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 groups generally constitute employment and are usually reportable.
A detailed explanation of the various specified persons defined to be employees is not possible in this handbook. Contact your local field representative with 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 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.
- 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 considered to be localized within the state where the majority of the services are performed.
- 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.
- 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.
- 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.
Since questions of jurisdiction of coverage are technical, employers in such situations should contact their KDOL 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 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.
- 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. A parent is always exempt when employed by a son or daughter. This family exemption does not apply to any corporation or limited liability company. 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 supported 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 a 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 as 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 that 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 and/or gas leases, relating to the operation and maintenance of such leases on a contractual basis. (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 and 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. (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.)
- Services performed as a qualified direct seller. A "direct seller" 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 a limited liability company (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.
- Service performed by an owner-operator of a motor vehicle that is leased or contracted to a licensed motor carrier with the services of a driver and is not treated under the terms of the lease agreement or contract with the licensed motor carrier as an employee.
- Other exemptions include certain services performed by students, inmates of correctional institutions, hospital patients, recipients of certain rehabilitation work-relief and work-training programs.
Misclassified Worker: The term employment, as it relates to independent contractors, is defined in the Kansas Employment Security Law. Specifically, K.S.A. 44-703(i)(3)(D) says:
- Services performed by an individual for wages or under any contract of hire shall be deemed to be employment subject to this act if the business for which activities of the individual are performed retains not only the right to control the end results of the activities performed, but the manner and means by which the end result is accomplished.
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 to avoid misclassification. Any person(s) found in violation of this law shall be subject to a civil penalty, per K.S.A. 44-766.
Any employer who is in doubt whether or not wages for services are reportable should contact their local KDOL field representative or write to Kansas Department of Labor: Unemployment Tax Contributions at 1309 SW Topeka Blvd, Topeka, KS 66612-1816.