $60 for the first quarter. Plaintiff also stated that she currently has no income but has a little money saved. She is helped along with her rent and groceries by her four sons.

The fact that a working arrangement might have been entered into for the very purpose of bringing a claimant within the coverage of the Social Security Act does not, in itself, condemn or disqualify the arrangement if there existed a bona fide employer-employee relationship. Sabbagha v. Celebrezze, 345 F.2d at p. 511. However, the hearing examiner in this case determined that, although the necessity of the services rendered by plaintiff for her son and daughter-in-law was not questioned, it was obvious from the entire record that the services were merely performed as a result of a cooperative family effort which was mutually advantageous to both parties and did not constitute an actual or implied employment contract. Relative to this issue of a bona fide employment contract in Section 404.1004(c) of the Secretary's regulations, 20 CFR 404.1004(c), which provides in pertinent part that,

(1) Every individual is an employee if under the usual common-law rules the relationship between him and the person from whom he performs services is the legal relationship of employer and employee.
(2) Generally, such relationship exists when the person for whom the services are performed has the right to control and direct the individual who performs the services, not only as to the result to be accomplished by the work but also as to the details and 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 shall be done. In this connection, it is not necessary that the employer actually direct or control the manner in which services are performed; it is sufficient if he has the right to do so.

It was the Secretary's opinion that a right to control and direct plaintiff in the performance of her services to the extent necessary under the usual common law rules to establish an employer-employee relationship had not been shown. Therefore, the quarters earned pursuant to the arrangement could not be credited to plaintiff's account and she lacked a sufficient number of quarters to qualify for social security retirement benefits.

After a thorough review of the record as a whole, we cannot conscientiously say that the Secretary's decision is not supported by substantial evidence, and without such conviction, we have no right to disturb it. There is no indication in the record that plaintiff's son or his wife gave her any instructions relevant to the care of the child or that they retained the right to direct and control the details of her services. Also of note is the fact that, subsequent to the alleged employment contract, plaintiff continued, on occasion, to care for her son's children without remuneration. Further, she has had no visible means of support for some time and has partially depended upon her sons for the payment of her rent and other living expenses. Plaintiff related in her statement of December 15, 1970, that she was paid by no particular standard and that she was mostly paid as her son was able and as she had need. Thus, there appears to be ample evidence that the work arrangement was merely a casual familial undertaking for the mutual benefit of the parties and did not comprise a bona fide employer-employee relationship. The mere designation of money received pursuant to the arrangement as wages and the payment of FICA taxes on that money cannot, in itself, create a bona fide employer-employee relationship if none in fact existed. Sabbagha v. Celebrezze, 345 F.2d at p. 511.

Plaintiff, in the alternative, urges the court to remand this case to the Secretary for the purpose of taking additional evidence on the issue of right of control. The basis for this contention is that plaintiff, with only an eighth grade education, was not represented by counsel during a hearing in which no specific questions were asked concerning the right of control. However, while Section 205(g) of the Act does empower the Court to remand a case to the Secretary for the taking of additional evidence upon a showing of good cause, we find no such showing here. Plaintiff was informed in writing prior to the hearing of her right to an attorney. She was once again apprised of this right by the hearing examiner but expressed a desire to proceed without one. In any event, plaintiff neither shows nor alleges to this Court that she in fact has any additional evidence to offer which would compel a different decision at the hearing level. Absent such a proffer, we would be unwarranted in speculating that it would be beneficial to the plaintiff to remand the case for the taking of more evidence.

Accordingly, having reviewed the record as a whole and having found substantial evidence to support the Secretary's decision, the defendant's motion for summary judgment must be granted and plaintiff's like motion denied.

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