SECTION III. - Covered and Excluded Employment

Liability under the Kansas Employment Security Law is incurred when an employer pays the required remuneration to persons in employment, or engages the required number of persons in employment as described in section I.

Covered Employment

The law defines employment as any service, unless specifically excluded, performed for compensation under a contract of hire, whether the contract is expressed or implied, written or oral, and without regard to whether the service is performed on a part-time, full-time or casual basis.

Employment is service performed by an active officer of a corporation, including professional and closely-held corporations (Sub-Chapter S), or any employee under the common law employer/employee relationship. Employment also includes specific types of services, such as agent driver and commission salesperson.

Terms such as regular employment, full-time employment, commission sales, casual labor, temporary employees, part-time employees, teenage workers, etc., are all different terms for describing employment. These items generally constitute employment and are usually reportable.

A detailed explanation of the various specified persons defined to be employees is not practical. Contact your local field representative for any specific questions you might have.

State of Jurisdiction

Generally, if an employee works entirely within Kansas, that employee is covered under Kansas law and all payments for services are reportable to Kansas. However, when an employee performs services in Kansas and other states, the question of whether that employee is covered by the Kansas law is determined by one of the four tests listed below. Similar tests have been adopted by a majority of the states. These uniform provisions have the objective of avoiding conflicts and overlapping coverage between states where an employee performs services in more than one state for a single employer. These tests require the use of four conditions which are applied in successive order. Once a condition is met, jurisdiction is established and no further test is considered. The tests must be applied to each employee, not the employer.

1. Location of Services. If services are performed entirely within a state, that is the state of jurisdiction. If some of the services are performed outside the state and such services are only isolated, temporary or incidental, then they are deemed to be localized within the state where the majority of the services are performed.

2. Base of Employee's Operations. If services are not localized, then the state of jurisdiction is the state from which an employee customarily starts out to perform services and customarily returns for employer instruction or communication, to replenish stock, to repair equipment, or to perform other employment-related activities.

3. Place of Direction and Control. If neither of the above tests apply, then the state of jurisdiction is the state from which the employee's services are directed and controlled.

4. Employee's Residence. If none of the above tests apply, then the state of jurisdiction is the state in which the employee resides, provided the employee performs some services there.

Kansas, as well as most other states, participates in making reciprocal arrangements with appropriate and duly authorized agencies of other states. These arrangements are made in order to prevent the reporting of a worker's wages to more than one state, as well as to concentrate and simplify an employer's unemployment tax reporting.

The Kansas law permits an election to cover multi-statework if the worker:

1. performs some services in Kansas
                  OR
2. has a residence in Kansas
                  OR
3. has an employer which maintains a place of business in Kansas.

An employer may make an election to cover multi-stateworkers in Kansas by filing form K-CNS 412, "Employer's Election to Cover Multi-State Workers Under the Kansas Employment Security Law," with the Chief of Contributions, Department of Labor, 401 SW Topeka Boulevard, Topeka, KS 66603-3182. The election must be approved by all states where the individual worker may do some work for the employer and under whose law they might otherwise be covered.

Since questions of jurisdiction of coverage are technical, an employer confronted with this type of situation should contact their field representative for a determination.

Excluded Employment

The services of some workers are excluded from coverage under the Kansas Employment Security Law. The employment and earnings of workers in excluded employment cannot be used to qualify them for unemployment insurance benefits. However, employment performed for a liable employer is covered employment unless specifically excluded.

Employment or payrolls connected with the following types of services are excluded from coverage:

• Independent contractors are excluded from coverage under the Kansas Employment Security Law. These are persons who are actually in business for themselves and hold themselves available to the general public to perform services.

While the law does not define an independent contractor, court decisions have held that the common law tests of master and servant must be applied in making determinations of whether services rendered by an individual are in the capacity of an employee or independent contractor.

The Kansas Employment Security Law provides two specific tests to be applied to the worker's service to determine if the service constitutes that of an independent contractual nature (K.S.A. 44-703).

1. Such individual has been and will continue to be free from control or direction over the performance of such services, both under the individual's contract of hire and in fact.

2. Such service is either outside the usual course of the business for which such service is performed or that such service is performed outside of all the places of business of the enterprise for which such service is performed.

These tests are of a conjunctive nature and BOTH MUST BE MET for a worker to be considered as an individual contractor, rather than an employee.

The degree of control necessary to establish an employer/employee relationship must be assessed with regard to the custom and usage surrounding the performance of the particular service involved. A thorough examination of the employer/employee relationship should be made before classifying a person as an independent contractor.

Since matters concerning the status of persons as employees or independent contractors are often complex, it is recommended that employers contact their local field representative for a determination.

• Services covered by another unemployment insurance law (such as Railroad Retirement Act and federal employees).

• Services performed by an individual in the employ of a son, daughter, or spouse, or by a child under 21 years of age employed by the child's parents. This family exemption does not apply to any corporation. It is applicable only for an individual proprietorship or a partnership if the relationship of the exempt member is the same for all partners of the partnership.

• Services performed for a church, convention, or association of churches, or an organization which is operated primarily for religious purposes and is owned, operated, controlled, or principally sup- ported by a church, or a convention, or association of churches.

• Services performed by carriers under 18 years of age in the delivery or distribution of newspapers or shopping news, not including delivery or distribution to any point for subsequent delivery or distribution.

• Services of an individual performed for an organization exempt from federal income tax as set forth in Section 501(a) of the Federal Internal Revenue Code, if wages for such services are less than $50 per calendar quarter.

• Services of an elected official, member of a legislative body or member of the judiciary of the state or its political subdivision in the performance of the duties of such office or position.

• Services performed as an insurance agent or solicitor, if all such service is performed for remuneration solely by way of commission.

• Services performed as a qualified real estate agent, if remuneration for services is directly related to sales or other output and the services are performed pursuant to a written contract and the contract provides that the individual will not be treated as an employee.

• Services performed for an employer by an extra in connection with any phase of motion pictures, or television, or television commercials for less than 14 days during any calendar year. (This exclusion shall not apply to any employer which is a governmental entity or any employer described in Section 501(c)(3) of the Federal Internal Revenue Code of 1986.)

• Services performed by oil and gas contract pumpers performing pumping and other related services on one or more oil or gas leases or on both oil and gas leases, relating to the operation and maintenance of such leases on a contractual basis. "Services" does not include services performed for a governmental entity or exempt nonprofit organization. (This exemption does not apply to governmental entities or any employer described in Section 501(c)(3) of the Federal Internal Revenue Code of 1986.)

• Service not in the course of trade or business is exempt employment unless the employee is paid $200 or more cash remuneration in the calendar quarter for such service or the employee is regularly employed by the employer to perform such service. An individual is considered regularly employed if the individual works some portion of 24 days during the calendar quarter for the employer performing service not in the course of the employer's trade or business or the individual was regularly employed during the preceding calendar quarter. (The exemption does not apply to governmental entities or any employer described in Section 501(c)(3) of the Federal Internal Revenue Code of 1986.)

• Services performed as a qualified direct seller. The term "direct seller" means any person who is engaged in the trade or business of selling or soliciting the sale of consumer products to any buyer on a buy-sell basis or a deposit-commission basis for resale in the home or other than in a permanent retail establishment. It also includes a person who is directly engaged in the trade or business of selling or soliciting the sale of consumer products in the home or other than in a permanent retail establishment.

• Services by member managers/members carrying out their duties as members are exempt employment. If a member performs services for the LLC over and above their duties as a member, the services would be covered employment and compensation received for those services would be taxable.

• Services performed by election officials and election workers receiving less than $1,000 a year are excluded from the term "employment."

• Service performed by agricultural workers who are aliens admitted to the United States to perform labor, as provided by the immigration and nationality act.

• Other exemptions include certain services performed by students, inmates of correctional institutions, hospital patients, recipients of certain rehabilitation work-relief and work-training programs.

• Any employer who is in doubt whether or not wages for services are reportable should contact their local field represntative, or write to:

    Kansas Department of Labor
    Unemployment Tax Contributions
    401 SW Topeka Boulevard
    Topeka, KS 66603-3182