asked whether she gave any money to her sister and replied, "I must be honest about this. I paid her what she paid me." Section 209 of the Social Security Act provides, as pertinent here, that the term "wages" means remuneration paid for employment, except that such terms shall not include remuneration paid in any medium other than cash to an employee for domestic service in the private home of the employer. Section 210(j) (2) of the Social Security Act provides as pertinent, that the term "employee" means any individual who, under the usual common-law rules applicable in determining the employer/employee relationship, has the status of an employee. Section 404.1004(c) of the Social Security Administration Regulations No. 4 provides, in pertinent part, that an employment relationship exists under the usual common-law rules 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 the result is to be accomplished; that is, an employee is subject to the will and control of an employer not only as to what shall be done but how it shall be done. Whether the relationship of employer and employee exists under the usual common-law rules will, in doubtful cases, be determined upon an examination of particular facts of each case. Whether a bona fide employment relationship exists in a given case is essentially a question of fact and, while the basic principles are the same in cases involving alleged employment between family members as in those where no family relationship exists, there is a difference between creating a bona fide employment relationship and merely giving to certain purported payments the color of wages for the purpose of qualifying for old-age insurance benefits. The latter is neither within the letter nor the spirit of the law. Gancher v. Hobby, 145 F. Supp. 461. Whether a claimant was an "employee" receiving "wages" for the requisite period is a question to be determined from all the evidence in this case. Domanski v. Celebrezze, 323 F.2d 882; Folsom v. O'Neal, 250 F.2d 946. In determining whether a bona fide employment relationship exists, the courts have held that the Social Security Administration has "... both the right and the duty to scrutinize with care the actuality of the relationship...." Hall v. Ribicoff, CCH, UIR, Fed. Para. 14,374; Thurston v. Hobby, 133 F.Supp. 205. The Appeals Council carefully considered this case and, while it did not question the fact that the claimant performed domestic services in her sister's home and was a great help to her sister, it was of the opinion that the services performed by the claimant were not performed within an employment relationship. The Appeals Council held that a proper evaluation of the evidentiary facts and circumstances in this case required the conclusion that whatever services the claimant performed and whatever payments she received were the result of a family arrangement motivated by mutual benefits, as well as family ties. The evidence did not establish, in the opinion of the Appeals Council, that there was a rendition of services and cash remuneration for such services pursuant to a contract of employment. The essence of an employment relationship is a contractual arrangement between parties whereby an employee agrees to perform services, subject to the control or reservation of a right to control by the party for whom the services are performed. In the absence of a contract, there is no employment relationship. Making due allowance for their family relationship and the informal nature of the arrangement, there was no indication that the claimant was required to do any minimum amount of work and work special hours, or that she was given any instructions as to the work to be done and the order of services or that such a relationship was contemplated. The record reveals that the services performed beginning January 1972 were the same services that she had performed prior to January 1972, when she received and expected to receive no remuneration. The fact that the sister had no need for a full-time housekeeper either before or after the period of alleged employment indicated that there was no real need for the claimant's services. It was the opinion of the Appeals Council that the claimant would have performed domestic duties for her sister within the course of daily living and that her purpose in going to live with her sister was to be near her eye doctor and not because of a contract of employment. If she had been "fired", nothing would have changed. Of particular significance to the Appeals Council and an even stronger indication that a true employment relationship did not exist was the revelation made by the claimant during the course of her appearance before the Appeals Council that she paid back to her sister whatever her sister paid to her. In actuality, the claimant received no remuneration for the services performed for her sister. The checks drawn to her order were designed to simulate the payment of wages when in fact no actual payment of wages was intended. The Appeals Council emphasized that nothing stated in its decision should be construed as implying any unethical conduct by the claimant. Instead, the Appeals Council commended the claimant for the honesty of her testimony before the Administrative Law Judge and the Appeals Council and her unwillingness to distort the facts for personal advantage. The findings of the Appeals Council were as follows: 1. An employment relationship did not exist between the 2. The claimant was not paid "wages" by her sister, within the 3. The claimant has only 9 of the 13 quarters of coverage re- The Appeals Council, therefore, decided that the claimant is not entitled to old-age insurance benefits pursuant to her application filed on January 16, 1973. PURPOSE: To initiate a policy as a result of a provision in the Tax Reform Act of 1976 (as amended by a provision in the Revenue Act of 1978) extending the definition of a trade or business for social security purposes to include services of certain fishermen whose compensation is based on a share of the catch. |