Bill Text: AZ SB1500 | 2018 | Fifty-third Legislature 2nd Regular | Engrossed
Bill Title: Employment security; employee; employer; status
Spectrum: Partisan Bill (Republican 1-0)
Status: (Passed) 2018-04-10 - Chapter 171 [SB1500 Detail]
Download: Arizona-2018-SB1500-Engrossed.html
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Senate Engrossed |
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State of Arizona Senate Fifty-third Legislature Second Regular Session 2018
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SENATE BILL 1500 |
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AN ACT
amending sections 23-613.01, 23-614 and 23-722, Arizona Revised Statutes; relating to employment security.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Section 23-613.01, Arizona Revised Statutes, is amended to read:
23-613.01. Employee; definition; exempt employment
A. "Employee" means any individual who performs services for an employing unit and who is subject to the direction, rule or control of the employing unit as to both the method of performing or executing the services and the result to be effected or accomplished. Indications of control by the employing unit include controlling the individual's hours of work, location of work, right to perform services for others, tools, equipment, materials, expenses and use of other workers and other indicia of employment, except employee does not include:
1. An individual who performs services as an independent contractor, business person, agent or consultant, or in a capacity characteristic of an independent profession, trade, skill or occupation.
2. An individual subject to the direction, rule or control or subject to the right of direction, rule or control of an employing unit solely because of a provision of law regulating the organization, trade or business of the employing unit.
3. An individual or class of individuals that the federal government has decided not to and does not treat as an employee or employees for federal unemployment tax purposes, as established by the outcome of an audit or other affirmative treatment by the internal revenue service of any taxpayer whose tax returns include income from the independent contractor relationship.
4. An individual if the employing unit demonstrates the individual performs services in the same manner as a similarly situated class of individuals that the federal government has decided not to and does not treat as an employee or employees for federal unemployment tax purposes.
5. An individual to whom all of the following apply:
(a) Performs officiating services in recreational, interscholastic or intercollegiate sporting events or contests on a contest‑by‑contest basis.
(b) Has the ability to accept or reject assignments to officiate a sporting event or contest.
(c) Has the right to officiate contests for multiple organizations or entities.
(d) Is not otherwise employed by the sponsoring school, association of schools or the organization, this state, or a political subdivision of this state sponsoring the sporting event or contest.
6. A medical or health care professional who contracts with a medical practice group or hospital, whether directly or through an agent, and who is characterized by all of the following:
(a) Observes the practices commonly associated with operating as a medical or professional entity, such as a professional corporation, a limited liability company or a contractor, and uses the practices of those entities for compensation, billing for services and filing tax returns.
(b) Is not paid wages and does not have wage withholdings from the contracted medical practice group or hospital.
(c) Is not provided employee benefits by the contracted medical practice group or hospital.
7. A home care services provider that contracts with a person other than as an employee, whether directly or through an agent, to furnish nonmedical therapeutic and restorative health-related or life assistance services, except behavioral health services, such as general supervision, protective, preventative and personal care, activities and living skills training, meals, housekeeping, companionship and health monitoring at the location where the recipient resides.
B. For the purposes of subsection A, paragraph 5 of this section, "officiating services" means overseeing the play of a sporting event or contest, judging whether the rules are being followed and penalizing participants for infringing the rules.
C. Notwithstanding this section, an individual or class of individuals shall not be treated as an employee by the department for purposes of this chapter if, before the department's determination that the individual or class of individuals at issue is an employee:
1. The individual or class of individuals had been performing services for the employing unit.
2. The department had inspected work records of the employing unit for time periods that the individual or class of individuals had been performing these services.
3. The individual or class of individuals at issue was not included on the contribution and wage reports of the employing unit.
4. After its inspection the department concluded in writing provided to the employing unit that either:
(a) No change or changes in the inspected reports were necessary.
(b) The individual or class of individuals in question did not constitute an employee for purposes of this chapter.
5. At no time between the date of the written determination prescribed in paragraph 4 of this subsection, and the department's subsequent conclusion that the individual or class of individuals at issue constitutes an employee, did the department notify the employing unit in writing that the individual or class of individuals at issue now constitutes an employee for purposes of this chapter.
D. Subsection C of this section does not apply if either:
1. There has been a substantial and material change in the facts upon on which the writing required by subsection C, paragraph 4 of this section was based.
2. The conclusion reached by the department pursuant to subsection C, paragraph 4 of this section was the result of false statements, misrepresentation, fraud or intimidation on the part of the employing unit.
E. The following services are exempt employment under this chapter, unless there is evidence of direction, rule or control sufficient to satisfy the definition of an employee under subsection A of this section, which is distinct from any evidence of direction, rule or control related to or associated with establishing the nature or circumstances of the services considered pursuant to this subsection:
1. Services which that are not a part or process of the organization, trade or business of an employing unit and which that are performed by an individual who is not treated by the employing unit in a manner generally characteristic of the treatment of employees.
2. Services performed by an individual for an employing unit or its clients through isolated or occasional transactions, regardless of whether such the services are a part or process of the organization, trade or business of the employing unit.
F. Notwithstanding this section, an individual or class of individuals determined to be an employee or employees for purposes of the federal unemployment tax act, as amended (26 United States Code sections 3301 through 3311), are employees under this chapter.
G. Notwithstanding any other provision of this chapter, this section applies to an employing unit to which the provisions of section 23‑750 apply only to the extent not inconsistent with the requirements of 26 United States Code sections 3304 (a)(6) and 3309.
H. For the purposes of determining employee status, the department shall consider all of the employment-related facts and may not base a determination on the facts that:
1. The individual performs services as a sole proprietorship.
2. The individual has executed a restrictive covenant, trade secret agreement or other confidentiality agreement with the employing unit.
3. The services of the individual are subject to standards for quality, time or location required by a client or customer of the putative employing unit.
Sec. 2. Section 23-614, Arizona Revised Statutes, is amended to read:
23-614. Employing unit; temporary services employer; professional employer organization; definitions
A. "Employing unit" means an individual or type of organization, including a partnership, association, trust, estate, joint‑stock company, insurance company or corporation, whether domestic or foreign, or the receiver, trustee in bankruptcy, trustee or successor of any of the foregoing, or the legal representative of a deceased person, which has, or subsequent to after January 1, 1936 had, one or more individuals performing services for it within this state. Effective January 1, 1962, "Employing unit" includes any federal instrumentality that is neither not wholly nor or partially owned by the United States and that has one or more individuals performing services for it within this state.
B. Each individual who performs services within in this state for an employing unit that maintains two or more separate establishments within in this state is performing services for a single employing unit for all the purposes of this chapter.
C. Each individual employed to perform or to assist in performing the work of any person in the service of an employing unit is engaged by the employing unit for all the purposes of this chapter, whether the individual was hired or paid directly by the employing unit or by such the person, provided if the employing unit had actual or constructive knowledge of the work. Notwithstanding any other provision of this chapter except for section 23‑612.01, an individual who performs services in or for a particular employing unit is not in the employment of such that employing unit if such the individual's wages for services in or for the particular employing unit are paid by another employing unit, and if the contributions required by this chapter on such the wages are paid by such the other employing unit.
D. Notwithstanding any other provision of this chapter, whether an individual or entity is the employer of specific employees shall be determined by section 23‑613.01, except as provided in subsections E and G of this section with respect to a professional employer organization or a temporary services employer. The exceptions to the definition of employee prescribed in section 23‑613.01, subsection A apply to determinations made pursuant to subsections E, F, G and H of this section.
E. A professional employer organization or a temporary services employer that contracts to supply a worker to perform services for a customer or client is the employer of the worker who performs the services. A customer or client who contracts with an individual or entity that is not a professional employer organization or a temporary services employer to engage a worker to perform services is the employer of the worker who performs the services. Except as provided in subsection F of this section, an individual or entity that is not a professional employer organization or a temporary services employer, that contracts to supply a worker to perform services to a customer or client and that pays remuneration to the worker acts as the agent of the employer for purposes of payment of remuneration.
F. In circumstances that are in essence a loan of an employee to another employer and the direction and control of the manner and means of performing the services changes to the employer to whom the employee is loaned, the loaning employer continues to be the employer of the employee if the loaning employer continues to pay remuneration to the employee, whether or not the loaning employer is reimbursed by the other employer. If the employer to whom the employee is loaned pays remuneration to the employee for the services performed, that employer is considered the employer for the purposes of any remuneration paid to the employee by the employer, regardless of whether the loaning employer also pays remuneration to the employee.
G. A professional employer organization shall report and pay all required contributions to the unemployment compensation fund using the state employer account number and the contribution rate of the professional employer organization.
H. On termination of a contract between a professional employer organization and a client or the failure by a professional employer organization to submit reports or make tax payments as required by this chapter, the client shall be treated as a new employer without a previous experience record if the client has been subject to a professional employer agreement for at least two years or if the client is not otherwise eligible for an experience rating.
I. For the purposes of this section:
1. "Professional employer organization" has the same meaning prescribed in section 23‑561.
2. "Temporary services employer" means an employing unit that contracts with clients or customers to supply workers to perform services in more than one industry for the client or customer and that performs all of the following:
(a) Negotiates with clients or customers for such matters as the time of work, the place of work, the type of work, the working conditions, the quality of services and the price of services.
(b) Determines assignments or reassignments of workers, even though workers retain the right to refuse specific assignments.
(c) Retains the authority to assign or reassign a worker to other clients or customers if a worker is determined unacceptable by a specific client or customer.
(d) Assigns or reassigns the worker to perform services for a client or customer.
(e) Sets the rate of pay of the worker, whether or not through negotiation.
(f) Pays the worker from its own account or accounts.
(g) Retains the right to hire and terminate workers.
Sec. 3. Section 23-722, Arizona Revised Statutes, is amended to read:
23-722. Reports of employing unit; information confidential; report of banking institution; disclosure of information; classification
A. The department, the appeals board or an appeal tribunal may require from an employing unit sworn or unsworn reports with respect to persons employed by it which it deems necessary for the effective administration of this chapter. Information thus obtained shall not be published or open to public inspection, other than to public employees in the performance of their duties or to an agent of the department designated as such in writing for the purpose of accomplishing certain of the department's functions, in any manner revealing the employing unit's identity, but except that a claimant at a hearing before an appeal tribunal, the appeals board or the department shall be supplied with the information from the records to the extent necessary for the proper presentation of his claim and the employer shall be furnished a complete copy of the case record on request.
B. The department may request the comptroller of the currency of the United States to make an examination of the correctness of any return or report of a national banking association rendered pursuant to this chapter and may in connection with such request transmit the report or return to the comptroller of the currency of the United States as provided in section 3305 of the federal internal revenue code.
C. An employee or an agent of the department who violates any provision of this section is guilty of a class 3 misdemeanor.
